<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 3, 1996
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
INTROGEN THERAPEUTICS, INC.
(Exact name of registrant as specified in its charter)
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<CAPTION>
DELAWARE 2834 74-2704230
<S> <C> <C>
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
</TABLE>
301 CONGRESS AVENUE
SUITE 1850
AUSTIN, TEXAS 78701
(512) 320-5010
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
------------------------
DAVID G. NANCE
PRESIDENT AND CHIEF EXECUTIVE OFFICER
INTROGEN THERAPEUTICS, INC.
301 CONGRESS AVENUE
SUITE 1850
AUSTIN, TEXAS 78701
(512) 320-5010
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
------------------------
COPIES TO:
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<S> <C>
ROBERT D. BROWNELL, ESQ. JI HOON HONG, ESQ.
MARNIA NICHOLS, ESQ. SHEARMAN & STERLING
WILSON SONSINI GOODRICH & ROSATI 599 LEXINGTON AVENUE
PROFESSIONAL CORPORATION NEW YORK, NEW YORK 10022
650 PAGE MILL ROAD (212) 848-4000
PALO ALTO, CALIFORNIA 94304
(415) 493-9300
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act of 1933 registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act of
1933 registration statement number of the earlier effective registration
statement for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
------------------------
CALCULATION OF REGISTRATION FEE
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<S> <C> <C>
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</TABLE>
<TABLE>
<CAPTION>
PROPOSED
MAXIMUM
TITLE OF EACH CLASS OF AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED OFFERING PRICE(1) REGISTRATION FEE
<S> <C> <C>
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Common Stock, $.001 par value............................................ $40,480,000 $14,000
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</TABLE>
(1) Estimated solely for the purpose of calculating the amount of the
registration fee pursuant to Rule 457(a) under the Securities Act of 1933.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE
REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
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<PAGE> 2
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED SEPTEMBER 3, 1996
3,200,000 SHARES
LOGO
COMMON STOCK
------------------------
All of the shares of Common Stock offered hereby are being sold by Introgen
Therapeutics, Inc. Prior to this offering, there has been no public market for
the Common Stock of the Company. It is currently estimated that the initial
public offering price will be between $ and $ per share. See
"Underwriting" for a discussion of the factors to be considered in determining
the initial public offering price.
Application has been made to have the Common Stock quoted on the Nasdaq
National Market System under the symbol INGN.
Rhone-Poulenc Rorer Pharmaceuticals Inc., a party to a collaborative
arrangement with the Company, has agreed to purchase $6.0 million of Common
Stock in this offering at a price per share equal to the price to public. See
"Business of Introgen -- Collaborative Arrangements."
THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK. SEE "RISK FACTORS"
BEGINNING ON PAGE 6.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
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<S> <C> <C> <C>
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Underwriting
Price to Discount and Proceeds to
Public Commissions(1) Company(2)
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Per Share............................ $ $ $
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Total................................ $ $ $
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Total Assuming Full Exercise of Over-
Allotment Option(3)................ $ $ $
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</TABLE>
(1) See "Underwriting."
(2) Before deducting expenses estimated at $750,000, which are payable by the
Company.
(3) Assuming exercise in full of the 45-day option granted by the Company to the
Underwriters to purchase up to 480,000 additional shares, on the same terms,
solely to cover over-allotments. See "Underwriting."
------------------------
The shares of Common Stock are offered by the Underwriters, subject to
prior sale, when, as and if delivered to and accepted by the Underwriters, and
subject to their right to reject orders in whole or in part. It is expected that
delivery of the Common Stock will be made in New York City on or about
- ------------, 1996.
------------------------
PAINEWEBBER INCORPORATED GENESIS MERCHANT GROUP
SECURITIES
------------------------
THE DATE OF THIS PROSPECTUS IS , 1996.
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor
may offers to buy be accepted prior to the time the registration statement
becomes effective. This prospectus shall not constitute an offer to sell or
the solicitation of an offer to buy nor shall there be any sale of these
securities
in any State in which such offer, solicitation, or sale would be unlawful
prior to registration or qualification under the securities laws of any
such State.
<PAGE> 3
[ARTWORK]
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK OF
THE COMPANY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET SYSTEM
OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
Introgen, Introgen Therapeutics, Inc. and the Introgen logo are claimed as
trademarks and service marks for the goods and services for which they are used.
This Prospectus may also include names and marks of companies other than
Introgen.
2
<PAGE> 4
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements appearing elsewhere in this Prospectus. For
a discussion of certain factors to be carefully considered when evaluating an
investment in the shares of Common Stock offered hereby, see "Risk Factors."
Except as set forth in the Financial Statements or as otherwise indicated, all
information in this Prospectus assumes (i) the filing of the Company's restated
Certificate of Incorporation authorizing a class of undesignated Preferred
Stock, (ii) the conversion of all outstanding shares of Convertible Preferred
Stock into Common Stock, (iii) the adoption of the Director Option Plan and the
Employee Stock Purchase Plan, and (iv) the increase of shares of Common Stock
authorized under the Incentive Stock Plan from 1,250,000 to 1,750,000, each of
which will be effective as of the closing of this offering, and (v) no exercise
of the Underwriters' over-allotment option. See "Description of Capital Stock"
and "Underwriting." Rhone-Poulenc Rorer Inc. and its wholly-owned subsidiaries
are referred to in this Prospectus as "RPR." In addition, all information
related to the Company's clinical data is reported as of July 15, 1996.
THE COMPANY
Introgen Therapeutics, Inc. ("Introgen" or the "Company") is a leader in
the development of gene therapy products to treat cancer by direct introduction
of the therapeutic gene inside the body ("in vivo"). Gene therapy is a new
technology that is being developed using genetic materials as therapeutic agents
to treat genetic defects causing cancer and other diseases. For treating cancer,
gene therapy seeks to restore or correct missing or aberrant gene functions
either by the addition of normal genes ("gene replacement") or by neutralizing
the activity of defective genes ("gene blocking"). Gene therapy involves two
significant components: the therapeutic genetic material and the system to
deliver this material to the desired site. Introgen is developing two categories
of gene cancer therapy products: (1) "gene replacement" products based on the
p53 tumor suppressor gene and (2) "gene blocking" products designed to
neutralize the activity of a mutant K-ras oncogene. Missing or dysfunctional p53
tumor suppressor genes are the single most common genetic alteration in cancer
discovered to date and occur in over 50% of human cancers. Mutated K-ras
oncogenes have been found in a variety of human cancers.
The Company is currently conducting Phase I/II clinical trials in the
United States of its lead products for the treatment of non-small cell ("NSC")
lung cancer and head and neck cancer. Additional clinical trials are expected to
commence in the United States, Europe and Asia over the next 12 to 18 months.
These clinical trials would include multi-center, Phase II/III trials of
Introgen's p53 "gene replacement" products. In addition, the Company is
currently conducting preclinical studies, and expects to initiate Phase I and
Phase I/II clinical trials, for products to treat cancers of the liver, bladder,
ovaries, brain, breast and prostate, as well as malignant ascites from
gastrointestinal cancers. The Company's current and expected clinical trials
test the Company's products both alone and in combination with standard cancer
treatments.
Preliminary results from Introgen's Phase I/II human clinical trials
indicate that its p53 "gene replacement" products demonstrate promise with
respect to both lack of toxicity and tumor response. These trials have involved
269 doses of p53 injected into the tumors of 37 patients. Twenty-eight of these
patients have been treated with p53 delivered by an adenoviral vector
("Ad-p53"), and nine patients have been treated with p53 delivered by a
retroviral vector ("RV-p53"). There has been no clinically significant
vector-related toxicity noted. Data from seven of the nine patients in
Introgen's RV-p53 trial for lung cancer could be clinically evaluated with
respect to tumor response. Of those seven patients, three showed tumor
regression at the treatment site, and three showed tumor stabilization.
Preliminary data from Introgen's clinical trials of Ad-p53 for the treatment of
head and neck cancer and lung cancer indicate that Ad-p53 injected into tumors
produces an increase in p53 expression, programmed cell death ("apoptosis") and
tumor necrosis.
Development and commercialization of Introgen's p53 and K-ras products are
being pursued in conjunction with RPR pursuant to a collaboration arrangement
with potential aggregate payments to the Company of approximately $50.0 million
prior to product commercialization (including research and development payments
already received and equity investments). The collaboration arrangement provides
that Introgen is primarily responsible for completing the early stage research
and development of products, which
3
<PAGE> 5
RPR is obligated to fund. If RPR elects, it shall be primarily responsible for
the later stage development of the products. In North America, Introgen retains
exclusive manufacturing rights and may elect to form a marketing collaboration
with RPR with respect to collaboration products. Under such marketing
collaboration, RPR and Introgen would share the costs and profits of marketing
the collaboration products in North America. Introgen is entitled to royalties
on product sales arising from RPR's exclusive marketing and manufacturing rights
in Europe. Both parties may, at their own expense, develop and market products
in Japan, Korea, China, Taiwan and India. Introgen and RPR have agreed that they
will not market or license, and RPR will not develop, any p53 or K-ras gene
therapy products prior to October 2004, except under the terms of the
collaboration arrangement. Pursuant to the terms of a stock purchase agreement
between the Company and RPR, RPR has agreed to purchase $6.0 million of Common
Stock at the price to public in this offering, as well as to make an additional
equity investment in 1997 and a future milestone payment for a potential
combined total of approximately $5.0 million (provided that the collaboration
agreements remain in effect).
Introgen has exclusively licensed 20 United States and 26 foreign patent
applications from the University of Texas M.D. Anderson Cancer Center
("UTMDACC"). These licensed patent applications relate to the use of tumor
suppressor genes in combination with DNA-altering treatments such as
chemotherapy and radiation, as well as genes, viral and non-viral delivery
systems, tissue-specific promoters and diagnostics. In January 1996, Introgen
received a notice of allowance of a licensed patent application of UTMDACC
covering certain recombinant p53 adenovirus compositions. Introgen is also
funding research at UTMDACC and the Sidney Kimmel Cancer Center ("SKCC") and has
the right to include any patentable inventions that arise from the research
under its exclusive license with the corresponding institution.
The Company's objective is to remain a leading developer of gene therapy
products for the treatment of cancer. To accomplish its objective, Introgen's
strategy is to pursue rapid clinical development and regulatory approval of
products that address severe life-threatening cancers; focus on key therapeutic
genes; leverage collaborative arrangements; pursue and expand its patent
portfolio; and, in the longer term, enhance the breadth of its existing product
platform.
The Company was incorporated in Delaware on June 17, 1993. The Company's
principal executive offices are located at 301 Congress Avenue, Suite 1850,
Austin, Texas 78701, and its telephone number is (512) 320-5010.
THE OFFERING
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<S> <C>
Common Stock Offered by the Company......... 3,200,000 shares(1)
Common Stock to be Outstanding after the
Offering.................................. 10,863,769 shares(2)
Use of Proceeds............................. To fund product research and development,
product clinical trials, manufacturing scale-up
and capacity expansion, support of sponsored
research programs, marketing and sales
organization development, and other general
corporate purposes.
Proposed Nasdaq National Market System
Symbol.................................... INGN
</TABLE>
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(1) Includes 545,455 shares to be purchased by RPR in this offering at an
assumed initial public offering price of $11.00 per share.
(2) Excludes, as of August 28, 1996, 746,354 shares of Common Stock reserved for
issuance upon the exercise of outstanding options granted pursuant to the
Company's Incentive Stock Plan at a weighted average exercise price of $0.65
per share and 114,251 shares of Common Stock issuable upon the exercise of
outstanding warrants at a weighted average exercise price of $7.17 per
share. See "Management -- Stock Plans," "Certain Transactions" and Notes 3
and 8 of Notes to Financial Statements included herein.
4
<PAGE> 6
SUMMARY FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
---------------------------------
1994(1) 1995 1996
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<S> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Collaborative research and development revenues from
affiliate.................................................. $ -- $ 2,664 $10,449
------ ------- -------
Operating expenses:
Research and development................................... 571 3,372 11,020
General and administrative................................. 115 624 972
------ ------- -------
Total operating expenses................................ 686 3,996 11,992
------ ------- -------
Loss from operations......................................... (686 ) (1,332) (1,543)
Interest income.............................................. -- 107 240
Interest expense............................................. -- -- (29)
------ ------- -------
Net loss..................................................... $ (686 ) $(1,225) $(1,332)
====== ======= =======
Pro forma net loss per share(2).............................. $ (0.18)
=======
Shares used in per share calculation......................... 7,478
=======
</TABLE>
<TABLE>
<CAPTION>
JUNE 30,
----------------------------------------------
1994 1995 1996
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PRO FORMA AS
ACTUAL ADJUSTED(3)
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<S> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash.............................................. $ 501 $ 2,799 $ 7,024 $ 39,010
Working capital................................... 341 2,060 5,613 37,599
Total assets...................................... 521 3,478 8,965 40,951
Total liabilities................................. 180 903 2,045 2,045
Accumulated deficit............................... (686) (1,911) (3,244) (3,244)
Stockholders' equity.............................. 341 2,575 6,920 38,906
</TABLE>
- ---------------
(1) From the Company's inception on June 17, 1993 through June 30, 1994.
(2) See Note 2 of Notes to Financial Statements included herein for a
description of the computation of pro forma net loss per share.
(3) Adjusted to reflect the sale of 3,200,000 shares of Common Stock offered by
the Company hereby at an assumed initial public offering price of $11.00 per
share and the receipt of the estimated net proceeds therefrom.
5
<PAGE> 7
RISK FACTORS
An investment in the shares of Common Stock offered hereby involves a high
degree of risk. Prospective investors should carefully consider the following
risk factors, in addition to the other information contained in this Prospectus,
in evaluating an investment in the shares offered hereby.
EARLY STAGE OF DEVELOPMENT; NO ASSURANCE OF SUCCESSFUL PRODUCT DEVELOPMENT
The Company is engaged in the development of gene therapy products and
related delivery systems for the treatment of cancer. No gene therapy products
are currently being marketed. The Company does not expect to have any products
commercially available for a number of years, if at all. Because the Company's
research and clinical development programs are at an early stage, substantial
additional research will be necessary in order for the Company to fully develop
products based on the Company's licensed technology. No assurance can be given
that any of the Company's development programs will be successfully completed,
that clinical trials will commence as planned, that required regulatory
approvals will be obtained on a timely basis, if at all, or that any products
for which approval may be obtained will be commercially successful. As products
are identified, they will require significant additional research, development,
preclinical and clinical testing, regulatory approval and substantial additional
investment prior to commercialization. There can be no assurance that any such
potential products will be successfully developed, proven to be safe and
efficacious in clinical trials, meet applicable regulatory standards, be capable
of being produced in commercial quantities at acceptable costs, be eligible for
third party reimbursement from governmental or private insurers, be successfully
marketed or achieve market acceptance. Further, these potential products may
prove to have undesirable or unintended side effects and require complex
delivery systems that may prevent or limit their commercial use. The Company has
not completed any Phase I or Phase I/II clinical trials of its potential
products. To date, no gene therapy products for cancer have been approved for
sale in the United States or internationally. If any of the Company's
development programs are not successfully completed, required regulatory
approvals are not obtained, or products for which approvals are obtained are not
commercially successful, the Company's business, financial condition and results
of operations would be materially adversely affected.
The Company's business is subject to the risks inherent in the development
of new products using new technologies and approaches. There can be no assurance
that unforeseen problems will not develop with these technologies or
applications, that the Company will be able to successfully address
technological challenges it encounters in its research and development programs
or that commercially feasible products will ultimately be developed by the
Company. See "Business of Introgen -- Product Development Programs."
LIMITED OPERATING HISTORY; UNCERTAINTY OF FUTURE PROFITABILITY
The Company is at a very early stage of development and has a limited
operating history which investors may use to evaluate its prospects or future
performance. Since its inception in June 1993, the Company has been engaged in
organizational and start-up activities, including the negotiation of the
collaborative agreements with UTMDACC and RPR, and early stage development of
potential gene therapy products for cancer. At June 30, 1996, the Company had an
accumulated deficit since inception of approximately $3.2 million. The Company's
only revenues to date have been payments from RPR under collaborative research
agreements and interest income. The Company anticipates that it will incur
losses in the future, which are likely to be greater than losses incurred in
prior years. Introgen also expects to incur substantial additional operating
expenses over the next several years as its research, development, preclinical
testing and clinical trial activities increase. To the extent that the Company
is unable to extend RPR's obligation to fund early stage research and
development beyond October 1997, the Company would incur even greater increases
in expenses and losses from operations. There can be no assurance that the
Company's products under development will be successfully developed or that its
products, if successfully developed, will generate revenues sufficient to enable
the Company to earn a profit. Introgen does not expect to generate revenues from
the sale of products, if any, for the foreseeable future. The Company's ability
to achieve profitability depends in part on its ability to enter into agreements
for product development, obtain regulatory approval for its products and develop
the capacity, or enter into agreements, for the manufacture, marketing and sale
of products. There can be no
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assurance that Introgen will obtain required regulatory approvals, or
successfully develop, manufacture, commercialize and market product candidates
or that the Company will ever achieve product revenues or profitability. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Business of Introgen -- Collaborative Arrangements."
NEED FOR ADDITIONAL FUNDING; UNCERTAINTY OF ACCESS TO CAPITAL
The Company will require substantial additional funding in order to
continue its research and product development programs (including preclinical
testing and clinical trials of its product candidates), for operating expenses
and, for the pursuit of regulatory approvals for its product candidates.
Introgen may also require additional funding to establish manufacturing and
marketing capabilities in the future. The Company believes that its existing
capital resources, the net proceeds of this offering and future payments under
collaborative agreements will be sufficient to satisfy its funding requirements
through fiscal year 1998. However, no assurance can be given that such resources
will be sufficient to conduct its research and development programs as planned,
or that changes in the Company's research and development plans or other changes
affecting the Company's operating expenses will not result in the expenditure of
such resources before such time. The Company's future capital requirements will
depend on many factors, including continued scientific progress in its research
and development programs, the magnitude of these programs, progress with
preclinical testing and clinical trials, the time and expense involved in
obtaining regulatory approvals, if any, competing technological and market
developments, the establishment of additional collaborative arrangements, the
costs involved in filing and prosecuting patent applications and enforcing
patent claims, establishing manufacturing facilities, conducting
commercialization activities and arrangements, product in-licensing and any
possible acquisitions. There can be no assurance that the Company's cash
reserves and other liquid assets, including the net proceeds of this offering,
together with funding that may be received under the Company's collaborative
agreements will be adequate to satisfy its capital and operating requirements.
The Company intends to seek additional funding through collaborative
agreements and may seek additional funding through public or private sales of
the Company's securities, including equity securities, or from other sources. In
addition, the Company may pursue opportunities to obtain debt financing in the
future. There can be no assurance, however, that additional equity or debt
financing will be available on reasonable terms, if at all. Any future equity
financings may be dilutive to the Company's stockholders. If adequate funds are
not available, the Company may be required to curtail significantly one or more
of its research and development programs and/or obtain funds through
arrangements with corporate partners or others that may require the Company to
relinquish rights to certain of its technologies or product candidates. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
DEPENDENCE ON COLLABORATIVE ARRANGEMENTS
The Company's business strategy for the development, clinical trials,
manufacturing and commercialization of its products includes maintaining and
entering into various collaborations with corporate partners, academic
institutions and others to help it carry out research, clinical testing,
manufacturing and commercialization of its products. To date, the Company has
entered into collaborative arrangements with several partners, including UTMDACC
and RPR. There can be no assurance that the Company will be able to maintain
existing collaborative arrangements, negotiate collaborative arrangements in the
future on acceptable terms, if at all, or that any such collaborative
arrangements will be successful. In addition, the Company's leading product
candidates are being developed in collaboration with RPR. Other potential
products of the Company are at a very early stage of preclinical development,
and there can be no assurance that the Company will be able to enter into
collaborative arrangements with established pharmaceutical companies to develop
and commercialize such potential products or that such arrangements could be
entered into within a reasonable period of time or on terms acceptable to the
Company.
To the extent that the Company is not able to maintain or establish such
arrangements, the Company would be required to undertake such activities at its
own expense, which would significantly increase the Company's capital
requirements and limit the programs the Company would be able to pursue. In
addition, the Company may encounter significant delays in introducing its
products into certain markets or find that the
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<PAGE> 9
development, manufacture or sale of its products in such markets is adversely
affected by the absence of such collaborative agreements. RPR's obligation to
continue funding of early stage research and development pursuant to the
collaborative arrangement with Introgen expires in October 1997. There can be no
assurance that the funding under the collaborative arrangement will be extended
under the existing or acceptable terms, if at all. If RPR does not elect to
continue the funding, Introgen would have to fund such research on its own.
Moreover, under the collaboration arrangement, Introgen is precluded from
marketing or licensing to third parties any p53 or K-ras products prior to
October 2004. If the Company is successful in developing such products on its
own, this could delay marketing efforts.
The Company cannot control the amount and timing of resources that its
collaborative partners devote to the Company's programs or potential products,
which can vary because of factors unrelated to such programs or potential
products. In particular, RPR may be largely responsible for the later stage
clinical development of the Company's p53 and K-ras products being developed in
collaboration with RPR, and no assurance can be given as to the resources that
RPR will devote to such development. In addition, these relationships may in
some cases be terminated at the discretion of the Company or the Company's
collaborative partners with only limited notice to the Company and for reasons
outside the Company's control, including failure by the Company to meet certain
technical milestones or satisfy other contractual obligations, some of which may
require significant clinical progress.
If any of the Company's collaborative partners breaches or terminates its
agreements with the Company or fails to conduct its collaborative activities in
a timely manner, the preclinical or clinical development or commercialization of
product candidates or research programs will be delayed, and the Company will be
required to devote additional resources to product development and
commercialization or terminate certain development programs. There can also be
no assurance that disputes will not arise in the future with respect to the
ownership of rights to any technology developed with collaborators or otherwise.
Possible disagreements between collaborators and the Company could lead to
delays in the collaborative research, development or commercialization of
certain product candidates or could require or result in litigation or
arbitration, which may be time consuming and expensive, and would have a
material adverse effect on the Company's business, financial condition and
results of operations.
In addition, the Company's collaborative partners may develop outside of
the scope of the collaboration agreements, either alone or with others, products
that compete with the development and marketing of the Company's products.
Competing products, either developed by the collaborative partners or to which
the collaborative partners have rights, may result in their withdrawal of
support with respect to all or a portion of the Company's technology, which
would have a material adverse effect on the Company's business, financial
condition and results of operations. See "Business of Introgen -- Collaborative
Arrangements."
PATENT APPLICATIONS AND PROPRIETARY TECHNOLOGY
The Company's patent position, like that of other biotechnology and
pharmaceutical companies, is highly uncertain and involves complex legal and
factual questions. Claims made under patent applications may be denied or
significantly narrowed. There can be no assurance that any patents which may be
issued as a result of the Company's licensed United States and international
patent applications will provide any competitive advantage to the Company or
that they will not be successfully challenged, invalidated or circumvented in
the future. In addition, there can be no assurance that competitors, many of
which have substantial resources and have made significant investments in
competing technologies, will not seek to apply for and obtain patents that will
prevent, limit or interfere with the Company's ability to make, use and sell its
potential products either in the United States or in international markets.
Patent applications in the United States are, in most cases, maintained in
secrecy until patents issue, and publication of discoveries in the scientific or
patent literature frequently occurs substantially later than the date on which
the underlying discoveries were made. Consequently, the Company cannot be
certain that its licensed patent applications lay claim to the first made
inventions or that they were the first filed patent applications for such
inventions.
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<PAGE> 10
The biotechnology and pharmaceutical industry has been characterized by
extensive litigation regarding patents and other intellectual property rights,
and companies have employed intellectual property litigation to gain a
competitive advantage. There are a number of filed and issued patents related to
gene therapy and the treatment of cancer by gene therapy. A series of patents
controlled by Enzo Biochem, Inc. ("Enzo Biochem") relating to antisense
technology has recently been found invalid by the United States District Court
for the District of Delaware. Introgen anticipates that Enzo Biochem will appeal
this ruling. If the ruling is overturned and this series of patents is held to
be valid, Introgen's RV-AS-K-ras product could be subject to an infringement
claim.
Canji, Inc. ("Canji"), a wholly-owned subsidiary of Schering-Plough
Corporation ("Schering-Plough"), controls a pending United States patent
application and its European counterpart which involve p53 related therapeutic
applications. The Company's knowledge about the status of this United States
patent application is limited because this United States application has been
maintained in secrecy. The claims of the European counterpart to this
application have been rejected but could later be allowed based upon further
prosecution. Another pending United States patent application and its European
counterpart involve a method of supplying normal p53 function to a cell which
has lost such function and associated delivery systems. These patent
applications are controlled by Pharmagenics, Inc. ("Pharmagenics"). Accordingly,
since neither application has issued, the Company is unable to assess the
potential breadth and validity of these pending applications.
In addition, Canji controls an issued United States patent and its European
counterpart involving a method of treating mammalian cancer cells lacking normal
p53 protein by introducing into the cancer cell a normal p53 protein. While the
Company believes, after consultation with its patent counsel, that its potential
products do not infringe any valid claim of the Canji patent, there can be no
assurance that Canji will not assert a claim against the Company. Furthermore,
there can be no assurance that the Company will not become subject to any other
patent infringement claims or litigation arising out of pending applications,
should they issue, including the Canji and Pharmagenics applications described
above, or interference proceedings declared by the United States Patent and
Trademark Office ("USPTO") to determine the priority of inventions.
The defense and prosecution of intellectual property suits, USPTO
interference proceedings and related legal and administrative proceedings
involve complex legal and factual questions. As a result such proceedings are
costly and time-consuming to pursue and their outcome is uncertain. Litigation
may be necessary to enforce patents issued or licensed to the Company, to
protect trade secrets or know-how owned by the Company or to determine the
enforceability, scope and validity of the proprietary rights of others. Any
litigation or interference proceedings will result in substantial expense to the
Company and significant diversion of effort by the Company's technical and
management personnel. An adverse determination in litigation or interference
proceedings to which the Company may become a party could subject the Company to
significant liabilities to third parties or require the Company to seek licenses
from third parties or prevent the Company from selling its products in certain
markets, or at all. Although patent and intellectual property disputes are often
settled through licensing or similar arrangements, costs associated with such
arrangements may be substantial and could include ongoing royalties.
Furthermore, there can be no assurance that the necessary licenses would be
available to the Company on satisfactory terms, if at all. Adverse
determinations in a judicial or administrative proceeding or failure to obtain
necessary licenses could restrict or prevent the Company from manufacturing and
selling its products, which would have a material adverse effect on the
Company's business, financial condition and results of operations.
In addition to patents, the Company relies on trade secrets and proprietary
know-how, which it seeks to protect, in part, through confidentiality and
proprietary information agreements. There can be no assurance that such
confidentiality or proprietary information agreements will not be breached, that
the Company would have adequate remedies for any breach, or that the Company's
trade secrets will not otherwise become known to or be independently developed
by competitors.
UNCERTAINTIES RELATED TO CLINICAL TRIALS
Before obtaining regulatory approvals for the commercial sale of any of its
potential products, the Company must demonstrate through preclinical testing and
clinical trials that the product is safe and effective
9
<PAGE> 11
for use in the target indication. The Company's products have only been
administered to a total of 37 patients. The results from preclinical testing and
early clinical trials may not be predictive of results obtained in later
clinical trials, and there can be no assurance that clinical trials conducted by
the Company will demonstrate sufficient safety and efficacy to obtain the
requisite regulatory approvals or will result in marketable products. In
addition, the Company's clinical trials are conducted with patients who have
failed conventional treatments and they are often in the most advanced stages of
the disease. During the course of treatment, these patients can die or suffer
adverse medical effects for reasons that may not be related to the
pharmaceutical agent being tested but which can nevertheless adversely affect
clinical trial results. A number of companies in the biotechnology and
pharmaceutical industries have suffered significant setbacks in advanced
clinical trials, even after promising results in earlier trials. If the
Company's product candidates are not shown to be safe and effective in clinical
trials, the resulting delays in developing other products and conducting related
preclinical testing and clinical trials, as well as the potential need for
additional financing, would have a material adverse effect on the Company's
business, financial condition and results of operations.
The commencement and rate of completion of clinical trials conducted by the
Company may be delayed by many factors, including slower than expected patient
recruitment or unforeseen safety issues. In addition, the results of ongoing
clinical trials could cause the Company to terminate, modify or delay currently
scheduled clinical trials. Any delays in, or termination of, the Company's
clinical trials would have a material adverse effect on the Company's business,
financial condition and results of operations. There can be no assurance that
Introgen will be permitted by regulatory authorities to undertake any additional
clinical trials for its potential products or, if such additional trials are
conducted, that any of the Company's product candidates will prove to be safe
and efficacious or will receive regulatory approvals. See "Business of
Introgen -- Product Development Programs" and "-- Government Regulation."
GOVERNMENT REGULATIONS; NO ASSURANCE OF REGULATORY APPROVALS
The Company's research, preclinical testing and clinical trials of its
potential products are, and the manufacturing and marketing of its products will
be, subject to extensive and rigorous regulation by numerous government
authorities in the United States, including the United States Food and Drug
Administration (the "FDA"), and in other countries where the Company intends to
test and market its product candidates. Prior to marketing, any product
developed by the Company must undergo an extensive regulatory approval process.
This regulatory process includes preclinical testing and clinical trials of each
product candidate to establish its safety and efficacy, can take many years and
require the expenditure of substantial resources, and will involve
post-marketing surveillance. Data obtained from preclinical testing and clinical
trials are susceptible to varying interpretations which could delay, limit or
prevent regulatory approval. In addition, delays or rejections may be
encountered based upon changes in FDA policy for drug approval during the period
of product development and the FDA regulatory review of each submitted new drug
application ("NDA") or product license application ("PLA"). Similar delays may
also be encountered in foreign countries. There can be no assurance that
regulatory approval will be obtained for any products developed by the Company.
Moreover, regulatory approval may entail limitations on the indicated uses of
the product. Further, even if regulatory approval is obtained, a marketed drug
and its manufacturer are subject to continuing review, and discovery of
previously unknown problems with a product or manufacturer can result in the
withdrawal of the product from the market. Violations of regulatory requirements
at any stage, including preclinical testing and clinical trials, the approval
process or post-approval, may result in various adverse consequences including
the FDA's delay in approving or its refusal to approve a product, withdrawal of
an approved product from the market, and the imposition of civil or criminal
penalties against the manufacturer and NDA or PLA holder. The Company has not
completed any Phase I or Phase I/II clinical trials of its potential products or
commenced any Phase II/III trials. To date, no gene therapy products for cancer
have been approved for sale in the United States or internationally. No
assurance can be given that the Company will be able to obtain FDA approval for
any products. Failure to obtain requisite regulatory approvals or failure to
obtain approvals of the scope requested will delay or preclude the Company from
marketing its products, could limit the commercial use of its products and would
have a material adverse effect on the Company's business, financial condition
and results of operations. See "Business of Introgen -- Government Regulation."
10
<PAGE> 12
INTENSE COMPETITION; UNCERTAINTY OF TECHNOLOGICAL CHANGE
The biotechnology and pharmaceutical industries are subject to rapid and
intense technological change. The Company faces, and will continue to face,
competition in the development and marketing of its product candidates from
academic institutions, government agencies, research institutions and
biotechnology and pharmaceutical companies. Competition may arise from other
drug development technologies, methods of preventing or reducing the incidence
of disease, including vaccines, and new small molecule or other classes of
therapeutic agents. There can be no assurance that developments by others will
not render the Company's product candidates or technologies obsolete or
noncompetitive.
There are many companies, both publicly and privately held, including
well-known pharmaceutical companies, as well as academic and other research
institutions, engaged in developing products for the treatment of cancer. The
Company is aware that Canji, a wholly-owned subsidiary of Schering-Plough, is
currently conducting clinical trials with p53 related gene therapy products.
Various small molecule drug and antisense approaches to cancer treatment are
being investigated by other companies in earlier stages of research and
development. The Company is also aware that Onyx Pharmaceuticals, Inc. has
initiated a clinical study of a virus-based therapy which targets cells that are
mutant for p53. Certain companies, including Merck & Co. and Genentech, Inc.,
are developing small molecule drugs to inhibit targets involving the ras
pathway. Other companies have developed or are developing small molecule drugs,
gene therapy and antisense approaches to treat ras-related cancers. Many of
these companies and institutions have substantially greater financial resources
and larger research and development staffs than the Company. In addition, many
of these competitors have significantly greater experience than the Company in
developing products, in undertaking preclinical testing and human clinical
trials, in obtaining FDA and other regulatory approvals of products and in
manufacturing and marketing products. Accordingly, the Company's competitors may
succeed in obtaining patent protection, receiving FDA approval or
commercializing products more rapidly than the Company. If and when the Company
commences commercial sales of products, it will be competing against companies
with greater marketing and manufacturing capabilities, areas in which it has
limited or no experience. The Company also competes with universities and other
research institutions in the development of products, technologies and
processes. In many instances, the Company competes with other commercial
entities in acquiring products or technologies from universities. See "Business
of Introgen -- Competition."
LIMITED MANUFACTURING EXPERIENCE
The material used in the Company's preclinical testing and clinical trials
was produced by UTMDACC and by a third-party contract manufacturer. The Company
recently completed a pilot-scale manufacturing facility with sufficient capacity
to supply Ad-p53 for currently planned clinical trials. The Company has not
produced RV-p53 or any of its other potential products at its pilot-scale
manufacturing facility. The production of clinical quantities of material
requires advanced manufacturing techniques and rigorous process controls.
Furthermore, the Company is required to register the facility with the FDA and
is subject to inspections confirming compliance with current Good Manufacturing
Practices ("cGMP") regulations established by the FDA. This facility is
currently producing its first batches of Ad-p53 for evaluation. No assurance can
be given that the Company will be able to produce clinical quantities of its
potential products in compliance with applicable regulations or at an acceptable
cost.
The Company is currently designing a commercial-scale cGMP manufacturing
facility to further support clinical trials and the possible commercial sale of
its potential products. Companies often encounter manufacturing difficulties,
including problems involving production yields, quality control and assurance or
shortages of qualified personnel, during the scale-up of manufacturing. No
assurance can be given that the Company will be able to produce commercial
quantities of its potential products in compliance with applicable regulations
or at an acceptable cost.
If the Company is unable to produce its potential products in clinical or,
if necessary, commercial quantities, then it will remain dependent on
third-party contract manufacturers for the production of such materials. There
are only a limited number of contract manufacturers who have the ability and
capacity to produce the Company's potential products. Failure by any such
contract manufacturer or the Company to
11
<PAGE> 13
deliver the Company's required quantities of potential products on a timely
basis and at commercially reasonable prices would materially adversely affect
the Company's business, financial condition and results of operations.
NO MARKETING AND SALES EXPERIENCE
The Company has no experience in marketing or selling pharmaceutical
products and does not have a marketing and sales staff. In order to achieve
commercial success for any product candidate approved by the FDA, Introgen must
either develop a marketing and sales force or enter into arrangements with third
parties to market and sell its products. There can be no assurance that Introgen
will successfully develop such experience or that it will be able to enter into
marketing and sales agreements with others on acceptable terms, if at all. If
the Company develops its own marketing and sales capabilities as part of a
marketing collaboration with RPR to sell products in North America, it will
compete with other companies that have experienced and well-funded marketing and
sales operations. To the extent that RPR has exclusive marketing and sales
rights in Europe and to the extent that the Company enters into a marketing
collaboration with RPR, any revenues to be received by Introgen will be
dependent on the efforts of others. There can be no assurance that such efforts
will be successful. See "Business of Introgen -- Marketing and Sales."
NEED TO ATTRACT AND RETAIN KEY EMPLOYEES AND CONSULTANTS
The Company is highly dependent on the principal members of its scientific
and management staff. In order to pursue its product development and marketing
plans, the Company will be required to hire additional qualified scientific
personnel to perform research and development, as well as personnel with
expertise in clinical testing, government regulation, manufacturing and
marketing. In addition, the Company will be required to hire additional
qualified scientific personnel in order to meet its obligations to perform
research under its collaborative agreements with RPR. Expansion in product
development also is expected to require the addition of management personnel and
the development of additional expertise by existing management personnel.
Attracting and retaining qualified personnel, consultants and advisors will be
critical to the Company's success. There can be no assurance that the Company
will be able to attract and retain personnel on acceptable terms given the
competition for such personnel among biotechnology, pharmaceutical and health
care companies, universities and non-profit research institutions. In addition,
the Company relies on members of its Scientific Advisory Board and several other
consultants to assist the Company in formulating its research and development
strategy. All of Introgen's consultants and the members of the Company's
Scientific Advisory Board are employed by employers other than the Company, and
may have commitments to, or advisory or consulting agreements with, other
entities that may limit their availability to the Company. The loss of services
of any of these personnel could impede the achievement of the Company's
development objectives. See "Business of Introgen -- Scientific Advisory Board"
and "Management."
POTENTIAL PRODUCT LIABILITY EXPOSURE AND LIMITED INSURANCE COVERAGE
The use of any of the Company's potential products in clinical trials, and
the sale of any approved products, may expose the Company to liability claims
resulting from the use of its products. These claims might be made directly by
consumers, health care providers or by pharmaceutical companies or others
selling such products. Introgen has obtained limited product liability insurance
coverage for its clinical trials in the amount of $2.0 million per occurrence
and $2.0 million in the aggregate. The Company intends to expand its insurance
coverage to include the sale of commercial products if marketing approval is
obtained for products in development. However, insurance coverage is becoming
increasingly expensive, and no assurance can be given that the Company will be
able to maintain insurance coverage at a reasonable cost or in sufficient
amounts to protect the Company against losses due to liability. There can also
be no assurance that the Company will be able to obtain commercially reasonable
product liability insurance for any products approved for marketing. A
successful product liability claim or series of claims brought against the
Company could have a material adverse effect on its business, financial
condition and results of operations.
12
<PAGE> 14
HAZARDOUS AND RADIOACTIVE MATERIALS; ENVIRONMENTAL MATTERS
The Company's research and development processes involve the controlled use
of hazardous and radioactive materials. The Company is subject to federal, state
and local laws and regulations governing the use, manufacture, storage, handling
and disposal of such materials and certain waste products. Although the Company
believes that its safety procedures for handling and disposing of such materials
comply with the standards prescribed by such laws and regulations, the risk of
accidental contamination or injury from these materials cannot be completely
eliminated. In the event of such an accident, the Company could be held liable
for any damages that result and any such liability could exceed the resources of
the Company. The Company believes that it is in compliance in all material
respects with applicable environmental laws and regulations. Accordingly, it
does not expect to make material capital expenditures for environmental control
facilities in the near-term. However, there can be no assurance that it will not
be required to incur significant costs to comply with environmental laws and
regulations in the future, or that the operations, business or assets of the
Company will not be materially adversely affected by the costs of compliance
with current or future environmental laws or regulations.
NO PRIOR PUBLIC MARKET FOR COMMON STOCK
Prior to this offering, there has been no public market for the Common
Stock, and there can be no assurance that a regular trading market will develop
and continue after this offering or that the market price of the Common Stock
will not decline below the initial public offering price. The initial public
offering price will be determined through negotiations between the Company and
the representatives of the Underwriters (the "Representatives") and may not be
indicative of the market price of the Common Stock following this offering.
Among the factors considered in such negotiations are prevailing market
conditions, certain financial information of the Company, market valuations of
other companies that the Company and the Representatives believe to be
comparable to the Company, estimates of the business potential of the Company,
the present state of the Company's development and other factors deemed
relevant. See "Underwriting."
VOLATILITY OF COMMON STOCK PRICE
The market prices for securities of biotechnology and pharmaceutical
companies have historically been highly volatile, and the market has from time
to time experienced significant price and volume fluctuations that are unrelated
to the operating performance of particular companies. Factors such as
fluctuations in the Company's operating results, announcements of technological
innovations or new therapeutic products by the Company or others, clinical trial
results, developments concerning collaborative arrangements, government
regulation, developments in patent or other proprietary rights, public concern
as to the safety of potential products developed by the Company or others,
future sales of substantial amounts of Common Stock by existing stockholders,
comments by securities analysts and general market conditions can have an
adverse effect on the market price of the Common Stock. In addition, the
realization of any of the risks described in these "Risk Factors" could have a
dramatic and material adverse impact on market price of the Company's Common
Stock.
POTENTIAL ADVERSE EFFECT OF SHARES ELIGIBLE FOR FUTURE SALE
As of August 28, 1996, 860,605 shares of Common Stock are issuable upon the
exercise of outstanding stock options, warrants and conversion rights. The
issuance of Common Stock, which will occur upon the exercise of such stock
options, warrants and conversion rights, and as a result of future sales of
Common Stock by the Company or by existing stockholders, or the perception that
such sales could occur, could adversely affect the market price of the Common
Stock. In private placement transactions between August 1994 and June 1996, the
Company sold to RPR and various institutional and individual investors shares of
convertible preferred stock of the Company (the "Convertible Preferred Stock"),
which will convert into 5,220,409 shares of Common Stock at the closing of this
offering. The sale of a significant number of shares by these investors could
have a substantial negative impact on the market price of the Common Stock or
impair the Company's ability to raise capital. In addition, RPR and the Board of
Regents of the University of Texas System (the "Board of Regents"), are
significant stockholders. The sale of shares by either of these entities could
have a
13
<PAGE> 15
substantial negative impact on the market price of the Common Stock. Each of the
Company's officers, directors and certain other stockholders has agreed with the
Representatives for a period of 180 days after the date of this Prospectus,
subject to certain exceptions, not to offer to sell, contract to sell, grant an
option to sell, or otherwise dispose of any shares of Common Stock, any options
or warrants to purchase any shares of Common Stock, or any securities
convertible into or exchangeable for shares of Common Stock owned as of the date
of this Prospectus or thereafter acquired directly by such holders or with
respect to which they have or hereafter acquire the power of disposition,
without the prior written consent of PaineWebber Incorporated. However,
PaineWebber Incorporated may, in its sole discretion and at any time without
notice, release all or any portion of the securities subject to these lock-up
agreements. Certain stockholders are also entitled to registration rights. See
"Description of Capital Stock -- Registration Rights of Certain Holders" and
"Shares Eligible for Future Sale."
CONTROL BY MANAGEMENT AND EXISTING STOCKHOLDERS
Following this offering, the present directors, executive officers and
principal stockholders of the Company and their affiliates will beneficially own
approximately 71% of the Common Stock. Accordingly, such stockholders, if they
act together, will have the ability to control the election of the Company's
directors and most other stockholders' actions. See "Principal Stockholders."
POTENTIAL ADVERSE EFFECT OF ANTI-TAKEOVER PROVISIONS
The Company's restated Certificate of Incorporation (the "Restated
Certificate of Incorporation") does not provide for cumulative voting in the
election of directors. In addition, the Board of Directors has the authority,
without further action by the stockholders, to fix the rights and preferences
of, and issue shares of, Preferred Stock. Further, the Company is subject to
Section 203 of the Delaware General Corporation Law which, subject to certain
exceptions, restricts certain transactions and business combinations between a
corporation and a stockholder owning 15% or more of the corporation's
outstanding voting stock (an "interested stockholder") for a period of three
years from the date the stockholder becomes an interested stockholder. The lack
of cumulative voting, preferred stock provision and other provisions of the
Company's charter and Delaware corporate law may discourage certain types of
transactions involving an actual or potential change in control of the Company.
In addition, in the event of a merger, reorganization or change in the ownership
of the Company, all options outstanding under the Company's Incentive Stock Plan
and Director Option Plan shall be fully vested. See "Description of Capital
Stock -- Certain Charter and Bylaw Provisions and Delaware Anti-Takeover
Statute," "Management -- Compensation of Directors" and "-- Stock Plans."
DILUTION
Upon the purchase of the Common Stock offered hereby, investors will
experience an immediate and substantial dilution of $7.42 per share in the pro
forma net tangible book value of the Common Stock they acquire in this offering.
Additional dilution is likely to occur upon the exercise of options, warrants
and conversion rights granted by the Company. See "Dilution" and "Shares
Eligible for Future Sale."
ABSENCE OF CASH DIVIDENDS
The Company has never paid any cash dividends and does not anticipate
paying cash dividends on the Common Stock in the foreseeable future. See
"Dividend Policy."
14
<PAGE> 16
USE OF PROCEEDS
The net proceeds to the Company from the sale of the 3,200,000 shares of
Common Stock offered hereby are estimated to be approximately $32.0 million
($36.9 million if the Underwriters' over-allotment option is exercised in full),
at an assumed initial public offering price of $11.00 per share, after deducting
the estimated underwriting discounts and commissions and offering expenses.
The Company anticipates that the net proceeds of this offering will be used
to pay costs and expenses related to product research and development, product
clinical trials, manufacturing scale-up and capacity expansion, support of
sponsored research programs, marketing and sales organization development, and
other general corporate purposes. The actual amount and timing of expenditures
in each of these areas may vary significantly depending upon the rate of the
Company's progress in research and development, the results of preclinical
studies and clinical trials, the timing of regulatory approvals, receipt of
payments, if any, under collaborative agreements entered into by the Company,
the availability of alternative methods of financing, and competitive
developments. Pending such uses, the net proceeds of this offering will be
invested in investment-grade, interest-bearing securities.
The Company believes that its existing capital resources, the net proceeds
of this offering, and future payments due under collaborative agreements will be
sufficient to satisfy its funding requirements through fiscal year 1998. There
can be no assurance, however, that changes in the Company's research and
development plans or other changes affecting the Company's operating expenses
will not result in the expenditure of such resources before such time. The
Company will need to raise substantial additional funds to continue to conduct
its research and development programs and to commence or continue the
preclinical studies and clinical trials necessary to obtain regulatory approval
for any of its proposed products. There can be no assurance that such funds will
be available on favorable terms, or at all. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Liquidity and
Capital Resources," and "Risk Factors -- Need for Additional Funding;
Uncertainty of Access to Capital."
DIVIDEND POLICY
The Company has never declared or paid cash dividends on its Common Stock.
The Company intends to retain earnings, if any, and will not pay cash dividends
in the foreseeable future. Any future determination to pay cash dividends will
be at the discretion of the Board of Directors and will be dependent upon the
Company's financial condition, results of operations, capital requirements,
general business conditions and such other factors as the Board of Directors may
deem relevant.
15
<PAGE> 17
CAPITALIZATION
The following table sets forth as of June 30, 1996, after giving effect to
the 1.2 for 1 split of the Common Stock and the filing of an amendment to the
Company's Certificate of Incorporation authorizing 50,000,000 shares of Common
Stock, $0.001 par value, both effected in August 1996, (i) the pro forma
capitalization of the Company after giving effect to the conversion of all of
the outstanding shares of Convertible Preferred Stock into Common Stock and the
filing of the Restated Certificate of Incorporation authorizing 5,000,000 shares
of Preferred Stock, $0.001 par value (the "Preferred Stock"), at the closing of
this offering and (ii) the pro forma capitalization of the Company as adjusted
to reflect the issuance and sale of 3,200,000 shares of Common Stock offered
hereby at an assumed public offering price of $11.00 per share and the receipt
of the estimated net proceeds therefrom. This table should be read in
conjunction with the financial statements, related notes and other financial
information included herein.
<TABLE>
<CAPTION>
PRO FORMA
PRO FORMA AS ADJUSTED(1)
--------- --------------
(IN THOUSANDS)
<S> <C> <C>
Capital lease obligations, net of current portion.......... $ 130 $ 130
------- -------
Stockholders' equity:
Preferred Stock, 5,000,000 shares ($.001 par value)
authorized: none issued and outstanding pro forma or
pro forma as adjusted................................. -- --
Common Stock, 50,000,000 shares ($.001 par value)
authorized; 7,663,769 shares issued and outstanding
pro forma and 10,863,769 shares issued and outstanding
pro forma as adjusted ................................ 8 11
Additional paid-in capital............................... 10,743 42,726
Deferred compensation.................................... (587) (587)
Accumulated deficit...................................... (3,244) (3,244)
------- -------
Total stockholders' equity....................... 6,920 38,906
------- -------
Total capitalization............................. $ 7,050 $ 39,036
======= =======
</TABLE>
- ---------------
(1) Excludes, as of August 28, 1996, 746,354 shares of Common Stock reserved for
issuance upon exercise of outstanding options granted pursuant to the
Company's Incentive Stock Plan at a weighted average exercise price of $0.65
per share and 114,251 shares of Common Stock issuable upon the exercise of
outstanding warrants at a weighted average exercise price of $7.17 per
share. See "Management -- Stock Plans," "Certain Transactions" and Notes 3
and 8 of Notes to Financial Statements.
16
<PAGE> 18
DILUTION
The pro forma net tangible book value of the Company as of June 30, 1996
was $6.9 million or $0.90 per share of Common Stock. Pro forma net tangible book
value per share represents the amount of the Company's total tangible assets
less total liabilities, divided by the number of shares of Common Stock
outstanding after giving effect to the conversion of all outstanding shares of
Convertible Preferred Stock into Common Stock upon closing of this offering and
the 1.2 for 1 stock split effected in August 1996. Pro forma net tangible book
value dilution per share represents the difference between the amount per share
paid by purchasers of shares of Common Stock in the offering made hereby and the
adjusted pro forma net tangible book value per share of Common Stock immediately
after completion of this offering. After giving effect to the sale of 3,200,000
shares of Common Stock offered hereby (at an assumed public offering price of
$11.00 per share) and the receipt of the estimated net proceeds therefrom, the
adjusted pro forma net tangible book value as of June 30, 1996 would have been
$38.9 million or approximately $3.58 per share of Common Stock. This represents
an immediate increase in pro forma net tangible book value of $2.68 per share to
existing stockholders and an immediate dilution in adjusted pro forma net
tangible book value of $7.42 per share to new investors of Common Stock in this
offering, as illustrated by the following table:
<TABLE>
<S> <C> <C>
Assumed initial public offering price............................... $11.00
Pro forma net tangible book value as of June 30, 1996............. $0.90
Increase attributable to new investors............................ 2.68
-----
Adjusted pro forma net tangible book value after offering........... 3.58
------
Dilution per share to new investors................................. $ 7.42
======
</TABLE>
The following table sets forth, on a pro forma basis as of June 30, 1996,
the difference between the number of shares of Common Stock purchased from the
Company, the total consideration paid and the average price per share paid
(assuming a public offering price of $11.00 per share) by the existing holders
of Common Stock and by the new investors, before deducting the underwriting
discounts and commissions and estimated offering expenses payable by the
Company:
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
---------------------- ----------------------- PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
---------- ------- ----------- ------- ---------
<S> <C> <C> <C> <C> <C>
Existing stockholders.... 7,663,769 70.5% $10,457,054 22.9% $ 1.36
New investors............ 3,200,000 29.5 35,200,000 77.1 11.00
---------- ------ ---------- ------
Total.......... 10,863,769 100.0% $45,657,054 100.0%
========== ====== ========== ======
</TABLE>
The calculation of net tangible book value and other computations above
assumes no exercise of outstanding options or warrants. As of August 28, 1996,
746,354 shares of Common Stock were subject to outstanding options granted
pursuant to the Company's Incentive Stock Plan at a weighted average exercise
price of $0.65 per share and 114,251 shares of Common Stock were subject to
outstanding warrants at a weighted average exercise price of $7.17 per share.
See "Management -- Stock Plans," "Certain Transactions" and Notes 3 and 8 of
Notes to Financial Statements.
17
<PAGE> 19
SELECTED FINANCIAL DATA
The selected financial data for the period from June 17, 1993 (date of
inception) through June 30, 1994, and for the years ended June 30, 1995 and 1996
and as of June 30, 1994, 1995 and 1996, are derived from the financial
statements of the Company which have been included elsewhere herein and have
been audited by Arthur Andersen LLP, independent public accountants. The data
set forth below is qualified by reference to and should be read in conjunction
with "Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the financial statements and related notes thereto included
elsewhere in this Prospectus.
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
-----------------------------
1994(1) 1995 1996
----- ------- -------
(IN THOUSANDS, EXCEPT PER
SHARE DATA)
<S> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Collaborative research and development revenues
from affiliate........................................ $ -- $ 2,664 $10,449
------ ------- -------
Operating expenses:
Research and development.............................. 571 3,372 11,020
General and administrative............................ 115 624 972
------ ------- -------
Total operating expenses...................... 686 3,996 11,992
------ ------- -------
Loss from operations.................................... (686) (1,332) (1,543)
Interest income......................................... -- 107 240
Interest expense........................................ -- -- (29)
------ ------- -------
Net loss................................................ $(686) $(1,225) $(1,332)
====== ======= =======
Pro forma net loss per share(2)......................... $ (0.18)
=======
Shares used in per share calculation.................... 7,478
=======
</TABLE>
<TABLE>
<CAPTION>
JUNE 30,
-----------------------------
1994 1995 1996
----- ------- -------
<S> <C> <C> <C>
BALANCE SHEET DATA:
Cash.................................................... $ 501 $ 2,799 $ 7,024
Working capital......................................... 341 2,060 5,613
Total assets............................................ 521 3,478 8,965
Total liabilities....................................... 180 903 2,045
Accumulated deficit..................................... (686) (1,911) (3,244)
Stockholders' equity.................................... 341 2,575 6,920
</TABLE>
- ---------------
(1) From the Company's inception on June 17, 1993 through June 30, 1994.
(2) See Note 2 of Notes to Financial Statements for a description of the
computation of pro forma net loss per share.
18
<PAGE> 20
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
OVERVIEW
Since its inception in June 1993, the Company has devoted its resources
primarily to fund its research and development programs. At June 30, 1996, the
Company had an accumulated deficit since inception of approximately $3.2
million. The Company's only income to date has been payments from RPR under
collaborative research agreements and interest income. Introgen expects its
revenues and income for the next several years to continue to be derived solely
from these sources. RPR's obligation to continue funding Introgen's early stage
research and development activities pursuant to the collaboration arrangement
expires in October 1997. Even if RPR agrees to extend such research and
development funding, the terms of any such extension cannot be predicted. To the
extent that the Company is unable to extend such funding obligations of RPR
beyond October 1997, the Company would incur even greater increases in expenses
and losses from operations unless it is able to secure alternative funding. The
Company anticipates that it will incur losses in the future, which are likely to
be greater than losses incurred in prior years. There can be no assurance that
the Company's products under development will be successfully developed or that
its products, if successfully developed, will generate revenues sufficient to
enable the Company to earn a profit. Introgen does not expect to generate
revenues from the sale of products, if any, for the foreseeable future. See
"Risk Factors -- Limited Operating History; Uncertainty of Future Profitability"
and "-- Dependence on Collaborative Arrangements."
Payments in connection with collaborative research are recognized as
revenue as the Company performs its obligations related to such research
agreements. Deferred revenue is recorded for collaborative research payments
received for which the related expenses have not been incurred and for the
effect of research and development required to be funded by the Company under
the terms of its collaborative research agreements.
RESULTS OF OPERATIONS
Years Ended June 30, 1996 and 1995
Collaborative research and development revenues from affiliate (RPR) for
the year ended June 30, 1996 were $10.4 million, as compared to $2.7 million for
the year ended June 30, 1995, an increase of 292%. This increase was primarily
due to increased reimbursement under collaborative agreements as a result of
increased preclinical research and development, commencement of additional
clinical trials and increased sponsored research program activities.
The Company's research and development expenses for the year ended June 30,
1996 were $11.0 million, as compared to $3.4 million for the year ended June 30,
1995, an increase of 227%. This increase resulted primarily from increased
preclinical research and development, commencement of additional clinical trials
and increased sponsored research program activities. The Company expects these
expenses to increase in the future as these activities continue to expand.
General and administrative expenses increased to $972,000 for the year
ended June 30, 1996, from $624,000 for the year ended June 30, 1995, an increase
of 56%. The increase was due primarily to the expansion of administrative
support activities and increased business development efforts. The Company
expects these expenses to increase in the future as these activities continue to
expand. Additionally, the Company recorded noncash deferred compensation of
$693,000 in connection with certain options to purchase shares of Common Stock
granted during the year ended June 30, 1996, of which $106,000 was recognized as
an expense through June 30, 1996. Subsequent to June 30, 1996, the Company
issued certain additional options and will record deferred compensation of
$1,282,000 in connection therewith during the quarter ending September 30, 1996.
The remaining deferred compensation will be amortized ratably over the vesting
period of the options and will continue to impact the Company's results of
operations. See Notes 3 and 8 of Notes to Financial Statements.
19
<PAGE> 21
Interest income for the year ended June 30, 1996 increased to $240,000,
from $107,000 for the year ended June 30, 1995, an increase of 124% as a result
of interest earned on higher cash balances derived from private sales of stock
to third parties and from stock sales to and collaborative research payments
from RPR.
Interest expense for the year ended June 30, 1996 increased to $29,000 from
zero for the year ended June 30, 1995 as a result of the financing of equipment
acquisitions under capital leases during the year ended June 30, 1996. There
were no borrowings prior to June 30, 1995.
As a result of the foregoing, the Company recognized a net loss of $1.3
million for the year ended June 30, 1996, as compared to a net loss of $1.2
million for the year ended June 30, 1995, an increase of 9%.
Year Ended June 30, 1995 and the Period from Inception (June 17, 1993)
through June 30, 1994
Collaborative research and development revenues from affiliate for the year
ended June 30, 1995 were approximately $2.7 million. There were no revenues for
the period from June 17, 1993 (inception) through June 30, 1994. This increase
was the result of the commencement of preclinical research and development and
clinical trials in fiscal year 1995 and the corresponding receipt of payments
from RPR under the collaboration agreements.
The Company's research and development expenses for the year ended June 30,
1995 were approximately $3.4 million, as compared to $571,000 for the period
from June 17, 1993 (inception) through June 30, 1994, an increase of 491%. This
increase in research and development expenses resulted primarily from costs
related to the commencement of preclinical research and development and payments
for sponsored research and clinical trials.
General and administrative expenses increased to $624,000 for the year
ended June 30, 1995 from $115,000 for the period from June 17, 1993 (inception)
through June 30, 1994, an increase of 443%. This increase was due primarily to
increased business development efforts and the initiation of various
administrative support activities.
Interest income for the year ended June 30, 1995 of $107,000 was a result
of interest earned on cash balances resulting from stock sales and collaborative
research payments from RPR in fiscal 1995.
As a result of the foregoing, the Company recognized a net loss of $1.2
million for the year ended June 30, 1995, as compared to a net loss of $686,000
for the period from June 17, 1993 (inception) through June 30, 1994, an increase
of 79%.
INCOME TAXES
The Company uses the liability method of accounting for income taxes. The
Company has had losses since inception and, therefore, has not been subject to
federal income taxes. As of June 30, 1996, the Company has generated net
operating loss (NOL) carryforwards of approximately $1.6 million and
approximately $12,500 of research and development credits which may be available
to reduce future income taxes. These carryforwards begin to expire in 2008. For
financial reporting purposes, a valuation allowance has been established as of
June 30, 1994, 1995 and 1996, to fully offset the Company's net deferred tax
assets, including those relating to its carryforwards. The Company's ability to
utilize these carryforwards to reduce future taxable income may be limited due
to ownership changes and may be further limited upon the completion of the
offering contemplated by this Prospectus. See Note 4 of Notes to Financial
Statements.
LIQUIDITY AND CAPITAL RESOURCES
The Company has financed its operations since inception primarily through
private sales of its equity securities to third parties and from proceeds
received under research and development collaboration and stock purchase
agreements with RPR. Since June 17, 1993 (inception) through June 30, 1996, the
Company received approximately $9.9 million in net proceeds from sales of its
equity securities and $13.4 million under collaboration agreements with RPR.
20
<PAGE> 22
At June 30, 1996, the Company had cash of approximately $7.0 million, and
working capital of approximately $5.6 million as compared to $2.8 million and
$2.1 million, respectively, at June 30, 1995. The increase was primarily due to
receipt of net proceeds of approximately $1.3 million from sales of Series B
Preferred Stock to RPR and approximately $4.3 million from private sales of
Series C Preferred Stock, both of which were partially offset by the Company's
operating expenses and capital expenditures.
From June 17, 1993 (inception) through June 30, 1996, the Company has
acquired capital equipment in the aggregate amount of $811,000 through cash
purchases. During the year ended June 30, 1996 an additional $911,000 of capital
equipment has been acquired and financed under capital lease arrangements.
The Company expects its cash requirements to increase significantly in
future periods. The Company will require substantial funds to conduct research
and development programs, preclinical studies and clinical trials of its
potential products and to market any pharmaceutical products that are developed.
The Company's capital requirements will depend on numerous factors, including
the progress of its research and development programs, the scope and results of
preclinical studies and clinical trials, the time and costs involved in
obtaining regulatory approvals, the costs of filing, prosecuting, defending and
enforcing patent claims and other intellectual property rights, competing
technological and market developments, changes in the Company's existing
research relationships, the ability of the Company to establish and maintain
collaborative arrangements and the development of commercialization activities
and arrangements. In addition, it is possible the Company will expand production
of certain of its products during the fiscal years ending June 30, 1997 and
thereafter for which the Company could expend significant resources that could
result in costs to the Company that have not been previously incurred.
The Company's future capital requirements will depend on many factors,
including continued scientific progress in its research and development
programs, the magnitude of these programs, progress with preclinical testing and
clinical trials, the time and expense involved in obtaining regulatory
approvals, if any, competing technological and market developments, the
establishment of additional collaborative arrangements, the costs involved in
filing and prosecuting patent applications and enforcing patent claims,
establishing manufacturing facilities, conducting commercialization activities
and arrangements, product in-licensing and any possible acquisitions. The
Company believes that its existing capital resources, the net proceeds of this
offering and future payments under collaborative agreements will be sufficient
to satisfy its funding requirements through fiscal year 1998. There can be no
assurance, however, that changes in the Company's research and development plans
or other changes affecting the Company's operating expenses will not result in
the expenditure of such resources before such time.
The Company intends to seek additional funding through collaborative
agreements and may seek additional funding through public or private sales of
the Company's securities, including equity securities, or from other sources. In
addition, the Company may pursue opportunities to obtain debt financing in the
future. There can be no assurance, however, that additional collaboration
arrangements will be successfully negotiated, or equity or debt financing will
be available on reasonable terms, if at all. See "Risk Factors -- Need for
Additional Funding; Uncertainty of Access to Capital."
21
<PAGE> 23
GENE THERAPY CANCER TREATMENT
Introgen's business is based upon the technology described in this section.
For a complete discussion of Introgen's business, see "Business of Introgen."
CANCER INCIDENCE AND CURRENT TREATMENT
Cancer remains a major and pressing health problem. In the United States
each year approximately 1.4 million people are newly diagnosed with cancer and
over 500,000 people die from the disease. It is the nation's second leading
cause of death, surpassed only by heart disease. Worldwide, approximately 6.5
million people are newly diagnosed with cancer each year. According to the most
recently available results of the Surveillance, Epidemiology and End Results
("SEER") program of the National Cancer Institute ("NCI"), the incidence rate of
all cancers combined increased between 1973 and 1991 by 31.5% for men and 13.6%
for women. Over the same period cancer mortality for all ages rose by 6.9%
according to the SEER data.
The financial costs of cancer are substantial both for the individual
patient and for health care systems. In 1994, the NCI estimated overall costs
for cancer in the United States at $104 billion: $35 billion for direct medical
costs, $12 billion for morbidity costs (cost of lost productivity), and $57
billion for mortality costs. Nearly half of the direct medical costs are due to
treatment of breast ($6 billion), lung ($5 billion), and prostate ($5 billion)
cancers. The cancer drug market in the United States was an estimated $3 billion
in 1995, and the Company believes that the worldwide cancer drug market is $6
billion.
Despite advancements in cancer research in recent years, better treatments
for cancer are urgently needed. The current therapeutic approaches of surgery,
chemotherapy and/or radiation therapy have proven ineffective or only partially
effective in many cancer types, and the newer approach of immunotherapy has not
yet been shown to be widely applicable. In many cases, cancer is either
inaccessible or impossible to remove completely by surgery. For certain cancers
such as head and neck cancer, surgery can be an effective treatment of the
cancer but may result in severe disfigurement of the patient. Radiation therapy
and chemotherapy patients frequently suffer from the toxicity of those
treatments, which limit their effectiveness. Drug resistance to chemotherapeutic
drugs is also a major problem. Industry sources state that approximately 45% of
newly diagnosed cancers and approximately 90% of patients receiving chemotherapy
have cancers that are resistant to the chemotherapeutic agent. Moreover, once a
tumor develops resistance to a single chemotherapeutic agent, it typically
becomes resistant to others with a similar mechanism of action, thereby
rendering many chemotherapeutic agents ineffective. The conventional therapies
are also marked by debilitating side effects and frequently the necessity to
administer additional and costly medications to ameliorate such side effects.
GENE THERAPY
Gene therapy is a new technology that is being developed using genetic
materials as therapeutic agents to treat genetic defects causing cancer and
other diseases. Gene therapy seeks to restore or correct missing or aberrant
gene functions either by the addition of normal genes ("gene replacement") or by
neutralizing the activity of defective genes ("gene blocking"). Gene therapy
involves two significant components: the therapeutic genetic material and the
system to deliver this material to the desired site. Gene therapy is a rapidly
developing area of medicine although its effectiveness in treating human disease
still remains to be established. The significant promise of gene therapy was
affirmed in a report on December 7, 1995 by the Advisory Committee to the
Director of the National Institutes of Health ("NIH"). The report also
emphasized the importance of developing improved delivery vehicles (vectors) and
animal models for gene therapy.
Cancer accounts for the majority of current clinical investigations
involving gene therapy. Cancer may be particularly amenable to gene therapy in
part because with today's technology the treatment goal of rapidly eliminating
tumor cells can potentially be more readily accomplished than can the long-term
restoration of lost or missing gene function required in treating certain other
diseases. Moreover, a favorable risk-benefit profile is more likely to exist for
short-term treatment of a life-threatening disease. In fact, to date, clinical
experience with gene therapy for cancer has revealed that patients generally do
not experience clinically significant adverse events due to this treatment, a
finding in contrast to established treatments which are frequently toxic and
debilitating.
To become cancerous, a cell must first undergo mutations to escape the
multiple controls on cell division and then accumulate further changes to become
endowed with the capacity for invasion and metastasis. This evolution from a
normal to a cancerous state usually takes many years. Cells are frequently
exposed to a variety of agents -- from both external and internal
sources -- that damage DNA. Even minor DNA damage can have profound effects,
causing certain genes to become overactive, to undergo partial or complete
22
<PAGE> 24
inactivation, or to function abnormally. Although cells have a number of
protective and backup mechanisms that allow them to compensate for most DNA
damage, the failure of such systems can lead to the development of cancer.
Damage to two classes of genes in particular has been found to play a crucial
role in the evolution and expansion of cancer: tumor suppressor genes and
oncogenes. Tumor suppressor genes block cancerous growth of cells. Activated
oncogenes promote cancerous growth of cells. Gene therapy seeks to selectively
abrogate genetic lesions occurring in cancer cells, thereby restoring normal
control and protective pathways. If successful gene therapies are developed, the
cancer cells could be targeted with little consequence to surrounding normal
tissue.
THE P53 TUMOR SUPPRESSOR GENE
The protein encoded by the p53 tumor suppressor gene is believed to be a
central, vital regulator of cellular activities in that many of the signals that
monitor the state of a cell converge on p53. p53 has been implicated in the
control of the cell cycle, DNA repair and replication, cell differentiation,
genomic plasticity and programmed cell death ("apoptosis"). If the DNA of a cell
undergoes a limited amount of damage, the cell has an array of enzymes to repair
it; if the damage is extensive, the cell undergoes apoptosis, a process thought
to be involved in preventing cancer. p53 is capable of such wide-ranging effects
because it orchestrates the activity of a host of other genes and proteins.
Because of the multiple roles of p53, the cell is extremely vulnerable to the
loss of this gene.
p53 mutations are the single most common genetic alteration observed to
date, appearing in at least 50% of human cancer cases, including approximately
half of all NSC lung cancers and approximately two-thirds of all head and neck
cancers. Researchers have documented more than 51 types of human tumors carrying
p53 mutations.
Evidence from laboratory and preclinical studies suggests that while
multiple genetic mutations are required for cells to become cancerous, restoring
the function of a tumor suppressor gene may be sufficient to slow, stop or kill
cancer cells (see Figure 1 below). The Company believes that the p53 gene holds
promise as an effective cancer therapeutic that would restore normal tumor
suppressor functions. Consequently, the Company has entered into clinical trials
with p53 "gene replacement" therapies. See "Business of Introgen -- Product
Development Programs."
p53 Diagram
23
<PAGE> 25
THE K-RAS ONCOGENE
Activated oncogenes, such as K-ras, promote cancerous growth of cells. In
normal specialized cells, like those found in the lung, breast and other
tissues, oncogenes are inactive. In many cancer cells oncogenes become
overactive. Activated oncogenes give cells inappropriate signals to grow.
Mutations in the K-ras oncogene have been found to lead to continuous abnormal
stimulation of cell proliferation associated with human cancer (see Figure 2
below).
K-ras Diagram
Mutations in K-ras have been found in 30% to 40% of lung adenocarcinomas,
70% to 90% of pancreatic adenocarcinomas and 30% to 40% of colorectal cancers.
Evidence exists that mutant ras reduces the propensity of certain cells to
undergo apoptosis. Accordingly, the Company intends to initiate clinical trials
of a gene therapy product that delivers into the cell a portion of the normal
K-ras gene which is oriented in an antisense (reverse) direction. It is
anticipated that RNA from the antisense fragment will bind with RNA derived from
the activated K-ras gene and block the production of K-ras protein. If such
binding occurs successfully, the Company believes that this could stop or slow
the progression of the cancer. See "Business of Introgen -- Product Development
Programs."
DELIVERY SYSTEMS
An essential requirement of gene therapy is a suitable delivery system for
introducing therapeutic genes into cancer cells. Two major approaches that have
been employed to deliver genes to tumor cells are viral and non-viral delivery
systems (vectors). Different disease targets and routes of administration
generally require delivery systems with differing performance characteristics.
Thus far most gene therapy clinical trials have relied on retroviral
vectors as the delivery system. The retroviral vector can cause the therapeutic
gene to be incorporated into the cancer cell's chromosomes, which permits the
gene to persist and function for an extended time period. Retroviral vectors are
effective only in dividing cells -- such as cancer cells -- and therefore are
less likely to affect normal cells, and they can also
24
<PAGE> 26
infect nearly all cell types. Retroviral vector systems can result in high
levels of production (expression) of the therapeutic gene product and can be
manufactured in large quantities to meet very stringent safety specifications.
However, since all the cells in a tumor are not dividing at the same time,
repeated treatment may be necessary. Furthermore, since retroviral vectors are
believed to integrate randomly into the host cell's genetic material, this may
disrupt or inappropriately activate the functions of cellular genes near or at
the integration sites.
Adenoviral delivery systems have different characteristics than retroviral
delivery systems. Adenoviral vectors can infect and express genes in
non-dividing as well as dividing cells, thereby potentially reducing the need
for repeated treatments. They can be grown to very high concentration and can
therefore be used to deliver a concentrated therapeutic dose. The DNA of these
vectors does not generally integrate into the cell genome. Instead, it typically
remains as an autonomous genetic unit inside the nucleus and eventually
disintegrates. This feature protects normal cells that might have taken up the
viral vector. Cancer cells may not require the long-term presence of such
therapeutic genes because the treated cells may become endowed with the
capability of either undergoing apoptosis or repairing genetic damage. A major
concern of the adenoviral delivery system is the immune response to viral
proteins that it is capable of inducing in the patient. Such an immune response
may reduce or eliminate the efficacy of repeat doses of adenoviral-based gene
therapeutics. However, a local-regional application of the adenoviral vector,
such as that being utilized by Introgen, may be a means of minimizing an immune
response.
Introgen believes that no single gene therapy delivery system will be
applicable to all clinical needs. Accordingly, the Company is pursuing the
development of both retroviral and adenoviral delivery systems in parallel.
Introgen believes that the performance characteristics of retroviral and
adenoviral delivery systems are complementary, potentially allowing a wide range
of diseases and routes of administration to be successfully addressed. Both
types of viral vectors have been modified to eliminate their ability to
replicate in a human host. In addition, the Company is pursuing the development
of non-viral delivery systems, which it believes could potentially prove useful
as alternatives to viral delivery for certain clinical indications. However,
non-viral technology is at an earlier state of development than viral vector
technology, and improvements are needed in the ability of non-viral systems to
deliver therapeutic genes efficiently. See "Business of Introgen -- Product
Development Programs."
25
<PAGE> 27
BUSINESS OF INTROGEN
OVERVIEW
Introgen is a leader in the development of gene therapy products to treat
cancer by direct introduction of the therapeutic gene inside the body ("in
vivo"). For treating cancer, gene therapy seeks to restore or correct missing or
aberrant gene functions either by the addition of normal genes ("gene
replacement") or by neutralizing the activity of defective genes ("gene
blocking"). Introgen is developing two categories of gene therapy cancer
products: (1) "gene replacement" products based on the p53 tumor suppressor gene
and (2) "gene blocking" products designed to neutralize the activity of a mutant
K-ras oncogene. The Company is currently conducting Phase I/II clinical trials
in the United States of its lead products for the treatment of NSC lung cancer
and head and neck cancer. Additional clinical trials are expected to commence in
the United States, Europe and Asia over the next 12 to 18 months. These
scheduled clinical trials would include multi-center, Phase II/III trials of
Introgen's p53 "gene replacement" products. In addition, the Company is
currently conducting preclinical studies, and expects to initiate Phase I and
Phase I/II clinical trials, for products to treat cancers of the liver, bladder,
ovaries, brain, breast and prostate, as well as malignant ascites from
gastrointestinal cancers. The Company's current and expected clinical trials
test the Company's products both alone and in combination with standard cancer
treatments.
Preliminary results from Introgen's Phase I/II human clinical trials
indicate that its p53 "gene replacement" products demonstrate promise with
respect to both lack of toxicity and tumor response. These trials have involved
269 doses of p53 injected into the tumors of 37 patients. Twenty-eight of these
patients have been treated with p53 delivered by an adenoviral vector
("Ad-p53"), and nine patients have been treated with p53 delivered by a
retroviral vector ("RV-p53"). There has been no clinically significant
vector-related toxicity noted. Data from seven of the nine patients in
Introgen's RV-p53 trial for lung cancer could be clinically evaluated with
respect to tumor response. Of those seven patients, three showed tumor
regression at the treatment site, and three showed tumor stabilization.
Preliminary data from the Company's clinical trials of Ad-p53 for the treatment
of head and neck cancer and lung cancer indicate that Ad-p53 injected into
tumors produces an increase in p53 expression, apoptosis, and tumor necrosis.
Development and commercialization of Introgen's p53 and K-ras products are
being pursued in conjunction with RPR pursuant to a collaboration arrangement
with potential aggregate payments to the Company of approximately $50.0 million
prior to product commercialization (including research and development payments
already received and equity investments). The collaboration arrangement provides
that Introgen is primarily responsible for completing the early stage research
and development of products, which RPR is obligated to fund. If RPR elects, it
shall be primarily responsible for the later stage development of the products.
In North America, Introgen retains exclusive manufacturing rights and may elect
to form a marketing collaboration with RPR to market collaboration products.
Introgen is entitled to royalties on product sales arising from RPR's exclusive
marketing and manufacturing rights in Europe. Both parties may, at their own
expense, develop and market products in Japan, Korea, China, Taiwan and India.
Introgen and RPR have agreed that they will not market or license, and RPR will
not develop, any p53 or K-ras gene therapy products prior to October 2004,
except under the terms of the collaboration arrangement. Pursuant to the terms
of a stock purchase agreement between the Company and RPR, RPR has agreed to
purchase $6.0 million of Common Stock at the price to public in this offering,
as well as to make an additional equity investment in 1997 and a future
milestone payment for a potential combined total of approximately $5.0 million
(provided that the collaboration agreements remain in effect).
Introgen has exclusively licensed 20 United States and 26 foreign patent
applications from UTMDACC. In addition, Introgen has exclusively licensed two
United States applications and one foreign patent application from SKCC. These
licensed patent applications relate to the use of tumor suppressor genes in
combination with DNA-altering treatments such as chemotherapy and radiation, as
well as genes, viral and non-viral delivery systems, tissue-specific promoters
and diagnostics. In January 1996, Introgen received a notice of allowance of a
licensed patent application covering certain recombinant p53 adenovirus
compositions. Introgen is also funding research at UTMDACC and SKCC and has the
right to include any patentable inventions that arise from the research under
its exclusive license with the corresponding institution.
26
<PAGE> 28
BUSINESS STRATEGY
The Company's objective is to remain a leading developer of gene therapy
products for the treatment of cancer. Introgen's approach is to seek out product
applications that move from the laboratory to human applications in a rapid time
frame. To accomplish its objective, Introgen's strategy is to:
Pursue Rapid Clinical Development and Regulatory Approval. The Company
believes that emphasis on clinical trials of products to treat life-threatening
cancers will allow sufficient toxicity and efficacy data to be acquired
relatively rapidly. The Company seeks to obtain accelerated regulatory approval
and market entry for gene therapy cancer products that address severe,
life-threatening, malignant diseases for which alternative treatments are either
unsatisfactory or non-existent. The Company believes that such products may
qualify for fast-track approval by regulatory authorities and in some cases may
qualify for orphan drug status in the United States.
Focus on Key Therapeutic Genes. Introgen endeavors to maximize the
probability of successful product development by carefully selecting appropriate
therapeutic genes for incorporation into its gene therapy cancer products. For
example, the p53 tumor suppressor gene, upon which many of the Company's initial
products are based, is among the most well-established and central genes
involved in preventing cancer, and the ability of the normal p53 gene to
preserve the integrity of the genome and prevent unchecked cellular
proliferation is well documented. Similarly, the role of a mutated K-ras
oncogene in stimulating abnormal cellular proliferation has been well studied,
as has the ability of interventions that neutralize mutant K-ras activity to
inhibit abnormal cell growth. Within the last year the Company has begun
preclinical research with an adenoviral vector for C-CAM, a therapeutic gene
whose expression is missing in prostate cancer.
Leverage Collaborative Arrangements. Introgen intends to continue to
establish collaborative arrangements with leading pharmaceutical companies and
academic institutions, such as RPR and UTMDACC, to develop and commercialize
products. In particular, the Company's collaborative partners are expected to
provide research, manufacturing and marketing expertise. The Company believes
that establishing and maintaining collaborations with corporate and academic
partners will enable the Company to more effectively and economically leverage
its resources to develop and market products. The Company's efforts in
establishing collaborative arrangements have recently resulted in a sponsored
research agreement and exclusive license with SKCC, and a letter of intent for a
Collaborative Research and Development Agreement ("CRADA") with RPR and NCI.
Pursue and Expand Patent Portfolio. The Company will enhance its existing
patent portfolio by pursuing additional patents through collaborative
arrangements, sponsored research and internal research. The Company presently
has the exclusive royalty-bearing license to 22 United States patent
applications and 27 foreign patent applications. In addition, the Company is
currently funding research at UTMDACC and SKCC and has the right to include any
patentable inventions that arise from this funded research under the exclusive
license with the corresponding institution. The Company is also pursuing patents
on products, applications, and constructs arising from its own internal research
programs. In January 1996, Introgen received a notice of allowance of a licensed
patent application covering certain recombinant p53 adenovirus compositions.
Enhance Product Breadth. Introgen's long term strategy is to provide a
broad portfolio of gene therapy products for cancer and other life-threatening
diseases. The Company believes that several of its products under development
may be effective in the treatment of indications not currently the focus of the
Company's clinical trials. The Company will continue to develop therapeutic
genes and other technologies that show promise as commercial applications
through licensing, collaborative arrangements and internal research.
PRODUCT DEVELOPMENT PROGRAMS
Introgen is currently conducting clinical development on two categories of
products: (1) "gene replacement" products based on the p53 tumor suppressor gene
and (2) "gene blocking" products designed to neutralize the activity of a mutant
K-ras oncogene. Introgen's p53 products have been developed using two delivery
systems: one employing a retroviral vector ("RV-p53") and the other employing an
adenoviral vector
27
<PAGE> 29
("Ad-p53"). Introgen's initial K-ras product consists of a partial antisense
K-ras gene delivered by a retroviral vector ("RV-AS-K-ras"). The table below
sets forth the clinical status for the Company's products by indication. For the
purposes of this table, a clinical trial is assumed to commence when the Company
has obtained required regulatory approval and begins enrolling patients.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Indication Technology Development/Clinical Status
<S> <C> <C>
--------------------------------------------------------------------------------------------
NSC Lung Cancer RV-p53 Phase I/II
Ad-p53 Phase I/II (US)
Preclinical (Japan)
Ad-p53 + Cisplatin Phase I/II
RV-AS-K-ras IND approved
--------------------------------------------------------------------------------------------
Head and Neck Cancer Ad-p53 Phase I/II
Ad-p53 + Surgery Phase I/II
Ad-p53 + Cisplatin Preclinical, IRB approved
(The Netherlands)
--------------------------------------------------------------------------------------------
Liver Cancer (Hepatoma) Ad-p53 Preclinical
(percutaneous delivery)
Ad-p53 Preclinical
(intra-arterial delivery)
--------------------------------------------------------------------------------------------
Bladder Cancer Ad-p53 Preclinical
--------------------------------------------------------------------------------------------
Ovarian Cancer Ad-p53 Preclinical
Ad-p53 + Cisplatin Preclinical
--------------------------------------------------------------------------------------------
Brain Cancer (Glioblastoma) Ad-p53 Preclinical
--------------------------------------------------------------------------------------------
Breast Cancer Ad-p53 Preclinical
--------------------------------------------------------------------------------------------
Malignant Ascites Ad-p53 Preclinical, IRB approved
(United Kingdom)
--------------------------------------------------------------------------------------------
Prostate Cancer Ad-C-CAM Preclinical
--------------------------------------------------------------------------------------------
</TABLE>
As of July 15, 1996, the Company's trials have involved 269 doses of p53
injected into tumors of 37 patients. The Company believes that reintroduction of
normal p53 genes into cancer cells may cause the cells either to undergo a
process of programmed cell death (apoptosis) or to repair genetic damage
sufficiently to restore responsiveness to normal cellular controls. With respect
to the K-ras antisense gene therapy, the Company believes that when the RNA of
antisense K-ras combines with that of a mutant K-ras oncogene, it may block its
action and induce the growth arrest or killing of cells receiving the
transferred gene. The primary endpoint being measured in the clinical trials is
reduced tumor size. However, additional endpoints are being investigated to
verify gene delivery, gene expression and mechanism of response.
Clinical trials in addition to those listed above are expected to commence
in the United States, Europe and Asia over the next 12 to 18 months. These
clinical trials would include multi-center, Phase II/III trials of Introgen's
p53 "gene replacement" products. In addition, the Company expects to initiate
Phase I and Phase I/II trials for products to treat cancers of the liver,
bladder, ovaries, brain, breast and prostate, as well as malignant ascites from
gastrointestinal cancers. The Company's current and expected trials test the
Company's products both alone and in combination with standard cancer
treatments.
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The Company has not yet completed any Phase I or Phase I/II clinical trials
for its potential products. There can be no assurance that future clinical
studies will commence on schedule or that RPR will elect to proceed with later
stage development. The results of ongoing clinical trials could cause the
Company to delay or terminate currently planned clinical trials. In addition,
research on some of the Company's potential products is being performed in
conjunction with NCI pursuant to a letter of intent. The letter of intent
anticipates that the Company will enter into a formal CRADA, however, there can
be no assurance that the CRADA will be finalized. In addition, research relating
to the Company's second tumor suppressor gene, C-CAM, is conducted pursuant to
an agreement with UTMDACC, which is subject to ratification by the Board of
Regents. To date, no gene therapy products for cancer have been approved for
sale in the United States or internationally. See "Risk Factors -- Early Stage
of Development; No Assurance of Successful Product Development," "-- Dependence
on Collaborative Arrangements," "-- Uncertainties Related to Clinical Trials"
and "-- Government Regulations; No Assurance of Regulatory Approvals."
Non-Small Cell Lung Cancer
Lung cancer is the leading cause of cancer death in the United States, with
an estimated 177,000 new cases in 1996. Most lung cancer patients die within a
year of diagnosis. The five year survival rate is approximately 13% for all
stages of lung cancer and approximately 47% for localized disease stages. The
unfavorable prognosis for the disease is due to the poor responsiveness of lung
cancer to the standard therapies of surgery, chemotherapy and radiation, as well
as combinations of these therapies. NSC lung cancers (which include
adenocarcinoma, large-cell lung cancer and squamous cell carcinoma) account for
75% to 80% of all lung cancers. Mutations of p53 are found in approximately half
of NSC lung cancers. K-ras mutations appear in approximately 20% of NSC lung
cancers.
In Introgen's sponsored preclinical studies, both "gene replacement" with
p53 and "gene blocking" therapy with antisense K-ras reduced the growth of NSC
lung cancer. Adenoviral introduction of the p53 gene into NSC lung cancer cells
in vitro reduced the growth rate by approximately 75% in cell lines with p53
mutations or deletions. In a nude mouse model of orthotopic human lung cancer,
Ad-p53 treatment reduced tumor formation by an average of 67% and tumors that
did develop following such treatment were significantly smaller. Testing of
RV-AS-K-ras in a mouse model of orthotopic human lung cancer indicated that
tumor formation was inhibited in 80% to 90% of mice in three independent
studies.
Introgen's Phase I/II clinical trials for the treatment of NSC lung cancer
began in 1995 and are being conducted at UTMDACC. These trials are restricted to
patients with advanced metastatic lung cancer who have failed to respond to
conventional cancer treatments and have tumors with missing or mutant p53 genes.
Each trial involves the intralesional injection of the product into one tumor
site. One trial involves RV-p53 delivered alone in up to 14 patients. Nine
patients have been treated with RV-p53 in this trial. The second trial involves
Ad-p53 delivered alone in up to 27 patients. Seven patients have been treated
with Ad-p53 in this trial. The third trial involves the treatment of up to 27
patients with Ad-p53 in conjunction with cisplatin, a chemotherapeutic agent.
Three patients have been treated in this trial.
Preliminary results from the Company's human clinical trials indicate that
its RV-p53 product demonstrates promise with respect to both lack of toxicity
and tumor response. The preliminary data from nine patients with NSC lung cancer
who were treated with RV-p53 alone in the Company's Phase I/II trial indicate no
clinically significant vector-related toxicity. Data from seven of the nine
patients in the Company's RV-p53 trial for NSC lung cancer could be clinically
evaluated with respect to tumor response. Of these seven patients, three showed
tumor regression at the treatment site, three showed tumor stabilization and one
showed tumor progression.
Head and Neck Cancer
Cancers of the head and neck are the fourth most common malignancy
worldwide with an estimated 400,000 new cases each year. These cancers primarily
include squamous cell carcinoma of the oral cavity, pharynx and larynx. The
overall rate of survival of these patients is approximately 50%. A majority of
patients
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<PAGE> 31
(60%) are diagnosed with locally advanced disease with a cure rate of only
approximately 30%. Conventional treatment for head and neck cancer patients is
surgery and/or radiation. Surgery frequently results in facial disfigurement.
The majority of these patients relapse, and development of a recurrent tumor is
almost always fatal. In a published study, the tumors of 68% of head and neck
cancer patients were found to contain one or more p53 mutations.
In preclinical studies sponsored by Introgen, gene therapy with p53 reduced
the growth of head and neck cancer. Adenoviral introduction of p53 into head and
neck cancer cell lines resulted in growth suppression and cell death regardless
of the endogenous p53 status of the tumor cells. Growth of both p53 normal and
p53 mutant tumor cell lines were inhibited by Ad-p53 in two mouse models of head
and neck cancer. In a microscopic residual model, the incidence of tumor
formation in animals implanted with tumor cell lines containing p53 normal genes
was 14% (2 of 14 animals tested) following Ad-p53 treatment and 79% (11 of 14)
following treatment with a control vector (an 82% reduction in tumor formation).
The incidence of tumor formation in animals implanted with tumor cell lines
containing p53 mutant genes was 0% (0 of 16) following treatment with Ad-p53 and
100% (16 of 16) following treatment with a control vector. In an established
tumor model, Ad-p53 treatment significantly reduced the size of tumors formed by
either p53 normal or p53 mutant head and neck cancer cells.
Introgen's Phase I/II clinical trials for the treatment of head and neck
cancer with Ad-p53 commenced in 1995 at UTMDACC and are ongoing. These trials
are restricted to patients who have extensive incurable local or regional
disease and who have either failed or cannot receive conventional treatment. The
first trial in progress involves the delivery of Ad-p53 alone to a maximum of 27
patients with non-resectable (inoperable) disease. Eight patients have been
treated in this trial. The second trial involves delivery of Ad-p53 in
conjunction with surgery for up to 27 patients with resectable disease. Ten
patients have been treated in this trial.
Results of the head and neck trials have been promising. The preliminary
data from 18 patients in both trials showed no clinically significant
vector-related toxicity after treatment. Preliminary data from these trials
indicates that Ad-p53 injected into tumors produces an increase in p53
expression, apoptosis and tumor necrosis.
Liver Cancer (Hepatoma)
There will be an estimated 20,000 new cases of primary liver and biliary
passage cancer in the United States in 1996; further, metastatic liver cancer
occurs at least 20 times more frequently than primary liver cancer. The annual
number of deaths from liver cancer worldwide is estimated to exceed 250,000. No
adequate therapy exists for many patients with liver tumors, and few patients
are viable candidates for surgery. The median survival for patients with
non-resectable liver cancer unresponsive to conventional therapy is less than
six months.
Introgen and RPR have a letter of intent with the NCI to conduct Phase I/II
clinical trials, using its Ad-p53 product, for this indication under an NCI
CRADA. The protocol being developed will test percutaneous injection of Ad-p53
alone and subsequently Ad-p53 in combination with cisplatin.
Bladder Cancer
There will be an estimated 52,900 new cases of bladder cancer during 1996
in the United States. The annual number of deaths from this indication in the
United States is estimated to be 12,000. Bladder anatomy and ease of access can
allow high concentrations of gene therapeutic agents to be delivered directly to
the bladder cancer. Mutations of the p53 gene occur in approximately 80% of
invasive transitional-cell carcinomas of the bladder. Their frequency appears to
be positively correlated with the grade and stage of bladder cancer, and such
mutations may be important in the multistep progression of the disease.
In preclinical studies sponsored by Introgen, "gene replacement" with p53
reduced in vitro growth of bladder cancer cells that were either mutant for or
missing p53. Since Ad-p53 may be delivered intravesically to treat bladder
cancer, Introgen is currently conducting toxicology studies to support this
route of
30
<PAGE> 32
administration. Introgen and RPR have a letter of intent with the NCI to conduct
Phase I/II clinical trials, using its Ad-p53 product, for this indication under
an NCI CRADA.
Ovarian Cancer
There will be an estimated 26,700 new cases of ovarian cancer in the United
States in 1996 with 14,800 deaths. While approximately 80% of patients present
with advanced, incurable disease the cancer remains accessible to treatment
within the peritoneal cavity. Overexpression of mutant p53 often occurs in
invasive epithelial ovarian cancers, and many mixed mesodermal sarcomas of the
ovary also overexpress p53.
In preclinical studies sponsored by Introgen, "gene replacement" with p53
reduced the in vitro growth of ovarian cancer cells that were either mutant for
or missing p53. In orthotopic models of human ovarian cancer in nude mice,
animals treated intraperitoneally with Ad-p53 showed enhanced survival and
reduced tumor growth relative to control groups. Since Ad-p53 may be delivered
intraperitoneally to treat ovarian cancer, Introgen is currently conducting
toxicology studies to support this alternative route of administration.
Introgen and RPR have a letter of intent with the NCI to conduct Phase I/II
clinical trials, using its Ad-p53 product, for this indication under an NCI
CRADA. These trials are expected to test the use of Ad-p53 alone and in
conjunction with either surgery or cisplatin.
Brain Cancer (Glioblastoma)
An estimated 13,000 people die of cancers of the brain and central nervous
system in the United States each year. Tumors of astrocytic cell origin, the
most common brain tumors, are graded in terms of malignancy, with high grades
carrying an extremely poor prognosis. Up to 60% of all high-grade astrocytomas
(glioblastoma) involve missing or mutated p53 tumor suppressor genes.
In preclinical studies sponsored by Introgen, "gene replacement" with p53
in vitro induced apoptosis in glioblastoma cells that were mutant for p53, and
reduced the growth of glioblastoma cells that contained a normal p53 gene.
Introgen and RPR have a letter of intent with the NCI to conduct a Phase
I/II clinical trial, using its Ad-p53 product, for this indication under an NCI
CRADA.
Breast Cancer
An estimated 184,000 new cases of breast cancer will occur in women in the
United States during 1996, and more than 44,000 are expected to die of the
disease. Alterations in p53 are the most common changes identified to date in
breast cancer, occurring in 25% to 45% of breast cancer cases. p53 mutations are
associated with aggressive tumors and a poor patient prognosis both for
remaining disease-free and for survival.
Introgen and RPR have a letter of intent with the NCI to conduct a Phase II
clinical trial, using its Ad-p53 product, for this indication under an NCI
CRADA. This trial is designed to administer Ad-p53 to patients with locally
recurrent breast cancer involving the chest wall.
Malignant Ascites
There are an estimated 200,000 new cases of gastrointestinal cancer each
year in the United States, and the Company believes that approximately the same
number of new cases occur in Europe. Malignant ascites (comprised of malignant
cells and fluid in the peritoneal cavity) occurs in up to one-fifth of all
patients suffering from a gastrointestinal cancer, usually late during the
course of the disease. The median survival for patients with newly diagnosed
malignant ascites is approximately two to six months, depending on the tumor
type. Therefore, standard therapy has focused on palliation of symptoms,
maximizing ambulatory out-of-hospital time and minimizing treatment-induced
morbidity.
Currently, Introgen is conducting preclinical toxicity and pharmacokinetic
studies related to malignant ascites.
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<PAGE> 33
Prostate Cancer
In the United States, prostate cancer is the most common cancer and the
second leading cause of male cancer death. In 1996, there are projected to be
317,000 new cases of prostate cancer and approximately 41,000 deaths directly
attributable to this disease. The magnitude of the prostate cancer problem in
the United States is expected to increase as the age distribution of American
men shifts to an increased number of older males.
The Company is engaged in the preclinical testing of a second tumor
suppressor gene, C-CAM, delivered by an adenoviral vector ("Ad-C-CAM") for the
treatment of prostate cancer. Mutations or inappropriate regulation of C-CAM may
be involved in cancer of the prostate. Preclinical studies conducted at UTMDACC
identified C-CAM as a tumor suppressor based on its ability to alter the growth
rate and characteristics of prostate cancer cells in both in vitro and in vivo
models of human prostate cancer. Prostate cancer cells treated with Ad-C-CAM
vectors showed significantly slower growth rates and reduced tumorigenicity.
Furthermore, non-tumorigenic prostate cells became tumorigenic when C-CAM levels
were experimentally reduced through an antisense RNA approach. Following
completion of preclinical studies, the Company anticipates filing an IND
application, which, if approved, will permit clinical trials to begin.
Additional Preclinical Development
Anti-proliferative (Bystander) Effector. Data from the Company's
preclinical in vitro and animal studies of Ad-p53 and RV-p53 gene therapies
indicate that functional genetic material is delivered ("transduction") to less
than 100% of the tumor cells. However, transduction of 100% of the tumor cells
does not appear necessary to achieve regression of treated tumors. Instead a
"bystander effect" appears to operate in which transduced cells are able to
induce an anti-proliferative effect on non-transduced, neighboring cells.
Introgen is conducting preclinical research to identify the anti-proliferative
effector molecules involved in this bystander effect. If the Company is
successful in identifying such molecules, it could further elucidate the
mechanisms by which therapeutic genes are able to mediate tumor regression and
could result in additional therapeutic approaches to cancer treatment.
Single Chain Antibody. Intracellular antibody, or intrabody, technology
provides a novel potential avenue for gene therapy cancer treatments. In this
approach, the gene that is introduced into the cancer cells produces an
antibody-like molecule, which is intended to block the action of a particular
disease-mediating protein by binding to it. Introgen is collaborating with RPR
in the development of a single-chain antibody to ras proteins delivered by an
adenoviral vector ("Ad-scFv-ras"). Different possible constructs are in testing
at both Introgen and RPR. The goal will be to produce an intracellular antibody
that interferes with the ability of ras proteins to transmit growth signals,
thereby limiting tumor formation or growth. Certain technology in this area was
developed at a leading cancer center, licensed by RPR, and made available for
use under the Introgen-RPR collaboration arrangement.
COLLABORATIVE ARRANGEMENTS
Introgen's strategy is to enter into collaboration agreements or licensing
arrangements with collaborative partners for product development, manufacturing
and marketing. The Company believes that it will be necessary to enter into
collaborative arrangements and licensing arrangements with other companies in
the future to develop, commercialize, manufacture and market additional
products. To varying degrees, the Company is dependent on its collaborative
partners for the preclinical study, clinical development, regulatory approval,
manufacturing and marketing of products based on the results of these
collaborative research programs. The agreements with these collaborative
partners allow such partners significant discretion in electing whether to
pursue any of these activities. See "Risk Factors -- Dependence on Collaborative
Arrangements."
Rhone-Poulenc Rorer
In October 1994, Introgen entered into two collaboration agreements with
RPR to develop and commercialize gene therapy cancer products in two fields, one
to develop products based on the p53 pathway
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<PAGE> 34
and one to develop products based on K-ras inhibition. Under the terms of the
agreements, Introgen is primarily responsible for conducting research and
development of the products through completion of Phase I or Phase I/II clinical
trials and RPR is obligated to fund such early stage research and development
until October 1997.
Following completion of Phase I or Phase I/II clinical trials of a product
funded by RPR, RPR has the option to proceed with later stage development and
commercialization of such product (a "Later Stage Product"). If it so elects,
RPR will finance and be primarily responsible for conducting later stage
clinical trials, including all further submissions of existing Investigational
New Drug applications ("INDs") as well as preparation of all PLAs and
Establishment License Applications ("ELAs") for the Later Stage Product. Unless
RPR terminates the applicable collaboration agreement, it is obligated to
proceed with later stage development for at least one Later Stage Product in the
applicable field (either products based upon the p53 pathway or products based
upon K-ras inhibition). If RPR terminates the collaboration agreement for a
particular field then RPR may not develop or commercialize any products in such
field for three years and Introgen may pursue the development and
commercialization of such Later Stage Products and other products in such field.
If RPR does not elect to continue funding early stage development in the
applicable field beyond October 1997 or such later date as the parties may
agree, Introgen would have to fund such development. However, RPR would only
have rights under the applicable collaborative agreement to products that are
Later Stage Products when RPR ceases funding early stage development. In any
event, unless the applicable collaboration agreement is terminated, Introgen and
RPR are precluded from marketing or licensing, and RPR is precluded from
developing, any gene therapy cancer products in the applicable field prior to
October 2004, except pursuant to the terms of the applicable collaboration
agreement.
In North America, Introgen has the right to form a marketing collaboration
with RPR for the marketing of the products developed under the collaborative
agreements. Under a marketing collaboration Introgen and RPR would share the
costs and profits of marketing products. In the event Introgen does not elect to
form a marketing collaboration, RPR will retain exclusive marketing rights in
North America, subject to royalties on product sales to Introgen. In addition,
Introgen retains exclusive manufacturing rights in North America, including an
exclusive supply arrangement with RPR in the event a marketing collaboration is
not formed. In Europe, RPR retains exclusive marketing and manufacturing rights,
subject to royalties to Introgen on product sales. In Japan, Korea, India, China
and Taiwan, both companies have the right, at their own expense, to develop,
market and manufacture products.
In October 1994, Introgen and RPR entered into a stock purchase agreement
under which RPR agreed to make a series of equity investments in Introgen. Under
the terms of the stock purchase agreement, as amended, RPR has agreed to make
certain investments and a milestone payment in a potential aggregate amount of
approximately $11.0 million in addition to amounts previously paid. RPR has
agreed: (i) to purchase $6.0 million of Common Stock at the price to public in
this offering; (ii) to purchase $2.5 million of Common Stock on October 1, 1997,
so long as the collaboration agreements are then in effect, at the higher of the
price to public in this offering or the then current average trading price; and
(iii) subject to the terms of the stock purchase agreement, to make a payment of
approximately $2.5 million at the earlier of (1) the completion of Phase III
clinical trials for a collaboration product, (2) a commercial sale of a
collaboration product, or (3) June 1, 1999. The aggregate potential payments to
Introgen under the collaboration agreements and the stock purchase agreement is
approximately $50.0 million prior to product commercialization (including
research and development payments already received and equity investments).
Under the terms of the stock purchase agreement, so long as RPR holds at least
15% of the outstanding stock of the Company, the Company shall include a nominee
of RPR, who is reasonably acceptable to the Company, in its recommended slate
for election to the Board of Directors.
RPR is a global pharmaceutical company with reported 1995 sales of
approximately $5.3 billion (as adjusted to reflect acquisitions) and research
and development expenditures of over $826 million (as adjusted to reflect
acquisitions). In 1994, RPR formed a division, RPR Gencell, dedicated to the
discovery, development, manufacture and commercialization of cell and gene
therapy products. RPR Gencell is
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<PAGE> 35
organized as a decentralized, interactive network linking leading biotechnology
companies and research organizations worldwide with its own internal activities.
Members of RPR Gencell's network include Introgen, AASTROM Biosciences, Inc.,
the Centre National de Recherche Scientifique, Darwin Molecular Corporation,
Genetix Pharmaceuticals, Genopoietic Genethon, the Institut Gustave Roussy, the
Institut Pasteur Lille, IntraImmune Therapies, Inc., the Lawrence Berkeley
Laboratory/Human Genome Center, Pasteur Merieux Connaught, St. Elizabeth's
Medical Center, the University of British Columbia and the Universite Louis
Pasteur.
The University of Texas M.D. Anderson Cancer Center
Introgen's core technologies were developed at UTMDACC in Houston. Introgen
sponsors research performed by researchers at UTMDACC to further the development
of technologies being investigated by UTMDACC that could have potential
commercial viability. Through these sponsored research agreements, Introgen has
access to UTMDACC's resources and expertise for the development of the Company's
technology. In addition, the Company has the right to include certain patentable
inventions arising from these sponsored research agreements under its exclusive
license with UTMDACC. Introgen's strategy for product development, which
includes licensing of new technologies, is designed to take advantage of the
significant multidisciplinary resources of UTMDACC.
Introgen's research and development laboratories, manufacturing facilities,
and core clinical support laboratory are located in Houston in close proximity
to UTMDACC and the Texas Medical Center. UTMDACC has an annual budget of
approximately $900 million, over 700 basic scientists and clinicians on staff,
and an average of over 2,300 patient visits each day. Through its sponsored
research agreements, Introgen supports a group of approximately 25 clinicians
and researchers at UTMDACC investigating gene therapy products and clinical
applications.
National Cancer Institute
In April 1996, Introgen and its collaborative partner RPR signed a letter
of intent with NCI. The purpose of this letter of intent is to permit joint
research among the parties pending review of a formal CRADA by a CRADA
subcommittee of the NCI and approval of the CRADA by the Director of the NCI.
The goal of the CRADA is to evaluate the potential effectiveness and superiority
to other treatments of Introgen's Ad-p53 products against a range of designated
cancers including breast cancer, ovarian cancer, bladder cancer, liver cancer
(hepatoma) and brain cancer (glioblastoma). There can be no assurance that the
CRADA will receive approval from the CRADA subcommittee or the director of the
NCI. If such approval is not obtained it would have a material adverse effect on
the Company's business, financial condition and results of operations.
Sidney Kimmel Cancer Center
In March 1996, the Company entered into a licensing and sponsored research
agreement with SKCC, formerly known as the San Diego Regional Cancer Center.
SKCC is active in the field of gene therapy cancer research. Pursuant to the
terms of this agreement, the Company has agreed to advance funds to SKCC for the
performance of certain research by SKCC. In return for the funding of such
research, the Company will obtain the exclusive license rights to certain
inventions made during the course of such research. These activities focus on
combination therapies using p53 and other tumor suppressor genes in combination
with conventional cancer treatments. Introgen has also licensed certain
proprietary technology from SKCC.
MARKETING AND SALES
The Company's marketing strategy is to target well defined markets that can
be penetrated effectively and to pursue those efforts with resources provided by
collaborative arrangements. For example, under the RPR collaboration
arrangement, the Company may elect to form a marketing collaboration to market
collaboration products in North America and will receive a royalty on sales made
by RPR in Europe. The Company believes that pursuing this strategy will allow it
to capture the benefits of more substantial revenues
34
<PAGE> 36
associated with the marketing function as well as to bring its products to
market in a cost efficient and competitive manner.
The Company has no experience in marketing or selling pharmaceutical
products and does not have a marketing and sales staff. In order to achieve
commercial success for any product candidate approved by the FDA, Introgen must
either develop a marketing and sales force or enter into arrangements with third
parties to market and sell its products. There can be no assurance that Introgen
will successfully develop such experience or that it will be able to enter into
marketing and sales agreements with others on acceptable terms, if at all. If
the Company develops its own marketing and sales capabilities as part of a
marketing collaboration with RPR to sell products in North America, it will
compete with other companies that have experienced and well-funded marketing and
sales operations. To the extent that RPR has exclusive marketing and sales
rights in Europe, and to the extent that the Company enters into a joint venture
with RPR, any revenues to be received by Introgen will be dependent on the
efforts of RPR. There can be no assurance that such efforts will be successful.
MANUFACTURING AND PROCESS DEVELOPMENT
The material used in the Company's preclinical testing and clinical trials
was produced by UTMDACC and by a third-party contract manufacturer. The Company
recently completed construction and validation of a pilot-scale manufacturing
facility with sufficient capacity to supply a portion of Ad-p53 for currently
planned clinical trials. This facility has already produced initial quantities
of Ad-p53 intended to be used in clinical trials.
The Company is considering the establishment of a commercial-scale cGMP
manufacturing facility to further support clinical trials and the possible
commercial sale of its potential products. For this purpose the Company has
retained cGMP facility consultants with experience in designing, overseeing
construction, commissioning equipment and completing validation for cGMP
manufacturing operations. The commercial-scale manufacturing facility is
currently in the design phase and the Company is investigating possible sites.
Commercial-scale manufacturing will require significant improvements in the
Company's current manufacturing techniques, as well as rigorous process
controls. Companies often encounter manufacturing difficulties, including
problems involving production yields, quality control and assurance or shortages
of qualified personnel, during the scale-up of manufacturing. Furthermore, the
Company will be required to register the facility with the FDA and will be
subject to inspections confirming compliance with cGMP regulations established
by the FDA. No assurance can be given that the Company will be able to produce
clinical or commercial quantities of its potential products in compliance with
applicable regulations or at an acceptable cost. Should the Company elect to
build this facility, the construction and validation of the facility would take
approximately 24 months.
If the Company is unable to produce its potential products in the necessary
clinical or commercial quantities, then it will remain dependent on third-party
contract manufacturers for the production of such materials. There are only a
limited number of contract manufacturers who have the ability and capacity to
produce the Company's potential products. Failure by any such contract
manufacturer or the Company to deliver the Company's required quantities of
potential products on a timely basis and at commercially reasonable prices would
materially adversely affect the Company's business, financial condition and
results of operations.
LICENSED PATENT APPLICATIONS AND PROPRIETARY TECHNOLOGY
The Company's success will depend in part on its ability to develop and
maintain proprietary aspects of its technology. The Company has exclusively
licensed 20 United States and 26 foreign patent applications from UTMDACC. In
addition, the Company has licensed two United States patent applications and one
foreign patent application from SKCC. These licensed patent applications relate
to genes, viral and non-viral delivery systems, tissue-specific promoters and
diagnostics. Certain of these patent applications also pertain to the use of
tumor suppressor genes in combination with DNA-altering treatments such as
chemotherapy and radiation. In January 1996, USPTO granted a notice of allowance
of a licensed patent application covering certain recombinant p53 adenovirus
compositions. The Company has been licensed to make, have made, use and sell
35
<PAGE> 37
products utilizing the technology described in the licensed patent applications
and is obligated to make royalty payments based on product sales. The Company is
also funding research at UTMDACC and SKCC and has the right to include any
patentable inventions that arise from the research under an exclusive license
with the corresponding institution. The Company believes this will lead to
additional licensed patent applications in the future.
The Company's patent position like that of other biotechnology and
pharmaceutical companies is highly uncertain and involves complex legal and
factual questions. Claims made under patent applications may be denied or
significantly narrowed. There can be no assurance that any patents which may be
issued as a result of the Company's licensed United States and international
patent applications will provide any competitive advantage to the Company or
that they will not be successfully challenged, invalidated or circumvented in
the future. In addition, there can be no assurance that competitors, many of
which have substantial resources and have made significant investments in
competing technologies, will not seek to apply for and obtain patents that will
prevent, limit or interfere with the Company's ability to make, use and sell its
potential products either in the United States or in international markets.
Patent applications in the United States are, in most cases, maintained in
secrecy until patents issue, and publication of discoveries in the scientific or
patent literature frequently occurs substantially later than the date on which
the underlying discoveries were made. Consequently, the Company cannot be
certain that its licensed patent applications lay claim to the first made
inventions or that they were the first patent filed applications for such
inventions.
The biotechnology and pharmaceutical industry has been characterized by
extensive litigation regarding patents and other intellectual property rights,
and companies have employed intellectual property litigation to gain a
competitive advantage. There are a number of filed and issued patents related to
gene therapy and the treatment of cancer by gene therapy. A series of patents
controlled by Enzo Biochem relating to antisense technology has recently been
found invalid by the United States District Court for the District of Delaware.
Introgen anticipates that Enzo Biochem will appeal this ruling. If the ruling is
overturned and this series of patents is held to be valid, Introgen's
RV-AS-K-ras product could be subject to an infringement claim.
Canji controls a pending United States patent application and its European
counterpart which involve p53 related therapeutic applications. The Company's
knowledge about the status of this United States patent application is limited
because this United States application has been maintained in secrecy. The
claims of the European counterpart of this application have been rejected but
could later be allowed based upon further prosecution. Another pending United
States patent application and its European counterpart involve a method of
supplying normal p53 function to a cell which has lost such function and
associated delivery systems. These patent applications are controlled by
Pharmagenics. Accordingly, since neither application has issued, the Company is
unable to assess the potential breadth and validity of these pending
applications.
In addition, Canji controls an issued United States patent and its European
counterpart involving a method of treating mammalian cancer cells lacking normal
p53 protein by introducing into the cancer cell a normal p53 protein. While the
Company believes, after consultation with its patent counsel, that its potential
products do not infringe any valid claim of the Canji patent, there can be no
assurance that Canji will not assert a claim against the Company. Furthermore,
there can be no assurance that the Company will not become subject to any other
patent infringement claims or litigation arising out of pending applications,
should they issue, including the Canji and Pharmagenics applications described
above or interference proceedings declared by the USPTO to determine the
priority of inventions.
The defense and prosecution of intellectual property suits, USPTO
interference proceedings and related legal and administrative proceedings
involve complex legal and factual questions. As a result such proceedings are
costly and time-consuming to pursue and their outcome is uncertain. Litigation
may be necessary to enforce patents issued to the Company, to protect trade
secrets or know-how owned by the Company or to determine the enforceability,
scope and validity of the proprietary rights of others. Any litigation or
interference proceedings will result in substantial expense to the Company and
significant diversion of effort by the Company's technical and management
personnel. An adverse determination in litigation or interference proceedings to
which the Company may become a party could subject the Company to significant
liabilities to
36
<PAGE> 38
third parties or require the Company to seek licenses from third parties or
could restrict or prevent the Company from selling its products in certain
markets. Although patent and intellectual property disputes are often settled
through licensing or similar arrangements, costs associated with such
arrangements may be substantial and could include ongoing royalties.
Furthermore, there can be no assurance that the necessary licenses would be
available to the Company on satisfactory terms, if at all. Adverse
determinations in a judicial or administrative proceeding or failure to obtain
necessary licenses could restrict or prevent the Company from manufacturing and
selling its products, which would have a material adverse effect on the
Company's business, financial condition and results of operations.
In addition to patents, the Company relies on trade secrets and proprietary
know-how, which it seeks to protect, in part, through confidentiality and
proprietary information agreements. There can be no assurance that such
confidentiality or proprietary information agreements will not be breached, that
the Company would have adequate remedies for any breach, or that the Company's
trade secrets will not otherwise become known to or be independently developed
by competitors.
GOVERNMENT REGULATION
The production and marketing of the Company's proposed products and its
research and development activities are subject to regulation for safety,
effectiveness and quality by numerous governmental authorities in the United
States and other countries. In the United States, drugs are subject to rigorous
FDA regulations. The Federal Food, Drug, and Cosmetic Act, as amended, the
regulations promulgated thereunder, and other federal and state statutes and
regulations govern, among other things, the testing, manufacture, safety,
effectiveness, labeling, storage, record keeping, advertising and promotion of
the Company's products. Product development and approval within this regulatory
framework take a number of years and involve the expenditure of substantial
resources.
The steps required before the Company's proposed products may be marketed
in the United States include (i) preclinical laboratory tests, in vivo
preclinical studies and formulation studies, (ii) the submission to the FDA of
an IND application for human clinical testing, which must become effective
before human clinical trials commence, (iii) adequate and well-controlled human
clinical trials to establish the safety and effectiveness of the drug, (iv) the
submission to the FDA of a PLA and ELA (for a biologic) or an NDA (for a drug),
and (v) the FDA approval of the PLA/ELA or NDA prior to any commercial sale or
shipment of the drug. In addition to obtaining FDA approval for each product and
indication, each domestic manufacturing establishment must be registered with,
and approved by, the FDA. Domestic manufacturing establishments are subject to
biennial inspections by the FDA and must comply with cGMP for both drugs and
devices. To supply products for use in the United States, foreign manufacturing
establishments, including third party facilities, must comply with cGMP and are
subject to periodic inspection by the FDA or by corresponding regulatory
agencies in such countries under reciprocal agreements with the FDA. In addition
to FDA regulation, the Company is also subject to a variety of additional
governmental regulations under the Occupational Safety and Health Act, the
Environmental Protection Act, the Toxic Substances Control Act, the Energy
Reorganization Act of 1974, the Resource Conservation and Recovery Act and other
current and future federal, state and local regulations.
Preclinical tests include laboratory evaluation of product chemistry and
formulation, as well as animal studies to assess the potential safety and
effectiveness of the product. Compounds must be adequately manufactured and
preclinical safety tests must be conducted by laboratories that comply with FDA
Good Laboratory Practices ("GLP") regulations. The results of the preclinical
tests are submitted to the FDA as part of an IND and are reviewed by the FDA
prior to the commencement of human clinical trials. There can be no assurance
that submission of an IND will result in FDA authorization to commence clinical
trials.
Clinical trials involve the administration of the investigational new drug
to healthy volunteers or to patients, under the supervision of qualified
principal investigators. Clinical trials must be conducted in accordance with
Good Clinical Practices under protocols that detail the objectives of the study,
the parameters to be used to monitor safety and the effectiveness criteria to be
evaluated. Each protocol must be submitted to the FDA for clearance as part of
the IND. Further, each clinical trial must be conducted under the auspices of
37
<PAGE> 39
an independent Institutional Review Board ("IRB") at the institution at which
the trial will be conducted. The IRB will consider, among other things, ethical
factors, the safety of human subjects, informed consent and the possible
liability of the institution.
Clinical trials are typically conducted in three sequential phases, but the
phases often overlap. In Phase I, the initial introduction of the drug into
healthy subjects, the drug is tested for safety (adverse effects), dosage
tolerance, absorption, distribution, metabolism, excretion and pharmacodynamics
(clinical pharmacology). Phase II involves studies in a limited patient
population to (i) determine the effectiveness of the drug for specific, targeted
indications, (ii) determine dosage tolerance and optional dosage and (iii)
identify possible adverse effects and safety risks. When a compound is found to
be effective and to have an acceptable safety profile in Phase II evaluations,
Phase III trials are undertaken to further evaluate clinical effectiveness and
to further test for safety within an expanded patient population at
geographically dispersed clinical study sites. There can be no assurance that
Phase I, Phase II or Phase III testing will be completed within any specific
time period, if at all, with respect to any of the Company's products subject to
such testing. Furthermore, the Company or the FDA may suspend clinical trials at
any time if it is believed that the patients are being exposed to an
unacceptable health risk.
Among other things, the results of the preclinical and clinical studies,
along with manufacturing information, are submitted to the FDA in the form of a
PLA/ELA or an NDA for approval of the marketing and commercial shipment of the
drug. Upon accepting a Company's marketing approval applications, the FDA
generally convenes an Advisory Committee to review clinical trial results and
make a non-binding recommendation concerning the drug's approval. After
considering the Advisory Committee recommendation and other information, the FDA
may or may not issue an approval letter. This letter sets out the specific terms
and conditions that the Company must satisfy in order to receive final approval
to market. The testing and approval process is likely to require substantial
time and effort and there can be no assurance that any approval will be granted
on a timely basis, if at all. The FDA may deny a PLA/ELA or an NDA if applicable
regulatory criteria are not satisfied, require additional testing or
information, or require postmarketing testing and surveillance to monitor the
safety of the Company's products if they do not view the PLA/ELA or the NDA as
containing adequate evidence of the safety and effectiveness of the drug.
Notwithstanding the submission of such data, the FDA may ultimately decide that
the application does not satisfy regulatory criteria for approval. Moreover, if
regulatory approval is granted, such approval will entail limitations on the
indicated uses for which it may be marketed. Finally, approvals may be withdrawn
if compliance with regulatory standards is not maintained or if problems occur
following initial marketing.
Under the Orphan Drug Act, the FDA may designate drug products as orphan
drugs if there is no reasonable expectation of recovery of the costs of research
and development from sales in the United States or if such drugs are intended to
treat a rare disease or condition, which is defined as a disease or condition
that affects less than 200,000 persons in the United States. If certain
conditions are met, designation as an orphan drug confers upon the sponsor
marketing exclusivity for seven years following FDA approval of the product,
meaning that the FDA cannot approve another version of the "same" product for
the same use during such seven-year period. The market exclusivity provision
does not, however, prevent the FDA from approving a different orphan drug for
the same use or the same orphan drug for a different use. The Company believes
that certain of its potential products may qualify for orphan drug designation.
There can be no assurance that any of the Company's potential products will
ultimately receive orphan drug designation, or that the benefits currently
provided by such a designation will not hereafter be amended or eliminated. The
Orphan Drug Act has been controversial, and many legislative proposals have from
time to time been introduced in Congress to modify various aspects of the Orphan
Drug Act, particularly the market exclusivity provisions. There can be no
assurance that new legislation will not be introduced in the future that may
adversely impact the availability or attractiveness of orphan drug status for
any of the Company's potential products.
Among the conditions for FDA approval is the requirement that the
prospective manufacturer's quality control and manufacturing procedures conform
to cGMP. In complying with standards set forth in these regulations,
manufacturers must continue to expend time, money and effort in the area of
production and quality control to ensure full technical compliance. The FDA
stringently applies regulatory standards for manufacturing.
38
<PAGE> 40
COMPETITION
The biotechnology and pharmaceutical industries are subject to rapid and
intense technological change. The Company faces, and will continue to face,
competition in the development and marketing of its product candidates from
academic institutions, government agencies, research institutions and
biotechnology and pharmaceutical companies. Competition may arise from other
drug development technologies, methods of preventing or reducing the incidence
of disease, including vaccines, and new small molecule or other classes of
therapeutic agents. There can be no assurance that developments by others will
not render the Company's product candidates or technologies obsolete or
noncompetitive.
There are many companies, both publicly and privately held, including
well-known pharmaceutical companies, as well as academic and other research
institutions, engaged in developing products for human therapeutic applications.
The Company is aware that Canji is currently conducting clinical trials with p53
related gene therapy products. Various small molecule drug and antisense
approaches are being investigated by other companies in earlier stages of
research and development. The Company is also aware that Onyx Pharmaceuticals,
Inc. has initiated a clinical study of a virus-based therapy which targets cells
that are mutant for p53. Certain companies, including Merck & Co. and Genentech,
Inc., are developing small molecule drugs to inhibit targets involving the ras
pathway. Other companies have or are developing small molecule drugs, gene
therapy and antisense approaches to treat ras related cancers. Many of these
companies and institutions have substantially greater financial resources and
larger research and development staffs than the Company. In addition, many of
these competitors have significantly greater experience than the Company in
developing products, in undertaking preclinical testing and human clinical
trials, in obtaining FDA and other regulatory approvals of products and in
manufacturing and marketing products. Accordingly, the Company's competitors may
succeed in obtaining patent protection, receiving FDA approval or
commercializing products more rapidly than the Company. If and when the Company
commences commercial sales of products, it will be competing against companies
with greater marketing capabilities and manufacturing experience, areas in which
it has limited or no experience. The Company also competes with universities and
other research institutions in the development of products, technologies and
processes. In many instances, the Company competes with other commercial
entities in acquiring products or technologies from universities.
The Company expects that competition among products approved for sale will
be based, among other things, on product efficacy, safety, reliability,
availability, price, patent position and sales, marketing and distribution
capabilities. The Company's competitive position also depends upon its ability
to attract and retain qualified personnel, obtain patent protection or otherwise
develop proprietary products or processes and secure sufficient capital
resources for the often substantial period between technological conception and
commercial sales.
HUMAN RESOURCES
As of August 28, 1996, Introgen employs approximately 52 persons engaged in
research and development, regulatory affairs, clinical affairs and manufacturing
activities. The Company's employees include 14 holders of the Ph.D. or M.D.
degree. Many of Introgen's employees have brought extensive prior experience in
the pharmaceutical and biotechnology industries to the Company.
In addition to its full-time staff, Introgen provides financial support
through sponsored research agreements for approximately 25 research scientists
and technicians at UTMDACC who serve as investigators for Introgen on clinical
and preclinical research projects. Introgen also has entered into part-time
consulting arrangements with several UTMDACC scientists and clinicians.
Introgen's sponsored research projects with UTMDACC involve investigators in a
wide range of specialties, including thoracic and cardiovascular surgery,
neurology, gynecology, urology, and gastrointestinal medicine. The human
resources devoted to development of Introgen technology and products is further
augmented by the Company's collaborators at SKCC.
None of the Company's employees is covered by collective bargaining
agreements, and the Company believes it enjoys mutually satisfactory relations
with its employees and consultants. The Company's success will depend in
significant part upon its ability to attract and retain qualified personnel. See
"Risk Factors -- Need to Attract and Retain Key Employees and Consultants."
39
<PAGE> 41
FACILITIES
Introgen leases facilities in Houston, Texas of approximately 22,000 square
feet devoted to research and development laboratories, the Company's pilot-scale
cGMP manufacturing facility, core clinical support laboratory and administrative
offices. The Company's corporate offices are located in Austin, Texas. The
Company expects its current facilities, as they may be supplemented by the
commercial-scale cGMP manufacturing facility currently in the design phase, to
satisfy its requirements for at least the next two years.
SCIENTIFIC ADVISORY BOARD
Introgen receives guidance on a broad range of scientific, clinical and
technical issues from its Scientific Advisory Board. Members of the Scientific
Advisory Board are recognized experts in their respective fields of research and
clinical medicine related to molecular oncology. The members of the Board are:
Jack A. Roth, M.D., Chairman of the Scientific Advisory Board, is
Chairman, Department of Thoracic and Cardiovascular Surgery at UTMDACC. An
Introgen founder and the Company's Chief Medical Advisor, Dr. Roth has been
a widely recognized pioneer in the application of gene therapy to the
treatment of cancer. He is the primary inventor of the technology upon
which Introgen's gene therapy products are based.
J. Carl Barrett, Ph.D., is the Scientific Director, Division of
Intramural Research, National Institute of Environmental Health Sciences.
Dr. Barrett received his doctoral degree in biophysical chemistry from the
Johns Hopkins University. Dr. Barrett has received numerous awards
including the NIH Merit Award in 1994 and the NIH Director's Award in 1995.
Elizabeth Grimm, Ph.D., is Biologist and Professor of Tumor Biology at
UTMDACC. A recipient of the Ph.D. degree in microbiology from the
University of California, Los Angeles School of Medicine, Dr. Grimm has
served as Cancer Expert, Surgical Branch of the NCI.
Michael J. Imperiale, Ph.D., is the Director of Cancer Biology
Training Programs at the University of Michigan Cancer Center and holds a
concurrent position in the Department of Microbiology and Immunology at the
University of Michigan. Dr. Imperiale earned his Ph.D. degree in biological
sciences from Columbia University and received postdoctoral training at the
Rockefeller University Laboratory of Molecular Cell Biology where he
studied the regulation of early adenovirus gene expression.
Peter Nowell, M.D., of the Department of Pathology and Laboratory
Medicine at the University of Pennsylvania School of Medicine, received his
medical training at the University of Pennsylvania School of Medicine. Dr.
Nowell is a past president of the American Society for Experimental
Pathology and past Director of the American Association for Cancer
Research.
Carol L. Prives, Ph.D., is a Professor of Biology at Columbia
University. She is the Chair of the NIH Experimental Virology Study Section
and a member of the NCI Intramural Scientific Advisory Board, as well as
the Dana-Farber Cancer Center Advisory Board. She is an editor of the
Journal of Virology and serves on the editorial boards of three other
prominent journals. She received her Ph.D. in biochemistry from McGill
University.
Daniel Von Hoff, M.D., is the Director of the Institute for Drug
Development, Cancer Therapy and Research in San Antonio, Texas and a
Professor in the Departments of Medicine and Cellular and Structural
Biology at the University of Texas Health Science Center. Dr. Von Hoff is
certified in medical oncology by the American Board of Internal Medicine.
LEGAL PROCEEDINGS
The Company is not a party to any legal proceedings.
40
<PAGE> 42
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The executive officers and directors of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
------------------------------------ --- -------------------------------------------------
<S> <C> <C>
David G. Nance...................... 44 President, Chief Executive Officer and Director
Mahendra G. Shah, Ph.D.(2).......... 51 Vice President, Corporate and Business
Development and Director
James W. Albrecht, Jr............... 42 Chief Financial Officer
James A. Merritt, M.D............... 45 Vice President, Clinical Affairs
Mary E. Harper, Ph.D................ 43 Vice President, Research
J. David Enloe, Jr.................. 33 Vice President, Administration
Shawn L. Gallagher.................. 35 Vice President, Manufacturing
John N. Kapoor, Ph.D................ 53 Chairman of the Board
Thierry Soursac, M.D., Ph.D.(1)..... 39 Director
Austin M. Long, III(2).............. 51 Director
Mark B. Chandler, Ph.D.(1).......... 43 Director
</TABLE>
- ---------------
(1) Member of Compensation Committee
(2) Member of Audit Committee
DAVID G. NANCE has been the President and Chief Executive Officer of the
Company since its inception in June 1993. Since 1992, Mr. Nance has been
Managing Partner of Texas Biomedical Development Partners, the investment group
that founded Introgen. From 1991 to 1993, he served as Chairman of LifeScience
Corporation, a private company that develops anticancer technologies. Mr. Nance
is a Director of the Texas Medical Research Foundation. See "Certain
Transactions."
MAHENDRA G. SHAH, PH.D., has been Vice President, Corporate and Business
Development of the Company since its inception in June 1993. From 1991 to the
present, he has been a Vice President of EJ Financial Enterprises, Inc. ("EJ")
and NeoPharm, Inc. From 1987 to 1991, he was the Senior Director of New Business
Development with Fujisawa USA, Inc. Prior to that time, he worked in various
positions with Schering Plough and Bristol Meyers-Squibb Company. Dr. Shah
received a Ph.D. in Industrial Pharmacy from St. John's University. Dr. Shah
serves as Vice President, Corporate and Business Development, pursuant to a
consulting agreement with EJ. See "Certain Transactions."
JAMES W. ALBRECHT, JR. joined the Company in November 1994 as its Vice
President, Operations and Administration and has been the Chief Financial
Officer of the Company since September 1995. From 1994 to 1996, he was also
Chief Financial Officer of Spertus Investments LLC and SDC Properties, Inc.,
real estate development and family asset management businesses. From 1993 to
1994, Mr. Albrecht was Chief Financial Officer of On-Demand Technologies, Inc.,
a software development company. From 1988 to 1995, he was the Controller and
Accounting Manager of CompuAdd Computer Corporation, a personal computer
manufacturing and sales company. Mr. Albrecht is a Certified Public Accountant.
JAMES A. MERRITT, M.D., has been Vice President, Clinical Affairs since
joining the Company in February 1996. From 1994 to 1995, he was Vice President
of Medical Affairs at Viagene, Inc. From 1990 to 1994, he held various positions
with IDEC Pharmaceuticals Corp., most recently as Senior Director, Clinical
Sciences. Dr. Merritt is board certified in internal medicine and medical
oncology and has served on the board of Anti-Cancer Drugs since 1990. He
received his M.D. from the University of Vermont.
MARY E. HARPER, PH.D., has been Vice President, Research since joining the
Company in January 1996. From 1990 to 1996, she held various positions at Genta,
Inc., most recently as Vice President of Biological Research. Dr. Harper
received her Ph.D. in molecular genetics from the University of Minnesota.
41
<PAGE> 43
J. DAVID ENLOE, JR. joined the Company in March 1995 as its General
Business Manager and has been Vice President, Administration of the Company
since May, 1996. From 1989 to 1995, he held various positions at Centrilift, an
affiliate of the Baker Hughes Company, most recently as Region General Manager,
Southeast Asia. Mr. Enloe is a Certified Public Accountant.
SHAWN L. GALLAGHER has been Vice President, Manufacturing, since joining
the Company in August 1996. From 1995 to 1996, he was Director of Operations at
Magenta Corporation. From 1991 to 1995, he held various manufacturing management
positions at ImmunoGen, Inc. Mr. Gallagher received an M.S. in chemical
engineering from the University of California at San Diego.
JOHN N. KAPOOR, PH.D., has been Chairman of the Board of the Company since
its inception in June 1993. In 1990, Dr. Kapoor founded EJ Financial
Enterprises, Inc. and is presently its President. He is also presently Chairman
of OptionCare, Inc., Unimed Pharmaceuticals, Inc. and NeoPharm, Inc., Chairman
and Chief Executive Officer of Akorn, Inc. and is a director of Bone Care, Inc.
Dr. Kapoor received his Ph.D. in medicinal chemistry from the State University
of New York.
THIERRY SOURSAC, M.D., PH.D., has been a director of the Company since
October 1994. Since 1987, he has held various positions at Rhone-Poulenc Rorer
Inc. and is currently a Senior Vice President of RPR and General Manager of RPR
Gencell. Dr. Soursac received his Doctorate in Medicine from Universite
d'Angers, his Ph.D. from Universite de Paris and his M.B.A. from INSEAD.
AUSTIN M. LONG, III has been a director of the Company since October 1994.
From 1987 to the present, he has been Vice President of Private Investments of
the University of Texas Investment Management Company. He is also a director of
Targeted Genetics Corporation. Mr. Long holds an M.P.A. from the University of
Texas, a J.D. from DePaul University Law School and is a Certified Public
Accountant.
MARK B. CHANDLER, PH.D., has been a director of the Company since October
1994. Dr. Chandler co-founded Inland Laboratories, Inc. in 1983 and is currently
its President. Dr. Chandler holds a Ph.D. in Immunology from the University of
Texas, Health Science Center.
All directors hold office until the next annual meeting of stockholders or
until their successors have been elected and qualified. Officers serve at the
discretion of the Board of Directors. There are no family relationships between
any of the directors or executive officers of the Company.
In connection with a personal real estate investment, Mr. Nance filed a
petition for bankruptcy under Chapter 13 of the United States Bankruptcy Code in
August 1992. Mr. Nance voluntarily moved to dismiss the filing later that month,
which motion was granted in October 1992.
On August 16, 1992, a lawsuit was filed against Dr. Kapoor in the United
States District Court for the Northern District of Illinois by Fujisawa
Pharmaceutical Co., Ltd. and Fujisawa USA, Inc. ("Fujisawa"). The complaint
alleged that Dr. Kapoor, while President and Chief Executive Officer of
Lyphomed, Inc., a company acquired by Fujisawa, violated provisions of the
Federal securities laws and the Racketeer Influenced and Corrupt Organizations
Act (RICO), and also asserted certain state law claims. On July 25, 1996, the
complaint was dismissed in part, and Dr. Kapoor was granted summary judgment on
the remaining claims. On August 22, 1996, Fujisawa filed a notice of appeal of
the dismissal and summary judgment decision. Dr. Kapoor vigorously denies the
allegations and filed a complaint against Fujisawa in Illinois state court on
August 27, 1996 claiming breach of contract, defamation of character and other
state law claims.
COMPENSATION OF DIRECTORS
Directors currently receive no cash fees for services provided in that
capacity but are reimbursed for out-of-pocket expenses they incur in connection
with their attendance at meetings of the Board. The Company's Director Option
Plan provides for the grant of options to nonemployee directors ("Outside
Directors") pursuant to a nondiscretionary, automatic grant mechanism, whereby
each Outside Director is granted an option at fair market value to purchase
2,000 shares on the date of each Annual Meeting of Shareholders, provided such
director is reelected. Each new Outside Director that joins the Board will
automatically be granted an initial option at fair market value to purchase
10,000 shares of Common Stock upon the date on
42
<PAGE> 44
which such person first becomes an Outside Director. The Company has reserved
200,000 shares of Common Stock for issuance under this plan. The initial options
vest at a rate of 25% per year following the date of grant so long as the
optionee remains a director of the Company. The re-election options vest at a
rate of 12.5% per month following the date of grant so long as the optionee
remains a director of the Company. In the event a director's status as a
director is terminated, the director may exercise any vested option within one
year after the date of such termination after which time all unexercised options
will be canceled. All unvested options will be canceled as of the date of the
director's termination. In the event of a merger, sale of substantially all of
the Company's assets or change in the ownership of the Company, all options
outstanding under the Director Option Plan shall be fully vested. Each such
vested option will remain exercisable in accordance with the terms under which
such option was granted. Prior to the adoption of the Company's Director Option
Plan as of June 30, 1996, Outside Directors held options exercisable for 90,000
shares of Common Stock at a weighted average exercise price of $0.63 under the
Incentive Stock Plan.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee is responsible for determining salaries,
incentives and other forms of compensation for directors, officers and other
employees of the Company. The Compensation Committee also administers various
incentive compensation and benefit plans. In fiscal year 1996, the Compensation
Committee consisted of Thierry Soursac and Mark B. Chandler.
EXECUTIVE COMPENSATION
The following table sets forth the compensation paid by the Company during
the fiscal year ended June 30, 1996 to the Chief Executive Officer and its four
other most highly compensated executive officers whose cash compensation
exceeded $100,000 (the Chief Executive Officer and such other executive officers
are hereinafter referred to as the "Executive Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
--------------------------------------- ------------
OTHER ANNUAL SECURITIES ALL OTHER
SALARY COMPENSATION UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION ($) BONUS ($) ($)(2) OPTIONS (#) ($)
- ------------------------------ -------- --------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
David G. Nance $175,000(1) -- -- 60,000 --
President, Chief Executive
Officer
Mahendra G. Shah, Ph.D. 150,000(3) -- -- 48,000 --
Vice President, Corporate
and Business Development
James W. Albrecht, Jr. 109,500(4) -- -- 12,000 --
Chief Financial Officer
James A. Merritt, M.D. 56,827(5) -- -- 60,000 $ 15,000(6)
Vice President, Clinical
Affairs
Mary E. Harper, Ph.D. 63,077(7) -- -- 48,000 25,000(6)
Vice President, Research
</TABLE>
- ---------------
(1) Mr. Nance's compensation was paid to Domecq Technologies, Inc. ("Domecq") of
which he is the President.
(2) Other annual compensation in the form of perquisite and other personal
benefits, securities or property has been omitted in those cases where the
aggregate amount of such compensation is the lesser of either $50,000 or 10%
of the total of annual salary and bonus reported for the named executive
officer.
(3) Dr. Shah's compensation is paid to EJ by which he is employed.
(4) Includes compensation as a consultant prior to March 1, 1996 and salary
after that date as an employee. Mr. Albrecht's current annual compensation
is $150,000.
(5) Includes salary from February 14, 1996 upon commencement of employment. Dr.
Merritt's current annual compensation is $150,000.
(6) Relocation allowance.
(7) Includes salary from January 31, 1996 upon commencement of employment. Dr.
Harper's current annual compensation is $150,000.
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<PAGE> 45
STOCK OPTION INFORMATION
The following table sets forth certain information for the year ended June
30, 1996, with respect to each grant of stock options to the Executive Officers:
OPTION GRANTS IN FISCAL YEAR 1996
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE
VALUE AT ASSUMED
INDIVIDUAL GRANTS ANNUAL
-------------------------------------------------- RATES OF STOCK
NUMBER OF % OF TOTAL PRICE
SECURITIES OPTIONS APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OPTION TERM(1)
OPTIONS EMPLOYEES IN PRICE PER EXPIRATION -------------------
NAME GRANTED FISCAL YEAR SHARE DATE 5% 10%
- ---------------------------------- ---------- ------------ --------- ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
David G. Nance.................... 60,000 23% $0.63 9/29/05 $23,584 $59,765
Mahendra G. Shah, Ph.D............ 48,000 18% 0.63 9/29/05 18,867 47,812
James W. Albrecht, Jr............. 12,000 5% 0.63 1/12/06 4,717 11,953
James A. Merritt, M.D............. 60,000 23% 0.63 2/14/06 23,584 59,765
Mary E. Harper, Ph.D.............. 48,000 18% 0.63 1/12/06 18,867 47,812
</TABLE>
- ---------------
(1) In accordance with the rules of the Securities and Exchange Commission (the
"Commission"), shown are the gains or "option spreads" that would exist for
the respective options granted. These gains are based on the assumed rates
of annual compound stock price appreciation of 5% and 10% from the date the
option was granted over the full option term. These assumed annual compound
rates of stock price appreciation are mandated by the rules of the
Commission and do not represent the Company's estimate or projection of
future Common Stock prices.
No stock options were exercised by the Executive Officers during the year
ended June 30, 1996. The following table sets forth certain information
concerning the value of unexercised stock options held by the Executive Officers
at the end of fiscal year 1996.
AGGREGATED OPTION EXERCISES IN 1996 AND 1996 YEAR-END VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
NUMBER OF VALUE UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
SHARES REALIZED JUNE 30, 1996 JUNE 30, 1996 (1)
ACQUIRED ON UPON --------------------------- ---------------------------
NAME EXERCISE EXERCISE EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
David G. Nance................. -- -- 78,000 6,000 $ 7,800 $ 600
Mahendra G. Shah, Ph.D......... -- -- 66,000 6,000 6,600 600
James W. Albrecht, Jr.......... -- -- 12,000 36,000 1,200 3,600
James A. Merritt, M.D.......... -- -- -- 60,000 -- 6,000
Mary E. Harper, Ph.D........... -- -- -- 48,000 -- 4,800
</TABLE>
- ---------------
(1) Based upon an assumed fair market value of $0.725 per share as of June 30,
1996 less the exercise price per share.
STOCK PLANS
Incentive Stock Plan. A total of 1,750,000 shares of Common Stock have
been reserved for issuance under the Company's Incentive Stock Plan. Under the
Incentive Stock Plan, as of August 28, 1996, options to purchase an aggregate
746,354 shares were outstanding, no shares of Common Stock had been purchased
pursuant to the exercise of stock options and stock purchase rights and
1,003,646 shares were available for future grant.
The Incentive Stock Plan provides for the grant of incentive stock options
within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code"), nonqualified stock options and stock purchase rights to
employees and consultants of the Company. Incentive stock options may be granted
only to employees. The Incentive Stock Plan is administered by the Board of
Directors or by a committee appointed by the Board of Directors, which
determines the terms of options granted, including the exercise price and the
number of shares subject to each option. The Board of Directors also determines
the schedule upon which
44
<PAGE> 46
options become exercisable. The exercise price of incentive stock options
granted under the Incentive Stock Plan must be at least equal to the fair market
value of the Company's Common Stock on the date of grant for employees
generally. However, for any employee holding more than 10% of the voting power
of all classes of the Company's stock, the exercise price will be no less than
110% of the fair market value. The exercise price of nonqualified stock options
is set by the administrator of the Incentive Stock Plan. The maximum term of
options granted under the Incentive Stock Plan is ten years. In the event of a
merger, reorganization or change in the ownership of the Company, all options
outstanding under the Plan shall be fully vested.
In the event a consultant or an employee is terminated, such employee or
consultant will have at least 90 days after such termination to exercise any
vested non-qualified option and three months to exercise vested incentive stock
options. After the applicable exercise period, all unexercised options will be
canceled. All unvested options will be canceled as of the date of the employee's
termination. In the event of a merger, sale of substantially all of the
Company's assets or change in the ownership of the Company, all options
outstanding under the Incentive Stock Plan shall be fully vested. Each such
vested option will remain exercisable in accordance with the terms under which
such option was granted.
Employee Stock Purchase Plan. The Company's Employee Stock Purchase Plan
(the "Purchase Plan") was adopted by the Company's Board of Directors and
approved by the Company's stockholders in August 1996. The Purchase Plan is
intended to qualify under Section 423 of the Code. The Company has reserved
100,000 shares of Common Stock for issuance under the Purchase Plan. Under the
Purchase Plan, an eligible employee will be granted an option to purchase shares
of Common Stock from the Company through payroll deductions of up to 10% of his
or her compensation, at a price per share equal to 85% of the lower of (i) the
fair market value of the Company's Common Stock on the first day of an offering
period under the Purchase Plan or (ii) the fair market value of the Common Stock
on the last day of an offering period. Except for the first offering period,
each offering period will last for six months and will commence the first day on
which the national stock exchanges and the Nasdaq National Market System are
open for trading, on or after May 1 and November 1 of each year. The first
offering period will begin upon the effective date of this offering and will end
on October 31, 1997. On the last day of each offering period, the option to
purchase the shares will be exercised automatically, and the maximum number of
full shares subject to the option will be purchased for the employee with the
accumulated payroll deductions in his or her account. Any employee who is
customarily employed for at least 20 hours per week and more than five months
per calendar year and, who has been so employed for at least three consecutive
months on or before the commencement date of an offering period is eligible to
participate in the Purchase Plan. An employee may elect to withdraw from the
Purchase Plan by withdrawing all, but not less than all, payroll deductions from
his account prior to the exercise date, and a termination of employment will be
treated as a withdrawal from the Purchase Plan.
In the event of merger of the Company with or into another corporation, all
outstanding options will either be assumed or an equivalent option will be
substituted by the successor corporation, unless the Board in its discretion
accelerates the exercise date of such options or cancels the options and refunds
all payroll deductions collected from the employees. If the Board accelerates
the exercise date, it must give the employees ten days' notice of the new
exercise date.
EMPLOYMENT AND CONSULTING AGREEMENTS
Until August 1, 1996, the Company had a service agreement with Domecq
pursuant to which David G. Nance provided his services as President and Chief
Executive Officer of Introgen. Mr. Nance is the President of Domecq. Effective
August 1, 1996, the Company entered into an employment agreement with Mr. Nance,
under which he will continue to serve as President and Chief Executive Officer
and will be paid at the annual rate of $225,000 during the first year of the
agreement and at the annual rate of $250,000 thereafter through December 31,
1998. The Company also has a consulting agreement with EJ pursuant to which
Mahendra G. Shah provides his services as Vice President, Corporate and Business
Development. See "Management" and "Certain Transactions."
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<PAGE> 47
SECTION 401(K) PLAN
In May 1995, the Company adopted a retirement savings and investment plan
(the "401(k) Plan") covering the Company's employees who are located in the
United States. Pursuant to the 401(k) Plan, employees may elect to reduce their
current compensation by up to the statutorily prescribed annual amount ($9,240
in 1995 and $9,500 in 1996) and to have the amount of such reduction contributed
to the 401(k) Plan. The 401(k) Plan permits, but does not require, additional
matching contributions by the Company on behalf of all participants in the
401(k) Plan. The Company has not made any matching contributions to the 401(k)
Plan. The 401(k) Plan is intended to qualify under Section 401(k) of the Code,
so that (i) contributions to the 401(k) Plan by employees or by the Company, and
the investment earnings thereon, are not taxable to employees until withdrawn
from the 401(k) Plan; and (ii) contributions by the Company, if any, will be
deductible by the Company when made.
LIMITATIONS ON LIABILITY AND INDEMNIFICATION MATTERS
The Restated Certificate of Incorporation limits the liability of directors
to the maximum extent permitted by Delaware law. Delaware law provides that
directors of a corporation will not be personally liable for monetary damages
for breach of their fiduciary duties as directors, except liability for (i)
breach of their duty of loyalty to the corporation or its stockholders, (ii)
acts or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) unlawful payments of dividends or unlawful stock
repurchases or redemptions, or (iv) any transaction from which the director
derived an improper personal benefit. Such limitation of liability does not
apply to liabilities arising under the federal or state securities laws and does
not affect the availability of equitable remedies such as injunctive relief or
rescission.
The Company's Bylaws provide that the Company shall indemnify its
directors, officers, employees and other agents to the fullest extent permitted
by law. The Company believes that indemnification under its Bylaws covers at
least negligence and gross negligence on the part of indemnified parties. The
Company's Bylaws also permit it to secure insurance on behalf of any officer,
director, employee or other agent for any liability arising out of his or her
actions in such capacity, regardless of whether the Bylaws permit such
indemnification.
The Company has entered into agreements to indemnify its directors and
executive officers, in addition to the indemnification provided for in the
Company's Bylaws. These agreements, among other things, indemnify the Company's
directors and executive officers for certain expenses (including attorneys'
fees), judgments, fines and settlement amounts incurred by any such person in
any action or proceeding, including any action by or in the right of the Company
arising out of such person's services as a director, officer, employee, agent or
fiduciary of the Company, any subsidiary of the Company or any other company or
enterprise to which the person provides services at the request of the Company.
The Company believes that these provisions and agreements are necessary to
attract and retain qualified persons as directors and executive officers.
At present, there is no pending litigation or proceeding involving a
director or officer of the Company in which indemnification is required or
permitted, and the Company is not aware of any threatened litigation or
proceeding that may result in a claim for such indemnification.
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<PAGE> 48
CERTAIN TRANSACTIONS
CONSULTING AND SERVICE AGREEMENTS
Dr. Jack A. Roth individually and as trustee of Roth 1994 Investment Trust
owns shares of Common Stock of Introgen. He is also Chairman of the Department
of Thoracic and Cardiovascular Surgery at UTMDACC with which Introgen has a
licensing agreement and several research agreements. Introgen entered into a
consulting agreement with Dr. Roth effective as of October 1, 1994. Pursuant to
this agreement, Dr. Roth provides his technical knowledge, expertise and
assistance in the development and commercialization of Introgen's products and
abides by confidentiality and noncompetition provisions. Dr. Roth received
$20,000 at the execution of the agreement. The agreement also provides the
following compensation formula: $30,000 per year starting October 1, 1994,
$75,000 per year starting October 1, 1995, $100,000 per year starting October 1,
1996, with the yearly compensation increasing to $200,000 starting October 1,
2003, subject to adjustment for inflation. While the term of this agreement is
15 years from October 1, 1994, upon one year's notice, the Company may terminate
this agreement effective October 1, 1997.
David G. Nance, President, Chief Executive Officer and director of
Introgen, is also President of Domecq. On July 1, 1994, Introgen entered into a
service agreement with Domecq pursuant to which Domecq provided the services of
Mr. Nance to serve the Company as President and Chief Executive Officer for
compensation of $175,000 per year through August 1, 1996. Effective August 1,
1996, the Company entered into an employment agreement with Mr. Nance, under
which he will serve in the same positions and will be paid at the annual rate of
$225,000 during the first year of the agreement and at the annual rate of
$250,000 thereafter through December 31, 1998. Mr. Nance is also a member of the
board of directors of Pinnacle Management & Trust Co., the current administrator
of the Company's 401(k) plan. See "Management -- Employment and Consulting
Agreements."
Mahendra G. Shah, Vice President and director of Introgen, is also an
employee of EJ, a shareholder of the Company. On July 1, 1994, the Company and
EJ entered into a consulting agreement pursuant to which EJ provides the
services of Dr. Shah to Introgen. The agreement provides that Dr. Shah will
serve as Introgen's Vice President and assist with business development, license
negotiation, market analysis and general corporate development. Introgen is
obligated to pay EJ compensation of $150,000 per calendar year. The term of the
agreement is three years commencing July 1, 1994 unless terminated by the
Company on 30 days' notice. After the initial term, the agreement is
automatically renewed for additional one-year terms unless either party gives
notice of termination. Over the course of the term of the agreement and at
present, Dr. Shah devotes a substantial portion of his time to Introgen as Vice
President, Corporate and Business Development of the Company. Dr. Shah has
indicated that it is his intention to remain as Vice President, Corporate and
Business Development of the Company, subject to Introgen's right to terminate
the agreement.
OTHER ARRANGEMENTS
Thierry Soursac is a Senior Vice President of RPR and General Manager of
RPR Gencell. RPR is a stockholder of the Company and has several agreements with
the Company. Pursuant to the terms of a stock purchase agreement between the
Company and RPR, RPR has agreed to purchase $6.0 million of Common Stock at the
price to public in this offering, as well as to make an additional equity
investment in 1997 and a future milestone payment for a potential combined total
of approximately $5.0 million (provided that the collaboration agreements remain
in effect). See "Business of Introgen -- Collaborative Arrangements --
Rhone-Poulenc Rorer."
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<PAGE> 49
The Board of Regents of the University of Texas System is a stockholder of
the Company. The Board of Regents of the University of Texas System, UTMDACC and
Introgen are parties to the Patent and Technology License Agreement and several
sponsored research agreements. See "Business of Introgen -- Collaborative
Agreements -- The University of Texas M.D. Anderson Cancer Center."
Genesis Merchant Group Securities ("Genesis"), an underwriter in this
offering, is a stockholder and warrant holder of Introgen. As of July 31, 1996,
Genesis and certain related persons beneficially own an aggregate of 40,863
shares of the Company's Series C Preferred Stock and outstanding warrants
exercisable for 52,328 shares of the Common Stock at an exercise price of $7.929
per share. The Series C Preferred Stock will automatically be converted to
Common Stock upon the completion of this offering.
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<PAGE> 50
PRINCIPAL STOCKHOLDERS
The following table sets forth as of June 30, 1996, and as adjusted to
reflect the sale of the shares of Common Stock offered hereby, certain
information with respect to the beneficial ownership of the Common Stock as to
(i) each person known by the Company to own beneficially more than 5% of the
outstanding shares of Common Stock, (ii) each director of the Company, (iii)
each of the executive officers named in the Summary Compensation Table, and (iv)
all directors and executive officers of the Company as a group.
<TABLE>
<CAPTION>
PERCENTAGE OF SHARES
NUMBER OF OUTSTANDING
SHARES --------------------------
BENEFICIALLY BEFORE THE AFTER THE
BENEFICIAL OWNER OWNED(1) OFFERING OFFERING(2)
- --------------------------------------------------------- ------------ ---------- -----------
<S> <C> <C> <C>
John N. Kapoor, Ph.D.(3)................................. 2,331,731 30.35% 21.43%
225 Deerpath, #250
Lake Forest, IL 60045
David G. Nance(4)........................................ 2,137,178 27.61 19.53
c/o Introgen Therapeutics, Inc.
301 Congress, Suite 1850
Austin, TX 78701
Rhone-Poulenc Rorer International (Holdings) Inc.(5)..... 1,117,764 14.57 15.30
Delaware Corporate Center I
Suite 114
1 Righter Parkway
Wilmington, DE 19803
The Board of Regents of the University of Texas 730,749 9.53 6.72
System(6)..............................................
201 West 7th Street
Austin, TX 78701
Jack A. Roth, M.D.(7).................................... 724,749 9.46 6.67
2324 Bolsover
Houston, TX 77005
Thierry Soursac, M.D., Ph.D.............................. -0- * *
Mahendra G. Shah, Ph.D.(8)............................... 66,000 * *
James W. Albrecht, Jr.(9)................................ 12,000 * *
Mark B. Chandler, Ph.D.(10).............................. 6,000 * *
Austin M. Long, III(11).................................. -0- * *
James A. Merritt, M.D.(12)............................... -0- * *
Mary E. Harper, Ph.D.(13)................................ -0- * *
All directors and executive officers as a group
(10 persons)(3)(4)(7)(8)(9)(10)(11)(12)................ 4,570,909 58.14 41.32
</TABLE>
- ---------------
(*) Less than 1%.
(1) Applicable percentage ownership is based on 7,663,769 shares of Common
Stock as of June 30, 1996, together with applicable options for such
stockholder. Beneficial ownership is determined in accordance with the
rules of the Commission, based on factors including voting and investment
power with respect to shares. Shares of Common Stock subject to the options
currently exercisable, or exercisable within 60 days after June 30, 1996,
are deemed outstanding for computing the percentage ownership of the person
holding such options, but are not deemed outstanding for computing the
percentage ownership of any other person.
(2) After giving effect to the issuance of 3,200,000 shares of Common Stock
offered hereby.
(3) Consists of 1,156,865 shares held by EJ Financial Investments IV, L.P.,
925,492 shares held by EJ Financial Investments VI, L.P., 231,374 shares
held by EJ and 18,000 shares held by Dr. Kapoor subject to stock options
that are exercisable within 60 days of June 30, 1996. EJ Financial
Investments IV, L.P. and EJ Financial Investments, VI, L.P. are
partnerships controlled by their general partner, EJ. Dr. Kapoor, Chairman
of the Board of the Company, is President of EJ. Dr. Kapoor disclaims
beneficial ownership of the shares held by EJ, EJ Financial Investments IV,
L.P. and EJ Financial Investments VI, L.P.
(4) Consists of 1,121,883 shares held by David G. Nance, trustee, 927,862
shares held by Technology Capital Corporation, 9,433 shares held by Domecq,
and 78,000 shares subject to stock options that are exercisable within 60
days of June 30, 1996. Mr. Nance is President and Chief Executive Officer
of the Company, President of Technology Capital Corporation and President
of Domecq. Mr. Nance holds the right to vote for each entity and has
dispositive control over the shares of Common Stock.
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<PAGE> 51
(5) Includes 545,455 shares of Common Stock purchased by RPR in this offering
at an assumed initial public offering price of $11.00 per share and 6,000
shares subject to stock options that are exercisable within 60 days of June
30, 1996.
(6) Consists of 724,749 shares held by the Board of Regents and 6,000 shares
subject to stock options that are exercisable within 60 days of June 30,
1996.
(7) Consists of 362,374 shares held by Roth 1994 Investment Trusts and 362,375
shares held by Dr. Roth. Dr. Roth holds the right to vote for each entity
and has dispositive control over the shares of Common Stock.
(8) All 66,000 shares subject to stock options that are exercisable within 60
days of June 30, 1996.
(9) All 12,000 shares subject to stock options that are exercisable within 60
days of June 30, 1996.
(10) All 6,000 shares subject to stock options that are exercisable within 60
days of June 30, 1996.
(11) All 6,000 shares subject to stock options exercisable within 60 days of
June 30, 1996. These shares are held by the Board of Regents. Mr. Long
holds no right to vote these shares and disclaims beneficial ownership.
(12) Dr. Merritt has been granted options to purchase 60,000 shares of Common
Stock, none of which are exercisable within 60 days of June 30, 1996.
(13) Dr. Harper has been granted options to purchase 48,000 shares of Common
Stock, none of which are exercisable within 60 days of June 30, 1996.
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<PAGE> 52
DESCRIPTION OF CAPITAL STOCK
GENERAL
The Company has 50,000,000 shares of Common Stock, $0.001 par value per
share, authorized. The Restated Certificate of Incorporation, which will become
effective upon the closing of this offering, authorizes the issuance of
5,000,000 shares of Preferred Stock, $0.001 par value per share ("Preferred
Stock"), the rights and preferences of which may be established from time to
time by the Company's Board of Directors. The following summary of certain
provisions of the Company's capital stock describes the material provisions of,
but does not purport to be complete and is subject to, and qualified in its
entirety by, the provisions of the Restated Certificate of Incorporation and the
Company's Bylaws, which are included as exhibits to the Registration Statement
of which this Prospectus forms a part and by the provisions of applicable law.
COMMON STOCK
Each holder of Common Stock is entitled to one vote for each share held on
all matters to be voted upon by the stockholders and there are no cumulative
voting rights. Subject to preferences that may be applicable to any outstanding
Preferred Stock, holders of Common Stock are entitled to receive ratably such
dividends as may be declared by the Board of Directors out of funds legally
available therefor. See "Dividend Policy." In the event of a liquidation,
dissolution or winding up of the Company, holders of Common Stock would be
entitled to share in the Company's assets remaining after the payment of
liabilities and the satisfaction of any liquidation preference granted the
holders of any outstanding shares of Preferred Stock. Holders of Common Stock
have no preemptive or conversion rights or other subscription rights. There are
no redemption or sinking fund provisions applicable to the Common Stock. All
outstanding shares of Common Stock are, and the shares of Common Stock offered
by the Company in this offering, when issued and paid for, will be, fully paid
and nonassessable. The rights, preferences and privileges of the holders of
Common Stock are subject to, and may be adversely affected by, the rights of the
holders of shares of any series of Preferred Stock which the Company may
designate in the future.
PREFERRED STOCK
Effective upon the closing of this offering, the Board of Directors is
authorized, subject to any limitations prescribed by law, without stockholder
approval, from time to time to issue up to an aggregate of 5,000,000 shares of
Preferred Stock, in one or more series, each of such series to have such rights
and preferences, including voting rights, dividend rights, conversion rights,
redemption privileges and liquidation preferences, as shall be determined by the
Board of Directors. The rights of the holders of Common Stock will be subject
to, and may be adversely affected by, the rights of holders of any Preferred
Stock that may be issued in the future. Issuance of Preferred Stock, while
providing desirable flexibility in connection with possible acquisitions and
other corporate purposes, could have the effect of making it more difficult for
a third party to acquire, or of discouraging a third party from attempting to
acquire, a majority of the outstanding voting stock of the Company. The Company
has no present plans to issue any shares of Preferred Stock.
REGISTRATION RIGHTS OF CERTAIN HOLDERS
The holders of 1,773,463 shares of Common Stock (the "Registrable
Securities") or their transferees are entitled to certain registration rights
with respect to the registration of such shares under the Securities Act of
1933, as amended (the "Securities Act"). These rights are provided under the
terms of the Series B Preferred Stock Purchase Agreement and the Series C
Preferred Stock Purchase Agreement (collectively, the "Stock Purchase
Agreements") between the Company and the holders of the Registrable Securities.
The holders of at least 50% of the Registrable Securities or RPR may require,
respectively, subject to certain limitations in the Stock Purchase Agreements,
on one or two occasions, after December 31, 1998, that the Company use its best
efforts to register the Registrable Securities for public resale. In addition,
if the Company registers any of its Common Stock either for its own account or
for the account of other security holders the holders of Registrable Securities
are entitled to include their shares of Common Stock in the registration. These,
shares will not form a part of the shares of the Common Stock registered in this
offering. A holder's right to include
51
<PAGE> 53
shares in an underwritten registration statement is subject to the ability of
the underwriters to limit the number of shares included in the offering. The
holders of Registrable Securities may also require the Company to register all
or a portion of their Registrable Securities on Form S-3 when use of such form
becomes available to the Company, provided, among other limitations, that the
proposed aggregate selling price, net of underwriting discounts and commissions,
is at least $1,000,000. All registration expenses must be borne by the Company
and all selling expenses relating to Registrable Securities must be borne by the
holders of the securities being requested. If such holders, by exercising their
demand registration rights, cause a large number of securities to be registered
and sold in the public market, such sales could have an adverse effect on the
market price for the Company's Common Stock. If the Company were to initiate a
registration and include Registrable Securities pursuant to the exercise of
piggyback registration rights, the sale of such Registrable Securities may have
an adverse effect on the Company's ability to raise capital.
CERTAIN CHARTER AND BYLAWS PROVISIONS AND DELAWARE ANTI-TAKEOVER STATUTE
Certain provisions of the Restated Certificate of Incorporation and the
Company's Bylaws may have the effect of making it more difficult for a third
party to acquire, or of discouraging a third party from attempting to acquire,
control of the Company. Such provisions could limit the price that certain
investors might be willing to pay in the future for shares of Common Stock.
Certain of these provisions allow the Company to issue Preferred Stock without
any vote or further action by the stockholders and eliminate the right of
stockholders to act by written consent without a meeting. These provisions may
make it more difficult for stockholders to take certain corporate actions and
could have the effect of delaying or preventing a change in control of the
Company. In addition, the Company is subject to Section 203 of the Delaware
General Corporation Law which, subject to certain exceptions, prohibits a
Delaware corporation from engaging in any business combination with any
interested stockholder for a period of three years following the date that such
stockholder became an interested stockholder, unless: (1) prior to such date,
the board of directors of the corporation approved either the business
combination or the transaction which resulted in the stockholder becoming an
interested stockholder, or (2) upon consummation of the transaction which
resulted in the stockholder becoming an interested stockholder, the interested
stockholder owned at least 85% of the voting stock of the corporation
outstanding at the time the transaction commenced, excluding for purposes of
determining the number of shares outstanding of those shares owned (i) by
persons who are directors and also officers and (ii) employee stock plans in
which employee participants do not have the right to determine confidentially
whether shares held subject to the plan will be tendered in a tender or exchange
offer, or (3) on or subsequent to such time the business combination is approved
by the board of directors and authorized at an annual or special meeting of
stockholders, and not by written consent, by the affirmative vote of at least
66 2/3% of the outstanding voting stock which is not owned by the interested
stockholder.
TRANSFER AGENT AND REGISTRAR
The Transfer Agent and Registrar for the Company's Common Stock is Norwest
Bank Minnesota, N.A.
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<PAGE> 54
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of this offering, the Company will have outstanding
10,863,769 shares of Common Stock, assuming no exercise of options after June
30, 1996. Of these shares, the 3,200,000 shares sold in this offering will be
freely tradable without restriction or further registration under the Securities
Act unless purchased by "affiliates" of the Company as that term is defined in
Rule 144 of the Securities Act ("Rule 144"). The remaining 7,663,769 shares
outstanding upon completion of this offering will be "restricted securities" as
that term is defined under Rule 144 (the "Restricted Shares"). Each of the
Company's officers, directors and certain other stockholders has agreed with the
Underwriters not to sell or otherwise dispose of any shares of Common Stock for
a period of 180 days after the date of this Prospectus (the "Lock-up Period")
without the prior written consent of PaineWebber Incorporated. See
"Underwriting." The number of shares of Common Stock available for sale in the
public market is further limited by restrictions under the Securities Act.
Because of the restrictions noted above, on the date of this Prospectus, no
shares other than the 3,200,000 shares offered hereby will be eligible for sale.
Beginning 180 days after the date of this Prospectus (or earlier with the prior
written consent of PaineWebber Incorporated), 7,154,788 shares, including
393,600 shares issuable upon exercise of currently outstanding vested options,
will be eligible for sale in the public market subject to Rule 144 and Rule 701
of the Securities Act. The remaining 902,581 shares held by existing
stockholders will become eligible for sales from time to time upon the
expiration of the minimum holding period prescribed by Rule 144.
In general, under Rule 144, as currently in effect, a person (or persons
whose shares are aggregated), including an affiliate, who has beneficially owned
Restricted Shares for at least two years from the later of the date such
Restricted Shares are acquired from the Company and (if applicable) the date
they were acquired from an affiliate, is entitled to sell, within any
three-month period, a number of shares that does not exceed the greater of 1% of
the then outstanding shares of Common Stock or the average weekly trading volume
in the Nasdaq National Market System during the four calendar weeks preceding
the filing of a Form 144 with respect to such sale. Sales under Rule 144 are
also subject to certain requirements as to the manner and notice of sales and
the availability of public information concerning the Company. All shares,
including Restricted Shares, held by affiliates of the Company eligible for sale
in the public market under Rule 144 are subject to the foregoing volume
limitations and other restrictions. In addition, an individual that is not
deemed to have been an affiliate of the Company at any time during the 90 days
preceding a sale, and who has beneficially owned for at least three years the
shares proposed to be sold, would be entitled to sell such shares under Rule
144(k) without regard to the requirements described above.
The Commission has proposed an amendment to Rule 144 and Rule 144(k) that
would reduce the applicable requisite holding periods to one year and two years,
respectively. If this proposal is adopted, as of the expected closing of this
offering an additional 902,581 shares of Common Stock will become eligible for
sale by the first anniversary of the expected closing of this offering.
In general, Rule 701 permits resales of shares issued pursuant to certain
compensatory benefit plans and contracts commencing 90 days after the issuer
becomes subject to the reporting requirements of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), in reliance upon Rule 144 but without
compliance with certain restrictions, including the holding period requirements,
contained in Rule 144. Prior to the expiration of the Lock-up Period, the
Company intends to register on a registration statement on Form S-8, (i) a total
of 100,000 shares of Common Stock reserved for issuance under the Purchase Plan,
(ii) a total of 200,000 shares of Common Stock reserved for issuance under the
Director Plan and (iii) assuming no exercise of options after June 30, 1996,
746,354 shares of Common Stock subject to outstanding options under the
Incentive Stock Plan and 1,003,646 shares reserved for future issuance pursuant
to such plan. Such registration will permit the resale of shares so registered
by non-affiliates in the public market without restriction under the Securities
Act.
Prior to this offering, there has been no public market for the Common
Stock of the Company, and any sale of substantial amounts of Common Stock in the
open market may adversely affect the market price of the Common Stock offered
hereby. See "Risk Factors -- Potential Adverse Effect of Shares Eligible for
Future Sale."
53
<PAGE> 55
UNDERWRITING
The Underwriters named below, acting through their Representatives, have
severally agreed with the Company, subject to the terms and conditions of the
Underwriting Agreement among the Company and the Representatives (the
"Underwriting Agreement"), to purchase the number of shares of Common Stock set
forth opposite their respective names below. The Underwriters are committed to
purchase and pay for all such shares if any are purchased.
<TABLE>
<CAPTION>
NUMBER
UNDERWRITER OF SHARES
-------------------------------------------------------------------------- ---------
<S> <C>
PaineWebber Incorporated..................................................
Genesis Merchant Group Securities.........................................
------
Total........................................................... 3,200,000
======
</TABLE>
The Representatives have advised the Company that the Underwriters propose
to offer the shares of Common Stock to the public at the public offering price
set forth on the cover page of this Prospectus and to certain dealers at such
price less a concession of not in excess of $ per share, of which
$ may be reallowed to other dealers. After this offering, the public
offering price, concession and reallowance to dealers may be reduced by the
Representatives. No such reduction shall change the amount of proceeds to be
received by the Company as set forth on the cover page of this Prospectus.
The Company has granted to the Underwriters an option, exercisable during
the 45-day period after the date of this Prospectus, under which the
Underwriters may purchase up to an additional 480,000 shares of Common Stock
from the Company at the public offering price set forth on the cover page of
this Prospectus, less underwriting discounts and commissions. The Underwriters
may exercise the option only to cover over-allotments, if any. To the extent
such option is exercised, each Underwriter will become obligated, subject to
certain conditions, to purchase approximately the same percentage of such
additional shares as it was obligated to purchase pursuant to the Underwriter
Agreement.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act, or to contribute to
payments the Underwriters may be required to make in respect thereof.
The Company and each of its officers, directors and certain other
stockholders, have agreed with the Representatives for the Lock-up Period,
subject to certain exceptions, without the prior written consent of PaineWebber
Incorporated, not to offer to sell, contract to sell, grant an option to sell,
or otherwise dispose of or file, or require the Company to file, with the
Commission a registration statement under the Securities Act to register any
shares of Common Stock or securities convertible into or exchangeable for Common
Stock or warrants or other rights to acquire shares of Common Stock. See "Shares
Eligible for Future Sale." Approximately 6,761,188 of such shares will be
eligible for immediate public sale following expiration of the Lock-up Period,
subject to the provisions of Rule 144.
As of the date of this Prospectus, Genesis and certain related persons
beneficially own an aggregate of 40,863 shares of the Company's Series C
Preferred Stock (not including 52,328 shares subject to outstanding warrants
exercisable for the Common Stock). See "Certain Transactions -- Other
Arrangements."
Prior to this offering, there has been no public market for the Common
Stock. Consequently, the initial public offering price for the Common Stock
offered hereby will be determined through negotiations among the Company and the
Representatives. The material factors to be considered in such negotiations will
be prevailing market conditions, certain financial information of the Company,
market valuations of other companies that the Company and the Representatives
believe to be comparable to the Company, estimates of the business potential of
the Company, the present state of the Company's development and the current
state of the economy as a whole.
54
<PAGE> 56
LEGAL MATTERS
The validity of the Common Stock offered hereby will be passed upon for the
Company by Wilson Sonsini Goodrich & Rosati, P.C. Certain legal matters relating
to patents in connection with this offering will be passed on by Arnold, White &
Durkee. Shearman & Sterling is acting as legal counsel for the Underwriters in
connection with certain legal matters relating to the shares of Common Stock
offered hereby. As of the date of this Prospectus, members of Wilson Sonsini
Goodrich & Rosati, P.C., and investment partnerships of which members of such
firm are partners, beneficially own approximately 30,000 shares of Common Stock.
As of the date of this Prospectus, a partner at Arnold, White & Durkee holds a
warrant exercisable for 12,000 shares of the Common Stock.
EXPERTS
The financial statements included in this Prospectus and elsewhere in the
Registration Statement have been audited by Arthur Andersen LLP, independent
public accountants, as indicated in their report with respect thereto, and are
included herein in reliance upon the authority of said firm as experts in giving
said report.
The statements in this Prospectus under the caption "Risk Factors -- Patent
Applications and Proprietary Technology" and "Business -- Licensed Patent
Applications and Proprietary Technology" have been reviewed and approved by
Arnold, White & Durkee, patent counsel for the Company, as experts in such
matters and are included herein in reliance upon such review and approval.
AVAILABLE INFORMATION
The Company has filed with the Commission a Registration Statement, of
which this Prospectus constitutes a part, under the Securities Act with respect
to the shares of Common Stock offered hereby. This Prospectus omits certain
information contained in the Registration Statement, and reference is made to
the Registration Statement and the exhibits thereto for further information with
respect to the Company and the Common Stock offered hereby. Statements contained
herein concerning the provisions of any documents are not necessarily an
exhaustive description of such documents, and reference is made to the copy of
such document filed as an exhibit to the Registration Statement. Each such
statement is qualified in its entirety by such reference. The Registration
Statement, including exhibits filed therewith, may be inspected without charge
at the public reference facilities maintained by the Commission at Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the
regional offices of the Commission located at Seven World Trade Center, 13th
Floor, New York, New York 10048 and Citicorp Atrium Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661. Copies of such materials may be
obtained from the Public Reference Section of the Commission, Room 1034,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and its public
reference facilities in New York, New York and Chicago, Illinois, at prescribed
rates. In addition, the Commission maintains a World Wide Web site that contains
reports, proxy and information statements that are filed electronically with the
Commission. The address of the site is http://www.sec.gov.
55
<PAGE> 57
INTROGEN THERAPEUTICS, INC.
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
Report of Independent Public Accountants............................................... F-2
Balance Sheets as of June 30, 1996 and 1995............................................ F-3
Statements of Operations for the Years Ended June 30, 1996 and 1995, and the Period
from
Inception (June 17, 1993) through June 30, 1994...................................... F-4
Statements of Stockholders' Equity for the Years Ended June 30, 1996 and 1995, and the
Period
from Inception (June 17, 1993) through June 30, 1994................................. F-5
Statements of Cash Flows for the Years Ended June 30, 1996 and 1995, and the Period
from
Inception (June 17, 1993) through June 30, 1994...................................... F-6
Notes to Financial Statements.......................................................... F-7
</TABLE>
F-1
<PAGE> 58
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Introgen Therapeutics, Inc.:
We have audited the accompanying balance sheets of Introgen Therapeutics,
Inc. (a Delaware corporation), as of June 30, 1996 and 1995, and the related
statements of operations, stockholders' equity and cash flows for the years
ended June 30, 1996 and 1995, and the period from inception (June 17, 1993)
through June 30, 1994. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Introgen Therapeutics, Inc.,
as of June 30, 1996 and 1995, and the results of its operations and its cash
flows for the years ended June 30, 1996 and 1995, and the period from inception
(June 17, 1993) through June 30, 1994, in conformity with generally accepted
accounting principles.
Houston, Texas
July 19, 1996 (except with respect to the
matters discussed in Note 8, as to
which the date is August 26, 1996)
F-2
<PAGE> 59
INTROGEN THERAPEUTICS, INC.
BALANCE SHEETS -- JUNE 30, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
ASSETS
Cash.............................................................. $ 7,024,347 $ 2,799,015
Collaborative research payments receivable from affiliate......... 138,547 128,745
Prepaid sponsored research........................................ 296,000 --
Other current assets.............................................. 69,407 35,527
----------- -----------
Total current assets.................................... 7,528,301 2,963,287
Property and equipment, net of accumulated depreciation of
$333,157 and $46,620, respectively.............................. 1,388,476 465,516
Deposits and other assets......................................... 48,215 49,418
----------- -----------
Total assets............................................ $ 8,964,992 $ 3,478,221
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Accounts payable................................................ $ 918,492 $ --
Accrued liabilities............................................. 100,822 102,647
Deferred revenue from affiliate................................. 321,668 800,341
Current portion of capital lease obligations.................... 574,252 --
----------- -----------
Total current liabilities............................... 1,915,234 902,988
----------- -----------
Capital lease obligations, net of current portion............... 130,089 --
----------- -----------
Commitments and contingencies
Stockholders' equity:
Series A convertible preferred stock, $.001 par value;
liquidation preference of $1.00 per share; 3,011,423 shares
authorized; 3,011,423 shares issued and outstanding at June
30, 1996 and 1995, respectively.............................. 3,011 3,011
Series B convertible preferred stock, $.001 par value;
liquidation preference of $5.75 per share; 2,114,100 shares
authorized; 787,500 and 616,875 shares issued and outstanding
at June 30, 1996 and 1995, respectively...................... 788 617
Series C convertible preferred stock, $.001 par value;
liquidation preference of $8.65 per share; 1,183,000 shares
authorized, 551,410 shares and none issued and outstanding at
June 30, 1996 and 1995, respectively......................... 551 --
Common stock, $.001 par value; 50,000,000 shares authorized;
2,443,360 shares issued and outstanding at June 30, 1996 and
1995, respectively........................................... 2,443 2,443
Additional paid-in capital...................................... 10,743,332 4,480,540
Deferred compensation........................................... (586,883) --
Accumulated deficit............................................. (3,243,573) (1,911,378)
----------- -----------
Total stockholders' equity.............................. 6,919,669 2,575,233
----------- -----------
Total liabilities and stockholders' equity.............. $ 8,964,992 $ 3,478,221
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE> 60
INTROGEN THERAPEUTICS, INC.
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED JUNE 30, 1996 AND 1995, AND THE PERIOD
FROM INCEPTION (JUNE 17, 1993) THROUGH JUNE 30, 1994
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30, INCEPTION
1996 (JUNE 17, 1993)
--------------------------- THROUGH JUNE 30,
1996 1995 1994
----------- ----------- ----------------
<S> <C> <C> <C>
Collaborative research and development revenues
from affiliate.................................. $10,449,154 $ 2,664,192 $ --
Operating expenses:
Research and development........................ 11,020,491 3,371,652 571,302
General and administrative...................... 971,770 624,090 115,466
----------- ----------- ---------
Loss from operations......................... (1,543,107) (1,331,550) (686,768)
Interest income................................... 239,571 106,614 326
Interest expense.................................. (28,659) -- --
----------- ----------- ---------
Net loss.......................................... $(1,332,195) $(1,224,936) $ (686,442)
=========== =========== =========
Pro forma net loss per share...................... $ (0.18)
===========
Shares used in computing pro forma net loss per
share........................................... 7,477,556
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE> 61
INTROGEN THERAPEUTICS, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED JUNE 30, 1996 AND 1995, AND
THE PERIOD FROM INCEPTION (JUNE 17, 1993) THROUGH JUNE 30, 1994
<TABLE>
<CAPTION>
SERIES A SERIES B SERIES C
CONVERTIBLE CONVERTIBLE CONVERTIBLE
PREFERRED STOCK PREFERRED STOCK PREFERRED STOCK COMMON STOCK
------------------ ---------------- ---------------- ------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
--------- ------ ------- ------ ------- ------ --------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at Inception (June 17, 1993)..... -- $ -- -- $ -- -- $ -- -- $ --
Capital contributed in payment of Company
obligations............................ -- -- -- -- -- -- -- --
Cash received in June 1994 in connection
with letter of intent.................. -- -- -- -- -- -- -- --
Net loss................................. -- -- -- -- -- -- -- --
--------- ------ ------- ---- ------- ---- -------- ------
Balance, June 30, 1994................... -- -- -- -- -- -- -- --
Issuance of common stock in July 1994 in
consideration for patent and technology
license agreement ($.0625 per share)... -- -- -- -- -- -- 2,413,360 2,413
Issuance of Series A preferred stock in
August 1994 in consideration for
capital contributed in payment of
Company obligations ($.175 per
share)................................. 3,011,423 3,011 -- -- -- -- -- --
Issuance of common stock in September
1994 ($.0417 per share)................ -- -- -- -- -- -- 30,000 30
Issuance of Series B preferred stock in
October 1994 for cash received in
connection with June 1994 letter of
intent ($5.72 per share)............... -- -- 87,422 87 -- -- -- --
Issuance of Series B preferred stock in
October 1994 in accordance with stock
purchase agreement with affiliate
($5.72 per share), net of offering
costs of $19,659....................... -- -- 358,828 359 -- -- -- --
Issuance of Series B preferred stock in
February 1995 in accordance with stock
purchase agreement with affiliate
($7.47 per share)...................... -- -- 170,625 171 -- -- -- --
Net loss................................. -- -- -- -- -- -- -- --
--------- ------ ------- ---- ------- ---- -------- ------
Balance, June 30, 1995................... 3,011,423 3,011 616,875 617 -- -- 2,443,360 2,443
Issuance of Series B preferred stock in
January 1996 in accordance with stock
purchase agreement with affiliate
($7.47 per share)...................... -- -- 170,625 171 -- -- -- --
Issuance of Series C preferred stock in
March and May 1996 in connection with
private placement ($8.65 per share),
net of offering costs of $380,645...... -- -- -- -- 551,410 551 -- --
Deferred compensation relating to
issuance of certain stock options...... -- -- -- -- -- -- -- --
Amortization of deferred compensation.... -- -- -- -- -- -- -- --
Net loss................................. -- -- -- -- -- -- -- --
--------- ------ ------- ---- ------- ---- -------- ------
Balance, June 30, 1996................... 3,011,423 $3,011 787,500 $788 551,410 $551 2,443,360 $2,443
========= ====== ======= ==== ======= ==== ======== ======
<CAPTION>
ADDITIONAL DEFERRED ACCUMULATED
PAID-IN CAPITAL COMPENSATION DEFICIT TOTAL
--------------- ------------ ----------- ----------
<S> <C> <C> <C> <C>
Balance at Inception (June 17, 1993)..... $ -- $ -- $ -- $ --
Capital contributed in payment of Company
obligations............................ 527,330 -- -- 527,330
Cash received in June 1994 in connection
with letter of intent.................. 500,000 -- -- 500,000
Net loss................................. -- -- (686,442) (686,442)
----------- --------- ----------- ----------
Balance, June 30, 1994................... 1,027,330 -- (686,442) 340,888
Issuance of common stock in July 1994 in
consideration for patent and technology
license agreement ($.0625 per share)... 148,159 -- -- 150,572
Issuance of Series A preferred stock in
August 1994 in consideration for
capital contributed in payment of
Company obligations ($.175 per
share)................................. (3,011) -- -- --
Issuance of common stock in September
1994 ($.0417 per share)................ 1,220 -- -- 1,250
Issuance of Series B preferred stock in
October 1994 for cash received in
connection with June 1994 letter of
intent ($5.72 per share)............... (87) -- -- --
Issuance of Series B preferred stock in
October 1994 in accordance with stock
purchase agreement with affiliate
($5.72 per share), net of offering
costs of $19,659....................... 2,032,533 -- -- 2,032,892
Issuance of Series B preferred stock in
February 1995 in accordance with stock
purchase agreement with affiliate
($7.47 per share)...................... 1,274,396 -- -- 1,274,567
Net loss................................. -- -- (1,224,936) (1,224,936)
----------- --------- ----------- ----------
Balance, June 30, 1995................... 4,480,540 -- (1,911,378) 2,575,233
Issuance of Series B preferred stock in
January 1996 in accordance with stock
purchase agreement with affiliate
($7.47 per share)...................... 1,274,397 -- -- 1,274,568
Issuance of Series C preferred stock in
March and May 1996 in connection with
private placement ($8.65 per share),
net of offering costs of $380,645...... 4,295,020 -- -- 4,295,571
Deferred compensation relating to
issuance of certain stock options...... 693,375 (693,375) -- --
Amortization of deferred compensation.... -- 106,492 -- 106,492
Net loss................................. -- -- (1,332,195) (1,332,195)
----------- --------- ----------- ----------
Balance, June 30, 1996................... $10,743,332 $ (586,883) $(3,243,573) $6,919,669
=========== ========= =========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE> 62
INTROGEN THERAPEUTICS, INC.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED JUNE 30, 1996 AND 1995, AND THE PERIOD
FROM INCEPTION (JUNE 17, 1993) THROUGH JUNE 30, 1994
<TABLE>
<CAPTION>
INCEPTION
YEAR ENDED JUNE 30, (JUNE 17, 1993)
------------------------- THROUGH JUNE 30,
1996 1995 1994
----------- ----------- -----------------
<S> <C> <C> <C>
Cash flows used by operating activities:
Net loss........................................... $(1,332,195) $(1,224,936) $ (686,442)
Adjustments to reconcile net loss to net cash used
by operating activities:
Depreciation.................................... 286,537 46,620 --
Amortization of deferred compensation related to
certain stock options......................... 106,492 -- --
Research and development expense related to
issuance of common stock for patent and
technology license agreement.................. -- 150,572 --
Changes in assets and liabilities:
Increase in receivable from affiliate......... (9,802) (128,745) --
Increase in prepaid sponsored research........ (296,000) -- --
Increase in deposits and other assets......... (32,677) (64,860) (20,085)
Increase in accounts payable.................. 918,492 -- --
Increase (decrease) in accrued liabilities.... (1,825) (77,455) 180,102
Increase (decrease) in deferred revenue
from affiliate............................. (478,673) 800,341 --
------------ ------------ -----------
Net cash used by operating activities...... (839,651) (498,463) (526,425)
------------ ------------ -----------
Cash flows used by investing activities:
Purchases of property and equipment................ (298,904) (512,136) --
------------ ------------ -----------
Net cash used by investing activities...... (298,904) (512,136) --
------------ ------------ -----------
Cash flows from financing activities:
Net proceeds from sale of preferred stock.......... 5,570,139 3,307,459 500,000
Proceeds from sale of common stock................. -- 1,250 --
Capital contributed in payment of Company
obligations..................................... -- -- 527,330
Payments under capital lease obligations........... (206,252) -- --
------------ ------------ -----------
Net cash provided by financing
activities............................... 5,363,887 3,308,709 1,027,330
------------ ------------ -----------
Net increase in cash................................. 4,225,332 2,298,110 500,905
Cash, beginning of period............................ 2,799,015 500,905 --
------------ ------------ -----------
Cash, end of period.................................. $ 7,024,347 $ 2,799,015 $ 500,905
============ ============ ===========
Supplemental disclosure of cash flow information:
Cash paid for interest............................. $ 28,659 $ -- $ --
============ ============ ===========
Supplemental disclosure of noncash financing
activity:
Purchases of equipment under capital lease
obligations..................................... $ 910,593 $ -- $ --
============ ============ ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE> 63
INTROGEN THERAPEUTICS, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1996
1. ORGANIZATION AND BUSINESS
Introgen Therapeutics, Inc., a Delaware corporation ("Introgen" or the
"Company"), was incorporated on June 17, 1993, and commenced operations in
September 1993. The Company is developing gene therapy products to deliver genes
that may provide unique clinical benefits in the treatment of cancer. The
Company's initial research and drug discovery programs are based primarily on
inventions by scientists at the University of Texas M.D. Anderson Cancer Center
("UTMDACC"), the rights to which are covered by a patent and technology license
agreement with the Board of Regents of the University of Texas System (see Note
5). Prior to 1996, the Company was in the development stage.
Introgen has not yet generated any revenues from the sale of products, nor
is there any assurance of future product revenues. The Company's research and
development activities involve a high degree of risk and uncertainty. The
ability of the Company to successfully develop, manufacture and market its
products is dependent upon many factors. These factors include, but are not
limited to, the need for additional financings, the reliance on collaborative
research and development arrangements with corporate and academic affiliates and
the ability to develop manufacturing, sales and marketing experience. Additional
factors include uncertainties as to patents and proprietary technologies,
technological change and risk of obsolescence, development of products,
competition, government regulations and regulatory approval, and product
liability exposure. As a result of the aforementioned factors and the related
uncertainties, there can be no assurance of the Company's future success. See
"Risk Factors" elsewhere in the Prospectus.
The Company has stock purchase and research collaboration agreements with
Rhone-Poulenc Rorer Pharmaceuticals Inc. ("RPR"). Under the terms of the stock
purchase agreement, RPR has purchased approximately $6.0 million of preferred
stock through June 30, 1996. RPR has the right to purchase additional preferred
stock upon the occurrence of certain future events, including, but not limited
to, the Company's attainment of certain milestones.
Development and commercialization of certain products are being pursued in
conjunction with RPR pursuant to a collaboration arrangement which provides that
Introgen is primarily responsible for completing the early stage research and
development of products, which RPR is primarily obligated to fund until October
1997. Introgen must pay at least $2,000,000 of the costs for such activities
using its own funds by June 1997, of which $1,000,000 had been paid as of June
30, 1996, and of which $500,000 must be paid by August 1996 and $500,000 must be
paid by June 1997. If RPR elects, it shall be primarily responsible for the
later stage development of the products. In North America, Introgen retains
exclusive manufacturing rights and may elect to form a marketing collaboration
with RPR to market collaboration products. RPR can terminate this agreement upon
six months' notice, subject to certain wind-down provisions. Introgen is
entitled to royalties on product sales arising from RPR's exclusive marketing
and manufacturing rights in Europe. Both parties may, at their own expense,
develop and market products in Japan, Korea, China, Taiwan and India. Introgen
and RPR have agreed that they will not market or license, and RPR will not
develop any of the gene therapy products covered by their collaboration
arrangement prior to October 2004 except under the terms of the collaboration
arrangement. RPR will be allowed to recover certain research and development
costs from proceeds of future product sales, if any.
2. SIGNIFICANT ACCOUNTING POLICIES
Revenue Recognition
Payments received in connection with collaborative research agreements are
recognized as revenue as the Company performs its obligations related to such
research agreements. Deferred revenue is recorded for cash received for which
the related expenses have not been incurred and for the effect of research and
development required to be funded by the Company as discussed in Note 1.
F-7
<PAGE> 64
INTROGEN THERAPEUTICS, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
JUNE 30, 1996
Property and Equipment
Property and equipment are carried at cost, less accumulated depreciation.
Maintenance, repairs and minor replacements are charged to expense as incurred.
Significant renewals and betterments are capitalized. Depreciation is computed
using the straight-line basis over the estimated useful economic lives of the
assets involved (generally two years) or, in the case of leasehold improvements,
over the remaining term of the lease.
Property and equipment consisted of the following as of June 30, 1996 and
1995:
<TABLE>
<CAPTION>
1996 1995
---------- --------
<S> <C> <C>
Laboratory equipment......................................... $1,158,472 $233,190
Leasehold improvements....................................... 483,678 278,946
Construction in process...................................... 79,483 --
---------- --------
Total property and equipment....................... 1,721,633 512,136
Less-Accumulated depreciation................................ (333,157) (46,620)
---------- --------
Net property and equipment......................... $1,388,476 $465,516
========== ========
</TABLE>
Approximately $911,000 of the above equipment as of June 30, 1996, is held
under capital leases and is being depreciated over the applicable lease terms
(see Note 6). Construction in process at June 30, 1996, relates to the planning
and design of manufacturing facilities.
Research and Development Costs
Research and development costs include the costs of conducting basic
research, developing product applications, conducting preclinical investigations
and performing clinical trials to obtain data for regulatory filings for product
approvals. Research and development costs are expensed as incurred.
Pro Forma Net Loss Per Share
The Company's pro forma net loss per share is based on the weighted-average
number of shares of common stock outstanding assuming the conversion of
convertible preferred stock into common stock on the respective dates of
original issuance. Common equivalent shares are excluded from the per share
calculations, as the effect of their inclusion is antidilutive. However,
pursuant to Securities and Exchange Commission Staff Accounting Bulletins, all
common, preferred and common equivalent shares issued during the 12 months
preceding or in contemplation of the Company's initial public offering (using
the treasury stock method and an assumed initial public offering price of $11.00
per share) have been included in the calculation of common and common equivalent
shares outstanding as if they were outstanding for all periods prior to
completion of the Company's initial public offering. Options and warrants
granted by the Company prior to June 30, 1996, and not in contemplation of an
offering have been excluded from the calculation of common and common equivalent
shares outstanding because such options and warrants are antidilutive.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities, and the reported amounts of
revenues and expenses. Actual results could differ from those estimates.
F-8
<PAGE> 65
INTROGEN THERAPEUTICS, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
JUNE 30, 1996
3. CAPITAL STOCK
Series A Convertible Preferred Stock
In August 1994, the Company issued 3,011,423 shares of Series A preferred
stock in consideration for the payment by Texas Biomedical Development Partners
("TBDP") of $527,330 of research and administrative costs incurred during the
period from December 1992 through June 1994, all of which were expensed by the
Company and recorded as a capital contribution.
Holders of Series A preferred stock may receive dividends of $.10 per share
per annum, noncumulative, at the discretion of the Company's board of directors.
The holders of Series A preferred stock have preference in declaration and
payment of any dividend over the holders of Series B preferred stock and Series
C preferred stock and common stock. To date, no dividends have been declared.
In the event of any liquidation, dissolution or winding up of the Company,
the holders of Series A preferred stock are entitled to receive preference over
any distribution to the holders of Series B and Series C preferred and common
stock in the amount of $1.00 per share. The holders of Series A preferred stock
have registration rights as described in the stock purchase agreement.
Series A preferred stock is convertible at the option of the holder into
common stock on a 1.2 for 1 basis, as adjusted for certain events. Series A
preferred stock shall automatically be converted into common stock upon the
closing of a public offering with total proceeds of at least $10,000,000. The
holders of Series A preferred stock have the right to vote on all stockholder
matters on an as-if-converted basis. In addition, the holders of Series A
preferred stock, voting as a separate class, are entitled to elect one director
of the Company.
Series B Convertible Preferred Stock
In October 1994, the Company entered into a stock purchase agreement with
RPR. This agreement requires that RPR purchase preferred stock of the Company in
multiple closings upon the occurrence of certain milestones and events.
The first closing occurred in October 1994. At that time, RPR purchased
446,250 shares of Series B preferred stock from the Company for $2,552,550 (of
which $500,000 was previously received in June 1994 and recorded as additional
paid-in capital at that time) and 78,750 shares of Series A preferred stock from
TBDP for $450,450.
A second and third closing occurred in February 1995 and January 1996,
respectively. At each of these closings, RPR purchased 170,625 shares of Series
B preferred stock from the Company for $1,274,567 and 30,110 shares of Series A
preferred stock from TBDP for $224,923.
RPR may purchase additional shares of Series B preferred stock pursuant to
the stock purchase agreement. RPR's purchase of certain additional stock is
accelerated in the event of a public offering of common stock by the Company of
at least $10,000,000 and provided there is reasonable evidence of local efficacy
of a Company product in Phase I or later-stage clinical trials. In this event,
the stock purchase agreement provides that the required shares and dollar amount
purchased can range, at RPR's discretion, from all remaining unpurchased shares
under the stock purchase agreement to a lesser amount computed based on RPR
owning an amount of shares after a public offering that does not exceed 19.9% of
total outstanding stock of the Company. However, the dollar amount by which the
shares actually purchased by RPR is less than the dollar amount of RPR's
remaining obligation for the unpurchased shares must subsequently be paid to the
Company at the time there would have otherwise been closings under the stock
purchase agreement. In this later event, no equity securities are required to be
issued to RPR in consideration for these payments.
F-9
<PAGE> 66
INTROGEN THERAPEUTICS, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
JUNE 30, 1996
Absent the events described in the preceding paragraph, the remaining
shares of Series B preferred stock will be purchased by RPR in stages provided
the collaboration agreements between Introgen and RPR remain in effect and upon
the occurrence of certain events related to Phase I, II or III clinical trials
for a product and/or products. The purchase price per share set forth in the
agreement will be adjusted upward (but not downward) to equal the price per
share received by the Company in the most recent equity financing of the Company
if such financing raises $2,000,000 or more. In this event, the gross proceeds
received at each issuance will remain the same and the number of shares issued
will be reduced to yield the applicable purchase price per share. Up to 15
percent of all shares purchased by RPR, including those purchased in connection
with a public offering, are subject to purchase directly from the Series A
preferred stock holdings of TBDP or its successors upon the election of such by
TBDP or its successors.
Holders of Series B preferred stock may receive dividends of $0.575 per
share per annum, noncumulative, at the discretion of the Company's board of
directors. The holders of Series B preferred stock have preference in
declaration and payment of any dividend over the holders of Series C preferred
stock and common stock. To date, no dividends have been declared.
In the event of any liquidation, dissolution or winding up of the Company,
the holders of Series B preferred stock are entitled to receive preference over
any distribution to the holders of Series C preferred stock and common stock in
the amount of $5.75 per share. The holders of Series B preferred stock have
registration rights as defined in the stock purchase agreement and as described
in the Prospectus.
Shares of Series B preferred stock are convertible at the option of the
holder into common stock on a 1.2 for 1 basis, as adjusted for certain events.
Series B preferred stock shall automatically be converted into common stock upon
the closing of a public offering with total proceeds of at least $10,000,000.
The holders of Series B preferred stock have the right to vote on all
stockholder matters on an as-if-converted basis. In addition, the holders of
Series B preferred stock, voting as a separate class, are entitled to elect one
director of the Company.
Series C Convertible Preferred Stock
The Series C preferred stock was issued to third parties in connection with
the Company's private placement of securities during the year ended June 30,
1996. Series C preferred stock carries the same rights as the Series B preferred
stock except (a) the dividend rate is $0.865 per share per annum, noncumulative
and the distribution amount in the event of liquidation, dissolution or winding
up of the Company is $8.65 per share, both of which are preferential only to the
holders of common stock, and (b) the holders of Series C preferred stock are not
entitled to elect any directors voting as a separate class. No dividends have
been declared through June 30, 1996.
Incentive Stock Plan
The Incentive Stock Plan (the "Plan") provides for the granting of options,
either incentive or nonstatutory, or Stock purchase rights to employees and
consultants of the Company. As of June 30, 1996, 1,250,000 shares of common
stock have been reserved for issuance upon exercise of stock options or stock
purchase rights under the Plan. The exercise price shall be no less than the
fair value at the date of the grant for incentive stock options and no less than
85% of the fair market value at date of the grant for nonstatutory options.
Options granted generally vest annually over four years from the date of a
recipient's commencement of services to the Company. In the event of a merger,
reorganization or change in controlling ownership of the Company, all options
outstanding under the Plan shall be fully vested.
F-10
<PAGE> 67
INTROGEN THERAPEUTICS, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
JUNE 30, 1996
The following is a summary of option activity under the Plan:
<TABLE>
<CAPTION>
EXERCISE
OPTIONS PRICE PER
OUTSTANDING COMMON SHARE
----------- ------------
<S> <C> <C>
Balance, June 30, 1994...................................... -- $ --
Granted................................................... 339,000 0.625
-------
Balance, June 30, 1995...................................... 339,000 0.625
Granted................................................... 261,000 0.625
Canceled.................................................. (24,000) 0.625
-------
Balance, June 30, 1996...................................... 576,000 0.625
=======
Exercisable at June 30, 1996................................ 268,500 0.625
=======
</TABLE>
As of June 30, 1996, there were 674,000 options available for grant under
the Plan.
For options granted during the year ended June 30, 1996, the Company
recognized compensation expense for the excess of the deemed fair market value
of the common stock on the date the options were granted ($6.00 per share) over
the $0.625 exercise price per share of such options. Aggregate deferred
compensation of $693,375 resulted from the issuance of these options, and
compensation expense will be recognized ratably over the vesting period of each
option, generally four years. The Company recognized $106,492 of this amount as
compensation expense during the year ended June 30, 1996.
The Financial Accounting Standards Board has adopted SFAS No. 123,
"Accounting for Stock-Based Compensation," which is effective for the Company's
year ended June 30, 1997. SFAS No. 123 allows the Company to adopt one of two
methods of accounting for stock options. The Company currently intends to adopt
the method that approximates its current accounting treatment. SFAS No. 123 will
require the Company to disclose for the year ended June 30, 1997, the effect of
adoption of the alternative method, which would generally require the Company to
record compensation expense equal to the valuation of a stock option on the
grant date.
Warrants
In connection with the issuance of the Series C preferred stock, the
Company issued warrants, at a nominal fee, to purchase 102,251 shares of common
stock for $7.929 per share, to the investment banking firms that assisted in the
sale of the Series C preferred stock. These warrants expire in 2001. The value
of these warrants on the date issued was not significant.
4. FEDERAL INCOME TAXES
The Company recognizes deferred tax liabilities and assets for the expected
future tax consequences of events that have been recognized differently in the
financial statements or tax returns. Under this method, deferred tax liabilities
and assets are determined based on the difference between the financial
statement carrying amounts and tax bases of liabilities and assets using enacted
tax rates and laws in effect in the years in which the differences are expected
to reverse. Deferred tax assets are evaluated for realization based on a
more-likely-than-not criteria in determining if a valuation should be provided.
F-11
<PAGE> 68
INTROGEN THERAPEUTICS, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
JUNE 30, 1996
The reconciliation of the statutory federal income tax rate to the
Company's effective income tax rate for the years ended June 30, 1996 and 1995,
is as follows:
<TABLE>
<CAPTION>
1996 1995
----- -----
<S> <C> <C>
Statutory rate..................................................... (34.0)% (34.0)%
Increase in deferred tax valuation allowance....................... 30.8 33.4
Stock option compensation not deductible........................... 2.2 --
Disallowance of business meals and entertainment................... 0.6 0.4
Other.............................................................. 0.4 0.2
----- -----
--% --%
===== =====
</TABLE>
The components of the Company's deferred tax assets at June 30, 1996 and
1995, are as follows:
<TABLE>
<CAPTION>
1996 1995
----------- ---------
<S> <C> <C>
Net operating loss carryforwards........................... $ 530,400 $ 391,500
Capitalized start-up costs................................. 115,800 140,400
Research and development tax credits....................... 12,500 20,000
Technology license......................................... 51,200 51,200
Tax basis of property and equipment in excess of book
basis.................................................... 229,300 29,200
Prepaid sponsored research................................. 45,800 --
Capital leases............................................. 55,100 --
Other...................................................... 18,900 25,500
---------- --------
Total deferred tax assets.................................. 1,059,000 657,800
Less valuation allowance................................... (1,059,000) (657,800)
---------- --------
Net deferred tax assets.................................... $ -- $ --
========== ========
</TABLE>
As of June 30, 1996, the Company has generated net operating loss ("NOL")
carryforwards of approximately $1.6 million and research and development credits
of approximately $12,500 available to reduce future income taxes. These
carryforwards begin to expire in 2008. A change in ownership, as defined by
federal income tax regulations, could significantly limit the Company's ability
to utilize its carryforwards. The Company's ability to utilize its current and
future NOLs to reduce future taxable income and tax liabilities may be limited.
Additionally, because Federal tax laws limit the time during which these
carryforwards may be applied against future taxes, the Company may not be able
to take full advantage of these attributes for federal income tax purposes. As
the Company has had cumulative losses and there is no assurance of future
taxable income, a valuation allowance has been established to fully offset the
deferred tax asset at June 30, 1996 and 1995. The valuation allowance increased
$401,200 and $413,300 for the years ended June 30, 1996 and 1995, respectively,
primarily due to the Company's losses.
5. LICENSE AND RESEARCH AGREEMENTS
Patent and Technology License Agreement With the University of Texas System
In July 1994, the Company entered into a patent and technology license
agreement with the Board of Regents of The University of Texas System (the
"System") and UTMDACC, a component institution of the System, whereby the
Company has an exclusive, noncancelable worldwide license to use certain
technology. In exchange for the grant of this exclusive license, the Company
issued 1,449,498 and 963,862 shares of common stock to the System and Technology
Capital Corporation, respectively, pursuant to an agreement with the System.
Beginning with the first commercial sale of a product incorporating the licensed
technologies,
F-12
<PAGE> 69
INTROGEN THERAPEUTICS, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
JUNE 30, 1996
the Company will pay UTMDACC, for the longer of 15 years or the life of the
patent, a royalty based on net sales by the Company or its affiliates or by
sublicense agreement of products incorporating any of such technologies. The
Company is obligated by the agreement to reimburse any of UTMDACC's costs that
may be incurred in connection with obtaining patents related to the licensed
technologies.
Sponsored Research at UTMDACC
Under sponsored research agreements, Introgen funds certain research
performed by UTMDACC to further the development of technologies being
investigated by UTMDACC that could have potential commercial viability. By
sponsoring and funding this research, Introgen has the right to include certain
patentable inventions arising therefrom under its patent and technology license
agreement with the System. During fiscal year 1996, the Company paid
approximately $2,331,000 pursuant to these agreements and has committed to pay a
minimum of approximately $557,000 and $135,000 in fiscal year 1997 and 1998,
respectively, to continue funding research activities. Amounts due to UTMDACC
under these agreements are recorded as research and development expense as the
costs are incurred. At June 30, 1996, by mutual agreement with UTMDACC, the
Company prepaid $296,000 pursuant to these agreements which is included as
prepaid sponsored research in the accompanying balance sheet.
6. COMMITMENTS AND CONTINGENCIES
Lease Commitments
The Company is obligated under various capital and operating leases for
equipment and facilities which expire at various dates through June 2000. Future
minimum lease payments under noncancelable operating leases and the present
value of future minimum capital lease payments as of June 30, 1996, are as
follows:
<TABLE>
<CAPTION>
CAPITAL OPERATING
LEASES LEASES
-------- ---------
<S> <C> <C>
Year ending June 30,
1997....................................................... $631,812 $ 501,583
1998....................................................... 133,002 91,350
1999....................................................... -- 55,450
2000....................................................... -- 7,592
-------- --------
Total minimum lease payments................................. 764,814 $ 655,975
========
Less-Amount representing interest............................ (60,473)
--------
Present value of net minimum capital lease payments.......... 704,341
Less-Current portion of capital lease obligations............ 574,252
--------
Capital lease obligations, net of current portion............ $130,089
========
</TABLE>
Claims
The Company is subject to numerous risks and uncertainties because of the
nature and status of its operations. The Company maintains insurance coverage
for events and in amounts that it deems appropriate. Management believes that
uninsured losses, if any, would not be materially adverse to the Company's
financial position or results of operations.
Retirement Plan
The Company has an employee retirement savings and investment plan intended
to qualify under Section 401(k) of the Internal Revenue Code. Employees may
contribute a portion of their compensation to
F-13
<PAGE> 70
INTROGEN THERAPEUTICS, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
JUNE 30, 1996
the plan up to a statutorily prescribed annual amount ($9,500 in 1996). This
plan permits matching contributions by the Company of which none have been made.
7. RELATED PARTIES
Introgen's President and Chief Executive Officer and another officer of the
Company are owners in or otherwise associated with other companies that are
stockholders of the Company. The Company paid the companies, with which these
officers are associated, consulting fees of $325,000 during each of the years
ended June 30, 1996 and 1995, and is obligated to pay them $150,000 for the year
ended June 30, 1997, in consideration for their services as officers of
Introgen. See Note 8.
The Company has a consulting agreement with the physician primarily
responsible for the creation of its technology who is also a stockholder of
Introgen. Under this consulting agreement, Introgen paid him fees of $63,750 and
$42,500 during the fiscal years ended June 30, 1996 and 1995, respectively, and
is obligated to pay him fees in the amounts of $93,750 and $118,750 during the
fiscal years ending June 30, 1997 and 1998, respectively. While this agreement
provides for continued payment of fees through 2009, the Company can, upon one
year's notice, cancel this agreement effective September 1997 or later. In
addition, the Company has consulting agreements with various other individuals
under which the Company is obligated to pay fees in the amount of $37,750 during
the year ended June 30, 1997.
8. SUBSEQUENT EVENTS
Public Offering of Common Stock
Subsequent to June 30, 1996, the Board of Directors authorized the filing
of a Registration Statement with the Securities and Exchange Commission
permitting the Company to sell shares of its common stock to the public. If the
offering is consummated under terms presently anticipated, all of the preferred
stock outstanding will automatically convert upon closing into 5,220,409 shares
of common stock and the Company will file a restated Certificate of
Incorporation authorizing 5,000,000 shares of undesignated preferred stock. The
pro forma balances of the stockholders' equity accounts at June 30, 1996
assuming this conversion are as follows:
<TABLE>
<CAPTION>
JUNE 30, 1996
-----------------------------
ACTUAL PRO FORMA
----------- -----------
(UNAUDITED)
<S> <C> <C>
Preferred Stock......................................... $ 4,350 $ --
Common Stock............................................ 2,443 7,663
Additional paid-in capital.............................. 10,743,332 10,742,462
Deferred compensation................................... (586,883) (586,883)
Accumulated deficit..................................... (3,243,573) (3,243,573)
----------- -----------
Stockholders' equity.................................... $ 6,919,669 $ 6,919,669
=========== ===========
</TABLE>
Stock Option and Purchase Plans
Subsequent to June 30, 1996, the Company issued options under its Incentive
Stock Plan to purchase 170,354 shares of common stock at an exercise price of
$0.73. In conjunction therewith, the Company will record deferred compensation
of approximately $1,282,000 during the three months ending September 30, 1996.
Compensation expense will be recognized ratably over the vesting period of each
option which is generally four years. In addition, the Board of Directors
approved an increase of the shares reserved for issuance under this plan to a
total of 1,750,000 subject to the closing of the public offering of common
stock.
F-14
<PAGE> 71
INTROGEN THERAPEUTICS, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
JUNE 30, 1996
In August 1996, the Board of Directors approved a Director Option Plan
subject to the closing of the public offering of common stock. The Plan provides
for the grant of options to purchase common stock to nonemployee members of the
Company's Board of Directors as compensation for their services. Upon initial
election to the Board of Directors, a director will be issued options to
purchase 10,000 shares of common stock with such options vesting annually at the
rate of 25% per year. At each reelection to the Board of Directors, a director
will be issued options to purchase an additional 2,000 shares of common stock
with such options vesting at the rate of 12.5% per month. In the event of a
merger, sale of substantially all of the Company's assets or change in the
ownership of the Company, all options outstanding under the Plan shall be fully
vested. These options allow the holder to purchase common stock at a price equal
to its fair market value at the date the option is granted. The Company has
reserved 200,000 shares of common stock for issuance under this plan. No options
have been issued under this plan.
In August 1996, the Company approved an Employee Stock Purchase Plan
subject to the closing of the public offering of common stock. Under this plan,
an eligible employee may designate up to 10% of their compensation for the
purchase of common stock directly from the Company at a price equal to 85% of
the fair market value of common stock determined as defined in the plan. The
Company has reserved 100,000 shares for issuance under this plan. No common
stock has been sold by the Company under this plan.
Warrants
In August 1996, the Company issued to an individual, for a nominal fee, a
warrant to purchase 12,000 shares of common stock for an exercise price of $0.73
per share. In conjunction with this warrant issuance, the Company will recognize
approximately $90,000 in expenses for the services provided by the individual
during the year ended June 30, 1997. The warrant expires in 2001.
Employment Agreement
In August 1996, the Company entered into an employment agreement with its
President and Chief Executive Officer under which the Company is obligated to
pay him $225,000 during the first year of the agreement and $250,000 per year
thereafter through December 31, 1998.
Stock Split
In August 1996, the Board of Directors approved a 1.2 for 1 stock split. An
amount equal to the increased par value of the common shares has been reflected
as a transfer from additional paid-in capital to common stock. Retroactive
effect has been given to the stock split in stockholders' equity and in all
share and per share data in the accompanying financial statements.
F-15
<PAGE> 72
- ---------------------------------------------------------
- ---------------------------------------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS IN
CONNECTION WITH THIS OFFERING OTHER THAN THOSE
CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE,
SUCH OTHER INFORMATION AND REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY OR THE UNDERWRITERS. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL,
UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT
THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY
SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED
HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR
A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER
THAN THE REGISTERED SECURITIES TO WHICH IT RELATES. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY SUCH SECURITIES IN ANY
CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS
UNLAWFUL.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary............................ 3
Risk Factors.................................. 6
Use of Proceeds............................... 15
Dividend Policy............................... 15
Capitalization................................ 16
Dilution...................................... 17
Selected Financial Data....................... 18
Management's Discussion and Analysis of
Financial Condition and
Results of Operations....................... 19
Gene Therapy Cancer Treatment................. 22
Business of Introgen.......................... 26
Management.................................... 41
Certain Transactions.......................... 47
Principal Stockholders........................ 49
Description of Capital Stock.................. 51
Shares Eligible for Future Sale............... 53
Underwriting.................................. 54
Legal Matters................................. 55
Experts....................................... 55
Available Information......................... 55
Financial Statements.......................... F-1
</TABLE>
------------------------
UNTIL , 1996, ALL DEALERS EFFECTING TRANSACTIONS
IN THE REGISTERED SECURITIES, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION,
MAY BE REQUIRED TO DELIVER A
PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATION OF
DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS
UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.
- ---------------------------------------------------------
- ---------------------------------------------------------
- ---------------------------------------------------------
- ---------------------------------------------------------
3,200,000 SHARES
LOGO
COMMON STOCK
------------------------
PROSPECTUS
------------------------
PAINEWEBBER INCORPORATED
GENESIS MERCHANT GROUP
SECURITIES
------------------------
, 1996
- ---------------------------------------------------------
- ---------------------------------------------------------
<PAGE> 73
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, payable by the Company in connection
with the sale of Common Stock being registered. All amounts are estimates except
the registration fee, the NASD filing fee and the Nasdaq National Market System
listing fee.
<TABLE>
<CAPTION>
AMOUNT
TO BE PAID
----------
<S> <C>
Registration Fee.......................................................... $ 14,000
NASD Filing Fee........................................................... 4,548
The Nasdaq National Market System Listing Fee............................. 23,400
Printing.................................................................. 80,000
Legal Fees and Expenses................................................... 400,000
Accounting Fees and Expenses.............................................. 150,000
Blue Sky Fees and Expenses................................................ 25,000
Registrar and Transfer Agent Fees......................................... 10,000
Miscellaneous............................................................. 43,052
--------
Total........................................................... $750,000
========
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law permits a corporation
to include in its charter documents, and in agreements between the corporation
and its directors and officers, provisions expanding the scope of
indemnification beyond that specifically provided by the current law.
Article VII of the Registrant's Certificate of Incorporation provides for
the indemnification of directors to the fullest extent permissible under
Delaware law.
Article VI of the Registrant's Bylaws provides for the indemnification of
officers, directors and third parties acting on behalf of the corporation if
such person acted in good faith and in a manner reasonably believed to be in and
not opposed to the best interest of the corporation, and, with respect to any
criminal action or proceeding, the indemnified party had no reason to believe
his conduct was unlawful.
The Registrant has entered into indemnification agreements with its
directors and executive officers, in addition to indemnification provided for in
the Registrant's Bylaws, and intends to enter into indemnification agreements
with any new directors and executive officers in the future.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
(a) From inception through June 30, 1996, the Registrant has issued and
sold the following unregistered securities:
(1) From August 23, 1994 to September 28, 1994, the Registrant sold
2,443,360 shares of Common Stock to eight investors at an average price of
$0.06 per share.
(2) On August 23, 1994, the Registrant sold 3,011,423 shares of Series
A Preferred Stock to one investor at a price of $0.18 per share.
(3) On October 7, 1994 the Registrant sold 446,250 shares of Series B
Preferred Stock to RPR at $5.72 per share for $2,552,550. In February 1995,
the Registrant sold 170,625 shares of Series B Preferred Stock to RPR at
$7.47 per share for $1,274,567. In January 1996, the Registrant sold
170,625 shares of Series B Preferred Stock to RPR at $7.47 per share for
$1,274,567.
II-1
<PAGE> 74
(4) From March 29, 1996 to June 28, 1996 the Registrant sold 551,410
shares of Series C Preferred Stock to 26 Investors at $8.65 per share.
(b) The Registrant was assisted in the issuance and sale of the Series C
Preferred Stock by Genesis Merchant Group Securities and Harris, Webb &
Garrison, Inc.
(c) The sales of the above securities were deemed to be exempt from
registration under the Securities Act in reliance on Section 4(2) of the
Securities Act, or Regulation D promulgated thereunder, or Rule 701 promulgated
under Section 3(b) of the Securities Act as transactions by an issuer not
involving a public offering or transactions pursuant to compensatory benefit
plans and contracts relating to compensation as provided under such Rule 701.
The recipients of securities in each such transaction represented their
intentions to acquire the securities for investment only and not with a view to
or for sale in connection with any distribution thereof and appropriate legends
were affixed to the instruments representing such securities issued in such
transactions. All recipients had adequate access, through their relationships
with the Company, to information about the Registrant.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
<TABLE>
<S> <C>
1.1 Form of Underwriting Agreement.
3.1 Certificate of Incorporation of the Company, as amended, as currently in
effect.
3.2 Form of Restated Certificate of Incorporation of the Company, to be filed
immediately following the closing of the offering made under this
Registration Statement.
3.3 Bylaws of the Company.
4.1* Specimen Common Stock Certificate.
5.1 Opinion of Wilson Sonsini Goodrich & Rosati, Professional Corporation.
10.1 Form of Indemnification Agreement between the Company and each of its
directors and officers.
10.2 Incentive Stock Plan and form of Stock Option Agreement thereunder.
10.3 Director Option Plan and form of Director Stock Option Agreement thereunder.
10.4 Employee Stock Purchase Plan and forms of agreements thereunder.
10.5 Series A Preferred Stock Purchase Agreement, dated August 23, 1994, between
the Company and Texas Biomedical Development Partners.
10.6+ Series B Preferred Stock Purchase Agreement, dated October 7, 1994, between
the Company and RPR.
10.7 Form of Series C Preferred Stock Purchase Agreement between the Company and
certain investors.
10.8 Lease Agreement, dated February 9, 1996, between the Company and Aetna Life
Insurance Company for the Company's facility located at 301 Congress Avenue,
Suite 1850, Austin, Texas, 78701.
10.9A Sublease Agreement, dated February 1, 1995 between the Company and Bee-Mac
Reference Laboratories, Inc. for the Company's facility located at 8080
North Stadium Drive, #1200, Houston, Texas, 77059.
10.9B Addendum to Sublease Agreement by and between the Company and Bee-Mac
Reference Laboratories, Inc., dated November 1, 1995.
10.10 Lease Agreement, dated June 7, 1996, between the Company and Plaza del Oro
Business Center for the Company's facility located at 8012 El Rio, Houston,
Texas 77054.
</TABLE>
II-2
<PAGE> 75
<TABLE>
<S> <C>
10.11+ Patent and Technology License Agreement, effective as of July 20, 1994, by
and between the Board of Regents of the University of Texas System, UTMDACC
and the Company.
10.12+ Sponsored Research Agreement for Clinical Study, No. CS 93-27, dated
February 11, 1993, between the Company and UTMDACC, as amended.
10.13+ Sponsored Research Agreement No. SR95-012, dated September 21, 1995 between
the Company and UTMDACC, as amended.
10.14+ Sponsored Research Agreement No. SR 93-04, dated February 11, 1993 between
UTMDACC and the Company, as amended.
10.15+ Sponsored Laboratory Study Agreement No. LS95-035 between UTMDACC and the
Company, dated September 21, 1995.
10.16+ Sponsored Research Agreement No. SR 96-004 between the Company and UTMDACC,
dated January 17, 1996.
10.17+ Sponsored Research Agreement, dated March 29, 1996, between the Company and
SKCC.
10.18+ License Agreement, dated March 29, 1996 between the Company and SKCC.
10.19 Consulting Agreement between the Company and Jack A. Roth, M.D., effective
as of October 1, 1994.
10.20 Consulting Agreement between EJ Financial Enterprises, Inc. and Introgen,
effective as of July 1, 1994.
10.21 Service Agreement between Introgen and Domecq Technologies, Inc. effective
as of July 1, 1994.
10.22+ Collaboration Agreement (p53 Products), effective as of October 7, 1994,
between the Company and RPR, as amended.
10.23+ Collaboration Agreement (K-ras Products), effective as of October 7, 1994,
between the Company and RPR, as amended.
10.24+ Letter of Intent dated March 26, 1996 between NCI, the Company and RPR
regarding a CRADA.
10.25* Employment Agreement between the Company and David G. Nance.
10.26* Master Lease Agreement, dated as of July 31, 1996, by and between the
Company and Oxford Financial Services Corporation.
11.1 Calculation of earnings per share.
23.1 Consent of Arthur Andersen LLP, Independent Public Accountants.
23.2 Consent of Counsel (included in Exhibit 5.1).
23.3 Consent of Arnold, White & Durkee, patent counsel for the Company.
24.1 Power of Attorney (see page II-5).
</TABLE>
- ---------------
+ Confidential treatment requested for portions of these agreements.
* To be filed by amendment.
(b) Financial Statement Schedules
Schedules have been omitted because the information required to be set
forth therein is not applicable or is shown in the financial statements or notes
thereto.
ITEM 17. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions described in Item 14, or
II-3
<PAGE> 76
otherwise, the registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
The undersigned registrant hereby undertakes to provide to the Underwriter
at the closing specified in the underwriting agreement certificates in such
denominations and registered in such names as required by the Underwriter to
permit prompt delivery to each purchaser.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in
the form of prospectus filed by the registrant pursuant to Rule 424(b)(1)
or (4) or 497(h) under the Securities Act shall be deemed to be part of
this registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-4
<PAGE> 77
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Austin,
State of Texas, on the 3rd day of September, 1996.
INTROGEN THERAPEUTICS, INC.
By: /s/ DAVID G. NANCE
------------------------------------
David G. Nance
President and Chief Executive
Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints, jointly and severally, David G.
Nance and James W. Albrecht, Jr., and each of them acting individually, as his
or her attorney-in-fact, each with full power of substitution, for him or her in
any and all capacities, to sign any and all amendments (including, without
limitation, post-effective amendments and any amendments or abbreviated
registration statements increasing the amount of securities for which
registration is being sought) to this Registration Statement, with all exhibits
and any and all documents required to be filed with respect thereto, with the
Securities and Exchange Commission or any regulatory authority, granting unto
such attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite and necessary to be done
in order to effectuate the same as fully to all intents and purposes as he or
she might or could do if personally present, hereby ratifying and confirming all
that such attorneys-in-fact and agents, or any of them, or their substitute or
substitutes, may lawfully do or cause to be done.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------- ------------------------------ --------------------
<S> <C> <C>
/s/ DAVID G. NANCE President, Chief Executive September 3, 1996
- ------------------------------------- Officer (Principal Executive
David G. Nance Officer) and Director
/s/ MAHENDRA G. SHAH Vice President, Corporate and September 3, 1996
- ------------------------------------- Business Development and
Mahendra G. Shah, Ph.D. Director
/s/ JAMES W. ALBRECHT, JR. Chief Financial Officer September 3, 1996
- ------------------------------------- (Principal Financial and
James W. Albrecht, Jr. Accounting Officer)
/s/ JOHN N. KAPOOR Chairman of the Board September 3, 1996
- -------------------------------------
John N. Kapoor, Ph.D.
/s/ THIERRY SOURSAC Director September 3, 1996
- -------------------------------------
Thierry Soursac, M.D., Ph.D.
/s/ AUSTIN M. LONG, III Director September 3, 1996
- -------------------------------------
Austin M. Long, III
/s/ MARK B. CHANDLER Director September 3, 1996
- -------------------------------------
Mark B. Chandler, Ph.D.
</TABLE>
II-5
<PAGE> 78
APPENDIX -- DESCRIPTION OF GRAPHICS
INSIDE FRONT COVER:
HEADER: "Introgen seeks to treat cancer by delivering its p53 in vivo gene
therapy products directly to the tumor."
SUBHEADER: "p53 gene therapy for non-small cell lung cancer."
(LEFT SIDE): This diagram depicts the progression of cancer cells when
treated with the p53 therapeutic gene. There are three phases of this process,
each described vertically along the left half of the diagram.
The three phases are:
1. A group of cancerous cells being delivered the p53 therapeutic gene,
with the text "Vectors deliver p53 gene to cells" next to sketch;
2. The same group of cells with the gene depicted to be inside the cell,
with the text "p53 protein produced in cell;" and,
3. The cells are shown going through stages of destruction or arrest, with
the text "p53 protein induces programmed cell death (apoptosis) or
growth arrest."
(RIGHT SIDE): This illustration is a silhouette of a man, with the lungs
and air passageway visible, with a tumor visible in the left lung. A syringe is
shown with a needle being injected into the tumor.
PAGE 23 -- FIGURE 1
TITLE: "Depiction of Tumor Suppressor p53 Inducing Cancer Cells To Undergo
Apoptosis or Growth Arrest"
This illustration shows a standard cell cycle circular diagram on the lower
left portion of the illustration, with the following phrases describing the
steps of the cycle; these include
1. G1 -- Preparation For DNA Synthesis
2. S -- DNA Synthesis
3. G2 -- Preparation For Cell Division
4. M -- Cell Division
An arrow is shown leaving the "M" portion of the cycle, showing cancer
cells forming as a function of mutated cell growth. A hexagon depicting p53 is
shown entering the "G1" portion of the cycle, with two arrows leaving the cell
cycle, indicating the effect of the p53 therapeutic material injected.
One arrow points to a depiction of cell destruction, with the description,
"Apoptosis (Programmed Cell Death)." The second arrow points to a depiction of a
cell in growth arrest, with the description "Growth Arrest."
<PAGE> 79
PAGE 24 -- FIGURE 2
TITLE: "Depiction of K-ras Antisense Gene Therapy Inhibiting Abnormal
Growth of Cancer Cells"
This diagram illustrates a semi-circularly shaped cell broken into three
layers: the cell surface, cytoplasm and nucleus. the cell is further separated,
through the middle, into two parts to illustrate (1) cancer and (2) the
inhibition of cell growth.
The right half of the cell shows an oval with the phrase "Growth Signals,"
with an arrow pointing to an oval on the cell surface which is titled,
"Receptor." A hexagon with a double-helix symbol is shown by an arrow as
entering the cytoplasm portion of the cell, with the words, "K-ras Antisense
Gene Therapy" next to the hexagon. An arrowhead line is drawn from the
"Receptor" oval to a circle titled, "ras off," and another arrowhead line is
drawn to a triangle titled "ras on," with a reverse direction arrowhead line
pointed back to the "ras off" circle symbolizing the "on-off" regulation the ras
pathway controls. Arrows are drawn to a rectangle inside the cell nucleus with
the words, "Cell growth genes regulated normally," and a subtitle at the bottom
of this half of the diagram saying, "Inhibition of normal growth."
The left half of the cell is identical to the right half, except the
"K-ras" antisense gene therapy" hexagon is not shown. The "ras on" triangle is
larger than in the right half illustration, and the arrow from "ras off" to "ras
on" is thicker and darker than the other direction, implying a propensity for
the ras signal to remain activated ("on"). The "ras on" triangle has arrows
entering the cell nucleus where a rectangle indicates "Cell growth genes
activated." A subtitle at the bottom of this half of the diagram says "Cancer."
<PAGE> 1
Exhibit 1.1
[ ] Shares
INTROGEN THERAPEUTICS, INC.
Common Stock
UNDERWRITING AGREEMENT
[_________], 1996
PAINEWEBBER INCORPORATED
GENESIS MERCHANT GROUP SECURITIES
As Representatives of the
several Underwriters
c/o PaineWebber Incorporated
1285 Avenue of the Americas
New York, New York 10019
Dear Sirs:
Introgen Therapeutics, Inc., a Delaware corporation (the
"Company"), proposes to sell an aggregate of [_________] shares (the "Firm
Shares") of the Company's Common Stock, $.001 par value per share (the "Common
Stock"), to you and to the other underwriters named in Schedule I hereto
(collectively, the "Underwriters"), for whom you are acting as representatives
(the "Representatives"). The Company has also agreed to grant to you and the
other Underwriters an option (the "Option") to purchase up to an additional
[_________] shares of Common Stock (the "Option Shares") on the terms and for
the purposes set forth in Section 1(b) hereof. The Firm Shares and the Option
Shares are hereinafter collectively referred to as the "Shares."
The initial public offering price per share for the Shares and
the purchase price per share for the Shares to be paid by the several
Underwriters shall be agreed upon by the Company and the Representatives, acting
on behalf of the several Underwriters, and such agreement shall be set forth in
a separate written instrument substantially in the form of Exhibit A hereto (the
"Price Determination Agreement"). The Price Determination Agreement may take the
form of an exchange of any standard form of written telecommunication among the
Company and the Representatives and shall specify such applicable information as
is indicated in Exhibit A hereto. The offering of the Shares will be governed by
this Agreement, as supplemented by the Price Determination Agreement. From and
after the date of the execution and delivery of the Price Determination
Agreement, this Agreement shall be deemed to incorporate, and, unless the
context otherwise indicates, all references contained herein to "this Agreement"
and to the phrase "herein" shall be deemed to include the Price Determination
Agreement.
The Company confirms as follows its agreements with the
Representatives and the several other Underwriters.
<PAGE> 2
1. Agreement to Sell and Purchase.
(a) On the basis of the representations, warranties and
agreements of the Company herein contained and subject to all the terms and
conditions of this Agreement, the Company agrees to sell to each Underwriter
named below, and each Underwriter, severally and not jointly, agrees to purchase
from the Company at the purchase price per share for the Firm Shares to be
agreed upon by the Representatives and the Company in accordance with Section
1(c) or 1(d) hereof and set forth in the Price Determination Agreement, the
number of Firm Shares set forth opposite the name of such Underwriter in
Schedule I hereto, plus such additional number of Firm Shares which such
Underwriter may become obligated to purchase pursuant to Section 8 hereof.
Schedule I hereto may be attached to the Price Determination Agreement.
(b) Subject to all the terms and conditions of this Agreement,
the Company grants the Option to the several Underwriters to purchase, severally
and not jointly, up to [_________] Option Shares from the Company at the same
price per share as the Underwriters shall pay for the Firm Shares. The Option
may be exercised only to cover over-allotments in the sale of the Firm Shares by
the Underwriters and may be exercised in whole or in part at any time (but not
more than once) on or before the 45th day after the date of the Price
Determination Agreement), upon written or telegraphic notice (the "Option Shares
Notice") by the Representatives to the Company no later than 12:00 noon, New
York City time, at least two and no more than five business days before the date
specified for closing in the Option Shares Notice (the "Option Closing Date")
setting forth the aggregate number of Option Shares to be purchased and the time
and date for such purchase. On the Option Closing Date, the Company will issue
and sell to the Underwriters the number of Option Shares set forth in the Option
Shares Notice, and each Underwriter will purchase such percentage of the Option
Shares as is equal to the percentage of Firm Shares that such Underwriter is
purchasing, as adjusted by the Representatives in such manner as they deem
advisable to avoid fractional shares.
(c) The initial public offering price per share for the Firm
Shares and the purchase price per share for the Firm Shares to be paid by the
several Underwriters shall be agreed upon and set forth in the Price
Determination Agreement. In the event such price has not been agreed upon and
the Price Determination Agreement has not been executed by the close of business
on the 14th business day following the date on which the Registration Statement
becomes effective, this Agreement shall terminate forthwith, without liability
of any party to any other party except that Section 6 hereof shall remain in
effect.
2. Delivery and Payment. Delivery of the Firm Shares shall be made to
the Representatives for the accounts of the Underwriters against payment of the
purchase price by wire transfer in Federal (same-day) funds to an account
designated by the Company at the office of PaineWebber Incorporated, 1285 Avenue
of the Americas, New York, New York 10019. Such payments shall be made at 10:00
a.m., New York City time, on the third (or fourth, if the pricing shall occur
after 4:30 p.m.) business day after the date of this Agreement or at such time
on such other date, not later than ten business days after such date, as may be
agreed upon by the Company and the Representatives (such date is hereinafter
referred to as the "Closing Date").
To the extent the Option is exercised, delivery of the Option Shares
against payment by the Underwriters (in the manner specified above) will take
place at the offices specified above for the Closing Date at the time and date
(which may be the Closing Date) specified in the Option Shares Notice.
-2-
<PAGE> 3
[Certificates evidencing the Shares shall be in definitive form and
shall be registered in such names and in such denominations as the
Representatives shall request at least two business days prior to the Closing
Date or the Option Closing Date, as the case may be, by written notice to the
Company. For the purpose of expediting the checking and packaging of
certificates for the Shares, the Company agrees to make such certificates
available for inspection at least 24 hours prior to the Closing Date or the
Option Closing Date, as the case may be.]
The cost of original issue tax stamps, if any, in connection with the
issuance and delivery of the Firm Shares and Option Shares by the Company to the
respective Underwriters shall be borne by the Company. The Company will pay and
save each Underwriter and any subsequent holder of the Shares harmless from any
and all liabilities with respect to or resulting from any failure or delay in
paying Federal and state stamp and other transfer taxes, if any, which may be
payable or determined to be payable in connection with the original issuance or
sale to such Underwriter of the Firm Shares and Option Shares.
3. Representations and Warranties of the Company. The Company
represents, warrants and covenants to each Underwriter that:
(a) A registration statement (Registration No.
333-[____________]) on Form S-1 relating to the Shares, including a preliminary
prospectus and such amendments to such registration statement as may have been
required to the date of this Agreement, has been prepared by the Company under
the provisions of the Securities Act of 1933, as amended (the "Act"), and the
rules and regulations (collectively referred to as the "Rules and Regulations")
of the Securities and Exchange Commission (the "Commission") thereunder, and has
been filed with the Commission. The term "preliminary prospectus" as used herein
means a preliminary prospectus as contemplated by Rule 430 or Rule 430A ("Rule
430A") of the Rules and Regulations included at any time as part of the
registration statement. Copies of such registration statement and amendments and
of each related preliminary prospectus have been delivered to the
Representatives. The term "Registration Statement" means the registration
statement as amended at the time it becomes or became effective (the "Effective
Date"), including financial statements and all exhibits and any information
deemed to be included by Rule 430A or Rule 434 of the Rules and Regulations. If
the Company files a registration statement to register a portion of the Shares
and relies on Rule 462(b) of the Rules and Regulations for such registration
statement to become effective upon filing with the Commission (the "Rule 462
Registration Statement"), then any reference to the "Registration Statement"
shall be deemed to include the Rule 462 Registration Statement, as amended from
time to time. The term "Prospectus" means the prospectus as first filed with the
Commission pursuant to Rule 424(b) of the Rules and Regulations or, if no such
filing is required, the form of final prospectus included in the Registration
Statement at the Effective Date.
(b) On the Effective Date, the date the Prospectus is first
filed with the Commission pursuant to Rule 424(b) (if required), at all times
subsequent to and including the Closing Date and, if later, the Option Closing
Date and when any post-effective amendment to the Registration Statement becomes
effective or any amendment or supplement to the Prospectus is filed with the
Commission, the Registration Statement and the Prospectus (as amended or as
supplemented if the Company shall have filed with the Commission any amendment
or supplement thereto), including the financial statements included in the
Prospectus, did or will comply with all applicable provisions of the Act and the
Rules and Regulations and will contain all statements required to be stated
therein in accordance with the Act and the Rules and Regulations. On the
Effective Date and when any post-effective amendment to the Registration
Statement becomes effective, no part of the Registration Statement or any such
amendment did or will contain any
-3-
<PAGE> 4
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein not
misleading. At the Effective Date, the date the Prospectus or any amendment or
supplement to the Prospectus is filed with the Commission and at the Closing
Date and, if later, the Option Closing Date, the Prospectus did not or will not
contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading. The foregoing representations and
warranties in this Section 3(b) do not apply to any statements or omissions made
in reliance on and in conformity with information relating to any Underwriter
furnished in writing to the Company by the Representatives specifically for
inclusion in the Registration Statement or Prospectus or any amendment or
supplement thereto. For all purposes of this Agreement, the amounts of the
selling concession and reallowance set forth in the first sentence of the first
paragraph and the first sentence of the second paragraph under the caption
"Underwriting" constitute the only information specifically for inclusion in the
Registration Statement, the preliminary prospectus or the Prospectus. The
Company has not distributed any offering material in connection with the
offering or sale of the Shares other than the Registration Statement, the
preliminary prospectus, the Prospectus or any other materials, if any, permitted
by the Act.
(c) The Company has no, nor at the Closing Date will have any,
subsidiaries (as defined in the Rules and Regulations). The Company is, and at
the Closing Date will be, a corporation duly organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation. The Company
has, and at the Closing Date will have, full power and authority to conduct all
the activities conducted by it, to own or lease all the assets owned or leased
by it and to conduct its business as described in the Registration Statement and
the Prospectus. The Company is, and at the Closing Date will be, duly licensed
or qualified to do business and in good standing as a foreign corporation in all
jurisdictions in which the nature of the activities conducted by it or the
character of the assets owned or leased by it makes such licensing or
qualification necessary, except where the failure to be so licensed or qualified
would not have a material adverse effect on the business, properties, business
prospects, condition (financial or otherwise), or results of operations of the
Company (the foregoing being the "Business of the Company"). Except as disclosed
in the Registration Statement, the Company does not own, and at the Closing Date
will not own, directly or indirectly, any shares of stock or any other equity or
long-term debt securities of any corporation or have any equity interest in any
firm, partnership, joint venture, association or other entity. Complete and
correct copies of the certificate of incorporation and of the by-laws of the
Company and all amendments thereto have been delivered to the Representatives,
and no changes therein will be made subsequent to the date hereof and prior to
the Closing Date or, if later, the Option Closing Date.
(d) The outstanding shares of Common Stock have been, and the
Shares to be issued and sold by the Company upon such issuance will be, duly
authorized, validly issued, fully paid and nonassessable and will not be subject
to any preemptive or similar right, and none of such shares will be subject to
any pledge, lien, security interest, charge, claim, equity or encumbrance of any
kind. The description of the capital stock of the Company in the Registration
Statement and the Prospectus is, and at the Closing Date will be, complete and
accurate in all respects. Except as set forth in the Prospectus, the Company
does not have outstanding, and at the Closing Date will not have outstanding,
any options to purchase, or any rights or warrants to subscribe for, or any
securities or obligations convertible into, or any contracts or commitments to
issue or sell, any shares of Common Stock (except any options, rights or shares
issued after the date as of which information with respect thereto is given in
the Prospectus pursuant to employee benefit plans described in the Prospectus).
-4-
<PAGE> 5
(e) The financial statements and schedules included in the
Registration Statement or the Prospectus present fairly the consolidated
financial condition of the Company as of the respective dates thereof and the
consolidated results of operations and cash flows of the Company for the
respective periods covered thereby, all in conformity with generally accepted
accounting principles applied on a consistent basis throughout the entire period
involved, except as otherwise disclosed in the Prospectus. The pro forma
financial information included in the Registration Statement or the Prospectus
(i) presents fairly in all material respects the information shown therein, (ii)
has been prepared in accordance with the Commission's rules and guidelines with
respect to pro forma financial statements and (iii) has been properly computed
on the bases described therein. The assumptions used in the preparation of the
pro forma financial information included in the Registration Statement or the
Prospectus are reasonable and the adjustments used therein are appropriate to
give effect to the transactions or circumstances referred to therein. No other
financial statements or schedules of the Company are required by the Act or the
Rules and Regulations to be included in the Registration Statement or the
Prospectus. Arthur Andersen LLP (the "Accountants") who have reported on such
financial statements and schedules, are independent accountants with respect to
the Company as required by the Act and the Rules and Regulations. The statements
included in the Registration Statement with respect to the Accountants pursuant
to Rule 509 of Regulation S-K of the Rules and Regulations are true and correct
in all material respects.
(f) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurance that (i) transactions are
executed in accordance with management's general or specific authorization; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(g) Subsequent to the respective dates as of which information
is given in the Registration Statement and the Prospectus and prior to the
Closing Date, except as set forth in or contemplated by the Registration
Statement and the Prospectus, (i) there has not been and will not have been any
change in the capitalization of the Company or in the Business of the Company,
arising for any reason whatsoever, (ii) the Company has not incurred nor will it
incur any material liabilities or obligations, direct or contingent, nor has it
entered into nor will it enter into any material transactions other than
pursuant to this Agreement and the transactions referred to herein and (iii) the
Company has not and will not have paid or declared any dividends or other
distributions of any kind on any class of its capital stock.
(h) The Company is not and will not become an "investment
company" or an "affiliated person" of, or "promoter" or "principal underwriter"
for, an "investment company," as such terms are defined in the Investment
Company Act of 1940, as amended.
(i) Except as set forth in the Registration Statement and the
Prospectus, there are no actions, suits or proceedings pending or threatened
against or affecting the Company or any of its officers in their capacity as
such, before or by any Federal or state court, commission, regulatory body,
administrative agency or other governmental body, domestic or foreign, wherein
an unfavorable ruling, decision or finding might materially and adversely affect
the Company or the Business of the Company.
-5-
<PAGE> 6
(j) The Company has, and at the Closing Date will have, (i)
all governmental licenses, permits, consents, orders, approvals and other
authorizations necessary to carry on its business as contemplated in the
Prospectus, (ii) complied in all respects with all laws, regulations and orders
applicable to it or its business and (iii) performed all its obligations
required to be performed by it, and is not, and at the Closing Date will not be,
in default, under any indenture, mortgage, deed of trust, voting trust
agreement, loan agreement, bond, debenture, note agreement, lease, contract or
other agreement or instrument (collectively, a "contract or other agreement") to
which it is a party or by which its property is bound or affected. To the best
knowledge of the Company, no other party under any contract or other agreement
to which it is a party is in default in any respect thereunder. The Company is
not, nor at the Closing Date will it be, in violation of any provision of its
certificate of incorporation or by-laws.
(k) No consent, approval, authorization or order of, or any
filing or declaration with, any court or governmental agency or body is required
in connection with the consummation by the Company of the transactions on its
part contemplated herein, except such as have been obtained under the Act or the
Rules and Regulations and such as may be required under state securities or Blue
Sky laws or the by-laws and rules of the National Association of Securities
Dealers, Inc. (the "NASD") in connection with the purchase and distribution by
the Underwriters of the Shares.
(l) The Company has full corporate power and authority to
enter into this Agreement. This Agreement has been duly authorized, executed and
delivered by the Company and constitutes a valid and binding agreement of the
Company and is enforceable against the Company in accordance with the terms
hereof. The performance of this Agreement and the consummation of the
transactions contemplated hereby and the application of the net proceeds from
the offering and sale of the Shares in the manner set forth in the Prospectus
under "Use of Proceeds" will not result in the creation or imposition of any
lien, charge or encumbrance upon any of the assets of the Company pursuant to
the terms or provisions of, or result in a breach or violation of any of the
terms or provisions of, or constitute a default under, or give any other party a
right to terminate any of its obligations under, or result in the acceleration
of any obligation under, the certificate of incorporation or by-laws of the
Company, any contract or other agreement to which the Company is a party or by
which the Company or any of its properties is bound or affected, or violate or
conflict with any judgment, ruling, decree, order, statute, rule or regulation
of any court or other governmental agency or body applicable to the business or
properties of the Company.
(m) The Company has good and marketable title to all
properties and assets described in the Prospectus as owned by it, free and clear
of all liens, charges, encumbrances or restrictions, except such as are
described in the Prospectus or are not material to the Business of the Company.
The Company has valid, subsisting and enforceable leases for the properties
described in the Prospectus as leased by it, with such exceptions as are not
material and do not materially interfere with the use made and proposed to be
made of such properties by the Company.
(n) There is no document or contract of a character required
to be described in the Registration Statement or the Prospectus or to be filed
as an exhibit to the Registration Statement which is not described or filed as
required. All such contracts to which the Company is a party have been duly
authorized, executed and delivered by the Company, constitute valid and binding
agreements of the Company and are enforceable against the Company in accordance
with the terms thereof.
-6-
<PAGE> 7
(o) No statement, representation, warranty or covenant made by
the Company in this Agreement or made in any certificate or document required by
this Agreement to be delivered to the Representatives was or will be, when made,
inaccurate, untrue or incorrect.
(p) Neither the Company nor any of its directors, officers or
controlling persons has taken, directly or indirectly, any action intended, or
which might reasonably be expected, to cause or result, under the Act or
otherwise, in, or which has constituted, stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of the
Shares.
(q) Except as set forth in the Registration Statement and the
Prospectus, no holder of securities of the Company has rights to the
registration of any securities of the Company because of the filing of the
Registration Statement.
(r) The Shares have been approved for inclusion, subject to
official notice of issuance, in the National Association of Securities Dealers
Automated Quotations System/National Market System ("NASDAQ/NMS").
(s) The Company is not involved in any material labor dispute
nor, to the knowledge of the Company, is any such dispute threatened.
(t) The Company is not making, nor, to the Company's
knowledge, has any employee or agent of the Company made, any payment of funds
of the Company or received or retained any funds in violation of any law, rule
or regulation or of a character required to be disclosed in the Prospectus.
(u) Each of the agreements set forth on Schedule II hereto is
in full force and effect and constitutes a valid and binding agreement between
the parties thereto, enforceable in accordance with its terms, subject as to
enforcement to bankruptcy, insolvency, reorganization and other laws of general
applicability relating to or affecting creditors' rights and to general equity
principles, and there has not occurred any default under either such agreement
or any event that with the giving of notice or lapse of time would constitute a
default thereunder.
(v) The Company is conducting business in compliance with all
applicable statutes, rules, regulations, standards, guides and orders
administered or issued by any governmental or regulatory authority in the
jurisdictions in which it is conducting business, including, without limitation,
the United States Food and Drug Administration, except where the failure to be
so in compliance would not have, individually or in the aggregate, a material
adverse change in the Business of the Company.
(w) Except as disclosed in the Prospectus, the Company is not
in violation of any statute, or any rule, regulation, decision or order of any
governmental agency or body or any court relating to the use, disposal or
release of hazardous or toxic substances or relating to the protection or
restoration of the environment or human exposure to hazardous or toxic
substances (collectively, "Environmental Laws"), does not own or operate any
real property contaminated with any substance that is subject to any
Environmental Laws, is not liable for any off-site disposal or contamination
pursuant to any Environmental Laws, and is not subject to any claim relating to
any Environmental Laws, which violation, contamination, liability or claim would
have, individually or in the aggregate, a material adverse change in the
Business of the Company; and the Company is not aware of any pending
investigation which could reasonably be expected to lead to such a claim.
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<PAGE> 8
(x) Except as disclosed in the Prospectus, the Company owns or
possesses valid, binding, enforceable licenses or other rights to use any
patents, patent licenses, trademarks, service marks, trade names, service names,
copyrights, mask works, technology, know-how and other proprietary intellectual
property rights ("Intellectual Property") necessary to conduct the business now
or proposed to be conducted by it as described in the Prospectus and the Company
has not received any notice of infringement of or conflict with (and knows of no
such infringement of or conflict with) asserted rights of others with respect to
any patents, trademarks, service marks, trade names, copyrights, mask works,
technology or know-how which could materially and adversely affect the Company
or its business, properties, business prospects, condition (financial or
otherwise) or results of operations; the Company or its assignor has duly and
properly filed with the U.S. Patent and Trademark Office the pending patent
applications referred to in the Prospectus (the "Patent Applications"); the
information contained in the Registration Statement and Prospectus concerning
the Patent Applications and patents licensed to the Company is accurate in all
material respects; and the Company's discoveries, inventions, products or
processes owned or licensed by the Company referred to in the Prospectus do not,
to the knowledge of the Company, infringe or conflict and the Company has not
received any notice that its Intellectual Property or activities infringe or
conflict with any right or patent, or any discovery, invention, product or
process which is the subject of a patent application known to the Company, which
infringement or conflict could result in any material adverse change in the
Business of the Company.
(y) The Company has complied, and until the completion of the
distribution of the Shares will comply, with all of the provisions of
(including, without limitation, filing all forms required by) Section 517.075 of
the Florida Securities and Investor Protection Act and regulation 3E-900.001
issued thereunder with respect to the offering and sale of the Shares.
(z) All federal, state, local and foreign tax returns and
reports of the Company required to be filed have been timely filed. All such
returns and reports are true, correct and complete and all taxes shown on such
returns and reports, or otherwise due or payable, have been timely paid. No
adjustment to any federal, state, local or foreign tax return of the Company has
been proposed (formally or informally) by any tax authority and no basis exists
for any such adjustment. There are no outstanding requests for information with
respect to the Company's tax returns and there are no pending or threatened
actions or proceedings with respect to taxes of the Company. All taxes required
to be withheld, collected or deposited by the Company have been timely withheld,
collected or deposited and, to the extent required, have been paid to the
relevant tax authority. The Company has paid (or there has been paid on its
behalf) all taxes which are due (including any withholding taxes) and for which
no tax return is required. There are no liens on any of the Company's assets for
taxes, other than for taxes which have accrued but which are not yet due and
payable. The Company is not liable for any taxes that are imposed on any other
person or corporation.
(aa) With respect to each employee benefit plan, program and
arrangement (including, without limitation, any "employee benefit plan" as
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA")) maintained or contributed to by the Company, or with
respect to which the Company could incur any liability under ERISA
(collectively, the "Benefit Plans"), no event has occurred and, to the best
knowledge of the Company, there exists no condition or set of circumstances, in
connection with which the Company could be subject to any liability under the
terms of such Benefit Plan, applicable law (including, without limitation, ERISA
and the Internal Revenue Code of 1986, as amended) or any applicable agreement
that could materially adversely affect the condition
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<PAGE> 9
(financial or otherwise), results of operations, business affairs or business
prospects of the Company.
4. Agreements of the Company. The Company agrees with the several
Underwriters as follows:
(a) The Company will not, either prior to the Effective Date
or thereafter during such period as the Prospectus is required by law to be
delivered in connection with sales of the Shares by an Underwriter or dealer,
file any amendment or supplement to the Registration Statement or the
Prospectus, unless a copy thereof shall first have been submitted to the
Representatives within a reasonable period of time prior to the filing thereof
and the Representatives shall not have objected thereto in good faith.
(b) The Company will use its best efforts to cause the
Registration Statement to become effective, and will notify the Representatives
promptly, and will confirm such advice in writing, (i) when the Registration
Statement has become effective and when any post-effective amendment thereto
becomes effective, (ii) of any request by the Commission for amendments or
supplements to the Registration Statement or the Prospectus or for additional
information, (iii) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the initiation of
any proceedings for that purpose or the threat thereof, (iv) of the happening of
any event during the period mentioned in the second sentence of Section 4(e)
hereof that in the judgment of the Company makes any statement made in the
Registration Statement or the Prospectus untrue or that requires the making of
any changes in the Registration Statement or the Prospectus in order to make the
statements therein, in light of the circumstances in which they are made, not
misleading and (v) of receipt by the Company or any representative or attorney
of the Company of any other communication from the Commission relating to the
Company, the Registration Statement, any preliminary prospectus or the
Prospectus. If at any time the Commission shall issue any order suspending the
effectiveness of the Registration Statement, the Company will make every
reasonable effort to obtain the withdrawal of such order at the earliest
possible moment. The Company will use its best efforts to comply with the
provisions of and make all requisite filings with the Commission pursuant to
Rule 430A and to notify the Representatives promptly of all such filings.
(c) The Company will furnish to the Representatives, without
charge, two signed copies of the Registration Statement and of any
post-effective amendment thereto, including financial statements and schedules,
and all exhibits thereto and will furnish to the Representatives, without
charge, for transmittal to each of the other Underwriters, a copy of the
Registration Statement and any post-effective amendment thereto, including
financial statements and schedules but without exhibits.
(d) The Company will comply with all the provisions of any
undertakings contained in the Registration Statement.
(e) On the Effective Date, and thereafter from time to time,
the Company will deliver to each of the Underwriters, without charge, as many
copies of the Prospectus or any amendment or supplement thereto as the
Representatives may reasonably request. The Company consents to the use of the
Prospectus or any amendment or supplement thereto by the several Underwriters
and by all dealers to whom the Shares may be sold, both in connection with the
offering or sale of the Shares and for any period of time thereafter during
which the Prospectus is required by law to be delivered in connection therewith.
If during such period of time any event shall occur which in the judgment of the
Company or counsel to the Underwriters should be set
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<PAGE> 10
forth in the Prospectus in order to make any statement therein, in the light of
the circumstances under which it was made, not misleading, or if it is necessary
to supplement or amend the Prospectus to comply with law, the Company will
forthwith prepare and duly file with the Commission an appropriate supplement or
amendment thereto, and will deliver to each of the Underwriters, without charge,
such number of copies thereof as the Representatives may reasonably request.
(f) Prior to any public offering of the Shares by the
Underwriters, the Company will cooperate with the Representatives and counsel to
the Underwriters in connection with the registration or qualification of the
Shares for offer and sale under the securities or Blue Sky laws of such
jurisdictions as the Representatives may request; provided that in no event
shall the Company be obligated to qualify to do business in any jurisdiction
where it is not now so qualified or to take any action which would subject it to
general service of process in any jurisdiction where it is not now so subject.
(g) During the period of five years commencing on the
Effective Date, the Company will furnish to the Representatives and each other
Underwriter who may so request copies of such financial statements and other
periodic and special reports as the Company may from time to time distribute
generally to the holders of any class of its capital stock, and will furnish to
the Representatives and each other Underwriter who may so request a copy of each
annual or other report it shall be required to file with the Commission pursuant
to the Securities Exchange Act of 1934, as amended (the "Exchange Act").
(h) The Company will make generally available to holders of
its securities as soon as may be practicable but in no event later than the last
day of the 15th full calendar month following the calendar quarter in which the
Effective Date falls, an earnings statement (which need not be audited but shall
be in reasonable detail) for a period of 12 months ended commencing after the
Effective Date, and satisfying the provisions of Section 11(a) of the Act
(including Rule 158 of the Rules and Regulations).
(i) Whether or not the transactions contemplated by this
Agreement are consummated or this Agreement is terminated, the Company will pay,
or reimburse if paid by the Representatives, all costs and expenses incident to
the performance of the obligations of the Company under this Agreement,
including but not limited to costs and expenses of or relating to (1) the
preparation, printing and filing of the Registration Statement and exhibits to
it, each preliminary prospectus, the Prospectus and any amendment or supplement
to the Registration Statement or the Prospectus, (2) the preparation and
delivery of certificates representing the Shares, (3) the printing of this
Agreement, the Agreement Among Underwriters, any Dealer Agreements and any
Underwriters' Questionnaire, (4) furnishing (including costs of shipping,
mailing and courier) such copies of the Registration Statement, the Prospectus
and any preliminary prospectus, and all amendments and supplements thereto, as
may be requested for use in connection with the offering and sale of the Shares
by the Underwriters or by dealers to whom Shares may be sold, (5) the quotation
of the Shares on NASDAQ/NMS, (6) any filings required to be made by the
Underwriters with the NASD, and the fees, disbursements and other charges of
counsel for the Underwriters in connection therewith, (7) the registration or
qualification of the Shares for offer and sale under the securities or Blue Sky
laws of such jurisdictions designated pursuant to Section 4(f) hereof, including
the fees, disbursements and other charges of counsel to the Underwriters in
connection therewith, and the preparation and printing of preliminary,
supplemental and final Blue Sky memoranda, (8) counsel to the Company, (9) the
transfer agent for the Shares and (10) the Accountants.
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<PAGE> 11
(j) If this Agreement shall be terminated by the Company
pursuant to any of the provisions hereof (otherwise than pursuant to Section 8
hereof) or if for any reason the Company shall be unable to perform its
obligations hereunder, the Company will reimburse the several Underwriters for
all out-of-pocket expenses (including the fees, disbursements and other charges
of counsel to the Underwriters) reasonably incurred by them in connection
herewith.
(k) The Company will not at any time, directly or indirectly,
take any action intended, or which might reasonably be expected, to cause or
result in, or which will constitute, stabilization of the price of the shares of
Common Stock to facilitate the sale or resale of any of the Shares.
(l) The Company will apply the net proceeds from the offering
and sale of the Shares to be sold by the Company in the manner set forth in the
Prospectus under "Use of Proceeds."
(m) The Company will not, and will cause each of its executive
officers, directors and each beneficial owner of more than [__]% of the
outstanding shares of Common Stock to enter into agreements with the
Representatives in the form set forth in Exhibit B hereto (each, a "Lock-up
Agreement") to the effect that they will not, for a period of 180 days after the
commencement of the public offering of the Shares, without the prior written
consent of PaineWebber Incorporated, sell, contract to sell or otherwise dispose
of any shares of Common Stock, or require the Company to file with the
Commission a registration statement under the Act or to register any shares of
Common Stock or securities convertible into or exchangeable for Common Stock or
warrants or other rights to acquire shares of Common Stock (other than pursuant
to employee stock option plans or in connection with other employee incentive
compensation arrangements).
5. Conditions of the Obligations of the Underwriters. In addition to
the execution and delivery of the Price Determination Agreement, the obligations
of each Underwriter hereunder are subject to the following conditions:
(a) Notification that the Registration Statement has become
effective shall be received by the Representatives not later than 5:00 p.m., New
York City time, on the date of this Agreement or at such later date and time as
shall be consented to in writing by the Representatives and all filings required
by Rule 424 of the Rules and Regulations and Rule 430A shall have been made.
(b) (i) No stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall be pending or threatened by the Commission, (ii) no order
suspending the effectiveness of the Registration Statement or the qualification
or registration of the Shares under the securities or Blue Sky laws of any
jurisdiction shall be in effect and no proceeding for such purpose shall be
pending before or threatened or contemplated by the Commission or the
authorities of any such jurisdiction, (iii) any request for additional
information on the part of the staff of the Commission or any authorities shall
have been complied with to the satisfaction of the staff of the Commission or
such authorities and (iv) after the date hereof no amendment or supplement to
the Registration Statement or the Prospectus shall have been filed unless a copy
thereof was first submitted to the Representatives and the Representatives did
not object thereto in good faith, and the Representatives shall have received
certificates, dated the Closing Date and the Option Closing Date and signed by
the Chief Executive Officer or the Chairman of the Board of Directors of the
Company and the Chief Financial Officer of the Company (who may, as to
proceedings
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<PAGE> 12
threatened, rely upon the best of their information and belief), to the effect
of clauses (i), (ii) and (iii).
(c) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, (i) there shall not have
been a material adverse change in the Business of the Company, whether or not
arising from transactions in the ordinary course of business, in each case other
than as set forth in or contemplated by the Registration Statement and the
Prospectus and (ii) the Company shall not have sustained any material loss or
interference with its business or properties from fire, explosion, flood or
other casualty, whether or not covered by insurance, or from any labor dispute
or any court or legislative or other governmental action, order or decree, which
is not set forth in the Registration Statement and the Prospectus, if in the
judgment of the Representatives any such development makes it impracticable or
inadvisable to consummate the sale and delivery of the Shares by the
Underwriters at the initial public offering price.
(d) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, there shall have been no
litigation or other proceeding instituted against the Company or any of its
respective officers or directors in their capacities as such, before or by any
Federal, state or local court, commission, regulatory body, administrative
agency or other governmental body, domestic or foreign, in which litigation or
proceeding an unfavorable ruling, decision or finding would materially and
adversely affect the Business of the Company.
(e) Each of the representations and warranties of the Company
contained herein shall be true and correct in all material respects at the
Closing Date and, with respect to the Option Shares, at the Option Closing Date,
as if made at the Closing Date and, with respect to the Option Shares, at the
Option Closing Date, and all covenants and agreements herein contained to be
performed on the part of the Company and all conditions herein contained to be
fulfilled or complied with by the Company at or prior to the Closing Date and,
with respect to the Option Shares, at or prior to the Option Closing Date, shall
have been duly performed, fulfilled or complied with.
(f) The Representatives shall have received an opinion, dated
the Closing Date and, with respect to the Option Shares, the Option Closing
Date, and satisfactory in form and substance to counsel for the Underwriters,
from each of (i) Wilson & Varner, counsel for the Company, to the effect set
forth in Exhibit C hereto, (ii) Wilson Sonsini, Goodrich & Rosati, special
counsel for the Company, to the effect set forth in Exhibit D hereto and (iii)
Arnold, White & Durkee, patent counsel for the Company, to the effect set forth
in Exhibit E hereto.
(g) The Representatives shall have received an opinion, dated
the Closing Date and, as to the Option Shares, the Option Closing Date, from
Shearman & Sterling, counsel to the Underwriters, with respect to the
Registration Statement, the Prospectus and this Agreement, which opinion shall
be satisfactory in all respects to the Representatives.
(h) On the date of the Prospectus, the Accountants shall have
furnished to the Representatives a letter, dated the date of its delivery,
addressed to the Representatives and in form and substance satisfactory to the
Representatives, confirming that they are independent accountants with respect
to the Company as required by the Act and the Rules and Regulations and with
respect to the financial and other statistical and numerical information
contained in the Registration Statement. At the Closing Date and, as to the
Option Shares, the Option Closing Date, the Accountants shall have furnished to
the Representatives a letter, dated the date of its
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<PAGE> 13
delivery, which shall confirm, on the basis of a review in accordance with the
procedures set forth in the letter from the Accountants, that nothing has come
to their attention during the period from the date of the letter referred to in
the prior sentence to a date (specified in the letter) not more than five days
prior to the Closing Date and the Option Closing Date which would require any
change in their letter dated the date of the Prospectus, if it were required to
be dated and delivered at the Closing Date and the Option Closing Date.
(i) At the Closing Date and, as to the Option Shares, the
Option Closing Date, there shall be furnished to the Representatives an accurate
certificate, dated the date of its delivery, signed by each of the Chief
Executive Officer and the Chief Financial Officer of the Company, in form and
substance satisfactory to the Representatives, to the effect that:
(i) Each signer of such certificate has carefully
examined the Registration Statement and the Prospectus and (A) as of
the date of such certificate, such documents are true and correct in
all material respects and do not omit to state a material fact required
to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
untrue or misleading and (B) since the Effective Date, no event has
occurred as a result of which it is necessary to amend or supplement
the Prospectus in order to make the statements therein not untrue or
misleading in any material respect.
(ii) Each of the representations and warranties of
the Company contained in this Agreement were, when originally made, and
are, at the time such certificate is delivered, true and correct in all
material respects.
(iii) Each of the covenants required herein to be
performed by the Company on or prior to the delivery of such
certificate has been duly, timely and fully performed and each
condition herein required to be complied with by the Company on or
prior to the date of such certificate has been duly, timely and fully
complied with.
(j) At or prior to the Closing Date, the Representatives shall
receive copies of the duly executed Lock-up Agreements pursuant to Section 2(m)
hereof.
(k) The Shares shall be qualified for sale in such states as
the Representatives may reasonably request, each such qualification shall be in
effect and not subject to any stop order or other proceeding on the Closing Date
and the Option Closing Date.
(l) Prior to the Closing Date, the Shares shall be listed for
quotation on the NASDAQ/NMS.
(m) Prior to the Closing Date, the Representatives shall
receive a copy of the restated certificate of incorporation of the Company (the
"Restated Certificate"), effective as of the Closing Date, certified by the
Secretary of State of the State of Delaware as being a true and correct copy of
the Restated Certificate executed, acknowledged, filed and recorded in
accordance with Section 103 of the Delaware General Corporation Law.
(n) The Company shall have furnished to the Representatives
such certificates, in addition to those specifically mentioned herein, as the
Representatives may have reasonably requested as to the accuracy and
completeness at the Closing Date and the Option Closing Date of any statement in
the Registration Statement or the Prospectus, as to the accuracy at the Closing
Date and the Option Closing Date of the representations and warranties of the
Company herein,
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<PAGE> 14
as to the performance by the Company of its obligations hereunder, or as to the
fulfillment of the conditions concurrent and precedent to the obligations
hereunder of the Representatives.
6. Indemnification.
(a) The Company will indemnify and hold harmless each
Underwriter and each person, if any, who controls each Underwriter (and each
director, officer, employee and agent of each Underwriter alleged to control any
Underwriter) within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act from and against any and all losses, claims, liabilities, expenses
and damages (including any and all investigative, legal and other expenses
reasonably incurred in connection with, and any amount paid in settlement of,
any action, suit or proceeding between any of the indemnified parties and any
indemnifying parties or between any indemnified party and any third party, or
otherwise, or any claim asserted), to which they, or any of them, may become
subject under the Act, the Exchange Act or other Federal or state statutory law
or regulation, at common law or otherwise, insofar as such losses, claims,
liabilities, expenses or damages arise out of or are based on (i) any untrue
statement or alleged untrue statement of a material fact contained in any
preliminary prospectus, the Registration Statement or the Prospectus or any
amendment or supplement to the Registration Statement or the Prospectus, or (ii)
the omission or alleged omission to state in such document a material fact
required to be stated in it or necessary to make the statements in it not
misleading, or (iii) any act or failure to act or any alleged act or failure to
act by an Underwriter in connection with, or relating in any manner to, the
Shares or the offering contemplated hereby, and which is included as part of or
referred to in any loss, claim, damage, liability or action arising out of or
based upon matters covered by clause (i) or (ii) above (provided that the
Company shall not be liable under this clause (iii) to the extent it is
determined in a final judgment by a court of competent jurisdiction that such
loss, claim, damage, liability or action resulted directly from any such acts or
failures to act undertaken or omitted to be taken by such Underwriter through
its gross negligence or willful misconduct), provided that the Company will not
be liable to the extent that such loss, claim, liability, expense or damage
arises from the sale of the Shares in the public offering to any person by an
Underwriter and is based on an untrue statement or omission or alleged untrue
statement or omission made in reliance on and in conformity with information
relating to any Underwriter furnished in writing to the Company by the
Representatives on behalf of any Underwriter expressly for inclusion in the
Registration Statement, any preliminary prospectus or the Prospectus. This
indemnity agreement will be in addition to any liability that the Company might
otherwise have.
(b) Each Underwriter will indemnify and hold harmless the
Company, each person, if any, who controls the Company within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act, each director of the
Company and each officer of the Company who signs the Registration Statement to
the same extent as the foregoing indemnity from the Company to each Underwriter,
but only insofar as losses, claims, liabilities, expenses or damages arise out
of or are based on any untrue statement or omission or alleged untrue statement
or omission made in reliance on and in conformity with information relating to
any Underwriter furnished in writing to the Company by the Representatives on
behalf of such Underwriter expressly for use in the Registration Statement, the
Preliminary Prospectus or the Prospectus. This indemnity will be in addition to
any liability that each Underwriter might otherwise have.
(c) Any party that proposes to assert the right to be
indemnified under this Section 6 will, promptly after receipt of notice of
commencement of any action against such party in respect of which a claim is to
be made against an indemnifying party or parties under this Section 6, notify
each such indemnifying party of the commencement of such action, enclosing a
copy of all papers served, but the omission so to notify such indemnifying party
will not relieve it
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<PAGE> 15
from any liability that it may have to any indemnified party under the foregoing
provisions of Section 6 unless, and only to the extent that, such omission
results in the forfeiture of substantive rights or defenses by the indemnifying
party. If any such action is brought against any indemnified party and it
notifies the indemnifying party of its commencement, the indemnifying party will
be entitled to participate in and, to the extent that it elects by delivering
written notice to the indemnified party promptly after receiving notice of the
commencement of the action from the indemnified party, jointly with any other
indemnifying party similarly notified, to assume the defense of the action, with
counsel satisfactory to the indemnified party, and after notice from the
indemnifying party to the indemnified party of its election to assume the
defense, the indemnifying party will not be liable to the indemnified party for
any legal or other expenses except as provided below and except for the
reasonable costs of investigation subsequently incurred by the indemnified party
in connection with the defense. The indemnified party will have the right to
employ its own counsel in any such action, but the fees, expenses and other
charges of such counsel will be at the expense of such indemnified party unless
(1) employment of counsel by the indemnified party has been authorized in
writing by the indemnifying party, (2) the indemnified party has reasonably
concluded (based on advice of counsel) that there may be legal defenses
available to it or other indemnified parties that are different from or in
addition to those available to the indemnifying party, (3) a conflict or
potential conflict exists (based on advice of counsel to the indemnified party)
between the indemnified party and the indemnifying party (in which case the
indemnifying party will not have the right to direct the defense of such action
on behalf of the indemnified party) or (4) the indemnifying party has not in
fact employed counsel to assume the defense of such action within a reasonable
time after receiving notice of the commencement of the action, in each of which
cases the reasonable fees, disbursements and other charges of counsel will be at
the expense of the indemnifying party or parties. It is understood that the
indemnifying party or parties shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the reasonable fees,
disbursements and other charges of more than one separate firm admitted to
practice in such jurisdiction at any one time for all such indemnified party or
parties. All such fees, disbursements and other charges will be reimbursed by
the indemnifying party promptly as they are incurred. An indemnifying party will
not be liable for any settlement of any action or claim effected without its
written consent (which consent will not be unreasonably withheld). No
indemnifying party shall, without the prior written consent of each indemnified
party, settle or compromise or consent to the entry of any judgment in any
pending or threatened claim, action or proceeding relating to the matters
contemplated by this Section 6 (whether or not any indemnified party is a party
thereto), unless such settlement, compromise or consent includes an
unconditional release of each indemnified party form all liability arising or
that may arise out of such claim, action or proceeding.
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in the foregoing
paragraphs of this Section 6 is applicable in accordance with its terms but for
any reason is held to be unavailable from the Company or the Underwriters, the
Company and the Underwriters will contribute to the total losses, claims,
liabilities, expenses and damages (including any investigative, legal and other
expenses reasonably incurred in connection with, and any amount paid in
settlement of, any action, suit or proceeding or any claim asserted, but after
deducting any contribution received by the Company from persons other than the
Underwriters, such as persons who control the Company within the meaning of the
Act, officers of the Company who signed the Registration Statement and directors
of the Company, who also may be liable for contribution) to which the Company
and any one or more of the Underwriters may be subject in such proportion as
shall be appropriate to reflect the relative benefits received by the Company on
the one hand and the Underwriters on the other. The relative benefits received
by the Company on the one hand and the Underwriters on the other shall be deemed
to be in the same proportion as the total net proceeds from the offering (before
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<PAGE> 16
deducting expenses) received by the Company bear to the total underwriting
discounts and commissions received by the Underwriters, in each case as set
forth in the table on the cover page of the Prospectus. If, but only if, the
allocation provided by the foregoing sentence is not permitted by applicable
law, the allocation of contribution shall be made in such proportion as is
appropriate to reflect not only the relative benefits referred to in the
foregoing sentence but also the relative fault of the Company, on the one hand,
and the Underwriters, on the other, with respect to the statements or omissions
which resulted in such loss, claim, liability, expense or damage, or action in
respect thereof, as well as any other relevant equitable considerations with
respect to such offering. Such relative fault shall be determined by reference
to whether the untrue or alleged untrue statement of a material fact or omission
or alleged omission to state a material fact relates to information supplied by
the Company or the Representatives on behalf of the Underwriters, the intent of
the parties and their relative knowledge, access to information and opportunity
to correct or prevent such statement or omission. The Company and the
Underwriters agree that it would not be just and equitable if contributions
pursuant to this Section 6(d) were to be determined by pro rata allocation (even
if the Underwriters were treated as one entity for such purpose) or by any other
method of allocation which does not take into account the equitable
considerations referred to herein. The amount paid or payable by an indemnified
party as a result of the loss, claim, liability, expense or damage, or action in
respect thereof, referred to above in this Section 6(d) shall be deemed to
include, for purposes of this Section 6(d), any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
Section 6(d), no Underwriter shall be required to contribute any amount in
excess of the underwriting discounts received by it and no person found guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
will be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations to contribute as
provided in this Section 6(d) are several in proportion to their respective
underwriting obligations and not joint. For purposes of this Section 6(d), any
person who controls a party to this Agreement within the meaning of the Act will
have the same rights to contribution as that party, and each officer of the
Company who signed the Registration Statement will have the same rights to
contribution as the Company, subject in each case to the provisions hereof. Any
party entitled to contribution, promptly after receipt of notice of commencement
of any action against such party in respect of which a claim for contribution
may be made under this Section 6(d), will notify any such party or parties from
whom contribution may be sought, but the omission so to notify will not relieve
the party or parties from whom contribution may be sought from any other
obligation it or they may have under this Section 6(d). No party will be liable
for contribution with respect to any action or claim settled without its written
consent (which consent will not be unreasonably withheld).
(e) The indemnity and contribution agreements contained in
this Section 6 and the representations and warranties of the Company contained
in this Agreement shall remain operative and in full force and effect regardless
of (i) any investigation made by or on behalf of the Underwriters, (ii)
acceptance of the Shares and payment therefor or (iii) any termination of this
Agreement.
7. Termination. The obligations of the several Underwriters under this
Agreement may be terminated at any time on or prior to the Closing Date (or,
with respect to the Option Shares, on or prior to the Option Closing Date), by
notice to the Company from the Representatives, without liability on the part of
any Underwriter to the Company, if, prior to delivery and payment for the Shares
(or the Option Shares, as the case may be), in the sole judgment of the
Representatives, (i) trading in any of the equity securities of the Company
shall have been suspended by the Commission, or by the NASDAQ/NMS, (ii) trading
in securities
-16-
<PAGE> 17
generally on the New York Stock Exchange shall have been suspended or limited or
minimum or maximum prices shall have been generally established on such
exchange, or additional material governmental restrictions, not in force on the
date of this Agreement, shall have been imposed upon trading in securities
generally by such exchange or by order of the Commission or any court or other
governmental authority, (iii) a general banking moratorium shall have been
declared by either Federal or New York State authorities or (iv) any material
adverse change in the financial or securities markets in the United States or in
political, financial or economic conditions in the United States or any outbreak
or material escalation of hostilities or declaration by the United States of a
national emergency or war or other calamity or crisis shall have occurred the
effect of any of which is such as to make it, in the sole judgment of the
Representatives, impracticable or inadvisable to market the Shares on the terms
and in the manner contemplated by the Prospectus.
8. Substitution of Underwriters. If any one or more of the Underwriters
shall fail or refuse to purchase any of the Firm Shares which it or they have
agreed to purchase hereunder, and the aggregate number of Firm Shares which such
defaulting Underwriter or Underwriters agreed but failed or refused to purchase
is not more than one-tenth of the aggregate number of Firm Shares, the other
Underwriters shall be obligated, severally, to purchase the Firm Shares which
such defaulting Underwriter or Underwriters agreed but failed or refused to
purchase, in the proportions which the number of Firm Shares which they have
respectively agreed to purchase pursuant to Section 1 hereof bears to the
aggregate number of Firm Shares which all such non-defaulting Underwriters have
so agreed to purchase, or in such other proportions as the Representatives may
specify; provided that in no event shall the maximum number of Firm Shares which
any Underwriter has become obligated to purchase pursuant to Section 1 hereof be
increased pursuant to this Section 8 by more than one-ninth of the number of
Firm Shares agreed to be purchased by such Underwriter without the prior written
consent of such Underwriter. If any Underwriter or Underwriters shall fail or
refuse to purchase any Firm Shares and the aggregate number of Firm Shares which
such defaulting Underwriter or Underwriters agreed but failed or refused to
purchase exceeds one-tenth of the aggregate number of the Firm Shares and
arrangements satisfactory to the Representatives and the Company for the
purchase of such Firm Shares are not made within 48 hours after such default,
this Agreement will terminate without liability on the part of any
non-defaulting Underwriter or the Company for the purchase or sale of any Shares
under this Agreement. In any such case either the Representatives or the Company
shall have the right to postpone the Closing Date, but in no event for longer
than seven days, in order that the required changes, if any, in the Registration
Statement and in the Prospectus or in any other documents or arrangements may be
effected. Any action taken pursuant to this Section 8 shall not relieve any
defaulting Underwriter from liability in respect of any default of such
Underwriter under this Agreement.
9. Miscellaneous. Notice given pursuant to any of the provisions of
this Agreement shall be in writing and, unless otherwise specified, shall be
mailed or delivered (a) if to the Company, at the office of the Company, [7000
Fannin Street, Suite 1920, Houston, Texas 77030], Attention: David G. Nance, or
(b) if to the Underwriters, to the Representatives at the offices of PaineWebber
Incorporated, 1285 Avenue of the Americas, New York, New York 10019, Attention:
Corporate Finance Department. Any such notice shall be effective only upon
receipt. Any notice under Section 7 or 8 hereof may be made by telex or
telephone, but if so made shall be subsequently confirmed in writing.
This Agreement has been and is made solely for the benefit of the
several Underwriters and the Company and of the controlling persons, directors
and officers referred to in Section 6 hereof, and their respective successors
and assigns, and no other person shall acquire or have any right under or by
virtue of this Agreement. The term "successors and assigns" as used in this
-17-
<PAGE> 18
Agreement shall not include a purchaser, as such purchaser, of Shares from any
of the several Underwriters.
All representations, warranties and agreements of the Company contained
herein or in certificates or other instruments delivered pursuant hereto, shall
remain operative and in full force and effect regardless of any investigation
made by or on behalf of any Underwriter or any of its controlling persons and
shall survive delivery of and payment for the Shares hereunder.
Any action required or permitted to be taken by the Representatives
under this Agreement may be taken by them jointly or by PaineWebber
Incorporated.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICT
OF LAWS PRINCIPLES OF SUCH STATE.
This Agreement may be signed in two or more counterparts with the same
effect as if the signatures thereto and hereto were upon the same instrument.
In case any provision in 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.
The Company and the Underwriters each hereby irrevocably waive any
right they may have to a trial by jury in respect of any claim based upon or
arising out of this Agreement or the transactions contemplated hereby.
This Agreement may not be amended or otherwise modified or any
provision hereof waived except by an instrument in writing signed by the
Representatives and the Company.
-18-
<PAGE> 19
Please confirm that the foregoing correctly sets forth the agreement
among the Company and the several Underwriters.
Very truly yours,
INTROGEN THERAPEUTICS,
INC.
By:___________________
Title:
Confirmed as of the date first above mentioned:
PAINEWEBBER INCORPORATED GENESIS MERCHANT GROUP SECURITIES Acting on behalf of
themselves and as the Representatives of the other several Underwriters named in
Schedule I hereto.
By: PAINEWEBBER INCORPORATED
By: _____________________________
Title:
GENESIS MERCHANT GROUP
SECURITIES
By: GENESIS MERCHANT GROUP SECURITIES
By: _____________________________
Title:
-19-
<PAGE> 20
SCHEDULE I
UNDERWRITERS
Number of
Name of Firm Shares
Underwriters to be Purchased
- ------------ ---------------
PaineWebber Incorporated
Genesis Merchant Group Securities
Total................................................
<PAGE> 21
SCHEDULE II
PRODUCT AGREEMENTS
Patent and Technology License Agreement, effective as of July 20, 1994, among
the Board of Regents of the University of Texas System, the University of Texas
M.D. Anderson Cancer Center ("UTMDACC") and Introgen Therapeutics, Inc. (the
"Company").
Sponsored Research Agreement for Clinical Study, No. CS93-27, dated February 11,
1993, between Texas Biomedical Development Partners and UTMDACC, as amended by
(i) Amendment No. 1, dated July 20, 1994, between the Company and UTMDACC, (ii)
Amendment No. 2, dated January 1, 1995, between the Company and UTMDACC, and
(iii) Amendment No. 3, dated December 31, 1995 between the Company and UTMDACC.
Sponsored Research Agreement No. SR95-012, dated September 21, 1995, between the
Company and UTMDACC, as amended by Amendment No. 1, dated July 24, 1994, between
the Company and UTMDACC.
Sponsored Research Agreement No. SR93-04, dated February 11, 1993, between
UTMDACC and Texas Biomedical Development Partners, as amended by (i) Amendment
No. 1, dated July 20, 1994, between the Company and UTMDACC, (ii) Amendment No.
2, dated January 1, 1995, between the Company and UTMDACC, and (iii) Amendment
No. 3, dated December 31, 1995 between the Company and UTMDACC.
Sponsored Laboratory Study Agreement No. LS95-035, dated September 21, 1995,
between the Company and UTMDACC.
Sponsored Research Agreement No. SR96-004, dated January 17, 1996, between the
Company and UTMDACC.
Sponsored Research Agreement, dated March 29, 1996, between the Company and
Sidney Kimmel Cancer Center ("SKCC").
License Agreement, dated March 29, 1996, between the Company and SKCC.
Collaboration Agreement (p53 products), dated as of October 7, 1994, between the
Company and Rhone-Poulenc Rorer Pharmaceuticals, Inc. ("RPR"), as amended by
Addendum No. 1, dated January 23, 1996, between the Company and RPR.
Collaboration Agreement (K-RAS products), dated as of October 7, 1994, between
the Company and RPR, as amended by (i) Amendment No. 1, dated September 27,
1995, between the Company and RPR, and (ii) Letter Agreement, dated September
27, 1995, between the Company and RPR.
Letter of Intent, dated March 26, 1996, among the National Cancer Institute,
the Company and RPR.
<PAGE> 22
EXHIBIT A
INTROGEN THERAPEUTICS, INC.
PRICE DETERMINATION AGREEMENT
[_____], 1996
PAINEWEBBER INCORPORATED
GENESIS MERCHANT GROUP SECURITIES
As Representatives of the several Underwriters
c/o PaineWebber Incorporated
1285 Avenue of the Americas
New York, New York 10019
Dear Sirs:
Reference is made to the Underwriting Agreement, dated [______], 1996
(the "Underwriting Agreement"), among Introgen Therapeutics, Inc., a Delaware
corporation (the "Company"), and the several Underwriters named in Schedule I
thereto or hereto (the "Underwriters"), for whom PaineWebber Incorporated and
Genesis Merchant Group Securities are acting as representatives (the
"Representatives"). The Underwriting Agreement provides for the purchase by the
Underwriters from the Company, subject to the terms and conditions set forth
therein, of an aggregate of [________] shares (the "Firm Shares") of the
Company's common stock, par value $.001 per share. This Agreement is the Price
Determination Agreement referred to in the Underwriting Agreement.
Pursuant to Section 1 of the Underwriting Agreement, the undersigned
agrees with the Representatives as follows:
The initial public offering price per share for the Firm Shares shall
be $[__________].
The purchase price per share for the Firm Shares to be paid by the
several Underwriters shall be $[__________] representing an amount equal to the
initial public offering price per share set forth above, less $[__________] per
share.
The Company represents and warrants to each of the Underwriters that
the representations and warranties of the Company set forth in Section 3 of the
Underwriting Agreement are accurate as though expressly made at and as of the
date hereof.
<PAGE> 23
As contemplated by the Underwriting Agreement, attached as Schedule I
hereto is a completed list of the several Underwriters, which shall be a part of
this Agreement and the Underwriting Agreement.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICT OF LAWS
PRINCIPLES OF SUCH STATE.
If the foregoing is in accordance with your understanding of the
agreement among the Underwriters and the Company, please sign and return to the
Company a counterpart hereof, whereupon this instrument along with all
counterparts and together with the Underwriting Agreement shall be a binding
agreement among the several Underwriters and the Company in accordance with its
terms and the terms of the Underwriting Agreement.
Very truly yours,
INTROGEN THERAPEUTICS, INC.
By:________________________
Title:
Confirmed as of the date first above mentioned:
PAINEWEBBER INCORPORATED GENESIS MERCHANT GROUP SECURITIES Acting on behalf of
themselves and as the Representatives of the other several Underwriters named in
Schedule I hereto.
By: PAINEWEBBER INCORPORATED
By: _____________________________
Title:
By: GENESIS MERCHANT GROUP SECURITIES
By: _____________________________
Title:
A-2
<PAGE> 24
EXHIBIT B
[_____________], 1996
PAINEWEBBER INCORPORATED
GENESIS MERCHANT GROUP SECURITIES
As Representatives of the
several Underwriters
c/o PaineWebber Incorporated
1285 Avenue of the Americas
New York, New York 10019
Ladies and Gentlemen:
In consideration of the agreement of the several Underwriters, for
which PaineWebber Incorporated and Genesis Merchant Group Securities (the
"Representatives") intend to act as Representatives to underwrite a proposed
public offering (the "Offering") of Common Stock, par value $.001 per share (the
"Common Stock") of Introgen Therapeutics, Inc., a Delaware corporation (the
"Company"), as contemplated by a registration statement with respect to such
shares to be filed with the Securities and Exchange Commission on Form S-1, the
undersigned hereby agrees that the undersigned will not, for a period of 180
days after the commencement of the public offering of such shares, without the
prior written consent of PaineWebber Incorporated, offer to sell, sell, contract
to sell, grant any option to sell, or otherwise dispose of, or require the
Company to file with the Securities and Exchange Commission a registration
statement under the Securities Act of 1933, as amended, or to register any
shares of Common Stock or securities convertible into or exchangeable for Common
Stock or warrants or other rights to acquire shares of Common Stock of which the
undersigned is now, or may in the future become, the beneficial owner within the
meaning of Rule 13d-3 under the Securities Exchange Act of 1934, as amended)
(other than pursuant to employee stock option plans of the Company or in
connection with other employee incentive compensation arrangements of the
Company).
Very truly yours,
By:______________________
Print Name:_______________________
<PAGE> 25
EXHIBIT C
Form of Opinion of Wilson & Varner,
Counsel for the Company
1. The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware. The Company is duly
licensed or qualified to do business and is in good standing as a foreign
corporation in all jurisdictions in which the nature of the activities conducted
by it or the character of the assets owned or leased by it makes such licensing
or qualification necessary, except where the failure to be so licensed or
qualified would not have a material adverse effect on the business, properties,
business prospects, condition (financial or otherwise), or results of operations
of the Company (the foregoing being the "Business of the Company"). The Company
has full power and authority to conduct all the activities conducted by it, to
own or lease all the assets owned or leased by it and to conduct its business as
described in the Registration Statement and the Prospectus.
2. The outstanding shares of Common Stock have been duly authorized and
validly issued and are fully paid and nonassessable and are not subject to any
preemptive or similar right.
3. The Shares sold to the Underwriters pursuant to the Underwriting
Agreement have been duly authorized and validly issued by the Company and are
fully paid and nonassessable; and no holder thereof is subject to personal
liability by reason of being such a holder.
4. The issuance of the Shares by the Company is not subject to
preemptive rights of any holder of securities of the Company.
5. No consent, approval, authorization or order of, or any filing or
declaration with, any court or government agency or body is required in
connection with the authorization, issuance, transfer, sale or delivery of the
Shares by the Company, in connection with the execution, delivery and
performance of the Underwriting Agreement by the Company or in connection with
the taking by the Company of any action contemplated thereby, except such as
have been obtained under the Act and the Rules and Regulations and such as may
be required under the by-laws and rules of the NASD in connection with the
purchase and distribution by the Underwriters of the Shares. All references in
this opinion to the Underwriting Agreement shall include the Price Determination
Agreement.
6. The authorized capital stock of the Company is as set forth in the
Registration Statement and the Prospectus. The description of the Company's
Common Stock contained in the Prospectus conforms to the terms thereof contained
in the Company's certificate of incorporation.
7. We have reviewed all contracts and other documents referred to in
the Registration Statement and the Prospectus, and the descriptions thereof
(insofar as such descriptions constitute a summary of the legal matters referred
to therein) are accurate in all material respects. After due inquiry, we do not
know of any contracts or other documents required to be so summarized or
disclosed or filed as an exhibit to the Registration Statement which have not
been so summarized or disclosed or filed.
8. All descriptions in the Prospectus of statutes and regulations and,
to the best of our knowledge, of legal or governmental proceedings are accurate
and fairly present the information shown therein.
<PAGE> 26
9. The Company has full corporate power and authority to enter into the
Underwriting Agreement, and the Underwriting Agreement has been duly authorized,
executed and delivered by the Company.
10. The execution and delivery of the Underwriting Agreement by the
Company, the consummation by the Company of the transactions therein
contemplated and the compliance by the Company with the terms of the
Underwriting Agreement do not and will not result in the creation or imposition
of any lien, charge or encumbrance upon any of the assets of the Company
pursuant to the terms or provisions of, or result in a breach or violation of
any of the terms or provisions of, or constitute a default or result in the
acceleration of any obligation under, the certificate of incorporation or
by-laws of the Company, or any indenture, mortgage, deed of trust, voting trust
agreement, loan agreement, bond, debenture, note agreement or other evidence of
indebtedness, lease, contract or other agreement or instrument known to us to
which the Company is a party or by which any of the Company's properties is
bound or affected, or any judgment, ruling decree or order known to us or any
statute, rule or regulation applicable to the business or properties of the
Company.
11. Delivery of certificates for the Shares will pass valid and
marketable title thereto free and clear of any liens, encumbrances or claims to
each Underwriter that has purchased such Shares in good faith without knowledge
or reason to know of any adverse claims thereto and we are not aware, after due
inquiry, of any adverse claim with respect thereto.
12. We know of no actions, suits or proceedings pending or threatened
against or affecting the Company or any of its officers in their capacities as
such, before or by any Federal or state or foreign court, commission, regulatory
body, administrative agency or other governmental body, wherein an unfavorable
ruling, decision or finding would materially and adversely affect the Company or
the Business of the Company, except as set forth in or contemplated by the
Registration Statement and the Prospectus.
13. To the best of our knowledge, neither the Company is not in
violation of its certificate of incorporation or by-laws or in default (nor has
an event occurred which with notice or lapse of time or both would constitute a
default or acceleration) in the performance of any obligation, agreement or
condition contained in any indenture, mortgage, deed of trust, voting trust
agreement, loan agreement, bond, debenture, note agreement or other evidence of
indebtedness, lease, contract or other agreement or instrument known to us to
which the Company is a party or by which its properties are bound or affected
and the Company is not in violation of any judgment, ruling, decree, order,
franchise, license or permit known to us or any statute, rule or regulation
applicable to the business or properties of the Company, where such violation or
default would have a material adverse effect on the Business of the Company.
14. Each of the agreements set forth on Schedule II to the Underwriting
Agreement has been duly authorized, executed and delivered by each of the
parties thereto and is enforceable against the Company in accordance with its
terms, subject to applicable bankruptcy and other similar laws affecting
creditors' rights generally and to general principles of equity.
In rendering the foregoing opinion, counsel may rely as to matters of
fact, to the extent they deem such reliance proper, on certificates of officers
of the Company and of government officials. Copies of all such certificates
shall be furnished to counsel to the Underwriters on the Closing Date. Such
counsel may state that they are not passing on matters relating to patents and
trademarks or federal or state regulation of healthcare products. Such counsel
may also state that their opinion is limited to the laws of the State of Texas
(other than the securities or Blue Sky
C-2
<PAGE> 27
laws thereof), the General Corporation Law of the State of Delaware and the
Federal laws of the United States.
C-3
<PAGE> 28
EXHIBIT D
Form of Opinion of Wilson Sonsini Goodrich & Rosati,
Special Counsel for the Company
1. The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware. The Company is duly
licensed or qualified to do business and is in good standing as a foreign
corporation in all jurisdictions in which the nature of the activities conducted
by it or the character of the assets owned or leased by it makes such licensing
or qualification necessary, except where the failure to be so licensed or
qualified would not have a material adverse effect on the business, properties,
business prospects, condition (financial or otherwise), or results of operations
of the Company (the foregoing being the "Business of the Company"). The Company
has full power and authority to conduct all the activities conducted by it, to
own or lease all the assets owned or leased by it and to conduct its business as
described in the Registration Statement and the Prospectus.
2. The outstanding shares of Common Stock have been duly authorized and
validly issued and are fully paid and nonassessable and are not subject to any
preemptive or similar right.
3. The Shares sold to the Underwriters pursuant to the Underwriting
Agreement have been duly authorized and validly issued by the Company and are
fully paid and nonassessable; and no holder thereof is subject to personal
liability by reason of being such a holder.
4. The issuance of the Shares by the Company is not subject to
preemptive rights of any holder of securities of the Company.
5. No consent, approval, authorization or order of, or any filing or
declaration with, any court or government agency or body is required in
connection with the authorization, issuance, transfer, sale or delivery of the
Shares by the Company, in connection with the execution, delivery and
performance of the Underwriting Agreement by the Company or in connection with
the taking by the Company of any action contemplated thereby, except such as
have been obtained under the Act and the Rules and Regulations and such as may
be required under the by-laws and rules of the NASD in connection with the
purchase and distribution by the Underwriters of the Shares. All references in
this opinion to the Underwriting Agreement shall include the Price Determination
Agreement.
6. The authorized capital stock of the Company is as set forth in the
Registration Statement and the Prospectus. The description of the Company's
Common Stock contained in the Prospectus conforms to the terms thereof contained
in the Company's certificate of incorporation.
7. The Registration Statement and the Prospectus comply in all material
respects as to form with the requirements of the Act and the Rules and
Regulations (except that we express no opinion as to financial statements,
schedules and other financial and statistical data contained in the Registration
Statement or the Prospectus).
8. We have participated in the preparation of the Registration
Statement and the Prospectus. Except as explicitly provided herein, we have not
undertaken to verify independently the facts disclosed in the Registration
Statement and the Prospectus. However, in the course of such participation
nothing has come to our attention which has caused us to believe that (i) the
<PAGE> 29
Registration Statement, at the time the Registration Statement became effective,
contained any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading and (ii) the Prospectus or any supplement thereto, at the
time the Prospectus or any supplement thereto was issued or on the date hereof,
contained or contains any untrue statement of a material fact or omitted or
omits to state any material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading (except that we express no opinion as to
financial statements, schedules and other financial or statistical data
contained in the Registration Statement or the Prospectus).
9. The Registration Statement has become effective under the Act and,
to the best of our knowledge, no order suspending the effectiveness of the
Registration Statement has been issued and no proceeding for that purpose has
been instituted or is threatened, pending or contemplated.
10. We have reviewed all contracts and other documents referred to in
the Registration Statement and the Prospectus, and the descriptions thereof
(insofar as such descriptions constitute a summary of the legal matters referred
to therein) are accurate in all material respects. After due inquiry, we do not
know of any contracts or other documents required to be so summarized or
disclosed or filed as an exhibit to the Registration Statement which have not
been so summarized or disclosed or filed.
11. All descriptions in the Prospectus of statutes and regulations and,
to the best of our knowledge, of legal or governmental proceedings are accurate
and fairly present the information shown therein.
12. The Company has full corporate power and authority to enter into
the Underwriting Agreement, and the Underwriting Agreement has been duly
authorized, executed and delivered by the Company.
13. The execution and delivery of the Underwriting Agreement by the
Company, the consummation by the Company of the transactions therein
contemplated and the compliance by the Company with the terms of the
Underwriting Agreement do not and will not result in the creation or imposition
of any lien, charge or encumbrance upon any of the assets of the Company
pursuant to the terms or provisions of, or result in a breach or violation of
any of the terms or provisions of, or constitute a default or result in the
acceleration of any obligation under, the certificate of incorporation or
by-laws of the Company, or any indenture, mortgage, deed of trust, voting trust
agreement, loan agreement, bond, debenture, note agreement or other evidence of
indebtedness, lease, contract or other agreement or instrument known to us to
which the Company is a party or by which any of the Company's properties is
bound or affected, or any judgment, ruling decree or order known to us or any
statute, rule or regulation applicable to the business or properties of the
Company.
14. Delivery of certificates for the Shares will pass valid and
marketable title thereto free and clear of any liens, encumbrances or claims to
each Underwriter that has purchased such Shares in good faith without knowledge
or reason to know of any adverse claims thereto and we are not aware, after due
inquiry, of any adverse claim with respect thereto.
15. We know of no actions, suits or proceedings pending or threatened
against or affecting the Company or any of its officers in their capacities as
such, before or by any Federal or state or foreign court, commission, regulatory
body, administrative agency or other governmental
D-2
<PAGE> 30
body, wherein an unfavorable ruling, decision or finding would materially and
adversely affect the Company or the Business of the Company, except as set forth
in or contemplated by the Registration Statement and the Prospectus.
16. To the best of our knowledge, neither the Company is not in
violation of its certificate of incorporation or by-laws or in default (nor has
an event occurred which with notice or lapse of time or both would constitute a
default or acceleration) in the performance of any obligation, agreement or
condition contained in any indenture, mortgage, deed of trust, voting trust
agreement, loan agreement, bond, debenture, note agreement or other evidence of
indebtedness, lease, contract or other agreement or instrument known to us to
which the Company is a party or by which its properties are bound or affected
and the Company is not in violation of any judgment, ruling, decree, order,
franchise, license or permit known to us or any statute, rule or regulation
applicable to the business or properties of the Company, where such violation or
default would have a material adverse effect on the Business of the Company.
17. The Company is not an "investment company" or an "affiliated
person" of, or "promoter" or "principal underwriter" for, an "investment
company," as such terms are defined in the Investment Company Act of 1940, as
amended.
18. The Shares have been duly authorized for quotation on the NASDAQ
National Market System upon official notice of issuance.
19. Each of the agreements set forth on Schedule II to the Underwriting
Agreement has been duly authorized, executed and delivered by each of the
parties thereto and is enforceable against the Company in accordance with its
terms, subject to applicable bankruptcy and other similar laws affecting
creditors' rights generally and to general principles of equity.
In rendering the foregoing opinion, counsel may rely as to matters of
fact, to the extent they deem such reliance proper, on certificates of officers
of the Company and of government officials. Copies of all such certificates
shall be furnished to counsel to the Underwriters on the Closing Date. Such
counsel may state that they are not passing on matters relating to patents and
trademarks or federal or state regulation of healthcare products. Such counsel
may also state that their opinion is limited to the laws of the state of Texas
(other than the securities or Blue Sky laws thereof), the General Corporation
Law of the State of Delaware and the Federal laws of the United States.
D-3
<PAGE> 31
EXHIBIT E
Form of Opinion of Arnold, White & Durkee,
Patent Counsel for the Company
1. The statements in the Registration Statement and the Prospectus
under the captions "Risk Factors--Uncertain Ability to Protect Patents" and
"Business--Patents and Proprietary Rights" insofar as such statements constitute
a summary of legal matters, documents or proceedings referred to therein are
accurate and fairly summarize the matters referred to therein.
2. There are no pending or, to the best of our knowledge, threatened
actions, suits or proceedings against or affecting any patents, patent licenses,
trademarks, service marks, trade names, copyrights, mask works, technology,
know-how or other proprietary intellectual property rights ("Intellectual
Property") owned or used by the Company or necessary to conduct the business now
or proposed to be conducted by it as described in the Prospectus, to which the
Company is a party or to which any of the properties of the Company is subject,
except as disclosed in the Registration Statement, which, if adversely decided,
would have a material adverse effect on the business, properties, business
prospects, condition (financial or otherwise), or results of operations of the
Company.
3. To the best of our knowledge, the Company has not received any
notice of infringement or alleged infringement of the Company or conflict with
asserted rights of others with respect to any Intellectual Property, except as
disclosed in the Registration Statement, which could have a material adverse
effect on the business, properties, business prospects, condition (financial or
otherwise), or results of operations of the Company.
4. The Company has duly and properly filed with the U.S. Patent and
Trademark Office the pending patent applications referred to in the Prospectus.
In rendering the foregoing opinion, counsel may rely as to matters of
fact, to the extent they deem such reliance proper, on certificates of officers
of the Company and of government officials. Copies of all such certificates
shall be furnished to counsel to the Underwriters on the Closing Date. Such
counsel may also state that their opinion is limited to the laws of the state of
Texas (other than the securities or Blue Sky laws thereof) and the Federal laws
of the United States.
<PAGE> 1
EXHIBIT 3.1
RESTATED CERTIFICATE OF INCORPORATION
OF INTROGEN THERAPEUTICS, INC.
Introgen Therapeutics, Inc., a corporation organized and existing under
the laws of the State of Delaware, hereby certifies as follows:
A. The name of the corporation is Introgen Therapeutics, Inc. The
original Certificate of Incorporation of the corporation was filed with the
Delaware Secretary of State on June 17, 1993.
B. Pursuant to Sections 241 and 245 of the Delaware General Corporation
Law, this Restated Certificate of Incorporation restates and integrates and
further amends the provisions of the Certificate of Incorporation of this
corporation.
C. The text of the Certificate of Incorporation, as amended, is hereby
amended and restated in its entirety to read as follows:
ONE. The name of this corporation is Introgen Therapeutics, Inc.
TWO. The address of the corporation's registered office in the State of
Delaware is Corporation Trust Center, 1209 Orange Street, in the City of
Wilmington, County of New Castle. The name of its registered agent at such
office is The Corporation Trust Company.
THREE. The purpose of the corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of Delaware.
FOUR. This corporation is authorized to issue two classes of stock to
be designated Common Stock and Preferred Stock. The total number of shares of
Common Stock, $0.001 par value, which this corporation has authority to issue is
20,000,000. The total number of shares of Preferred Stock, $0.001 par value,
which this corporation has authority to issue is 6,308,523. 3,011,423 shares of
Preferred Stock are designated Series A Preferred Stock ("Series A Preferred"),
2,114,100 shares of Preferred Stock are designated Series B Preferred Stock
("Series B Preferred") and 1,183,000 shares of Preferred Stock are designated
Series C Preferred Stock ("Series C Preferred").
<PAGE> 2
The relative powers, preferences, special rights, qualifications,
limitations and restrictions granted to or imposed on the respective classes of
the shares of capital stock or the holders thereof are as follows:
1. Dividends. The holders of the Series A Preferred, the Series B
Preferred and Series C Preferred shall be entitled, when and if declared by the
Board of Directors of the corporation, to dividends out of the corporation's
assets legally available therefor at the rate of $0.10, $0.575 and $.865 per
share per annum, respectively. Such dividends on the Series A Preferred shall be
paid in preference and prior to any payment of any dividend on the Series B
Preferred, Series C Preferred and Common Stock. Such dividends on the Series B
Preferred shall be paid in preference and prior to any payment of any dividend
on the Series C Preferred and Common Stock. Such dividends on the Series C
Preferred shall be paid in preference and prior to any payment of any dividend
on the Common Stock. Thereafter, the holders of Common Stock shall be entitled,
when and if declared by the Board of Directors, to dividends out of the
corporation's assets legally available therefor. The right to such dividends on
shares of the Common Stock or Preferred Stock shall not be cumulative, and no
right shall accrue to holders of Common Stock or Preferred Stock by reason of
the fact that dividends on said shares are not declared in any prior period.
2. Liquidation Preference. In the event of any liquidation, dissolution
or winding up of the corporation, either voluntarily or involuntarily,
distributions to the stockholders of the corporation shall be made in the
following manner:
(a) Series A Preference. The holders of the Series A Preferred
shall be entitled to receive, in preference and prior to any distribution of any
of the assets or surplus funds of the corporation to the holders of Series B
Preferred, Series C Preferred and Common Stock, an amount equal to $1.00 per
share, plus a further amount equal to any dividends declared but unpaid on such
shares (the "Series A Preference"). If, upon such liquidation, dissolution or
winding up of the corporation, the assets of the corporation are insufficient to
provide for the cash payment of the full Series A Preference, such assets as are
available shall be distributed ratably among the holders of the Series A
Preferred in proportion to the full preferential amount each such holder is
otherwise entitled to receive.
(b) Series B Preference. After payment of the Series A
Preference, the holders of the Series B Preferred shall be entitled to receive,
in preference and prior to any distribution of any of the assets or surplus
funds of the corporation to the holders of Series C Preferred and Common Stock,
an amount equal to $5.75 per share, plus a further amount equal to any dividends
declared but unpaid on such shares (the "Series B Preference"). If, upon such
liquidation, dissolution or winding up of the corporation, the assets of the
corporation are insufficient to provide for the cash payment of the full Series
B Preference, such assets as are available shall be distributed ratably among
the holders of the Series B Preferred in proportion to the full preferential
amount each such holder is otherwise entitled to receive.
(c) Series C Preference. After payment of the Series A
Preference and the Series B Preference, the holders of the Series C Preferred
shall be entitled to receive, in preference and prior
-2-
<PAGE> 3
to any distribution of any of the assets or surplus funds of the corporation to
the holders of Common Stock, an amount equal to $8.65 per share, plus a further
amount equal to any dividends declared but unpaid on such shares (the "Series C
Preference"). If, upon such liquidation, dissolution or winding up of the
corporation, the assets of the corporation are insufficient to provide for the
cash payment of the full Series C Preference, such assets as are available shall
be distributed ratably among the holders of the Series C Preferred in proportion
to the full preferential amount each such holder is otherwise entitled to
receive.
(d) After the payment or the setting apart of payment of the
Series A Preference, the Series B Preference and the Series C Preference, the
holders of Preferred Stock and Common Stock shall be entitled to receive all
remaining assets of this corporation pro rata based upon the number of shares of
Common Stock and Common Stock into which such shares of Preferred Stock could be
converted at the time of distribution.
(e) Consolidation or Merger. A merger, consolidation or sale
of all or substantially all of the assets of the corporation, or a series of
related transactions in which more than 50% of the voting power of the
corporation is disposed of, shall be deemed to be a liquidation, dissolution or
winding up within the meaning of this Section 2.
(f) Noncash Distributions. If any of the assets of the
corporation are to be distributed to the holders of Preferred Stock or Common
Stock other than in cash under this Section 2 (or for any purpose), then the
Board of Directors of the corporation shall promptly engage independent
competent appraisers to determine the value of the assets to be distributed. The
corporation shall, upon receipt of such appraiser's valuation, give prompt
written notice to each holder of shares of Preferred Stock or Common Stock of
the appraiser's valuation.
3. Voting Rights.
(a) Preferred Stock. Except as otherwise provided herein or
required by law, the holder of each share of Preferred Stock shall have voting
rights and powers equal to the voting rights and powers of the Common Stock.
Each holder of Preferred Stock shall be entitled to the number of votes equal to
the number of shares of Common Stock into which each share of Preferred Stock
could be converted pursuant to Section 4 hereof at the record date for the
determination of the stockholders entitled to vote on such matters or, if no
such record date is established, at the date such vote is taken. Fractional
votes shall not, however, be permitted and any fractional voting rights
resulting from the above formula shall be rounded to the nearest whole number
(with one-half rounded upward to one).
(b) Common Stock. Each holder of shares of Common Stock shall
be entitled to one vote for each share thereof held.
(c) Board of Directors. Notwithstanding the foregoing, (i) the
holders of the Series B Preferred Stock, voting as a separate class, shall be
entitled to elect one (1) director of the corporation; (ii) the holders of
Series A Preferred Stock, voting as a separate class, shall be entitled to
-3-
<PAGE> 4
elect one (1) director of the corporation; and (iii) the holders of Common
Stock, voting as a separate class, shall be entitled to elect one (1) director
of the corporation. All remaining directors of the corporation will be elected
by the holders of Common Stock and Preferred Stock voting together.
Notwithstanding any Bylaw provision to the contrary, the stockholders entitled
to elect a particular director shall be entitled to remove such director or to
fill a vacancy in the seat formerly held by such director, all in accordance
with the applicable provisions of the General Corporation Law of Delaware.
(d) Election by Ballot. The election of directors need not be
by written ballot unless the Bylaws of the corporation shall so provide.
4. Conversion. The holders of Preferred Stock shall have conversion
rights as follows (the "Conversion Rights"):
(a) Right to Convert. Each share of Preferred Stock shall be
convertible, at the option of the holder thereof, at any time after the date of
issuance of such share at the office of the corporation or any transfer agent
for such Preferred Stock. Each share of Preferred Stock shall be convertible
into the number of shares of Common Stock which results from dividing the
"Conversion Price" per share in effect for such series of Preferred Stock at the
time of conversion into the "Conversion Value" per share of such series of
Preferred Stock. The number of shares of Common Stock into which each series of
Preferred Stock is convertible is hereinafter collectively referred to as the
"Conversion Rate" for such series. The Conversion Price per share of (i) Series
A Preferred shall be $1.00, (ii) Series B Preferred shall be $5.75 and (iii)
Series C Preferred shall be $8.65. The Conversion Value per share of (i) Series
A Preferred shall be $1.00, (ii) Series B Preferred shall be $5.75 and (iii)
Series C Preferred shall be $8.65. The Conversion Price of each series of
Preferred Stock shall be subject to adjustment as hereinafter provided.
(b) Automatic Conversion. Each share of Preferred Stock shall
automatically be converted into shares of Common Stock at the then effective
Conversion Rate immediately upon the closing of an underwritten public offering
pursuant to an effective registration statement under the Securities Act of
1933, as amended, the aggregate gross proceeds of which equal or exceed
$10,000,000, (before expenses including underwriter discounts and commissions).
(c) Mechanics of Conversion. Before any holder of Preferred
Stock shall be entitled to convert the same into shares of Common Stock, he
shall surrender the certificate or certificates therefor, duly endorsed, at the
office of the corporation or of any transfer agent for such Preferred Stock and
shall give written notice to the corporation at such office that he elects to
convert the same. The corporation shall, as soon as practicable thereafter,
issue and deliver at such office to such holder of Preferred Stock a certificate
or certificates for the number of shares of Common Stock to which he shall be
entitled as aforesaid. Such conversion shall be deemed to have been made
immediately prior to the close of business on the date of such surrender of the
shares of Preferred Stock to be converted, and the person or persons entitled to
receive the shares of Common Stock issuable upon such conversion shall be
treated for all purposes as the record holder or holders of such shares of
Common Stock on such date.
-4-
<PAGE> 5
(d) Fractional Shares. No fractional shares of Common Stock
shall be issued upon conversion of the Preferred Stock. In lieu of any
fractional shares to which the holder would otherwise be entitled, the
corporation shall pay cash equal to such fraction multiplied by the applicable
Conversion Price.
(e) Adjustment of Conversion Price. The Conversion Price of
each series of Preferred Stock shall be subject to adjustment from time to time
as follows:
(i) If the number of shares of Common Stock
outstanding at any time after the date hereof is increased by a stock dividend
payable in shares of Common Stock or by a subdivision or split-up of shares of
Common Stock, then, on the date such payment is made or such change is
effective, the Conversion Price for the Preferred Stock shall be appropriately
decreased so that the number of shares of Common Stock issuable on conversion of
any shares of the Preferred Stock shall be increased in proportion to such
increase of outstanding shares.
(ii) If the number of shares of Common Stock
outstanding at any time after the date hereof is decreased by a combination of
the outstanding shares of Common Stock, then, on the effective date of such
combination, the Conversion Price for such series shall be appropriately
increased so that the number of shares of Common Stock issuable on conversion of
shares of the Preferred Stock shall be decreased in proportion to such decrease
in outstanding shares.
(iii) In case the corporation shall declare a cash
dividend upon its Common Stock payable otherwise than out of retained earnings
or shall distribute to holders of its Common Stock shares of its capital stock
(other than Common Stock), stock or other securities of other persons, evidences
of indebtedness issued by the corporation or other persons, assets (excluding
cash dividends) or options or rights (excluding options to purchase and rights
to subscribe for Common Stock or other securities of the corporation convertible
into or exchangeable for Common Stock), then, in each such case, immediately
following the record date fixed for the determination of the holders of Common
Stock entitled to receive such dividend or distribution, the Conversion Price
for the Preferred Stock in effect thereafter shall be determined by multiplying
the Conversion Price for the Preferred Stock in effect immediately prior to such
record date by a fraction of which the numerator shall be an amount equal to the
remainder of (x) the Current Market Price, of one share of Common Stock less (y)
the amount of such cash dividend in respect of one share of Common Stock or the
fair market value (as determined by the Board of Directors, whose determination
shall be conclusive) of the stock, securities, evidences or indebtedness,
assets, options or rights so distributed in respect of one share of Common
Stock, as the case may be, and of which the denominator shall be the Current
Market Price of one share of Common Stock. Such adjustment shall be made on the
date such dividend or distribution is made, and shall become effective at the
opening of business on the business day next following the record date for the
determination of stockholders entitled to such dividend or distribution.
(iv) In case, at any time after the date hereof, of
any capital reorganization (other than a reorganization covered by Section 2(c)
above), or any reclassification of the stock of the corporation (other than a
change in par value or as a result of a stock dividend or subdivision, split-up
-5-
<PAGE> 6
or combination of shares), the shares of Preferred Stock shall, after such
capital reorganization or reclassification, be convertible into the kind and
number of shares of stock or other securities or property of the corporation to
which such holder would have been entitled if immediately prior to such capital
reorganization or reclassification he had converted his shares of Preferred
Stock into Common Stock. The provisions of this Section 4(e)(iv) shall similarly
apply to successive reorganizations, reclassifications, consolidations, mergers,
sales or other dispositions.
(v) All calculations under this Section 4 shall be
made to the nearest cent or to the nearest one hundredth (1/100) of a share, as
the case may be.
(vi) For the purpose of any computation pursuant to
this Section 4(e), the "Current Market Price" at any date of one share of Common
Stock, shall be deemed to be the average of the highest reported bid and the
lowest reported offer prices on the preceding business day as furnished by the
National Quotation Bureau, Incorporated (or equivalent recognized source of
quotations); provided, however, that if the Common Stock is not traded in such
manner that the quotations referred to in this Section 4(e) are available for
the period required hereunder, Current Market Price shall be determined in good
faith by the Board of Directors of the corporation, but if challenged by the
holders of more than 50% of the outstanding Preferred Stock, then as determined
by an independent appraiser selected by the Board of Directors of the
corporation, the cost of such appraisal to be borne by the challenging parties.
(f) Minimal Adjustments. No adjustment in a Conversion Price
need be made if such adjustment would result in a change in a Conversion Price
of less than $0.01. Any adjustment of less than $0.01 which is not made shall be
carried forward and shall be made at the time of and together with any
subsequent adjustment which, on a cumulative basis, amounts to an adjustment of
$0.01 or more in a Conversion Price.
(g) No Impairment. The corporation will not, through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue or
sale of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be observed or performed
hereunder by the corporation, but will at all times in good faith assist in the
carrying out of all the provisions of this Section 4 and in the taking of all
such action as may be necessary or appropriate in order to protect the
Conversion Rights of the holders of Preferred Stock against impairment. This
provision shall not restrict the corporation from amending its Certificate of
Incorporation in accordance with the General Corporation Law of the State of
Delaware.
(h) Certificate as to Adjustments. Upon the occurrence of each
adjustment or readjustment of the Conversion Rate pursuant to this Section 4,
the corporation at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and prepare and furnish to each
holder of Preferred Stock a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which such adjustment or
readjustment is based. The corporation shall, upon written request at any time
of any holder of Preferred Stock, furnish or cause to be furnished to such
holder a like certificate setting forth (i) such adjustments and readjustments,
(ii) the Conversion Rate at the time in effect, and (iii) the number of shares
of
-6-
<PAGE> 7
Common Stock and the amount, if any, of other property which at the time would
be received upon the conversion of the Preferred Stock held by such holder.
(i) Notices of Record Date. In the event of any taking by the
corporation of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend (other than a cash dividend) or other distribution, the corporation
shall mail to each holder of Preferred Stock at least twenty (20) days prior to
the date specified therein, a notice specifying the date on which any such
record is to be taken for the purpose of such dividend or distribution.
(j) Reservation of Stock Issuable Upon Conversion. The
corporation shall at all times reserve and keep available out of its authorized
but unissued shares of Common Stock solely for the purpose of effecting the
conversion of the shares of Preferred Stock such number of its shares of Common
Stock as shall from time to time be sufficient to effect the conversion of all
outstanding shares of Preferred Stock; and if at any time the number of
authorized but unissued shares of Common Stock shall not be sufficient to effect
the conversion of all then outstanding shares of Preferred Stock, the
corporation 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.
(k) Notices. Any notice required by the provisions of this
Section 4 to be given to the holder of shares of Preferred Stock shall be deemed
given if deposited in the United States mail, postage prepaid, and addressed to
each holder of record at his address appearing on the books of the corporation.
5. Protective Provisions. So long as any shares of Preferred Stock
shall be outstanding, the corporation shall not, without first obtaining the
approval (by vote or written consent, as provided by law) of the holders of more
than 50% of the outstanding shares of Preferred Stock:
(a) alter or change the powers, preferences or special rights
of the Preferred Stock materially and adversely; or
(b) create any new class or series of shares having any
powers, preferences, or special rights superior to or on a parity with the
Preferred Stock; or
(c) effect a merger, consolidation or sale of substantially
all assets where the stockholders of the corporation before the transaction hold
less than 50% of the voting power of the surviving entity after the transaction.
FIVE. The corporation is to have perpetual existence.
-7-
<PAGE> 8
SIX. In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized to make, alter, amend or
repeal the Bylaws of the corporation.
SEVEN. The number of directors which constitute the whole Board of
Directors of the corporation shall be as specified in the Bylaws of the
corporation.
EIGHT. Meetings of stockholders may be held within or without the State
of Delaware, as the Bylaws may provide. The books of the corporation may be kept
(subject to any provisions contained in the statutes) outside the State of
Delaware at such place or places as may be designated from time to time by the
Board of Directors or in the Bylaws of the corporation.
NINE. To the fullest extent permitted by the Delaware General
Corporation Law, a director of the corporation shall not be personally liable to
the corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director. Neither any amendment nor repeal of this Article NINE, nor
the adoption of any provision of this Certificate of Incorporation inconsistent
with this Article NINE, shall eliminate or reduce the effect of this Article
NINE in respect of any matter occur ring, or any cause of action, suit or claim
that, but for this Article NINE, would accrue or arise, prior to such amendment,
repeal or adoption of an inconsistent provision.
TEN. Advance notice of new business and stockholder nominations for the
election of directors shall be given in the manner and to the extent provided in
the Bylaws of the corporation.
ELEVEN. The corporation reserves the right to amend, alter, change or
repeal any provisions contained in this Certificate, in the manner now or
hereafter prescribed by statute, and all rights conferred upon stockholders
herein are granted subject to this reservation.
IN WITNESS WHEREOF, the corporation has caused this Certificate to be
signed by James W. Albrecht, Jr., its Vice President, and attested by Rodney
Varner, its Secretary, this 31st day of December, 1995.
INTROGEN THERAPEUTICS, INC.
By: /s/ JAMES W. ALBRECHT, JR.
--------------------------
James W. Albrecht, Jr.
CFO and Vice President
ATTEST:
/s/ J. RODNEY VARNER
- ---------------------
J. Rodney Varner, Secretary
-8-
<PAGE> 9
CERTIFICATE OF AMENDMENT OF
RESTATED CERTIFICATE OF INCORPORATION OF
INTROGEN THERAPEUTICS, INC.
Introgen Therapeutics, Inc., a corporation organized and existing under
the laws of the State of Delaware, hereby certifies as follows:
1. That the following amendment to Article IV of the Corporation's
Restated Certificate of Incorporation has been duly adopted by the board of
directors in accordance with the provisions of Section 242 of the General
Corporation Law.
"ARTICLE IV
The Corporation is authorized to issue two classes of stock to be
designated Common Stock and Preferred Stock. The total number of shares of
Common Stock, $0.001 par value, which this corporation has authority to issue is
20,000,000. The total number of shares of Preferred Stock, $0.001 par value,
which this corporation has authority to issue is 6,308,523. 3,011,423 shares of
Preferred Stock are designated Series A Preferred Stock ("Series A Preferred"),
2,114,100 shares of Preferred Stock are designated Series B Preferred Stock
("Series B Preferred") and 1,183,000 shares of Preferred Stock are designated
Series C Preferred Stock ("Series C Preferred").
Upon the filing of this Certificate of Amendment of Certificate of
Incorporation, each outstanding share of Common Stock shall be split up and
converted to 1.2 shares of Common Stock."
2. The foregoing amendment has been duly approved by the stockholders
in accordance with the provisions of section 242 of the General Corporation Law.
IN WITNESS WHEREOF, the corporation has caused this Certificate to be
signed by David Nance, its President, and attested by Rodney Varner, its
Secretary, this 27th day of August, 1996.
INTROGEN THERAPEUTICS, INC.
By: /s/ DAVID G. NANCE
-------------------------
David G. Nance, President
ATTEST:
/s/ J. RODNEY VARNER
- ---------------------------
J. Rodney Varner, Secretary
-1-
<PAGE> 10
CERTIFICATE OF CORRECTION FILED TO CORRECT
A CERTAIN ERROR IN THE CERTIFICATE OF
AMENDMENT OF RESTATED CERTIFICATE OF INCORPORATION
OF INTROGEN THERAPEUTICS, INC.
FILED IN THE OFFICE OF THE SECRETARY OF STATE
OF DELAWARE ON AUGUST 27, 1996.
Introgen Therapeutics, Inc., a corporation organized and existing under and
by virtue of the General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY:
1. The name of the corporation is Introgen Therapeutics, Inc.
2. That a Certificate of Amendment of Restated Certificate of Incorporation
of Introgen Therapeutics, Inc. was filed by the Secretary of State of Delaware
on August 27, 1996 and that said Certificate requires correction as permitted by
Section 103 of the General Corporation Law of the State of Delaware.
3. The inaccuracy or defect of said Certificate to be corrected is as
follows: Total authorized number of shares of Common Stock set forth in Article
IV was inaccurately stated as 20,000,000 shares.
4. Article IV of the Certificate is corrected to read as follows:
"ARTICLE IV
The Corporation is authorized to issue two classes of stock to be
designated Common Stock and Preferred Stock. The total number of shares of
Common Stock, $0.001 par value, which this corporation has authority to issue is
50,000,000. The total number of shares of Preferred Stock, $0.001 par value,
which this corporation has authority to issue is 6,308,523. 3,011,423 shares of
Preferred Stock are designated Series A Preferred Stock ("Series A Preferred"),
2,114,100 shares of Preferred Stock are designated Series B Preferred Stock
("Series B Preferred") and 1,183,000 shares of Preferred Stock are designated
Series C Preferred Stock ("Series C Preferred").
Upon the filing of this Certificate of Amendment of Certificate of
Incorporation, each outstanding share of Common Stock shall be split up and
converted to 1.2 shares of Common Stock."
<PAGE> 11
IN WITNESS WHEREOF, the corporation has caused this Certificate to be signed by
David Nance, its President, and attested by Rodney Varner, its Secretary, this
28th day of August, 1996.
INTROGEN THERAPEUTICS, INC.
By: /s/ DAVID G. NANCE
-------------------------
David G. Nance, President
ATTEST:
/s/ J. RODNEY VARNER
- ----------------------------
J. Rodney Varner, Secretary
<PAGE> 1
EXHIBIT 3.2
RESTATED CERTIFICATE OF INCORPORATION
OF
INTROGEN THERAPEUTICS, INC.
The following Restated Certificate of Incorporation of Introgen
Therapeutics, Inc. (i) restates the provisions of the Certificate of
Incorporation of Introgen Therapeutics, Inc. filed with the Secretary of State
of the State of Delaware on June 17, 1993 under the name Intron Therapeutics,
Inc., and (ii) supersedes the original Certificate of Incorporation and all
prior restatements thereof and amendments thereto in their entirety.
ARTICLE I
The name of the corporation is Introgen Therapeutics, Inc. (the
"Corporation").
ARTICLE II
The address of the Corporation's registered office in the State of
Delaware is 1209 Orange Street, City of Wilmington, County of Newcastle,
Delaware 19801. The name of its registered agent at such address is The
Corporation Trust Company.
ARTICLE III
The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of Delaware.
ARTICLE IV
The Corporation is authorized to issue two classes of shares of stock
to be designated, respectively, Common Stock, $0.001 par value, and Preferred
Stock, $0.001 par value. The total number of shares that the Corporation is
authorized to issue is 55,000,000 shares. The number of shares of Common Stock
authorized is 50,000,000. The number of shares of Preferred authorized is
5,000,000.
The Preferred Stock may be issued from time to time in one or more
series pursuant to a resolution or resolutions providing for such issue duly
adopted by the board of directors (authority to do so being hereby expressly
vested in the board). The board of directors is further authorized to determine
or alter the rights, preferences, privileges and restrictions granted to or
imposed upon any wholly unissued series of Preferred Stock and to fix the number
<PAGE> 2
of shares of any series of Preferred Stock and the designation of any such
series of Preferred Stock. The board of directors, within the limits and
restrictions stated in any resolution or resolutions of the board of directors
originally fixing the number of shares constituting any series, may increase or
decrease (but not below the number of shares in any such series then
outstanding) the number of shares of any series subsequent to the issue of
shares of that series.
The authority of the board of directors with respect to each such class
or series shall include, without limitation of the foregoing, the right to
determine and fix:
(a) the distinctive designation of such class or series and
the number of shares to constitute such class or series;
(b) the rate at which dividends on the shares of such class or
series shall be declared and paid, or set aside for payment, whether dividends
at the rate so determined shall be cumulative or accruing, and whether the
shares of such class or series shall be entitled to any participating or other
dividends in addition to dividends at the rate so determined, and if so, on what
terms;
(c) the right or obligation, if any, of the corporation to
redeem shares of the particular class or series of Preferred Stock and, if
redeemable, the price, terms and manner of such redemption;
(d) the special and relative rights and preferences, if any,
and the amount or amounts per share, which the shares of such class or series of
Preferred Stock shall be entitled to receive upon any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation;
(e) the terms and conditions, if any, upon which shares of
such class or series shall be convertible into, or exchangeable for, shares of
capital stock of any other class or series, including the price or prices or the
rate or rates of conversion or exchange and the terms of adjustment, if any;
(f) the obligation, if any, of the corporation to retire,
redeem or purchase shares of such class or series pursuant to a sinking fund or
fund of a similar nature or otherwise, and the terms and conditions of such
obligation;
(g) voting rights, if any, on the issuance of additional
shares of such class or series or any shares of any other class or series of
Preferred Stock;
(h) limitations, if any, on the issuance of additional shares
of such class or series or any shares of any other class or series of Preferred
Stock; and
(i) such other preferences, powers, qualifications, special or
relative rights and privileges thereof as the board of directors of the
corporation, acting in accordance
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<PAGE> 3
with this Restated Certificate of Incorporation, may deem advisable and are not
inconsistent with law and the provisions of this Restated Certificate of
Incorporation.
ARTICLE V
The Corporation reserves the right to amend, alter, change, or repeal
any provision contained in this Certificate of Incorporation, in the manner now
or hereafter prescribed by statute, and all rights conferred upon the
stockholders herein are granted subject to this right.
ARTICLE VI
The Corporation is to have perpetual existence.
ARTICLE VII
1. Limitation of Liability. To the fullest extent permitted by the
General Corporation Law of the State of Delaware as the same exists or as may
hereafter be amended, a director of the Corporation shall not be personally
liable to the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director.
2. Indemnification. The Corporation may indemnify to the fullest extent
permitted by law any person made or threatened to be made a party to an action
or proceeding, whether criminal, civil, administrative or investigative, by
reason of the fact that such person or his or her testator or intestate is or
was a director, officer or employee of the Corporation, or any predecessor of
the Corporation, or serves or served at any other enterprise as a director,
officer or employee at the request of the Corporation or any predecessor to the
Corporation.
3. Amendments. Neither any amendment nor repeal of this Article VII,
nor the adoption of any provision of the Corporation's Certificate of
Incorporation inconsistent with this Article VII, shall eliminate or reduce the
effect of this Article VII, in respect of any matter occurring, or any action or
proceeding accruing or arising or that, but for this Article VII, would accrue
or arise, prior to such amendment, repeal, or adoption of an inconsistent
provision.
ARTICLE VIII
In the event any shares of Preferred Stock shall be redeemed or
converted pursuant to the terms hereof, the shares so converted or redeemed
shall not revert to the status of authorized but unissued shares, but instead
shall be canceled and shall not be re-issuable by the Corporation.
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<PAGE> 4
ARTICLE IX
Holders of stock of any class or series of this corporation shall not
be entitled to cumulate their votes for the election of directors or any other
matter submitted to a vote of the stockholders.
ARTICLE X
1. Number of Directors. The number of directors which constitutes the
whole Board of Directors of the corporation shall be designated in the Bylaws of
the corporation.
2. Election of Directors. Elections of directors need not be by written
ballot unless the Bylaws of the corporation shall so provide.
ARTICLE XI
In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized to make, alter, amend or
repeal the Bylaws of the corporation.
ARTICLE XII
Immediately upon the closing of a public offering pursuant to an
effective registration statement under the Securities Act of 1933, as amended,
covering any of the corporation's securities (as that term is defined under the
Securities Act of 1933, as then in effect), no action shall be taken by the
stockholders of the corporation except at an annual or special meeting of the
stockholders called in accordance with the Bylaws of the corporation and no
action shall be taken by the stockholders by written consent.
ARTICLE XIII
Meetings of stockholders may be held within or without the State of
Delaware, as the Bylaws may provide. The books of the Corporation may be kept
(subject to any provision contained in the statutes) outside of the State of
Delaware at such place or places as may be designated from time to time by the
Board of Directors or in the Bylaws of the Corporation.
This Restated Certificate of Incorporation has been duly adopted by the
board of directors of the Corporation in accordance with the provisions of
Sections 242 and 245 of the General Corporation Law of the State of Delaware, as
amended.
The Restated Certificate of Incorporation restates and integrates and
further amends the provisions of the Corporation's Certificate of Incorporation.
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<PAGE> 5
IN WITNESS WHEREOF, Introgen Therapeutics, Inc. has caused this
certificate to be signed by David G. Nance, its President, and J. Rodney Varner,
its Secretary, this ____ day of _________, 1996.
By: ____________________________________
David G. Nance, President
Attest: ________________________________
J. Rodney Varner, Secretary
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<PAGE> 1
EXHIBIT 3.3
BYLAWS
OF
INTROGEN THERAPEUTICS, INC.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE I - CORPORATE OFFICES........................................... 1
1.1 REGISTERED OFFICE...................................... 1
1.2 OTHER OFFICES.......................................... 1
ARTICLE II - MEETINGS OF STOCKHOLDERS................................... 1
2.1 PLACE OF MEETINGS...................................... 1
2.2 ANNUAL MEETING......................................... 1
2.3 SPECIAL MEETING........................................ 1
2.4 NOTICE OF STOCKHOLDERS' MEETINGS....................... 2
2.5 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE........... 2
2.6 QUORUM................................................. 2
2.7 ADJOURNED MEETING; NOTICE.............................. 3
2.8 CONDUCT OF BUSINESS.................................... 3
2.9 VOTING................................................. 3
2.10 WAIVER OF NOTICE....................................... 4
2.11 STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A
MEETING.............................................. 4
2.12 RECORD DATE FOR STOCKHOLDER NOTICE; VOTING; GIVING
CONSENTS............................................. 5
2.13 PROXIES................................................ 5
2.14 LIST OF STOCKHOLDERS ENTITLED TO VOTE.................. 6
ARTICLE III - DIRECTORS................................................. 6
3.1 POWERS................................................. 6
3.2 NUMBER OF DIRECTORS.................................... 6
3.3 ELECTION, QUALIFICATION AND TERM OF OFFICE OF
DIRECTORS............................................ 7
3.4 RESIGNATION AND VACANCIES.............................. 7
3.5 PLACE OF MEETINGS; MEETINGS BY TELEPHONE............... 8
3.6 REGULAR MEETINGS....................................... 8
3.7 SPECIAL MEETINGS; NOTICE............................... 8
3.8 QUORUM................................................. 9
3.9 WAIVER OF NOTICE....................................... 9
3.10 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING...... 10
3.11 FEES AND COMPENSATION OF DIRECTORS..................... 10
3.12 APPROVAL OF LOANS TO OFFICERS.......................... 10
3.13 REMOVAL OF DIRECTORS................................... 10
ARTICLE IV - COMMITTEES................................................. 11
4.1 COMMITTEES OF DIRECTORS................................ 11
</TABLE>
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<PAGE> 3
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
4.2 COMMITTEE MINUTES...................................... 12
4.3 MEETINGS AND ACTION OF COMMITTEES...................... 12
ARTICLE V - OFFICERS.................................................... 12
5.1 OFFICERS............................................... 12
5.2 APPOINTMENT OF OFFICERS................................ 12
5.3 SUBORDINATE OFFICERS................................... 13
5.4 REMOVAL AND RESIGNATION OF OFFICERS.................... 13
5.5 VACANCIES IN OFFICES................................... 13
5.6 CHAIRMAN OF THE BOARD.................................. 13
5.7 PRESIDENT.............................................. 13
5.8 VICE PRESIDENTS........................................ 14
5.9 SECRETARY.............................................. 14
5.10 CHIEF FINANCIAL OFFICER................................ 15
5.11 ASSISTANT SECRETARY.................................... 15
5.12 ASSISTANT TREASURER.................................... 15
5.13 REPRESENTATION OF SHARES OF OTHER CORPORATIONS......... 15
5.14 AUTHORITY AND DUTIES OF OFFICERS....................... 16
ARTICLE VI - INDEMNITY.................................................. 16
6.1 THIRD PARTY ACTIONS.................................... 16
6.2 ACTIONS BY OR IN THE RIGHT OF THE CORPORATION.......... 17
6.3 SUCCESSFUL DEFENSE..................................... 17
6.4 DETERMINATION OF CONDUCT............................... 17
6.5 PAYMENT OF EXPENSES IN ADVANCE......................... 18
6.6 INDEMNITY NOT EXCLUSIVE................................ 18
6.7 INSURANCE INDEMNIFICATION.............................. 18
6.8 THE CORPORATION........................................ 18
6.9 EMPLOYEE BENEFIT PLANS................................. 19
6.10 CONTINUATION OF INDEMNIFICATION AND ADVANCEMENT OF
EXPENSES............................................. 19
ARTICLE VII - RECORDS AND REPORTS....................................... 19
7.1 MAINTENANCE AND INSPECTION OF RECORDS.................. 19
7.2 INSPECTION BY DIRECTORS................................ 20
7.3 ANNUAL STATEMENT TO STOCKHOLDERS....................... 20
ARTICLE VIII - GENERAL MATTERS.......................................... 21
8.1 CHECKS................................................. 21
8.2 EXECUTION OF CORPORATE CONTRACTS AND INSTRUMENTS....... 21
</TABLE>
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<PAGE> 4
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
8.3 STOCK CERTIFICATES; PARTLY PAID SHARES................. 21
8.4 SPECIAL DESIGNATION ON CERTIFICATES.................... 22
8.5 LOST CERTIFICATES...................................... 22
8.6 CONSTRUCTION; DEFINITIONS.............................. 23
8.7 DIVIDENDS.............................................. 23
8.8 FISCAL YEAR............................................ 23
8.9 SEAL................................................... 23
8.10 TRANSFER OF STOCK...................................... 23
8.11 STOCK TRANSFER AGREEMENTS.............................. 24
8.12 REGISTERED STOCKHOLDERS................................ 24
ARTICLE IX - AMENDMENTS................................................. 24
</TABLE>
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<PAGE> 5
BYLAWS
OF
INTROGEN THERAPEUTICS, INC.
ARTICLE I
CORPORATE OFFICES
1.1 REGISTERED OFFICE
The registered office of the corporation shall be in the City of
Wilmington, County of New Castle, State of Delaware. The name of the registered
agent of the corporation at such location is The Corporation Trust Company.
1.2 OTHER OFFICES
The board of directors may at any time establish other offices at any
place or places where the corporation is qualified to do business.
ARTICLE II
MEETINGS OF STOCKHOLDERS
2.1 PLACE OF MEETINGS
Meetings of stockholders shall be held at any place, within or outside
the State of Delaware, designated by the board of directors. In the absence of
any such designation, stockholders' meetings shall be held at the registered
office of the corporation.
2.2 ANNUAL MEETING
The annual meeting of stockholders shall be held each year on a date
and at a time designated by the board of directors. In the absence of such
designation the annual meeting of shareholders shall be held on the first day of
July of each year at 9:00 a.m. However, if such day falls on a legal holiday,
then the meeting shall be held at the same time and place on the next succeeding
business day. At the meeting, directors shall be elected and any other proper
business may be transacted.
2.3 SPECIAL MEETING
A special meeting of the stockholders may be called at any
time by the board of directors, or by the chairman of the board, or
<PAGE> 6
by the president, or by one or more stockholders holding shares in the aggregate
entitled to cast not less than ten percent of the votes at that meeting.
If a special meeting is called by any person or persons other than the
board of directors, the request shall be in writing, specifying the time of such
meeting and the general nature of the business proposed to be transacted, and
shall be delivered personally or sent by registered mail or by telegraphic or
other facsimile transmission to the chairman of the board, the president or the
secretary of the corporation. No business may be transacted at such special
meeting otherwise than specified in such notice. The officer receiving the
request shall cause notice to be promptly given to the stockholders entitled to
vote, in accordance with the provisions of Sections 2.4 and 2.5 of this Article
II, that a meeting will be held at the time requested by the person or persons
calling the meeting, not less than ten (10) nor more than sixty (60) days after
the receipt of the request. Nothing contained in this paragraph of this Section
2.3 shall be construed as limiting, fixing, or affecting the time when a meeting
of stockholders called by action of the board of directors may be held.
2.4 NOTICE OF STOCKHOLDERS' MEETINGS
All notices of meetings with stockholders shall be in writing and shall
be sent or otherwise given in accordance with Section 2.5 of these bylaws not
less than ten (10) nor more than sixty (60) days before the date of the meeting
to each stockholder entitled to vote at such meeting. The notice shall specify
the place, date, and hour of the meeting, and, in the case of a special meeting,
the purpose or purposes for which the meeting is called.
2.5 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE
Written notice of any meeting of stockholders, if mailed, is given when
deposited in the United States mail, postage prepaid, directed to the
stockholder at his address as it appears on the records of the corporation. An
affidavit of the Secretary or an Assistant Secretary or of the transfer agent of
the corporation that the notice has been given shall, in the absence of fraud,
be prima facie evidence of the facts stated therein.
2.6 QUORUM
The holders of a majority of the stock issued and outstanding and
entitled to vote thereat, present in person or represented by proxy, shall
constitute a quorum at all meetings of the stock holders for the transaction of
business except as otherwise pro-
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<PAGE> 7
vided by statute or by the certificate of incorporation. If, however, such
quorum is not present or represented at any meeting of the stockholders, then
either (i) the Chairman of the meeting or (ii) the stockholders entitled to vote
thereat, present in person or represented by proxy, shall have power to adjourn
the meeting from time to time, without notice other than announcement at the
meeting, until a quorum is present or represented. At such adjourned meeting at
which a quorum is present or represented, any business may be transacted that
might have been transacted at the meeting as originally noticed.
2.7 ADJOURNED MEETING; NOTICE
When a meeting is adjourned to another time or place, unless these
bylaws otherwise require, notice need not be given of the adjourned meeting if
the time and place thereof are announced at the meeting at which the adjournment
is taken. At the adjourned meeting the corporation may transact any business
that might have been transacted at the original meeting. If the adjournment is
for more than thirty (30) days, or if after the adjournment a new record date is
fixed for the adjourned meeting, a notice of the adjourned meeting shall be
given to each stockholder of record entitled to vote at the meeting.
2.8 CONDUCT OF BUSINESS
The chairman of any meeting of stockholders shall determine the order
of business and the procedure at the meeting, including such regulation of the
manner of voting and the conduct of business.
2.9 VOTING
The stockholders entitled to vote at any meeting of stockholders shall
be determined in accordance with the provisions of Section 2.12 of these bylaws,
subject to the provisions of Sections 217 and 218 of the General Corporation
Law of Delaware (relating to voting rights of fiduciaries, pledgors and joint
owners of stock and to voting trusts and other voting agreements).
Except as provided in the last paragraph of this Section 2.9, or as may
be otherwise provided in the certificate of incorporation, each stockholder
shall be entitled to one vote for each share of capital stock held by such
stockholder.
At a stockholders' meeting at which directors are to be elected, each
stockholder shall be entitled to cumulate votes (i.e., cast for any candidate a
number of votes greater than the
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<PAGE> 8
number of votes which such stockholder normally is entitled to cast) if the
candidates' names have been properly placed in nomination (in accordance with
these bylaws) prior to commencement of the voting and the stockholder requesting
cumulative voting or any other stockholder voting at the meeting in person or by
proxy has given notice prior to commencement of the voting of the stockholder's
intention to cumulate votes. If cumulative voting is properly requested, each
holder of stock, or of any class or classes or of a series or series thereof,
who elects to cumulate votes shall be entitled to as many votes as equals the
number of votes which (absent this provision as to cumulative voting) he would
be entitled to cast for the election of directors with respect to his shares of
stock multiplied by the number of directors to be elected by him, and he may
cast all of such votes for a single director or may distribute them among the
number to be voted for, or for any two or more of them, as he may see fit.
2.10 WAIVER OF NOTICE
Whenever notice is required to be given under any provision of the
General Corporation Law of Delaware or of the certificate of incorporation or
these bylaws, a written waiver thereof, signed by the person entitled to notice,
whether before or after the time stated therein, shall be deemed equivalent to
notice. Attendance of a person at a meeting shall constitute a waiver of notice
of such meeting, except when the person attends a meeting for the express
purpose of objecting, at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened. Neither the
business to be transacted at, nor the purpose of, any regular or special meeting
of the stockholders need be specified in any written waiver of notice unless so
required by the certificate of incorporation or these bylaws.
2.11 STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING
Unless otherwise provided in the certificate of incorporation, any
action required by this chapter to be taken at any annual or special meeting of
stockholders of a corporation, or any action that may be taken at any annual or
special meeting of such stock holders, may be taken without a meeting, without
prior notice, and without a vote if a consent in writing, setting forth the
action so taken, is signed by the holders of outstanding stock having not less
than the minimum number of votes that would be necessary to authorize or take
such action at a meeting at which all shares entitled to vote thereon were
present and voted.
Prompt notice of the taking of the corporate action without a meeting
by less than unanimous written consent shall be given to
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<PAGE> 9
those stockholders who have not consented in writing. If the action which is
consented to is such as would have required the filing of a certificate under
any section of the General Corporation Law of Delaware if such action had been
voted on by stock holders at a meeting thereof, then the certificate filed under
such section shall state, in lieu of any statement required by such section
concerning any vote of stockholders, that written notice and written consent
have been given as provided in Section 228 of the General Corporation Law of
Delaware.
2.12 RECORD DATE FOR STOCKHOLDER NOTICE; VOTING; GIVING
CONSENTS
In order that the corporation may determine the stockholders entitled
to notice of or to vote at any meeting of stockholders or any adjournment
thereof, or entitled to express consent to corporate action in writing without
a meeting, or entitled to receive payment of any dividend or other distribution
or allotment of any rights, or entitled to exercise any rights in respect of any
change, conversion or exchange of stock or for the purpose of any other lawful
action, the board of directors may fix, in advance, a record date, which shall
not be more than sixty (60) nor less than ten (10) days before the date of such
meeting, nor more than sixty (60) days prior to any other action.
If the board of directors does not so fix a record date:
(i) The record date for determining stockholders entitled to
notice of or to vote at a meeting of stockholders shall be at the close of
business on the day next preceding the day on which notice is given, or, if
notice is waived, at the close of business on the day next preceding the day on
which the meeting is held.
(ii) The record date for determining stockholders entitled
to express consent to corporate action in writing without a meeting, when no
prior action by the board of directors is necessary, shall be the day on which
the first written consent is expressed.
(iii) The record date for determining stockholders for any
other purpose shall be at the close of business on the day on which the board of
directors adopts the resolution relating thereto.
A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the board of directors may fix a new record date for the
adjourned meeting.
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<PAGE> 10
2.13 PROXIES
Each stockholder entitled to vote at a meeting of stockholders or to
express consent or dissent to corporate action in writing without a meeting may
authorize another person or persons to act for him by a written proxy, signed by
the stockholder and filed with the secretary of the corporation, but no such
proxy shall be voted or acted upon after three (3) years from its date, unless
the proxy provides for a longer period. A proxy shall be deemed signed if the
stockholder's name is placed on the proxy (whether by manual signature,
typewriting, telegraphic transmission or otherwise) by the stockholder or the
stockholder's attorney-in-fact. The revocability of a proxy that states on its
face that it is irrevocable shall be governed by the provisions of Section
212(c) of the General Corporation Law of Delaware.
2.14 LIST OF STOCKHOLDERS ENTITLED TO VOTE
The officer who has charge of the stock ledger of a corporation shall
prepare and make, at least ten (10) days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten (10) days prior to
the meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present. Such list shall
presumptively determine the identity of the stockholders entitled to vote at the
meeting and the number of shares held by each of them.
ARTICLE III
DIRECTORS
3.1 POWERS
Subject to the provisions of the General Corporation Law of Delaware
and any limitations in the certificate of incorporation or these bylaws relating
to action required to be approved by the stockholders or by the outstanding
shares, the business and affairs
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<PAGE> 11
of the corporation shall be managed and all corporate powers shall be exercised
by or under the direction of the board of directors.
3.2 NUMBER OF DIRECTORS
The number of directors of the corporation shall be not less than five
(5) nor more than nine (9). The exact number of directors shall be six (6)
until changed, within the limits specified above, by a bylaw amending this
Section 3.2, duly adopted by the board of directors or by the stockholders. The
indefinite number of directors may be changed, or a definite number may be fixed
without provision for an indefinite number by a duly adopted amendment to the
certificate of incorporation or by an amendment to this bylaw duly adopted by
the vote or written consent of the holders of a majority of the stock issued and
outstanding and entitled to vote.
No reduction of the authorized number of directors shall have the
effect of removing any director before that director's term of office expires.
3.3 ELECTION, QUALIFICATION AND TERM OF OFFICE OF DIRECTORS
Except as provided in Section 3.4 of these bylaws, directors shall be
elected at each annual meeting of stockholders to hold office until the next
annual meeting. Directors need not be stock holders unless so required by the
certificate of incorporation or these bylaws, wherein other qualifications for
directors may be prescribed. Each director, including a director elected to fill
a vacancy, shall hold office until his successor is elected and qualified or
until his earlier resignation or removal.
Elections of directors need not be by written ballot.
3.4 RESIGNATION AND VACANCIES
Any director may resign at any time upon written notice to the
attention of the Secretary of the corporation. When one or more directors so
resigns and the resignation is effective at a future date, a majority of the
directors then in office, including those who have so resigned, shall have power
to fill such vacancy or vacancies, the vote thereon to take effect when such
resignation or resignations shall become effective, and each director so chosen
shall hold office as provided in this section in the filling of other vacancies.
Unless otherwise provided in the certificate of incorporation or these
bylaws:
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<PAGE> 12
(i) Vacancies and newly created directorships resulting from
any increase in the authorized number of directors elected by all of the
stockholders having the right to vote as a single class may be filled by a
majority of the directors then in office, although less than a quorum, or by a
sole remaining director.
(ii) Whenever the holders of any class or classes of stock or
series thereof are entitled to elect one or more directors by the provisions of
the certificate of incorporation, vacancies and newly created directorships of
such class or classes or series may be filled by a majority of the directors
elected by such class or classes or series thereof then in office, or by a sole
remaining director so elected.
If at any time, by reason of death or resignation or other cause, the
corporation should have no directors in office, then any officer or any
stockholder or an executor, administrator, trustee or guardian of a stockholder,
or other fiduciary entrusted with like responsibility for the person or estate
of a stockholder, may call a special meeting of stockholders in accordance with
the pro visions of the certificate of incorporation or these bylaws, or may
apply to the Court of Chancery for a decree summarily ordering an election as
provided in Section 211 of the General Corporation Law of Delaware.
If, at the time of filling any vacancy or any newly created
directorship, the directors then in office constitute less than a majority of
the whole board (as constituted immediately prior to any such increase), then
the Court of Chancery may, upon application of any stockholder or stockholders
holding at least ten (10) percent of the total number of the shares at the time
outstanding having the right to vote for such directors, summarily order an
election to be held to fill any such vacancies or newly created directorships,
or to replace the directors chosen by the directors then in office as aforesaid,
which election shall be governed by the provisions of Section 211 of the General
Corporation Law of Delaware as far as applicable.
3.5 PLACE OF MEETINGS; MEETINGS BY TELEPHONE
The board of directors of the corporation may hold meetings, both
regular and special, either within or outside the State of Delaware.
Unless otherwise restricted by the certificate of incorporation or
these bylaws, members of the board of directors, or any committee designated by
the board of directors, may participate in a meeting of the board of directors,
or any committee, by
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<PAGE> 13
means of conference telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each other, and such
participation in a meeting shall constitute presence in person at the meeting.
3.6 REGULAR MEETINGS
Regular meetings of the board of directors may be held without notice
at such time and at such place as shall from time to time be determined by the
board.
3.7 SPECIAL MEETINGS; NOTICE
Special meetings of the board of directors for any purpose or purposes
may be called at any time by the chairman of the board, the president, any vice
president, the secretary or any two (2) directors.
Notice of the time and place of special meetings shall be delivered
personally or by telephone to each director or sent by first-class mail or
telegram, charges prepaid, addressed to each director at that director's address
as it is shown on the records of the corporation. If the notice is mailed, it
shall be deposited in the United States mail at least four (4) days before the
time of the holding of the meeting. If the notice is delivered personally or by
telephone or by telegram, it shall be delivered personally or by telephone or to
the telegraph company at least forty-eight (48) hours before the time of the
holding of the meeting. Any oral notice given personally or by telephone may be
communicated either to the director or to a person at the office of the director
who the person giving the notice has reason to believe will promptly communicate
it to the director. The notice need not specify the purpose or the place of the
meeting, if the meeting is to be held at the principal executive office of the
corporation.
3.8 QUORUM
At all meetings of the board of directors, a majority of the
authorized number of directors shall constitute a quorum for the transaction of
business and the act of a majority of the directors present at any meeting at
which there is a quorum shall be the act of the board of directors, except as
may be otherwise specifically provided by statute or by the certificate of
incorporation. If a quorum is not present at any meeting of the board of
directors, then the directors present thereat may adjourn the meeting from time
to time, without notice other than announcement at the meeting, until a quorum
is present.
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<PAGE> 14
A meeting at which a quorum is initially present may continue to
transact business notwithstanding the withdrawal of directors, if any action
taken is approved by at least a majority of the required quorum for that
meeting.
3.9 WAIVER OF NOTICE
Whenever notice is required to be given under any provision of the
General Corporation Law of Delaware or of the certificate of incorporation or
these bylaws, a written waiver thereof, signed by the person entitled to notice,
whether before or after the time stated therein, shall be deemed equivalent to
notice. Attendance of a person at a meeting shall constitute a waiver of notice
of such meeting, except when the person attends a meeting for the express
purpose of objecting, at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened. Neither the
business to be transacted at, nor the purpose of, any regular or special meeting
of the directors, or members of a committee of directors, need be specified in
any written waiver of notice unless so required by the certificate of
incorporation or these bylaws.
3.10 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING
Unless otherwise restricted by the certificate of incorporation or
these bylaws, any action required or permitted to be taken at any meeting of the
board of directors, or of any committee thereof, may be taken without a meeting
if all members of the board or committee, as the case may be, consent thereto in
writing and the writing or writings are filed with the minutes of proceedings of
the board or committee.
3.11 FEES AND COMPENSATION OF DIRECTORS
Unless otherwise restricted by the certificate of incorporation or
these bylaws, the board of directors shall have the authority to fix the
compensation of directors.
3.12 APPROVAL OF LOANS TO OFFICERS
The corporation may lend money to, or guarantee any obligation of, or
otherwise assist any officer or other employee of the corporation or of its
subsidiary, including any officer or employee who is a director of the
corporation or its subsidiary, whenever, in the judgment of the directors, such
loan, guaranty or assistance may reasonably be expected to benefit the
corporation. The loan, guaranty or other assistance may be with or without
interest and may be unsecured, or secured in such manner as the board of direc-
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tors shall approve, including, without limitation, a pledge of shares of stock
of the corporation. Nothing in this section contained shall be deemed to deny,
limit or restrict the powers of guaranty or warranty of the corporation at
common law or under any statute.
3.13 REMOVAL OF DIRECTORS
Unless otherwise restricted by statute, by the certificate of
incorporation or by these bylaws, any director or the entire board of directors
may be removed, with or without cause, by the holders of a majority of the
shares then entitled to vote at an election of directors; provided, however,
that, so long as shareholders of the corporation are entitled to cumulative
voting, if less than the entire board is to be removed, no director may be
removed without cause if the votes cast against his removal would be sufficient
to elect him if then cumulatively voted at an election of the entire board of
directors.
No reduction of the authorized number of directors shall have the
effect of removing any director prior to the expiration of such director's term
of office.
ARTICLE IV
COMMITTEES
4.1 COMMITTEES OF DIRECTORS
The board of directors may, by resolution passed by a majority of the
whole board, designate one or more committees, with each committee to consist of
one or more of the directors of the corporation. The board may designate one or
more directors as alternate members of any committee, who may replace any absent
or disqualified member at any meeting of the committee. In the absence or
disqualification of a member of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not he or
they constitute a quorum, may unanimously appoint another member of the board of
directors to act at the meeting in the place of any such absent or disqualified
member. Any such committee, to the extent provided in the resolution of the
board of directors or in the bylaws of the corporation, shall have and may
exercise all the powers and authority of the board of directors in the
management of the business and affairs of the corporation, and may authorize the
seal of the corporation to be affixed to all papers that may require it; but no
such committee shall have the power or authority to (i) amend the certificate of
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incorporation (except that a committee may, to the extent authorized in the
resolution or resolutions providing for the issuance of shares of stock adopted
by the board of directors as provided in Section 151(a) of the General
Corporation Law of Delaware, fix the designations and any of the preferences or
rights of such shares relating to dividends, redemption, dissolution, any
distribution of assets of the corporation or the conversion into, or the
exchange of such shares for, shares of any other class or classes or any other
series of the same or any other class or classes of stock of the corporation or
fix the number of shares of any series of stock or authorize the increase or
decrease of the shares of any series), (ii) adopt an agreement of merger or
consolidation under Sections 251 or 252 of the General Corporation Law of
Delaware, (iii) recommend to the stockholders the sale, lease or exchange of all
or substantially all of the corporation's property and assets, (iv) recommend to
the stockholders a dissolution of the corporation or a revocation of a
dissolution, or (v) amend the bylaws of the corporation; and, unless the board
resolution establishing the committee, the bylaws or the certificate of
incorporation expressly so provide, no such committee shall have the power or
authority to declare a dividend, to authorize the issuance of stock, or to adopt
a certificate of ownership and merger pursuant to Section 253 of the General
Corporation Law of Delaware.
4.2 COMMITTEE MINUTES
Each committee shall keep regular minutes of its meetings and report
the same to the board of directors when required.
4.3 MEETINGS AND ACTION OF COMMITTEES
Meetings and actions of committees shall be governed by, and held and
taken in accordance with, the provisions of Article III of these bylaws, Section
3.5 (place of meetings and meetings by telephone), Section 3.6 (regular
meetings), Section 3.7 (special meetings and notice), Section 3.8 (quorum),
Section 3.9 (waiver of notice), and Section 3.10 (action without a meeting),
with such changes in the context of those bylaws as are necessary to substitute
the committee and its members for the board of directors and its members;
provided, however, that the time of regular meetings of committees may be
determined either by resolution of the board of directors or by resolution of
the committee, that special meetings of committees may also be called by
resolution of the board of directors and that notice of special meetings of
committees shall also be given to all alternate members, who shall have the
right to attend all meetings of the committee. The board of directors may adopt
rules for the government of any committee not inconsistent with the provisions
of these bylaws.
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ARTICLE V
OFFICERS
5.1 OFFICERS
The officers of the corporation shall be a president, a secretary, and
a chief financial officer. The corporation may also have, at the discretion of
the board of directors, a chairman of the board, one or more vice presidents,
one or more assistant vice presidents, one or more assistant secretaries, one or
more assistant treasurers, and any such other officers as may be appointed in
accordance with the provisions of Section 5.3 of these bylaws. Any number of
offices may be held by the same person.
5.2 APPOINTMENT OF OFFICERS
The officers of the corporation, except such officers as may be
appointed in accordance with the provisions of Sections 5.3 or 5.5 of these
bylaws, shall be appointed by the board of directors, subject to the rights, if
any, of an officer under any contract of employment.
5.3 SUBORDINATE OFFICERS
The board of directors may appoint, or empower the president to
appoint, such other officers and agents as the business of the corporation may
require, each of whom shall hold office for such period, have such authority,
and perform such duties as are pro vided in these bylaws or as the board of
directors may from time to time determine.
5.4 REMOVAL AND RESIGNATION OF OFFICERS
Subject to the rights, if any, of an officer under any contract of
employment, any officer may be removed, either with or without cause, by an
affirmative vote of the majority of the board of directors at any regular or
special meeting of the board or, except in the case of an officer chosen by the
board of directors, by any officer upon whom such power of removal may be
conferred by the board of directors.
Any officer may resign at any time by giving written notice to the
corporation. Any resignation shall take effect at the date of the receipt of
that notice or at any later time specified in that notice; and, unless otherwise
specified in that notice, the acceptance of the resignation shall not be
necessary to make it effec-
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tive. Any resignation is without prejudice to the rights, if any, of the
corporation under any contract to which the officer is a party.
5.5 VACANCIES IN OFFICES
Any vacancy occurring in any office of the corporation shall be filled
by the board of directors.
5.6 CHAIRMAN OF THE BOARD
The chairman of the board, if such an officer be elected, shall, if
present, preside at meetings of the board of directors and exercise and perform
such other powers and duties as may from time to time be assigned to him by the
board of directors or as may be prescribed by these bylaws. If there is no
president, then the chairman of the board shall also be the chief executive
officer of the corporation and shall have the powers and duties prescribed in
Section 5.7 of these bylaws.
5.7 PRESIDENT
Subject to such supervisory powers, if any, as may be given by the
board of directors to the chairman of the board, if there be such an officer,
the president shall be the chief executive officer of the corporation and shall,
subject to the control of the board of directors, have general supervision,
direction, and control of the business and the officers of the corporation. He
shall preside at all meetings of the stockholders and, in the absence or nonexis
tence of a chairman of the board, at all meetings of the board of directors. He
shall have the general powers and duties of management usually vested in the
office of president of a corporation and shall have such other powers and duties
as may be prescribed by the board of directors or these bylaws.
5.8 VICE PRESIDENTS
In the absence or disability of the president, the vice presidents, if
any, in order of their rank as fixed by the board of directors or, if not
ranked, a vice president designated by the board of directors, shall perform all
the duties of the president and when so acting shall have all the powers of, and
be subject to all the restrictions upon, the president. The vice presidents
shall have such other powers and perform such other duties as from time to time
may be prescribed for them respectively by the board of directors, these bylaws,
the president or the chairman of the board.
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5.9 SECRETARY
The secretary shall keep or cause to be kept, at the principal
executive office of the corporation or such other place as the board of
directors may direct, a book of minutes of all meetings and actions of
directors, committees of directors, and stockholders. The minutes shall show
the time and place of each meeting, whether regular or special (and, if
special, how authorized and the notice given), the names of those present at
directors' meetings or committee meetings, the number of shares present or
represented at stockholders' meetings, and the proceedings thereof.
The secretary shall keep, or cause to be kept, at the principal
executive office of the corporation or at the office of the corporation's
transfer agent or registrar, as determined by resolution of the board of
directors, a share register, or a duplicate share register, showing the names
of all stockholders and their addresses, the number and classes of shares held
by each, the number and date of certificates evidencing such shares, and the
number and date of cancellation of every certificate surrendered for
cancellation.
The secretary shall give, or cause to be given, notice of all meetings
of the stockholders and of the board of directors required to be given by law or
by these bylaws. He shall keep the seal of the corporation, if one be adopted,
in safe custody and shall have such other powers and perform such other duties
as may be prescribed by the board of directors or by these bylaws.
5.10 CHIEF FINANCIAL OFFICER
The chief financial officer shall keep and maintain, or cause to be
kept and maintained, adequate and correct books and records of accounts of the
properties and business transactions of the corporation, including accounts of
its assets, liabilities, receipts, disbursements, gains, losses, capital
retained earnings, and shares. The books of account shall at all reasonable
times be open to inspection by any director.
The chief financial officer shall deposit all moneys and other
valuables in the name and to the credit of the corporation with such
depositories as may be designated by the board of directors. He shall disburse
the funds of the corporation as may be ordered by the board of directors, shall
render to the president and direc tors, whenever they request it, an account of
all his transactions as chief financial officer and of the financial condition
of the corporation, and shall have other powers and perform such other
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duties as may be prescribed by the board of directors or these bylaws.
The chief financial officer shall be the treasurer of the corporation.
5.11 ASSISTANT SECRETARY
The assistant secretary, or, if there is more than one, the assistant
secretaries in the order determined by the stockholders or board of directors
(or if there be no such determination, then in the order of their election)
shall, in the absence of the secretary or in the event of his or her inability
or refusal to act, perform the duties and exercise the powers of the secretary
and shall perform such other duties and have such other powers as may be
prescribed by the board of directors or these bylaws.
5.12 ASSISTANT TREASURER
The assistant treasurer, or, if there is more than one, the assistant
treasurers, in the order determined by the stockholders or board of directors
(or if there be no such determination, then in the order of their election),
shall, in the absence of the chief financial officer or in the event of his or
her inability or refusal to act, perform the duties and exercise the powers of
the chief financial officer and shall perform such other duties and have such
other powers as may be prescribed by the board of directors or these bylaws.
5.13 REPRESENTATION OF SHARES OF OTHER CORPORATIONS
The chairman of the board, the president, any vice president, the
chief financial officer, the secretary or assistant secretary of this
corporation, or any other person authorized by the board of directors or the
president or a vice president, is authorized to vote, represent, and exercise on
behalf of this corporation all rights incident to any and all shares of any
other corporation or corporations standing in the name of this corporation. The
authority granted herein may be exercised either by such person directly or by
any other person authorized to do so by proxy or power of attorney duly executed
by such person having the authority.
5.14 AUTHORITY AND DUTIES OF OFFICERS
In addition to the foregoing authority and duties, all officers of the
corporation shall respectively have such authority and perform such duties in
the management of the business of the
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corporation as may be designated from time to time by the board of directors or
the stockholders.
ARTICLE VI
INDEMNITY
6.1 THIRD PARTY ACTIONS
The corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending, or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he is or was a director, officer, employee or agent of the corpora-
tion, or is or was serving at the request of the corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture
trust or other enterprise, against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement (if such settlement is approved
in advance by the corporation, which approval shall not be unreasonably
withheld) actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction, or upon
a plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interest of the
corporation, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.
6.2 ACTIONS BY OR IN THE RIGHT OF THE CORPORATION
The corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment in its favor by
reason of the fact that he is or was a director, officer, employee or agent of
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partner ship, joint
venture, trust or other enterprise against expenses (including attorneys' fees)
and amounts paid in settlement (if such settlement is approved in advance by the
corporation, which appro-
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val shall not be unreasonably withheld) actually and reasonably incurred by him
in connection with the defense or settlement of such action or suit if he acted
in good faith and in manner he reasonably believed to be in or not opposed to
the best interests of the corporation, except that no indemnification shall be
made in respect of any claim, issue or matter as to which such person shall have
been adjudged to be liable to the corporation unless and only to the extent that
the Delaware Court of Chancery or the court in which such action or suit was
brought shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which the Delaware
Court of Chancery or such other court shall deem proper. Notwithstanding any
other provision of this Article VI, no person shall be indemnified hereunder
for any expenses or amounts paid in settlement with respect to any action to
recover short-swing profits under Section 16(b) of the Securities Exchange Act
of 1934, as amended.
6.3 SUCCESSFUL DEFENSE
To the extent that a director, officer, employee or agent of the
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in Sections 6.1 and 6.2, or in defense
of any claim, issue or matter therein, he shall be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection therewith.
6.4 DETERMINATION OF CONDUCT
Any indemnification under Sections 6.1 and 6.2 (unless ordered by a
court) shall be made by the corporation only as authorized in the specific case
upon a determination that the indemnification of the director, officer, employee
or agent is proper in the circumstances because he has met the applicable
standard of conduct set forth in Sections 6.1 and 6.2. Such determination shall
be made (1) by the Board of Directors or the Executive Committee by a majority
vote of a quorum consisting of directors who were not parties to such action,
suit or proceeding or (2) or if such quorum is not obtainable or, even if
obtainable, a quorum of disinterested directors so directs, by independent legal
counsel in a written opinion, or (3) by the stockholders. Notwithstanding the
fore going, a director, officer, employee or agent of the Corporation shall be
entitled to contest any determination that the director, officer, employee or
agent has not met the applicable standard of conduct set forth in Sections 6.1
and 6.2 by petitioning a court of competent jurisdiction.
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6.5 PAYMENT OF EXPENSES IN ADVANCE
Expenses incurred in defending a civil or criminal action, suit or
proceeding, by an individual who may be entitled to indemnification pursuant to
Section 6.1 or 6.2, shall be paid by the corporation in advance of the final
disposition of such action, suit or proceeding upon receipt of an undertaking by
or on behalf of the director, officer, employee or agent to repay such amount if
it shall ultimately be determined that he is not entitled to be indemnified by
the corporation as authorized in this Article VI.
6.6 INDEMNITY NOT EXCLUSIVE
The indemnification and advancement of expenses provided by or granted
pursuant to the other sections of this Article VI shall not be deemed exclusive
of any other rights to which those seeking indemnification or advancement of
expenses may be entitled under any by-law, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in his official capacity
and as to action in another capacity while holding such office.
6.7 INSURANCE INDEMNIFICATION
The corporation shall have the power to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee
or agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against any liability
asserted against him and incurred by him in any such capacity or arising out of
his status as such, whether or not the corporation would have the power to
indemnify him against such liability under the provisions of this Article VI.
6.8 THE CORPORATION
For purposes of this Article VI, references to "the corporation" shall
include, in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, and employees or agents, so that
any person who is or was a director, officer, employee or agent of such
constituent corporation, or is or was serving at the request of such constituent
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, shall stand in the same
position under and subject to the provisions of this
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Article VI (including, without limitation the provisions of Section 6.4) with
respect to the resulting or surviving corporation as he would have with respect
to such constituent corporation if its separate existence had continued.
6.9 EMPLOYEE BENEFIT PLANS
For purposes of this Article VI, references to "other enterprises"
shall include employee benefit plans; references to "fines" shall include any
excise taxes assessed on a person with respect to an employee benefit plan; and
references to "serving at the request of the corporation" shall include any
service as a director, officer, employee or agent of the corporation which
imposes duties on, or involves services by, such director, officer, employee, or
agent with respect to an employee benefit plan, its participants, or
beneficiaries; and a person who acted in good faith and in a manner he
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the corporation" as referred to in this Article
VI.
6.10 CONTINUATION OF INDEMNIFICATION AND ADVANCEMENT OF
EXPENSES
The indemnification and advancement of expenses provided by, or
granted pursuant to, this Article VI shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
ARTICLE VII
RECORDS AND REPORTS
7.1 MAINTENANCE AND INSPECTION OF RECORDS
The corporation shall, either at its principal executive officer or at
such place or places as designated by the board of directors, keep a record of
its stockholders listing their names and addresses and the number and class of
shares held by each stockholder, a copy of these bylaws as amended to date,
accounting books, and other records.
Any stockholder of record, in person or by attorney or other agent,
shall, upon written demand under oath stating the purpose thereof, have the
right during the usual hours for business to inspect for any proper purpose the
corporation's stock ledger, a list of its stockholders, and its other books and
records and to
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make copies or extracts therefrom. A proper purpose shall mean a purpose
reasonably related to such person's interest as a stockholder. In every instance
where an attorney or other agent is the person who seeks the right to
inspection, the demand under oath shall be accompanied by a power of attorney or
such other writing that authorizes the attorney or other agent so to act on
behalf of the stockholder. The demand under oath shall be directed to the
corporation at its registered office in Delaware or at its principal place of
business.
The officer who has charge of the stock ledger of the corporation
shall prepare and make, at least ten (10) days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, showing the address of each stockholder
and the number of shares registered in the name of each stockholder. Such list
shall be open to the examination of any stockholder, for any purpose germane to
the meeting, during ordinary business hours, for a period of at least ten (10)
days prior to the meeting, either at a place within the city where the meeting
is to be held, which place shall be specified in the notice of the meeting, or,
if not so specified, at the place where the meeting is to be held. The list
shall also be produced and kept at the time and place of the meeting during the
whole time thereof, and may be inspected by any stockholder who is present.
7.2 INSPECTION BY DIRECTORS
Any director shall have the right to examine the corporation's stock
ledger, a list of its stockholders, and its other books and records for a
purpose reasonably related to his position as a director. The Court of Chancery
is hereby vested with the exclusive jurisdiction to determine whether a
director is entitled to the inspection sought. The Court may summarily order the
corporation to permit the director to inspect any and all books and records,
the stock ledger, and the stock list and to make copies or extracts therefrom.
The Court may, in its discretion, prescribe any limitations or conditions with
reference to the inspection, or award such other and further relief as the Court
may deem just and proper.
7.3 ANNUAL STATEMENT TO STOCKHOLDERS
The board of directors shall present at each annual meeting, and at
any special meeting of the stockholders when called for by vote of the
stockholders, a full and clear statement of the business and condition of the
corporation.
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ARTICLE VIII
GENERAL MATTERS
8.1 CHECKS
From time to time, the board of directors shall determine by
resolution which person or persons may sign or endorse all checks, drafts, other
orders for payment of money, notes or other evidences of indebtedness that are
issued in the name of or payable to the corporation, and only the persons so
authorized shall sign or endorse those instruments.
8.2 EXECUTION OF CORPORATE CONTRACTS AND INSTRUMENTS
The board of directors, except as otherwise provided in these bylaws,
may authorize any officer or officers, or agent or agents, to enter into any
contract or execute any instrument in the name of and on behalf of the
corporation; such authority may be general or confined to specific instances.
Unless so authorized or ratified by the board of directors or within the agency
power of an officer, no officer, agent or employee shall have any power or
authority to bind the corporation by any contract or engagement or to pledge its
credit or to render it liable for any purpose or for any amount.
8.3 STOCK CERTIFICATES; PARTLY PAID SHARES
The shares of the corporation shall be represented by certificates,
provided that the board of directors of the corporation may provide by
resolution or resolutions that some or all of any or all classes or series of
its stock shall be uncertificated shares. Any such resolution shall not apply to
shares represented by a certificate until such certificate is surrendered to the
corporation. Notwithstanding the adoption of such a resolution by the board of
directors, every holder of stock represented by certificates and upon request
every holder of uncertificated shares shall be entitled to have a certificate
signed by, or in the name of the corporation by the chairman or vice-chairman of
the board of directors, or the president or vice-president, and by the chief
financial officer or an assistant treasurer, or the secretary or an assistant
secretary of such corporation representing the number of shares registered in
certificate form. Any or all of the signatures on the certificate may be a
facsimile. In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate has ceased to be
such officer, transfer agent or registrar before such certificate is issued, it
may be issued by the corporation with the same effect as
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if he were such officer, transfer agent or registrar at the date of
issue.
The corporation may issue the whole or any part of its shares as
partly paid and subject to call for the remainder of the consideration to be
paid therefor. Upon the face or back of each stock certificate issued to
represent any such partly paid shares, upon the books and records of the
corporation in the case of uncertificated partly paid shares, the total amount
of the consideration to be paid therefor and the amount paid thereon shall be
stated. Upon the declaration of any dividend on fully paid shares, the corpora
tion shall declare a dividend upon partly paid shares of the same class, but
only upon the basis of the percentage of the consideration actually paid
thereon.
8.4 SPECIAL DESIGNATION ON CERTIFICATES
If the corporation is authorized to issue more than one class of stock
or more than one series of any class, then the powers, the designations, the
preferences, and the relative, participating, optional or other special rights
of each class of stock or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights shall be set forth in full or
summarized on the face or back of the certificate that the corporation shall
issue to represent such class or series of stock; provided, how ever, that,
except as otherwise provided in Section 202 of the General Corporation Law of
Delaware, in lieu of the foregoing requirements there may be set forth on the
face or back of the certificate that the corporation shall issue to represent
such class or series of stock a statement that the corporation will furnish
without charge to each stockholder who so requests the powers, the designations,
the preferences, and the relative, participating, optional or other special
rights of each class of stock or series thereof and the qualifications,
limitations or restrictions of such preferences and/or rights.
8.5 LOST CERTIFICATES
Except as provided in this Section 8.5, no new certificates for shares
shall be issued to replace a previously issued certificate unless the latter is
surrendered to the corporation and cancelled at the same time. The corporation
may issue a new certificate of stock or uncertificated shares in the place of
any certificate theretofore issued by it, alleged to have been lost, stolen or
destroyed, and the corporation may require the owner of the lost, stolen or
destroyed certificate, or his legal representative, to give the corporation a
bond sufficient to indemnify it against any claim that may be made against it on
account of the
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alleged loss, theft or destruction of any such certificate or the issuance of
such new certificate or uncertificated shares.
8.6 CONSTRUCTION; DEFINITIONS
Unless the context requires otherwise, the general provisions, rules
of construction, and definitions in the Delaware General Corporation Law shall
govern the construction of these bylaws. Without limiting the generality of this
provision, the singular number includes the plural, the plural number includes
the singular, and the term "person" includes both a corporation and a natural
person.
8.7 DIVIDENDS
The directors of the corporation, subject to any restrictions
contained in (i) the General Corporation Law of Delaware or (ii) the certificate
of incorporation, may declare and pay dividends upon the shares of its capital
stock. Dividends may be paid in cash, in property, or in shares of the
corporation's capital stock.
The directors of the corporation may set apart out of any of the funds
of the corporation available for dividends a reserve or reserves for any proper
purpose and may abolish any such reserve. Such purposes shall include but not be
limited to equalizing dividends, repairing or maintaining any property of the
corporation, and meeting contingencies.
8.8 FISCAL YEAR
The fiscal year of the corporation shall be fixed by resolution of the
board of directors and may be changed by the board of directors.
8.9 SEAL
The corporation may adopt a corporate seal, which shall be adopted and
which may be altered by the board of directors, and may use the same by causing
it or a facsimile thereof to be impressed or affixed or in any other manner
reproduced.
8.10 TRANSFER OF STOCK
Upon surrender to the corporation or the transfer agent of the
corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignation or authority to transfer, it shall be the
duty of the corporation to issue a new
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<PAGE> 29
certificate to the person entitled thereto, cancel the old certificate, and
record the transaction in its books.
8.11 STOCK TRANSFER AGREEMENTS
The corporation shall have power to enter into and perform any
agreement with any number of stockholders of any one or more classes of stock of
the corporation to restrict the transfer of shares of stock of the corporation
of any one or more classes owned by such stockholders in any manner not
prohibited by the General Corporation Law of Delaware.
8.12 REGISTERED STOCKHOLDERS
The corporation shall be entitled to recognize the exclusive right of
a person registered on its books as the owner of shares to receive dividends and
to vote as such owner, shall be entitled to hold liable for calls and
assessments the person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of another person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Delaware.
ARTICLE IX
AMENDMENTS
The bylaws of the corporation may be adopted, amended or repealed by
the stockholders entitled to vote; provided, however, that the corporation may,
in its certificate of incorporation, confer the power to adopt, amend or repeal
bylaws upon the directors. The fact that such power has been so conferred upon
the directors shall not divest the stockholders of the power, nor limit their
power to adopt, amend or repeal bylaws.
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<PAGE> 1
August 28, 1996
EXHIBIT 5.1
Introgen Therapeutics, Inc.
301 Congress Avenue, Suite 1850
Austin, TX 78701
RE: REGISTRATION STATEMENT ON FORM S-1
Ladies and Gentlemen:
We have examined the Registration Statement on Form S-1 filed by you
with the Securities and Exchange Commission (the "Commission") on or about
August 28, 1996 (as such may be further amended or supplemented, the
"Registration Statement"), in connection with the registration under the
Securities Act of 1933, as amended (the "Act"), of up to 3,680,000 shares of
your Common Stock (the "Shares"). The Shares, which include up to 480,000
shares of Common Stock issuable pursuant to an over-allotment option granted to
the underwriters (the "Underwriters"), are to be sold to the Underwriters as
described in such Registration Statement for sale to the public. All of the
shares being sold are being sold by the Company (including the 480,000 Shares
of Common Stock in the over-allotment option). As your counsel in connection
with this transaction, we have examined the proceedings proposed to be taken by
you in connection with the issuance and sale of the Shares.
Based on the foregoing, it is our opinion that, upon conclusion of the
proceedings being taken or contemplated by us, as your counsel, to be taken
prior to the issuance of the Shares and upon completion of the proceedings
taken in order to permit such transactions to be carried out in accordance with
the securities laws of various states where required, the Shares, when issued
and sold in the manner described in the Registration Statement, will be legally
and validly issued, fully paid and nonassessable.
We consent to the use of this opinion as an exhibit to the
Registration Statement, and further consent to the use of our name wherever
appearing in the Registration Statement, including the prospectus constituting
a part thereof, which has been approved by us, as such may be further amended
or supplemented, or incorporated by reference in any Registration Statement
relating to the prospectus file pursuant to Rule 462(b) of the Act.
Very truly yours,
WILSON SONSINI GOODRICH & ROSATI
Professional Corporation
<PAGE> 1
Exhibit 10.1
INTROGEN THERAPEUTICS, INC.
INDEMNIFICATION AGREEMENT
This Indemnification Agreement ("Agreement") is effective as of
, 1996 by and between Introgen Therapeutics, Inc., a Delaware
corporation (the "Company"), and , ("Indemnitee").
WHEREAS, the Company desires to attract and retain the services of
highly qualified individuals, such as Indemnitee, to serve the Company and its
related entities;
WHEREAS, in order to induce Indemnitee to continue to provide services
to the Company, the Company wishes to provide for the indemnification of, and
the advancement of expenses to, Indemnitee to the maximum extent permitted by
law;
WHEREAS, the Company and Indemnitee recognize the continued difficulty
in obtaining liability insurance for the Company's directors, officers,
employees, agents and fiduciaries, the sig nificant increases in the cost of
such insurance and the general reductions in the coverage of such insurance;
WHEREAS, the Company and Indemnitee further recognize the substantial
increase in corporate litigation in general, subjecting directors, officers,
employees, agents and fiduciaries to expensive litigation risks at the same time
as the availability and coverage of liability insurance has been severely
limited; and
WHEREAS, the Company and Indemnitee desire to continue to have in place
the additional protection provided by an indemnification agreement to provide
indemnification and advancement of expenses to the Indemnitee to the maximum
extent permitted by Delaware law;
WHEREAS, in view of the considerations set forth above, the Company
desires that Indemnitee shall be indemnified and advanced expenses by the
Company as set forth herein;
NOW, THEREFORE, the Company and Indemnitee hereby agree as set forth
below.
1. Certain Definitions.
(a) "Change in Control" shall mean, and shall be deemed to
have occurred if, on or after the date of this Agreement, (i) any "person" (as
such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of
1934, as amended) or group acting in concert, other than a trustee or other
fiduciary holding securities under an employee benefit plan of the Company
acting in such capacity or a corporation owned directly or indirectly by the
stockholders of the Company in substantially the same proportions as their
ownership of stock of the Company, becomes the "beneficial owner" (as defined in
Rule 13d-3 under said Act), directly or indirectly, of securities of the Company
representing more than 50% of the total voting power represented by the
Company's then outstanding Voting Securities, (ii) during any period of two
consecutive years, individuals who
<PAGE> 2
at the beginning of such period constitute the Board of Directors of the Company
and any new director whose election by the Board of Directors or nomination for
election by the Company's stockholders was approved by a vote of at least two
thirds (2/3) of the directors then still in office who either were directors at
the beginning of the period or whose election or nomination for election was
previously so approved, cease for any reason to constitute a majority thereof,
(iii) the stockholders of the Company approve a merger or consolidation of the
Company with any other corporation other than a merger or consolidation which
would result in the Voting Securities of the Company outstanding immediately
prior thereto continuing to represent (either by remaining outstanding or by
being converted into Voting Securities of the surviving entity) at least 80% of
the total voting power represented by the Voting Securities of the Company or
such surviving entity outstanding immediately after such merger or
consolidation, or (iv) the stockholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the sale or disposition
by the Company of (in one transaction or a series of related transactions) all
or substantially all of the Company's assets.
(b) "Claim" shall mean with respect to a Covered Event: any
threatened, pending or completed action, suit, proceeding or alternative dispute
resolution mechanism, or any hearing, inquiry or investigation that Indemnitee
in good faith believes might lead to the institution of any such action, suit,
proceeding or alternative dispute resolution mechanism, whether civil, criminal,
administrative, investigative or other.
(c) References to the "Company" shall include, in addition to
Introgen Therapeutics, Inc., any constituent corporation (including any
constituent of a constituent) absorbed in a consolidation or merger to which
Introgen Therapeutics, Inc. (or any of its wholly owned subsidi aries) is a
party which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, employees, agents or
fiduciaries, so that if Indemnitee is or was a director, officer, employee,
agent or fiduciary of such constituent corporation, or is or was serving at the
request of such constituent corporation as a director, officer, employee, agent
or fiduciary of another corporation, partnership, joint venture, employee
benefit plan, trust or other enterprise, Indemnitee shall stand in the same
position under the provisions of this Agreement with respect to the resulting or
surviving corporation as Indemnitee would have with respect to such constituent
corporation if its separate existence had continued.
(d) "Covered Event" shall mean any event or occurrence related
to the fact that Indemnitee is or was a director, officer, employee, agent or
fiduciary of the Company, or any subsidiary of the Company, or is or was serving
at the request of the Company as a director, officer, employee, agent or
fiduciary of another corporation, partnership, joint venture, trust or other
enterprise, or by reason of any action or inaction on the part of Indemnitee
while serving in such capacity.
(e) "Expenses" shall mean any and all expenses (including
attorneys' fees and all other costs, expenses and obligations incurred in
connection with investigating, defending, being a witness in or participating in
(including on appeal), or preparing to defend, to be a witness in or to
-2-
<PAGE> 3
participate in, any action, suit, proceeding, alternative dispute resolution
mechanism, hearing, inquiry or investigation), judgments, fines, penalties and
amounts paid in settlement (if such settlement is approved in advance by the
Company, which approval shall not be unreasonably withheld) of any Claim and any
federal, state, local or foreign taxes imposed on the Indemnitee as a result of
the actual or deemed receipt of any payments under this Agreement.
(f) "Expense Advance" shall mean a payment to Indemnitee
pursuant to Section 3 of Expenses in advance of the settlement of or final
judgement in any action, suit, proceeding or alternative dispute resolution
mechanism, hearing, inquiry or investigation which constitutes a Claim.
(g) "Independent Legal Counsel" shall mean an attorney or firm
of attorneys, selected in accordance with the provisions of Section 2(d) hereof,
who shall not have otherwise performed services for the Company or Indemnitee
within the last three years (other than with respect to matters concerning the
rights of Indemnitee under this Agreement, or of other Indemnitees under similar
indemnity agreements).
(h) References to "other enterprises" shall include employee
benefit plans; references to "fines" shall include any excise taxes assessed on
Indemnitee with respect to an employee benefit plan; and references to "serving
at the request of the Company" shall include any service as a director, officer,
employee, agent or fiduciary of the Company which imposes duties on, or involves
services by, such director, officer, employee, agent or fiduciary with respect
to an employee benefit plan, its participants or its beneficiaries; and if
Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to
be in the interest of the participants and beneficiaries of an employee benefit
plan, Indemnitee shall be deemed to have acted in a manner "not opposed to the
best interests of the Company" as referred to in this Agreement.
(i) "Reviewing Party" shall mean, subject to the provisions of
Section 2(d), any person or body appointed by the Board of Directors in
accordance with applicable law to review the Company's obligations hereunder and
under applicable law, which may include a member or members of the Company's
Board of Directors, Independent Legal Counsel or any other person or body not a
party to the particular Claim for which Indemnitee is seeking indemnification.
(j) "Section" refers to a section of this Agreement unless
otherwise indicated.
(k) "Voting Securities" shall mean any securities of the
Company that vote generally in the election of directors.
2. Indemnification.
(a) Indemnification of Expenses. Subject to the provisions of
Section 2(b) below, the Company shall indemnify Indemnitee for Expenses to the
fullest extent permitted by law if Indemnitee was or is or becomes a party to or
witness or other participant in, or is threatened to be made a party to or
witness or other participant in, any Claim (whether by reason of or arising in
part
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<PAGE> 4
out of a Covered Event), including all interest, assessments and other charges
paid or payable in connection with or in respect of such Expenses.
(b) Review of Indemnification Obligations. Notwithstanding the
foregoing, in the event any Reviewing Party shall have determined (in a written
opinion, in any case in which Indepen dent Legal Counsel is the Reviewing Party)
that Indemnitee is not entitled to be indemnified hereunder under applicable
law, (i) the Company shall have no further obligation under Section 2(a) to make
any payments to Indemnitee not made prior to such determination by such
Reviewing Party, and (ii) the Company shall be entitled to be reimbursed by
Indemnitee (who hereby agrees to reimburse the Company) for all Expenses
theretofore paid to Indemnitee to which Indemnitee is not entitled hereunder
under applicable law; provided, however, that if Indemnitee has commenced or
thereafter commences legal proceedings in a court of competent jurisdiction to
secure a determination that Indemnitee is entitled to be indemnified hereunder
under applicable law, any determination made by any Reviewing Party that
Indemnitee is not entitled to be indemnified hereunder under applicable law
shall not be binding and Indemnitee shall not be required to reimburse the
Company for any Expenses theretofore paid in indemnifying Indemnitee until a
final judicial determination is made with respect thereto (as to which all
rights of appeal therefrom have been exhausted or lapsed). Indemnitee's
obligation to reimburse the Company for any Expenses shall be unsecured and no
interest shall be charged thereon.
(c) Indemnitee Rights on Unfavorable Determination; Binding
Effect. If any Reviewing Party determines that Indemnitee substantively is not
entitled to be indemnified hereunder in whole or in part under applicable law,
Indemnitee shall have the right to commence litigation seeking an initial
determination by the court or challenging any such determination by such
Reviewing Party or any aspect thereof, including the legal or factual bases
therefor, and, subject to the provisions of Section 15, the Company hereby
consents to service of process and to appear in any such proceed ing. Absent
such litigation, any determination by any Reviewing Party shall be conclusive
and binding on the Company and Indemnitee.
(d) Selection of Reviewing Party; Change in Control. If there
has not been a Change in Control, any Reviewing Party shall be selected by the
Board of Directors, and if there has been such a Change in Control (other than a
Change in Control which has been approved by a majority of the Company's Board
of Directors who were directors immediately prior to such Change in Control),
any Reviewing Party with respect to all matters thereafter arising concerning
the rights of Indemnitee to indemnification of Expenses under this Agreement or
any other agreement or under the Company's Certificate of Incorporation or
Bylaws as now or hereafter in effect, or under any other applicable law, if
desired by Indemnitee, shall be Independent Legal Counsel selected by Indemnitee
and approved by the Company (which approval shall not be unreasonably withheld).
Such counsel, among other things, shall render its written opinion to the
Company and Indemnitee as to whether and to what extent Indemnitee would be
entitled to be indemnified hereunder under applicable law and the Company agrees
to abide by such opinion. The Company agrees to pay the reasonable fees of the
Independent Legal Counsel referred to above and to indemnify fully such counsel
against any and all expenses (including attorneys' fees), claims, liabilities
and damages arising
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<PAGE> 5
out of or relating to this Agreement or its engagement pursuant hereto.
Notwithstanding any other provision of this Agreement, the Company shall not be
required to pay Expenses of more than one Independent Legal Counsel in
connection with all matters concerning a single Indemnitee, and such Independent
Legal Counsel shall be the Independent Legal Counsel for any or all other
Indemnitees unless (i) the employment of separate counsel by one or more
Indemnitees has been previously authorized by the Company in writing, or (ii) an
Indemnitee shall have provided to the Company a written statement that such
Indemnitee has reasonably concluded that there may be a conflict of interest
between such Indemnitee and the other Indemnitees with respect to the matters
arising under this Agreement.
(e) Mandatory Payment of Expenses. Notwithstanding any other
provision of this Agreement other than Section 10 hereof, to the extent that
Indemnitee has been successful on the merits or otherwise, including, without
limitation, the dismissal of an action without prejudice, in defense of any
Claim, Indemnitee shall be indemnified against all Expenses incurred by
Indemnitee in connection therewith.
3. Expense Advances.
(a) Obligation to Make Expense Advances. Upon receipt of a
written undertaking by or on behalf of the Indemnitee to repay such amounts if
it shall ultimately be determined that the Indemnitee is not entitled to be
indemnified therefore by the Company hereunder under applicable law, the Company
shall make Expense Advances to Indemnitee.
(b) Form of Undertaking. Any obligation to repay any Expense
Advances hereunder pursuant to a written undertaking by the Indemnitee shall be
unsecured and no interest shall be charged thereon.
(c) Determination of Reasonable Expense Advances. The parties
agree that for the purposes of any Expense Advance for which Indemnitee has made
written demand to the Company in accordance with this Agreement, all Expenses
included in such Expense Advance that are certified by affidavit of Indemnitee's
counsel as being reasonable shall be presumed conclusively to be reasonable.
4. Procedures for Indemnification and Expense Advances.
(a) Timing of Payments. All payments of Expenses (including
without limitation Expense Advances) by the Company to the Indemnitee pursuant
to this Agreement shall be made to the fullest extent permitted by law as soon
as practicable after written demand by Indemnitee therefor is presented to the
Company, but in no event later than thirty (30) business days after such written
demand by Indemnitee is presented to the Company, except in the case of Expense
Advances, which shall be made no later than ten (10) business days after such
written demand by Indemnitee is presented to the Company.
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<PAGE> 6
(b) Notice/Cooperation by Indemnitee. Indemnitee shall, as a
condition precedent to Indemnitee's right to be indemnified or Indemnitee's
right to receive Expense Advances under this Agreement, give the Company notice
in writing as soon as practicable of any Claim made against Indemnitee for which
indemnification will or could be sought under this Agreement. Notice to the
Company shall be directed to the Chief Executive Officer of the Company at the
address shown on the signature page of this Agreement (or such other address as
the Company shall designate in writing to Indemnitee). In addition, Indemnitee
shall give the Company such information and cooperation as it may reasonably
require and as shall be within Indemnitee's power.
(c) No Presumptions; Burden of Proof. For purposes of this
Agreement, the termination of any Claim by judgment, order, settlement (whether
with or without court approval) or conviction, or upon a plea of nolo
contendere, or its equivalent, shall not create a presumption that Indemnitee
did not meet any particular standard of conduct or have any particular belief or
that a court has determined that indemnification is not permitted by this
Agreement or applicable law. In addition, neither the failure of any Reviewing
Party to have made a determination as to whether Indemnitee has met any
particular standard of conduct or had any particular belief, nor an actual
determination by any Reviewing Party that Indemnitee has not met such standard
of conduct or did not have such belief, prior to the commencement of legal
proceedings by Indemnitee to secure a judicial determination that Indemnitee
should be indemnified under this Agreement under applicable law, shall be a
defense to Indemnitee's claim or create a presumption that Indemnitee has not
met any particular standard of conduct or did not have any particular belief. In
connection with any determi nation by any Reviewing Party or otherwise as to
whether the Indemnitee is entitled to be indemnified hereunder under applicable
law, the burden of proof shall be on the Company to establish that Indemnitee is
not so entitled.
(d) Notice to Insurers. If, at the time of the receipt by the
Company of a notice of a Claim pursuant to Section 4(b) hereof, the Company has
liability insurance in effect which may cover such Claim, the Company shall give
prompt notice of the commencement of such Claim to the insurers in accordance
with the procedures set forth in the respective policies. The Company shall
thereafter take all necessary or desirable action to cause such insurers to pay,
on behalf of the Indemnitee, all amounts payable as a result of such Claim in
accordance with the terms of such policies.
(e) Selection of Counsel. In the event the Company shall be
obligated hereunder to provide indemnification for or make any Expense Advances
with respect to the Expenses of any Claim, the Company, if appropriate, shall be
entitled to assume the defense of such Claim with counsel approved by Indemnitee
(which approval shall not be unreasonably withheld) upon the delivery to
Indemnitee of written notice of the Company's election to do so. After delivery
of such notice, approval of such counsel by Indemnitee and the retention of such
counsel by the Company, the Company will not be liable to Indemnitee under this
Agreement for any fees or expenses of separate counsel subsequently retained by
or on behalf of Indemnitee with respect to the same Claim; provided that, (i)
Indemnitee shall have the right to employ Indemnitee's separate counsel in any
such Claim at Indemnitee's expense and (ii) if (A) the employment of separate
counsel by Indemnitee has
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<PAGE> 7
been previously authorized by the Company, (B) Indemnitee shall have reasonably
concluded that there may be a conflict of interest between the Company and
Indemnitee in the conduct of any such defense, or (C) the Company shall not
continue to retain such counsel to defend such Claim, then the fees and expenses
of Indemnitee's separate counsel shall be Expenses for which Indemnitee may
receive indemnification or Expense Advances hereunder.
5. Additional Indemnification Rights; Nonexclusivity.
(a) Scope. The Company hereby agrees to indemnify the
Indemnitee to the fullest extent permitted by law, notwithstanding that such
indemnification is not specifically authorized by the other provisions of this
Agreement, the Company's Certificate of Incorporation, the Company's Bylaws or
by statute. In the event of any change after the date of this Agreement in any
applicable law, statute or rule which expands the right of a Delaware
corporation to indemnify a member of its board of directors or an officer,
employee, agent or fiduciary, it is the intent of the parties hereto that
Indemnitee shall enjoy by this Agreement the greater benefits afforded by such
change. In the event of any change in any applicable law, statute or rule which
narrows the right of a Delaware corporation to indemnify a member of its board
of directors or an officer, employee, agent or fiduciary, such change, to the
extent not otherwise required by such law, statute or rule to be applied to this
Agreement, shall have no effect on this Agreement or the parties' rights and
obligations hereunder except as set forth in Section 10(a) hereof.
(b) Nonexclusivity. The indemnification and the payment of
Expense Advances provided by this Agreement shall be in addition to any rights
to which Indemnitee may be entitled under the Company's Certificate of
Incorporation, its Bylaws, any other agreement, any vote of stockholders or
disinterested directors, the General Corporation Law of the State of Delaware,
or otherwise. The indemnification and the payment of Expense Advances provided
under this Agreement shall continue as to Indemnitee for any action taken or not
taken while serving in an indemnified capacity even though subsequent thereto
Indemnitee may have ceased to serve in such capacity.
6. No Duplication of Payments. The Company shall not be liable under
this Agreement to make any payment in connection with any Claim made against
Indemnitee to the extent Indemnitee has otherwise actually received payment
(under any insurance policy, provision of the Company's Certificate of
Incorporation, Bylaws or otherwise) of the amounts otherwise payable hereunder.
7. Partial Indemnification. If Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of Expenses incurred in connection with any Claim, but not, however, for
all of the total amount thereof, the Company shall nevertheless indemnify
Indemnitee for the portion of such Expenses to which Indemnitee is entitled.
8. Mutual Acknowledgment. Both the Company and Indemnitee acknowledge
that in certain instances, federal law or applicable public policy may prohibit
the Company from indemnifying its directors, officers, employees, agents or
fiduciaries under this Agreement or otherwise.
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<PAGE> 8
Indemnitee understands and acknowledges that the Company has undertaken or may
be required in the future to undertake with the Securities and Exchange
Commission to submit the question of indemnification to a court in certain
circumstances for a determination of the Company's right under public policy to
indemnify Indemnitee.
9. Liability Insurance. To the extent the Company maintains
liability insurance applicable to directors, officers, employees, agents or
fiduciaries, Indemnitee shall be covered by such policies in such a manner as to
provide Indemnitee the same rights and benefits as are provided to the most
favorably insured of the Company's directors, if Indemnitee is a director; or of
the Company's officers, if Indemnitee is not a director of the Company but is an
officer; or of the Company's key employees, agents or fiduciaries, if Indemnitee
is not an officer or director but is a key employee, agent or fiduciary.
10. Exceptions. Notwithstanding any other provision of this
Agreement, the Company shall not be obligated pursuant to the terms of this
Agreement:
(a) Excluded Action or Omissions. To indemnify or make
Expense Advances to Indemnitee with respect to Claims arising out of acts,
omissions or transactions for which Indemnitee is prohibited from receiving
indemnification under applicable law.
(b) Claims Initiated by Indemnitee. To indemnify or make
Expense Advances to Indemnitee with respect to Claims initiated or brought
voluntarily by Indemnitee and not by way of defense, counterclaim or crossclaim,
except (i) with respect to actions or proceedings brought to establish or
enforce a right to indemnification under this Agreement or any other agreement
or insurance policy or under the Company's Certificate of Incorporation or
Bylaws now or hereafter in effect relating to Claims for Covered Events, (ii) in
specific cases if the Board of Directors has approved the initiation or bringing
of such Claim, or (iii) as otherwise required under Section 145 of the Delaware
General Corporation Law, regardless of whether Indemnitee ultimately is
determined to be entitled to such indemnification, Expense Advances, or
insurance recovery, as the case may be.
(c) Lack of Good Faith. To indemnify Indemnitee for any
Expenses incurred by the Indemnitee with respect to any action instituted (i) by
Indemnitee to enforce or interpret this Agreement, if a court having
jurisdiction over such action determines as provided in Section 13 that each of
the material assertions made by the Indemnitee as a basis for such action was
not made in good faith or was frivolous, or (ii) by or in the name of the
Company to enforce or interpret this Agreement, if a court having jurisdiction
over such action determines as provided in Section 13 that each of the material
defenses asserted by Indemnitee in such action was made in bad faith or was
frivolous.
(d) Claims Under Section 16(b). To indemnify Indemnitee
for Expenses and the payment of profits arising from the purchase and sale by
Indemnitee of securities in violation of Section 16(b) of the Securities
Exchange Act of 1934, as amended, or any similar successor statute.
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<PAGE> 9
11. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original.
12. Binding Effect; Successors and Assigns. This Agreement shall
be binding upon and inure to the benefit of and be enforceable by the parties
hereto and their respective successors, assigns (including any direct or
indirect successor by purchase, merger, consolidation or otherwise to all or
substantially all of the business or assets of the Company), spouses, heirs and
personal and legal representatives. The Company shall require and cause any
successor (whether direct or indirect, and whether by purchase, merger,
consolidation or otherwise) to all, substantially all, or a substantial part, of
the business or assets of the Company, by written agreement in form and
substance satisfactory to Indemnitee, expressly to assume and agree to perform
this Agreement in the same manner and to the same extent that the Company would
be required to perform if no such succession had taken place. This Agreement
shall continue in effect regardless of whether Indemnitee continues to serve as
a director, officer, employee, agent or fiduciary (as applicable) of the Company
or of any other enterprise at the Company's request.
13. Expenses Incurred in Action Relating to Enforcement or
Interpretation. In the event that any action is instituted by Indemnitee under
this Agreement or under any liability insurance policies maintained by the
Company to enforce or interpret any of the terms hereof or thereof, Indemnitee
shall be entitled to be indemnified for all Expenses incurred by Indemnitee with
respect to such action (including without limitation attorneys' fees),
regardless of whether Indemnitee is ultimately successful in such action, unless
as a part of such action a court having jurisdiction over such action makes a
final judicial determination (as to which all rights of appeal therefrom have
been exhausted or lapsed) that each of the material assertions made by
Indemnitee as a basis for such action was not made in good faith or was
frivolous; provided, however, that until such final judicial determination is
made, Indemnitee shall be entitled under Section 3 to receive payment of Expense
Advances hereunder with respect to such action. In the event of an action
instituted by or in the name of the Company under this Agreement to enforce or
interpret any of the terms of this Agreement, Indemnitee shall be entitled to be
indemnified for all Expenses incurred by Indemnitee in defense of such action
(including without limitation costs and expenses incurred with respect to
Indemnitee's counterclaims and cross-claims made in such action), unless as a
part of such action a court having jurisdiction over such action makes a final
judicial determination (as to which all rights of appeal therefrom have been
exhausted or lapsed) that each of the material defenses asserted by Indemnitee
in such action was made in bad faith or was frivolous; provided, however, that
until such final judicial determination is made, Indemnitee shall be entitled
under Section 3 to receive payment of Expense Advances hereunder with respect to
such action.
14. Period of Limitations. No legal action shall be brought and no
cause of action shall be asserted by or in the right of the Company against
Indemnitee, Indemnitee's estate, spouse, heirs, executors or personal or legal
representatives after the expiration of two years from the date of accrual of
such cause of action, and any claim or cause of action of the Company shall be
extinguished and deemed released unless asserted by the timely filing of a legal
action within such two year period; provided, however, that if any shorter
period of limitations is otherwise applicable to any
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<PAGE> 10
such cause of action, such shorter period shall govern.
15. Notice. All notices, requests, demands and other
communications under this Agreement shall be in writing and shall be deemed duly
given (i) if delivered by hand and signed for by the party addressed, on the
date of such delivery, or (ii) if mailed by domestic certified or registered
mail with postage prepaid, on the third business day after the date postmarked.
Addresses for notice to either party are as shown on the signature page of this
Agreement, or as subsequently modified by written notice.
16. Consent to Jurisdiction. The Company and Indemnitee each
hereby irrevocably consent to the jurisdiction of the courts of the State of
Delaware for all purposes in connection with any action or proceeding which
arises out of or relates to this Agreement and agree that any action instituted
under this Agreement shall be commenced, prosecuted and continued only in the
Court of Chancery of the State of Delaware in and for New Castle County, which
shall be the exclusive and only proper forum for adjudicating such a claim.
17. Severability. The provisions of this Agreement shall be
severable in the event that any of the provisions hereof (including any
provision within a single section, paragraph or sentence) are held by a court of
competent jurisdiction to be invalid, void or otherwise unenforceable, and the
remaining provisions shall remain enforceable to the fullest extent permitted by
law. Furthermore, to the fullest extent possible, the provisions of this
Agreement (including without limitation each portion of this Agreement
containing any provision held to be invalid, void or otherwise unenforceable,
that is not itself invalid, void or unenforceable) shall be construed so as to
give effect to the intent manifested by the provision held invalid, illegal or
unenforceable.
18. Choice of Law. This Agreement, and all rights, remedies,
liabilities, powers and duties of the parties to this Agreement, shall be
governed by and construed in accordance with the laws of the State of Delaware
as applied to contracts between Delaware residents entered into and to be
performed entirely in the State of Delaware without regard to principles of
conflicts of laws.
19. Subrogation. In the event of payment under this Agreement, the
Company shall be subrogated to the extent of such payment to all of the rights
of recovery of Indemnitee, who shall execute all documents required and shall do
all acts that may be necessary to secure such rights and to enable the Company
effectively to bring suit to enforce such rights.
20. Amendment and Termination. No amendment, modification,
termination or cancellation of this Agreement shall be effective unless it is in
writing signed by both parties hereto. No waiver of any of the provisions of
this Agreement shall be deemed to be or shall constitute a waiver of any other
provisions hereof (whether or not similar), nor shall such waiver constitute a
continuing waiver.
21. Integration and Entire Agreement. This Agreement sets forth
the entire understanding between the parties hereto and supersedes and merges
all previous written and oral negotiations,
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<PAGE> 11
commitments, understandings and agreements relating to the subject matter hereof
between the parties hereto.
22. No Construction as Employment Agreement. Nothing contained in
this Agreement shall be construed as giving Indemnitee any right to be retained
in the employ of the Company or any of its subsidiaries or affiliated entities.
IN WITNESS WHEREOF, the parties hereto have executed this
Indemnification Agreement as of the date first above written.
INTROGEN THERAPEUTICS, INC.
By:
----------------------------------------
Print Name:
--------------------------------
Title:
-------------------------------------
Address: 301 Congress Avenue, Suite 2025
Austin, TX 78701
AGREED TO AND ACCEPTED
INDEMNITEE:
----------------------------------------------
(signature)
Print Name:
-----------------------------------
Address:
--------------------------------------
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<PAGE> 1
EXHIBIT 10.2
INTROGEN THERAPEUTICS, INC.
1995 STOCK PLAN
(AS AMENDED)
1. Purposes of the Plan. The purposes of this Stock Plan are to
attract and retain the best available personnel for positions of substantial
responsibility, to provide additional incentive to Employees and Consultants of
the Company and its Subsidiaries and to promote the success of the Company's
business. Options granted under the Plan may be incentive stock options (as
defined under Section 422 of the Code) or non-statutory stock options, as
determined by the Administrator at the time of grant of an option and subject to
the applicable provisions of Section 422 of the Code, as amended, and the
regulations promulgated thereunder. Stock purchase rights may also be granted
under the Plan.
2. Definitions. As used herein, the following definitions shall
apply:
(a) "Administrator" means the Board or any of its Committees
appointed pursuant to Section 4 of the Plan.
(b) "Board" means the Board of Directors of the Company.
(c) "Code" means the Internal Revenue Code of 1986, as
amended.
(d) "Committee" means a Committee appointed by the Board of
Directors in accordance with Section 4 of the Plan.
(e) "Common Stock" means the Common Stock of the Company.
(f) "Company" means Introgen Therapeutics, Inc., a Delaware
corporation.
(g) "Consultant" means any person who is engaged by the
Company or any Parent or Subsidiary to render consulting or advisory services
and is compensated for such services, and any director of the Company whether
compensated for such services or not.
(h) "Continuous Status as an Employee or Consultant" means
that the employment or consulting relationship is not interrupted or terminated
by the Company, any Parent or Subsidiary. Continuous Status as an Employee or
Consultant shall not be considered interrupted in the case of: (i) any leave of
absence approved by the Company, including sick leave, military leave, or any
other personal leave; provided, however, that for purposes of Incentive Stock
Options, no such leave may exceed ninety (90) days, unless reemployment upon the
expiration of such leave is guaranteed by contract (including certain Company
policies) or statute; provided, further, that on the ninety-first (91st) day of
any such leave (where reemployment is not guaranteed by contract or statute) the
Optionee's Incentive Stock Option shall automatically convert to a Nonstatutory
Stock Option, or (ii) transfers between locations of the Company or between the
Company, its Parent, its Subsidiaries or its successor.
(i) "Disability" means total and permanent disability as
defined in Section 22(e)(3) of the Code.
<PAGE> 2
(j) "Employee" means any person, including officers and
directors, employed by the Company or any Parent or Subsidiary of the Company.
The payment of a director's fee by the Company shall not be sufficient to
constitute "employment" by the Company.
(k) "Exchange Act" means the Securities Exchange Act of 1934,
as amended.
(l) "Fair Market Value" means, as of any date, the value of
Common Stock determined as follows:
(i) If the Common Stock is listed on any
established stock exchange or a national market system, including without
limitation the Nasdaq National Market or The Nasdaq SmallCap Market of The
Nasdaq Stock Market, its Fair Market Value shall be the closing sales price for
such stock (or the closing bid, if no sales were reported) as quoted on such
exchange or system for the last market trading day prior to the time of
determination, as reported in The Wall Street Journal or such other source as
the Administrator deems reliable;
(ii) If the Common Stock is regularly quoted
by a recognized securities dealer but selling prices are not reported, the Fair
Market Value of a Share of Common Stock shall be the mean between the high bid
and low asked prices for the Common Stock on the last market trading day prior
to the day of determination, as reported in The Wall Street Journal or such
other source as the Administrator deems reliable;
(iii) In the absence of an established market
for the Common Stock, the Fair Market Value shall be determined in good faith by
the Administrator.
(m) "Incentive Stock Option" means an Option
intended to qualify as an incentive stock option within the meaning of Section
422 of the Code.
(n) "Nonstatutory Stock Option" means an Option not
intended to qualify as an Incentive Stock Option.
(o) "Officer" means a person who is an officer of
the Company within the meaning of Section 16 of the Exchange Act and the rules
and regulations promulgated thereunder.
(p) "Option" means a stock option granted pursuant
to the Plan.
(q) "Optioned Stock" means the Common Stock subject
to an Option or a Stock Purchase Right.
(r) "Optionee" means an Employee or Consultant who
receives an Option or Stock Purchase Right.
(s) "Parent" means a "parent corporation", whether
now or hereafter existing, as defined in Section 424(e) of the Code.
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<PAGE> 3
(t) "Plan" means this 1995 Stock Plan.
(u) "Restricted Stock" means shares of Common Stock
acquired pursuant to a grant of a Stock Purchase Right under Section 11 below.
(v) "Share" means a share of the Common Stock, as
adjusted in accordance with
Section 12 below.
(w) "Stock Purchase Right" means the right to
purchase Common Stock pursuant to Section 11 below.
(x) "Subsidiary" means a "subsidiary corporation",
whether now or hereafter existing, as defined in Section 424(f) of the Code.
3. Stock Subject to the Plan. Subject to the provisions of
Section 12 of the Plan, the maximum aggregate number of shares which may be
optioned and sold under the Plan is 1,750,000 shares of Common Stock. The shares
may be authorized, but unissued, or reacquired Common Stock.
If an Option or Stock Purchase Right expires or
becomes unexercisable without having been exercised in full, or is surrendered
pursuant to an option exchange program, the unpurchased Shares which were
subject thereto shall become available for future grant or sale under the Plan
(unless the Plan has terminated); provided, however, that Shares that have
actually been issued under the Plan, whether upon exercise of an Option or Stock
Purchase Right, shall not be returned to the Plan and shall not become available
for future distribution under the Plan, except that if Shares of Restricted
Stock are repurchased by the Company at their original purchase price, such
Shares shall become available for future grant under the Plan.
4. Administration of the Plan.
(a) Plan Procedure.
(i) Administration With Respect to Directors
and Officers. With respect to grants of Options or Stock Purchase Rights to
Officers or directors of the Company, the Plan shall be administered by (A) the
Board if the Board may administer the Plan in compliance with Rule 16b-3
promulgated under the Exchange Act or any successor thereto ("Rule 16b-3") with
respect to a plan intended to qualify thereunder as a discretionary plan, or (B)
a committee designated by the Board to administer the Plan, which committee
shall be constituted in such a manner as to permit the Plan to comply with Rule
16b-3 with respect to a plan intended to qualify thereunder as a discretionary
plan. Once appointed, such Committee shall continue to serve in its designated
capacity until otherwise directed by the Board. From time to time the Board may
increase the size of the Committee and appoint additional members thereof,
remove members (with or without cause) and appoint new members in sub stitution
therefor, fill vacancies, however caused, and remove all members of the
Committee and thereafter directly administer the Plan, all to the extent
permitted by Rule 16b-3 with respect to a plan intended to qualify thereunder as
a discretionary plan.
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<PAGE> 4
(ii) Multiple Administrative Bodies. If
permitted by Rule 16b-3, the Plan may be administered by different bodies with
respect to directors, non-director Officers and Employees who are neither
directors nor Officers.
(iii) Administration With Respect to
Consultants and Other Employees. With respect to grants of Options or Stock
Purchase Rights to Employees or Consultants who are neither directors nor
officers of the Company, the Plan shall be administered by (A) the Board or (B)
a committee designated by the Board, which committee shall be constituted in
such a manner as to satisfy the legal requirements relating to the
administration of incentive stock option plans, if any, of Delaware corporate
and securities laws, of the Code, and of any applicable stock exchange (the
"Applicable Laws"). Once appointed, such Committee shall continue to serve in
its designated capacity until otherwise directed by the Board. From time to time
the Board may increase the size of the Committee and appoint additional members
thereof, remove members (with or without cause) and appoint new members in
substitution therefor, fill vacancies, however caused, and remove all members of
the Committee and thereafter directly administer the Plan, all to the extent
permitted by the Applicable Laws.
(b) Powers of the Administrator. Subject to the
provisions of the Plan and, in the case of a Committee, the specific duties
delegated by the Board to such Committee, and subject to the approval of any
relevant authorities, including the approval, if required, of any stock exchange
upon which the Common Stock is listed, the Administrator shall have the
authority, in its discretion:
(i) to determine the Fair Market Value of the
Common Stock, in accordance with Section 2(l) of the Plan;
(ii) to select the Consultants and Employees to
whom Options and Stock Purchase Rights may from time to time be granted
hereunder;
(iii) to determine whether and to what extent
Options and Stock Purchase Rights or any combination thereof are granted
hereunder;
(iv) to determine the number of shares of
Common Stock to be covered by each such award granted hereunder;
(v) to approve forms of agreement for use under
the Plan;
(vi) to determine the terms and conditions, not
inconsistent with the terms of the Plan, of any award granted hereunder;
(vii) to determine whether and under what
circumstances an Option may be settled in cash under subsection 9(f) instead of
Common Stock;
(viii) to reduce the exercise price of any
Option to the then current Fair Market Value if the Fair Market Value of the
Common Stock covered by such Option shall have declined since the date the
Option was granted;
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<PAGE> 5
(ix) to determine the terms and restrictions
applicable to Stock Purchase Rights and the Restricted Stock purchased by
exercising such Stock Purchase Rights; and
(x) to construe and interpret the terms of the
Plan and awards granted pursuant to the Plan.
(c) Effect of Administrator's Decision. All
decisions, determinations and interpretations of the Administrator shall be
final and binding on all Optionees and any other holders of any Options or Stock
Purchase Rights.
5. Eligibility.
(a) Nonstatutory Stock Options and Stock Purchase
Rights may be granted to Employees and Consultants. Incentive Stock Options may
be granted only to Employees. An Employee or Consultant who has been granted an
Option or Stock Purchase Right may, if otherwise eligible, be granted additional
Options or Stock Purchase Rights.
(b) Each Option shall be designated in the written
option agreement as either an Incentive Stock Option or a Nonstatutory Stock
Option. However, notwithstanding such designations, to the extent that the
aggregate Fair Market Value of the Shares with respect to which Options
designated as Incentive Stock Options are exercisable for the first time by any
Optionee during any calendar year (under all plans of the Company or any Parent
or Subsidiary) exceeds $100,000, such excess Options shall be treated as
Nonstatutory Stock Options.
(c) For purposes of Section 5(b), Incentive Stock
Options shall be taken into account in the order in which they were granted, and
the Fair Market Value of the Shares shall be determined as of the time the
Option with respect to such Shares is granted.
(d) The following limitations shall apply to grants
of Options:
(i) No Employee shall be granted, in any
fiscal year of the Company, Options to purchase more than 500,000 Shares.
(ii) In connection with his or her initial
service, a Service Provider may be granted Options to purchase up to an
additional 500,000 Shares which shall not count against the limit set forth in
subsection (i) above.
(iii) The foregoing limitations shall be
adjusted proportionately in connection with any change in the Company's
capitalization as described in Section 12.
(iv) If an Option is cancelled in the same
fiscal year of the Company in which it was granted (other than in connection
with a transaction described in Section 12), the cancelled Option will be
counted against the limits set forth in subsections (i) and (ii) above. For this
purpose, if the
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<PAGE> 6
exercise price of an Option is reduced, the transaction will be treated as a
cancellation of the Option and the grant of a new Option.
(e) The Plan shall not confer upon any Optionee any
right with respect to continuation of employment relationship with the Company,
nor shall it interfere in any way with his or her right or the Company's right
to terminate his or her employment relationship at any time, with or without
cause.
6. Term of Plan. The Plan shall become effective upon the earlier
to occur of its adoption by the Board of Directors or its approval by the
shareholders of the Company, as described in Section 18 of the Plan. It shall
continue in effect for a term of ten (10) years unless sooner terminated under
Section 14 of the Plan.
7. Term of Option. The term of each Option shall be the term
stated in the Option Agreement; provided, however, that the term shall be no
more than ten (10) years from the date of grant thereof. However, in the case of
an Incentive Stock Option granted to an Optionee who, at the time the Option is
granted, owns stock representing more than ten percent (10%) of the voting power
of all classes of stock of the Company or any Parent or Subsidiary, the term of
the Option shall be five (5) years from the date of grant thereof or such
shorter term as may be provided in the Option Agreement.
8. Option Exercise Price and Consideration.
(a) The per share exercise price for the Shares to
be issued pursuant to exercise of an Option shall be such price as is determined
by the Administrator, but shall be subject to the following:
(i) In the case of an Incentive Stock Option
(A) granted to an Employee who, at the
time of the grant of such Incentive Stock Option, owns stock representing more
than ten percent (10%) of the voting power of all classes of stock of the
Company or any Parent or Subsidiary, the per Share exercise price shall be no
less than 110% of the Fair Market Value per Share on the date of grant.
(B) granted to any Employee, the per
Share exercise price shall be no less than 100% of the Fair Market Value per
Share on the date of grant.
(ii) In the case of a Nonstatutory Stock
Option, the per Share exercise price shall be determined by the Administrator.
(b) The consideration to be paid for the Shares to
be issued upon exercise of an Option, including the method of payment, shall be
determined by the Administrator (and, in the case of an Incentive Stock Option,
shall be determined at the time of grant) and may consist entirely of (1) cash,
(2) check, (3) promissory note, (4) other Shares which (x) in the case of Shares
acquired upon exercise of an Option, have been owned by the Optionee for more
than six months on the date of surrender, and (y) have a Fair Market Value on
the date of surrender equal to the aggregate exercise price of the Shares
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<PAGE> 7
as to which said Option shall be exercised, (5) delivery of a properly executed
exercise notice together with such other documentation as the Administrator and
the broker, if applicable, shall require to effect an exercise of the Option and
delivery to the Company of the sale or loan proceeds required to pay the
exercise price, or (6) any combination of the foregoing methods of payment. In
making its determination as to the type of consideration to accept, the
Administrator shall consider if acceptance of such consideration may be
reasonably expected to benefit the Company.
9. Exercise of Option.
(a) Procedure for Exercise; Rights as a Shareholder. Any
Option granted hereunder shall be exercisable at such times and under such
conditions as determined by the Administrator, including performance criteria
with respect to the Company and/or the Optionee, and as shall be permissible
under the terms of the Plan.
An Option may not be exercised for a fraction of a
Share.
An Option shall be deemed to be exercised when
written notice of such exercise has been given to the Company in accordance with
the terms of the Option by the person entitled to exercise the Option and full
payment for the Shares with respect to which the Option is exercised has been
received by the Company. Full payment may, as authorized by the Administrator,
consist of any consideration and method of payment allowable under Section 8(b)
of the Plan. Until the issuance (as evidenced by the appropriate entry on the
books of the Company or of a duly authorized transfer agent of the Company) of
the stock certificate evidencing such Shares, no right to vote or receive
dividends or any other rights as a shareholder shall exist with respect to the
Optioned Stock, notwithstanding the exercise of the Option. The Company shall
issue (or cause to be issued) such stock certificate promptly upon exercise of
the Option. No adjustment will be made for a dividend or other right for which
the record date is prior to the date the stock certificate is issued, except as
provided in Section 12 of the Plan.
Exercise of an Option in any manner shall result in
a decrease in the number of Shares which thereafter may be available, both for
purposes of the Plan and for sale under the Option, by the number of Shares as
to which the Option is exercised.
(b) Termination of Employment or Consulting Relationship. In
the event of termination of an Optionee's Continuous Status as an Employee or
Consultant with the Company (but not in the event of an Optionee's change of
status from Employee to Consultant (in which case an Employee's Incentive Stock
Option shall automatically convert to a Nonstatutory Stock Option on the
ninety-first (91st) day following such change of status) or from Consultant to
Employee), such Optionee may, but only within such period of time as is
determined by the Administrator, of at least thirty (30) days, with such
determination in the case of an Incentive Stock Option not exceeding three (3)
months after the date of such termination (but in no event later than the
expiration date of the term of such Option as set forth in the Option
Agreement), exercise his or her Option to the extent that Optionee was entitled
to exercise it at the date of such termination. To the extent that Optionee was
not entitled to exercise the Option at the date of such termination, or if
Optionee does not exercise such Option to the extent so entitled within the time
specified herein, the Option shall terminate.
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<PAGE> 8
(c) Disability of Optionee. In the event of termination of an
Optionee's consulting relationship or Continuous Status as an Employee as a
result of his or her Disability, Optionee may, but only within twelve (12)
months from the date of such termination (and in no event later than the
expiration date of the term of such Option as set forth in the Option
Agreement), exercise the Option to the extent otherwise entitled to exercise it
at the date of such termination. To the extent that Optionee was not entitled to
exercise the Option at the date of termination, or if Optionee does not exercise
such Option to the extent so entitled within the time specified herein, the
Option shall terminate, and the Shares covered by such Option shall revert to
the Plan.
(d) Death of Optionee. In the event of the death of an
Optionee, the Option may be exercised at any time within twelve (12) months
following the date of death (but in no event later than the expiration of the
term of such Option as set forth in the Notice of Grant), by the Optionee's
estate or by a person who acquired the right to exercise the Option by bequest
or inheritance, but only to the extent that the Optionee was entitled to
exercise the Option at the date of death. If, at the time of death, the Optionee
was not entitled to exercise his or her entire Option, the Shares covered by the
unexercisable portion of the Option shall immediately revert to the Plan. If,
after death, the Optionee's estate or a person who acquired the right to
exercise the Option by bequest or inheritance does not exercise the Option
within the time specified herein, the Option shall terminate, and the Shares
covered by such Option shall revert to the Plan.
(e) Rule 16b-3. Options granted to persons subject to Section
16(b) of the Exchange Act must comply with Rule 16b-3 and shall contain such
additional conditions or restrictions as may be required thereunder to qualify
for the maximum exemption from Section 16 of the Exchange Act with respect to
Plan transactions.
(f) Buyout Provisions. The Administrator may at any time offer
to buy out for a payment in cash or Shares, an Option previously granted, based
on such terms and conditions as the Administrator shall establish and
communicate to the Optionee at the time that such offer is made.
10. Non-Transferability of Options and Stock Purchase Rights.
Options and Stock Purchase Rights may not be sold, pledged, assigned,
hypothecated, transferred, or disposed of in any manner other than by will or by
the laws of descent or distribution and may be exercised, during the lifetime of
the Optionee, only by the Optionee.
11. Stock Purchase Rights.
(a) Rights to Purchase. Stock Purchase Rights may be issued
either alone, in addition to, or in tandem with other awards granted under the
Plan and/or cash awards made outside of the Plan. After the Administrator
determines that it will offer Stock Purchase Rights under the Plan, it shall
advise the offeree in writing of the terms, conditions and restrictions related
to the offer, including the number of Shares that such person shall be entitled
to purchase, the price to be paid, and the time within which such person must
accept such offer, which shall in no event exceed thirty (30) days from the date
upon which the Administrator made the determination to grant the Stock Purchase
Right. The price to be paid
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<PAGE> 9
shall be determined by the Administrator. The offer shall be accepted by
execution of a Restricted Stock Purchase Agreement in the form determined by the
Administrator. Shares purchased pursuant to the grant of a Stock Purchase Right
shall be referred to herein as "Restricted Stock."
(b) Repurchase Option. Unless the Administrator
determines otherwise, the Restricted Stock purchase agreement shall grant the
Company a repurchase option exercisable upon the voluntary or involuntary
termination of the purchaser's employment with the Company for any reason
(including death or Disability). The purchase price for Shares repurchased
pursuant to the Restricted Stock purchase agreement shall be the original price
paid by the purchaser and may be paid by cancellation of any indebtedness of the
purchaser to the Company. The repurchase option shall lapse at such rate as the
Administrator may determine.
(c) Other Provisions. The Restricted Stock purchase
agreement shall contain such other terms, provisions and conditions not
inconsistent with the Plan as may be determined by the Administrator in its sole
discretion. In addition, the provisions of Restricted Stock purchase agreements
need not be the same with respect to each purchaser.
(d) Rights as a Shareholder. Once the Stock
Purchase Right is exercised, the purchaser shall have the rights equivalent to
those of a shareholder, and shall be a shareholder when his or her purchase is
entered upon the records of the duly authorized transfer agent of the Company.
No adjustment will be made for a dividend or other right for which the record
date is prior to the date the Stock Purchase Right is exercised, except as
provided in Section 12 of the Plan.
12. Adjustments.
(a) Changes in Capitalization. Subject to any
required action by the shareholders of the Company, the number of shares of
Common Stock covered by each outstanding Option or Stock Purchase Right, and the
number of shares of Common Stock which have been authorized for issuance under
the Plan but as to which no Options or Stock Purchase Rights have yet been
granted or which have been returned to the Plan upon cancellation or expiration
of an Option or Stock Purchase Right, as well as the price per share of Common
Stock covered by each such outstanding Option or Stock Purchase Right, shall be
proportionately adjusted for any increase or decrease in the number of issued
shares of Common Stock resulting from a stock split, reverse stock split, stock
dividend, combination or reclas sification of the Common Stock, or any other
increase or decrease in the number of issued shares of Common Stock effected
without receipt of consideration by the Company; provided, however, that
conversion of any convertible securities of the Company shall not be deemed to
have been "effected without receipt of consideration." Such adjustment shall be
made by the Administrator, whose determination in that respect shall be final,
binding and conclusive. Except as expressly provided herein, no issuance by the
Company of shares of stock of any class, or securities convertible into shares
of stock of any class, shall affect, and no adjustment by reason thereof shall
be made with respect to, the number or price of shares of Common Stock subject
to an Option or Stock Purchase Right.
(b) Dissolution or Liquidation. In the event of the
proposed dissolution or liquidation of the Company, the Administrator shall
notify each Optionee as soon as practicable prior to the effective
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<PAGE> 10
date of such proposed transaction. The Administrator in its discretion may
provide for an Optionee to have the right to exercise his or her Option until
ten (10) days prior to such transaction as to all of the Optioned Stock covered
thereby, including Shares as to which the Option would not otherwise be
exercisable. In addition, the Administrator may provide that any Company
repurchase option applicable to any Shares purchased upon exercise of an Option
or Stock Purchase Right shall lapse as to all such Shares, provided the proposed
dissolution or liquidation takes place at the time and in the manner
contemplated. To the extent it has not been previously exercised, an Option or
Stock Purchase Right will terminate immediately prior to the consummation of
such proposed action.
(c) Merger or Asset Sale. In the event of a merger
of the Company with or into another corporation, or the sale of substantially
all of the assets of the Company, each outstanding Option and Stock Purchase
Right shall be assumed or an equivalent option or right substituted by the
successor corporation or a Parent or Subsidiary of the successor corporation. In
the event that the successor corporation refuses to assume or substitute for the
Option or Stock Purchase Right, the Optionee shall fully vest in and have the
right to exercise the Option or Stock Purchase Right as to all of the Optioned
Stock, including Shares as to which it would not otherwise be vested or
exercisable. If an Option or Stock Purchase Right becomes fully vested and
exercisable in lieu of assumption or substitution in the event of a merger or
sale of assets, the Administrator shall notify the Optionee in writing or
electronically that the Option or Stock Purchase Right shall be fully vested and
exercisable for a period of fifteen (15) days from the date of such notice, and
the Option or Stock Purchase Right shall terminate upon the expiration of such
period. For the purposes of this paragraph, the Option or Stock Purchase Right
shall be considered assumed if, following the merger or sale of assets, the
option or right confers the right to purchase or receive, for each Share of
Optioned Stock subject to the Option or Stock Purchase Right immediately prior
to the merger or sale of assets, the consideration (whether stock, cash, or
other securities or property) received in the merger or sale of assets by
holders of Common Stock for each Share held on the effective date of the
transaction (and if holders were offered a choice of consideration, the type of
consideration chosen by the holders of a majority of the outstanding Shares);
provided, however, that if such consideration received in the merger or sale of
assets is not solely common stock of the successor corporation or its Parent,
the Administrator may, with the consent of the successor corporation, provide
for the consideration to be received upon the exercise of the Option or Stock
Purchase Right, for each Share of Optioned Stock subject to the Option or Stock
Purchase Right, to be solely common stock of the successor corporation or its
Parent equal in fair market value to the per share consideration received by
holders of Common Stock in the merger or sale of assets.
13. Time of Granting Options and Stock Purchase Rights. The date
of grant of an Option or Stock Purchase Right shall, for all purposes, be the
date on which the Administrator makes the determination granting such Option or
Stock Purchase Right, or such other date as is determined by the Administrator.
Notice of the determination shall be given to each Employee or Consultant to
whom an Option or Stock Purchase Right is so granted within a reasonable time
after the date of such grant.
14. Amendment and Termination of the Plan.
(a) Amendment and Termination. The Board may at any time
amend, alter, suspend or terminate the Plan.
-10-
<PAGE> 11
(b) Shareholder Approval. The Company shall obtain
shareholder approval of any Plan amendment to the extent necessary and desirable
to comply with Applicable Laws.
(c) Effect of Amendment or Termination. No amendment,
alteration, suspension or termination of the Plan shall impair the rights of any
Optionee, unless mutually agreed otherwise between the Optionee and the
Administrator, which agreement must be in writing and signed by the Optionee and
the Company.
15. Conditions Upon Issuance of Shares. Shares shall not be
issued pursuant to the exercise of an Option or Stock Purchase Right unless the
exercise of such Option or Stock Purchase Right and the issuance and delivery of
such Shares pursuant thereto shall comply with all relevant provisions of law,
including, without limitation, the Securities Act of 1933, as amended, the
Exchange Act, the rules and regulations promulgated thereunder, and the
requirements of any stock exchange upon which the Shares may then be listed, and
shall be further subject to the approval of counsel for the Company with respect
to such compliance.
As a condition to the exercise of an Option or Stock Purchase
Right, the Company may require the person exercising such Option or Stock
Purchase Right to represent and warrant at the time of any such exercise that
the Shares are being purchased only for investment and without any present
intention to sell or distribute such Shares if, in the opinion of counsel for
the Company, such a representation is required by any of the aforementioned
relevant provisions of law.
16. Reservation of Shares. The Company, during the term of this
Plan, will at all times reserve and keep available such number of Shares as
shall be sufficient to satisfy the requirements of the Plan.
The inability of the Company to obtain authority from any
regulatory body having jurisdiction, which authority is deemed by the Company's
counsel to be necessary to the lawful issuance and sale of any Shares hereunder,
shall relieve the Company of any liability in respect of the failure to issue or
sell such Shares as to which such requisite authority shall not have been
obtained.
17. Agreements. Options and Stock Purchase Rights shall be
evidenced by written agreements in such form as the Administrator shall approve
from time to time.
18. Shareholder Approval. Continuance of the Plan shall be
subject to approval by the shareholders of the Company within twelve (12) months
before or after the date the Plan is adopted. Such shareholder approval shall be
obtained in the degree and manner required under applicable state and federal
law and the rules of any stock exchange upon which the Common Stock is listed.
-11-
<PAGE> 12
INTROGEN THERAPEUTICS, INC.
1995 STOCK PLAN
NOTICE OF GRANT
Unless otherwise defined herein, the terms defined in the Plan
shall have the same defined meanings in this Notice of Grant.
[Optionee's Name and Address]
- --------------
You have been granted an option to purchase Common Stock of the
Company, subject to the terms and conditions of the Plan and this Stock Option
Agreement, as follows:
Grant Number ____________________
Date of Grant ____________________
Vesting Commencement Date ____________________
Exercise Price per Share $___________________
Total Number of Shares Granted ____________________
Total Exercise Price $____________________
Type of Option: ___ Incentive Stock Option
___ Nonstatutory Stock Option
Term Date: _____________________________
Expiration Date: _____________________________
Vesting Schedule:
Twenty-five percent (25%) of the Shares subject to this Option
shall vest at the end of each twelve (12) month anniversary of the Vesting
Commencement Date in accordance with the following schedule:
<TABLE>
<CAPTION>
$ OF SHARES CUMULATIVE % OF SHARES
DATE THAT VEST VESTED
- --------------------- ----------- -----------------------
<S> <C> <C>
12 month anniversary 25% 25%
24 month anniversary 25% 50%
36 month anniversary 25% 75%
48 month anniversary 25% 100%
</TABLE>
<PAGE> 13
No vesting occurs at any date other than the anniversary dates
set forth above.
Termination Period:
This Option may be exercised for three (3) months after
termination of employment or consulting relationship, or such longer period as
may be applicable upon death or Disability of Optionee as provided in the Plan,
but in no event later than the Term/Expiration Date as provided above.
-2-
<PAGE> 14
INTROGEN THERAPEUTICS, INC.
1995 STOCK OPTION PLAN
OPTION AGREEMENT
1. Grant of Option. Introgen Therapeutics, Inc. (the "Company"),
hereby grants to the Optionee (the "Optionee") named in the Notice of Grant, an
option (the "Option") to purchase the total number of shares of Common Stock
(the "Shares") set forth in the Notice of Grant, at the exercise price per share
set forth in the Notice of Grant (the "Exercise Price") subject to the terms,
definitions and provisions of the 1995 Stock Option Plan (the "Plan") adopted by
the Company, which is incorporated herein by reference. Unless otherwise defined
herein, the terms defined in the Plan shall have the same defined meanings in
this Option Agreement.
If designated in the Notice of Grant as an
Incentive Stock Option ("ISO"), this Option is intended to qualify as an
Incentive Stock Option as defined in Section 422 of the Code. However, if this
Option is intended to be an Incentive Stock Option, to the extent that it
exceeds the $100,000 rule of Code Section 422(d) it shall be treated as a
Nonstatutory Stock Option ("NSO").
2. Exercise of Option. This Option shall be exercisable during
its term in accordance with the Vesting Schedule set out in the Notice of Grant
and with the provisions of Section 9 of the Plan as follows:
(i) Right to Exercise.
(a) This Option may not be exercised
for a fraction of a Share.
(b) In the event of Optionee's
death, disability or other termination of the Optionee's Continuous Status as an
Employee or Consultant, the exercisability of the Option is governed by Sections
6, 7 and 8 below, subject to the limitation contained in subsection 2(i)(c).
(c) In no event may this Option be
exercised after the date of expiration of the term of this Option as set forth
in the Notice of Grant.
(ii) Method of Exercise. This Option shall be
exercisable by written notice (in the form attached as Exhibit A) which shall
state the election to exercise the Option, the number of Shares in respect of
which the Option is being exercised, and such other representations and
agreements as to the holder's investment intent with respect to such shares of
Common Stock as may be required by the Company pursuant to the provisions of the
Plan. Such written notice shall be signed by the Optionee and shall be delivered
in person or by certified mail to the Secretary of the Company. The written
notice shall be accompanied by payment of the Exercise Price. This Option shall
be deemed to be exercised upon receipt by the Company of such written notice
accompanied by the Exercise Price.
No Shares will be issued pursuant to the exercise
of an Option unless such issuance and such exercise shall comply with all
relevant provisions of law and the requirements of any stock exchange or
national market system upon which the Common Stock is then listed. Assuming such
<PAGE> 15
compliance, for income tax purposes the Shares shall be considered transferred
to the Optionee on the date on which the Option is exercised with respect to
such Shares.
3. Optionee's Representations. In the event the Shares
purchasable pursuant to the exercise of this Option have not been registered
under the Securities Act of 1933, as amended, at the time this Option is
exercised, Optionee shall, if required by the Company, concurrently with the
exercise of all or any portion of this Option, deliver to the Company his or her
Investment Representation Statement in the form attached hereto as Exhibit B.
4. Lock-Up Period. Optionee hereby agrees that if so requested by
the Company or any representative of the underwriters (the "Managing
Underwriter") in connection with any registration of the offering of any
securities of the Company under the Securities Act, Optionee shall not sell or
otherwise transfer any Shares or other securities of the Company during the
180-day period (or such longer period as may be requested in writing by the
Managing Underwriter and agreed to in writing by the Company) (the "Market
Standoff Period") following the effective date of a registration statement of
the Company filed under the Securities Act; provided, however, that such
restriction shall apply only to the first registration statement of the Company
to become effective under the Securities Act that includes securities to be sold
on behalf of the Company to the public in an underwritten public offering under
the Securities Act. The Company may impose stop-transfer instructions with
respect to securities subject to the foregoing restrictions until the end of
such Market Standoff Period.
5. Method of Payment. Payment of the Exercise Price shall be by
any of the following, or a combination thereof, at the election of the Optionee:
(i) cash; or
(ii) check; or
(iii) surrender of other shares of Common Stock of
the Company which (A) in the case of Shares acquired pursuant to the exercise of
a Company option, have been owned by the Optionee for more than six (6) months
on the date of surrender, and (B) have a Fair Market Value on the date of
surrender equal to the Exercise Price of the Shares as to which the Option is
being exercised; or
(iv) to the extent authorized by the Company,
delivery of a properly executed exercise notice together with such other
documentation as the Administrator and the broker, if applicable, shall require
to effect an exercise of the Option and delivery to the Company of the sale or
loan proceeds required to pay the Exercise Price.
6. Restrictions on Exercise. This Option may not be exercised if
the issuance of such Shares upon such exercise or the method of payment of
consideration for such shares would constitute a violation of any applicable
federal or state securities or other law or regulation, including any rule under
Part 207 of Title 12 of the Code of Federal Regulations as promulgated by the
Federal
-2-
<PAGE> 16
Reserve Board. As a condition to the exercise of this Option, the Company may
require Optionee to make any representation and warranty to the Company as may
be required by any applicable law or regulation.
7. Termination of Relationship. In the event an Optionee's
Continuous Status as an Employee or Consultant terminates, Optionee may, to the
extent otherwise so entitled at the date of such termination (the "Termination
Date"), exercise this Option during the Termination Period set out in the Notice
of Grant. To the extent that Optionee was not entitled to exercise this Option
at the date of such termination, or if Optionee does not exercise this Option
within the time specified herein, the Option shall terminate.
8. Disability of Optionee. Notwithstanding the provisions of
Section 6 above, in the event of termination of an Optionee's Continuous Status
as an Employee or Consultant as a result of his or her Disability, Optionee may,
but only within twelve (12) months from the date of such termination (and in no
event later than the expiration date of the term of such Option as set forth in
the Notice of Grant) exercise the Option to the extent otherwise entitled to
exercise it at the date of such termination. To the extent that Optionee is not
entitled to exercise the Option at the date of termination, or if Optionee does
not exercise such Option to the extent so entitled within the time specified
herein, the Option shall terminate, and the Shares covered by such Option shall
revert to the Plan.
9. Death of Optionee. In the event of termination of Optionee's
Continuous Status as an Employee or Consultant as a result of the death of
Optionee, the Option may be exercised at any time within twelve (12) months
following the date of death (but in no event later than the date of expiration
of the term of this Option as set forth in Section 10 below), by Optionee's
estate or by a person who acquired the right to exercise the Option by bequest
or inheritance, but only to the extent the Optionee could exercise the Option at
the date of death.
10. Non-Transferability of Option. This Option may not be
transferred in any manner otherwise than by will or by the laws of descent or
distribution and may be exercised during the lifetime of Optionee only by
Optionee. The terms of this Option shall be binding upon the executors,
administrators, heirs, successors and assigns of the Optionee.
11. Term of Option. This Option may be exercised only within the
term set out in the Notice of Grant, and may be exercised during such term only
in accordance with the Plan and the terms of this Option. The limitations set
out in Section 7 of the Plan regarding Options designated as Incentive Stock
Options and Options granted to more than ten percent (10%) shareholders shall
apply to this Option.
12. Tax Consequences. Set forth below is a brief summary as of
the date of this Option of some of the federal tax consequences of exercise of
this Option and disposition of the Shares. THIS SUMMARY IS NECESSARILY
INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. OPTIONEE
SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE
SHARES.
-3-
<PAGE> 17
(i) Exercise of an ISO. If this Option qualifies as an ISO,
there will be no regular federal income tax liability upon the exercise of the
Option, although the excess, if any, of the Fair Market Value of the Shares on
the date of exercise over the Exercise Price will be treated as an adjustment to
the alternative minimum tax for federal tax purposes and may subject the
Optionee to the alternative minimum tax in the year of exercise.
(ii) Exercise of an NSO. There may be a regular federal
income tax liability upon the exercise of an NSO. The Optionee will be treated
as having received compensation income (taxable at ordinary income tax rates)
equal to the excess, if any, of the Fair Market Value of the Shares on the date
of exercise over the Exercise Price. If Optionee is an Employee, the Company
will be required to withhold from Optionee's compensation or collect from
Optionee and pay to the applicable taxing authorities an amount equal to a
percentage of this compensation income at the time of exercise.
(iii) Disposition of Shares. In the case of an NSO, if Shares
are held for at least one year, any gain realized on disposition of the Shares
will be treated as long-term capital gain for federal income tax purposes. In
the case of an ISO, if Shares transferred pursuant to the Option are held for at
least one year after exercise and are disposed of at least two years after the
Date of Grant, any gain realized on disposition of the Shares will also be
treated as long-term capital gain for federal income tax purposes. If Shares
purchased under an ISO are disposed of within such one-year period or within two
years after the Date of Grant, any gain realized on such disposition will be
treated as compensation income (taxable at ordinary income rates) to the extent
of the difference between the Exercise Price and the lesser of (1) the Fair
Market Value of the Shares on the date of exercise, or (2) the sale price of the
Shares.
(iv) Notice of Disqualifying Disposition of ISO Shares. If
the Option granted to Optionee herein is an ISO, and if Optionee sells or
otherwise disposes of any of the Shares acquired pursuant to the ISO on or
before the later of (1) the date two years after the Date of Grant, or (2) the
date one year after the date of exercise, the Optionee shall immediately notify
the Company in writing of such disposition. Optionee agrees that Optionee may be
subject to income tax withholding by the Company on the compensation income
recognized by the Optionee.
INTROGEN THERAPEUTICS, INC.
By:
--------------------------
OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES
PURSUANT TO THE OPTION HEREOF IS EARNED ONLY BY CONTINUING CONSULTANCY OR
EMPLOYMENT AT THE WILL OF THE COMPANY (NOT THROUGH THE ACT OF BEING HIRED, BEING
GRANTED THIS OPTION OR ACQUIRING SHARES HEREUNDER). OPTIONEE FURTHER
ACKNOWLEDGES AND AGREES THAT NOTHING IN THIS AGREEMENT, NOR IN THE COMPANY'S
1995 STOCK OPTION PLAN WHICH IS
-4-
<PAGE> 18
INCORPORATED HEREIN BY REFERENCE, SHALL CONFER UPON OPTIONEE ANY RIGHT WITH
RESPECT TO CONTINUATION OF EMPLOYMENT OR CONSULTANCY BY THE COMPANY, NOR SHALL
IT INTERFERE IN ANY WAY WITH OPTIONEE'S RIGHT OR THE COMPANY'S RIGHT TO
TERMINATE OPTIONEE'S EMPLOYMENT OR CONSULTANCY AT ANY TIME, WITH OR WITHOUT
CAUSE.
Optionee acknowledges receipt of a copy of the Plan and
represents that he is familiar with the terms and provisions thereof, and hereby
accepts this Option subject to all of the terms and provisions thereof. Optionee
has reviewed the Plan and this Option in their entirety, has had an opportunity
to obtain the advice of counsel prior to executing this Option and fully
understands all provisions of the Option. Optionee hereby agrees to accept as
binding, conclusive and final all decisions or interpretations of the
Administrator upon any questions arising under the Plan or this Option. Optionee
further agrees to notify the Company upon any change in the residence address
indicated below.
Dated:
----------------------- -------------------------------
Optionee
Residence Address:
- ---------------------------------------------
- ---------------------------------------------
-5-
<PAGE> 19
CONSENT OF SPOUSE
The undersigned spouse of Optionee has read and hereby approves
the terms and conditions of the Plan and this Option Agreement. In consideration
of the Company's granting his or her spouse the right to purchase Shares as set
forth in the Plan and this Option Agreement, the undersigned hereby agrees to be
irrevocably bound by the terms and conditions of the Plan and this Option
Agreement and further agrees that any community property interest shall be
similarly bound. The undersigned hereby appoints the undersigned's spouse as
attorney-in-fact for the undersigned with respect to any amendment or exercise
of rights under the Plan or this Option Agreement.
------------------------------
Spouse of Optionee
-6-
<PAGE> 20
EXHIBIT A
INTROGEN THERAPEUTICS, INC.
1995 STOCK OPTION PLAN
EXERCISE NOTICE
Introgen Therapeutics, Inc.
301 Congress Avenue
Suite 2025
Austin, TX 78701
Attention: Secretary
1. Exercise of Option. Effective as of today, ___________, 19__,
the undersigned ("Optionee") hereby elects to exercise Optionee's option to
purchase _________ shares of the Common Stock (the "Shares") of Introgen
Therapeutics, Inc. (the "Company") under and pursuant to the 1995 Stock Option
Plan, as amended (the "Plan") and the [ ] Incentive [ ] Nonstatutory Stock
Option Agreement dated ________, 19__ (the "Stock Option Agreement").
2. Representations of Optionee. Optionee acknowledges that
Optionee has received, read and understood the Plan and the Stock Option
Agreement and agrees to abide by and be bound by their terms and conditions.
3. Rights as Shareholder. Until the stock certificate evidencing
such Shares is issued (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company), no right to vote
or receive dividends or any other rights as a shareholder shall exist with
respect to the Optioned Stock, notwithstanding the exercise of the Option. The
Company shall issue (or cause to be issued) such stock certificate promptly
after the Option is exercised. No adjustment will be made for a dividend or
other right for which the record date is prior to the date the stock certificate
is issued, except as provided in Section 11 of the Plan.
Optionee shall enjoy rights as a shareholder until such time
as Optionee disposes of the Shares or the Company and/or its assignee(s)
exercises the Right of First Refusal hereunder. Upon such exercise, Optionee
shall have no further rights as a holder of the Shares so purchased except the
right to receive payment for the Shares so purchased in accordance with the
provisions of this Agreement, and Optionee shall forthwith cause the
certificate(s) evidencing the Shares so purchased to be surrendered to the
Company for transfer or cancellation.
4. Company's Right of First Refusal. Before any Shares held by
Optionee or any transferee (either being sometimes referred to herein as the
"Holder") may be sold or otherwise transferred (including transfer by gift or
operation of law), the Company or its assignee(s) shall have a right of first
refusal to purchase the Shares on the terms and conditions set forth in this
Section (the "Right of First Refusal").
<PAGE> 21
(a) Notice of Proposed Transfer. The Holder of the
Shares shall deliver to the Company a written notice (the "Notice") stating: (i)
the Holder's bona fide intention to sell or otherwise transfer such Shares; (ii)
the name of each proposed purchaser or other transferee (the "Proposed
Transferee"); (iii) the number of Shares to be transferred to each Proposed
Transferee; and (iv) the bona fide cash price or other consideration for which
the Holder proposes to transfer the Shares (the "Offered Price"), and the Holder
shall offer the Shares at the Offered Price to the Company or its assignee(s).
(b) Exercise of Right of First Refusal. At any time
within thirty (30) days after receipt of the Notice, the Company and/or its
assignee(s) may, by giving written notice to the Holder, elect to purchase all,
but not less than all, of the Shares proposed to be transferred to any one or
more of the Proposed Transferees, at the purchase price determined in accordance
with subsection (c) below.
(c) Purchase Price. The purchase price (the
"Purchase Price") for the Shares purchased by the Company or its assignee(s)
under this Section shall be the Offered Price. If the Offered Price includes
consideration other than cash, the cash equivalent value of the non-cash
consideration shall be determined by the Administrator in good faith.
(d) Payment. Payment of the Purchase Price shall be
made, at the option of the Company or its assignee(s), in cash, by check, by
cancellation of all or a portion of any outstanding indebtedness of the Holder
to the Company (or, in the case of repurchase by an assignee, to the assignee),
or by any combination thereof within 30 days after receipt of the Notice or in
the manner and at the times set forth in the Notice.
(e) Holder's Right to Transfer. If all of the
Shares proposed in the Notice to be transferred to a given Proposed Transferee
are not purchased by the Company and/or its assignee(s) as provided in this
Section , then the Holder may sell or otherwise transfer such Shares to that
Proposed Transferee at the Offered Price or at a higher price, provided that
such sale or other transfer is consummated within 120 days after the date of the
Notice and provided further that any such sale or other transfer is effected in
accordance with any applicable securities laws and the Proposed Transferee
agrees in writing that the provisions of this Section shall continue to apply to
the Shares in the hands of such Proposed Transferee. If the Shares described in
the Notice are not transferred to the Proposed Transferee within such period, a
new Notice shall be given to the Company, and the Company and/or its assignees
shall again be offered the Right of First Refusal before any Shares held by the
Holder may be sold or otherwise transferred.
(f) Exception for Certain Family Transfers.
Anything to the contrary contained in this Section notwithstanding, the transfer
of any or all of the Shares during the Optionee's lifetime or on the Optionee's
death by will or intestacy to the Optionee's immediate family or a trust for the
benefit of the Optionee's immediate family shall be exempt from the provisions
of this Section . "Immediate Family" as used herein shall mean spouse, lineal
descendant or antecedent, father, mother, brother or sister. In such case, the
transferee or other recipient shall receive and hold the Shares so
-2-
<PAGE> 22
transferred subject to the provisions of this Section , and there shall be no
further transfer of such Shares except in accordance with the terms of this
Section .
(g) Termination of Right of First Refusal. The
Right of First Refusal shall terminate upon the closing of the first sale of
Common Stock of the Company to the general public pursuant to a registration
statement filed with and declared effective by the Securities and Exchange
Commission under the Securities Act of 1933, as amended.
5. Tax Consultation. Optionee understands that Optionee may
suffer adverse tax consequences as a result of Optionee's purchase or
disposition of the Shares. Optionee represents that Optionee has consulted with
any tax consultants Optionee deems advisable in connection with the purchase or
disposition of the Shares and that Optionee is not relying on the Company for
any tax advice.
6. Restrictive Legends and Stop-Transfer Orders.
(a) Legends. Optionee understands and agrees that
the Company shall cause the legends set forth below or legends substantially
equivalent thereto, to be placed upon any certificate(s) evidencing ownership of
the Shares together with any other legends that may be required by state or
federal securities laws at the time of the issuance of the Shares:
THE SHARES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), AND MAY NOT BE OFFERED, SOLD
OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED
UNLESS AND UNTIL REGISTERED UNDER THE ACT OR THE
ISSUER OF THE SHARES (THE "ISSUER") HAS RECEIVED AN
OPINION OF COUNSEL IN FORM AND SUBSTANCE
SATISFACTORY TO THE ISSUER THAT SUCH OFFER, SALE OR
TRANSFER, PLEDGE OR HYPOTHECATION IS IN COMPLIANCE
WITH THE ACT.
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AND A
RIGHT OF FIRST REFUSAL HELD BY THE ISSUER OR ITS
ASSIGNEE(S) AS SET FORTH IN THE EXERCISE NOTICE
BETWEEN THE ISSUER AND THE ORIGINAL HOLDER OF THESE
SHARES, A COPY OF WHICH MAY BE OBTAINED AT THE
PRINCIPAL OFFICE OF THE ISSUER. SUCH TRANSFER
RESTRICTIONS AND RIGHT OF FIRST REFUSAL ARE BINDING
ON TRANSFEREES OF THE SHARES REPRESENTED HEREBY.
-3-
<PAGE> 23
(b) Stop-Transfer Notices. Optionee agrees that, in
order to ensure compliance with the restrictions referred to herein, the Company
may issue appropriate "stop transfer" instruc tions to its transfer agent, if
any, and that, if the Company transfers its own securities, it may make
appropriate notations to the same effect in its own records.
(c) Refusal to Transfer. The Company shall not be
required (i) to transfer on its books any Shares that have been sold or
otherwise transferred in violation of any of the provisions of this Agreement or
(ii) to treat as owner of such Shares or to accord the right to vote or pay
dividends to any purchaser or other transferee to whom such Shares shall have
been so transferred.
7. Successors and Assigns. The Company may assign any of its
rights under this Agreement to single or multiple assignees, and this Agreement
shall inure to the benefit of the successors and assigns of the Company. Subject
to the restrictions on transfer herein set forth, this Agreement shall be
binding upon Optionee and his or her heirs, executors, administrators,
successors and assigns.
8. Interpretation. Any dispute regarding the interpretation of
this Agreement shall be submitted by Optionee or by the Company forthwith to the
Administrator of the Plan, which shall review such dispute at its next regular
meeting. The resolution of such a dispute by the Administrator shall be final
and binding on the Company and on Optionee.
9. Governing Law; Severability. This Agreement shall be governed
by and construed in accordance with the laws of the State of Texas excluding
that body of law pertaining to conflicts of law. Should any provision of this
Agreement be determined by a court of law to be illegal or unenforceable, the
other provisions shall nevertheless remain effective and shall remain
enforceable.
10. Notices. Any notice required or permitted hereunder shall be
given in writing and shall be deemed effectively given upon personal delivery or
upon deposit in the United States mail by certified mail, with postage and fees
prepaid, addressed to the other party at its address as shown below beneath its
signature, or to such other address as such party may designate in writing from
time to time to the other party.
11. Further Instruments. The parties agree to execute such
further instruments and to take such further action as may be reasonably
necessary to carry out the purposes and intent of this Agreement.
12. Delivery of Payment. Optionee herewith delivers to the
Company the full Exercise Price for the Shares.
13. Entire Agreement. The Plan, the Notice of Grant, and the
Stock Option Agreement are incorporated herein by reference. This Agreement, the
Plan, the Notice of Grant, the Stock Option Agreement and the Investment
Representation Statement (if applicable) constitute the entire agreement of the
parties and supersede in their entirety all prior undertakings and agreements of
the Company and Optionee with respect to the subject matter hereof.
-4-
<PAGE> 24
Submitted by: Accepted by:
OPTIONEE: INTROGEN THERAPEUTICS, INC.
By:
---------------------------
Its:
- --------------------------- --------------------------
(Signature)
Address: Address:
- --------------------------- ---------------------------
- --------------------------- ---------------------------
-5-
<PAGE> 25
EXHIBIT B
INVESTMENT REPRESENTATION STATEMENT
OPTIONEE :
COMPANY : INTROGEN THERAPEUTICS, INC.
SECURITY : COMMON STOCK
AMOUNT :
DATE :
In connection with the purchase of the above-listed Securities, the undersigned
Optionee represents to the Company the following:
(a) Optionee is aware of the Company's business
affairs and financial condition and has acquired sufficient information about
the Company to reach an informed and knowledgeable decision to acquire the
Securities. Optionee is acquiring these Securities for investment for Optionee's
own account only and not with a view to, or for resale in connection with, any
"distribution" thereof within the meaning of the Securities Act of 1933, as
amended (the "Securities Act").
(b) Optionee acknowledges and understands that the
Securities constitute "restricted securities" under the Securities Act and have
not been registered under the Securities Act in reliance upon a specific
exemption therefrom, which exemption depends upon, among other things, the bona
fide nature of Optionee's investment intent as expressed herein. In this
connection, Optionee understands that, in the view of the Securities and
Exchange Commission, the statutory basis for such exemption may be unavailable
if Optionee's representation was predicated solely upon a present intention to
hold these Securities for the minimum capital gains period specified under tax
statutes, for a deferred sale, for or until an increase or decrease in the
market price of the Securities, or for a period of one year or any other fixed
period in the future. Optionee further understands that the Securities must be
held indefinitely unless they are subsequently registered under the Securities
Act or an exemption from such registration is available. Optionee further
acknowledges and understands that the Company is under no obligation to register
the Securities. Optionee understands that the certificate evidencing the
Securities will be imprinted with a legend which prohibits the transfer of the
Securities unless they are registered or such registration is not required in
the opinion of counsel satisfactory to the Company and any other legend required
under then applicable state or federal securities laws.
(c) Optionee is familiar with the provisions of
Rule 701 and Rule 144, each promulgated under the Securities Act, which, in
substance, permit limited public resale of "restricted securities" acquired,
directly or indirectly from the issuer thereof, in a non-public offering subject
to the satisfaction of certain conditions. Rule 701 provides that if the issuer
qualifies under Rule 701 at
<PAGE> 26
the time of the grant of the Option to the Optionee, the exercise will be exempt
from registration under the Securities Act. In the event the Company becomes
subject to the reporting requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") ninety (90) days
thereafter (or such longer period as any market stand-off agreement may require)
the Securities exempt under Rule 701 may be resold, subject to the satisfaction
of certain of the conditions specified by Rule 144, including: (1) the resale
being made through a broker in an unsolicited "broker's transaction" or in
transactions directly with a market maker (as said term is defined under the
Exchange Act); and, in the case of an affiliate, (2) the availability of certain
public information about the Company, (3) the amount of Securities being sold
during any three month period not exceeding the limitations specified in Rule
144(e), and (4) the timely filing of a Form 144, if applicable.
In the event that the Company does not qualify under Rule 701 at
the time of grant of the Option, then the Securities may be resold in certain
limited circumstances subject to the provisions of Rule 144, which requires the
resale to occur not less than two years after the later of the date the
Securities were sold by the Company or the date the Securities were sold by an
affiliate of the Company, within the meaning of Rule 144; and, in the case of
acquisition of the Securities by an affiliate, or by a non-affiliate who
subsequently holds the Securities less than three years, the satisfaction of the
conditions set forth in sections (1), (2), (3) and (4) of the paragraph
immediately above.
(d) Optionee further understands that in the event
all of the applicable requirements of Rule 701 or 144 are not satisfied,
registration under the Securities Act, compliance with Regulation A under the
Securities Act, or some other registration exemption will be required; and that,
notwithstanding the fact that Rules 144 and 701 are not exclusive, the Staff of
the Securities and Exchange Commission has expressed its opinion that persons
proposing to sell private placement securities other than in a registered
offering and otherwise than pursuant to Rules 144 or 701 will have a substantial
burden of proof in establishing that an exemption from registration is available
for such offers or sales, and that such persons and their respective brokers who
participate in such transactions do so at their own risk. Optionee understands
that no assurances can be given that any such other registration exemption will
be available in such event.
Signature of Optionee:
------------------------------------------
Date: , 19
--------------------- --
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<PAGE> 1
EXHIBIT 10.3
INTROGEN THERAPEUTICS, INC.
DIRECTOR OPTION PLAN
1. Purposes of the Plan. The purposes of this Director Option Plan are
to attract and retain the best available personnel for service as Outside
Directors (as defined herein) of the Company, to provide additional incentive to
the Outside Directors of the Company to serve as Directors, and to encourage
their continued service on the Board.
All options granted hereunder shall be "non-statutory stock
options."
2. Definitions. As used herein, the following definitions shall apply:
(a) "Board" means the Board of Directors of the Company.
(b) "Code" means the Internal Revenue Code of 1986, as
amended.
(c) "Common Stock" means the Common Stock of the Company.
(d) "Company" means Introgen Therapeutics, Inc., a Delaware
corporation.
(e) "Consultant" means any person, including an advisor,
engaged by the Company or a Parent or Subsidiary to render services and who is
compensated for such services, provided that the term "Consultant" shall not
include Directors who are paid only a director's fee by the Company or who are
not compensated by the Company for their services as Directors.
(f) "Continuous Status as a Director" means the absence of any
interruption or termination of service as a Director.
(g) "Director" means a member of the Board.
(h) "Employee" means any person, including officers and
Directors, employed by the Company or any Parent or Subsidiary of the Company.
The payment of a Director's fee by the Company shall not be sufficient in and of
itself to constitute "employment" by the Company.
(i) "Exchange Act" means the Securities Exchange Act of 1934,
as amended.
<PAGE> 2
(j) "Fair Market Value" means, as of any date, the value of
Common Stock determined as follows:
(i) If the Common Stock is listed on any established
stock exchange or a national market system, including without limitation the
National Market System of the National Association of Securities Dealers, Inc.
Automated Quotation ("NASDAQ") System, the Fair Market Value of a Share of
Common Stock shall be the closing sales price for such stock (or the closing
bid, if no sales were reported) as quoted on such system or exchange (or the
exchange with the greatest volume of trading in Common Stock) on the date of
grant, as reported in The Wall Street Journal or such other source as the Board
deems reliable;
(ii) If the Common Stock is quoted on the NASDAQ
System (but not on the National Market System thereof) or regularly quoted by a
recognized securities dealer but selling prices are not reported, the Fair
Market Value of a Share of Common Stock shall be the mean between the bid and
asked prices for the Common Stock on the last market trading day prior to the
day of determination, as reported in The Wall Street Journal or such other
source as the Board deems reliable, or;
(iii) In the absence of an established market for the
Common Stock, the Fair Market Value thereof shall be determined in good faith by
the Board.
(k) "Option" means a stock option granted pursuant to the
Plan.
(l) "Optioned Stock" means the Common Stock subject to an
Option.
(m) "Optionee" means an Outside Director who receives an
Option.
(n) "Outside Director" means a Director who is not an Employee
or Consultant.
(o) "Parent" means a "parent corporation", whether now or
hereafter existing, as defined in Section 424(e) of the Code.
(p) "Plan" means this Director Option Plan.
(i) "Share" means a share of the Common Stock, as adjusted in
accordance with Section 10 of the Plan.
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<PAGE> 3
(q) "Subsidiary" means a "subsidiary corporation", whether now
or hereafter existing, as defined in Section 424(f) of the Internal Revenue Code
of 1986.
3. Stock Subject to the Plan. Subject to the provisions of Section 10
of the Plan, the maximum aggregate number of Shares which may be optioned and
sold under the Plan is 200,000 Shares (the "Pool") of Common Stock. The Shares
may be authorized but unissued, or reacquired Common Stock.
If an Option should expire or become unexercisable for any reason
without having been exercised in full, the unpurchased Shares which were subject
thereto shall, unless the Plan shall have been terminated, become available for
future grant under the Plan.
4. Administration of and Grants of Options under the Plan.
(a) Procedure for Grants. The provisions set forth in this
Section 4(a) shall not be amended more than once every six months, other than to
comport with changes in the Code, the Employee Retirement Income Security Act of
1974, as amended, or the rules thereunder. All grants of Options to Outside
Directors under this Plan shall be automatic and non-discretionary and shall be
made strictly in accordance with the following provisions:
(i) No person shall have any discretion to select
which Outside Directors shall be granted Options or to determine the number of
Shares to be covered by Options granted to Outside Directors.
(ii) Each Outside Director who becomes a Director
following the date of approval of this Plan by the Board shall be automatically
granted an Option to purchase 10,000 Shares (the "First Option") on the date on
which such person first becomes a Director, whether through election by the
shareholders of the Company or appointment by the Board to fill a vacancy.
(iii) Each Outside Director shall be automatically
granted an Option to purchase 2,000 Shares (a "Subsequent Option") on the date
of the Company's Annual Meeting of Shareholders upon such Outside Director's
reelection, if on such date, he shall have served on the Board for at least six
(6) months.
(iv) The terms of a First Option granted hereunder
shall be as follows:
(A) the term of the First Option shall be ten
(10) years.
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<PAGE> 4
(B) the First Option shall be exercisable only
while the Outside Director remains a Director of the Company, except as set
forth in Section 8 hereof.
(C) the exercise price per Share shall be 100%
of the fair market value per Share on the date of grant of the First Option.
(D) the First Option shall become exercisable in
installments cumulatively as to twenty-five percent of the Shares subject to the
First Option on each anniversary of its date of grant.
(v) The terms of a Subsequent Option granted
hereunder shall be as follows:
(A) the term of the Subsequent Option shall be
ten (10) years.
(B) the Subsequent Option shall be exercisable
only while the Outside Director remains a Director of the Company, except as set
forth in Section 8 hereof.
(C) the exercise price per Share shall be 100%
of the fair market value per Share on the date of grant of the Subsequent
Option.
(D) the Subsequent Option shall become
exercisable as to twelve and one-half percent of the Shares subject to the
Subsequent Option on the first day of each month following its date of grant.
(vi) In the event that any Option granted under the
Plan would cause the number of Shares subject to outstanding Options plus the
number of Shares previously purchased under Options to exceed the Pool, then the
remaining Shares available for Option grant shall be granted under Options to
the Outside Directors on a pro rata basis. No further grants shall be made until
such time, if any, as additional Shares become available for grant under the
Plan through action of the Board to increase the number of Shares which may be
issued under the Plan; provided, further that such Options shall not be
exercisable until such time, if any, as the increase approved by the Board is
approved by the shareholders.
5. Eligibility. Options may be granted only to Outside Directors. All
Options shall be automatically granted in accordance with the terms set forth in
Section 4 hereof. An Outside Director who has been granted an Option may, if he
is otherwise
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<PAGE> 5
eligible, be granted an additional Option or Options in accordance with such
provisions.
The Plan shall not confer upon any Optionee any right with respect
to continuation of service as a Director or nomination to serve as a Director,
nor shall it interfere in any way with any rights which the Director or the
Company may have to terminate his or her directorship at any time.
6. Term of Plan. The Plan shall become effective upon the earlier to
occur of its adoption by the Board or its approval by the shareholders of the
Company as described in Section 16 of the Plan. It shall continue in effect for
a term of ten (10) years unless sooner terminated under Section 11 of the Plan.
7. Form of Consideration. The consideration to be paid for the Shares
to be issued upon exercise of an Option, including the method of payment, shall
consist of (i) cash, (ii) check, (iii) delivery of a properly executed exercise
notice together with such other documentation as the Company and the broker, if
applicable, shall require to effect an exercise of the Option and delivery to
the Company of the sale or loan proceeds required to pay the exercise price, or
(iv) any combination of the foregoing methods of payment.
8. Exercise of Option.
(a) Procedure for Exercise; Rights as a Shareholder. Any Option
granted hereunder shall be exercisable at such times as are set forth in Section
4 hereof; provided, however, that no Options shall be exercisable until
shareholder approval of the Plan in accordance with Section 16 hereof has been
obtained.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed to be exercised when written notice of
such exercise has been given to the Company in accordance with the terms of the
Option by the person entitled to exercise the Option and full payment for the
Shares with respect to which the Option is exercised has been received by the
Company. Full payment may consist of any consideration and method of payment
allowable under Section 7 of the Plan. Until the issuance (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company) of the stock certificate evidencing such Shares, no right
to vote or receive dividends or any other rights as a shareholder shall exist
with respect to the Optioned Stock, notwithstanding the exercise of the Option.
A share certificate for the number of Shares so acquired shall be
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<PAGE> 6
issued to the Optionee as soon as practicable after exercise of the Option. No
adjustment will be made for a dividend or other right for which the record date
is prior to the date the stock certificate is issued, except as provided in
Section 10 of the Plan.
Exercise of an Option in any manner shall result in a decrease in
the number of Shares which thereafter may be available, both for purposes of the
Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.
(b) Rule 16b-3. Options granted to Outside Directors must comply
with the applicable provisions of Rule 16b-3 promul gated under the Exchange Act
or any successor thereto and shall contain such additional conditions or
restrictions as may be required thereunder to qualify for the maximum exemption
from Section 16 of the Exchange Act with respect to Plan transactions.
(c) Termination of Continuous Status as a Director. In the event an
Optionee's Continuous Status as a Director terminates (other than upon the
Optionee's death or total and permanent dis ability (as defined in Section
22(e)(3) of the Code)), the Optionee may exercise his or her Option, but only
within three (3) months from the date of such termination, and only to the
extent that the Optionee was entitled to exercise it at the date of such
termination (but in no event later than the expiration of its ten (10) year
term). To the extent that the Optionee was not entitled to exercise an Option at
the date of such termination, and to the extent that the Optionee does not
exercise such Option (to the extent otherwise so entitled) within the time
specified herein, the Option shall terminate.
(d) Disability of Optionee. In the event Optionee's Continuous
Status as a Director terminates as a result of total and permanent disability
(as defined in Section 22(e)(3) of the Code), the Optionee may exercise his or
her Option, but only within twelve (12) months from the date of such
termination, and only to the extent that the Optionee was entitled to exercise
it at the date of such termination (but in no event later than the expiration of
its ten (10) year term). To the extent that the Optionee was not entitled to
exercise an Option at the date of termination, or if he or she does not exercise
such Option (to the extent otherwise so entitled) within the time specified
herein, the Option shall terminate.
(e) Death of Optionee. In the event of an Optionee's death, the
Optionee's estate or a person who acquired the right to exercise the Option by
bequest or inheritance may exercise the Option, but only within twelve (12)
months following the date of
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<PAGE> 7
death, and only to the extent that the Optionee was entitled to exercise it at
the date of death (but in no event later than the expiration of its ten (10)
year term). To the extent that the Optionee was not entitled to exercise an
Option at the date of death, and to the extent that the Optionee's estate or a
person who acquired the right to exercise such Option does not exercise such
Option (to the extent otherwise so entitled) within the time specified herein,
the Option shall terminate.
9. Non-Transferability of Options. The Option may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner other than by
will or by the laws of descent or dis tribution and may be exercised, during the
lifetime of the Optionee, only by the Optionee.
10. Adjustments Upon Changes in Capitalization, Dissolution, Merger,
Asset Sale or Change of Control.
(a) Changes in Capitalization. Subject to any required action by the
shareholders of the Company, the number of Shares covered by each outstanding
Option and the number of Shares which have been authorized for issuance under
the Plan but as to which no Options have yet been granted or which have been
returned to the Plan upon cancellation or expiration of an Option, as well as
the price per Share covered by each such outstanding Option, shall be
proportionately adjusted for any increase or decrease in the number of issued
Shares resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other increase or
decrease in the number of issued Shares effected without receipt of
consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Except as expressly provided herein, no
issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no adjustment
by reason thereof shall be made with respect to, the number or price of Shares
subject to an Option.
(b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, to the extent that an Option has not
been previously exercised, it will terminate immediately prior to the
consummation of such proposed action.
(c) Merger or Asset Sale. In the event of a merger of the Company
with or into another corporation, or the sale of substantially all of the assets
of the Company, each outstanding Option shall be assumed or an equivalent option
shall be substi tuted by the successor corporation or a Parent or Subsidiary of
the
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<PAGE> 8
successor corporation. In the event that the successor corporation does not
agree to assume the Option or to substitute an equivalent option, each
outstanding Option shall become fully vested and exercisable, including as to
Shares as to which it would not otherwise be exercisable, unless the Board, in
its discretion, determines otherwise. If an Option becomes fully vested and
exercisable in the event of a merger or sale of assets, the Board shall notify
the Optionee that the Option shall be fully exercisable for a period of thirty
(30) days from the date of such notice, and the Option will terminate upon the
expiration of such period. For the purposes of this paragraph, the Option shall
be considered assumed if, following the merger or sale of assets, the option or
right confers the right to purchase, for each Share of Optioned Stock subject to
the Option immediately prior to the merger or sale of assets, the consideration
(whether stock, cash, or other securities or property) received in the merger or
sale of assets by holders of Common Stock for each Share held on the effective
date of the transaction (and if holders were offered a choice of consideration,
the type of consideration chosen by the holders of a majority of the outstanding
Shares).
11. Amendment and Termination of the Plan.
(a) Amendment and Termination. Except as set forth in Section 4, the
Board may at any time amend, alter, suspend, or discontinue the Plan, but no
amendment, alteration, suspension, or discontinuation shall be made which would
impair the rights of any Optionee under any grant theretofore made, without his
or her consent. In addition, to the extent necessary and desirable to comply
with Rule 16b-3 under the Exchange Act (or any other applicable law or
regulation), the Company shall obtain shareholder approval of any Plan amendment
in such a manner and to such a degree as required.
(b) Effect of Amendment or Termination. Any such amendment or
termination of the Plan shall not affect Options already granted and such
Options shall remain in full force and effect as if this Plan had not been
amended or terminated.
12. Time of Granting Options. The date of grant of an Option shall, for
all purposes, be the date determined in accordance with Section 4 hereof. Notice
of the determination shall be given to each Outside Director to whom an Option
is so granted within a reasonable time after the date of such grant.
13. Conditions Upon Issuance of Shares. Shares shall not be issued
pursuant to the exercise of an Option unless the exercise of such Option and the
issuance and delivery of such Shares pursuant
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<PAGE> 9
thereto shall comply with all relevant provisions of law, including, without
limitation, the Securities Act of 1933, as amended, the Exchange Act, the rules
and regulations promulgated thereunder, state securities laws, and the
requirements of any stock exchange upon which the Shares may then be listed, and
shall be further subject to the approval of counsel for the Company with respect
to such compliance.
As a condition to the exercise of an Option, the Company may
require the person exercising such Option to represent and warrant at the time
of any such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares, if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned relevant provisions of law.
Inability of the Company to obtain authority from any
regulatory body having jurisdiction, which authority is deemed by the Company's
counsel to be necessary to the lawful issuance and sale of any Shares hereunder,
shall relieve the Company of any liability in respect of the failure to issue
or sell such Shares as to which such requisite authority shall not have been
obtained.
14. Reservation of Shares. The Company, during the term of this Plan,
will at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
15. Option Agreement. Options shall be evidenced by written option
agreements in such form as the Board shall approve.
16. Shareholder Approval. Continuance of the Plan shall be subject to
approval by the shareholders of the Company at or prior to the first annual
meeting of shareholders held subsequent to the granting of an Option hereunder.
Such shareholder approval shall be obtained in the degree and manner required
under applicable state and federal law.
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<PAGE> 10
INTROGEN THERAPEUTICS, INC.
DIRECTOR OPTION AGREEMENT
Introgen Therapeutics, Inc., a Delaware corporation (the "Company"),
has granted to ______________________________________ (the "Optionee"), an
option to purchase a total of __________________ (_________) shares of the
Company's Common Stock (the "Optioned Stock"), at the price determined as
provided herein, and in all respects subject to the terms, definitions and
provisions of the Company's Director Option Plan (the "Plan") adopted by the
Company which is incorporated herein by reference. The terms defined in the Plan
shall have the same defined meanings herein.
1. Nature of the Option. This Option is a nonstatutory option and is
not intended to qualify for any special tax benefits to the Optionee.
2. Exercise Price. The exercise price is $_______ for each share of
Common Stock.
3. Exercise of Option. This Option shall be exercisable during its term
in accordance with the provisions of Section 8 of the Plan as follows:
(i) Right to Exercise.
[(a) This Option shall become exercisable in installments
cumulatively with respect to twelve and one-half percent (12 1/2%) of the
Optioned Stock one month after the date of grant, and as to an additional twelve
and one-half percent (12 1/2%) of the Optioned Stock for each month thereafter,
so that one hundred percent (100%) of the Optioned Stock shall be exercisable
eight months after the date of grant; provided, however, that in no event shall
any Option be exercisable prior to the date the stockholders of the Company
approve the Plan.]
[(a) This Option shall become exercisable in installments
cumulatively with respect to twenty-five percent (25%) of the Optioned Stock one
year after the date of grant, and as to an additional twenty-five percent (25%)
of the Optioned Stock for each subsequent anniversary of the date of grant, so
that one hundred percent (100%) of the Optioned Stock shall be exercisable four
years after the date of grant; provided, however, that in no event shall any
Option be exercisable prior to the date the stockholders of the Company approve
the Plan.]
(b) This Option may not be exercised for a fraction of a share.
(c) In the event of Optionee's death, disability or other
termination of service as a Director, the exercisability of the Option is
governed by Section 8 of the Plan.
(ii) Method of Exercise. This Option shall be exercisable by written
notice which shall state the election to exercise the Option and the number of
Shares in respect of which the Option is
<PAGE> 11
being exercised. Such written notice, in the form attached hereto as Exhibit A,
shall be signed by the Optionee and shall be delivered in person or by certified
mail to the Secretary of the Company. The written notice shall be accompanied by
payment of the exercise price.
4. Method of Payment. Payment of the exercise price shall be by any of
the following, or a combination thereof, at the election of the Optionee:
(iii) cash;
(iv) check; or
(v) surrender of other shares which (x) in the case of Shares
acquired upon exercise of an Option, have been owned by the Optionee for more
than six (6) months on the date of surrender, and (y) have a Fair Market Value
on the date of surrender equal to the aggregate exercise price of the Shares as
to which said Option shall be exercised; or
(iv) delivery of a properly executed exercise notice together with
such other documentation as the Company and the broker, if applicable, shall
require to effect an exercise of the Option and delivery to the Company of the
sale or loan proceeds required to pay the exercise price.
5. Restrictions on Exercise. This Option may not be exercised if the
issuance of such Shares upon such exercise or the method of payment of
consideration for such shares would constitute a violation of any applicable
federal or state securities or other law or regulations, or if such issuance
would not comply with the requirements of any stock exchange upon which the
Shares may then be listed. As a condition to the exercise of this Option, the
Company may require Optionee to make any representation and warranty to the
Company as may be required by any applicable law or regulation.
6. Non-Transferability of Option. This Option may not be transferred in
any manner otherwise than by will or by the laws of descent or distribution and
may be exercised during the lifetime of Optionee only by the Optionee. The terms
of this Option shall be binding upon the executors, administrators, heirs,
successors and assigns of the Optionee.
7. Term of Option. This Option may not be exercised more than ten (10)
years from the date of grant of this Option, and may be exercised during such
period only in accordance with the Plan and the terms of this Option.
8. Taxation Upon Exercise of Option. Optionee understands that, upon
exercise of this Option, he or she will recognize income for tax purposes in an
amount equal to the excess of the then Fair Market Value of the Shares purchased
over the exercise price paid for such Shares. Since the Optionee is subject to
Section 16(b) of the Securities Exchange Act of 1934, as amended, under certain
limited circumstances the measurement and timing of such income (and the
commencement of any capital gain holding period) may be deferred, and the
Optionee is advised to contact a tax advisor concerning the application of
Section 83 in general and the availability a Section 83(b) election in
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<PAGE> 12
particular in connection with the exercise of the Option. Upon a resale of such
Shares by the Optionee, any difference between the sale price and the Fair
Market Value of the Shares on the date of exercise of the Option, to the extent
not included in income as described above, will be treated as capital gain or
loss.
DATE OF GRANT:
-------------------
INTROGEN THERAPEUTICS, INC.,
a Delaware corporation
By:
--------------------------------
Title:
----------------------------
Optionee acknowledges receipt of a copy of the Plan, a copy of which is
attached hereto, and represents that he or she is familiar with the terms and
provisions thereof, and hereby accepts this Option subject to all of the terms
and provisions thereof. Optionee hereby agrees to accept as binding, conclusive
and final all decisions or interpretations of the Board upon any questions
arising under the Plan.
Dated:
-----------------------
------------------------------
Optionee
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<PAGE> 13
EXHIBIT A
DIRECTOR OPTION EXERCISE NOTICE
Introgen Therapeutics, Inc.
301 Congress Avenue, Suite 2025
Austin, TX 78701
Attention: Corporate Secretary
1. Exercise of Option. The undersigned ("Optionee") hereby elects to
exercise Optionee's option to purchase ______ shares of the Common Stock (the
"Shares") of Introgen Therapeutics, Inc. (the "Company") under and pursuant to
the Company's Director Option Plan and the Director Option Agreement dated
_______________ (the "Agreement").
2. Representations of Optionee. Optionee acknowledges that Optionee has
received, read and understood the Agreement.
3. Federal Restrictions on Transfer. Optionee understands that the
Shares must be held indefinitely unless they are registered under the Securities
Act of 1933, as amended (the "1933 Act"), or unless an exemption from such
registration is available, and that the certificate(s) representing the Shares
may bear a legend to that effect. Optionee understands that the Company is under
no obligation to register the Shares and that an exemption may not be available
or may not permit Optionee to transfer Shares in the amounts or at the times
proposed by Optionee.
4. Tax Consequences. Optionee understands that Optionee may suffer
adverse tax consequences as a result of Optionee's purchase or disposition of
the Shares. Optionee represents that Optionee has consulted with any tax
consultant(s) Optionee deems advisable in connection with the purchase or
disposition of the Shares and that Optionee is not relying on the Company for
any tax advice.
5. Delivery of Payment. Optionee herewith delivers to the Company the
aggregate purchase price for the Shares that Optionee has elected to purchase
and has made provision for the payment of any federal or state withholding taxes
required to be paid or withheld by the Company.
6. Entire Agreement. The Agreement is incorporated herein by reference.
This Exercise Notice and the Agreement constitute the entire agreement of the
parties and supersede in their entirety all prior undertakings and agreements of
the Company and Optionee with respect to the
<PAGE> 14
subject matter hereof. This Exercise Notice and the Agreement are governed by
California law except for that body of law pertaining to conflict of laws.
Submitted by: Accepted by:
OPTIONEE: INTROGEN THERAPEUTICS, INC.
By:
- ------------------------------- ------------------------------------
Its:
------------------------------------
Address:
Dated: Dated:
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<PAGE> 1
Exhibit 10.4
INTROGEN THERAPEUTICS, INC.
EMPLOYEE STOCK PURCHASE PLAN
The following constitute the provisions of the Employee Stock Purchase
Plan of Introgen Therapeutics, Inc.
1. Purpose. The purpose of the Plan is to provide employees of the
Company and its Designated Subsidiaries with an opportunity to purchase Common
Stock of the Company through accumulated payroll deductions. It is the intention
of the company to have the Plan qualify as an "Employee Stock Purchase Plan"
under Section 423 of the Internal Revenue Code of 1986, as amended. The
provisions of the Plan, accordingly, shall be construed so as to extend and
limit participation in a manner consistent with the requirements of that section
of the Code.
2. Definitions.
(a) "Board" shall mean the Board of Directors of the company.
(b) "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(c) "Common Stock" shall mean the Common Stock of the Company.
(d) "Company" shall mean Introgen Therapeutics, Inc. and any
Designated Subsidiary of the Company.
(e) "Compensation" shall mean all compensation reportable on
Form W-2, including without limitation base straight time gross earnings, sales
commissions, payments for overtime, shift premiums, incentive compensation,
incentive payments, bonuses and other compensation.
(f) "Designated Subsidiaries" shall mean the Subsidiaries
which have been designated by the Board from time to time in its sole discretion
as eligible to participate in the Plan.
(g) "Employee" shall mean any individual who is an Employee of
the Company for tax purposes whose customary employment with the Company is at
least twenty (20) hours per week and more than five (5) months in any calendar
year. For purposes of the Plan, the employment relationship shall be treated as
continuing intact while the individual is on sick leave or other leave of
absence approved by the Company. Where the period of leave exceeds 90 days and
the individual's right to reemployment is not guaranteed either by statute or by
contract, the employment relationship will be deemed to have terminated on the
91st day of such leave.
(h) "Enrollment Date" shall mean the first day of each
Offering Period.
(i) "Exercise Date" shall mean the last day of each Offering
Period.
<PAGE> 2
(j) "Fair Market Value" shall mean, as of any date, the value
of Common Stock determined as follows:
(1) If the Common Stock is listed on any established
stock exchange or a national market system, including without limitation the
National Market System of the National Association of Securities Dealers, Inc.
Automated Quotation ("NASDAQ") System, its Fair Market Value shall be the
closing sale price for the Common Stock (or the mean of the closing bid and
asked prices, if no sales were reported), as quoted on such exchange (or the
exchange with the greatest volume of trading in Common Stock) or system on the
date of such determination, as reported in The Wall Street Journal or such other
source as the Board deems reliable, or;
(2) If the Common Stock is quoted on the NASDAQ
system (but not on the National Market System thereof) or is regularly quoted by
a recognized securities dealer but selling prices are not reported, its Fair
Market Value shall be the mean of the closing bid and asked prices for the
Common Stock on the date of such determination, as reported in The Wall Street
Journal or such other source as the Board deems reliable, or;
(3) In the absence of an established market for the
Common Stock, the Fair Market Value thereof shall be determined in good faith by
the Board.
(4) For purposes of the Enrollment Date under the
first Offering Period under the Plan, the Fair Market Value shall be the initial
price to the public as set forth in the final Prospectus included within the
Registration Statement in Form S-1 filed with the Securities and Exchange
Commission for the initial public offering of the Company's Common Stock.
(k) "Offering Period" shall mean a period of approximately six
(6) months, commencing on the first Trading Day on or after May 1 and
terminating on the last Trading Day in the period ending the following October
31, or commencing on the first Trading Day on or after November 1 and
terminating on the last Trading Day in the period ending the following April 30,
during which an option granted pursuant to the Plan may be exercised. The first
Offering Period shall begin on the effective date of the Company's initial
public offering of its Common Stock that is registered with the Securities and
Exchange Commission and shall end on the last Trading Day on or before October
31, 1997. The duration of Offering Periods may be changed pursuant to Section 4
of this Plan. The initial Offering Period shall be determined by the Board of
Directors.
(l) "Officer" means a person who is an officer of the Company
within the meaning of Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder.
(m) "Plan" shall mean this Employee Stock Purchase Plan.
(n) "Purchase Price" shall mean an amount equal to 85% of the
Fair Market Value of a share of Common Stock on the Enrollment Date or on the
Exercise Date, whichever is lower.
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<PAGE> 3
(o) "Reserves" shall mean the number of shares of Common Stock
covered by each option under the Plan which have not yet been exercised and the
number of shares of Common Stock which have been authorized for issuance under
the Plan but not yet placed under option.
(p) "Subsidiary" shall mean a corporation, domestic or
foreign, of which not less than 50% of the voting shares are held by the Company
or a Subsidiary, whether or not such corporation now exists or is hereafter
organized or acquired by the Company or a Subsidiary.
(q) "Trading Day" shall mean a day on which national stock
exchanges and the National Association of Securities Dealers Automated Quotation
(NASDAQ) System are open for trading.
3. Eligibility.
(a) Any Employee (as defined in Section 2(g)), who shall be
employed by the Company on a given Enrollment Date shall be eligible to
participate in the Plan.
(b) Any provisions of the Plan to the contrary
notwithstanding, no Employee shall be granted an option under the Plan (i) to
the extent, immediately after the grant, such Employee (or any other person
whose stock would be attributed to such Employee pursuant to Section 424(d) of
the Code) would own capital stock of the Company and/or hold outstanding options
to purchase such stock possessing five percent (5%) or more of the total
combined voting power or value of all classes of the capital stock of the
Company or of any Subsidiary, or (ii) to the extent his or her rights to
purchase stock under all employee stock purchase plans of the Company and its
subsidiaries to accrue at a rate which exceeds Twenty-Five Thousand Dollars
($25,000) worth of stock (determined at the fair market value of the shares at
the time such option is granted) for each calendar year in which such option is
outstanding at any time.
4. Offering Periods. The Plan shall be implemented by consecutive
Offering Periods with a new Offering Period commencing on the first Trading Day
on or after May 1 and November 1 each year, or on such other date as the Board
shall determine, and continuing thereafter until terminated in accordance with
Section 19 hereof. The first Offering Period shall begin on the effective date
of the Company's initial public offering of its Common Stock that is registered
with the Securities and Exchange Commission. The Board shall have the power to
change the duration of Offering Periods (including the commencement dates
thereof) with respect to future offerings without shareholder approval if such
change is announced at least fifteen (15) days prior to the scheduled beginning
of the first Offering Period to be affected thereafter.
5. Participation.
(a) An eligible Employee may become a participant in the Plan
by completing a subscription agreement authorizing payroll deductions in the
form of Exhibit A to this Plan and filing it with the Company's payroll office
prior to the applicable Enrollment Date. An eligible Officer may become a
participant in the Plan by completing a subscription agreement authorizing
payroll
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<PAGE> 4
deductions and an irrevocable election in the form of Exhibit B to this Plan and
filing it with the Company's payroll office prior to the applicable Enrollment
Date.
(b) Payroll deductions for a participant shall commence on the
first payroll following the Enrollment Date and shall end on the last payroll in
the Offering Period to which such authorization is applicable, unless sooner
terminated by the participant as provided in Section 10 hereof.
6. Payroll Deductions.
(a) At the time a participant files his or her subscription
agreement, he or she shall elect to have payroll deductions made on each pay day
during the Offering Period in an amount not exceeding ten percent (10%) of the
Compensation which he or she receives on each pay day during the Offering
Period.
(b) All payroll deductions made for a participant shall be
credited to his or her account under the Plan and will be withheld in whole
percentages only. A participant may not make any additional payments into such
account.
(c) A participant other than Officers may discontinue his or
her participation in the Plan as provided in Section 10 hereof, or may increase
or decrease the rate of his or her payroll deductions during the Offering Period
by completing or filing with the Company a new subscription agreement
authorizing a change in payroll deduction rate. The Board may, in its
discretion, limit the number of participation rate changes during any Offering
Period. The change in rate shall be effective with the first full payroll period
following five (5) business days after the Company's receipt of the new
subscription agreement unless the Company elects to process a given change in
participation more quickly. A participant's subscription agreement shall remain
in effect for successive Offering Periods unless terminated as provided in
Section 10 hereof.
(d) Notwithstanding the foregoing, to the extent necessary to
comply with Section 423(b)(8) of the Code and Section 3(b) hereof, a
participant's payroll deductions may be decreased to 0% at such time during any
Offering Period which is scheduled to end during the current calendar year (the
"Current Offering Period") that the aggregate of all payroll deductions which
were previously used to purchase stock under the Plan in a prior Offering Period
which ended during that calendar year plus all payroll deductions accumulated
with respect to the Current Offering Period equal $21,250. Payroll deductions
shall recommence at the rate provided in such participant' s subscription
agreement at the beginning of the first Offering Period which is scheduled to
end in the following calendar year, unless terminated by the participant as
provided in Section 10 hereof.
(e) At the time the option is exercised, in whole or in part,
or at the time some or all of the Company's Common Stock issued under the Plan
is disposed of, the participant must make adequate provision for the Company's
federal, state, or other tax withholding obligations, if any, which arise upon
the exercise of the option or the disposition of the Common Stock. At any time,
the Company may, but will not be obligated to, withhold from the participant's
compensation the amount
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<PAGE> 5
necessary for the Company to meet applicable withholding obligations, including
any withholding required to make available to the Company any tax deductions or
benefits attributable to sale or early disposition of Common Stock by the
Employee.
7. Grant of Option. On the Enrollment Date of each Offering Period,
each eligible Employee participating in such Offering Period shall be granted an
option to purchase on the Exercise Date of such Offering Period (at the
applicable Purchase Price) up to a number of shares of the Company's Common
Stock determined by dividing such Employee's payroll deductions accumulated
prior to such Exercise Date and retained in the Participant's account as of the
Exercise Date by the applicable Purchase Price; provided that in no event shall
an Employee be permitted to purchase during each Offering Period more than a
number of Shares determined by dividing $12,500 by the Fair Market Value of a
share of the Company's Common Stock on the Enrollment Date, and provided further
that such purchase shall be subject to the limitations set forth in Sections
3(b) and 12 hereof. Exercise of the option shall occur as provided in Section 8
hereof, unless the participant has withdrawn pursuant to Section 10 hereof, and
shall expire on the last day of the Offering Period.
8. Exercise of Option. Unless a participant withdraws from the Plan as
provided in Section 10 hereof, his or her option for the purchase of shares will
be exercised automatically on the Exercise Date, and the maximum number of full
shares subject to option shall be purchased for such participant at the
applicable Purchase Price with the accumulated payroll deductions in his or her
account. No fractional shares will be purchased; any payroll deductions
accumulated in a participant's account which are not sufficient to purchase a
full share shall be retained in the participant's account for the subsequent
Offering Period, subject to earlier withdrawal by the participant as provided in
Section 10 hereof. Any other monies left over in a participant's account after
the Exercise Date shall be returned to the participant. During a participant's
lifetime, a participant's option to purchase shares hereunder is exercisable
only by him or her.
9. Delivery. As promptly as practicable after each Exercise Date on
which a purchase of shares occurs, the Company shall arrange the delivery to
each participant who requests in writing, as reasonable and appropriate, of a
certificate representing the shares purchased upon exercise of his or her
option.
10. Withdrawal; Termination of Employment.
(a) A participant may withdraw all but not less than all the
payroll deductions credited to his or her account and not yet used to exercise
his or her option under the Plan at any time by giving written notice to the
Company in the form of Exhibit C to this Plan. All of the participant's payroll
deductions credited to his or her account will be paid to such participant
promptly after receipt of notice of withdrawal and such participant's option for
the Offering Period will be automatically terminated, and no further payroll
deductions for the purchase of shares will be made during the Offering Period.
If a participant withdraws from an Offering Period, payroll deductions will not
resume at the beginning of the succeeding Offering Period unless the participant
delivers to the Company a new subscription agreement.
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<PAGE> 6
(b) Upon a participant's ceasing to be an Employee (as defined
in Section 2(g) hereof ), for any reason, he or she will be deemed to have
elected to withdraw from the Plan and the payroll deductions credited to such
participant's account during the Offering Period but not yet used to exercise
the option will be returned to such participant or, in the case of his or her
death, to the person or persons entitled thereto under Section 14 hereof, and
such participant's option will be automatically terminated. The preceding
sentence notwithstanding, a participant who receives payment in lieu of notice
of termination of employment shall be treated as continuing to be an Employee
for the participant's customary number of hours per week of employment during
the period in which the participant is subject to such payment in lieu of
notice.
(c) A participant's withdrawal from an Offering Period will
not have any effect upon his or her eligibility to participate in any similar
plan which may hereafter be adopted by the Company or in succeeding Offering
Periods which commence after the termination of the Offering Period from which
the participant withdraws.
11. Interest. No interest shall accrue on the payroll deductions of a
participant in the Plan.
12. Stock.
(a) The maximum number of shares of the Company's Common Stock
which shall be made available for sale under the Plan shall be 100,000 shares,
subject to adjustment upon changes in capitalization of the Company as provided
in Section 18 hereof. If on a given Exercise Date the number of shares with
respect to which options are to be exercised exceeds the number of shares then
available under the Plan, the Company shall make a pro rata allocation of the
shares remaining available for purchase in as uniform a manner as shall be
practicable and as it shall determine to be equitable.
(b) The participant will have no interest or voting right in
shares covered by his option until such option has been exercised.
(c) Shares to be delivered to a participant under the Plan
will be issued in the name of the participant or in the name of the participant
and his or her spouse.
13. Administration.
(a) Administrative Body. The Plan shall be administered by the
Board or a committee of members of the Board appointed by the Board. The Board
or its committee shall have full and exclusive discretionary authority to
construe, interpret and apply the terms of the Plan, to determine eligibility
and to adjudicate all disputed claims filed under the Plan. Every finding,
decision and determination made by the Board or its committee shall, to the full
extent permitted by law, be final and binding upon all parties.
(b) Rule 16b-3 Limitations. Notwithstanding the provisions of
Subsection (a) of this Section 13, in the event that Rule 16b-3 promulgated
under the Securities Exchange Act of 1934,
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<PAGE> 7
as amended (the "Exchange Act"), or any successor provision ("Rule 16b-3")
provides specific requirements for the administrators of plans of this type, the
Plan shall be administered only by such a body and in such a manner as shall
comply with the applicable requirements of Rule 16b-3. Unless permitted by Rule
16b-3, no discretion concerning decisions regarding the Plan shall be afforded
to any committee or person that is not "disinterested" as that term is used in
Rule 16b-3.
14. Designation of Beneficiary.
(a) A participant may file a written designation of a
beneficiary who is to receive any shares and cash, if any, from the
participant's account under the Plan in the event of such participant's death
subsequent to an Exercise Date on which the option is exercised but prior to
delivery to such participant of such shares and cash. In addition, a participant
may file a written designation of a beneficiary who is to receive any cash from
the participant's account under the Plan in the event of such participant's
death prior to exercise of the option. If a participant is married and the
designated beneficiary is not the spouse, spousal consent shall be required for
such designation to be effective.
(b) Such designation of beneficiary may be changed by the
participant at any time by written notice. In the event of the death of a
participant and in the absence of a beneficiary validly designated under the
Plan who is living at the time of such participant's death, the Company shall
deliver such shares and/or cash to the executor or administrator of the estate
of the participant, or if no such executor or administrator has been appointed
(to the knowledge of the Company), the Company, in its discretion, may deliver
such shares and/or cash to the spouse or to any one or more dependents or
relatives of the participant, or if no spouse, dependent or relative is known to
the Company, then to such other person as the Company may designate.
15. Transferability. Neither payroll deductions credited to a
participant's account nor any rights with regard to the exercise of an option or
to receive shares under the Plan may be assigned, transferred, pledged or
otherwise disposed of in any way (other than by will, the laws of descent and
distribution or as provided in Section 14 hereof) by the participant. Any such
attempt at assignment, transfer, pledge or other disposition shall be without
effect, except that the Company may treat such act as an election to withdraw
funds from an Offering Period in accordance with Section 10 hereof.
16. Use of Funds. All payroll deductions received or held by the
Company under the Plan may be used by the Company for any corporate purpose, and
the Company shall not be obligated to segregate such payroll deductions.
17. Reports. Individual accounts will be maintained for each
participant in the Plan. Statements of account will be given to participating
Employees at least annually, which statements will set forth the amounts of
payroll deductions, the Purchase Price, the number of shares purchased and the
remaining cash balance, if any.
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<PAGE> 8
18. Adjustments Upon Changes in Capitalization.
(a) Changes in Capitalization. Subject to any required action
by the shareholders of the Company, the Reserves as well as the price per share
of Common Stock covered by each option under the Plan which has not yet been
exercised shall be proportionately adjusted for any increase or decrease in the
number of issued shares of Common Stock resulting from a stock split, reverse
stock split, stock dividend, combination or reclassification of the Common
Stock, or any other increase or decrease in the number of shares of Common Stock
effected without receipt of consideration by the Company; provided, however,
that conversion of any convertible securities of the Company shall not be deemed
to have been "effected without receipt of consideration". Such adjustment shall
be made by the Board, whose determination in that respect shall be final,
binding and conclusive. Except as expressly provided herein, no issuance by the
Company of shares of stock of any class, or securities convertible into shares
of stock of any class, shall affect, and no adjustment by reason thereof shall
be made with respect to, the number or price of shares of Common Stock subject
to an option.
(b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, the Offering Period will terminate
immediately prior to the consummation of such proposed action, unless otherwise
provided by the Board.
(c) Merger or Asset Sale. In the event of a proposed sale of
all or substantially all of the assets of the Company, or the merger of the
Company with or into another corporation, each option under the Plan shall be
assumed or an equivalent option shall be substituted by such successor
corporation or a parent or subsidiary of such successor corporation, unless the
Board determines, in the exercise of its sole discretion and in lieu of such
assumption or substitution, to shorten the Offering Period then in progress by
setting a new Exercise Date (the "New Exercise Date") or to cancel each
outstanding right to purchase and refund all sums collected from participants
during the Offering Period then in progress. If the Board shortens the Offering
Period then in progress in lieu of assumption or substitution in the event of a
merger or sale of assets, the Board shall notify each participant in writing, at
least ten (10) business days prior to the New Exercise Date, that the Exercise
Date for his option has been changed to the New Exercise Date and that his
option will be exercised automatically on the New Exercise Date, unless prior to
such date he has withdrawn from the Offering Period as provided in Section 10
hereof. For purposes of this paragraph, an option granted under the Plan shall
be deemed to be assumed if, following the sale of assets or merger, the option
confers the right to purchase, for each share of option stock subject to the
option immediately prior to the sale of assets or merger, the consideration
(whether stock, cash or other securities or property) received in the sale of
assets or merger by holders of Common Stock for each share of Common Stock held
on the effective date of the transaction (and if such holders were offered a
choice of consideration, the type of consideration chosen by the holders of a
majority of the outstanding shares of Common Stock); provided, however, that if
such consideration received in the sale of assets or merger was not solely
common stock of the successor corporation or its parent (as defined in Section
424(e) of the Code), the Board may, with the consent of the successor
corporation, provide for the consideration to be received upon exercise of the
option to be solely common stock of the
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<PAGE> 9
successor corporation or its parent equal in fair market value to the per share
consideration received by holders of Common Stock and the sale of assets or
merger.
The Board may, if it so determines in the exercise of its sole
discretion, also make provision for adjusting the Reserves, as well as the price
per share of Common Stock covered by each out standing option, in the event the
Company effects one or more reorganizations, recapitalization, rights offerings
or other increases or reductions of shares of its outstanding Common Stock, and
in the event of the Company being consolidated with or merged into any other
corporation.
19. Amendment or Termination.
(a) The Board of Directors of the Company may at any time and
for any reason terminate or amend the Plan. Except as provided in Section 18
hereof, no such termination can affect options previously granted, provided that
an Offering Period may be terminated by the Board of Directors on any Exercise
Date if the Board determines that the termination of the Plan is in the best
interests of the Company and its shareholders. Except as provided in Section 18
hereof, no amendment may make any change in any option theretofore granted which
adversely affects the rights of any participant. To the extent necessary to
comply with Rule 16b-3 or under Section 423 of the Code (or any successor rule
or provision or any other applicable law or regulation), the Company shall
obtain shareholder approval in such a manner and to such a degree as required.
(b) Without shareholder consent and without regard to whether
any participant rights may be considered to have been "adversely affected," the
Board (or its committee) shall be entitled to change the Offering Periods, limit
the frequency and/or number of changes in the amount withheld during an Offering
Period, establish the exchange ratio applicable to amounts withheld in a
currency other than U.S. dollars, permit payroll withholding in excess of the
amount designated by a participant in order to adjust for delays or mistakes in
the Company's processing of properly completed withholding elections, establish
reasonable waiting and adjustment periods and/or accounting and crediting
procedures to ensure that amounts applied toward the purchase of Common Stock
for each participant properly correspond with amounts withheld from the
participant's Compensation, and establish such other limitations or procedures
as the Board (or its committee) determines in its sole discretion advisable
which are consistent with the Plan.
20. Notices. All notices or other communications by a participant to
the Company under or in connection with the Plan shall be deemed to have been
duly given when received in the form specified by the Company at the location,
or by the person, designated by the Company for the receipt thereof.
21. Conditions Upon Issuance of Shares. Shares shall not be issued with
respect to an option unless the exercise of such option and the issuance and
delivery of such shares pursuant thereto shall comply with all applicable
provisions of law, domestic or foreign, including, without limitation, the
Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as
amended, the rules and regulations promulgated thereunder, and the requirements
of any stock exchange upon
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<PAGE> 10
which the shares may then be listed, and shall be further subject to the
approval of counsel for the Company with respect to such compliance.
As a condition to the exercise of an option, the Company may require
the person exercising such option to represent and warrant at the time of any
such exercise that the shares are being purchased only for investment and
without any present intention to sell or distribute such shares if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned applicable provisions of law.
22. Term of Plan. The Plan shall become effective upon the earlier to
occur of its adoption by the Board of Directors or its approval by the
shareholders of the Company. It shall continue in effect for a term of ten (10)
years unless sooner terminated under Section 19 hereof.
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<PAGE> 11
EXHIBIT A
INTROGEN THERAPEUTICS, INC.
EMPLOYEE STOCK PURCHASE PLAN
SUBSCRIPTION AGREEMENT
_____ Original Application Enrollment Date: __________
_____ Change in Payroll Deduction Rate
_____ Change of Beneficiary(ies)
1. _____________________________________ hereby elects to participate in
the Introgen Therapeutics, Inc. Employee Stock Purchase Plan (the
"Employee Stock Purchase Plan") and subscribes to purchase shares of
the Company' s Common Stock in accordance with this Subscription
Agreement and the Employee Stock Purchase Plan.
2. I hereby authorize payroll deductions from each paycheck in the amount
of ____% of my Compensation on each payday (not to exceed 10%) during
the Offering Period in accordance with the Employee Stock Purchase
Plan. (Please note that no fractional percentages are permitted.)
3. I understand that said payroll deductions shall be accumulated for the
purchase of shares of Common Stock at the applicable Purchase Price
determined in accordance with the Employee Stock Purchase Plan. I
understand that if I do not withdraw from an Offering Period, any
accumulated payroll deductions will be used to automatically exercise
my option.
4. I have received a copy of the complete "Employee Stock Purchase Plan."
I understand that my participation in the Employee Stock Purchase Plan
is in all respects subject to the terms of the Plan. I understand that
the grant of the option by the Company under this Subscription
Agreement is subject to obtaining shareholder approval of the Employee
Stock Purchase Plan.
5. Shares purchased for me under the Employee Stock Purchase Plan should
be issued in the name(s) of (Employee or Employee and Spouse Only):
6. I understand that if I dispose of any shares received by me pursuant to
the Plan within 2 years after the Enrollment Date (the first day of the
Offering Period during which I purchased such shares), I will be
treated for federal income tax purposes as having received ordinary
income at the time of such disposition in an amount equal to the excess
of the fair market value of the shares at the time such shares were
purchased by me over the price which I paid for the shares. I hereby
agree to notify the Company in writing within 30 days after the date of
any disposition of shares and I will make adequate provision for
Federal, state or other tax withholding obligations, if any, which
arise upon the disposition of the Common Stock. The
<PAGE> 12
Company may, but will not be obligated to, withhold from my
compensation the amount necessary to meet any applicable withholding
obligation including any withholding necessary to make available to the
Company any tax deductions or benefits attributable to sale or early
disposition of Common Stock by me. If I dispose of such shares at any
time after the expiration of the 2-year holding period, I understand
that I will be treated for federal income tax purposes as having
received income only at the time of such disposition, and that such
income will be taxed as ordinary income only to the extent of an amount
equal to the lesser of (1) the excess of the fair market value of the
shares at the time of such disposition over the purchase price which I
paid for the shares, or (2) 15% of the fair market value of the shares
on the first day of the Offering Period. The remainder of the gain, if
any, recognized on such disposition will be taxed as capital gain.
7. I hereby agree to be bound by the terms of the Employee Stock Purchase
Plan. The effectiveness of this Subscription Agreement is dependent
upon my eligibility to participate in the Employee Stock Purchase Plan.
8. In the event of my death, I hereby designate the following as my
beneficiary(ies) to receive all payments and shares due me under the
Employee Stock Purchase Plan:
NAME: (Please print) _____________________________________________
(First) (Middle) (Last)
_________________________ ____________________________________
Relationship
____________________________________
(Address)
EMPLOYEE NAME: (Please print) ___________________________________________
(First) (Middle) (Last)
____________________________________
____________________________________
(Address)
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<PAGE> 13
Employee's Social
Security Number: ___________________________________
Employee's Address: __________________________________
__________________________________
__________________________________
I UNDERSTAND THAT THIS SUBSCRIPTION AGREEMENT SHALL REMAIN IN EFFECT THROUGHOUT
SUCCESSIVE OFFERING PERIODS UNLESS TERMINATED BY ME.
Dated: ___________________ __________________________________
Signature of Employee
__________________________________
Spouse's Signature (If beneficiary
other than spouse)
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<PAGE> 14
EXHIBIT B
INTROGEN THERAPEUTICS, INC.
EMPLOYEE STOCK PURCHASE PLAN
SECTION 16 INSIDER IRREVOCABLE ELECTION AND WAIVER
To: Plan Administrator
With respect to the purchase period ending , 19 (the "Next Period")
under the Company's Employee Stock Purchase Plan (the "Plan") and for all future
periods, I hereby irrevocably elect:
(i) to have amounts withheld from each of my paychecks during such
period at the rate of % of my compensation (as defined
in the Plan) per pay period (minimum % and maximum
%); AND
(ii) to purchase shares at the end of the period designated above
with all amounts deducted from my pay and held in my account
under the Plan at the end of such period.
I hereby waive any rights that I would otherwise have under the Plan to withdraw
from, or to change my rate or amount of payroll deductions, during such period.
I understand that this election and waiver must be made prior to the
commencement of the Next Period. I further understand that this irrevocable
election may only be terminated by an irrevocable notice of termination which
takes effect at least six months after it has been made.
Signed:_________________________
Name:___________________________
Date:___________________________
<PAGE> 15
EXHIBIT C
INTROGEN THERAPEUTICS, INC.
EMPLOYEE STOCK PURCHASE PLAN
NOTICE OF WITHDRAWAL
The undersigned participant in the Offering Period of the Introgen
Therapeutics, Inc. Employee Stock Purchase Plan which began on ___________
19____ (the "Enrollment Date") hereby notifies the Company that he or she hereby
withdraws from the Offering Period. He or she hereby directs the Company to pay
to the undersigned as promptly as practicable all the payroll deductions
credited to his or her account with respect to such Offering Period. The
undersigned understands and agrees that his or her option for such Offering
Period will be automatically terminated. The undersigned understands further
that no further payroll deductions will be made for the purchase of shares in
the current Offering Period and the undersigned shall be eligible to participate
in succeeding Offering Periods only by delivering to the Company a new
Subscription Agreement.
Name and Address of Participant:
_______________________________
_______________________________
_______________________________
Signature:
_______________________________
Date: _________________________
<PAGE> 1
Exhibit 10.5
INTRON THERAPEUTICS, INC.
STOCK PURCHASE AGREEMENT
THIS AGREEMENT is made effective as of the 23rd day of August, 1994,
between Intron Therapeutics, Inc., a Delaware corporation (the "Company") and
Texas Biomedical Development Partners (the "Purchaser").
1. Sale of Stock. The Company hereby agrees to sell to the Purchaser
and the Purchaser hereby agrees to purchase an aggregate of 3,011,423 shares of
the Company's Series A Preferred Stock with the rights, preferences and
privileges set forth in the Company's Certificate of Incorporation attached
hereto as Exhibit A (the "Shares") in exchange for all prior contributions to
capital which contributions amount to $784,302.07.
2. Payment of Purchase Price. The purchase price for the Shares is
deemed paid as of the date of the contribution to capital.
3. Issuance of Shares. Promptly following the execution of this
Agreement, the Company shall issue and deliver to the Purchaser duly executed
certificates evidencing the Shares in the name of the Purchaser.
4. Investment Representations.
(a) In connection with the purchase of the Shares, the Purchaser
represents to the Company the following:
(i) He is aware of the Company's business affairs and
financial condition and has acquired sufficient information about the Company to
reach an informed and knowledgeable decision to acquire the securities. He is
purchasing these securities for investment for his own account only and not with
a view to, or for resale in connection with, any "distribution" thereof within
the meaning of the Securities Act of 1933 (the "Securities Act").
(ii) He understands that the securities have not been
registered under the Securities Act by reason of a specific exemption therefrom,
which exemption depends upon, among other things, the bona fide nature of his
investment intent as expressed herein. In this connection, he understands that,
in view of the Securities and Exchange Commission (the "Commission"), the
statutory basis for such exemption may not be present if his representations
meant that his present intention was to hold these securities for a minimum
capital gains period under the tax statutes, for a deferred sale, for a market
rise, for a sale if the market does not rise, or for a year or any other fixed
period in the future.
(iii) He further acknowledges, agrees and understands that
the securities must be held indefinitely unless they are subsequently registered
under the Securities Act or an exemption from such registration is available. He
further acknowledges, agrees and understands that the Company is under no
obligation to register the securities. He understands and agrees that the
<PAGE> 2
certificate evidencing the securities will be imprinted with a legend which
prohibits the transfer of the securities unless they are registered or such
registration is not required in the opinion of counsel for the Company.
(iv) He is aware of the adoption of Rule 144 by the
Commission, promulgated under the Securities Act, which permits limited public
resale of securities acquired in a non-public offering subject to the
satisfaction of certain conditions.
(v) He further acknowledges that in the event all of the
requirements of Rule 144 are not met, compliance with Regulation A or some other
registration exemption will be required; and that although Rule 144 is not
exclusive, the staff of the Commission has expressed its opinion that persons
proposing to sell private placement securities other than in a registered
offering and other than pursuant to Rule 144 will have a substantial burden of
proof in establishing that an exemption from registration is available for such
offers or sales and that such persons and the brokers who participate in the
transactions do so at their own risk.
(b) The Purchaser agrees, in connection with the Company's
initial public offering of the Company's securities, (i) not to sell, make short
sales of, loan, grant any options for the purchase of, or otherwise dispose of
any shares of Common Stock of the Company held by the Purchaser (other than
those shares included in the registration) without the prior written consent of
the Company or the underwriters managing such initial underwritten public
offering of the Company's securities for one hundred eighty (180) days from the
effective date of such registration and (ii) further agrees to execute any
agreement reflecting (i) above as may be requested by the underwriters at the
time of the public offering.
5. Legends. The share certificate evidencing the Shares issued
hereunder shall be endorsed with the following legends:
(a) "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN
ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION
WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR
DISPOSITION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL SATISFACTORY TO
THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE
SECURITIES ACT OF 1933".
6. Adjustment for Stock Split. All references to the number of Shares
and the purchase price of the Shares in this Agreement shall be appropriately
adjusted to reflect any stock split, stock dividend or other change in the
Shares which may be made by the Company after the date of this Agreement.
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<PAGE> 3
7. General Provisions.
(a) This Agreement shall be governed by the internal laws of the
State of California. This Agreement represents the entire agreement between the
parties with respect to the purchase of Common Stock by the Purchaser, may only
be modified or amended in writing signed by both parties and satisfies all of
the Company's obligations to the Purchaser with regard to the issuance or sale
of securities.
(b) Any notice, demand or request required or permitted to be
given by either the Company or the Purchaser pursuant to the terms of this
Agreement shall be in writing and shall be deemed given when delivered
personally or deposited in the U.S. mail, First Class with postage prepaid, and
addressed to the parties at the addresses of the parties set forth at the end of
this Agreement or such other address as a party may request by notifying the
other in writing.
(c) The rights and benefits of the Company under this Agreement
shall be transferable to any one or more persons or entities, and all covenants
and agreements hereunder shall inure to the benefit of, and be enforceable by
the Company's successors and assigns. The rights and obligations of the
Purchaser under this Agreement may only be assigned with the prior written
consent of the Company.
(d) Either party's failure to enforce any provision or provisions
of this Agreement shall not in any way be construed as a waiver of any such
provision or provisions, nor prevent that party thereafter from enforcing each
and every other provision of this Agreement. The rights granted both parties
herein are cumulative and shall not constitute a waiver of either party's right
to assert all other legal remedies available to it under the circumstances.
(e) The Purchaser agrees upon request to execute any further
documents or instruments necessary or desirable to carry out the purposes or
intent of this Agreement.
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<PAGE> 4
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the day and year first set forth above.
COMPANY: PURCHASER:
INTRON THERAPEUTICS, INC. TEXAS BIOMEDICAL
a Delaware corporation DEVELOPMENT PARTNERS
/s/ TIMOTHY R. KELLY /s/ DAVID G. NANCE
- ----------------------------------- ------------------------------------
Timothy R. Kelly, David G. Nance, Managing Partner
Chief Financial Officer
- ----------------------------------- ------------------------------------
(Address) (Address)
- ----------------------------------- ------------------------------------
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<PAGE> 1
EXHIBIT 10.6
INTROGEN THERAPEUTICS, INC.
SERIES B PREFERRED STOCK
PURCHASE AGREEMENT
301 Congress Avenue
Suite 2025
Austin, Texas 78701
October 7, 1994
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
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1. Purchase and Sale of Stock..................................................................................1
1.1 Authorization...................................................................................1
1.2 Sales of Preferred..............................................................................1
1.3 Seven Closings..................................................................................1
2. Closing Dates; Delivery.....................................................................................2
2.1 First Closing Date..............................................................................2
2.2 Second Closing Date.............................................................................2
2.3 Third Closing Date..............................................................................2
2.4 Fourth Closing Date.............................................................................2
2.5 Fifth Closing Date..............................................................................3
2.6 Sixth Closing Date..............................................................................3
2.7 Seventh Closing Date............................................................................3
2.8 Delivery........................................................................................4
3. Representations and Warranties of the Company...............................................................4
3.1 Organization, Good Standing and Qualification...................................................4
3.2 Capitalization..................................................................................4
3.3 Subsidiaries....................................................................................5
3.4 Authorization...................................................................................5
3.5 Valid Issuance of Preferred and Common Stock....................................................5
3.6 Liabilities.....................................................................................6
3.7 Governmental Consents...........................................................................6
3.8 Litigation......................................................................................6
3.9 Employees.......................................................................................6
3.10 Patents and Trademarks..........................................................................7
3.11 Compliance with Other Instruments...............................................................7
3.12 Agreements; Action..............................................................................8
3.13 Disclosure......................................................................................8
3.14 Registration Rights.............................................................................8
3.15 Title to Property and Assets....................................................................9
3.16 Financial Statements............................................................................9
3.17 Employee Benefit Plans..........................................................................9
3.18 Tax Returns, Payments and Elections.............................................................9
3.19 Insurance......................................................................................10
3.20 Labor Agreements and Actions...................................................................10
3.21 Real Property Holding Corporation..............................................................10
3.22 Offering.......................................................................................10
</TABLE>
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<TABLE>
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4. Representations and Warranties of the Investor.............................................................11
4.1 Authorization..................................................................................11
4.2 Purchase Entirely for Own Account..............................................................11
4.3 Disclosure of Information......................................................................11
4.4 Investment Experience..........................................................................11
4.5 Restricted Securities..........................................................................11
4.6 Further Limitations on Disposition.............................................................12
4.7 Legends........................................................................................12
5. Conditions to First Closing of Investor....................................................................13
5.1 Representations and Warranties Correct.........................................................13
5.2 Covenants......................................................................................13
5.3 Compliance Certificate.........................................................................13
5.4 Blue Sky.......................................................................................13
5.5 Restated Certificate...........................................................................13
5.6 Directors......................................................................................13
5.7 Collaboration Agreements.......................................................................13
6. Conditions to First Closing of Company.....................................................................13
6.1 Representations................................................................................14
6.2 Blue Sky.......................................................................................14
6.3 Restated Certificate...........................................................................14
7. Conditions to Second Closing of Investor...................................................................14
7.1 [*]............................................................................................14
7.2 Representations and Warranties.................................................................14
7.3 Covenants......................................................................................14
7.4 Compliance Certificate.........................................................................14
7.5 Collaboration Agreements.......................................................................14
7.6 Blue Sky.......................................................................................14
8. Conditions to Second Closing of Company....................................................................15
8.1 Representations................................................................................15
8.2 Blue Sky.......................................................................................15
8.3 Collaboration Agreements.......................................................................15
9. Conditions to Third Closing of Investors...................................................................15
9.1 [*]............................................................................................15
9.2 Representations and Warranties.................................................................15
9.3 Covenants......................................................................................15
</TABLE>
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(continued)
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9.4 Compliance Certificate.........................................................................15
9.5 Blue Sky.......................................................................................16
9.6 Collaboration Agreements.......................................................................16
10. Conditions to Third Closing of Company.....................................................................16
10.1 Representations................................................................................16
10.2 Blue Sky.......................................................................................16
10.3 Collaboration Agreements.......................................................................16
11. Conditions to Fourth Closing of Investor...................................................................16
11.1 [*]............................................................................................16
11.2 Representations and Warranties.................................................................16
11.3 Covenants......................................................................................16
11.4 Compliance Certificate.........................................................................17
11.5 Blue Sky.......................................................................................17
11.6 Collaboration Agreements.......................................................................17
12. Conditions to Fourth Closing of Company....................................................................17
12.1 Representations................................................................................17
12.2 Blue Sky.......................................................................................17
12.3 Collaboration Agreements.......................................................................17
13. Conditions to Fifth Closing of Investor....................................................................17
13.1 [*]............................................................................................17
13.2 Representations and Warranties.................................................................17
13.3 Covenants......................................................................................18
13.4 Compliance Certificate.........................................................................18
13.5 Blue Sky.......................................................................................18
13.6 Collaboration Agreements.......................................................................18
14. Conditions to Fifth Closing of Company.....................................................................18
14.1 Representations................................................................................18
14.2 Blue Sky.......................................................................................18
14.3 Collaboration Agreements.......................................................................18
</TABLE>
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TABLE OF CONTENTS
(continued)
<TABLE>
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15. Conditions to Sixth Closing of Investor....................................................................18
15.1 [*]............................................................................................18
15.2 Representations and Warranties.................................................................19
15.3 Covenants......................................................................................19
15.4 Compliance Certificate.........................................................................19
15.5 Blue Sky.......................................................................................19
15.6 Collaboration Agreements.......................................................................19
16. Conditions to Sixth Closing of Company.....................................................................19
16.1 Representations................................................................................19
16.2 Blue Sky.......................................................................................19
16.3 Collaboration Agreements.......................................................................19
17. Conditions to Seventh Closing of Investor..................................................................20
17.1 [*]............................................................................................20
17.2 Representations and Warranties.................................................................20
17.3 Covenants......................................................................................20
17.4 Compliance Certificate.........................................................................20
17.5 Blue Sky.......................................................................................20
17.6 Collaboration Agreements.......................................................................20
18. Conditions to Seventh Closing of Company...................................................................20
18.1 Representations................................................................................20
18.2 Blue Sky.......................................................................................20
18.3 Collaboration Agreements.......................................................................21
19. Additional Covenants and Restrictions Regarding
the Purchase of Series B Preferred.........................................................................21
19.1 Purchase Price Adjustment......................................................................21
19.2 Acceleration of Purchases Upon a Public Offering...............................................21
19.3 [*]............................................................................................22
19.4 Purchase of Common Stock.......................................................................22
19.5 Standstill Agreement...........................................................................22
</TABLE>
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(continued)
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20. Registration Rights........................................................................................22
20.1 Definitions....................................................................................22
20.2 Request for Registration.......................................................................23
20.3 Company Registration...........................................................................25
20.4 Obligations of the Company.....................................................................26
20.5 Furnish Information............................................................................27
20.6 Expenses of Demand Registration................................................................27
20.7 Expenses of Company Registration...............................................................28
20.8 Underwriting Requirements......................................................................28
20.9 Delay of Registration..........................................................................29
20.10 Indemnification................................................................................29
20.11 Reports Under Securities Exchange Act of 1934..................................................31
20.12 Form S-3 Registration..........................................................................32
20.13 Assignment of Registration Rights..............................................................33
20.14 Limitations on Subsequent Registration Rights..................................................33
20.15 "Market Stand-Off" Agreement...................................................................34
20.16 Amendment of Registration Rights
and Information Rights.........................................................................34
20.17 Termination of Registration Rights.............................................................35
21. Covenants of the Company...................................................................................35
21.1 Delivery of Financial Statements...............................................................35
21.2 Assignment of Rights to Financial Information..................................................35
21.3 Termination of Covenants.......................................................................36
22. Investor's Right of First Refusal..........................................................................36
22.1 Right of First Refusal.........................................................................36
23. Investor's Board Representation............................................................................37
23.1 Amendment to Certificate of Incorporation......................................................37
23.2 Scientific Advisory Board......................................................................38
23.3 Post Conversion................................................................................38
24. Miscellaneous..............................................................................................38
24.1 Survival of Warranties.........................................................................38
24.2 Successors and Assigns.........................................................................38
24.3 Governing Law..................................................................................38
</TABLE>
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(continued)
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24.4 Counterparts...................................................................................38
24.5 Titles and Subtitles...........................................................................38
24.6 Notices........................................................................................39
24.7 Finder's Fee...................................................................................39
24.8 Expenses.......................................................................................39
24.9 Amendments and Waivers.........................................................................39
24.10 Severability...................................................................................39
24.11 Aggregation of Stock...........................................................................40
EXHIBITS
A Restated Certificate of Incorporation
B Schedule of Purchases
C Schedule of Exceptions
D-1 Compliance Certificate for the First Closing
D-2 Compliance Certificate for the Second Closing
D-3 Compliance Certificate for the Third Closing
D-4 Compliance Certificate for the Fourth Closing
D-5 Compliance Certificate for the Fifth Closing
D-6 Compliance Certificate for the Sixth Closing
D-7 Compliance Certificate for the Seventh Closing
E Collaboration Agreement (Kras Products)
F Collaboration Agreement (P53 Products)
</TABLE>
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<PAGE> 8
STOCK PURCHASE AGREEMENT
THIS PREFERRED STOCK PURCHASE AGREEMENT is made as of the 7th day of
October 1994, by and between Introgen Therapeutics, Inc., a Delaware corporation
(the "Company"), and Rhone-Poulenc Rorer Pharmaceuticals Inc. (the "Investor").
THE PARTIES HEREBY AGREE AS FOLLOWS:
1. Purchase and Sale of Stock.
1.1 Authorization. The Company will authorize the sale and
issuance of up to 2,114,100 shares of its Series B Preferred Stock (the "Series
B Preferred") having the rights, privileges and preferences as set forth in the
Restated Certificate of Incorporation (the "Restated Certificate") in the form
attached to this Agreement as Exhibit A.
1.2 Sales of Preferred. Subject to the terms and conditions
hereof, the Company will issue and sell to the Investor, and the Investor will
buy from the Company at the Closings (defined below) set forth in column 2 of
the Schedule of Purchases attached hereto as Exhibit B, the number of shares of
Series B Preferred set forth in column 3 of the Schedule of Purchases for the
aggregate purchase price set forth in column 4 of the Schedule of Purchases (The
aggregate shares of Preferred Stock to be sold to the Investor hereunder are
hereinafter referred to as the "Shares"). The Shares shall be issued to the
entity listed in Column 1 of the Schedule of Purchases.
1.3 Seven Closings. The purchase and sale of the Shares shall
occur in seven installments. The first [*] shares (the "First Installment") of
the Company's Series B Preferred to be sold and purchased hereunder shall be
sold at the First Closing (as defined below). An additional [*] shares (the
"Second Installment") of the Company's Series B Preferred to be sold and
purchased here under shall be sold and purchased at the Second Closing (as
defined below). An additional [*] shares (the "Third Installment") of the
Company's Series B Preferred Stock to be sold and purchased hereunder shall be
sold and purchased at the Third Closing (as defined below). An additional [*]
shares (the "Fourth Installment") of the Company's Series B Preferred to be sold
and purchased hereunder shall be sold and purchased at the Fourth Closing (as
defined below). An additional [*] shares (the "Fifth Installment") of the
Company's Series B Preferred to be sold and purchased hereunder shall be sold
and purchased at the Fifth Closing (as defined below). An additional [*] shares
(the "Sixth Installment") of the Company's Series B Preferred to be sold and
purchased
<PAGE> 9
hereunder shall be sold and purchased at the Sixth Closing (defined below). An
additional [*] shares (the "Seventh Installment") of the Company's Series B
Preferred to be sold and purchased hereunder shall be sold and purchased at the
Seventh Closing (defined below). The issuance of the First, Second, Third,
Fourth, Fifth, Sixth and Seventh Installments shall be subject to satisfaction
of the conditions precedent to the First, Second, Third, Fourth, Fifth, Sixth
and Seventh Closings, respectively, described herein.
2. Closing Dates; Delivery.
2.1 First Closing Date. The closing of the First Installment
hereunder shall be held at the offices of Wilson, Sonsini, Goodrich & Rosati, a
Professional Corporation, 650 Page Mill Road, Palo Alto, California 94304 at
3:00 p.m., local time, on October 7, 1994 or at such other time and place upon
which the Company and the Investor shall agree (the "First Closing"). The date
of the First Closing is hereinafter referred to as the "First Closing Date."
2.2 Second Closing Date. The closing of the Second Installment
hereunder will take place as soon as practicable after the Company provides to
the Investor a certificate in the form attached hereto as Exhibit D-2 at such
place as the Company and Investors shall agree (the "Second Closing"). Should
the conditions precedent to the Second Closing specified in Section 7 hereof
not be satisfied or waived in writing by the Investor within twelve months of
the First Closing, the Investor's obligation to buy the Second Installment and
the Company's obligation to sell the Second Installment shall terminate. The
date of the Second Closing is hereinafter referred to as the "Second Closing
Date."
2.3 Third Closing Date. The closing of the Third Installment
hereunder will take place as soon as practicable after the Company provides to
the Investor a certificate in the form attached hereto as Exhibit D-3, at such
place as the Company and the Investors shall agree (the "Third Closing"). Should
the conditions precedent to the Third Closing specified in Section 9 hereof not
be satisfied or waived in writing by the Investor within twenty-four months of
the First Closing, the Investor's obligation to buy the Third Installment and
the Company's obligation to sell the Third Installment shall terminate. The date
of the Third Closing is hereinafter referred to as the "Third Closing Date."
2.4 Fourth Closing Date. The closing of the Fourth Installment
hereunder will take place as soon as practicable after the Company provides to
the Investor a certificate in the form attached hereto as Exhibit D-4, at such
place as the Company and
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<PAGE> 10
the Investor shall agree (the "Fourth Closing"). Should the conditions
precedent to the Fourth Closing specified in Section 11 hereof not be satisfied
or waived in writing by the Investor by January 15, 1997, the Investor's
obligation to buy the Fourth Installment and the Company's obligation to sell
the Fourth Installment shall terminate. The date of the Fourth Closing is
hereinafter referred to as the "Fourth Closing Date."
2.5 Fifth Closing Date. The closing of the Fifth Installment
hereunder will take place as soon as practicable after the Company provides to
the Investor a certificate in the form attached hereto as Exhibit D-4, at such
place as the Company and the Investor shall agree (the "Fifth Closing"). Should
the conditions precedent to the Fifth Closing specified in Section 13 hereof
not be satisfied or waived in writing by the Investor by January 15, 1997, the
Investor's obligation to buy the Fifth Installment and the Company's obligation
to sell the Fifth Installment shall terminate. The date of the Fifth Closing is
hereinafter referred to as the "Fifth Closing Date."
2.6 Sixth Closing Date. The closing of the Sixth Installment
hereunder will take place as soon as practicable after the Company provides to
the Investor a certificate in the form attached hereto as Exhibit D-5, at such
place as the Company and the Investor shall agree (the "Sixth Closing"). Should
the conditions precedent to the Sixth Closing specified in Section 15 hereof
not be satisfied or waived in writing by the Investor by June 15, 1999, the
Investor's obligation to buy the Sixth Installment and the Company's obligation
to sell the Sixth Installment shall terminate. The date of the Sixth Closing is
hereinafter referred to as the "Sixth Closing Date."
2.7 Seventh Closing Date. The closing of the Seventh
Installment hereunder will take place as soon as practicable after the Company
provides to the Investor a certificate in the form attached hereto as Exhibit
D-6, at such place as the Company and the Investor shall agree (the "Seventh
Closing"). Should the conditions precedent to the Seventh Closing specified in
Section 17 hereof not be satisfied or waived in writing by the Investor by June
15, 1999, the Investor's obligation to buy the Seventh Installment and the
Company's obligation to sell the Seventh Installment shall terminate. The date
of the Seventh Closing is hereinafter referred to as the "Seventh Closing Date."
The First Closing, the Second Closing, the Third Closing, the Fourth Closing,
the Fifth Closing, the Sixth Closing and the Seventh Closing shall be
individually referred to as a "Closing" and collectively referred to as
"Closings."
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<PAGE> 11
2.8 Delivery. At each Closing, the Company will deliver to the
Investor at such Closing a certificate, registered in the Investor's name,
representing the number of shares of Series B Preferred to be purchased by the
Investor at such Closing as specified in the Schedule of Purchases, against
payment of the purchase price therefor by check payable to the Company, by
surrender and cancellation of outstanding notes of the Company and/or by wire
transfer per the Company's wiring instructions.
3. Representations and Warranties of the Company. The Company hereby
represents and warrants to the Investor that, except as set forth on a Schedule
of Exceptions attached hereto as Exhibit C, which exceptions shall be deemed to
be representations and warranties as if made hereunder:
3.1 Organization, Good Standing and Qualification. The Company
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. The Company has all requisite corporate power and
authority to own and operate its properties and assets, to carry on its business
as now conducted and as proposed to be conducted, to enter into this Agreement
and to sell the Shares and carry out the other transactions contemplated
hereunder. The Company is duly qualified to transact business and is in good
standing in each jurisdiction in which the failure so to qualify would have a
material adverse effect on its business or properties.
3.2 Capitalization. The authorized capital of the Company
consists, or will consist prior to the First Closing, of:
(a) 5,125,523 shares of Preferred Stock
("Preferred Stock"), of which 3,011,423 shares have been designated Series A
Preferred Stock and 2,114,100 shares have been designated Series B Preferred
Stock. Prior to the First Closing, there will be 3,011,423 shares of issued and
outstanding Series A Preferred Stock and no issued or outstanding shares of
Series B Preferred Stock. The rights, privileges and preferences of the Series A
and the Series B Preferred Stock are as stated in the Restated Certificate.
(b) 10,000,000 shares of Common Stock ("Common
Stock"), of which 2,036,132 shares are issued and outstanding.
(c) Except as set forth in this Agreement and
the Exhibits hereto, there are no outstanding options, warrants, rights
(including conversion or preemptive rights) or agreements for the purchase or
acquisition from the Company of any shares of its capital stock or any other
securities of the Company.
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<PAGE> 12
(d) Except as set forth in this Agreement and
the Exhibits hereto, the Company is not a party to or is not subject to any
agreement or understanding relating to, and to the Company's knowledge there is
no agreement or understanding between any persons and/or entities which affects
or relates to, the voting of shares of capital stock of the Company or the
giving of written consents by a shareholder or director of the Company.
3.3 Subsidiaries. The Company does not presently own or
control, directly or indirectly, any interest in any other corporation,
association, or other business entity.
3.4 Authorization. All corporate action on the part of the
Company, its officers, directors and stockholders necessary for the
authorization, execution and delivery of this Agreement, the performance of all
obligations of the Company hereunder and the authorization, issuance (or
reservation for issuance) and delivery of the Series B Preferred sold hereunder
and the Common Stock issuable upon conversion of the Series B Preferred has been
taken or will be taken prior to the Closing. This Agreement constitutes a valid
and legally binding obligation of the Company, enforceable in accordance with
its terms, except as such enforcement is limited by bankruptcy, insolvency and
similar laws affecting creditor rights.
3.5 Valid Issuance of Preferred and Common Stock.
(a) The Series B Preferred purchased by the
Investors hereunder, when issued, sold and delivered in accordance with the
terms hereof for the consideration expressed herein, will be duly and validly
issued, fully paid and nonassessable and not subject to any preemptive rights,
rights of first refusal or other similar rights imposed by the Company, and will
be issued in compliance with all applicable federal and state securities laws.
The Common Stock issuable upon conversion of the Series B Preferred has been
duly and validly reserved for issuance and, upon issuance in accordance with the
terms of the Restated Certificate, shall be duly and validly issued, fully paid
and nonassessable, free of any liens or encumbrances and not subject to any
preemptive rights, rights of first refusal or other similar rights imposed by
the Company, and issued in compliance with all applicable federal and state
securities laws.
(b) The outstanding shares of Common Stock and
Series A Preferred Stock are all duly and validly authorized and issued, fully
paid and nonassessable, and were issued in compliance with all applicable
federal and state securities laws.
-5-
<PAGE> 13
3.6 Liabilities. The Company has not incurred any indebtedness
for money borrowed or any other liabilities (absolute, accrued or contingent) in
excess of $10,000 individually or $50,000 in the aggregate.
3.7 Governmental Consents. No consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with, any federal, state or local governmental authority on the part of
the Company is required in connection with the consummation of the transactions
contemplated by this Agreement, except for registration or qualification, or
taking such action to secure exemption from such registration or qualification,
under applicable state or federal securities laws, which actions shall be taken
on a timely basis as may be required.
3.8 Litigation. There is no action, suit, proceeding or
investigation pending or currently threatened against the Company which
questions the validity of this Agreement or the right of the Company to enter
into it, or to consummate the transactions contemplated hereby, or which might
result, either individually or in the aggregate, in any adverse changes in the
assets, condition, affairs or prospects of the Company, financially or
otherwise, or any change in the current equity ownership of the Company, nor is
the Company aware that there is any basis for the foregoing. The foregoing
includes, without limitation, actions pending or threatened (on any basis
therefor known to the Company) involving the prior employment of any of the
Company's employees, their use in connection with the Company's business of any
information or techniques allegedly proprietary to any of their former
employers, or their obligations under any agreements with prior employers. The
Company is not a party or subject to the provisions of any order, writ,
injunction, judgment or decree of any court or government agency or
instrumentality. There is no action, suit, proceeding or investigation by the
Company currently pending or which the Company intends to initiate.
3.9 Employees. The Company is not aware, nor has a third party
asserted to the Company, that any of its employees is obligated under any
contract (including licenses, covenants or contracts of any nature) or other
agreement, or subject to any judgment, decree or order of any court or
administrative agency, that would interfere with the use of his best efforts to
promote the interests of the Company or that would conflict with the Company's
business as proposed to be conducted. Neither the execution nor delivery of this
Agreement, nor the carrying on of the Company's business by the employees of the
Company, nor the conduct of the Company's business as proposed, will, to the
Company's knowledge, conflict with or result in a breach of the
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<PAGE> 14
terms, conditions or provisions of, or constitute a default under, any contract,
covenant or instrument under which any of such employees is now obligated.
3.10 Patents and Trademarks. The Company has sufficient title
and ownership of all trademarks, service marks, trade names, copyrights, trade
secrets, information, proprietary rights, processes, and, to its knowledge,
patents, necessary for its business as now conducted and as proposed to be
conducted without any conflict with or infringement of the rights of others.
There are no outstanding options, licenses, or agreements of any kind relating
to the foregoing, nor is the Company bound by or a party to any options,
licenses or agreements of any kind with respect to the patents, trademarks,
service marks, trade names, copyrights, trade secrets, licenses, information,
proprietary rights and processes of any other person or entity. The Company has
not received any communications alleging that the Company has violated or, by
conducting its business as proposed, would violate any of the patents,
trademarks, service marks, trade names, copyrights or trade secrets or other
proprietary rights of any other person or entity.
3.11 Compliance with Other Instruments.
(a) The Company is not in violation or default
of any provisions of its Certificate of Incorporation or Bylaws or of any
instrument, judgment, order, writ, decree or contract to which it is a party or
by which it is bound or, to its knowledge, of any provision of federal or state
statute, rule or regulation applicable to the Company, and, to its knowledge,
there is no such provision which materially and adversely affects the business
of the Company or its properties or assets. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby will not result in any such violation or be in conflict with
or constitute, with or without the passage of time and giving of notice, either
a default under any such provision, instrument, judgment, order, writ, decree or
contract or an event which results in the creation of any lien, charge or
encumbrance upon any assets of the Company.
(b) The Company has avoided every condition,
and has not performed any act, the occurrence of which would result in the
Company's loss of any right granted under any license, distribution or other
agreement.
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<PAGE> 15
3.12 Agreements; Action.
(a) Except for agreements explicitly contemplated
hereby, there are no agreements, understandings, transactions or proposed
transactions between the Company and any of its officers, directors, affiliates,
or any affiliate thereof, and none of any such individuals or entities have any
interest in any party to any such agreement, understanding, transaction or
proposed transaction.
(b) There are no agreements, understandings,
instruments, contracts transactions or proposed transactions to which the
Company is a party or by which it is bound which involve (i) obligations of, or
payments to the Company in excess of $5,000, or (ii) the license of any patent,
copyright, trade secret or other proprietary right to or from the Company.
(c) The Company has not (i) declared or paid any
dividends, or authorized or made any distribution upon or with respect to any
class or series of its capital stock, (ii) incurred any indebtedness for money
borrowed or incurred any other liabilities individually in excess of $10,000 or
in excess of $50,000 in the aggregate, (iii) made any loans or advances to any
person, other than ordinary advances for travel expenses, or (iv) sold,
exchanged or otherwise disposed of any of its assets or rights, other than in
the ordinary course of business.
(d) The Company is not a party to and is not bound by
any contract, agreement or instrument, or subject to any restriction under its
Restated Certificates or Bylaws, which materially adversely affects its business
as now conducted or as proposed to be conducted.
3.13 Disclosure. The Company has fully provided the Investor
with all the information which the Investor has requested for deciding whether
to purchase the Shares and all information which the Company believes is
reasonably necessary to enable the Investor to make such decision. Neither this
Agreement nor any other statements or certificates made or delivered in
connection herewith or otherwise provided to the Investor, when taken as a
whole, contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements herein or therein not misleading.
3.14 Registration Rights. Except as provided in Section 20 of
this Agreement, the Company has not granted or agreed to grant any registration
rights, including piggyback rights, to any person or entity.
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<PAGE> 16
3.15 Title to Property and Assets. The Company owns its
property and assets free and clear of all mortgages, liens, loans and
encumbrances, except such encumbrances and liens which arise in the ordinary
course of business and do not materially impair the Company's ownership or use
of such property or assets. With respect to the property and assets it leases,
the Company is in compliance with such leases and, to its knowledge, holds a
valid leasehold interest free of any liens, claims or encumbrances.
3.16 Financial Statements. The Company has delivered to the
Investor its unaudited financial statements (balance sheet and profit and loss
statement) at December 31, 1993 and for the fiscal year then ended
(respectively), and its unaudited financial statements (balance sheet and profit
and loss statement) as at and for the eight-month period ended August 31, 1994
(the "Financial Statements"). The Financial Statements have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis throughout the periods indicated and with each other, except that the
Financial Statements are prepared on a cash basis and do not contain all
footnotes required by generally accepted accounting principles. The Financial
Statements fairly present the financial condition and operating results of the
Company as of the dates, and for the periods, indicated therein, subject to
normal audit adjustments. Except as set forth in the Financial Statements and in
the material agreements listed in the Schedule of Exceptions, the Company has no
material liabilities, contingent or otherwise, other than (i) liabilities
incurred in the ordinary course of business subsequent to August 31, 1994 and
(ii) obligations under contracts and commitments incurred in the ordinary course
of business and not required under generally accepted accounting principles to
be reflected in the Financial Statements, which, in both cases, individually or
in the aggregate, are not material to the financial condition or operating
results of the Company. Except as disclosed in the Financial Statements, the
Company is not a guarantor or indemnitor of any indebtedness of any other
person, firm or corporation. The Company maintains and will continue to maintain
a standard system of accounting established and administered in accordance with
generally accepted accounting principles.
3.17 Employee Benefit Plans. The Company does not have any
Employee Benefit Plan as defined in the Employee Retirement Income Security Act
of 1974.
3.18 Tax Returns, Payments and Elections. The Company has
filed all tax returns and reports as required by law. These returns and reports
are true and correct in all material respects. The Company has not elected
pursuant to the Internal Revenue Code
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<PAGE> 17
of 1986, as amended ("Code"), to be treated as a Subchapter S corporation or a
collapsible corporation pursuant to Section 341(f) or Section 1362(a) of the
Code, nor has it made any other elections pursuant to the Code (other than
elections which relate solely to methods of accounting, depreciation or
amortization) which would have a material effect on the Company, its financial
condition, its business as presently conducted or proposed to be conducted or
any of its properties or material assets.
3.19 Insurance. The Company has in full force and effect fire,
casualty and liability insurance policies, with extended coverage, sufficient in
amount (subject to reasonable deductibles) to allow it to replace any of its
properties that might be damaged or destroyed.
3.20 Labor Agreements and Actions. The Company is not bound by
or subject to (and none of its assets or properties is bound by or subject to)
any written or oral, express or implied, contract, commitment or arrangement
with any labor union, and no labor union has requested or, to the knowledge of
the Company, has sought to represent any of the employees, representatives or
agents of the Company. There is no strike or other labor dispute involving the
Company pending, or to the knowledge of the Company threatened, which could have
a material adverse effect on the assets, properties, financial condition,
operating results, or business of the Company (as such business is presently
conducted and as it is proposed to be conducted), nor is the Company aware of
any labor organization activity involving its employees. The Company is not
aware that any officer or key employee, or that any group of key employees,
intends to terminate their employment with the Company, nor does the Company
have a present intention to terminate the employment of any of the foregoing.
The employment of each officer and employee of the Company is terminable at the
will of the Company.
3.21 Real Property Holding Corporation. The Company is not,
and has not been at any time a "United States real property holding corporation"
as defined in Section 897 of the Internal Revenue Code of 1986, as amended.
3.22 Offering. Subject in part on the accuracy of the
Investor's representations set forth in Section 4 of this Agreement, the offer,
sale and issuance of the Shares to be issued in conformity with the terms of
this Agreement constitute transactions exempt from the registration requirements
of Section 5 of the Securities Act of 1933, as amended (the "Act"), and from all
applicable state registration or qualification requirements.
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<PAGE> 18
4. Representations and Warranties of the Investor. The Investor hereby
represents and warrants the following:
4.1 Authorization. This Agreement constitutes its valid and
legally binding obligation, enforceable in accordance with its terms, except as
such enforcement is limited by bankruptcy, insolvency and similar laws
affecting creditor rights.
4.2 Purchase Entirely for Own Account. This Agreement is made
with the Investor in reliance upon the Investor's representation to the
Company, which by the Investor's execution of this Agreement the Investor hereby
confirms, that the Series B Preferred to be received by the Investor and the
Common Stock issuable upon conversion of the Series B Preferred Stock
(collectively, the "Securities") will be acquired for investment for the
Investor's own account, not as a nominee or agent, and not with a view to the
resale or distribution of any part thereof, and that the Investor has no present
intention of selling, granting any participation in, or otherwise distributing
the same. By executing this Agreement, the Investor further represents that the
Investor does not have any contract, undertaking, agreement or arrangement with
any person to sell, transfer or grant participation to such person or to any
third person, with respect to any of the Securities. Each Investor represents
that it has full power and authority to enter into this Agreement.
4.3 Disclosure of Information. The Investor has received all
the information it considers necessary or appropriate for deciding whether to
purchase the Series B Preferred hereunder. The Investor further represents that
it has had an opportunity to ask questions and receive answers from the Company
regarding the terms and conditions of the offering of the Series B Preferred.
The foregoing, however, does not limit or modify the representations and
warranties of the Company in Section 3 of this Agreement or the right of the
Investor to rely thereon.
4.4 Investment Experience. The Investor is an investor in
securities of companies in the development stage and acknowledges that it is
able to fend for itself, and bear the economic risk of its investment and has
such knowledge and experience in financial or business matters that it is
capable of evaluating the merits and risks of the investment in the Series B
Preferred hereunder.
4.5 Restricted Securities. The Investor understands that the
shares of Series Preferred it is purchasing are characterized as "restricted
securities" under the federal securities laws inasmuch as they are being
acquired from the Company in a trans-
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<PAGE> 19
action not involving a public offering and that under such laws and applicable
regulations such securities may be resold without registration under the Act
only in certain limited circumstances. In this connection, the Investor
represents that it is familiar with Rule 144, as presently in effect, and
understands the resale limitations imposed thereby and by the Act.
4.6 Further Limitations on Disposition. Without in any way
limiting the representations set forth above, the Investor further agrees not to
make any disposition of all or any portion of the Series B Preferred purchased
hereunder or Common Stock issuable upon the conversion of the Series B
Preferred, unless and until:
(a) There is then in effect a Registration
Statement under the Act covering such proposed disposition and such disposition
is made in accordance with such Registration Statement; or
(b) (i) The Investor shall have notified the
Company of the proposed disposition and shall have furnished the Company with a
detailed statement of the circumstances surrounding the proposed disposition,
and (ii) if reasonably requested by the Company, the Investor shall have
furnished the Company with an opinion of counsel, reasonably satisfactory to the
Company, that such disposition will not require registration of such shares
under the Act.
(c) Notwithstanding the provisions of
paragraphs (a) and (b) above, no such registration statement or opinion of
counsel shall be necessary for a transfer by an Investor pursuant to Rule 144 if
such Investor makes the factual representations reasonably requested by the
Company indicating the availability of the exemption provided by Rule 144.
4.7 Legends. It is understood that the certificates evidencing
the Series B Preferred and the Common Stock issuable upon conversion thereof,
may bear one or all of the following legends:
(a) "These securities have not been registered
under the Securities Act of 1933. 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 under the
Securities Act of 1933."
(b) Any legend required by applicable state
securities laws.
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<PAGE> 20
5. Conditions to First Closing of Investor. The Investor's obligation
to purchase the First Installment at the First Closing is, at the option of each
Investor, subject to the fulfillment as of the First Closing Date of the
following conditions:
5.1 Representations and Warranties Correct. The
representations and warranties made by the Company in Section 3 hereof shall be
true and correct in all material respects as of the First Closing Date.
5.2 Covenants. All covenants, agreements and conditions
contained in this Agreement to be performed by the Company on or prior to the
First Closing Date shall have been performed or complied with in all material
respects.
5.3 Compliance Certificate. The Company shall have delivered
to the Investors a certificate of the Company in the form of Exhibit D-1 hereto,
executed by the President of the Company, certifying to the fulfillment of the
conditions specified in Sections 5.1 and 5.2 of this Agreement.
5.4 Blue Sky. The Company shall have obtained all necessary
Blue Sky law permits and qualifications, or have the availability of exemptions
therefrom, required by any state for the offer and sale of the Series B
Preferred and the Common Stock issuable upon conversion thereof.
5.5 Restated Certificate. The Restated Certificate shall have
been filed with the Delaware Secretary of State.
5.6 Directors. The Company will have a Board of Directors with
six members. Upon the Closing the members of the Company's Board of Directors
shall be David G. Nance, Mahendra G. Shah, Ph.D., Austin Long, III, John N.
Kapoor, Ph.D., Mark B. Chandler and Thierry Soursac, M.D., Ph.D.
5.7 Collaboration Agreements. The Company and the Investor
shall have entered into the Collaboration Agreement (Kras Products) in
substantially the form of Exhibit E and the Collaboration Agreement (P53
Products) in substantially the form of Exhibit F (these agreements shall be
collectively referred to as the "Collaboration Agreements").
6. Conditions to First Closing of Company. The Company's obligation to
sell and issue the First Installment at the First Closing is, at the option of
the Company, subject to the fulfillment as of the First Closing Date of the
following conditions:
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<PAGE> 21
6.1 Representations. The representations made by the Investor
in Section 4 hereof shall be true and correct when made, and shall be true and
correct on the First Closing Date.
6.2 Blue Sky. The Company shall have obtained all necessary
Blue Sky law permits and qualifications, or have the availability of exemptions
therefrom, required by any state for the offer and sale of the Series B
Preferred and the Common Stock issuable upon conversion thereof.
6.3 Restated Certificate. The Restated Certificate shall have
been filed with the Delaware Secretary of State.
7. Conditions to Second Closing of Investor. The
Investor's obligation to purchase the Second Installment at the
Second Closing is, at the option of the Investor, subject to the
fulfillment as of the Second Closing Date of the following
conditions:
7.1 [*]
7.2 Representations and Warranties. The Representations and
Warranties made by the Company in Section 3 hereof, as modified or qualified by
the Company in an updated Schedule of Exceptions, shall be true and correct in
all material respects as of the Second Closing Date.
7.3 Covenants. All covenants, agreements and conditions
contained in this Agreement to be performed by the Company on or prior to the
Second Closing Date shall have been performed or complied with in all material
respects.
7.4 Compliance Certificate. The Company shall have delivered
to the Investor a certificate of the Company in the form of Exhibit D-2 hereto,
executed by the President of the Company, dated the Second Closing Date, and
certifying to the fulfillment of the conditions specified in Sections 7.1, 7.2
and 7.3 of this Agreement.
7.5 Collaboration Agreements. The Investor or its affiliate
shall not have delivered notice of termination for each of the Collaboration
Agreements to the Company, pursuant to Section 18.3.1 of such agreements.
7.6 Blue Sky. The Company shall have obtained all necessary
Blue Sky law permits and qualifications, or have the availability of exemptions
therefrom, required by any state for the
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<PAGE> 22
offer and sale of the Series B Preferred and the Common Stock issuable upon
conversion thereof.
8. Conditions to Second Closing of Company. The Company's obligation to
sell and issue the Second Installment at the Second Closing is, at the option of
the Company, subject to the fulfillment as of the Second Closing Date of the
following conditions:
8.1 Representations. The representations made by the Investors
in Section 4 hereof shall be true and correct when made, and shall be true and
correct on the Second Closing Date.
8.2 Blue Sky. The Company shall have obtained all necessary
Blue Sky law permits and qualifications, or have the availability of exemptions
therefrom, required by any state for the offer and sale of the Series B
Preferred and the Common Stock issuable upon conversion thereof.
8.3 Collaboration Agreements. The Investor or its affiliate
shall not have delivered notice of termination for each of the Collaboration
Agreements to the Company.
9. Conditions to Third Closing of Investors. The Investor's obligation
to purchase the Third Installment at the Third Closing is, at the option of the
Investor, subject to the fulfillment as of the Third Closing Date of the
following conditions:
9.1 [*]
9.2 Representations and Warranties. The Representations and
Warranties made by the Company in Section 3 hereof, as modified or qualified by
the Company in an updated Schedule of Exceptions, shall be true and correct in
all respects as of the Third Closing Date.
9.3 Covenants. All covenants, agreements and conditions
contained in this Agreement to be performed by the Company on or prior to the
Third Closing Date shall have been performed or complied with in all material
respects.
9.4 Compliance Certificate. The Company shall have delivered
to the Investors a certificate of the Company in the form of Exhibit D-3 hereto,
executed by the President of the Company, certifying to the fulfillment of the
conditions specified in Sections 9.1, 9.2 and 9.3 of this Agreement.
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<PAGE> 23
9.5 Blue Sky. The Company shall have obtained all necessary
Blue Sky law permits and qualifications, or have the availability of exemptions
therefrom, required by any state for the offer and sale of the Series B
Preferred and the Common Stock issuable upon conversion thereof.
9.6 Collaboration Agreements. The Investor or its affiliate
shall not have delivered notice of termination for each of the Collaboration
Agreements to the Company, pursuant to Section 18.3.1 of such agreements.
10. Conditions to Third Closing of Company. The Company's obligation to
sell and issue the Third Installment at the Third Closing is, at the option of
the Company, subject to the fulfillment as of the Third Closing Date of the
following conditions:
10.1 Representations. The representations made by the
Investors in Section 4 hereof shall be true and correct when made, and shall be
true and correct on the Third Closing Date.
10.2 Blue Sky. The Company shall have obtained all necessary
Blue Sky law permits and qualifications, or have the availability of exemptions
therefrom, required by any state for the offer and sale of the Series B
Preferred Stock and the Common Stock issuable upon conversion thereof.
10.3 Collaboration Agreements. The Investor or its affiliate
shall not have delivered notice of termination for each of the Collaboration
Agreements to the Company.
11. Conditions to Fourth Closing of Investor. The Investor's
obligations to purchase the Fourth Installment at the Fourth Closing is, at the
option of the Investor, subject to the fulfillment as of the Fourth Closing Date
of the following:
11.1 [*]
11.2 Representations and Warranties. The Representations and
Warranties made by the Company in Section 3 hereof, as modified or qualified by
the Company in an updated Schedule of Exceptions, shall be true and correct and
all material respects as of the Fourth Closing Date.
11.3 Covenants. All covenants, agreements and conditions
contained in this Agreement to be performed by the Company on or prior to the
Fourth Closing Date shall have been performed or complied with in all material
respects.
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<PAGE> 24
11.4 Compliance Certificate. The Company shall have delivered
to the Investors a certificate of the Company in the form of Exhibit D-4 hereto,
executed by the President of the Company, certifying to the fulfillment of the
conditions specified in Sections 11.1, 11.2 and 11.3 of this Agreement.
11.5 Blue Sky. The Company shall have obtained all necessary
Blue Sky law permits and qualifications, or have the availability of exemptions
therefrom, required by any state for the offer and sale of the Series B
Preferred and the Common Stock issuable upon conversion thereof.
11.6 Collaboration Agreements. The Investor or its
affiliate shall not have delivered notice of termination for each
of the Collaboration Agreements to the Company, pursuant to Section
18.3.1 of such agreements.
12. Conditions to Fourth Closing of Company. The Company's
obligation to sell and issue the Fourth Installment at the Fourth
Closing is, at the option of the Company, subject to fulfillment as
of the Fourth Closing Date of the following conditions:
12.1 Representations. The representations made by the
Investors in Section 4 hereof shall be true and correct when made, and shall be
true and correct on the Fourth Closing Date.
12.2 Blue Sky. The Company shall have obtained all necessary
Blue Sky law permits and qualifications, or have the availability of exemptions
therefrom, required by any state for the offer and sale of the Series B
Preferred Stock and the Common Stock issuable upon conversion thereof.
12.3 Collaboration Agreements. The Investor or its
affiliate shall not have delivered notice of termination for each
of the Collaboration Agreements to the Company.
13. Conditions to Fifth Closing of Investor. The Investor's
obligations to purchase the Fifth Installment at the Fifth Closing
is, at the option of the Investor, subject to the fulfillment as of
the Fifth Closing Date of the following:
13.1 [*]
13.2 Representations and Warranties. The Representations and
Warranties made by the Company in Section 3 hereof, as modified or qualified by
the Company in an updated Schedule of Exceptions, shall be true and correct and
all material respects as of the Fifth Closing Date.
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<PAGE> 25
13.3 Covenants. All covenants, agreements and conditions
contained in this Agreement to be performed by the Company on or prior to the
Fifth Closing Date shall have been performed or complied with in all material
respects.
13.4 Compliance Certificate. The Company shall deliver to the
Investors a certificate of the Company in the form of Exhibit D-4 hereto,
executed by the President of the Company, dated the Fifth Closing Date, and
certifying to the fulfillment of the conditions specified in Sections 13.1, 13.2
and 13.3 of this Agreement.
13.5 Blue Sky. The Company shall have obtained all necessary
Blue Sky law permits and qualifications, or have the availability of exemptions
therefrom, required by any state for the offer and sale of the Series B
Preferred and the Common Stock issuable upon conversion thereof.
13.6 Collaboration Agreements. The Investor or its affiliate
shall not have delivered notice of termination for each of the Collaboration
Agreements to the Company, pursuant to Section 18.3.1 of such agreements.
14. Conditions to Fifth Closing of Company. The Company's
obligation to sell and issue the Fifth Installment at the Fifth
Closing is, at the option of the Company, subject to fulfillment as
of the Fifth Closing Date of the following conditions:
14.1 Representations. The representations made by the
Investors in Section 4 hereof shall be true and correct when made, and shall be
true and correct on the Fifth Closing Date.
14.2 Blue Sky. The Company shall have obtained all necessary
Blue Sky law permits and qualifications, or have the availability of exemptions
therefrom, required by any state for the offer and sale of the Series B
Preferred Stock and the Common Stock issuable upon conversion thereof.
14.3 Collaboration Agreements. The Investor or its affiliate
shall not have delivered notice of termination for each of the Collaboration
Agreements to the Company.
15. Conditions to Sixth Closing of Investor. The Investor's
obligations to purchase the Sixth Installment at the Sixth Closing
is, at the option of the Investor, subject to the fulfillment as of
the Sixth Closing Date of the following:
15.1 [*]
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<PAGE> 26
15.2 Representations and Warranties. The Representations and
Warranties made by the Company in Section 3 hereof, as modified or qualified by
the Company in an updated Schedule of Exceptions shall be true and correct in
all material respects as of the Sixth Closing Date.
15.3 Covenants. All covenants, agreements and conditions
contained in this Agreement to be performed by the Company on or prior to the
Sixth Closing Date shall have been performed or complied with in all material
respects.
15.4 Compliance Certificate. The Company shall deliver to the
Investors a certificate of the Company in the form of Exhibit D-6 hereto,
executed by the President of the Company, certifying to the fulfillment of the
conditions specified in Sections 15.1, 15.2 and 15.3 of this Agreement.
15.5 Blue Sky. The Company shall have obtained all necessary
Blue Sky law permits and qualifications, or have the availability of exemptions
therefrom, required by any state for the offer and sale of the Series B
Preferred and the Common Stock issuable upon conversion thereof.
15.6 Collaboration Agreements. The Investor or its affiliate
shall not have delivered notice of termination for each of the Collaboration
Agreements to the Company, pursuant to Section 18.3.1 of such agreements.
16. Conditions to Sixth Closing of Company. The Company's obligation to
sell and issue the Sixth Installment at the Sixth Closing is, at the option of
the Company, subject to fulfillment as of the Sixth Closing Date of the
following conditions:
16.1 Representations. The representations made by the
Investors in Section 4 hereof shall be true and correct when made, and shall be
true and correct on the Sixth Closing Date.
16.2 Blue Sky. The Company shall have obtained all necessary
Blue Sky law permits and qualifications, or have the availability of exemptions
therefrom, required by any state for the offer and sale of the Series B
Preferred Stock and the Common Stock issuable upon conversion thereof.
16.3 Collaboration Agreements. The Investor or its affiliate
shall not have delivered notice of termination for each of the Collaboration
Agreements to the Company.
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<PAGE> 27
17. Conditions to Seventh Closing of Investor. The Investor's
obligations to purchase the Seventh Installment at the Seventh Closing is, at
the option of the Investor, subject to the fulfillment as of the Seventh Closing
Date of the following:
17.1 [*]
17.2 Representations and Warranties. The Representations and
Warranties made by the Company in Section 3 hereof, as modified or qualified by
the Company in an updated Schedule of Exceptions shall be true and correct and
all material respects as of the Seventh Closing Date.
17.3 Covenants. All covenants, agreements and conditions
contained in this Agreement to be performed by the Company on or prior to the
Seventh Closing Date shall have been performed or complied with in all material
respects.
17.4 Compliance Certificate. The Company shall deliver to the
Investor a certificate of the Company in the form of Exhibit D-7 hereto,
executed by the President of the Company, certifying to the fulfillment of the
conditions specified in Sections 17.1, 17.2 and 17.3 of this Agreement.
17.5 Blue Sky. The Company shall have obtained all necessary
Blue Sky law permits and qualifications, or have the availability of exemptions
therefrom, required by any state for the offer and sale of the Series B
Preferred and the Common Stock issuable upon conversion thereof.
17.6 Collaboration Agreements. The Investor or its affiliate
shall not have delivered notice of termination for each of the Collaboration
Agreements to the Company, pursuant to Section 18.3.1 of such agreements.
18. Conditions to Seventh Closing of Company. The Company's obligation
to sell and issue the Seventh Installment at the Seventh Closing is, at the
option of the Company, subject to fulfillment as of the Seventh Closing Date of
the following conditions:
18.1 Representations. The representations made by the
Investors in Section 4 hereof shall be true and correct when made, and shall be
true and correct on the Seventh Closing Date.
18.2 Blue Sky. The Company shall have obtained all necessary
Blue Sky law permits and qualifications, or have the availability of exemptions
therefrom, required by any state for the
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<PAGE> 28
offer and sale of the Series B Preferred Stock and the Common Stock issuable
upon conversion thereof.
18.3 Collaboration Agreements. The Investor or its affiliate
shall not have delivered notice of termination for each of the Collaboration
Agreements to the Company.
19. Additional Covenants and Restrictions Regarding the Purchase of
Series B Preferred. Notwithstanding the foregoing provisions, the following
provisions shall govern the purchase of Series B Preferred pursuant to this
Agreement:
19.1 Purchase Price Adjustment.
(a) For all Closings which occur after January 1,
1995 and prior to an underwritten public offering of the Common Stock of the
Company, the purchase price per share of Series B Preferred indicated on Exhibit
B hereto shall be [*]. The adjustment of the price per share [*]
(b) At the election of the Investor, the purchase
price per share of Series B Preferred indicated on Exhibit B hereto or the
Adjusted Purchase Price calculated pursuant to Section 19.1(a) above, as
applicable, may be [*]. The adjustment of the purchase price per share shall not
[*].
19.2 Acceleration of Purchases Upon a Public Offering. In the
event of an underwritten public offering of Common Stock of the Company with
aggregate gross proceeds of more than $10,000,000 (an "IPO"):
(a) The Investor shall be obligated to
purchase at the closing of an IPO, the dollar amount of stock indicated on
Exhibit B hereto which still remains unpurchased pursuant to the Closings (the
"Scheduled IPO Purchase Amount"). The price per share shall be the price per
share to the public in the IPO.
(b) Notwithstanding the provisions of
paragraph (a) above, the Investor can reduce the IPO Purchase Amount (x) to 20%
of the gross proceeds to be received in the IPO, but not to exceed the lesser of
$4,000,000 or such dollar amount of shares that when aggregated with the other
shares held by the Investor would amount to 19.9% of the outstanding stock of
the Company (calculated on an as-converted to Common Stock basis) following the
IPO, in the event that there is reasonable evidence of local efficacy of a
Company product in Phase I or later stage clinical trials or (y) to zero, in the
event that there is not reasonable
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<PAGE> 29
evidence of local efficacy of a Company product in Phase I or later stage
clinical trials. Such reduced amount shall be referred to as the "Actual IPO
Purchase Amount".
(c) In the event that the Investor reduces the
Scheduled IPO Purchase Amount pursuant to paragraph (b) above, then the Investor
shall be obligated to pay a sum equal to the Scheduled IPO Purchase Amount less
the Actual IPO Purchase Amount; provided, however, that such sum shall only be
payable (i) at those times when a purchase of Series B Preferred would have
occurred at a Closing, if the Company had not undertaken the IPO and (ii) no
payments need be made until the dollar amount of the Series B Preferred that
would have been purchased at a Closing or Closings following the date of the IPO
(if the Company had not undertaken the IPO) exceeds the Actual IPO Purchase
Amount.
19.3 [*]
19.4 Purchase of Common Stock. In the event that the Investor
is obligated to purchase Series B Preferred Stock at a Closing or upon the
acceleration of purchases upon an IPO and the Series B Preferred Stock has
converted to Common Stock pursuant to the terms of the Company's Certificate of
Incorporation then obligation to purchase and sell Series B Preferred shall be
an obligation to purchase and sell Common Stock.
19.5 Standstill Agreement. Prior to the date which is five
years from the date of the Company's initial public offering, neither the
Investor nor any subsidiary, parent corporation or other affiliate of the
Investor's shall acquire beneficial ownership of any voting stock in the Company
("Voting Stock"), any securities convertible into or exchangeable for Voting
Stock, or any other right to acquire Voting Stock (except, in any case, by way
of stock dividends or other distributions or offerings made available to holders
of any Voting Stock generally) or authorize or make a tender, exchange or other
offer, without the written consent of the Company, if the effect of such
acquisition would be to increase the Investor's percentage ownership beyond
thirty-two percent (32%) of the voting power of all Voting Stock of the Company.
20. Registration Rights. The Company covenants and agrees as
follows:
20.1 Definitions. For purposes of this Section 20:
(a) The term "register," "registered," and
"registration" refer to a registration effected by preparing and
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filing a registration statement or similar document in compliance with the Act,
and the declaration or ordering of effectiveness of such registration statement
or document;
(b) The term "Registrable Securities" means
(1) the Common Stock issuable or issued upon conversion of the Series B
Preferred sold pursuant to this Agreement, (2) the Common Stock issuable or
issued upon conversion of any Series A Preferred Stock held by individuals and
entities who have signed a consent for the purpose of being bound by this
Section 20, (3) any Common Stock held by individuals and entities who have
signed a consent for the purposes of being bound by this Section 20 and (4) 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 Series A Preferred Stock, Series B Preferred Stock, or Common Stock,
excluding in all cases, however, (i) any Registrable Securities sold by a person
in a transaction in which his rights under this Section 20 are not assigned, or
(ii) any Registrable Securities sold to or through a broker or dealer or
underwriter in a public distribution or a public securities transaction.
(c) The number of shares of "Registrable
Securities then outstanding" shall be determined by the number of shares of
Common Stock outstanding which are, and the number of shares of Common Stock
issuable pursuant to then exercisable or convertible securities which are,
Registrable Securities.
(d) The term "Holder" means any person owning or
having the right to acquire Registrable Securities or any assignee thereof in
accordance with Section 20.13 hereof; and
(e) The term "Form S-3" means such form under the
Act as in effect on the date hereof or any registration form under the Act
subsequently adopted by the Securities and Exchange Commission ("SEC") which
permits inclusion or incorporation of substantial information by reference to
other documents filed by the Company with the SEC.
(f) The term "Act" shall mean the Securities Act
of 1933, as amended.
20.2 Request for Registration.
(a) If the Company shall receive at any time
after December 31, 1998, either (i) a written request from the Holders of at
least fifty percent (50%) of the Registrable Securities
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(including securities convertible into Registrable Securities) then outstanding
that the Company file a registration statement under the Act covering the
registration of at least forty percent (40%) of the Registrable Securities (or a
lesser percentage if the anticipated aggregate offering price, net of
underwriting discounts and commissions, would exceed $10,000,000) or (ii) a
written request from the Investor that the Company file a registration statement
under the Act covering the registration of at least sixty percent (60%) of the
Registrable Securities held by the Investor (or a lesser percentage if the
anticipated aggregate offering price, net of underwriting discounts and
commissions would exceed $10,000,000), then the Company shall, within ten (10)
days of the receipt thereof, give written notice of such request to all Holders
and shall, subject to the limitations of subsections 20.2(b) and (c), effect as
soon as practicable, and in any event within 120 days of the receipt of such
request, the registration under the Act of all Registrable Securities which the
Holders request to be registered within 20 days of the mailing of such written
notice by the Company.
(b) Notwithstanding the foregoing, the Company
shall not be obligated to take any action to effect any such registration,
qualification or compliance pursuant to subsection 20.2(a):
(i) During the period starting with the
date sixty (60) days prior to the Company's estimated date of filing of, and
ending on the date six months immediately following the effective date of, any
registration statement pertaining to securities of the Company (other than a
registration of securities in a Rule 145 transaction or with respect to an
employee benefit plan), provided that the Company is actively employing in good
faith all reasonable efforts to cause such registration statement to become
effective;
(ii) After the Company has effected two
registrations pursuant to subsection 20.2(a) (i) (if the request is being made
pursuant to subsection 20.2(a)(i)), and such registration has been declared or
ordered effective, or after the Company has effected a single registration
pursuant to subsection 20.2(a)(ii) (if the request is being made pursuant to
subsection 20.2(a)(ii)) and such registration has been declared or ordered
effective;
(iii) If the Company shall furnish to such
Holders a certificate signed by the President of the Company stating that in the
good faith judgment of the Board of Directors it would be seriously detrimental
to the Company or its share-
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<PAGE> 32
holders for a registration statement to be filed at such time, then the
Company's obligation to use its best efforts to register, qualify or comply
under subsection 20.2(a) shall be deferred for a period not to exceed 120 days
from the date of receipt of written request from the Holders; provided, however,
that the Company may not utilize this right more than once in any twelve-month
period.
(c) If the Holders initiating the registration
request hereunder ("Initiating Holders") intend to distribute the Registrable
Securities covered by their request by means of an underwriting, they shall so
advise the Company as a part of their request made pursuant to this Section 20.2
and the Company shall include such information in the written notice referred to
in subsection 20.2(a). In such event, the right of any Holder to include his
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 (unless otherwise mutually agreed by
a majority in interest of the Holders requesting the registration and such
Holder) to the extent provided herein. All Holders proposing to distribute their
securities through such underwriting shall (together with the Company as
provided in subsection 20.4(e)) enter into an underwriting agreement in
customary form with the underwriter or underwriters selected for such
underwriting by a majority in interest of the Holders requesting the
registration and reasonably acceptable to the Company. Notwithstanding any other
provision of this Section 20.2, if the underwriter advises the Holders
requesting the registration that marketing factors require a limitation of the
number of shares to be underwritten, then the Initiating Holders shall so advise
all Holders of Registrable Securities which would otherwise be underwritten
pursuant hereto, and the number of shares of Registrable Securities that may be
included in the underwriting shall be allocated among all Holders thereof, in
proportion (as nearly as practicable) to the amount of Registrable Securities of
the Company owned by each Holder; provided, however, that the number of shares
of Registrable Securities to be included in such underwriting shall not be
reduced unless all other securities are first entirely excluded from such
underwriting.
20.3 Company Registration. If (but without any obligation to
do so) the Company proposes to register (including for this purpose a
registration effected by the Company for shareholders other than the Holders)
any of its stock or other securities under the Act in connection with the public
offering of such securities solely for cash (other than a registration relating
solely to the sale of securities to participants in a Company stock plan, or a
registration on any form which does not include substan-
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<PAGE> 33
tially the same information as would be required to be included in a
registration statement covering the sale of the Registrable Securities), the
Company shall, at such time, promptly give each Holder written notice of such
registration. Upon the written request of each Holder given within twenty (20)
days after mailing of written notice by the Company, the Company shall, subject
to the provisions of Section 20.8, cause to be registered under the Act all of
the Registrable Securities that each such Holder has requested to be registered.
20.4 Obligations of the Company. Whenever required under this
Section 20 to effect the registration of any Registrable Securities, the Company
shall, as expeditiously as reasonably possible:
(a) Prepare and file with the SEC a registration
statement with respect to such Registrable Securities and use its best efforts
to cause such registration statement to become effective, and, upon the request
of the Holders of a majority of the Registrable Securities registered
thereunder, keep such registration statement effective for up to sixty (60)
days.
(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 may be necessary to comply with
the provisions of the Act with respect to the disposition of all securities
covered by such registration statement.
(c) Furnish to the Holders such numbers of copies
of a prospectus, including a preliminary prospectus, in conformity with the
requirements of the 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 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 of such
offering. Each Holder participating in such underwriting shall also enter into
and perform its obligations under such an agreement.
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<PAGE> 34
(f) Notify each Holder of Registrable Securities
covered by such registration statement at any time when a prospectus relating
thereto is required to be delivered under the Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing.
(g) Furnish, at the request of any Holder
requesting registration of Registrable Securities pursuant to this Section 20,
on the date that such Registrable Securities are delivered to the underwriters
for sale in connection with a registration pursuant to this Section 20, if such
securities are being sold through underwriters, or, if such securities are not
being sold through underwriters, on the date that the registration statement
with respect to such securities becomes effective, (i) an opinion, dated such
date, of the counsel representing the Company for the purposes of such
registration, in form and substance as is customarily given to underwriters in
an underwritten public offering, addressed to the underwriters, if any, and to
the Holders requesting registration of Registrable Securities and (ii) a letter
dated such date, from the independent certified public accountants of the
Company, in form and substance as is customarily given by independent certified
public accountants to underwriters in an underwritten public offering, addressed
to the underwriters, if any, and to the Holders requesting registration of
Registrable Securities.
20.5 Furnish Information. It shall be a condition precedent to
the obligations of the Company to take any action pursuant to this Section 20
with respect to the Registrable Securities of any selling Holder that such
holder shall furnish to the Company such information regarding itself, the
Registrable Securities held by it, and the intended method of disposition of
such securities as shall be required to effect the registration of such Holder's
Registrable Securities.
20.6 Expenses of Demand Registration. All expenses, other than
underwriting discounts and commissions and any fees and expenses of a special
counsel of a selling stockholder, incurred in connection with registrations,
filings or qualifications pursuant to Section 20.2, including (without
limitation) all registration, federal and state filing and qualification fees
and expenses, printers' and accounting fees and fees and disbursements of
counsel for the Company, shall be paid by the Company; provided, however, that
the Company shall not be required to pay for any expenses of
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<PAGE> 35
any registration proceeding begun pursuant to Section 20.2 if the registration
request is subsequently withdrawn at the request of the Holders of a majority of
the Registrable Securities to be registered (in which case all Participating
Holders shall bear such expenses), unless the Holders of a majority of the
Registrable Securities agree to forfeit their right to one demand registration
pursuant to Section 20.2; provided further, however, that if at the time of such
withdrawal, the Holders have learned of a material adverse change in the
condition, business, or prospects of the Company from that known to the Holders
at the time of their request, then the Holders shall not be required to pay any
of such expenses and shall retain their rights pursuant to Section 20.2. The
Company's obligations under this 20.6 shall apply to each registration pursuant
to Section 20.2.
20.7 Expenses of Company Registration. The Company shall bear
and pay all expenses incurred in connection with any registration, filing or
qualification of Registrable Securities with respect to the registrations
pursuant to Section 20.3 for each Holder (which right may be assigned as
provided in Section 20.13), including (without limitation) all registration,
filing, qualification, printers and accounting fees relating or apportionable
thereto, but excluding underwriting discounts and commissions relating to
Registrable Securities and any fees or expenses of a special counsel of a
selling stockholder.
20.8 Underwriting Requirements. In connection with any
offering involving an underwriting of shares being issued by the Company, the
Company shall not be required under Section 20.3 to include any of the Holders'
securities in such underwriting unless they accept the terms of the underwriting
as agreed upon between the Company and the underwriters selected by it, and then
only in such quantity as is provided for herein. If the underwriters determine
that marketing factors require a limitation of the number of shares to be
underwritten, the underwriters may limit the number of Registrable Securities to
be included in the registration on a pro-rata basis, or may exclude Registrable
Securities entirely from such registration (the securities so included to be
apportioned pro rata among the selling stockholders according to the total
amount of securities entitled to be included therein owned by each selling
stockholder or in such other proportions as shall mutually be agreed to by such
selling stockholders) but in no event shall any shares being sold by a
stockholder exercising a demand registration right similar to that granted in
Section 20.2 be excluded from such offering. For purposes of apportionment, any
selling stockholder which is a Holder of Registrable Securities and which is a
partnership or corporation, the partners, retired partners and shareholders of
such Holder, or the estates and family members of
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<PAGE> 36
any such partners and retired partners and any trusts for the benefit of any of
the foregoing persons shall be deemed to be a single "selling stockholder", and
any pro rata reduction with respect to such "selling stockholder" shall be based
upon the aggregate amount of shares carrying registration rights owned by all
entities and individuals included in such "selling stockholder", as defined in
this sentence.
20.9 Delay of Registration. 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 20.
20.10 Indemnification. In the event any Registrable Securities
are included in a registration statement under this Section 20:
(a) To the extent permitted by law, the Company
will indemnify and hold harmless each Holder, any underwriter (as defined in the
Act) for such Holder and each person, if any, who controls such Holder or
underwriter within the meaning of the Act or the Securities Exchange Act of
1934, amended (the "1934 Act"), against any losses, claims, damages, or
liabilities (joint or several) to which they may become subject under the Act,
the 1934 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"): (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 Act, the 1934 Act, any state securities law or
any rule or regulation promulgated under the Act, the 1934 Act or any state
securities law; and the Company will pay to each such Holder, underwriter or
controlling person, as incurred, 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 subsection 20.10(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
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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 any such Holder, underwriter or controlling person.
(b) To the extent permitted by law, each selling
Holder will indemnify and hold harmless the Company, each of its directors, each
of its officers who has signed the registration statement, each person, if any,
who controls the Company within the meaning of the Act, any underwriter, any
other Holder selling securities in such registration statement and any
controlling person of any such underwriter or other Holder, against any losses,
claims, damages, or liabilities (joint or several) to which any of the foregoing
persons may become subject, under the Act, the 1934 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
expressly for use in connection with such registration; and each such Holder
will pay, as incurred, any legal or other expenses reasonably incurred by any
person intended to be indemnified pursuant to this subsection 20.10(b), in
connection with investigating or defending any such loss, claim, damage,
liability, or action; provided, however, that the indemnity agreement contained
in this subsection 20.10(b) 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 Holder, which consent shall not be unreasonably
withheld; provided, that, in no event shall any indemnity under this subsection
20.10(b) exceed the gross proceeds from the offering received by such Holder.
(c) Promptly after receipt by an indemnified
party under this Section 20.10 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
20.10, 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
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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 prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this Section
20.10, 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 20.10.
(d) The obligations of the Company and Holders
under this Section 20.10 shall survive the completion of any offering of
Registrable Securities in a registration statement under this Section 20, and
otherwise.
20.11 Reports Under Securities Exchange Act of 1934. With a view
to making available to the Holders the benefits of Rule 144 promulgated under
the Act and any other rule or regulation of the SEC that may at any time permit
a Holder to sell securities of the Company to the public without registration or
pursuant to a registration on Form S-3, the Company agrees to:
(a) make and keep public information available,
as those terms are understood and defined in SEC Rule 144, at all times after
ninety (90) days after the effective date of the first registration statement
filed by the Company for the offering of its securities to the general public;
(b) take such action, including the voluntary
registration of its Common Stock under Section 12 of the 1934 Act, as is
necessary to enable the Holders to utilize Form S-3 for the sale of their
Registrable Securities, such action to be taken as soon as practicable after the
end of the fiscal year in which the first registration statement filed by the
Company for the offering of its securities to the general public is declared
effective;
(c) file with the SEC in a timely manner all
reports and other documents required of the Company under the Act and the 1934
Act; and
(d) furnish to any Holder, so long as the Holder
owns any Registrable Securities, forthwith upon request (i) a written statement
by the Company that it has complied with the reporting requirements of SEC Rule
144 (at any time after ninety (90) days after the effective date of the first
registration statement filed by the Company), the Act and the 1934 Act (at any
time after it has become subject to such reporting requirements), or that it
qualifies as a registrant whose securities may be resold pursuant to Form S-3
(at any time after it so qualifies), (ii) a
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<PAGE> 39
copy of the most recent annual or quarterly report of the Company and such other
reports and documents so filed by the Company, and (iii) such other information
as may be reasonably requested in availing any Holder of any rule or regulation
of the SEC (exclusive of Rule 144A) which permits the selling of any such
securities without registration or pursuant to such form.
20.12 Form S-3 Registration. In case the Company shall receive
from any Holder or Holders of the Registrable Securities a written request or
requests that the Company effect a registration on Form S-3 and any related
qualification or compliance with respect to shares of Registrable Securities the
reasonably anticipated aggregate price to the public of which, net of
underwriting discounts and commissions, would exceed $1,000,000 all or a part of
the Registrable Securities owned by such Holder or Holders, the Company will:
(a) promptly give written notice of the proposed
registration, and any related qualification or compliance, to all other Holders;
and
(b) as soon as practicable, effect such
registration and all such qualifications and compliances as may be so requested
and as would permit or facilitate the sale and distribution of all or such
portion of such Holder's or Holders' Registrable Securities as are specified in
such request, together with all or such portion of the Registrable Securities of
any other Holder or Holders joining in such request as are specified in a
written request given within 15 days after receipt of such written notice from
the Company; provided, however, that the Company shall not be obligated to
effect any such registration, qualification or compliance, pursuant to this
Section 20.12: (1) if Form S-3 is not available for such offering by the
Holders; (2) if the Holders, together with the holders of any other securities
of the Company entitled to inclusion in such registration, propose to sell
Registrable Securities and such other securities (if any) at an aggregate price
to the public (net of any underwriters' discounts or commissions) of less than
$1,000,000; (3) if the Company shall furnish to the Holders a certificate signed
by the President of the Company stating that in the good faith judgment of the
Board of Directors of the Company, it would be seriously detrimental to the
Company and its shareholders for such Form S-3 Registration to be effected at
such time, in which event the Company shall have the right to defer the filing
of the Form S-3 registration statement for a period of not more than 120 days
after receipt of the request of the Holder or Holders under this Section 20.12;
provided, however, that the Company shall not utilize this right more than once
in any twelve (12) month period; or (4) in any particular juris-
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diction in which the Company would be required to qualify to do business or to
execute a general consent to service of process in effecting such registration,
qualification or compliance.
(c) Subject to the foregoing, the Company shall
file a registration statement covering the Registrable Securities and other
securities so requested to be registered as soon as practicable after receipt of
the request or requests of the Holders. All expenses incurred in connection with
the registrations requested pursuant to Section 20.12, (exclusive of
underwriting discounts and commissions and any fees and expenses of a special
counsel to a selling shareholder) shall be paid by the Company.
20.13 Assignment of Registration Rights. The rights to cause the
Company to register Registrable Securities pursuant to this Section 20 may be
assigned by a Holder to a transferee or assignee of such securities who acquires
(i) at least 300,000 shares of Registrable Securities, or (ii) all shares of
Registrable Securities then held by such Holder if such Holder transfers all
such Registrable Securities to a single entity, provided the Company is, within
a reasonable time after such transfer, furnished with written notice of the name
and the address of such transferee or assignee and the securities with respect
to which such registration rights are being assigned; and provided, further,
that such assignment shall be effective only if immediately following such
transfer the further disposition of such securities by the transferee or
assignee is restricted under the Act. Notwithstanding the above, such rights may
be assigned by a Holder to a limited partner or general partner of the Holder
regardless of the number of shares acquired by such transferee.
20.14 Limitations on Subsequent Registration Rights. From and
after the date of this Agreement, the Company shall not, without the prior
written consent of the Holders of a majority of the Registrable Securities,
enter into any agreement (other than an amendment to this agreement or
supplemental agreement effected in accordance with Section 20.16 of this
Agreement) with any holder or prospective holder of any securities of the
Company which would allow such holder or prospective holder (a) to include such
securities in any registration filed pursuant to Section 20.2 hereof, unless
under the terms of such agreement such holder or prospective holder may include
such securities in any such registration only to the extent that the inclusion
of such securities will not reduce the amount of the Registrable Securities of
the Holders which are included in any such registration or (b) to make a demand
registration which could result in such registration being declared effective
prior to the earlier of either of the dates set forth in
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subsection 20.2(a) or within six months of the effective date of any
registration effected pursuant to Section 20.2.
20.15 "Market Stand-Off" Agreement. Each holder of securities
which are or at one time were Registrable Securities (or which are or were
convertible into Registrable Securities) hereby agrees that, during a period not
to exceed 180 days, following the effective date of a registration statement of
the Company filed under the Act, it shall not, to the extent requested by the
Company and such underwriter, sell or otherwise transfer or dispose of (other
than to donees who agree to be similarly bound) any Common Stock or Preferred
Stock of the Company held by it at any time during such period except Common
Stock included in such registration; provided, however, that:
(a) such agreement shall be applicable only to
the first such registration statement of the Company which covers Common Stock
(or other securities) to be sold on its behalf to the public in an underwritten
offering; and
(b) all officers and directors of the Company,
and all other persons with registration rights (whether or not pursuant to this
Agreement) enter into similar agreements.
In order to enforce the foregoing covenant, the Company may
impose stop-transfer instructions with respect to the Registrable Securities of
each Holder (and the shares or securities of every other person subject to the
foregoing restriction) until the end of such period.
20.16 Amendment of Registration Rights and Information Rights. Any
provision of Sections 20 and 21 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, the holders of at
least sixty-seven percent (67%) of the Registrable Securities then outstanding
and the holders of a majority of the Series B Preferred Stock then outstanding,
and with the same consent the Company may enter into a supplemental agreement
for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of Sections 20 or 21. Any amendment, waiver or
supplemental agreement effected in accordance with this Section 20.16 shall be
binding upon each holder of any securities which are or at one time were
Registrable Securities (or which are or were convertible into Registrable
Securities), each future holder of all such securities, and the Company.
-34-
<PAGE> 42
20.17 Termination of Registration Rights. No stockholder shall be
entitled to exercise any right provided for in this Section 20 after six (6)
years following the consummation of the sale of securities pursuant to a
registration statement filed by the Company under the Act in connection with the
initial underwritten offering of its securities to the general public.
21. Covenants of the Company.
21.1 Delivery of Financial Statements. The Company shall
deliver to each Holder which holds 300,000 shares of Registrable Securities:
(a) as soon as practicable, but in any event
within ninety (90) days after the end of each fiscal year of the Company,
statements of operations and cash flow for such fiscal year, a balance sheet of
the Company as of the end of such year, and a schedule as to the sources and
applications of funds for such year, all in reasonable detail, prepared in
accordance with generally accepted accounting principles ("GAAP"), and audited
and certified by independent public accountants of nationally recognized
standing selected by the Company;
(b) as soon as practicable, but in any event
within forty-five (45) days of the end of each quarter, an unaudited statement
of operations and balance sheet for and as of the end of such quarter, in
reasonable detail and prepared in accordance with GAAP, subject to year end
audit adjustments and the absence of footnotes;
(c) as soon as practicable, but in any event
within thirty (30) days of the end of each month (commencing six calendar months
from the first Closing), an unaudited statement of operations and balance sheet
for and as of the end of such month, in reasonable detail and prepared in
accordance with GAAP, subject to year-end audit adjustments and the absence of
footnotes; and
(d) such other information relating to the
financial condition, business, prospects or corporate affairs of the Company as
the Holder may from time to time request, provided, however, that the Company
shall not be obligated to provide information which it deems in good faith to be
proprietary unless such Investor or assignee of such Investor agrees in writing
to hold in confidence and trust and to act in a fiduciary manner with respect to
all information so provided.
21.2 Assignment of Rights to Financial Information. The rights
granted pursuant to Section 21.1 may not be assigned or
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<PAGE> 43
otherwise conveyed by any Holder or by any subsequent transferee of any such
rights without the prior written consent of the Company; provided, however, that
any Holder may assign to any transferee, other than a competitor of the Company,
and after giving notice to the Company, the rights granted pursuant to Section
21.1 to (i) a transferee who acquires at least 300,000 shares of Registrable
Securities.
21.3 Termination of Covenants. The covenants set forth in
Section 21.1 shall terminate as to Holders when the sale of securities pursuant
to a registration statement filed by the Company under the Act in connection
with the firm commitment underwritten offering of its securities to the general
public is consummated or when the Company first becomes subject to the periodic
reporting requirements of Sections 12(g) or 15(d) of the Securities Exchange Act
of 1934, whichever event shall first occur.
22. Investor's Right of First Refusal.
22.1 Right of First Refusal. As more specifically set forth
below, the Company hereby grants to the Investor the right of first refusal to
purchase, pro rata, all or any part of New Securities (as defined in this
Section 22.1) which the Company may, from time to time, propose to sell and
issue. A pro rata share, for purposes of this right of first refusal, is the
ratio that the sum of the number of shares of Common Stock and Common Stock
issuable upon conversion of the Series B Preferred then held by the Investor
bears to the sum of the total number of shares of Common Stock then outstanding
and the number of shares of Common Stock issuable upon conversion of the then
outstanding Preferred Stock.
(a) Except as set forth below, "New Securities"
shall mean any shares of Common Stock or Preferred Stock of the Company, whether
now authorized or not, and rights, options or warrants to purchase shares of
Common Stock or Preferred Stock, and securities of any type whatsoever that are,
or may become, convertible into shares of Common Stock or Preferred Stock.
Notwithstanding the foregoing, "New Securities" does not include (i) the
Preferred purchased under this Agreement, including Common Stock issuable upon
conversion of the Series B Preferred, (ii) securities offered to the public
generally pursuant to a registration statement or pursuant to Regulation A under
the Act, (iii) securities issued pursuant to the acquisition of or strategic
partnering with another corporation by the Company by merger, purchase of
substantially all of the assets, licensing arrangement, joint venture
arrangement or other transaction, (iv) employees, officers and directors of, and
consultants, customers, and vendors to, the Company, pursuant to any arrangement
approved by the Board of
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<PAGE> 44
Directors of the Company, (v) stock issued pursuant to any rights or agreements,
including without limitation convertible securities, options and warrants,
provided that the rights of first refusal established by this Section 22.1 apply
with respect to the initial sale or grant by the Company of such rights or
agreements, (vi) stock issued in connection with any stock split, stock dividend
or recapitalization by the Company.
(b) In the event the Company proposes to
undertake an issuance of New Securities, it shall give the Investor written
notice of its intention, describing the type of New Securities, and the price
and terms upon which the Company proposes to issue the same. The Investor shall
have 20 days from the date of receipt of any such notice to agree to purchase up
to its pro rata share of such New Securities for the price and upon the terms
specified in the notice by giving written notice to the Company and stating
therein the quantity of New Securities to be purchased.
(c) In the event the Investor fails to exercise
the right of first refusal within the 20 day period, the Company shall have 120
days thereafter to enter into an agreement to sell the New Securities not
elected to be purchased by the Investor at the price and upon the terms no more
favorable to the purchasers of such securities than specified in the Company's
notice. In the event the Company has not entered into an agreement to sell the
New Securities within the 120 day period, the Company shall not thereafter
issue or sell any New Securities, without first offering such securities in the
manner provided above.
(d) The right of first refusal granted under this
Agreement shall expire upon the closing of the first public offering of the
Common Stock of the Company to the general public which is effected pursuant to
a registration statement filed with, and declared effective by, the SEC under
the Act.
(e) The right of first refusal hereunder is not
assignable except by the Investor.
23. Investor's Board Representation.
23.1 Amendment to Certificate of Incorporation. The Company
shall not amend its Certificate of Incorporation to eliminate the right of the
holders of Series B Preferred Stock to select a member of the Company's Board of
Directors, without the consent of the holders of at least a majority of the
Series B Preferred Stock.
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<PAGE> 45
23.2 Scientific Advisory Board. The holders of Series B
Preferred Stock shall be entitled to appoint a member to the Company's
Scientific Advisory Board who is reasonably acceptable to the Company.
23.3 Post Conversion. Following a conversion of Series B
Preferred Stock into Common Stock and provided that the Investor is still
holding at least fifteen percent (15%) of the outstanding stock of the Company,
the Company shall (i) include a nominee of the Investor who is reasonably
acceptable to the Company in its recommended slate for the Board of Directors
and shall utilize the same degree of effort to have such nominee elected as it
utilizes to have the other members of the slate elected, and (ii) include a
nominee of the Investor who is reasonably acceptable to the Company upon the
Company's Scientific Advisory Board.
24. Miscellaneous.
24.1 Survival of Warranties. The warranties, representations
and covenants of the Company and the Investor contained in this Agreement shall
survive the execution and delivery of this Agreement and the Closing and shall
in no way be affected by any investigation of the subject matter thereof made by
or on behalf of the Investor or the Company.
24.2 Successors and Assigns. The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the respective
successors and assigns of the parties. Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the parties hereto or
their respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
24.3 Governing Law. This Agreement shall be governed by and
construed under the laws of the State of Delaware as applied to agreements among
Delaware residents entered into and to be performed entirely within Delaware.
24.4 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
24.5 Titles and Subtitles. The titles and subtitles used in
this Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
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<PAGE> 46
24.6 Notices. Unless otherwise provided, any notice required
or permitted under this Agreement shall be given in writing and shall be deemed
effectively given upon personal delivery to the party to be notified or upon
deposit with the United States Post Office, by registered or certified mail, or
other courier service, postage prepaid and addressed to the party to be notified
at the address indicated for such party in the Company's stock records or in the
case of the Company on the first page of this Agreement, or at such other
address as such party may designate by ten (10) days' advance written notice to
the other parties.
24.7 Finder's Fee. Each party represents that it neither is
nor will be obligated for any finders' fee or commission in connection with this
transaction. The Investor agrees to indemnify and to hold harmless the Company
from any liability for any commission or compensation in the nature of a
finders' fee (and the costs and expenses of defending against such liability or
asserted liability) for which the Investor or any of its officers, partners,
employees, or representatives is responsible. The Company agrees to indemnify
and hold harmless the Investor from any liability for any commission or
compensation in the nature of a finders' fee (and the costs and expenses of
defending against such liability or asserted liability) for which the Company or
any of its officers, employees or representatives is responsible.
24.8 Expenses. Each party shall pay its own fees and expenses
with respect to this Agreement. If any action at law or in equity is necessary
to enforce or interpret the terms of this Agreement or the Restated Articles,
the prevailing party shall be entitled to reasonable attorney's fees, costs and
necessary disbursements in addition to any other relief to which such party may
be entitled.
24.9 Amendments and Waivers. Any term of this Agreement
(except those set forth in Sections 20 and 21) may be amended and the observance
of any term of this Agreement 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 Investor. Amendments, waivers and supplemental
agreements relating to Sections 20 and 21 hereof shall be governed by the
provisions of Section 17.16 hereof.
24.10 Severability. If one or more provisions of this Agreement
are held to be unenforceable under applicable law, such provision shall be
excluded from this Agreement and the balance of the Agreement shall be
interpreted as if such provision were so excluded and shall be enforceable in
accordance with its terms.
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<PAGE> 47
24.11 Aggregation of Stock. All shares of Common Stock, Series A
Preferred Stock and Series B Preferred Stock held or acquired by affiliated
entities or persons shall be aggregated together for the purpose of determining
the availability of any rights under this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
INTROGEN THERAPEUTICS, INC.
By: /s/ DAVID NANCE
-----------------------------
Title: President
RHONE-POULENC RORER
PHARMACEUTICALS INC.
By: /s/ MICHEL DE ROSEN
-----------------------------
Title: President
-40-
<PAGE> 48
EXHIBIT B
SCHEDULE OF PURCHASES
<TABLE>
<CAPTION>
(1) (2) (3) (4)
Aggregate
Number of Purchase
Investor Closing Shares Price
- ------------------------ ------- --------- ----------
<S> <C> <C> <C>
Phone-Poulenc Rorer
International (Holdings) Inc. First [*] [*]
Delaware Corporate Center I Second [*] [*]
Suite 114 Third [*] [*]
1 Righter Parkway Fourth [*] [*]
Wilmington, DE 19803 Fifth [*] [*]
Sixth [*] [*]
Seventh [*] [*]
--------- ----------
TOTAL [*] [*]
--------- ----------
</TABLE>
(1) [*] of ;this purchase price was paid prior to closing pursuant to the
Letter of Intent between the Company and the Investor dated June 15,
1994.
<PAGE> 49
EXHIBIT C
SCHEDULE OF EXCEPTIONS
This Schedule of Exceptions, dated as of October 7, 1994, is made and
given pursuant to Section 3 of the Introgen Therapeutics, Inc. Series B and
Series B Preferred Stock Purchase Agreement dated October 7, 1994 (the
"Agreement"). The Section numbers in this Schedule of Exceptions correspond to
the Section numbers in the Agreement; however, any information disclosed herein
under any Section number shall be deemed to be disclosed and incorporated into
any other Section number under the Agreement where such disclosure would be
appropriate. Any terms defined in the Agreement shall have the same meaning when
used in this Schedule of Exceptions as when used in the Agreement unless the
context otherwise requires.
3.6 Liabilities.
The Company is a party to the following agreements (copies of which
have been provided to the Investor) which may result in liabilities in
excess of $10,000:
- Consulting Agreement with EJ Financinal Enterprises, Inc.
- Consulting Agreement with Jack A. Roth, M.D.
- Service Agreement with Domecq Technologies, Inc.
- Sponsored Research Agreements and Clinical Study
Agreements with the University of Texas M.D. Anderson
Cancer Center.
- Genetix License and Materials Transfer Agreement.
- Patent and Technology License Agreement with the Board of
Regents of the University of Texas System.
Legal fees and expenses due to Wilson & Varner, PC.
Legal fees and expenses due to Wilson, Sonsini, Goodrich & Rosati, PC.
3.8 Litigation.
In December 1993, Schering Corporation contacted the Company
(then known as Intron Therapeutics, Inc.) and asked that the
name "Intron", allegedly a Schering trademark, cease to be used
by the Company. Schering threatened the Company with trademark
infringement litigation. On January 28, 1994, Schering
<PAGE> 50
notified the Company that Schering would not file an infringement
complaint based upon the Company's representation that the Company
would change its name. The Company subsequently changed its name to
Introgen Therapeutics, Inc. and has notified Schering of the name
change.
The Company believes there will continue to be significant litigation
regarding patent and other intellectual property rights of companies
involved in gene therapy.
3.9 Employees.
The Company entered into a Consulting Agreement with Domecq
Technologies, Inc. effective July 1, 1994. The Company acknowledged in
the Consulting Agreement that Mr. Nance serves as an officer, director
and or trustee of other entities and that it is in the best interest of
the Company for Mr. Nance to continue those activities which are deemed
by the Company to be not conflicting with the Company's interests.
3.10 Patents and Trademarks.
The Company's success will depend, in large part, on the strength of
its current and future patent position relating to gene therapy. The
Company's patent position, like that of others in the gene therapy
field, is highly uncertain and involves complex legal and factual
questions. The Company is the licensee of certain patents and patent
applications of the University of Texas System. Claims made under
patent applications may be denied or significantly narrowed and issued
patents may not provide significant commercial protection to the
Company. There is no assurance that the Company's patents will not be
challenged by others, and the Company could incur substantial costs in
proceedings before the United States Patent Office, including
interference proceedings. These proceedings could also result in
adverse decisions as to the priority of the Company's licensed
inventions. There can be no assurance that the Company's products do
not or will not infringe on the patent or proprietary rights of others,
and the Company may be required to obtain additional licenses to the
patents, patent applications or other proprietary rights of others.
There can be no assurance that any such licenses would be made
available on terms acceptable to the Company, if at all.
-2-
<PAGE> 51
3.12 Agreement; Action. The following parties:
<TABLE>
<CAPTION>
Association with
Name the Company
-------------- -----------------------------
<S> <C>
David G. Nance President and Chief Executive
Officer
Jack A. Roth, M.D. Consultant and Chairman of the
Scientific Advisory Board
Mahendra G. Shah, Ph.D. Vice President
Timothy R. Kelly Chief Financial Officer
Rodney Varner Secretary
John N. Kapoor, Ph.D. Director
</TABLE>
are associated with the following entities which are also
affiliated with the Company.
- Dr. Kapoor, Dr. Shah and Mr. Kelly are associated with EJ
Financial Enterprises, Inc. (a consultant to the Company)
and Texas Biomedical Development Partners (a major
shareholder of the Company).
- Mr. Nance is associated with Texas Biomedical Development
Partners and Technology Capital Corporation.
- Rodney Varner is associated with Wilson & Varner PC which
provides legal services to the Company.
- Dr. Roth is an employee of M.D. Anderson Cancer Center
which is a component of Regents of the University of Texas
System (a Licensor to the Company).
3.13 Disclosure.
The Company's License Agreement with the Board of Regents of the
University of Texas System has been amended. However, such amendment is
not legally binding until it has been approved at a meeting of the
Board of Regents, and no such approval has been obtained.
3.19 Insurance.
The Company has no insurance at this time.
-3-
<PAGE> 52
3.20 Labor Agreements and Actions.
The Company is not bound by any labor union agreements, except as may
indirectly apply through the Company's agreements with the University
of Texas M.D. Anderson Cancer Center ("UTMDACC") related to sponsored
research and clinical studies. The Company pays UTMDACC which in turn
pays UTMDACC and University of Texas personnel and employees. Some of
these personnel and employees may be associated with a state employee
labor union or other union.
-4-
<PAGE> 53
EXHIBIT D-1
The undersigned, hereby certifies that:
1. He is the duly elected and acting President of Introgen
Therapeutics, Inc., a Delaware corporation.
2. The conditions specified in Sections 5.1 and 5.2 of the Series
B Preferred Stock Purchase Agreement dated October 1, 1994
have been fulfilled.
IN WITNESS WHEREOF, the undersigned has executed this certificate as an
officer of the Company as of___________________ .
______________________________
__________________, President
-5-
<PAGE> 54
EXHIBIT D-2
The undersigned, hereby certifies that:
1. He is the duly elected and acting President of Introgen
Therapeutics, Inc., a Delaware corporation.
2. The conditions specified in Sections 7.1, 7.2 and 7.3 of the
Series B Preferred Stock Purchase Agreement dated October 1,
1994 have been fulfilled.
IN WITNESS WHEREOF, the undersigned has executed this certificate as an
officer of the Company as of______________________ .
______________________________
__________________, President
<PAGE> 55
EXHIBIT D-3
The undersigned, hereby certifies that:
1. He is the duly elected and acting President of Introgen
Therapeutics, Inc., a Delaware corporation.
2. The conditions specified in Sections 9.1, 9.2 and 9.3 of the
Series B Preferred Stock Purchase Agreement dated October 1,
1994 have been fulfilled.
IN WITNESS WHEREOF, the undersigned has executed this certificate as an
officer of the Company as of____________________ .
______________________________
__________________, President
<PAGE> 56
EXHIBIT D-4
The undersigned, hereby certifies that:
1. He is the duly elected and acting President of Introgen
Therapeutics, Inc., a Delaware corporation.
2. The conditions specified in Sections 11.1, 11.2 and 11.3 of
the Series B Preferred Stock Purchase Agreement dated October
1, 1994 have been fulfilled.
IN WITNESS WHEREOF, the undersigned has executed this certificate as an
officer of the Company as of________________________ .
______________________________
__________________, President
<PAGE> 57
EXHIBIT D-5
The undersigned, hereby certifies that:
1. He is the duly elected and acting President of Introgen
Therapeutics, Inc., a Delaware corporation.
2. The conditions specified in Sections 13.1, 13.2 and 13.3 of
the Series B Preferred Stock Purchase Agreement dated October
1, 1994 have been fulfilled.
IN WITNESS WHEREOF, the undersigned has executed this certificate as an
officer of the Company as of______________ .
______________________________
__________________, President
<PAGE> 58
EXHIBIT D-6
The undersigned, hereby certifies that:
1. He is the duly elected and acting President of Introgen
Therapeutics, Inc., a Delaware corporation.
2. The conditions specified in Sections 15.1, 15.2 and 15.3 of
the Series B Preferred Stock Purchase Agreement dated October
1, 1994 have been fulfilled.
IN WITNESS WHEREOF, the undersigned has executed this certificate as an
officer of the Company as of________________________ .
______________________________
__________________, President
<PAGE> 59
EXHIBIT D-7
The undersigned, hereby certifies that:
1. He is the duly elected and acting President of Introgen
Therapeutics, Inc., a Delaware corporation.
2. The conditions specified in Section of the Series
B Preferred Stock Purchase Agreement dated October 1,
1994 have been fulfilled.
IN WITNESS WHEREOF, the undersigned has executed this certificate as an
officer of the Company as of_______________________ .
______________________________
__________________, President
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<PAGE> 1
EXHIBIT 10.7
INTROGEN THERAPEUTICS, INC.
SERIES C PREFERRED STOCK
PURCHASE AGREEMENT
301 Congress Avenue
Suite 2025
Austin, Texas 78701
<PAGE> 2
TABLE OF CONTENTS
PAGE
----
1. Purchase and Sale of Stock..................................... 1
1.1 Authorization.......................................... 1
1.2 Sales of Preferred..................................... 1
2. Closing Date; Delivery......................................... 1
2.1 Closing Date........................................... 1
2.2 Delivery............................................... 1
2.3 Subsequent Sales....................................... 1
3. Representations and Warranties of the Company.................. 2
3.1 Organization, Good Standing and Qualification.......... 2
3.2 Capitalization......................................... 2
3.3 Subsidiaries........................................... 3
3.4 Authorization.......................................... 3
3.5 Valid Issuance of Preferred and Common Stock........... 3
3.6 Governmental Consents.................................. 3
3.7 Litigation............................................. 3
3.8 Employees.............................................. 4
3.9 Patents and Trademarks................................. 4
3.10 Compliance with Other Instruments...................... 4
3.11 Adverse Agreements. .................................. 5
3.12 Disclosure............................................. 5
3.13 Title to Property and Assets........................... 5
3.14 Financial Statements................................... 5
3.15 Employee Benefit Plans................................. 6
3.16 Tax Returns, Payments and Elections.................... 6
3.17 Labor Agreements and Actions........................... 6
3.18 Offering............................................... 6
4. Representations and Warranties of the Investors................ 6
4.1 Authorization.......................................... 6
4.2 Purchase Entirely for Own Account...................... 6
4.3 Disclosure of Information.............................. 7
4.4 Investment Experience.................................. 7
4.5 Accredited Investor.................................... 7
4.6 Residence.............................................. 7
4.7 Restricted Securities.................................. 7
-i-
<PAGE> 3
TABLE OF CONTENTS
(CONTINUED)
PAGE
----
4.8 Further Limitations on Disposition...................... 7
4.9 Legends................................................. 8
5. Conditions to Closing of Investors.............................. 8
5.1 Representations and Warranties Correct.................. 8
5.2 Covenants............................................... 8
5.3 Blue Sky................................................ 8
5.4 Restated Certificate.................................... 8
6. Conditions to Closing of Company................................ 9
6.1 Representations......................................... 9
6.2 Blue Sky................................................ 9
6.3 Restated Certificate.................................... 9
7. Registration Rights............................................. 9
7.1 Definitions............................................. 9
7.2 Request for Registration................................ 10
7.3 Company Registration.................................... 11
7.4 Obligations of the Company.............................. 12
7.5 Furnish Information..................................... 13
7.6 Expenses of Demand Registration......................... 13
7.7 Expenses of Company Registration........................ 13
7.8 Underwriting Requirements............................... 13
7.9 Delay of Registration................................... 14
7.10 Indemnification......................................... 14
7.11 Reports Under Securities Exchange Act of 1934........... 15
7.12 Form S-3 Registration................................... 16
7.13 Assignment of Registration Rights....................... 17
7.14 Limitations on Subsequent Registration Rights........... 17
7.15 "Market Stand-Off" Agreement............................ 18
7.16 Amendment of Registration Rights........................ 18
7.17 Termination of Registration Rights...................... 18
7.18 Prior Registration Rights............................... 18
-ii-
<PAGE> 4
TABLE OF CONTENTS
(CONTINUED)
PAGE
----
8. Miscellaneous........................................... 19
8.1 Survival of Warranties.......................... 19
8.2 Successors and Assigns.......................... 19
8.3 Governing Law................................... 19
8.4 Counterparts.................................... 19
8.5 Titles and Subtitles............................ 19
8.6 Notices......................................... 19
8.7 Expenses........................................ 19
8.8 Amendments and Waivers.......................... 19
8.9 Severability.................................... 19
8.10 Aggregation of Stock............................ 20
EXHIBITS
A. Restated Certificate of Incorporation
-iii-
<PAGE> 5
PREFERRED STOCK PURCHASE AGREEMENT
THIS PREFERRED STOCK PURCHASE AGREEMENT is made by and between Introgen
Therapeutics, Inc., a Delaware corporation (the "Company"), and the investors
listed on the signature pages attached hereto (the "Investors"). This Agreement
is effective as of the date on which the Company has sold at least $1,000,000 of
Series C Preferred Stock to an Investor.
THE PARTIES HEREBY AGREE AS FOLLOWS:
1. Purchase and Sale of Stock.
1.1 Authorization. The Company will authorize the sale and
issuance of up to 1,183,000 shares of its Series C Preferred Stock (the "Series
C Preferred") having the rights, privileges and preferences as set forth in the
Restated Certificate of Incorporation (the "Restated Certificate") in the form
attached to this Agreement as Exhibit A.
1.2 Sales of Preferred. Subject to the terms and conditions
hereof, the Company will issue and sell to each Investor, and each Investor
shall separately purchase from the Company at the Closing (defined below) the
number of shares set forth beneath their signature page to this agreement at the
per share purchase price of $8.65. (The aggregate shares of Series C Preferred
Stock to be sold to the Investors hereunder are hereinafter referred to as the
"Shares"). No funds taken by an Investor for deposit in an escrow account with
Texas Commerce Bank, N.A. shall be released from such escrow account until all
conditions to closing set forth herein have been satisfied.
2. Closing Date; Delivery.
2.1 Closing Date. The first closing of the sale of the Series
C Preferred hereunder shall take place at such time and place upon which the
Company and the purchasers of at least $1,000,000 of Series C Preferred shall
agree (a "Closing"). The date of a Closing is hereinafter referred to as the
"Closing Date."
2.2 Delivery. At a Closing, the Company will deliver to each
Investor purchasing at such closing a certificate, registered in the Investors'
name, representing the number of shares of Series C Preferred to be purchased by
such Investor against payment of the purchase price therefor by check payable to
the Company or by wire transfer per the Company's wiring instructions.
2.3 Subsequent Sales. Following the date of the first Closing
but not after March 31, 1996, the Company may sell up to the balance of the
1,183,000 authorized shares of Series C Preferred Stock which have not been
previously sold. Each such sale shall be considered a "Closing" hereunder and
each purchaser shall be deemed an "Investor" hereunder and shall append a
signature page to this Agreement.
<PAGE> 6
3. Representations and Warranties of the Company. Except as set forth
in the Confidential Private Placement Memorandum previously delivered to each
Investor, which disclosure (particularly the section entitled "Risk Factors")
shall modify the following representations and warranties, the Company hereby
represents and warrants:
3.1 Organization, Good Standing and Qualification. The Company
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. The Company has all requisite corporate power and
authority to own and operate its properties and assets, to carry on its business
as now conducted and as proposed to be conducted, to enter into this Agreement
and to sell the Shares and carry out the other transactions contemplated
hereunder. The Company is duly qualified to transact business and is in good
standing in each jurisdiction in which the failure so to qualify would have a
material adverse effect on its business or properties.
3.2 Capitalization. The authorized capital of the Company
consists, or will consist prior to the first Closing, of:
(a) 6,308,523 shares of Preferred Stock
("Preferred Stock"), of which 3,011,423 shares have been designated Series A
Preferred Stock, 2,114,100 shares have been designated Series B Preferred Stock
and 1,183,000 shares have been designated Series C Preferred Stock. Prior to the
first Closing, there will be 3,011,423 shares of issued and outstanding Series A
Preferred Stock and 787,500 issued and outstanding shares of Series B Preferred
Stock and no issued or outstanding shares of Series C Preferred Stock. The
rights, privileges and preferences of the Series A, Series B and Series C
Preferred Stock are as stated in the Restated Certificate. At the first Closing,
the Company shall sell at least $1,000,000 of Series C Preferred. In no event,
shall more than 1,183,000 shares of Series C Preferred be sold pursuant to this
Agreement. There can be no assurance that greater than $1,000,000 of Series C
Preferred will be sold pursuant to this Agreement. All shares sold pursuant to
this Agreement shall be sold for $8.65 per share.
(b) 20,000,000 shares of Common Stock ("Common
Stock"), of which 2,036,132 shares are issued and outstanding.
(c) Except for (i) 1,187,630 shares of Series B
Preferred Stock that may be sold to Rhone-Poulenc Rorer (of which 15% is subject
to purchase directly from the Series A Preferred Stock held by Texas Biomedical
Development Partners) in the event the Company achieves certain technical
milestones, and (ii) 1,250,000 shares of Common Stock reserved for issuance
pursuant to the Company's 1995 Stock Plan (as of the first Closing 442,500
shares are subject to outstanding options and 807,500 shares are available for
future grant), there are no outstanding options, warrants, rights (including
conversion or preemptive rights) or agreements for the purchase or acquisition
from the Company of any shares of its capital stock or any other securities of
the Company.
(d) Except as set forth in this Agreement and the
Exhibits hereto, the Company is not a party to or is not subject to any
agreement or understanding relating to, and to the
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Company's knowledge there is no agreement or understanding between any persons
and/or entities which affects or relates to, the voting of shares of capital
stock of the Company or the giving of written consents by a shareholder or
director of the Company.
3.3 Subsidiaries. The Company does not presently own or
control, directly or indirectly, any interest in any other corporation,
association, or other business entity.
3.4 Authorization. All corporate action on the part of the
Company, its officers, directors and stockholders necessary for the
authorization, execution and delivery of this Agreement, the performance of all
obligations of the Company hereunder and the authorization, issuance (or
reservation for issuance) and delivery of the Series C Preferred sold hereunder
and the Common Stock issuable upon conversion of the Series C Preferred has been
taken or will be taken prior to the Closing. This Agreement constitutes a valid
and legally binding obligation of the Company, enforceable in accordance with
its terms, except as such enforcement is limited by bankruptcy, insolvency and
similar laws affecting creditor rights.
3.5 Valid Issuance of Preferred and Common Stock.
(a) The Series C Preferred purchased by the
Investors hereunder, when issued, sold and delivered in accordance with the
terms hereof for the consideration expressed herein, will be duly and validly
issued, fully paid and nonassessable and not subject to any preemptive rights,
rights of first refusal or other similar rights imposed by the Company, and will
be issued in compliance with all applicable federal and state securities laws.
The Common Stock issuable upon conversion of the Series C Preferred has been
duly and validly reserved for issuance and, upon issuance in accordance with the
terms of the Restated Certificate, shall be duly and validly issued, fully paid
and nonassessable, free of any liens or encumbrances and not subject to any
preemptive rights, rights of first refusal or other similar rights imposed by
the Company, and issued in compliance with all applicable federal and state
securities laws.
(b) The outstanding shares of Common Stock,
Series A Preferred Stock and Series B Preferred Stock are duly and validly
authorized and issued, fully paid and nonassessable, and were issued in
compliance with all applicable federal and state securities laws.
3.6 Governmental Consents. No consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with, any federal, state or local governmental authority on the part of
the Company is required in connection with the consummation of the transactions
contemplated by this Agreement, except for registration or qualification, or
taking such action to secure exemption from such registration or qualification,
under applicable state or federal securities laws, which actions shall be taken
on a timely basis as may be required.
3.7 Litigation. There is no action, suit, proceeding or
investigation pending or currently threatened against the Company which
questions the validity of this Agreement or the right of the Company to enter
into it, or to consummate the transactions contemplated hereby, or which might
result, either individually or in the aggregate, in any adverse changes in the
assets, condition,
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<PAGE> 8
affairs or prospects of the Company, financially or otherwise, or any change in
the current equity ownership of the Company, nor is the Company aware that there
is any basis for the foregoing. The foregoing includes, without limitation,
actions pending or threatened (on any basis therefor known to the Company)
involving the prior employment of any of the Company's employees, their use in
connection with the Company's business of any information or techniques
allegedly proprietary to any of their former employers, or their obligations
under any agreements with prior employers. The Company is not a party or subject
to the provisions of any order, writ, injunction, judgment or decree of any
court or government agency or instrumentality. There is no action, suit,
proceeding or investigation by the Company currently pending or which the
Company intends to initiate.
3.8 Employees. The Company is not aware, nor has a third party
asserted to the Company, that any of its employees is obligated under any
contract (including licenses, covenants or contracts of any nature) or other
agreement, or subject to any judgment, decree or order of any court or
administrative agency, that would interfere with the use of his best efforts to
promote the interests of the Company or that would conflict with the Company's
business as proposed to be conducted. Neither the execution nor delivery of this
Agreement, nor the carrying on of the Company's business by the employees of the
Company, nor the conduct of the Company's business as proposed, will, to the
Company's knowledge, conflict with or result in a breach of the terms,
conditions or provisions of, or constitute a default under, any contract,
covenant or instrument under which any of such employees is now obligated.
3.9 Patents and Trademarks. To its knowledge, the Company has
sufficient title and ownership of all trademarks, service marks, trade names,
copyrights, trade secrets, information, proprietary rights, processes, and, to
its knowledge, patents, necessary for its business as now conducted without any
conflict with or infringement of the rights of others. There are no outstanding
options, licenses, or agreements of any kind relating to the foregoing, nor is
the Company bound by or a party to any options, licenses or agreements of any
kind with respect to the patents, trademarks, service marks, trade names,
copyrights, trade secrets, licenses, information, proprietary rights and
processes of any other person or entity. The Company has not received any
communications alleging that the Company has violated any of the patents,
trademarks, service marks, trade names, copyrights or trade secrets or other
proprietary rights of any other person or entity.
3.10 Compliance with Other Instruments.
(a) The Company is not in violation or default of
any provisions of its Certificate of Incorporation or Bylaws or of any
instrument, judgment, order, writ, decree or contract to which it is a party or
by which it is bound or, to its knowledge, of any provision of federal or state
statute, rule or regulation applicable to the Company, and, to its knowledge,
there is no such provision which materially and adversely affects the business
of the Company or its properties or assets. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby will not result in any such violation or be in conflict with
or constitute, with or without the passage of time and giving of notice, either
a default under any such
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<PAGE> 9
provision, instrument, judgment, order, writ, decree or contract or an event
which results in the creation of any lien, charge or encumbrance upon any assets
of the Company.
(b) The Company has avoided every condition, and
has not performed any act, the occurrence of which would result in the Company's
loss of any right granted under any license, distribution or other agreement.
3.11 Adverse Agreements. The Company is not a party to and is
not bound by any contract, agreement or instrument, or subject to any
restriction under its Restated Certificates or Bylaws, which materially
adversely affects its business as now conducted.
3.12 Disclosure. The Company has fully provided each Investor
with all the information which such Investor has requested for deciding whether
to purchase the Shares and all information which the Company believes is
reasonably necessary to enable all Investor to make such decision. Neither this
Agreement nor the Confidential Private Placement Memorandum previously provided
to the Investors, when taken as a whole, contains any untrue statement of a
material fact or omits to state a material fact necessary to make the statements
herein or therein not misleading.
3.13 Title to Property and Assets. The Company owns its
property and assets free and clear of all mortgages, liens, loans and
encumbrances, except such encumbrances and liens which arise in the ordinary
course of business and do not materially impair the Company's ownership or use
of such property or assets. With respect to the property and assets it leases,
the Company is in compliance with such leases and, to its knowledge, holds a
valid leasehold interest free of any liens, claims or encumbrances.
3.14 Financial Statements. The Company has delivered to the
Investors its audited financial statements as of June 30, 1995 and June 30,
1994, and for the period from the Company's inception through June 30, 1995 (the
"Financial Statements"). The Financial Statements have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis throughout the periods indicated and with each other and includes all
footnotes required by generally accepted accounting principles. The Financial
Statements fairly present the financial condition and operating results of the
Company as of the dates, and for the periods, indicated therein. Except as set
forth in the Financial Statements, the Company has no material liabilities,
contingent or otherwise, other than (i) liabilities incurred in the ordinary
course of business subsequent to June 30, 1995 and (ii) obligations under
contracts and commitments incurred in the ordinary course of business and not
required under generally accepted accounting principles to be reflected in the
Financial Statements, which, in both cases, individually or in the aggregate,
are not material to the financial condition or operating results of the Company.
Except as disclosed in the Financial Statements, the Company is not a guarantor
or indemnitor of any indebtedness of any other person, firm or corporation. The
Company maintains and will continue to maintain a standard system of accounting
established and administered in accordance with generally accepted accounting
principles.
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<PAGE> 10
3.15 Employee Benefit Plans. Other than the Company's 401(k)
plan (to which the Company is not obligated to make contributions), the Company
does not have any Employee Benefit Plan as defined in the Employee Retirement
Income Security Act of 1974.
3.16 Tax Returns, Payments and Elections. The Company has
filed all tax returns and reports as required by law. These returns and reports
are true and correct in all material respects. The Company has not elected
pursuant to the Internal Revenue Code of 1986, as amended ("Code"), to be
treated as a Subchapter S corporation or a collapsible corporation pursuant to
Section 341(f) or Section 1362(a) of the Code, nor has it made any other
elections pursuant to the Code (other than elections which relate solely to
methods of accounting, depreciation or amortization) which would have a material
effect on the Company, its financial condition, its business as presently
conducted or proposed to be conducted or any of its properties or material
assets.
3.17 Labor Agreements and Actions. The Company is not bound by
or subject to (and none of its assets or properties is bound by or subject to)
any written or oral, express or implied, contract, commitment or arrangement
with any labor union, and no labor union has requested or, to the knowledge of
the Company, has sought to represent any of the employees, representatives or
agents of the Company. There is no strike or other labor dispute involving the
Company pending, or to the knowledge of the Company threatened, which could have
a material adverse effect on the assets, properties, financial condition,
operating results, or business of the Company (as such business is presently
conducted and as it is proposed to be conducted), nor is the Company aware of
any labor organization activity involving its employees. The Company is not
aware that any officer or key employee, or that any group of key employees,
intends to terminate their employment with the Company, nor does the Company
have a present intention to terminate the employment of any of the foregoing.
The employment of each officer and employee of the Company is terminable at the
will of the Company.
3.18 Offering. Subject in part on the accuracy of the
Investors' representations set forth in Section 4 of this Agreement, the offer,
sale and issuance of the Shares to be issued in conformity with the terms of
this Agreement constitute transactions exempt from the registration requirements
of Section 5 of the Securities Act of 1933, as amended (the "Act"), and from all
applicable state registration or qualification requirements.
4. Representations and Warranties of the Investors. Each Investor
hereby represents and warrants the following:
4.1 Authorization. This Agreement constitutes its valid and
legally binding obligation, enforceable in accordance with its terms, except as
such enforcement is limited by bankruptcy, insolvency and similar laws affecting
creditor rights. It has full power and authority to enter into this Agreement.
4.2 Purchase Entirely for Own Account. This Agreement is made
with the Investors in reliance upon the Investors' representation to the
Company, which each Investor execution of this Agreement hereby confirms, that
the Series C Preferred to be received by the
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<PAGE> 11
Investor and the Common Stock issuable upon conversion of the Series C Preferred
Stock (collectively, the "Securities") will be acquired for investment for the
Investor's own account, not as a nominee or agent, and not with a view to the
resale or distribution of any part thereof, and that the Investor has no present
intention of selling, granting any participation in, or otherwise distributing
the same. By executing this Agreement, the Investor further represents that the
Investor does not have any contract, undertaking, agreement or arrangement with
any person to sell, transfer or grant participation to such person or to any
third person, with respect to any of the Securities.
4.3 Disclosure of Information. The Investor has received all
the information it considers necessary or appropriate for deciding whether to
purchase the Series C Preferred hereunder. The Investor further represents that
it has had an opportunity to ask questions and receive answers from the Company
regarding the terms and conditions of the offering of the Series C Preferred.
4.4 Investment Experience. The Investor is an investor in
securities of companies in the development stage and acknowledges it is able to
fend for itself, and bear the economic risk of its investment and has such
knowledge and experience in financial or business matters that it is capable of
evaluating the merits and risks of the investment in the Series C Preferred
hereunder.
4.5 Accredited Investor. It is an "accredited investor" as
defined in Rule 501(a) promulgated under the Securities Act.
4.6 Residence. The legal residence of the Investor is set
forth on its signature page to this Agreement.
4.7 Restricted Securities. The Investor understands that the
shares of Series C Preferred it is purchasing are characterized as "restricted
securities" under the federal securities laws inasmuch as they are being
acquired from the Company in a transaction not involving a public offering and
that under such laws and applicable regulations such securities may be resold
without registration under the Act only in certain limited circumstances. In
this connection, the Investor represents that it is familiar with Rule 144, as
presently in effect, and understands the resale limitations imposed thereby and
by the Act. The Investor understands that there is no public market for the
Securities and there can be no assurance that there will ever be a public market
for the Securities.
4.8 Further Limitations on Disposition. Without in any way
limiting the representations set forth above, the Investor further agrees not to
make any disposition of all or any portion of the Series C Preferred purchased
hereunder or Common Stock issuable upon the conversion of the Series C
Preferred, unless and until:
(a) There is then in effect a Registration
Statement under the Act covering such proposed disposition and such disposition
is made in accordance with such Registration Statement; or
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<PAGE> 12
(b) (i) The Investor shall have notified the
Company of the proposed disposition and shall have furnished the Company with a
detailed statement of the circumstances surrounding the proposed disposition,
and (ii) if reasonably requested by the Company, the Investor shall have
furnished the Company with an opinion of counsel, reasonably satisfactory to the
Company, that such disposition will not require registration of such shares
under the Act.
(c) Notwithstanding the provisions of paragraphs
(a) and (b) above, no such registration statement or opinion of counsel shall be
necessary for a transfer by an Investor pursuant to Rule 144 if such Investors
makes the factual representations reasonably requested by the Company indicating
the availability of the exemption provided by Rule 144.
4.9 Legends. It is understood that the certificates evidencing
the Series C Preferred and the Common Stock issuable upon conversion thereof,
may bear one or all of the following legends:
(a) "THESE SECURITIES HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933. 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 UNDER THE
SECURITIES ACT OF 1933."
(b) Any legend required by applicable state
securities laws.
5. Conditions to Closing of Investors. The Investors' obligation to
purchase the Series C Preferred at a Closing is, at the option of each Investor,
subject to the fulfillment as of the Closing Date of the following conditions:
5.1 Representations and Warranties Correct. The
representations and warranties made by the Company in Section 3 hereof shall be
true and correct in all material respects as of the Closing Date.
5.2 Covenants. All covenants, agreements and conditions
contained in this Agreement to be performed by the Company on or prior to the
Closing Date shall have been performed or complied with in all material
respects.
5.3 Blue Sky. The Company shall have obtained all necessary
Blue Sky law permits and qualifications, or have the availability of exemptions
therefrom, required by any state for the offer and sale of the Series C
Preferred and the Common Stock issuable upon conversion thereof.
5.4 Restated Certificate. The Restated Certificate shall have
been filed with the Delaware Secretary of State.
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<PAGE> 13
5.5 Minimum Purchase Amount. The first Closing under this
Agreement shall be for at least $1,000,000 of Series C Preferred Stock.
6. Conditions to Closing of Company. The Company's obligation to sell
and issue the Series C Preferred at a Closing is, at the option of the Company,
subject to the fulfillment as of the Closing Date of the following conditions:
6.1 Representations. The representations made by the Investors
in Section 4 hereof shall be true and correct when made, and shall be true and
correct in all material respects on the Closing Date.
6.2 Blue Sky. The Company shall have obtained all necessary
Blue Sky law permits and qualifications, or have the availability of exemptions
therefrom, required by any state for the offer and sale of the Series C
Preferred and the Common Stock issuable upon conversion thereof.
6.3 Restated Certificate. The Restated Certificate shall have
been filed with the Delaware Secretary of State.
7. Registration Rights. The Company covenants and agrees as follows:
7.1 Definitions. For purposes of this Section 7:
(a) The term "register," "registered," and
"registration" refer to a registration effected by preparing and filing a
registration statement or similar document in compliance with the Act, and the
declaration or ordering of effectiveness of such registration statement or
document;
(b) The term "Registrable Securities" means (1)
the Common Stock issuable or issued upon conversion of the Company's Series B
Preferred Stock, (2) the Common Stock issuable or issued upon conversion of any
Series A Preferred Stock held by individuals and entities who signed a consent
for the purpose of being bound by Section 20 of the Company's Series B Preferred
Stock Purchase Agreement, (3) any Common Stock held by individuals and entities
who have signed a consent for the purposes of being bound by Section 20 of the
Company's Series B Preferred Stock Purchase Agreement; (4) the Common Stock
issuable or issued upon conversion of the Company's Series C Preferred Stock and
(5) 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 Series A Preferred Stock, Series B Preferred Stock, Series
C Preferred Stock, or Common Stock, excluding in all cases, however, (i) any
Registrable Securities sold by a person in a transaction in which his rights
under this Section 7 are not assigned, or (ii) any Registrable Securities sold
to or through a broker or dealer or underwriter in a public distribution or a
public securities transaction.
(c) The number of shares of "Registrable
Securities then outstanding" shall be determined by the number of shares of
Common Stock outstanding which are, and the
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number of shares of Common Stock issuable pursuant to then exercisable or
convertible securities which are, Registrable Securities.
(d) The term "Holder" means any person owning or
having the right to acquire Registrable Securities or any assignee thereof in
accordance with Section 7.13 hereof; and
(e) The term "Form S-3" means such form under the
Act as in effect on the date hereof or any registration form under the Act
subsequently adopted by the Securities and Exchange Commission ("SEC") which
permits inclusion or incorporation of substantial information by reference to
other documents filed by the Company with the SEC.
(f) The term "Act" shall mean the Securities Act
of 1933, as amended.
7.2 Request for Registration.
(a) If the Company shall receive at any time
after December 31, 1998, either (i) a written request from the Holders of at
least fifty percent (50%) of the Registrable Securities (including securities
convertible into Registrable Securities) then outstanding that the Company file
a registration statement under the Act covering the registration of at least
forty percent (40%) of the Registrable Securities (or a lesser percentage if the
anticipated aggregate offering price, net of underwriting discounts and
commissions, would exceed $10,000,000) or (ii) a written request from
Rhone-Poulenc Rorer Pharmaceuticals, Inc. that the Company file a registration
statement under the Act covering the registration of at least sixty percent
(60%) of the Registrable Securities held by Rhone-Poulenc Rorer Pharmaceuticals,
Inc. (or a lesser percentage if the anticipated aggregate offering price, net of
underwriting discounts and commissions would exceed $10,000,000), then the
Company shall, within ten (10) days of the receipt thereof, give written notice
of such request to all Holders and shall, subject to the limitations of
subsections 7.2(b) and (c), effect as soon as practicable, and in any event
within 120 days of the receipt of such request, the registration under the Act
of all Registrable Securities which the Holders request to be registered within
20 days of the mailing of such written notice by the Company.
(b) Notwithstanding the foregoing, the Company
shall not be obligated to take any action to effect any such registration,
qualification or compliance pursuant to subsection 7.2(a):
(i) During the period starting with the
date sixty (60) days prior to the Company's estimated date of filing of, and
ending on the date six months immediately following the effective date of, any
registration statement pertaining to securities of the Company (other than a
registration of securities in a Rule 145 transaction or with respect to an
employee benefit plan), provided that the Company is actively employing in good
faith all reasonable efforts to cause such registration statement to become
effective;
(ii) After the Company has effected two
registrations pursuant to subsection 7.2(a) (i) (if the request is being made
pursuant to subsection 7.2(a)(i)), and such
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<PAGE> 15
registration has been declared or ordered effective, or after the Company has
effected a single registration pursuant to subsection 7.2(a)(ii) (if the request
is being made pursuant to subsection 7.2(a)(ii)) and such registration has been
declared or ordered effective;
(iii) If the Company shall furnish to such
Holders a certificate signed by the President of the Company stating that in the
good faith judgment of the Board of Directors it would be seriously detrimental
to the Company or its shareholders for a registration statement to be filed at
such time, then the Company's obligation to use its best efforts to register,
qualify or comply under subsection 7.2(a) shall be deferred for a period not to
exceed 120 days from the date of receipt of written request from the Holders;
provided, however, that the Company may not utilize this right more than once in
any twelve-month period.
(c) If the Holders initiating the registration
request hereunder ("Initiating Holders") intend to distribute the Registrable
Securities covered by their request by means of an underwriting, they shall so
advise the Company as a part of their request made pursuant to this Section 7.2
and the Company shall include such information in the written notice referred to
in subsection 7.2(a). In such event, the right of any Holder to include his
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 (unless otherwise mutually agreed by
a majority in interest of the Holders requesting the registration and such
Holder) to the extent provided herein. All Holders proposing to distribute their
securities through such underwriting shall (together with the Company as
provided in subsection 7.4(e)) enter into an underwriting agreement in customary
form with the underwriter or underwriters selected for such underwriting by a
majority in interest of the Holders requesting the registration and reasonably
acceptable to the Company. Notwithstanding any other provision of this Section
7.2, if the underwriter advises the Holders requesting the registration that
marketing factors require a limitation of the number of shares to be
underwritten, then the Initiating Holders shall so advise all Holders of
Registrable Securities which would otherwise be underwritten pursuant hereto,
and the number of shares of Registrable Securities that may be included in the
underwriting shall be allocated among all Holders thereof, in proportion (as
nearly as practicable) to the amount of Registrable Securities of the Company
owned by each Holder; provided, however, that the number of shares of
Registrable Securities to be included in such underwriting shall not be reduced
unless all other securities are first entirely excluded from such underwriting.
7.3 Company Registration. If (but without any obligation to do
so) the Company proposes to register (including for this purpose a registration
effected by the Company for shareholders other than the Holders) any of its
stock or other securities under the Act in connection with the public offering
of such securities solely for cash (other than a registration relating solely to
the sale of securities to participants in a Company stock plan, or a
registration on any form which does not include substantially the same
information as would be required to be included in a registration statement
covering the sale of the Registrable Securities), the Company shall, at such
time, promptly give each Holder written notice of such registration. Upon the
written request of each Holder given within twenty (20) days after mailing of
written notice by the Company, the Company
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<PAGE> 16
shall, subject to the provisions of Section 7.8, cause to be registered under
the Act all of the Registrable Securities that each such Holder has requested to
be registered.
7.4 Obligations of the Company. Whenever required under this
Section 7 to effect the registration of any Registrable Securities, the Company
shall, as expeditiously as reasonably possible:
(a) Prepare and file with the SEC a registration
statement with respect to such Registrable Securities and use its best efforts
to cause such registration statement to become effective, and, upon the request
of the Holders of a majority of the Registrable Securities registered
thereunder, keep such registration statement effective for up to sixty (60)
days.
(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 may be necessary to comply with
the provisions of the Act with respect to the disposition of all securities
covered by such registration statement.
(c) Furnish to the Holders such numbers of copies
of a prospectus, including a preliminary prospectus, in conformity with the
requirements of the 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 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 of such
offering. Each Holder participating in such underwriting shall also enter into
and perform its obligations under such an agreement.
(f) Notify each Holder of Registrable Securities
covered by such registration statement at any time when a prospectus relating
thereto is required to be delivered under the Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing.
(g) Furnish, at the request of any Holder
requesting registration of Registrable Securities pursuant to this Section 7, on
the date that such Registrable Securities are delivered to the underwriters for
sale in connection with a registration pursuant to this Section 7, if such
securities are being sold through underwriters, or, if such securities are not
being sold through
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<PAGE> 17
underwriters, on the date that the registration statement with respect to such
securities becomes effective, (i) an opinion, dated such date, of the counsel
representing the Company for the purposes of such registration, in form and
substance as is customarily given to underwriters in an underwritten public
offering, addressed to the underwriters, if any, and to the Holders requesting
registration of Registrable Securities and (ii) a letter dated such date, from
the independent certified public accountants of the Company, in form and
substance as is customarily given by independent certified public accountants to
underwriters in an underwritten public offering, addressed to the underwriters,
if any, and to the Holders requesting registration of Registrable Securities.
7.5 Furnish Information. It shall be a condition precedent to
the obligations of the Company to take any action pursuant to this Section 7
with respect to the Registrable Securities of any selling Holder that such
holder shall furnish to the Company such information regarding itself, the
Registrable Securities held by it, and the intended method of disposition of
such securities as shall be required to effect the registration of such Holder's
Registrable Securities.
7.6 Expenses of Demand Registration. All expenses, other than
underwriting discounts and commissions and any fees and expenses of a special
counsel of a selling stockholder, incurred in connection with registrations,
filings or qualifications pursuant to Section 7.2, including (without
limitation) all registration, federal and state filing and qualification fees
and expenses, printers' and accounting fees and fees and disbursements of
counsel for the Company, shall be paid by the Company; provided, however, that
the Company shall not be required to pay for any expenses of any registration
proceeding begun pursuant to Section 7.2 if the registration request is
subsequently withdrawn at the request of the Holders of a majority of the
Registrable Securities to be registered (in which case all Participating Holders
shall bear such expenses), unless the Holders of a majority of the Registrable
Securities agree to forfeit their right to one demand registration pursuant to
Section 7.2; provided further, however, that if at the time of such withdrawal,
the Holders have learned of a material adverse change in the condition,
business, or prospects of the Company from that known to the Holders at the time
of their request, then the Holders shall not be required to pay any of such
expenses and shall retain their rights pursuant to Section 7.2. The Company's
obligations under this 7.6 shall apply to each registration pursuant to Section
7.2.
7.7 Expenses of Company Registration. The Company shall bear
and pay all expenses incurred in connection with any registration, filing or
qualification of Registrable Securities with respect to the registrations
pursuant to Section 7.3 for each Holder (which right may be assigned as provided
in Section 7.13), including (without limitation) all registration, filing,
qualification, printers and accounting fees relating or apportionable thereto,
but excluding underwriting discounts and commissions relating to Registrable
Securities and any fees or expenses of a special counsel of a selling
stockholder.
7.8 Underwriting Requirements. In connection with any offering
involving an underwriting of shares being issued by the Company, the Company
shall not be required under Section 7.3 to include any of the Holders'
securities in such underwriting unless they accept the terms of the underwriting
as agreed upon between the Company and the underwriters selected by it, and then
only in such quantity as is provided for herein. If the underwriters determine
that marketing
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<PAGE> 18
factors require a limitation of the number of shares to be underwritten, the
underwriters may limit the number of Registrable Securities to be included in
the registration on a pro-rata basis, or may exclude Registrable Securities
entirely from such registration (the securities so included to be apportioned
pro rata among the selling stockholders according to the total amount of
securities entitled to be included therein owned by each selling stockholder or
in such other proportions as shall mutually be agreed to by such selling
stockholders) but in no event shall any shares being sold by a stockholder
exercising a demand registration right similar to that granted in Section 7.2 be
excluded from such offering. For purposes of apportionment, any selling
stockholder which is a Holder of Registrable Securities and which is a
partnership or corporation, the partners, retired partners and shareholders 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 persons shall be
deemed to be a single "selling stockholder", and any pro rata reduction with
respect to such "selling stockholder" shall be based upon the aggregate amount
of shares carrying registration rights owned by all entities and individuals
included in such "selling stockholder", as defined in this sentence.
7.9 Delay of Registration. 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 7.
7.10 Indemnification. In the event any Registrable Securities
are included in a registration statement under this Section 7:
(a) To the extent permitted by law, the Company
will indemnify and hold harmless each Holder, any underwriter (as defined in the
Act) for such Holder and each person, if any, who controls such Holder or
underwriter within the meaning of the Act or the Securities Exchange Act of
1934, amended (the "1934 Act"), against any losses, claims, damages, or
liabilities (joint or several) to which they may become subject under the Act,
the 1934 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"): (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 Act, the 1934 Act, any state securities law or
any rule or regulation promulgated under the Act, the 1934 Act or any state
securities law; and the Company will pay to each such Holder, underwriter or
controlling person, as incurred, 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 subsection 7.10(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 any such Holder, underwriter or controlling person.
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<PAGE> 19
(b) To the extent permitted by law, each selling
Holder will indemnify and hold harmless the Company, each of its directors, each
of its officers who has signed the registration statement, each person, if any,
who controls the Company within the meaning of the Act, any underwriter, any
other Holder selling securities in such registration statement and any
controlling person of any such underwriter or other Holder, against any losses,
claims, damages, or liabilities (joint or several) to which any of the foregoing
persons may become subject, under the Act, the 1934 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
expressly for use in connection with such registration; and each such Holder
will pay, as incurred, any legal or other expenses reasonably incurred by any
person intended to be indemnified pursuant to this subsection 7.10(b), in
connection with investigating or defending any such loss, claim, damage,
liability, or action; provided, however, that the indemnity agreement contained
in this subsection 7.10(b) 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 Holder, which consent shall not be unreasonably
withheld; provided, that, in no event shall any indemnity under this subsection
7.10(b) exceed the gross proceeds from the offering received by such Holder.
(c) Promptly after receipt by an indemnified
party under this Section 7.10 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
7.10, 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 prejudicial to its ability to defend
such action, shall relieve such indemnifying party of any liability to the
indemnified party under this Section 7.10, 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
7.10.
(d) The obligations of the Company and Holders
under this Section 7.10 shall survive the completion of any offering of
Registrable Securities in a registration statement under this Section 7, and
otherwise.
7.11 Reports Under Securities Exchange Act of 1934. With a
view to making available to the Holders the benefits of Rule 144 promulgated
under the Act and any other rule or regulation of the SEC that may at any time
permit a Holder to sell securities of the Company to the public without
registration or pursuant to a registration on Form S-3, the Company agrees to:
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<PAGE> 20
(a) make and keep public information available,
as those terms are understood and defined in SEC Rule 144, at all times after
ninety (90) days after the effective date of the first registration statement
filed by the Company for the offering of its securities to the general public;
(b) take such action, including the voluntary
registration of its Common Stock under Section 12 of the 1934 Act, as is
necessary to enable the Holders to utilize Form S-3 for the sale of their
Registrable Securities, such action to be taken as soon as practicable after the
end of the fiscal year in which the first registration statement filed by the
Company for the offering of its securities to the general public is declared
effective;
(c) file with the SEC in a timely manner all
reports and other documents required of the Company under the Act and the 1934
Act; and
(d) furnish to any Holder, so long as the Holder
owns any Registrable Securities, forthwith upon request (i) a written statement
by the Company that it has complied with the reporting requirements of SEC Rule
144 (at any time after ninety (90) days after the effective date of the first
registration statement filed by the Company), the Act and the 1934 Act (at any
time after it has become subject to such reporting requirements), or that it
qualifies as a registrant whose securities may be resold pursuant to Form S-3
(at any time after it so qualifies), (ii) a copy of the most recent annual or
quarterly report of the Company and such other reports and documents so filed by
the Company, and (iii) such other information as may be reasonably requested in
availing any Holder of any rule or regulation of the SEC (exclusive of Rule
144A) which permits the selling of any such securities without registration or
pursuant to such form.
7.12 Form S-3 Registration. In case the Company shall receive
from any Holder or Holders of the Registrable Securities a written request or
requests that the Company effect a registration on Form S-3 and any related
qualification or compliance with respect to shares of Registrable Securities the
reasonably anticipated aggregate price to the public of which, net of
underwriting discounts and commissions, would exceed $1,000,000 all or a part of
the Registrable Securities owned by such Holder or Holders, the Company will:
(a) promptly give written notice of the proposed
registration, and any related qualification or compliance, to all other Holders;
and
(b) as soon as practicable, effect such
registration and all such qualifications and compliances as may be so requested
and as would permit or facilitate the sale and distribution of all or such
portion of such Holder's or Holders' Registrable Securities as are specified in
such request, together with all or such portion of the Registrable Securities of
any other Holder or Holders joining in such request as are specified in a
written request given within 15 days after receipt of such written notice from
the Company; provided, however, that the Company shall not be obligated to
effect any such registration, qualification or compliance, pursuant to this
Section 7.12: (1) if Form S-3 is not available for such offering by the Holders;
(2) if the Holders, together with the holders of any other securities of the
Company entitled to inclusion in such registration, propose to
-16-
<PAGE> 21
sell Registrable Securities and such other securities (if any) at an aggregate
price to the public (net of any underwriters' discounts or commissions) of less
than $1,000,000; (3) if the Company shall furnish to the Holders a certificate
signed by the President of the Company stating that in the good faith judgment
of the Board of Directors of the Company, it would be seriously detrimental to
the Company and its shareholders for such Form S-3 Registration to be effected
at such time, in which event the Company shall have the right to defer the
filing of the Form S-3 registration statement for a period of not more than 120
days after receipt of the request of the Holder or Holders under this Section
7.12; provided, however, that the Company shall not utilize this right more than
once in any twelve (12) month period; or (4) in any particular jurisdiction in
which the Company would be required to qualify to do business or to execute a
general consent to service of process in effecting such registration,
qualification or compliance.
(c) Subject to the foregoing, the Company shall
file a registration statement covering the Registrable Securities and other
securities so requested to be registered as soon as practicable after receipt of
the request or requests of the Holders. All expenses incurred in connection with
the registrations requested pursuant to Section 7.12, (exclusive of underwriting
discounts and commissions and any fees and expenses of a special counsel to a
selling shareholder) shall be paid by the Company.
7.13 Assignment of Registration Rights. The rights to cause
the Company to register Registrable Securities pursuant to this Section 7 may be
assigned by a Holder to a transferee or assignee of such securities who acquires
(i) at least 300,000 shares of Registrable Securities, or (ii) all shares of
Registrable Securities then held by such Holder if such Holder transfers all
such Registrable Securities to a single entity, provided the Company is, within
a reasonable time after such transfer, furnished with written notice of the name
and the address of such transferee or assignee and the securities with respect
to which such registration rights are being assigned; and provided, further,
that such assignment shall be effective only if immediately following such
transfer the further disposition of such securities by the transferee or
assignee is restricted under the Act. Notwithstanding the above, such rights may
be assigned by a Holder to a limited partner or general partner of the Holder
regardless of the number of shares acquired by such transferee.
7.14 Limitations on Subsequent Registration Rights. From and
after the date of this Agreement, the Company shall not, without the prior
written consent of the Holders of a majority of the Registrable Securities,
enter into any agreement (other than an amendment to this agreement or
supplemental agreement effected in accordance with Section 7.16 of this
Agreement) with any holder or prospective holder of any securities of the
Company which would allow such holder or prospective holder (a) to include such
securities in any registration filed pursuant to Section 7.2 hereof, unless
under the terms of such agreement such holder or prospective holder may include
such securities in any such registration only to the extent that the inclusion
of such securities will not reduce the amount of the Registrable Securities of
the Holders which are included in any such registration or (b) to make a demand
registration which could result in such registration being declared effective
prior to the earlier of either of the dates set forth in subsection 7.2(a) or
within six months of the effective date of any registration effected pursuant to
Section 7.2.
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<PAGE> 22
7.15 "Market Stand-Off" Agreement. Each holder of securities
which are or at one time were Registrable Securities (or which are or were
convertible into Registrable Securities) hereby agrees that, during a period not
to exceed 180 days, following the effective date of a registration statement of
the Company filed under the Act, it shall not, to the extent requested by the
Company and such underwriter, sell or otherwise transfer or dispose of (other
than to donees who agree to be similarly bound) any Common Stock or Preferred
Stock of the Company held by it at any time during such period except Common
Stock included in such registration; provided, however, that:
(a) such agreement shall be applicable only to
the first such registration statement of the Company which covers Common Stock
(or other securities) to be sold on its behalf to the public in an underwritten
offering; and
(b) all officers and directors of the Company,
and all other persons with registration rights (whether or not pursuant to this
Agreement) enter into similar agreements.
In order to enforce the foregoing covenant, the Company may
impose stop-transfer instructions with respect to the Registrable Securities of
each Holder (and the shares or securities of every other person subject to the
foregoing restriction) until the end of such period.
7.16 Amendment of Registration Rights. Any provision of this
Section 7 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 (i) the Company, (ii) the
holders of at least sixty-seven percent (67%) of the Registrable Securities then
outstanding, (iii) the holders of a majority of the Series B Preferred Stock
then outstanding and (iv) the holders of a majority of the Series C Preferred
Stock then outstanding, and with the same consent the Company may enter into a
supplemental agreement for the purpose of adding any provisions to or changing
in any manner or eliminating any of the provisions of this Section 7. Any
amendment, waiver or supplemental agreement effected in accordance with this
Section 7.16 shall be binding upon each holder of any securities which are or at
one time were Registrable Securities (or which are or were convertible into
Registrable Securities), each future holder of all such securities, and the
Company.
7.17 Termination of Registration Rights. No stockholder shall
be entitled to exercise any right provided for in this Section 7 after six (6)
years following the consummation of the sale of securities pursuant to a
registration statement filed by the Company under the Act in connection with the
initial underwritten offering of its securities to the general public.
7.18 Prior Registration Rights. Each undersigned Investor and
each undersigned party who joins this Agreement solely for the purposes of this
Section 7 who is entitled to registration rights pursuant to the Company's
Series B Preferred Stock Purchase Agreement hereby agrees on behalf of all
holders of such registration rights that they shall be amended and restated in
their entirety and the registration rights under this Section 7 shall be
substituted.
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<PAGE> 23
8. Miscellaneous.
8.1 Survival of Warranties. The warranties, representations
and covenants of the Company and the Investors contained in this Agreement shall
survive the execution and delivery of this Agreement and the Closing and shall
in no way be affected by any investigation of the subject matter thereof made by
or on behalf of the Investors or the Company.
8.2 Successors and Assigns. The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the respective
successors and assigns of the parties. Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the parties hereto or
their respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
8.3 Governing Law. This Agreement shall be governed by and
construed under the laws of the State of Delaware as applied to agreements among
Delaware residents entered into and to be performed entirely within Delaware.
8.4 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
8.5 Titles and Subtitles. The titles and subtitles used in
this Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
8.6 Notices. Unless otherwise provided, any notice required or
permitted under this Agreement shall be given in writing and shall be deemed
effectively given upon personal delivery to the party to be notified or upon
deposit with the United States Post Office, by registered or certified mail, or
other courier service, postage prepaid and addressed to the party to be notified
at the address indicated for such party in the Company's stock records or in the
case of the Company on the first page of this Agreement, or at such other
address as such party may designate by ten (10) days' advance written notice to
the other parties.
8.7 Expenses. Each party shall pay its own fees and expenses
with respect to this Agreement. If any action at law or in equity is necessary
to enforce or interpret the terms of this Agreement or the Restated Articles,
the prevailing party shall be entitled to reasonable attorney's fees, costs and
necessary disbursements in addition to any other relief to which such party may
be entitled.
8.8 Amendments and Waivers. Any term of this Agreement may be
amended and the observance of any term of this Agreement 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 Investors.
8.9 Severability. If one or more provisions of this Agreement
are held to be unenforceable under applicable law, such provision shall be
excluded from this Agreement and the
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<PAGE> 24
balance of the Agreement shall be interpreted as if such provision were so
excluded and shall be enforceable in accordance with its terms.
8.10 Aggregation of Stock. All shares of Common Stock, Series
A Preferred Stock, Series B Preferred and Series C Preferred Stock held or
acquired by affiliated entities or persons shall be aggregated together for the
purpose of determining the availability of any rights under this Agreement.
-20-
<PAGE> 25
IN WITNESS WHEREOF, the parties have executed this Series C Preferred
Stock Purchase Agreement as of the date set forth below.
INTROGEN THERAPEUTICS, INC.
By:
------------------------------
Title:
------------------------------
INVESTOR:
------------------------------------
(print name)
------------------------------------
(signature)
------------------------------------
(title, if applicable)
Resident Address:
-------------------------
-------------------------
-------------------------
Number of
Shares Purchased:
-------------------------
Date:
-------------------------
-21-
<PAGE> 1
EXHIBIT 10.8
BASIC LEASE INFORMATION
"Lease Date": February 9, 1996
"Tenant": Introgen Therapeutics, Inc., a Delaware
Corporation
Address of Tenant: 301 Congress Avenue
Suite 1850
Austin, Texas 78711
Contact: David G. Nance Telephone: 512/320-5010
"Landlord": Aetna Life Insurance Company
Address of Landlord: c/o Trammell Crow Central Texas, Inc.
301 Congress Avenue
Suite 1300
Austin, Texas 78711
Contact: Jeff Pace Telephone: 512/474-9900
"Premises": Suite No. 1850, which is located in the
office building, sometimes referred to as
301 Congress (the "Building") to be (or
which has been) constructed on the land
(the "Land") described in Exhibit A
attached hereto, which Premises are
outlined in the plan attached hereto as
Exhibit B.
"Property": Collectively, the Land and Building,
together with all landscaping, driveways,
parking areas, parking garages, and all
other buildings and improvements which are
now or hereafter located on the Land.
"Lease Term": The period commencing on the Commencement
Date (as defined in the Lease) and,
subject to and upon the terms and
conditions set forth in the Lease, or in
any exhibit or addendum thereto,
continuing for thirty-six (36) calendar
months thereafter, provided, however, if
the term of the Lease is deemed to have
commenced on a date other than the first
day of a calendar month, the expiration
date of the primary term shall be extended
so as to give effect to the full term
specified above in addition to the
remainder of the calendar month during
which the Lease is deemed to have
commenced.
"Estimated Commencement Date": March 1, 1996
"Net Rentable Area of the Premises": Three Thousand Six Hundred Seventy Seven
(3,677) square feet.
"Basic Rental": Three Thousand Three Hundred Seventy and
58/100 Dollars ($3,370.58) per month.
"Estimated Operating Expenses": $7.90 per square foot of NRA of the
Premises or per annum, or: Two Thousand
Four Hundred Twenty and 69/100 Dollars
($2,420.69) per month.
"Adjusted Rental": ($4,791.27) per month.
"Security Deposit": Five Thousand Seven Hundred Twenty Eight
and 00/100 Dollars ($5,791.27)
"Permitted Use": Tenant shall occupy the Premises for
general office purposes and for no other
use or purpose without the prior written
consent of Landlord.
This Basic Lease Information is hereby incorporated into and make a
part of the lease attached hereto (the "Lease").
Each reference in the Lease to any of the information or definitions
set forth in this Basic Lease Information shall mean and refer to the
information and definitions hereinabove set forth and shall be used in
conjunction with the provisions of the Lease. In the event of any direct
conflict between this Basic Lease Information and the Lease, this Basic Lease
Information shall control; provided, however, that those provisions of the Lease
(including its Exhibits) which expressly require an adjustment to any of the
matters set forth in this Basic Lease Information shall supersede the provisions
of this Basic Lease Information.
LANDLORD: TENANT:
AETNA LIFE INSURANCE COMPANY INTROGEN THERAPEUTICS, INC.,
A DELAWARE CORPORATION
/s/ THOMAS G. DUDECK /s/ JAMES W. ALBRECHT, JR.
- ---------------------------------- ------------------------------------
By: Thomas G. Dudeck By: James W. Albrecht, Jr.
------------------------------- ---------------------------------
Title: Assistant Vice President Title: Chief Financial Officer
---------------------------- ------------------------------
<PAGE> 2
OFFICE BUILDING LEASE AGREEMENT
THIS LEASE AGREEMENT is entered into as of the Lease Date set forth in the Basic
Lease Information by and between Aetna Life Insurance Company (hereinafter
called "Landlord") and Introgen Therapeutics, Inc. (hereinafter called
"Tenant").
WITNESSETH:
1. DEFINITIONS AND BASIC PROVISIONS. The definitions, information and
basic provisions set forth in the Basic Lease Information (the "Basic Lease
Information") executed by Landlord and Tenant contemporaneously herewith are
incorporated herein by reference for all purposes and shall be used in
conjunction with the provisions of this Lease. As used herein, the term "Net
Rentable Area" or "NRA" shall mean and refer to the Gross Floor Area
(hereinafter defined) minus the Unrentable Floor Area (hereinafter defined) plus
additional areas as provided herein. The term "Gross Floor Area" shall mean and
refer to all floor areas on a given floor under the roof of the Building and
measured to the "Exterior Building Wall" (which shall mean the outside surface
of the outer glass or midpoint of the wall in the absence of glass of the
exterior wall of the Building). The "Unrentable Floor Area" shall mean and refer
to the vertical penetrations of the Building measured from within the
penetration to the midpoint of the outermost wall enclosing the penetration and
includes the elevator shafts, Building stairs and vertical flues and ducts. In
the case of a single tenancy floor, the NRA shall include (i) the "Allowable
Area," which as used herein shall mean all floor area enclosed by the Exterior
Building Wall of the Premises on such floor and measured to the midpoint of
walls separating areas devoted to Building mechanical rooms, Building electrical
rooms, and Building janitor closets located on such floor, and (ii) an
allocation of the square footage of the ground floor lobby, arcades, service
corridors, telephone, mail and engineer rooms, and other Building service and
common areas. In the case of a multiple tenancy floor, the NRA shall include (i)
the "Allowable Area," which as used herein shall mean all floor area enclosed by
the Exterior Building Wall of the Premises on such floor and measured to the
midpoint of the walls separating areas leased by or held for lease to other
tenants or from areas devoted to corridors, elevator lobbies, restrooms,
mechanical rooms, janitor closets, vending areas and other similar facilities
which are intended for the use of all tenants on the particular floor, (ii) an
allocation of the Building service and common areas located on such floor, and
(iii) an allocation of the square footage of the ground floor lobby, arcades,
service corridors, telephone, mail and engineer rooms and other Building service
and common areas. No deductions from NRA are made for columns or projections
necessary to the Building. The Net Rentable Area of the Premises has been
calculated on the basis of the foregoing definitions in general, and is hereby
stipulated for all purposes hereof to be as set forth in the Basic Lease
Information, whether the same should be more or less as a result of minor
variations resulting from actual construction and completion of the Premises or
the Building. The term "Net Rentable Area of the Building" shall mean the
aggregate total of all Net Rentable Area in the Building.
2. LEASE GRANT. Landlord, in consideration of the rent to be paid and
the other covenants and agreements to be performed by Tenants and upon the terms
hereinafter stated, does hereby lease, demise and let unto Tenant the Premises
commencing on the first to occur of (i) the date upon which Tenant occupies the
Premises, or (ii) the date upon which the Premises are substantially complete
and
<PAGE> 3
ready for occupancy (the "Commencement Date") and ending on the last day of the
Lease Term unless sooner terminated as herein provided. If the Premises are to
be in default hereunder, and Landlord shall not be liable or responsible for any
claims, damages or liabilities in connection therewith or by reason thereof, and
Tenant agrees to accept possession of the Premises at such time as Landlord is
able to tender the same and this Lease shall continue for the lease Term
specified in the Basic Lease Information. By occupying the Premises, Tenant
shall be deemed to have accepted the same as suitable for the purpose herein
intended and to have acknowledged that the same comply fully with Landlord's
obligations, notwithstanding that certain "punch list" type items may not have
been completed. Within fifteen (15) days after Tenant's receipt of a request
from Landlord, Tenant agrees to give Landlord a letter confirming the
Commencement Date and certifying that Tenant has accepted delivery of the
Premises and that the condition of the Premises complies with Landlord's
obligations hereunder.
3. RENT. In consideration of this Lease, Tenant promises and agrees
to pay Landlord the Adjusted Rental, which is the sum of the monthly Basic
Rental and monthly Estimated Operating Expenses (subject to adjustment as
hereinafter provided) without deduction or set off, for each month of the entire
Lease Term. One such monthly installment, together with the Security Deposit,
shall be payable by Tenant to Landlord contemporaneously with the execution of
this Lease, and a like monthly installment shall be due and payable without
demand beginning on the first day of the calendar month following the expiration
of the first full calendar month of the Lease Term and continuing thereafter on
or before the first day of each succeeding calendar month during the Lease Terms
hereof. Rent for any fractional month at the beginning of the Lease Term shall
be prorated based on one-three hundred sixty-fifth (1/365) of the current
annual Adjusted Rental for each day of the partial month this Lease is in
effect, and shall be due and payable on or before that date on which Tenant
certifies that it has accepted the Premises pursuant to Paragraph 2 hereof. In
the event any installment of the Adjusted Rental, or any portion thereof, is not
received by the due date thereof, then (without in any way implying Landlord's
consent to such late payment) Tenant, to the extent permitted by law, agrees to
pay, in addition to said installment of the Adjusted Rental, a late payment
charge equal to five percent (5%) of the installment of the Adjusted Rental, or
portion thereof, within thirty (30) days after the due date thereof, or fails to
pay any other sum (other than Adjusted Rental) which at any time becomes due to
Landlord under any provision of this Lease as and when the same becomes due
hereunder, then, in either such event, Tenant shall pay Landlord interest on
such overdue amounts from the due date thereof until paid at an annual rate (the
"Past Due Rate") which equals the lesser of (i) eighteen percent (18%) or (ii)
the highest rate then permitted by law. The Security Deposit shall be held by
Landlord without liability for interest and as security for the performance by
Tenant of Tenant's covenants and obligations under this Lease, it being
expressly understood that such deposit shall not be considered an advance
payment of rental or a measure of Landlord's damages in case of default by
Tenant; Landlord may, from time to time, without prejudice to any other remedy,
use such deposit to the extent necessary to make good any arrearage of Rent or
other amounts due hereunder and any other damage, injury, expense or liability
caused to Landlord by such event of default. Following any such application of
the Security Deposit, Tenant shall pay to Landlord on demand the amount so
applied in order to restore the Security Deposit to its original amount. If
Tenant is not then in default hereunder, any remaining balance of such deposit
shall be returned by Landlord to Tenant within a reasonable period of time after
the expiration of this Lease. If Landlord transfers its interest in the Premises
during the Lease term, Landlord will assign the Security
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Deposit to the transferee and, thereafter, shall have no further liability for
the return of such Security Deposit.
4. LANDLORD'S OBLIGATIONS.
a. Subject to the limitations hereinafter set forth,
Landlord agrees to furnish Tenant while occupying the Premises and while Tenant
is not in default under this Lease facilities to provide (i) water (hot, cold
and refrigerated) at those points of supply provided for general use of tenants
in the Building; (ii) heated and refrigerated air conditioning in season, during
Customary Business Hours (as hereinafter defined), and at such temperatures and
in such amounts as are reasonably considered by Landlord to be standard, such
service at hours other than Customary Business Hours to be furnished only after
Landlord's receipt of request from Tenant, who shall bear the entire cost
thereof; (iii) janitorial service to the Premises as are reasonably considered
by the Landlord to be standard on weekdays other than Holidays (as hereinafter
defined) and such window-washing as may from time to time in Landlord's judgment
be reasonably required; (iv) operatorless passenger elevators for ingress and
egress to the floor on which the Premises are located, in common with other
tenants, provided that Landlord may reasonably limit the number of elevators to
be in operation at times other than during Customary Business Hours for the
Building; (v) replacement of Building Standard light bulbs and fluorescent
tubes; and (vi) security, deemed appropriate by Landlord to the Building during
the weekends and after normal working hours during the week; provided that
Landlord shall not be liable to Tenant for any reason for losses due to theft or
burglary, or for damages done by unauthorized persons on the Premises. In
addition, Landlord agrees to maintain the public and common areas of the
Building, such as lobbies, stairs, corridors, and restrooms, in reasonably good
order and condition, except for damage occasioned by Tenant, or its employees,
agents, or invitees. If Tenant shall desire any of the services specified in
this Paragraph 4 at any time or in an amount other than times or amounts herein
designated, such excess service or services shall be supplied to Tenant, subject
to availability, only if a request from Tenant has been received by Landlord
before 3:00 p.m. on the business day preceding such extra usage, and Tenant
shall pay to Landlord as additional rent the cost of such excess service or
services (plus an additional charge of fifteen percent [15%] of such cost
[excluding utility costs] to cover overhead) within fifteen (15) days after
Tenant's receipt of a bill therefor. The term "Customary Business Hours" means
7:00 a.m. to 7:00 p.m., Monday through Friday, and Saturday 8:00 a.m. to 1:00
p.m., except Holidays. The term "Holidays" means New Year's Day, Memorial Day,
the Fourth of July, Labor Day, Thanksgiving Day and Christmas Day.
b. Landlord shall make available to Tenant electric power
facilities as provided in EXHIBIT D sufficient to furnish power for lighting,
typewriters, voice writers, calculating machines and other machines of similar
low electrical consumption, but not including electronic data processing
equipment which (singularly) consumes more than 0.5 kilowatts per hour at a
rated capacity or requires a voltage other than 120 volts single phase. In the
event that, in Landlord's judgment, Tenant's use of electricity exceeds that
which is contemplated by the preceding sentence, Tenant shall bear the entire
cost thereof, including, without limitation, the cost of any metering devices
which may be necessary to determine the amount of such excess. Landlord shall
also make available electric lighting and current for the common areas of the
Building in the manner and to the extent deemed by Landlord to be standard. The
obligation of Landlord hereunder to make available such utilities shall be
subject to the rules and
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regulations of the supplier of such utilities and of any municipal or other
governmental authority regulating the business of providing such utility
service. Landlord shall not in any way be liable or responsible to Tenant for
any loss or damage or expense that Tenant may sustain or incur if either the
quantity or character of any utility service is changed. Any riser or risers or
wiring to meet Tenant's excess electrical requirements will be installed by
Landlord at the sole cost and expense of Tenant (if, in Landlord's sole
judgment, the same are necessary and will not cause any permanent damage or
injury to the Building or the Premises or cause or create a dangerous or
hazardous condition or entail excessive or unreasonable alterations, repairs or
expense or interfere with or disturb other tenants or occupants). When heat
generating machines, equipment, fixtures, or devices of any nature whatsoever
which affect the temperature otherwise maintained by the air conditioning
system, are used in the Premises by Tenant, Landlord shall have the right to
install supplementary air conditioning units in the Premises, and the cost
thereof, including the cost of installation and the cost of operation and
maintenance thereof, shall be paid by Tenant to Landlord upon demand by
Landlord.
c. Failure to any extent to make available, or any
slowdown, stoppage or interruption of, the services set forth in this Paragraph
4 resulting from any cause (including, but not limited to, Landlord's compliance
with (i) governmental or business guidelines now or hereafter published or (ii)
any requirements now or hereafter established by any governmental agency, board
or bureau having jurisdiction over the operation and maintenance of the
Building) shall not render Landlord liable in any respect for damages to either
person, property or business, nor be construed an eviction of Tenant or work an
abatement of Rent, nor relieve Tenant from fulfillment of any covenant or
agreement hereof; provided, however, Landlord shall use its best efforts to
resume said services in a timely manner. Should any equipment or machinery
furnished by Landlord break down or for any cause cease to function properly,
Landlord shall use reasonable diligence to repair same promptly, but Tenant
shall have no claim for abatement of Rent or damages on account of any
interruption in service occasioned thereby or resulting therefrom.
d. Notwithstanding any termination of this Lease prior to
the Lease expiration date, Tenant's obligations to pay any and all additional
rent pursuant to this Lease shall continue and shall cover all periods up to the
expiration date of this Lease; and, if Landlord terminates this lease without
specifically waiving in writing Landlord's right to seek damages against Tenant,
Tenant's obligations to pay any and all additional rent pursuant to this Lease
shall not terminate as a result thereof. Tenant's obligations to pay any and all
additional rent or other sums owing by Tenant to Landlord under this Lease shall
survive any expiration or termination of this Lease.
e. The covenants and obligations of Tenant to pay the
Adjusted Rental and all additional rental (collectively, the "Rent") hereunder
shall be unconditional and independent of any other covenant or condition
imposed on either Landlord or Tenant, whether under this Lease, at law or in
equity.
5. LEASEHOLD IMPROVEMENTS. Improvements to the Premises shall be
installed as provided in EXHIBIT D. Landlord has made no representation or
warranties as to the condition of the Premises, the Building or the Property,
nor has Landlord made any commitments to remodel, repair or decorate,
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except as expressly set forth herein and in EXHIBIT D. Otherwise, Tenant
acknowledges that Tenant is entering into this Lease on an "as is" basis.
6. USE. Tenant shall use the Premises only for the Permitted Use.
Tenant will not occupy or use the premises, or permit any portion of the
Premises to be occupied or used, for any business or purpose other than the
Permitted Use or for any use or purpose, which is unlawful in part or in whole
or deemed to be disreputable in any manner or extra hazardous on account of
fire, nor permit anything to be done that will in any way increase the rate of
insurance on the Building or contents. Tenant will conduct its business and
control its agents, employees and invitees in such a manner as not to create any
nuisance, nor interfere with, annoy or disturb other tenants or Landlord in the
management of the Building. Tenant will maintain the Premises in a clean,
healthful and safe condition and will comply with all laws, ordinances, orders,
rules and regulations (state, federal, municipal and other agencies or bodies
having any jurisdiction thereof) with reference to the use, condition or
occupancy of the Premises.
Tenant shall not dump, flush, or any way introduce any
hazardous substances or any toxic substances into the septic, sewage, or other
waste disposal system serving the Premises, and shall not generate, store, or
dispose of hazardous or toxic substances in or on the Premises or dispose of
hazardous substances from the Premises to any other location without the prior
written approval of Landlord and then only in accordance with applicable law,
ordinances, regulations and orders.
7. TENANT'S REPAIRS AND ALTERATIONS. Tenant agrees, as its own cost
and expense, to repair or replace any damage or injury done to the Property, or
any part thereof, by Tenant or Tenant's agents, employees, invitees, or
visitors; provided, however, if Tenant fails to make such repairs or
replacement, within fifteen (15) days after the occurrence of such damage or
injury, Landlord may, at its option, make such repairs or replacement, and
Tenant shall pay the cost thereof (plus an additional charge of fifteen percent
[15%] of such cost to cover overhead) to Landlord within fifteen (15) days after
Tenant's receipt of a request for Landlord to do so. Tenant further agrees not
to commit or allow any waste or damage to be committed on any portion of the
Property, and at the termination of this Lease, by lapse of time or otherwise,
Tenant shall deliver up said Premises to Landlord in as good condition as at the
commencement date, ordinary wear and tear excepted. Unless otherwise expressly
stipulated herein, Landlord shall not be required to make any improvements or
repairs of any kind or character on or to the Property, or any portion thereof,
during the term of this Lease, except such repairs as may be required for normal
maintenance operations and such additional maintenance as may be deemed
necessary by Landlord because of damages, except damages caused by Tenant, its
agents, employees, invitees or visitors. Tenant, without the prior written
consent of Landlord, shall not paint, install lighting or decorations, or
install any signs, window or door lettering or advertising media of any type on
or about the Property, or any part thereof, or make any other alterations or
physical additions in or to the Property, or any part thereof. All alterations,
additions or improvements (whether temporary or permanent in character) made in
or upon the Property, either by Landlord or Tenant, shall be Landlord's property
on termination of this Lease and shall remain on the Property without
compensation to Tenant or, at Landlord's option, Tenant shall restore those
portions of the Premises which Tenant altered, added to or improved to their
original condition. All furniture, movable trade fixtures and equipment
installed in the Premises by Tenant may be removed by Tenant at the termination
of this Lease if Tenant so elects, and shall be so removed if required by
Landlord, or if not so removed shall, at the option of Landlord, become
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the property of Landlord. In the event of any such removal, tenant shall, at its
expense, repair and restore to its original condition any portion of the
Premises which is damaged by such removal. All such installations, removals and
restorations shall be accomplished in a good workmanlike manner so as not to
damage the Premises or the primary structure or structural qualities of the
Building or the plumbing, electrical lines or other utilities.
8. ASSIGNMENT AND SUBLETTING.
a. Tenant shall not assign all or any portion of this
Lease, nor sublet the Premises or any part thereof, without the prior written
consent of Landlord. In the event Tenant should desire to assign all or any
portion of this Lease or sublet the Premises or any part thereof, Tenant shall
give Landlord notice of such desire at least sixty (60) days in advance of the
date on which Tenant desires to make such assignment or sublease, which notice
shall contain the name of the proposed assignee or subtenant and the nature and
character of the business of the proposed assignee or subtenant, the term, use,
rental rate (which must not be less than the Adjusted Rental per square foot of
NRA which was otherwise due from Tenant hereunder) and other particulars of the
proposed subletting or assignment, including, without limitation, evidence
satisfactory to Landlord that the proposed subtenant or assignee is financially
responsible and will immediately occupy and thereafter use the Premises (or any
sublet portion thereof) for the remainder of the Lease Term (or for the entire
term of the sublease, if shorter). Landlord shall then have a period of thirty
(30) days following receipt of such notice within which to notify Tenant in
writing that Landlord elects to approve or disapprove Tenant's proposed
assignment or sublease. If Landlord shall fail to notify Tenant in writing of
such election within said thirty (30) day period, Landlord shall be deemed to
have denied consent to such assignment or sublease. If Landlord consents to an
assignment or sublease, Tenant agrees to provide, at its expense, direct access
from the assignment or subletting space to a public corridor of the Building.
All plans and specifications for any alterations which may be necessary to
provide such access shall be submitted by Tenant to Landlord for its prior
written approval, which approval shall not be unreasonably withheld. No
assignment or subletting by tenant shall relieve Tenant of any obligations under
this Lease. Consent of Landlord to a particular assignment or sublease or other
transaction shall not be deemed a consent to any other or subsequent
transaction.
b. If Landlord consents to any subletting or assignment by
Tenant as hereinabove provided, and subsequently any category of Rent received
by tenant under any such sublease is in excess of the same category of Rent
payable to Landlord under this Lease, or any additional consideration is paid to
Tenant by the assignee under any such assignment, the Landlord may, at its
option, declare such excess rents under any sublease or such additional
consideration for any assignment to be due and payable by Tenant to Landlord as
additional rent hereunder.
c. Landlord shall have the right to transfer and assign, in
whole or in part, all its rights and obligations hereunder and in the Building
and Property referred to herein, and in such event and upon assumption by the
transferee of Landlord's obligations hereunder (any such transferee to have the
benefit of, and be subject to, the provisions of this Lease), no further
liability or obligation shall thereafter accrue against Landlord hereunder.
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d. Tenant agrees that it shall not place (or permit any
employee or agent to place) any signs on or about the Property, nor conduct (or
permit any employee or agent to conduct) any public advertising which includes
any pictures, renderings, sketches or other representation of any kind of the
Building (or a portion thereof) with respect to any proposed assignment or
subletting of the Premises or any part thereof, without Landlord's prior written
consent.
e. Tenant shall not mortgage, pledge, hypothecate or
otherwise encumber (or grant a security interest in) this Lease or any of
Tenant's rights hereunder.
f. Tenant shall not sell, transfer, exchange, distribute or
otherwise dispose of more than thirty percent (30%) of its assets (other than
the Lease) without the prior written consent of Landlord.
9. INDEMNITY. Landlord shall not be liable or responsible to Tenant
for any loss or damage to any property or person occasioned by theft, act of
God, public enmity, injunction, riot, strike, insurrection, war, court order,
requisition or order of governmental body or authority, or for any damage or
inconvenience that may arise through repair or alteration of any part of the
Building, or failure to make any such repairs. In addition, Landlord shall not
be liable to Tenant, or to Tenant's agents, servants, employees, customers or
invitees and Tenant shall indemnify and save harmless Landlord of and from all
fines, suits, claims, demands, losses and actions (including attorney's fees)
for any injury to person or damage to property caused by any act, omission or
neglect of Tenant, Tenant's agents, servants, employees, customers or invitees.
10. SUBORDINATION. This Lease and all rights of Tenant hereunder are
subject and subordinate to any deeds of trust, mortgages or other instruments of
security, as well as to any ground leases or primary leases, that now or
hereafter cover all or any part of the Property, or any interest of Landlord
therein, and to any and all advances made on the security thereof, and to any
and all increase, renewals, modifications, consolidations, replacements and
extensions of any of such deeds of trust, mortgages, instruments of security or
leases. This clause shall be self-operative and no further instrument of
subordination need be required by any mortgage. In confirmation of such
subordination, however, Tenant shall execute promptly any reasonably appropriate
certificate or instrument that Landlord may request, including, without
limitation, a Subordination, Attornment, Notice and Non-Disturbance Agreement in
form reasonably satisfactory to Landlord's mortgage. In the event of the
enforcement by the trustee or the beneficiary under any such mortgage or trusts
of the remedies provided by law or by such mortgage or deed of trust. Tenant
will, upon request of any person or party succeeding to the interest of Landlord
as a result of such enforcement, automatically become the tenant of such
successor in interest without change in the terms or other provisions of this
Lease; provided, however, that such successor in interest shall not be bound by
or liable for (i) any payment of Rent for more than one month in advance except
prepayments (in an amount not in excess of one month's Adjusted Rental) in the
nature of security for the performance by Tenant of its obligations under this
Lease, (ii) any amendment or modification of this Lease made without the written
consent of such trustee or such beneficiary or such successor in interest, or
(iii) any offset, claim or cause of action which Tenant may have against
Landlord relating to the period which is prior to the time Tenant becomes the
tenant of such successor in interest. Upon request by such successor in
interest, Tenant shall execute and deliver an instrument confirming
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the attornment herein provided for. Notwithstanding the foregoing provisions,
Tenant agrees that any mortgage will have the right at any time to subordinate
any rights of such mortgagee to the rights of Tenant under this Lease.
Subordination of this Lease and Tenant's rights hereunder is conditioned upon
Landlord's reasonable efforts to procure execution and delivery by any such
successor in interest of a "Non Disturbance Agreement" to the effect that, for
so long as Tenant is not in default (including any periods allowed for cure of
defaults under this Lease) such successor in interest will not disturb Tenant's
quiet enjoyment of the Premises under the terms of this Lease.
11. RULES AND REGULATIONS. Tenant and Tenant's agents, employees, and
invitees shall comply fully with all requirements of the rules and regulations
of the Building and related facilities that are attached hereto as EXHIBIT C,
and made a part hereof as though fully set out herein. Tenant shall further be
responsible for the compliance with such rules and regulations by the employees,
servants, agents, visitors and invitees of Tenant. Landlord reserves the right
to amend or rescind any of the rules and regulations and to make such other and
further rules and regulations as in its reasonable judgment shall from time to
time be needful for the safety, protection, care and cleanliness of the
Building, the operation thereof, the preservation of good order therein and the
protection and comfort of the tenants and their agents, employees and invitees,
which rules and regulations, when made and notice thereof given to a tenant,
shall be binding upon it in like manner as if originally herein prescribed.
12. INSPECTION. Landlord or its officers, agents and representatives
shall have the right to enter into and upon any and all parts of the Premises at
all reasonable hours (or, in any emergency, at any hour) to (a) inspect same or
clean or make repairs or alterations or additions as Landlord may deem necessary
(but without any obligation to do so, except as expressly provided for herein)
or (b) show the Premises to prospective tenants, purchasers or lenders; and
tenant shall not be entitled to any abatement or reduction of Rent by reason
thereof, nor shall such be deemed to be an actual or constructive eviction.
13. CONDEMNATION. If the Premises or any part thereof, or if the
Property or any portion of the Property leaving the remainder of the Property
unsuitable for use as an office building comparable to its use on the
Commencement Date of this Lease, shall be taken or condemned in whole or in part
for public purposes, or sold in lieu of condemnation, then this Lease shall, at
the sole option of the Landlord, forthwith cease and terminate; all compensation
awarded for any taking (or sale proceeds in lieu thereof) shall be the property
of Landlord, and Tenant shall have no claim thereto, the same being hereby
expressly waived by Tenant.
14. FIRE OR OTHER CASUALTY. In the event that substantially all of
the Building should be destroyed by fire, tornado or other casualty or in the
event the Premises or the Building should be so damaged that rebuilding of
repairs cannot, in the reasonable judgment of Landlord be completed within one
hundred eighty (180) days after the date of such damage, Landlord may at its
option terminate this Lease, in which event, this Lease shall terminate
effective as of the date of such damage. In the event the Building or the
Premises should be damaged by fire, tornado or other casualty covered by
Landlord's insurance, but only to such extent that rebuilding or repairs can, in
the reasonable judgment of Landlord, be completed within one hundred eighty
(180) days after the date of such damage, or if the damage should be more
serious but Landlord does not elect to terminate this Lease, in either such
event Landlord shall within thirty (30) days after the date of such damage
commence to rebuild or repair the Building
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and/or the Premises and shall proceed with reasonable diligence to restore the
Building and/or Premises to substantially the same condition in which it was
immediately prior to the happening of the casualty, except that Landlord shall
not be required to rebuild, repair or replace any part of the furniture,
equipment, fixtures and other improvements which may have been placed by Tenant
or other tenants within the Building or the Premises. Landlord shall allow
Tenant a diminution of Adjusted Rental during the time the Premises are unfit
for occupancy, which diminution shall be based upon the proportion of square
feet which are unfit for occupancy to the total square feet in the Premises. In
the event any mortgagee under a deed of trust, security agreement or mortgage on
the Building should require that the insurance proceeds be used to retire the
mortgage debt, then Landlord, at Landlord's option, may elect not to rebuild and
this Lease shall terminate upon Tenant's receipt of a notice from Landlord to
that effect. Except as hereinafter provided, any insurance which may be carried
by Landlord or Tenant against loss or damage to the Building or to the Premises
shall be for the sole benefit of the party carrying such insurance and under its
sole control.
15. HOLDING OVER. Should Tenant, or any of its successors in interest
hold over the Premises, or any part hereof, after the expiration of the Lease
Term, unless otherwise agreed in writing by Landlord, such holding over shall
constitute and be construed as a tenancy at will only, at a daily rental equal
to the daily Rent payable for the last month of the Lease Term plus fifty
percent (50%) of such amount. The inclusion of the preceding sentence shall not
be construed as Landlord's consent for Tenant to hold over.
16. TAXES ON TENANT'S PROPERTY. Tenant shall be liable for all taxes
levied or assessed against all personal property, furniture or fixtures placed
by Tenant in the Premises. If any such taxes for which Tenant is liable are
levied or assessed against Landlord or Landlord's property and if Landlord
elects to pay the same or if the assessed value of Landlord's property is
increased by inclusion of personal property, furniture or fixtures placed by
Tenant in the Premises, and Landlord elects to pay the taxes based on such
increase, Tenant shall pay to Landlord upon demand that part of such taxes for
which Tenant is primarily liable hereunder.
17. EVENTS OF DEFAULT. The following events shall be deemed to be
events of default by Tenant under this Lease:
a. Tenant shall fail to pay when due any Rent or other sums
payable by Tenant hereunder (or under any other lease now or hereafter executed
by Tenant in connection with space in the Building).
b. Tenant shall fail to comply with or observe any other
provision of this Lease (or any other lease now or hereafter executed by Tenant
in connection with space in the Building).
c. Tenant or any guarantor of Tenant's obligations
hereunder shall make an assignment for the benefit of creditors.
d. Any petition shall be filed by or against Tenant or any
guarantor of Tenant's obligations hereunder under any section or chapter of the
National Bankruptcy Act, as amended, or under
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any similar law or statute of the United States or any State thereof; or Tenant
or any guarantor of Tenant's obligations shall be adjudged bankrupt or insolvent
in proceedings filed thereunder.
e. A receiver of Trustee shall be appointed for all or
substantially all of the assets of Tenant or any guarantor of Tenant's
obligations hereunder.
f. Tenant shall desert or vacate any portion of the
Premises.
18. REMEDIES. Upon the occurrence of any event of default specified
in this Lease, Landlord shall have the option to pursue any and all remedies
which it may then have hereunder or at law or in equity, including, without
limitation, any one or more of the following, in each case, without any notice
or demand whatsoever:
a. Terminate this Lease, in which event Tenant shall
immediately surrender the Premises to Landlord, and if Tenant fails to do so,
Landlord may, without prejudice to any other remedy which it may have for
possession or arrearage in Rent, enter upon and take possession and expel or
remove Tenant and any other person who may be occupying said Premises or any
part thereof, by force if necessary, without being liable for prosecution or any
claim for damages therefor; and Tenant agrees to pay to Landlord on demand the
amount of all loss, cost, expense and damage which Landlord may suffer or incur
by reason of such termination, whether through inability to relet the Premises
on satisfactory terms or otherwise, including the loss of Rent for the remainder
of the Lease Term.
b. Enter upon and take possession of the Premises and expel
or remove Tenant and any other person who may be occupying the Premises or any
part thereof, by force if necessary, without being liable for prosecution or any
claim for damages therefor, and if Landlord so elects, relet the Premises on
such terms as Landlord shall deem advisable (including, without limitation, such
concessions and free rent as Landlord deems necessary or desirable) and receive
and retain all of the rent therefor; and Tenant agrees (i) to pay to Landlord on
demand any deficiency that may arise by reason of such reletting for the
remainder of the Lease Term, and (ii) that Tenant shall not be entitled to any
rents or other payments received by Landlord in connection with such reletting
even if such rents and other payments are in excess of the amounts that would
otherwise be payable to Landlord under this Lease.
c. Make such payments and/or take such action (including,
without limitation, entering upon the Premises by force if necessary, without
being liable for prosecution or any claim for damages therefor) and pay and/or
perform whatever Tenant is obligated to pay or perform under the terms of this
Lease; and Tenant agrees to reimburse Landlord on demand for any expenditures
and expenses (together with interest thereon at the Past Due Rate from the date
paid by Landlord) which Landlord may make or incur in thus effecting compliance
with Tenant's obligations under this Lease, and Tenant further agrees that
Landlord shall not be liable for any damages resulting to Tenant from such
action.
d. Collect, from time to time, by suit or otherwise, each
installment of Rent or other sum as it becomes due hereunder, or to enforce,
from time to time, by suit or otherwise, any other term or provision hereof on
the part of Tenant required to be kept or performed.
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e. In lieu of the monthly payments of Rent to be made by
Tenant to Landlord pursuant to the preceding paragraphs (but in addition to the
sums payable for Landlord's expenses for keeping the Premises in good order and
for preparing the same for reletting), Landlord may elect to recover from
Tenant, and Tenant agrees to pay, upon demand, as liquidated damages, an amount
equal to the difference between the Rent reserved for the unexpired portion of
the term of this Lease and the then prevailing rental rate of the Premises for
the same period, discounted to the date of termination at the rate of seven
percent (7%) per annum.
f. No re-entry or taking possession of the Premises by
Landlord shall be construed as an election on its part to terminate this Lease,
unless a notice of such intention be given to Tenant. Notwithstanding any such
reletting or re-entry or taking possession, Landlord may at any time thereafter
elect to terminate this Lease for a previous default. Pursuit of any of the
foregoing remedies shall not preclude pursuit of any of the other remedies
herein provided or any other remedies provided by law, nor shall pursuit or any
remedy herein provided constitute a forfeiture or waiver of any Rent due to
Landlord hereunder or of any damages occurring to Landlord by reason of the
violation of any of the terms, provisions and covenants herein contained. No
waiver by Landlord or any violation or breach of any of the terms, provisions,
and covenants herein contained shall be deemed or construed to constitute a
waiver of any other violation or default. The loss or damage that Landlord may
suffer by reason of termination of this Lease or the deficiency from any
reletting as provided for above shall include the expense of repossession and
any repairs or remodeling undertaken by a Landlord following possession. Should
Landlord at any time terminate this Lease for any default, in addition to any
other remedy Landlord may have, Landlord may recover from Tenant all damages
Landlord may incur by reason of such default (together with interest thereon at
the Past Due Rate), including the cost of recovering the Premises and the loss
of Rent for the remainder of the Lease Term.
g. Tenant, for itself and on behalf of any and all persons
claiming through or under it, including, without limitation, all creditors of
all kinds, does hereby waive and surrender all right and privilege which it or
any of them might have under or by reason of any present or future law to redeem
the Premises or to have a continuance of this Lease after having been
dispossessed or rejected therefrom by process of law or under the terms and
conditions of this Lease or after the termination of this Lease as herein
provided.
19. SURRENDER OF PREMISES. No act or thing done by Landlord or its
agents during the term hereby granted shall be deemed an acceptance of a
surrender of the Premises, and no agreement to accept a surrender of the
Premises shall be valid unless the same be made in writing and signed by
Landlord.
20. ATTORNEY'S FEES. In the event that any action or proceeding is
brought to enforce any term, covenant or condition of this Lease on the part of
Landlord or Tenant, the prevailing party in such litigation shall be entitled to
reasonable attorney's fees to be fixed by the court in such action or
proceeding.
21. LANDLORD'S LIEN. In consideration of the mutual benefits arising
under this Lease, Tenant hereby grants to Landlord a lien and security interest
on all property of Tenant now or hereafter placed in or upon the Premises, and
such property shall be and remain subject to such lien and security interest
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<PAGE> 13
of Landlord for payment of all Rent and other sums agreed to be paid by Tenant
herein. Said line and security interest shall be in addition to and cumulative
of Landlord's lines provided by law. This Lease shall constitute a security
agreement under the Uniform Commercial Code so that Landlord shall have and may
enforce a security interest on all property of Tenant now or hereafter placed in
or on the Premises by Tenant. Tenant agrees to execute as debtor such financing
statement or statements as Landlord may now or hereafter request in order that
such security interests may be protected pursuant to said Code. Landlord may at
its election at any time file a copy of this Lease as a financing statement.
Landlord, as secured party, shall be entitled to all of the rights and remedies
afforded a secured party under said Uniform Commercial Code, which rights and
remedies shall be in addition to and cumulative of Landlord's liens and rights
provided by law or by the other terms and provisions of this Lease.
22. MECHANIC'S LIENS. Tenant will not permit any mechanic's lien or
liens to be placed upon the Property, or any portion thereof, caused by or
resulting from any work performed, materials furnished or obligation incurred by
or at the request of Tenant, and in the case of the filing of any such lien,
Tenant will immediately pay and discharge the same. If default in payment
thereof shall continue for fifteen (15) days after Tenant's receipt of a notice
thereof from Landlord, Landlord shall have the right and privilege at Landlord's
option of paying the same or any portion thereof without inquiry as to the
validity thereof, and any amounts so paid, including expenses and interest,
shall be so much additional rent hereunder due from Tenant to Landlord and shall
be repaid to Landlord (together with interest at the Past Due Rate from the date
paid by Landlord) within fifteen (15) days after Tenant's receipt of a request
from Landlord therefor.
23. NO SUBROGATION-LIABILITY INSURANCE.
a. Each party hereto hereby waives any cause of action it
might have against the other party, on account of any loss or damage that is
insured against under any standard insurance policy (to the extent such loss or
damage is recoverable under such insurance policy) that covers the Building, the
Premises, Landlord's or Tenant's fixtures, personal property, leasehold
improvements or business and which names Landlord or Tenant, as the case may be,
as a party insured, it being understood and agreed that this provision is
cumulative of paragraph 9 hereof. Notwithstanding the foregoing, the release in
the preceding sentence shall be applicable and in full force and effect only so
long as and to the extent such release does not invalidate any policy or
policies of insurance now or hereafter maintained by the other party hereto.
Each party hereto agrees that it will request its insurance carrier to endorse
all applicable policies waiving the carrier's rights of recovery under
subrogation or otherwise against the other party.
b. Tenant shall, at its expense, maintain a policy or
policies of comprehensive general liability insurance pertaining to its use and
occupancy of the Premises hereunder, with the premiums thereof fully paid in
advance, issued by and binding upon a solvent insurance company approved by
Landlord, such insurance to name Landlord (listed as Aetna Life Insurance
Company and Trammell Crow Central Texas, Inc.) and Tenant as additional insureds
and to afford minimum protection of not less than One Million and No/100 Dollars
($1,000,000.00) combined single limit for bodily injury, death to any one
person, or property damage in any one occurrence. Upon Tenant's execution of
this Lease and at any time from time to time thereafter when Landlord so
requests, Tenant shall furnish a certificate of insurance and such other
evidence satisfactory to Landlord of the maintenance of all insurance coverages
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<PAGE> 14
required hereunder, and Tenant shall obtain written obligation on the part of
each insurance company to notify Landlord at least thirty (30) days prior to
cancellation of material change of any such insurance.
24. BROKERAGE. Each of Tenant and Landlord warrants that it has had
no dealings with any broker or agent in connection with the negotiation or
execution of this Lease, other than Trammell Crow Central Texas, Inc., and each
party agrees to indemnify the other against all costs, expenses, attorney's fees
or other liability for commissions or other compensation or charges claimed by
any broker or agent, other than Trammell Crow Central Texas, Inc. claiming the
same by, through or under Tenant for this Lease, or any renewals, extension,
amendments, addenda or expansions with respect to this Lease. Landlord is
responsible for any commissions paid to Trammell Crow Central Texas, Inc.
involving this lease transaction.
25. CHANGE OF BUILDING NAME. Landlord reserves the right at any time
to change the name by which the Building is designated.
26. ESTOPPEL CERTIFICATES. From time to time when requested by
Landlord, Tenant shall deliver to any prospective purchaser, present or future
mortgagee or lessor, in each case, of all or any part of the Property, or any
interest of Landlord therein, a certificate signed by Tenant confirming and
containing such factual certificates and representations reasonably deemed
appropriate by Landlord or any such purchaser, mortgagee or lessor, and Tenant
shall, within fifteen (15) days following Tenant's receipt of said proposed
certificate from Landlord, return a fully executed copy of said certificate to
Landlord.
27. NOTICES. Each provision of this Lease, or of any applicable
governmental laws, ordinances, regulations, and other requirements with
reference to the sending, mailing or delivery of any notice or with reference to
the making of any payment or request by Tenant or Landlord, shall be deemed to
be compiled with when and if the following steps are taken:
a. All Rent and other payments required to be made by
Tenant to Landlord hereunder shall be payable to, and must be received by,
Landlord on the date due and at the address set forth in the Basic Lease
Information or at such other address as Landlord may specify from time to time
by written notice delivered in accordance herewith.
b. Any notice, request or document (excluding Rent or other
payments) permitted or required to be delivered hereunder must be in writing and
shall be deemed to be received if actually received and whether or not received
when deposited in the United States mail, postage prepaid, certified or
registered mail (with or without return receipt requested), addressed to the
parties hereto at the respective addresses set forth in the Basic Lease
Information, with, in the case of Landlord, a copy to: Aetna Life Insurance
Company, 242 Trumbull Street, Hartford, CT 06103, Attention: Asset Management &
Sales, or at such other address as either of said parties have theretofore
specified by written notice delivered in accordance herewith.
28. SEPARABILITY. If any clause or provision of this Lease is
illegal, invalid or unenforceable under present or future laws effective during
the Lease Term, then and in that event, it is the intention
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<PAGE> 15
of the parties hereto that the remainder of this Lease shall not be affected
thereby, and it is also the intention of the parties to this Lease that in lieu
of each clause or provision of this Lease that is illegal, invalid or
unenforceable, there be added as a part of this Lease a clause or provision as
similar in terms to such illegal, invalid or unenforceable clause or provision
as may be possible and be legal, valid and enforceable.
29. AMENDMENTS; BINDING EFFECT. This Lease may not be altered,
changed or amended, except by instrument in writing signed by both parties
hereto. No provision of this Lease shall be deemed to have been waived by
Landlord unless such waiver be in writing signed by Landlord and addressed to
Tenant, nor shall any custom or practice which may evolve between the parties in
the administration of the terms hereof be construed to waive or lessen the right
of Landlord to insist upon the performance by Tenant in strict accordance with
the terms hereof. The terms and conditions contained in this Lease shall apply
to, inure to the benefit of, and be binding upon the parties hereto, and upon
their respective successors in interest and legal representatives, except as
otherwise herein expressly provided, except as otherwise herein expressly
provided, except that the Landlord named herein and each successive owner of the
Premises shall be liable only for the obligations accruing during the period of
its ownership.
30. QUIET ENJOYMENT. Provided Tenant has performed all of the terms
and conditions of this Lease, including the payment of Rent, to be performed by
Tenant, Landlord shall not interfere with the peaceable and quiet enjoyment of
the Premises by Tenant during the Lease Term subject to the terms and conditions
of this Lease.
31. GENDER. Words of any gender used in this Lease shall be held and
construed to include any other gender, and words in the singular number shall be
held to include the plural, unless the context otherwise requires.
32. JOINT AND SEVERAL LIABILITY. If there be no more than one Tenant,
the obligations hereunder imposed upon Tenant shall be joint and several. If
there be a guarantor of Tenant's obligations hereunder, the obligations
hereunder imposed upon Tenant shall be the joint and several obligations of
Tenant and such guarantor and Landlord need not first proceed against Tenant
before proceeding against such guarantor nor shall any such guarantor be
released from its guaranty for any reason whatsoever, including, without
limitation, in case of any amendments hereto, waivers hereof or failure to give
such guarantor any notices hereunder.
33. PERSONAL LIABILITY. The liability of Landlord to Tenant for any
claim against Landlord which arises under or by reason of this Lease shall be
limited to the interest of Landlord in the Property, and Landlord shall not be
personally liable for any deficiency. This clause shall not be deemed to limit
or deny any remedies which Tenant may have in the event of default by Landlord
hereunder which do not involve the personal liability of Landlord.
34. CERTAIN RIGHTS RESERVED BY LANDLORD. Landlord shall have the
following rights, exercisable without notice and without liability to Tenant for
damage or injury to property, persons or business and without effecting an
eviction, constructive or actual, or disturbance of Tenant's use or possession
or giving rise to any claim for set off or abatement of Rent:
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<PAGE> 16
a. To decorate and to make repairs, alterations, additions,
changes or improvements, whether structural or otherwise, in and about the
Property, or any part thereof, and for such purposes to enter upon the Premises
and, during the continuance of any such work, to temporarily close doors,
entryways, public space and corridors in the Building, to interrupt or
temporarily suspend Building services and facilities and to change the
arrangement and location of entrances or passageways, doors and doorways,
corridors, elevators, stairs, toilets, or other public parts of the Building,
all without abatement of Rent or affecting any of Tenant's obligations
hereunder, so long as the Premises are reasonably accessible.
b. To have and retain a paramount title to the Premises
free and clear of any act of Tenant purporting to burden or encumber them.
c. To grant to anyone the exclusive right to conduct any
business or render any service in or to the Building, provided such exclusive
right shall not operate to exclude Tenant from the use expressly permitted
herein.
d. To prohibit the placing of vending or dispensing
machines of any kind in or about the Premises without the prior written
permission of Landlord.
e. To have access for Landlord and other tenants of the
Building to any mail chutes located on the Premises according to the rules of
the United States Postal Service.
f. To take all such reasonable measures as Landlord may
deem advisable for the security of the property and its occupants, including,
without limitation, the evacuation of the Building for cause, suspected cause,
or for drill purposes, the temporary denial of access to the Building, and the
closing of the Building after normal business hours and on Saturdays, Sunday and
Holidays, subject, however, to Tenant's rights to admittance when the Building
is closed after normal business hours under such reasonable regulations as
Landlord may prescribe from time to time which may include, by way of example
but not of limitation, that persons entering or leaving the Building, whether or
not during normal business hours, identify themselves to a security officer by
registration or otherwise and that such persons establish their right to enter
or leave the Building.
35. NOTICE TO LENDER. If the Property or any part thereof is at any
time subject to a first mortgage or a first deed of trust or other similar
instruments and this Lease or any of the Rent is assigned to such mortgagee,
trustee or beneficiary and Tenant is given written notice thereof, including the
post office address of such assignee, then Tenant shall not terminate this Lease
or abate any of the Rent for any default on the part of Landlord without first
giving written notice by certified or registered mail, return receipt requested,
to such assignee, specifying the default in reasonable detail, and affording
such assignee a reasonable opportunity to make performance, at its election, for
and on behalf of Landlord.
36. CAPTIONS. The captions contained in this Lease are for
convenience of reference only, and in no way limit or enlarge the terms and
conditions of this Lease.
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<PAGE> 17
37. MISCELLANEOUS.
a. Any approval by Landlord or Landlord's architects and/or
engineers of any of Tenant's drawings, plans and specifications that are
prepared in connection with any construction of improvements in the Premises
shall not in any way be construed or operate to bind Landlord or to constitute a
representation or warranty of Landlord as to the adequacy or sufficiency of such
drawings, plans and specifications, or the improvements to which they relate for
any use, purpose, or condition, but such approval shall merely be the consent of
Landlord as may be required hereunder in connection with Tenant's construction
of improvements in the leased Premises in accordance with such drawings, plans
and specifications.
b. Each and every consent and agreement contained in this
Lease is, and shall be construed to be, a separate and independent covenant and
agreement.
c. There shall be no merger of this Lease or of the
leasehold estate hereby created with the fee estate in the leased Premises or
any part thereof by reason of the fact that the same person may acquire or hold,
directly or indirectly, this Lease or the leasehold estate hereby created or any
interest in this Lease or in such leasehold estate as well as the fee estate in
the leasehold Premises or any interest in such fee estate.
d. Neither Landlord nor Landlord's agents or brokers have
made any representations or promises with respect to the Property, or any
portion thereof, except as herein expressly set forth and no rights, easements
or licenses are acquired by Tenant by implication or otherwise except as
expressly set forth in the provisions of this Lease.
e. The submission of this Lease to Tenant for examination
does not constitute an offer, reservation or option in favor of Tenant, and
Tenant shall have no rights with respect to this Lease or the Premises unless
and until Landlord shall elect, or shall elect to cause its managing agent, to
execute a copy of this Lease and deliver the same to Tenant, the date of which
delivery shall be deemed the "Delivery Date."
38. PREVAILING RENTAL RATE. In the event that any provision of this
Lease provides for the payment or determination of any Basic Rental at "the
prevailing rental rate" or at "the Market Rate" or other similar provision (in
any case, the "Market Rate") and Landlord and Tenant are unable to agree upon
the Market Rate, Landlord and Tenant shall each promptly appoint a real estate
appraiser who is a member of the American Institute of Real Estate Appraisers
(or its equivalent) to assist in the determination of the Market Rate, and the
two appraisers shall appoint a third appraiser who is also a member of the
American Institute of Real Estate Appraisers (or its equivalent). The
determination of the Market Rate by the agreement of any two of such three
appraisers shall be accepted by and binding upon Landlord and Tenant as the
Market Rate. Landlord and Tenant will use all reasonable diligence to cause
their appointed appraisers to perform in good faith and in a timely manner in
order to make the determination of the Market Rate on or before the date on
which the Market Rate is to become effective. In the event such appraisers shall
not make such determination prior to the date on which the Market
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<PAGE> 18
Rate is to become effective, (a) this Lease shall nevertheless continue in full
force and effect until such determination is made, (b) the Rental for such
period shall be payable at the rate otherwise payable hereunder, and (c) upon
the determination by such appraisers of the Market Rate, the payment of the
Market Rate shall commence on the first day of the month following the date of
such determination, and in addition to such monthly installment of Rent. Tenant
shall pay to Landlord the increase in the Rent payable hereunder, if any,
applicable to the period from the date on which the Market Rate was scheduled to
become effective to the payment of the first installment at the Market Rate. In
the event that the determination of the Market Rate is not made prior to the
time which is six (6) months after the date upon which the Market Rate is to
become effective, the determination of the Market Rate by the third appraiser
shall be accepted and binding upon Landlord and Tenant as the Market Rate, and
the provisions of subparagraph (c) in the preceding sentence shall apply.
Landlord and Tenant shall each bear the costs and fees of their respective
appraisers and shall share equally the cost of the third appraiser.
39. FORCE MAJEURE. In the event that Landlord shall be delayed in the
performance of any obligation of Landlord hereunder as a result of strikes,
lockouts, shortages of labor, fuel or materials, acts of God, legal
requirements, fire or other casualty, or any other cause beyond the control of
Landlord, then the performance of such obligation shall be excused for the
period of such delay, and the period for the performance of such obligation
shall be extended by the number of days equivalent to the number of days of such
delay. Landlord shall in no event be required to settle or compromise any
strike, lockout or other labor disputes, the resolution thereof being within the
sole discretion of Landlord.
40. APPLICABLE LAW. This Lease has been executed in the State of
Texas and shall be governed in all respects by the laws of the State of Texas.
It is the intent of Landlord and Tenant to conform strictly to all applicable
state and federal usury laws. All agreements between Landlord and Tenant,
whether now existing or hereafter arising and whether written or oral, are
hereby expressly limited so that in no contingency or event whatsoever shall the
amount contracted for, charged or received by Landlord for the use, forbearance
or detention of money hereunder or otherwise exceed the maximum amount which
Landlord is legally entitled to contract for, charge or collect under applicable
state or federal law. If, from any circumstance whatsoever, fulfillment of any
provision hereof at the time performance of such provision shall be due shall
involve transcending the limit of validity prescribed by law, then the
obligation to be fulfilled shall be automatically reduced to the limit of such
validity, and if from any such circumstance, Landlord shall ever receive as
interest or otherwise an amount in excess of the maximum that can be legally
collected, then such amount which would be excessive interest shall be applied
to the reduction of the Rent; and if such amount which would be excessive
interest exceeds the Rent, then such additional amount shall be refunded to
Tenant.
41. THIRD PARTY RIGHTS. Nothing herein expressed or implied is
intended, or shall be construed, to confer upon or give to any person or entity,
other than the parties hereto, any right or remedy under or by reason of this
Lease.
42. EXHIBITS AND ATTACHMENTS. All exhibits, attachments, riders and
addenda referred to in this Lease and the exhibits listed hereinbelow and
attached hereto are incorporated into this Lease and made a part hereof for all
intents and purposes as if fully set out herein. All capitalized terms used in
such documents shall, unless otherwise defined therein, have the same meanings
as are set forth herein.
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<PAGE> 19
EXHIBIT A - LEGAL DESCRIPTION
EXHIBIT B - OUTLINE OF PREMISES
EXHIBIT C - BUILDING RULES AND REGULATIONS
EXHIBIT D - BUILDING STANDARD IMPROVEMENTS
EXHIBIT E - PARKING
EXHIBIT F - OPERATING EXPENSES
EXHIBIT G - SPECIAL PROVISIONS
DATED as of the date first above written.
LANDLORD: TENANT:
AETNA LIFE INSURANCE COMPANY INTROGEN THERAPEUTICS, INC.
/s/ THOMAS G. DUDECK /s/ JAMES W. ALBRECHT, JR.
- ---------------------------------- ------------------------------------
By: Thomas G. Dudeck By: James W. Albrecht, Jr.
------------------------------- ---------------------------------
Title: Assistant Vice President Title: Chief Financial Officer
---------------------------- ------------------------------
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<PAGE> 20
EXHIBIT "A"
LEGAL DESCRIPTION
Lots 1, 2, the South 18' of Lot 3, and all of Lots 7-12, inclusive, out of Block
30 of the Original City of Austin, in Travis County, Texas, according to the map
or plat of said Original City filed for record in the General Land Office of the
State of Texas, together with the alley running through Block 30, as vacated in
Ordinance No. 840517-Q, City of Austin, more commonly referred to as 301
Congress Avenue, Austin, Texas.
<PAGE> 21
EXHIBIT "B"
OUTLINE OF PREMISES
[PLAN OF PREMISES ON TWO (2) PAGES]
<PAGE> 22
EXHIBIT "C"
RULES AND REGULATIONS
The following rules and regulations shall apply, where applicable, to
the Property and to each portion thereof:
1. Sidewalks, doorways, vestibules, halls, stairways and other
similar areas shall not be obstructed by tenants or used by any tenant for any
purpose other than ingress and egress to and from the premises and for going
from one to another part of the Property.
2. Plumbing, fixtures and appliances shall be used only for the
purposes for which designed, and no sweepings, rubbish, rags or other unsuitable
material shall be thrown or placed therein. Damage resulting to any such
fixtures or appliances from misuse by a tenant or such tenant's agents,
employees or invitees shall be paid by such tenant and Landlord shall not in any
case be responsible therefor.
3. No signs, advertisements or notices shall be painted or affixed on
or to any windows or doors or other exterior part of the Property (or be visible
from any public or common area) unless they are of such color, size and style
and in such places as shall be first approved in writing by Landlord. Landlord,
at tenant's sole cost and expense, shall install all letters or numerals by or
on doors in such tenant's leased premises which letters or numerals shall be in
building standard graphics. No nails, hooks or screws shall be driven or
inserted in any part of the Building outside the premises except by the Building
maintenance personnel nor shall any part of the Building be defaced by tenants.
No curtains or other window treatments shall be placed between the glass and the
Building standard window treatments.
4. Landlord shall provide and maintain an alphabetical directory
board for all tenants in the first floor (main lobby) of the Building and no
other directory shall be permitted unless previously consented to by Landlord in
writing.
5. Ten keys to the locks on the corridor doors entering each tenant's
leased premises shall be furnished by Landlord free of charge, with any
additional keys to be furnished by Landlord to each tenant, at tenant's cost.
Landlord shall provide all locks for other doors in each tenant's leased
premises, at the cost of such tenant, and no tenant shall place any additional
lock or locks on any door in or to its leased premises without Landlord's prior
written consent. All such keys shall remain the property of Landlord. Each
tenant shall give to Landlord the explanation of the combination of all locks
for safe, safe cabinets and vault doors, if any, in such tenant's leased
premises.
6. With respect to work being performed by tenants in any leased
premises with the approval of Landlord, all tenants will refer all contractors,
contractors' representatives and installation technicians rendering any service
to them to Landlord for Landlord's supervision, approval and control before the
performance of any contractual services. This provision shall apply to all work
performed in the Building including, but not limited to, installation of
telephones, telegraph equipment, electrical devices and
<PAGE> 23
attachments, doors, entranceways, and any and all installations of every nature
affecting floors, walls, woodwork, trim, windows, ceilings, equipment and any
other physical portion of the Building.
7. Movement in or out of the Building of furniture or office
equipment, or dispatch or receipt by tenants of any bulky material, merchandise
or materials which requires use of elevators or stairways, or movement through
the Building entrances or lobby shall be restricted to such hours as Landlord
shall designate. All such movements shall be under the supervision of Landlord
and in the manner agreed between the tenants and Landlord by prearrangement
before performance. Such pre-arrangement initiated by a tenant will include
determination by Landlord, and subject to its decision and control, as to the
time, method, and routing of movement and as to the limitations for safety or
other concern which may prohibit any article, equipment or any other item from
being brought into the Building. The tenants are to assume all risks as to the
damage to articles moved and injury to persons or public engaged or not engaged
in such movement, including equipment, property and personnel of Landlord if
damaged or injured as a result of acts in connection with carrying out this
service for a tenant from time of entering the property to completion of work;
and Landlord shall not be liable for acts of any person engaged in, or any
damage or loss to any of said property or persons resulting from, any act in
connection with such service performed for a tenant.
8. Landlord shall have the right to prescribe the weight and position
of safes and other heavy equipment or items, which shall in all cases, to
distribute weight, stand on supporting devices approved by Landlord. All damages
done to the Building by the installation or removal of any property of a tenant,
or done by a tenant's property while in the Building, shall be repaired at the
expense of such tenant. Tenant shall bear all costs incurred by Landlord or
Tenant in determining the feasibility or actual installation of any such heavy
equipment.
9. A tenant shall notify the Building manager when safes or other
heavy equipment are to be taken in or out of the building and the moving shall
be done under the supervision of the Building manager, after written permission
from Landlord. Persons employed to move such property must be acceptable to
Landlord.
10. Corridor doors, when not in use, shall be kept closed.
11. Each tenant shall cooperate with Landlord's employees in keeping
its leased premises neat and clean.
12. Landlord shall be in no way responsible to the tenants, their
agents, employees or invitees for any loss of property from the leased premises
or public areas or for any damages to any property thereon from any cause
whatsoever.
13. To ensure orderly operation of the Building, no ice, mineral or
other water, towels, newspapers, etc. shall be delivered to any leased area
except by persons appointed or approved by Landlord in writing.
Exhibit "C" Page 2
<PAGE> 24
14. Should a tenant require telegraphic, telephonic, annunciator or
other communication service, Landlord will direct the electrician where and how
wires are to be introduced and placed and none shall be introduced or placed
except as Landlord shall direct. Except as provided in each tenant's lease,
electric current shall not be used for heating or nonstandard power requirements
without Landlord's prior written permission.
15. Tenant shall not make or permit any improper objectionable or
unpleasant noises or odors in the building or otherwise interfere in any way
with other tenants or persons having business with them.
16. Nothing shall be swept or thrown into the corridors, halls,
elevator shafts or stairways. No birds or animals shall be brought into or kept
in, on or about any tenant's leased premises.
17. No machinery of any kind shall be operated by tenant on its
leased area without the prior written consent of Landlord, nor shall any tenant
use or keep in the Building any inflammable or explosive fluid or substance.
18. No portion of any tenant's leased premises shall at any time be
used or occupied as sleeping or lodging quarters.
19. Each tenant and its agents, employees and invitees shall park
only in those areas designated by Landlord for parking by such tenant and shall
not park on any public or private streets contiguous to, surrounding or in the
vicinity of the Building without Landlord's prior written consent.
20. Landlord will not be responsible for lost or stolen property,
money or jewelry from tenant's leased premises or public or common areas
regardless of whether such loss occurs when the area is locked against entry or
not.
Exhibit "C" Page 3
<PAGE> 25
EXHIBIT "D"
BUILDING STANDARD IMPROVEMENTS
Subject to the conditions hereinafter set forth, Landlord will
provide Tenant with $8.15 per square foot of Net Rentable Area for improvements
and additions required to the premises, the "Tenant Improvement Allowance". This
Tenant Improvement Allowance is meant to be comprehensive including but not
limited to architectural and engineering fees, actual construction material and
labor, computer cabling, relocation expenses, phone line expenses, furnishings,
interior upgrades and a fee of 5% of the total construction costs to reimburse
Landlord for its management of construction and administrative costs. The
Landlord neither presumes or insures that this allowance will completely cover
the improvements and additions as contemplated by Tenant, but it is the amount
of Tenant Finish allowed based on the Basic Rental as proposed. For all purposes
hereof, the premises contain approximately 3,677 square feet Net Rentable Area.
Tenant recognizes that all improvements and additions to the Premises not paid
for directly by Tenant shall remain the property of the Landlord. Landlord will
recognize that any improvements or additions that are paid for by Tenant, and
evidence is provided of such, which are not considered fixtures and can be
removed without damage to the Premises, shall remain the property of Tenant. The
Tenant Improvement Allowance will be paid to Tenant within thirty (30) days
after the Commencement Date. If the total cost of the improvements and additions
is greater than the Tenant Improvement Allowance, Tenant may increase the Tenant
Improvements Allowance by up to $10,000.00, which amount shall be amortized over
the Lease Term and added to the Basic Rental at an interest rate of twelve
percent (12%) per annum. At the time the parties know the actual amount of said
additional $10,000 allowance used by Tenant, the parties will amend this Lease
to reflect the appropriate increase in Basic Rental. If Tenant uses less than
$30,000 of the Tenant Improvement Allowance, the Landlord will reduce the Basic
Rental by the difference of $30,000 and the amount actually used by Tenant,
provided that such reduction shall not exceed a total of $5,000. The reduction
will be a dollar-for-dollar reduction applied over the Lease Term.
<PAGE> 26
EXHIBIT "E"
PARKING
Provided Tenant is not in default hereunder, Tenant shall be
permitted to use the parking area (including parking garage, if any), associated
with the Building during the primary Lease Term for parking of not more than six
(6) automobiles and subject to such terms, conditions and regulations as are
from time to time applicable to patrons of said parking area for spaces
similarly situated within said parking area; provided, however, in the event
Tenant, upon commencement of or at any time during the Lease Term, fails to
utilize all or any of said parking spaces, Landlord shall have no obligation to
make available to Tenant the spaces not utilized; provided further, the
inability of Tenant to utilize said parking spaces shall under no circumstances
be deemed a default by Landlord as to permit Tenant to terminate this Lease, in
whole or in part, or to have any claim or cause of action against Landlord as a
result thereof, the same being hereby expressly waived by Tenant. The parking
spaces specified above shall be allocated as follows: six (6) parking spaces in
the parking garage at a rate of $75.00 plus tax per space each month during the
term hereof. Notwithstanding anything herein to the contrary, in no event shall
the parking rate per space each month be less than the rate in effect for the
preceding month.
<PAGE> 27
EXHIBIT "F"
OPERATING EXPENSES
In addition to the rental payable by Tenant under this Lease, Tenant
shall pay additional rent determined as follows:
1. For the purposes of this Exhibit, the term "Basic Cost" shall mean
any and all costs, expenses and disbursements of every kind and character
(subject to the limitations set forth below) which Landlord shall incur, pay or
become obligated to pay in connection with the ownership of any estate or
interest in, operation, insurance, maintenance, repair, replacement, and
security of the Property, or any portion thereof, determined in accordance with
accepted cash basis accounting principles consistently applied, including but
not limited to the following:
a. Wages, salaries and other benefits of all employees of
Landlord and/or managing agent who are engaged in the operation, repair,
replacement, maintenance, or security of the Property (including, without
limitation, payroll, unemployment, social security and other taxes, insurance,
vacation, Holiday, sick pay, and other fringe benefits, but excluding profit
sharing benefits, if any) and management fees of any managing agent of the
Property.
b. All supplies, equipment and materials used in the
operation, maintenance, repair, replacement, or security of all or any portion
of the Property.
c. Cost of all capital improvements made to the Property
which although capital in nature can reasonably be expected to reduce the normal
operating costs of the Property, as well as all capital improvements made in
order to comply with any statutes, rules, regulations, or directives hereafter
promulgated by any governmental authority relating to energy, conservation,
public safety or security, as amortized (with interest on the unamortized
balance at the market rate then generally available for such improvements) over
the useful life of such improvements by Landlord for federal income tax
purposes.
d. Cost of all utilities, other than the cost of excess
electricity (or individually metered electricity) supplied to tenants of the
Building which is actually reimbursed to Landlord by such tenants.
e. Cost of all maintenance and service agreements on
equipment, including alarm service, window cleaning and elevator maintenance.
f. Cost of casualty, rental and liability insurance
applicable to the Property and Landlord's personal property used in connection
therewith, together with any other insurance deemed by Landlord or any mortgagee
to be necessary or desirable.
g. All taxes and assessments and governmental charges,
whether federal, state, county or municipal, and whether they be by taxing
districts or authorities presenting taxing or by others,
<PAGE> 28
subsequently created or otherwise, and any other taxes and assessments
attributable to the Property, or any portion thereof, or its operations,
excluding, however, federal and state taxes on income.
h. Cost of repairs, replacements, and maintenance of the
Property, or any portion thereof.
i. Cost of service or maintenance contracts with
independent contractors for the operation, maintenance, repair, replacement, or
security of the Property, or any portion thereof.
j. Prorata cost incurred by reason of any recorded
easements or restrictions which affect all or any portion of the Property and
any costs incurred in the operation, maintenance, insurance, repair,
replacement, and security of the common or public areas of the business park or
planned development of which the Property, or any portion thereof, is part or
included within.
k. If the Building is less than ninety-five percent (95%)
occupied for all or a portion of the calendar year, those costs and expenses of
the type included in the foregoing provisions of this Paragraph 1 which, in
Landlord's reasonable judgment, would have been incurred if the Building had
been one hundred percent (100%) occupied.
There are specifically excluded from the definition of the term "Basic Cost" (i)
expenses for capital improvements made to the Property other than (A) capital
improvements described in subparagraph (1)(c) above and (B) items which, though
capital for accounting purposes, are properly considered maintenance and repair
items (such as painting of common areas, replacement of carpet in elevator
lobbies, and the like); (ii) electricity costs paid by Tenant pursuant to
Paragraph 4 of this Lease; (iii) expenses for repair, replacements and general
maintenance paid by proceeds of insurance or by Tenant or other third parties,
and alterations attributable solely to tenants of the Building other than
Tenant; (iv) depreciation of the Property; (v) leasing commissions; (vi) legal
expenses (other than those legal expenses, if any, which are incurred to contest
real estate taxes or assessments); (vii) income taxes imposed on the income of
Landlord from the operation of the Property; and (viii) those costs, if any, for
which Landlord is entitled to direct reimbursement from any Tenant, but only to
the extent that Landlord is so entitled.
2. In addition to the Adjusted Rental, Tenant shall, with respect to
the entire Lease Term (and any renewal or extension thereof) pay as additional
rent an amount equal to Tenant's Share (as hereinafter defined) of the actual
Basic Cost for each calendar year which is in excess of the total amount of
Estimated Operating Expenses and the Additional Payments (hereinafter defined)
paid by Tenant as part of the Adjusted Rental Payable with respect to such
calendar year (the "Excess"). Landlord, at its option, may collect such
additional renting a lump sum, to be due and payable within fifteen (15) days
after Landlord furnishes to Tenant a statement of Basic Cost for the previous
calendar year, and/or beginning with the first full calendar year following the
Commencement Date, and during each calendar year thereafter, Landlord shall also
have the option to make a good faith estimate of the Excess for each such
calendar year and, upon fifteen (15) days notice to Tenant, may require a
monthly payment (payable in advance on the first day of each month) of such
additional rent equal to one-twelfth (1/12) of such estimated Excess. Any
amounts paid based on such an estimate (the "Additional Payments") shall be
subject to adjustment pursuant to Paragraph 3 of this Exhibit "F" when the
actual Basic cost is available
Exhibit "F" Page 2
<PAGE> 29
for such calendar year. If during all or any portion of the calendar year the
Building is less that ninety-five percent (95%) occupied, then during that
calendar year, or such portion thereof the term "Tenant's Share" shall mean the
percentage obtained by dividing the Net Rentable area of the Premises by the Net
Rentable Area of the Building multiplied by one hundred (100). At all other
times the term "Tenant's Share" shall mean the percentage obtained by dividing
the Net Rentable Area of the Premises by the Net Rentable Area of the Building
actually occupied multiplied by one hundred (100).
3. By April 1 of each year, or soon thereafter as practical, Landlord
shall furnish to Tenant a statement of the actual Basic Cost for the previous
calendar year. If such statement shows that the sum of the Estimated Operating
Expenses and Additional Payments paid by Tenant to Landlord with respect to the
year covered by such statement is in excess of Tenant's Share of the actual
Basic Cost for such year, then Landlord shall, at Landlord's option, either
refund any such overpayment to Tenant or credit any such overpayment to Tenant's
account. Likewise, Tenant shall pay to Landlord, within fifteen (15) days after
Tenant's receipt of a request therefor, any underpayment with respect to such
year.
Exhibit "F" Page 3
<PAGE> 30
EXHIBIT "G"
SPECIAL PROVISIONS
1. Sublease. Landlord hereby authorizes Tenant to sublet all or a
portion of the premises to Wilson & Varner, L.L.P., David G. Nance, Cap One
Partners, Technology Capital Corporation, Texas Biomedical Development Partners,
Domccq Technologies or any affiliate of any of said named parties in accordance
with the provisions of Paragraph 8 of this Lease.
2. Renewal Option. Tenant shall have the right and option to renew
this Lease one (1) additional term of three (3) years each by delivering written
notice of the exercise thereof to Landlord at least six (6) months prior to the
expiration of the lease term provided that at the time of any such notice and at
the commencement of any such extended lease term Tenant is not in default
hereunder. Upon the delivery of said notice and subject to the conditions set
forth in the preceding sentence, this Lease, including any Expansion Space taken
during the primary lease term, shall be extended upon the same terms, covenants
and conditions as provided in this Lease except as follows:
a) The Basic Rental payable for each month during
each such extended lease term shall be prevailing
rental rate, at the commencement of such extended
term, for space of equivalent quality, size,
utility and location, with the length of the
extended lease term, the other provisions of this
Lease and the credit standing of Tenant to be
taken into account, but in no event less that the
Basic Rental Rate for the last year of the
initial Lease Term.
b) Tenant shall have no further renewal options
unless expressly granted by Landlord in writing.
c) Tenant shall not have the right to assign its
renewal rights to any sublessee of the leased
premises or assignee of the Lease without prior
written consent of Landlord.
3. In addition to the utilities provided pursuant to Paragraph 4 of
this Lease, Landlord will provide hot and cold water and electricity in the
Kitchen situated within the Premises, at no additional charge.
4. The provisions of Paragraph 17 notwithstanding, the filing of a
bankruptcy petition against Tenant or the appointment of a receiver or trustee
for substantially all of the assets of Tenant shall not constitute a default
hereunder provided that such bankruptcy or receivership is vacated or dismissed
within 120 days from the date of filing or appointment.
5. Notwithstanding the provisions of Paragraph 17 or any other
provision of this Lease, Tenant shall not be deemed in default of this Lease
until Landlord shall first have given Tenant written notice; and (i) if the
default is a failure to pay any sum of money due hereunder, then Tenant shall
have
<PAGE> 31
a period of five business days from the date of such notice in which to cure
such default and (ii) if the default arises from any other act, condition, or
occurrence, Tenant shall have a period of thirty days from Tenant's receipt of
such notice in which to cure the default. Notwithstanding the immediately
preceding sentence, Tenant shall be entitled to no more than two notices of
default for failure to pay sums of money due hereunder during any calendar year
(January 1 to December 31). After Landlord has justifiably given two such
notices of default for failure to pay money due hereunder during a calendar
year, Tenant shall be entitled to no further notices for such failure during
such calendar year, and shall be in default upon any further failure to pay
money when due under this Lease during such calendar year.
6. The provisions of Paragraph 21 of this Lease notwithstanding,
Landlord agrees to provide a waiver of its statutory, constitutional, and
contractual Landlord's liens in favor of any lender or lessor who provides
financing for furniture, equipment, or other items within the Premises.
7. Any other provision of this Lease notwithstanding, Landlord agrees
that at all times the Building will be maintained and operated as a Class A,
first class office building comparable to other Class A, first class office
buildings located on Congress Avenue between the Colorado River and the State
Capitol in Austin, Texas. Landlord will not, by allowing excessive occupancy or
otherwise, allow the appearance, cleanliness or security of the Building to
deteriorate below that offered by such other Class A office buildings.
8. First Right of Refusal. Subject to existing rights of tenants, if
during the primary lease term and any renewals, a bona fide offer from a third
party is made to lease the space located on the 18th floor of the Building
("First Refusal Space") as depicted on Exhibit "B", Tenant shall have the first
right and option to lease such additional space. When said third party offers to
lease such space, Landlord shall first offer to lease such space to Tenant at
the terms offered to the third party. If, within seven (7) days after Landlord
gives Tenant notice of the availability of such additional space, Tenant does
not notify Landlord in writing that Tenant elects to lease all of such space as
so offered, and fails to execute a lease on such space as so offered, within
twenty (20) days thereafter, then Tenant's rights to lease such additional space
shall immediately terminate and Landlord shall be free to lease same to third
party. If Landlord shall not execute a lease with such third party, Tenant's
preferential right to lease the space shall continue.
9. Storage Space. Landlord will use reasonable efforts to provide a
reasonable amount of storage space outside the Leased Premises to Tenant.
Exhibit "G" Page 2
<PAGE> 32
ESTOPPEL CERTIFICATE
The undersigned, Introgen Therapeutics, Inc., a Delaware Corporation
("Tenant"), whose mailing address is 301 Congress Avenue, Suite 1850, Austin,
Texas 78701, hereby certifies as follows:
1. Attached hereto is a true, correct and complete copy of that
certain lease dated February 9, 1996, between Landlord and Tenant (the "Lease"),
regarding the premises located at 301 Congress Avenue, Suite 1850, Austin, Texas
78701 (the "Premises"). The Lease is now in full force and effect and has not
been amended, modified or supplemented, except as set forth in Paragraph 4
below.
2. The Term of the Lease commenced on March 21, 1996.
3. The Term of the Lease shall expire on March 31, 1999,
provided that there is a renewal option.
4. The Lease has: (Initial One)
(____) not been amended, modified, supplemented, extended,
renewed or assigned.
( X )been amended, modified, supplemented, extended,
renewed or assigned by the following described terms or
agreements, copies of which are attached hereto:
The building has promised an amendment clarifying the
Tenant's right to access the 18th Floor balcony from
Tenant's space.
5. Tenant has accepted and is now in possession of the
Premises.
6. Tenant and Landlord acknowledge that Landlord's interest in
the Lease will be assigned to 301 Congress Avenue, L.P., a
Delaware limited partnership, and that no modifications,
adjustment, revision or cancellation of the Lease or
amendments thereto, except for the case referenced above,
shall be effective unless written consent of 301 Congress
Avenue, L.P., a Delaware limited partnership, is obtained,
and that until further notice, payments under the Lease may
continue as heretofore.
7. The amount of Monthly Base Rent which shall be due upon
commencement of the Lease term is $3,370.58.
8. The amount of security deposits (if any) is $5,791.27. No
other security deposits have been made except as follows:
---------------------------------------------------------
---------------------------------------------------------
<PAGE> 33
9. Tenant is paying the full lease rental which has been paid
in full as of the date hereof. No rent or other charges
under the Lease have been paid for more than thirty (3)
days in advance of its due date except as follows:_________
___________________________________________________________
10. All work required to be performed by Landlord under the
Lease has been completed except as follows: Landlord to
install balcony access door in David Nance's office, and to
complete the items on the attached list ("Items Requiring
Attention").
11. There are no defaults on the part of the Landlord or Tenant
under the Lease except as follows:
___________________________________________________________
___________________________________________________________
___________________________________________________________
12. Neither Landlord nor Tenant has any defense as to its
obligations under the Lease and claims nonset-off or
counterclaim against the other party except as follows:____
___________________________________________________________
___________________________________________________________
13. Tenant has no right to any concession (rental or otherwise)
or similar compensation in connection with renting the
space it occupies except as follows: $30,000.00 outstanding
in tenant improvements, and an additional $10,000.00 for
improvements to be amortized over lease term at 12%, except
as provided in the attached lease.
14. Tenant has the following unexercised rights to renew the
Term of the Lease which remain outstanding: See attached
Lease.
All provisions of the Lease and the amendments thereto (if any) referred to
above are hereby ratified, and will be ratified by Landlord upon Landlord's
acceptance of this Estoppel Certificate.
The foregoing certification is made with the knowledge that 301 Congress Avenue,
L.P., a Delaware limited partnership, and its constituent partners, Aetna Life
Insurance Company, a Connecticut corporation, Crescent Real Estate Equities
Limited Partnership, a Delaware limited partnership ("Crescent"), and an
affiliate of Crescent are about to purchase or acquire the building in which the
Premises are located and its related facilities (the "Project") (or part
thereof) from Landlord and that, individually and collectively, they are relying
upon the representations herein made in purchasing or acquiring the Project (or
part thereof). The foregoing certification shall inure to the benefit of the
-2-
<PAGE> 34
successors and assigns of each of the above-mentioned parties and any lenders of
such parties lending money secured by the Project.
IN WITNESS WHEREOF, this certificate has been duly executed and
delivered by the authorized officers of the undersigned as of April 2, 1996.
TENANT: INTROGEN THERAPEUTICS, INC.
a Delaware Corporation
By: /s/ JAMES W. ALBRECHT, JR.
-----------------------------------------------
Name: James W. Albrecht, Jr.
---------------------------------------------
Title: Vice President and Chief Financial Officer
--------------------------------------------
-3-
<PAGE> 35
Trammell Crow Central Texas, Ltd.
301 Congress Avenue
Suite 120
Austin, Texas 78701-4096
512/320-4141 Tel.
512/320-4125 Fax
April 11, 1996
Mr. James W. Albrecht
Introgen Therapeutics, Inc.
301 Congress Avenue
Suite 1850
Austin, Texas 78701
Re: Lease Agreement Dated February 9, 1996 Between Aetna Life Insurance
Company and Introgen Therapeutics, Inc.
Dear Mr. Albrecht:
The following is your payment schedule for 3,677 square feet of net
rentable area:
Lease Commencement Date: March 21, 1996
Lease Expiration Date: March 31, 1999
Base Rent: $3,370.58/mo. 4/96-03/99
Est. Operating Expenses: $2,420.69/mo. 49/96-03/99
Enclosed are payment coupons for 1996. Please verify the amount shown on
each coupon and notify me of any discrepancies.
If you are in agreement with this schedule, please indicate by signing in
the space below and return the original to me. If there is a conflict between
the lease and this rent schedule, the lease will prevail.
Sincerely,
TRAMMELL CROW CENTRAL TEXAS, LTD.
/s/ LISA K. BONE
--------------------------------------------
Lisa K. Bone
Property Management
LKB/mbh
cc: Lease File
AGREED AND ACCEPTED THIS 11TH DAY OF APRIL, 1996.
INTROGEN THERAPEUTICS, INC.
/s/ JAMES W. ALBRECHT, JR.
- ---------------------------------------
By: James W. Albrecht, Jr.
Title:CFO
<PAGE> 1
Exhibit 10.9A
SUBLEASE AGREEMENT
This Sublease Agreement (the "Sublease") is made by and between BEE-MAC
REFERENCE LABORATORIES, INC., a Texas Corporation (the "Sublessor"), and
INTROGEN THERAPEUTICS, INC., a Delaware Corporation (the "Sublessee") as of the
1st day of February, 1995.
W I T N E S S E T H
WHEREAS, Sublessor desires to lease certain space to Sublessee, and
Sublessee desires to lease such space from Sublessor, and,
WHEREAS, Sublessee desires to operate a research laboratory and
associated business office within the office space to be subleased from
Sublessor.
NOW THEREFORE, in consideration of the promises and the mutual
covenants and agreements hereinafter set forth, it is agreed as follows:
ARTICLE I
SECTION 1.1, DEMISE AND DESCRIPTION OF PROPERTY
A. On the terms and conditions provided below, Sublessor hereby
subleases to Sublessee, and Sublessee hereby subleases from Sublessor, the
subleased premises more fully described as follows:
Approximately 11750 square feet of Rentable Area being
outlined in red on Exhibit A and being located on the 2nd
floor of the building located at 8080 North Stadium Drive,
Houston, Texas, such building and the land described on
Exhibit B on which it is situated together with other
improvements thereon, being hereinafter called "Building" and
being a portion of the premises leased by Sublessor pursuant
to the terms of the lease dated as of May 15, 1992, between
Texas Children's Hospital, Landlord therein (hereinafter
referred to in this Sublease as "Landlord"), and BEE-MAC
REFERENCE LABORATORIES, INC., Tenant therein
<PAGE> 2
(hereinafter referred to in this Sublease as "Sublessor");
together with all improvements and fixtures located therein,
including, without limitation, the personal property and
fixtures listed on Exhibit "C" hereto. Such personal property
and fixtures shall be in good working condition upon
commencement of the lease. The above described subleased
premises shall hereinafter be referred to as "Subleased
Premises".
B. The term "Rentable Area", as used herein shall mean that on each
floor of the building on which space is or will be leased to more than one
tenant or sublessee hereinafter referred to as ("multi-tenant floor") the
rentable area attributable to each such sublease shall include, but not be
limited to, the total of (i) the entire area included within the Subleased
Premises covered by such sublease, being the area bounded by the inside surface
of any exterior glass walls (or the inside surface of the permanent exterior
wall where there is not glass) of the Building bounding such Subleased Premises,
the exterior of all walls separating such Subleased Premises from any public
corridors or other public areas on such floor, and the centerline of all walls
separating such Subleased Premises from other areas leased or to be leased to
other tenants or sublessees on such floor, (ii) a prorata portion of the area of
the following items, including, but not limited to, the elevator lobbies,
corridors, restrooms, mechanical rooms, stair landings, electrical rooms,
telephone closets, janitors closets, other spaces necessary to the core and
common area columns and other structural portions and/or projections of the
Building situated in the common areas on such floor, and (iii) a prorata portion
of the area of the building services (defined herein to include, but not be
limited to, ground floor lobby, and corridors, mailroom, fireman's control
station, telephone room). Sublessee's proportionate part of the common areas on
Sublessee's floor shall be based upon the ratio which the Sublessee's Rentable
Area on such floor bears to the aggregate Rentable Area on such floor.
C. The Rentable Area for the entire building shall be deemed to be
approximately 46,176 square feet for the purpose of this Sublease. The Rentable
Area contained within the Subleased Premises shall be deemed to be the number of
square feet set forth above. The Rentable Area in the premises has been
calculated on the basis of the foregoing definition and is hereby stipulated for
all purposes hereof to be the number of square feet specified in Section 1.1A,
whether the same in fact should be more or less
-2-
<PAGE> 3
as a result of minor variations resulting from actual construction and
completion of the Subleased Premises for occupancy.
SECTION 1.2 TERM - Subject to the provisions for termination
hereinafter provided, the initial term of this Sublease shall be for a period
commencing on February 1, 1995 and terminating two years after such commencement
date subject to Tenant's renewal options contained herein. Upon commencement the
Leased Premises shall be clean, in good repair and ready for occupancy by
Sublessee.
SECTION 1.3 RENEWAL OPTIONS - Sublessee shall have the right and option
to extend this lease for: (a) a one-year period after the initial term (the
"First Renewal Option"); and (b) an additional period commencing at the end of
said one-year period and terminating on September 30, 1999 (the "Second Renewal
Option"). Such options shall be exercised, if at all, by Sublessee's delivery of
written notice of exercise to Sublessor at least ninety (90) days before
expiration of the then current lease term. All terms and provisions of this
lease, including the amount of base rental, shall remain in force throughout
each such each renewal term.
SECTION 1.4 USE OF THE SUBLEASED PREMISES - The Subleased Premises
shall be used exclusively for the operation of a research laboratory business
and business offices and uses ancillary to the operation of a non-clinical
laboratory.
Sublessee shall not use Subleased Premises for (a) research using
animals with the exception of laboratory mice, rats, or animals smaller than
rats, (b) abortions, or (c) any purpose other than biomedical, biological or
similar laboratory operations. Sublessee, at its own expense, will comply with
all federal, state municipal and other laws, orders, rules, regulations,
ordinances and deed restrictions relating to the use, conditions, and occupancy
of the Subleased Premises and the business conducted therein by Sublessee,
(including, without limitation all laws relating to health and the environment).
Sublessee will not engage in any activity in the Subleased Premises which is
disreputable or creates extraordinary fire hazards or results in Landlord's or
Sublessor's fire and extended coverage insurance to be canceled or the rate
therefore to be increased for the Building or its contents. Sublessee will not
commit any act which is a nuisance or annoyance to Sublessor or to other
tenants, or which might, in the exclusive judgment
-3-
<PAGE> 4
of Sublessor, injure or depreciate the Building. Sublessee will not commit or
permit waste in the Subleased Premises or Building, or in any manner that
creates a nuisance or interferes with any other tenant's or sublessee's peaceful
use and occupancy of the Building.
SECTION 1.5 ASSUMPTION AGREEMENT AND COVENANTS - Sublessee subleases
the Subleased Premises subject to the provisions of the underlying lease for
Subleased Premises between the Sublessor and its Landlord (the "Main Lease"), a
copy of the Main Lease being attached hereto as Exhibit D, and Sublessee shall
comply with the terms of the Main Lease during the term hereof. Insofar as the
provisions of the Main Lease do not conflict with specific provisions herein
contained, they and each of them are incorporated into this Sublease as fully as
if completely rewritten herein and Sublessee agrees to be bound to Sublessor as
Lessee by all terms of main Lease. The relationship between the Sublessee and
Sublessor hereunder shall be the same as that between the Sublessor and its
Landlord under the Main Lease with respect to the Subleased Premises to the
extent that the provisions of the Sublease do not conflict with this Sublease
Agreement. Sublessee agrees to indemnify Sublessor from any damages or injuries
resulting from Sublessee's breach of any of the terms or provisions or covenants
of this Sublease Agreement, and with respect to the Subleased Premises of the
Main Lease. Sublessee hereby expressly assumes Sublessor's obligations under the
Main Lease that are properly allocable to the space that is the subject of this
sublease, but only to the extent of the rent Sublessee has agreed to pay
Sublessor, and only to the extent that Sublessor has performed its obligations
hereunder, (Landlord is intended to be a third party beneficiary of such
assumption).
Sublessor hereby warrants and represents that on the date of execution
hereof the Main Lease is in full force and effect; that a true and correct copy
of the Main Lease is attached hereto as Exhibit "D"; that the Main Lease has not
been modified or amended; that the Landlord has consented to execution of this
Sublease; and that Sublessor has the full right, power and authority to execute
this Sublease. Further, Sublessor covenants and agrees that throughout the term
of this Sublease, including any extension terms, it will timely pay all rents
and other amounts which may become due under the Main Lease, and Sublessor will
engage in no act, omission or failure to act which constitutes a default under
the Main Lease.
-4-
<PAGE> 5
SECTION 1.6, ASSIGNMENT AND SUBLETTING - Sublessee shall not, without
the prior written consent of Sublessor, which may be granted or denied in
Sublessor's absolute discretion, (i) assign, transfer, or encumber this Sublease
or any estate or interest herein, whether directly, indirectly or by operation
of law, (ii) permit any other entity to become Sublessee hereunder by merger,
consolidation or other reorganization, (iii) if Sublessee is an entity other
than a corporation whose stock is publicly traded, permit the transfer of any
ownership interest in Sublessee so as to result in a change of more than fifty
percent (50%) of the equity ownership of Sublessee, (iv) sublet any portion of
the Subleased Premises, (v) grant any license, concession, or other right of
occupancy of any portion of the Subleased Premises, or (vi) permit the use of
the Sublease Premises by any parties other than Sublessee (any of the events
listed in clauses (i) through (vi) shall be herein called a "Transfer").
Sublessor shall not unreasonably withhold consent to a requested Transfer.
Sublessor shall give its consent in writing to Sublessee within ten (10) days of
Notice by Sublessee to Sublessor of its desire to effect a Transfer. If
Sublessee requests Sublessor's consent to a Transfer, then Sublessee shall
provide Sublessor with a written description of all terms and conditions of the
proposed Transfer, copies of the proposed documentation and the following
information about the proposed transferee: name and address; reasonably
satisfactory information about its business and business history; its proposed
use of the portion of the Subleased Premises to be transferred; banking,
financial, and other credit information; and, general references sufficient to
enable Sublessor to determine the proposed transferee's creditworthiness and
character. Sublessee shall reimburse Sublessor for its reasonable attorney's
fees and other expenses incurred in connection with a Transfer. If Sublessor
consents to a proposed Transfer, then the proposed transferee shall deliver to
Sublessor a written agreement whereby it expressly assumes the Sublessees
obligations hereunder. Sublessor's consent to a Transfer shall not release
Sublessee from performing its obligations under this Sublease, but rather
Sublessee and (subject to the previous sentence) its transferee shall be jointly
and severally liable therefor. Sublessor's consent to any Transfer shall not
waive Sublessor's rights as to any subsequent Transfers. If an event of default
occurs while the Building or any part thereof is subject to a Transfer, then
Sublessor, in addition to its other remedies, may collect directly from such
transferee all rents becoming due to Sublessee and apply such rents against
Rent. Sublessee authorizes its transferee to make payments of rent directly to
Sublessor upon receipt of notice for Sublessor to do so. Sublessor shall in no
event approve any proposed transfer by Sublessee without first obtaining its
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Landlord's written approval. Sublessee shall have no right to assign, transfer
or sublet the Subleased Premises without the prior consent of Sublessor and
Landlord.
In addition to the agreements above, Introgen shall receive the
exclusive right and option to lease any additional space in the building which
becomes vacant during the term hereof (including renewal terms). Should any
lease upon space in the building occupied by a tenant other than Introgen
terminate, or should space in the building otherwise become available, Sublessor
shall give Introgen written notice of the availability of said space, together
with a detailed description of the space becoming available. Sublessee shall
have the exclusive right and option to lease all or part of the space becoming
available, which option shall be exercised by delivery of written notice of
exercise from Sublessee to Sublessor within twenty (20) days after receipt of
notice by Sublessee of availability of the space. Should Sublessee exercise its
option, the lease upon such optioned space shall commence upon the date it has
been vacated by the other occupant and is clean and ready for occupancy by
Sublessee, and shall continue for the remainder of the term of this lease,
including renewal options. Each lease on optioned space shall be at the same
rental rate, for the same term, including renewal options, and subject to all of
the other terms and provisions of this lease. At or prior to its occupancy of
any such optioned space, Sublessee shall post a security deposit with respect
thereto in an amount equal, to one month's rent upon such space.
ARTICLE II
SECTION 2.1, LEASEHOLD IMPROVEMENTS - Sublessee takes the space "AS
IS".
SECTION 2.2, IMPROVEMENTS, ALTERATIONS OR ADDITIONS AFTER COMMENCEMENT
OF LEASE TERM Except as expressly provided below, upon commencement of the lease
term and thereafter, Sublessee shall not make any improvements, alterations, or
additions (or series of related improvements, alterations or additions) to the
Subleased Premises if the cost thereof (including labor and material) would
exceed $1,500.00, or if the installation or use thereof would affect the
Building's structure or exterior appearance, or adversely affect the Building's
electrical, plumbing, HVAC, or mechanical systems, except in accordance with
plans and specifications (or change orders with respect thereto) which have
previously been submitted to and approved in writing by Sublessor and Landlord.
Sublessor shall not unreasonably
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withhold its approval, provided that: (a) such plans and specification (or
change orders) and the improvements and the methods of installation described
thereon, comply with applicable governmental laws, codes, rules, regulations,
and deed restrictions; (b) such plans and specification (and change orders) are
sufficiently detailed to allow construction of the improvements in a good and
workmanlike manner; (c) the improvements and methods of installation described
therein will not adversely affect the Building's structure or the Building's
HVAC, plumbing, electrical or mechanical systems, and will not affect the
exterior appearance of the Building or the Subleased Premises; (d) such plans
and specifications are accompanied by a detailed, itemized budget of the cost of
making the improvements described therein; and, (e) Sublessor's landlord
approves the plans and specifications of the improvements, alterations of
additions to the Subleased Premises. All alterations, additions or improvements
(whether temporary or permanent in character) including without limitation, all
air conditioning equipment and all other equipment that is in any manner
connected to the Building's plumbing system made in or upon the Subleased
Premises, either by Sublessor or Sublessee, shall be Landlord's property at the
end of the term and shall remain on the Subleased Premises without compensation
to Sublessee. Approval by Sublessor or Landlord of any of Sublessee's drawings,
plans and specifications shall not constitute a representation or warranty by
Sublessor or Landlord as to the adequacy or sufficiency of such drawings or
plans and specifications, or the improvements, alterations or additions to which
they relate, for any use, purpose or condition, but such approval shall merely
be the approval of Sublessor or Landlord as required hereunder. Sublessee shall
not be permitted to make any improvement, alteration, or addition to the
Subleased Premises unless such proposed improvement, alteration or addition
complies with the requirements of the Americans with Disabilities Act of 1990
and all amendments, rules, regulations and guidelines relating thereto. The
above notwithstanding, Sublessor hereby authorizes Sublessee to install an
electronic badge type, keyless lock on each door of the Subleased Premises,
provided that Sublessor is provided means to accomplish its rights to access as
provided elsewhere in this lease, and provided that such devices do not violate
any fire or safety codes of the City of Houston.
SECTION 2.3, REPAIRS AND MAINTENANCE BY SUBLESSEE - Except for the work
Sublessor is required to perform pursuant to Section 2.8, Section 7.1, Section
8.1 or Section 12.1(4) of this Sublease, Sublessee, at its expense, shall
maintain the Subleased Premises in good repair and condition. Sublessee,
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throughout the term, shall take good care of the Subleased Premises and keep
them free from waste or nuisance, and at the end of the term, deliver the
Subleased Premises clean and free of trash and in good repair and condition,
with all equipment situated in the premises on the commencement date, or
replacements thereof in working order at least equal to the condition in which
it existed as of the commencement date (ordinary wear and tear excepted).
Sublessee covenants and agrees, at Sublessee's own cost and expense, to repair
or replace any damage or injury done to the building, or any part thereof,
caused by Sublessee or Sublessee's agents, employees, invitees, or visitors;
provided, however, if Sublessee fails to make such repair or replacement
promptly, Sublessor may, at its option, make repairs or replacements and
Sublessee shall repay the cost thereof to Sublessor on demand.
SECTION 2.4, PERFORMANCE OF WORK - All work or improvements to be
constructed by Sublessee in connection with improvements, alterations, or
additions to be constructed pursuant to the requirements of Section 2.2, shall
be performed only by contractors and subcontractors approved in writing by
Sublessor and Landlord, which approval shall not be unreasonably withheld.
Sublessor shall cause all contractors and subcontractors retained by it to
procure and maintain insurance coverage against such risks, in such amounts, and
with such companies as Sublessor reasonably requires, naming Sublessor and
Landlord as additional insured. Evidence of such insurance coverage must be
delivered to Sublessor before any work may be performed in the Subleased
Premises. All such work shall be performed in accordance with all legal
requirements (including, without limitation, the retrofit requirements of the
Americans with Disabilities Act of 1990, and the rules, regulations, and
guidelines promulgated thereunder, necessitated by any such work [collectively
the "ADA"]) and in a good and workmanlike manner so as not to damage the
Subleased Premises, nor the Building, including the primary structure or
structural qualities of the Building, building plumbing or electrical lines, or
any other Building utility transmission facility.
SECTION 2.5, APPROVAL PROCESS - Sublessor shall, within twenty (20)
days after its receipt of any plans and specifications for improvements which
Sublessee intends to construct at the Subleased Premises and within twelve (12)
days after its receipt of any change orders with respect thereto, notify
Sublessee as to whether Sublessor approves or disapproves the same. If Sublessor
disapproves any such plans and
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specifications or change orders, then the notice of disapproval shall be
accompanied by a statement in reasonable detail of the reasons therefor. If
Sublessor fails to timely notify Sublessee as aforesaid, the Sublessor shall be
deemed to have given its approval. Upon completion of the improvements,
alterations or additions in question, Sublessee shall deliver Sublessor an
accurate, reproducible "as built" plan (e.g. sepia) thereof. In no event shall
Sublessor be required to approve improvements if the Landlord does not approve
of such improvements, alterations, or additions.
SECTION 2.6, MECHANIC'S LIENS - Sublessee shall not permit any
mechanic's liens to be filed against the Subleased Premises of the Building for
any work performed, materials furnished, or obligation incurred by, or at the
request of Sublessee. If such a lien is filed, the Sublessee shall, within
fifteen (15) days after Sublessor has delivered notice of the filing to
Sublessee, either pay the amount of the lien or diligently contest such lien and
deliver to Sublessor and Landlord a bond or other security reasonably
satisfactory to Sublessor and Landlord to insure that Sublessor and Landlord are
indemnified from any liability as a result of such lien. If Sublessee fails to
timely take either such action, the Sublessor may pay the lien claim without
inquiry as to the validity thereof, and any amounts so paid, including expenses
and interest, shall be paid by Sublessee to Sublessor within ten (10) days after
Sublessor has delivered to Sublessee an invoice therefor.
SECTION 2.7, DIGNIFIED USE OF THE SUBLEASED PREMISES - Sublessor
covenants that all portions of the building other than the leased premises shall
throughout the Sublease term be used in a manner consistent with the general
high standards of the building as of the date of execution hereof, and not in
disreputable or immoral manner, or in violation of any national, state, or local
laws; and Sublessee agrees that the Subleased Premises shall be used in the same
manner.
SECTION 2.8, REPAIRS BY SUBLESSOR - Unless otherwise stipulated herein,
Sublessor shall not be required to make any improvements to, or repairs of any
kind or character on the Subleased Premises during the term of this Sublease,
except such repairs as may reasonably be deemed necessary by Sublessor for
normal maintenance operation. The obligation of Sublessor to maintain and repair
the Subleased Premises shall be limited to building standard items. Sublessor
shall, without limitation, maintain and
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keep in good repair and condition the roof, exterior walls, all structural or
load-bearing walls, all common areas including lobbies, entryways and foyers,
common stairways, elevators, restrooms, building plumbing and wiring, parking
lots, sidewalks, exterior lawns and landscaping, common area lighting, exterior
lighting, windows, vents and exterior exhausts.
ARTICLE III
SECTION 3.1, BASE RENTAL - As a part of the consideration for the
execution of this Sublease and for the Sublease and use of the Subleased
Premises, for and during the term of this Sublease, Sublessee covenants and
agrees and promises to pay to the order of Sublessor at 2550 Holly Hall,
Houston, Texas, or at such other address as Sublessor shall designate, a total
sum of $584,680.00 as base rent, payable at a rate of $24,361.67 per month for
the period from commencement date through the term of this lease. This
represents a rental rate of $24.88 per square foot per year.
SECTION 3.2, PAYMENT - Sublessee shall timely pay to Sublessor base
rental and all other sums to be paid by Sublessee to Sublessor under this
Sublease, collectively (the "Rent") without deduction or set-off (except as
hereinafter provided) at Sublessor's address. Base rental, adjusted as provided
herein, shall be payable monthly in advance. The first base rental installment
shall be due contemporaneously with the execution hereof; thereafter, base
rental for the remaining full calendar months of the term shall be payable on
the first day of each month of the term beginning on the first day of the first
month which commences after Sublessee's occupancy of the Leased Premises. Base
rental for any fractional month of the term shall be prorated based on 1/365 of
the then current annual base rental for each day of any partial month this
Sublease is in effect.
SECTION 3.3, DELINQUENT PAYMENT AND HANDLING CHARGES - All past due
payments required of Sublessee hereunder shall bear interest from the date due
until paid at the maximum lawful rate of interest; alternatively, Sublessor may
charge Sublessee a fee equal to five percent (5%) of any delinquent payment that
is not paid to Sublessor within five (5) days after Sublessor has delivered to
Sublessee written notice of such delinquency; however, if Sublessor has notified
Sublessee of a delinquency four (4) times during the term, Sublessor may charge
Sublessee such five percent (5%) fee immediately upon
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any future delinquency. Such fee shall be payable to Sublessor to reimburse
Sublessor for its costs and inconvenience incurred as a consequence of
Sublessees delinquency. In no event, however, shall the charges permitted under
this Section 3.3, or elsewhere in this Sublease, to the extent they are
considered to be interest under law, exceed the maximum lawful rate of interest
allowed by the applicable law.
SECTION 3.4, SECURITY DEPOSIT - Contemporaneously with the execution of
this Sublease, Sublessee shall pay Sublessor $24,361.67 which shall be held by
Sublessor to secure Sublessee's performance of its obligations under this
Sublease, such amount being referred to herein as "Security Deposit". The
Security Deposit is not an advance payment of rent or measure or limit of
Sublessor's damages upon an event of default defined in Section 10.1. Sublessor
may, from time to time, and without prejudice to any other remedy, use all or a
part of the Security Deposit to perform any obligations which Sublessee was
obligated, but failed, to perform hereunder. Following each such application of
the Security deposit, Sublessee shall pay to Sublessor, on demand, the amount so
applied in order to restore the Security Deposit to its original amount, which
additional amount shall accrue interest as provided above. Provided that
Sublessee has performed all of its obligations hereunder, Sublessor shall,
within 30 days after the term ends, return to Sublessee the portion of the
Security Deposit which was not applied to satisfy Sublessee's obligations. If
Sublessor transfers its interests in the premises, and the transferee assumes
Sublessor's obligations under this Sublease, then Sublessor may assign the
Security Deposit to the transferee and Sublessor thereafter shall have no
further liability for the return of the Security Deposit.
SECTION 3.5, PAYMENT OF AMOUNTS OWED SUBLESSOR - All rental shall be
paid in lawful money of the United States. In addition to any other Rent to be
paid pursuant to this Sublease, Sublessee agrees to pay to Sublessor, as
additional rental, all charges for any services, goods or materials furnished by
Sublessor at Sublessee's request which are not required to be furnished by
Sublessor under this Sublease (as well as all other sums payable to Sublessee
hereunder within ten (10) days after Sublessor renders a statement therefore to
Sublessee). All past due additional rental amounts shall bear interest from the
date due until paid at the maximum lawful rate of interest.
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ARTICLE IV
SECTION 4.1 SUBLESSEE'S INSURANCE - Before the commencement date,
Sublessee shall obtain and thereafter keep in force during the term, at
Sublessee's expense, the following insurance coverage:
(1) fire and extended coverage on all of its personal property,
including removable trade fixtures, located in the Subleased Premises and on all
additions and improvements made by Sublessee, and covering all personal property
of Sublessee located in the Subleased Premises under any other agreement or
lease, and covering all other property placed in the Subleased Premises for the
full insurable value and naming Sublessor and Landlord as additional insured
parties, as their interests may appear; and
(2) commercial general liability insurance, to include coverage for
premises, operations and independent contractors, in an amount of not less than
a combined single limit of $1,000,000 or such other amount as Sublessor, or its
Landlord, may from time to time reasonably require, insuring Sublessee,
Sublessor and Landlord against all liability for injury to or death of a person
or persons or damage to property arising from the use and occupancy of the
Subleased Premises.
Such policies shall be in form and substance reasonably satisfactory to
Sublessor and Sublessor's Landlord and Landlord's Mortgagee. Sublessee shall
provide to Sublessor copies of all insurance policies required to be maintained
by Sublessor hereunder when issued. Each such policy shall provide that it may
not be cancelled or amended without thirty (30) days, prior written notice to
Sublessor, and shall provide primary coverage to Sublessor and Landlord when any
policy issued to Sublessor and Landlord provides duplicate or similar coverage
(and, in such circumstance, Sublessor's and Landlord's insurance policy shall be
in excess of Sublessee's policy). At least fifteen (15) days before the
expiration of each of such policies, Sublessee shall deliver to Sublessor and
Landlord and to Landlord's Mortgagee a certificate of insurance evidencing the
renewal of such policy, together with evidence satisfactory to Sublessor of the
payment of the premiums therefore. If Sublessee fails to maintain insurance in
accordance with Section 4.1, and does not cure such failure within ten (10) days
after receiving from Sublessor written notice thereof, then without limiting any
other remedy available to Sublessor under this Lease, Sublessor may cause such
insurance to be issued in accordance with this Section 4.1, whereupon Sublessee
shall reimburse to Sublessor the amount of all costs additional to the foregoing
insurance.
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SECTION 4.2, WAIVER, NO SUBROGATION - Sublessee and Sublessor each
waive any claim they might have against the other or Landlord for any injury to
or death of any person or persons or the damage or theft, destruction, loss, or
loss of use of any property (a "Loss"), to the extent the same is insured
against under any insurance policy maintained by Sublessee or Sublessor pursuant
to this Section (or is required to be maintained by Sublessee or Sublessor
respectively under the terms hereof) or could be insured against under the terms
of standard fire and extended coverage insurance policies referred to in Section
4.1, that covers Sublessor's or Sublessee's fixtures, personal property,
leasehold improvements, or business, regardless of cause or origin, whether the
negligence of Sublessee, Sublessor or Landlord or their agents, officers or
employees caused such loss. Sublessee and Sublessor shall cause their respective
insurance carriers to endorse all applicable policies waiving the carrier's
rights of recovery under subrogation or otherwise against each other
respectively and Landlord.
SECTION 4.3, INDEMNITY - Subject to the terms of Section 4.2, Sublessee
shall defend, indemnify, and hold harmless Sublessor, Landlord, and their agents
from and against all claims, demands, liabilities, causes of action, suits,
judgments, and expenses, (including attorneys' fees) for any Loss arising from
any occurrence on the Subleased Premises or from Sublessee's failure to perform
its obligations under this Sublease (other than a Loss arising from the
negligence or gross negligence of Landlord or Sublessor or their agents), even
though caused or alleged to be caused by the negligence or fault of Sublessor
and Landlord or its agents, and even though any such claim, cause of action, or
suit is based upon, or alleged to be based upon, the strict liability of
Landlord or Sublessor or their agents, officers or employees. This indemnity
provision shall survive termination or expiration of this Sublease.
Subject to the terms of Section 4.2, Sublessor shall defend, indemnify,
and hold harmless Sublessee, and its agents from and against all claims,
demands, liabilities, causes of action, suits, judgments, and expenses,
(including attorneys' fees) for any Loss arising from any occurrence in the
common areas of the building or from Sublessor's failure to perform its
obligations under this Sublease (other than a Loss arising from the negligence
or gross negligence of Sublessee or its agents), even though caused or alleged
to be caused by the negligence or fault of Sublessee or its agents, and even
though any such claim, cause of action, or suit is based upon, or alleged to be
based upon, the strict
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liability of Sublessee or its agents, officers or employees. This indemnity
provision shall survive termination or expiration of this Sublease.
ARTICLE V
SECTION 5.1, SUBORDINATION - This Sublease shall be subordinate to the
liens and other matters affecting title to the Leased Premises which are shown
on Exhibit "G" hereto, which is incorporated herein for all purposes.
SECTION 5.2, ATTORNMENT - Sublessee shall attorn to any party
succeeding to Sublessor's interest in the Subleased Premises, whether by
purchase, foreclosure, deed in lieu of foreclosure, power of sale, termination
of lease, or otherwise, upon such party's request, and shall execute such
agreements confirming such attornment as such party may reasonably request.
ARTICLE VI
SECTION 6.1, RULES AND REGULATIONS - Sublessee shall perform, observe
and comply with the Rules and Regulations of the Building which are attached
hereto as Exhibit E. Sublessor and Landlord shall have the right, from time to
time, to change such rules and regulations for the safety, care and cleanliness
of the Subleased Premises, the Building and related facilities, or if such
change is necessitated by law. Sublessee shall be responsible for the compliance
with such rules and regulations by its employees, agents, invitees and
assignees. Sublessor shall not have any liability to Sublessee for any failure
of any other tenant, tenants, or sublessees of the Building to comply with such
rules and regulations. Notwithstanding anything contained in the Rules and
Regulations attached hereto to the contrary, any provision of Rules and
Regulations which are in conflict with the Sublease Agreement or the terms of
Exhibit D, shall be null and void.
SECTION 6.2, PARKING - Sublessor promises to provide Sublessee with ten
(10) parking spaces on site. Additional spaces may be provided located at the
garage of the Department of Human Services immediately North of the demised
premises, if such space is available. The rental rate for said space shall
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be $1.00 per day per space during the term of this sublease or such value as the
city of Houston charges. Such rental shall be payable according to the terms of
Section 3.2 of this Agreement.
ARTICLE VII
SECTION 7.1, CONDEMNATION - If there shall be taken by exercise of the
power of eminent domain during the term of this Sublease any substantial part of
the Subleased Premises or the Building, Sublessor may elect to terminate this
Sublease or to continue same in effect. If such exercise of the power of eminent
domain renders the Subleased Premises uninhabitable or incapable of being used
for purposes expressed in this Sublease, then, either Sublessor or Sublessee may
elect to terminate this Sublease, provided, however, the condemnation of
portions of the property which do not affect the Subleased Premises shall not
give Sublessor the right to so terminate. Sublessee and Sublessor shall each
respectively have thirty (30) days after the conclusion of the eminent domain
proceeding to deliver notice to the other party of the exercise of their right,
if any, to terminate the Sublease as a result of events described pursuant to
this Section. If Sublessor elects to continue the Sublease, the rental shall be
reduced in proportion to the area of the Subleased Premises so taken and
Sublessor shall repair any damage to the Subleased Premises resulting from such
taking. All sums awarded to or agreed upon between Landlord or Sublessor and the
condemning authority for the taking of the interests of Landlord or Sublessor,
whether as damages or as compensation, will be the property of Landlord or
Sublessor, whomever has received such award. Sublessee may separately pursue a
claim against the condemnor for the value of Sublessee's leasehold interest and
for Sublessee's personal property which Sublessee is entitled to remove under
this Sublease, moving costs, loss of business or other claims it may have.
ARTICLE VIII
SECTION 8.1, DAMAGE TO PREMISES - If the Subleased Premises are damaged
or destroyed by fire or any other casualty during the Term to such an extent
that the damage cannot be (a) repaired within 60 days thereafter or (b) if such
damages or destruction occurs during the last 6 months of the Term, then both
Sublessee and Sublessor shall have the option, exercisable by written notice to
the other within 60 days after such damage or destruction, to terminate this
Lease effective as of the date of such damage or destruction. If neither
Sublessor nor Sublessee has a right to terminate this Sublease, or if neither
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Sublessee nor Sublessor elects to terminate this Sublease during the sixty (60)
day period, then Sublessor shall, at Sublessor's cost, repair and rebuild the
damaged or destroyed Subleased Premises to substantially the same condition as
existed immediately prior to such damage or destruction, subject to changes
thereto acceptable to Landlord or Sublessor. Provided, however, Sublessor's
obligation to repair is subject to (1) Landlord permitting Sublessor to rebuild,
and (2) the limitation that Sublessor shall only be required to provide building
standard improvements and Sublessee shall be responsible for repair and
rebuilding of improvements in the Subleased Premises that exceed building
standard. All such work will be performed in accordance with Section 2.4 hereof.
There will be an abatement of Rent during such period of time as the Premises
are affected by such damage or destruction.
ARTICLE IX
INTENTIONALLY OMITTED
ARTICLE X
SECTION 10.1, EVENTS OF DEFAULT - Each of the following occurrences
shall be an "Event of Default":
(a) Sublessee's failure to pay Rent, Additional Rent, or any amounts
owing by Sublessee to Sublessor when due and for a period of five (5) days after
Sublessor has given Sublessee written notice of Sublessee's failure to pay any
such amount when due; provided, however, that Sublessor shall not be obligated
to give written notice of failure to pay rent when due more than three (3) times
during any calendar year during the term hereof.
(b) Sublessee's failure to perform, comply with, or observe any other
agreement or obligation of Sublessee under this Sublease for a period of more
than thirty (30) days after Sublessor has delivered to Sublessee written notice
of such failure; however, if such failure cannot be cured within such thirty
(30) day period and Sublessee commences to cure such failure within such thirty
(30) day period and thereafter diligently pursues such cure to completion, then
such failure shall not be an Event of Default; and
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(c) The filing of petition by or against Sublessee (the term
"Sublessee" shall include, for the purpose of this Section any guarantor of the
Sublessee obligations hereunder) (i) in any bankruptcy the appointment of a
liquidator or receiver for all or substantially all of or for Sublessee's
interest in this Lease; or (ii) for the reorganization or modification of
Sublessee's capital structure; however, if such a petition is filed against
Sublessee, then such filing shall not be an Event of Default unless Sublessee
fails to have the proceeding initiated by such petition dismissed within 90 days
after the filing thereof.
SECTION 10.2, REMEDIES - Upon any Event of Default, Sublessor may, in
addition to all other rights and remedies afforded Sublessor hereunder of by law
or equity, take any of the following actions:
(a) Terminate this Sublease by giving Sublessee written notice thereof,
in which event, Sublessee shall pay to Sublessor the sum of (i) all Rent accrued
hereunder through the date of termination, (ii) all amounts due under Section
10.3(a) and (iii) and an amount equal to (A) the total Rent that Sublessee would
have been required to pay for the remainder of the term discounted to present
value at a per annum rate equal to the difference between the "Prime Rate" as
published on the date this Sublease is terminated by The Wall Street Journal,
Southwest Edition, in its listing of "Money Rates" and one percent per annum,
minus (B) the then present fair rental value of the Subleased Premises for such
period, similarly discounted; or
(b) Terminate Sublessee's right to possess the Subleased Premises
without terminating this Sublease by giving written notice thereof to Sublessee,
in which event Sublessee shall pay to Sublessor (i) all Rent and other amounts
accrued hereunder to the date of termination of possession, (ii) all amounts due
from time to time under Section 10.3(a) and (iii) all Rent and other sums
required hereunder to be paid by Sublessee during the remainder of the term,
diminished by any sums thereafter received by Sublessor through reletting the
Subleased Premises during such period. Sublessor shall use reasonable efforts to
relet the Subleased Premises on such terms as Sublessor in its sole discretion
may determine (including a term different from the Term, rental concessions, and
alterations to and improvement of the Subleased Premises). Sublessor shall not
be liable for, nor shall Sublessee's obligations hereunder be diminished because
of, Sublessor's failure to relet the Premises or to collect rent due for such
reletting. Sublessee shall not be entitled to the excess of any consideration
obtained by reletting over the Rent due
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hereunder. Re-entry by Sublessor in the Subleased Premises shall not affect
Sublessees obligations hereunder for the unexpired term; rather, Sublessor may,
from time to time, bring an action against Sublessee to collect amounts due by
Sublessee, without the necessity of Sublessor waiting until the expiration of
the term. Unless Sublessor delivers written notice to Sublessee expressly
stating that it has elected to terminate this Sublease, all actions taken by
Sublessor to dispossess or exclude Sublessee from the Subleased Premises shall
be deemed to be taken under this Paragraph 10.2b. If the Sublessor elects to
proceed under this Paragraph 10.2b, it may at any time elect to terminate this
Sublease under Paragraph 10.2a.
Additionally, in the case of an Event of Default specified in Section
10.1, after notice as therein provided, Sublessor may alter locks or other
security devices at the Subleased Premises to deprive Sublessee of access
thereto, and Sublessor shall not be required to provide a new key or right of
access to Sublessee.
(c) Enter upon and take possession of the Subleased Premises and expel
and remove Sublessee and any other occupant therefrom with or without having
terminated the Sublease.
(d) Alter locks and other security devices at the Subleased Premises.
No alteration of security devices and no removal or other exercise of dominion
by Sublessor over the property of Sublessee or others at the Subleased Premises,
shall be deemed unauthorized or constitute a conversion, Sublessee hereby
consenting, after any event of default and notice as provided herein, to the
aforesaid exercise of dominion over Sublessee's property within the Building.
All claims for damages by reason of such re-entry and/or repossession or
alteration of locks or other security devices are hereby waived as are claims
for damages by reason of any distress warrant, forcible detainer proceedings,
sequestration proceedings or other legal process. Sublessee agrees that any
re-entry by Sublessor may be pursuant to judgment obtained in forcible detainer
proceedings or other legal proceedings, or without the necessity of legal
proceedings as Sublessor may elect, and Sublessor may not be liable in trespass
or otherwise.
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<PAGE> 19
(e) In the case of event of default, Sublessee shall be liable for and
pay to Sublessor at Houston, Harris County, Texas, in addition to any sum
provided to be paid above: (1) one-half of any reasonable broker fees incurred
by Sublessor in connection with reletting the whole or any part of the Subleased
Premises; (2) the cost of removing and restoring Sublessee's or other occupant's
property; (3) the cost of repairing, altering,, remodeling, or otherwise putting
the Subleased Premises into condition acceptable to a new tenant or tenants,
plus an additional charge of fifteen percent (15%) to cover overhead; and, (4)
all reasonable expenses incurred by Sublessor in enforcing Sublessor's remedies,
including reasonable attorney's fees. Past due rent and other past due amounts
shall bear interest from maturity until paid at the maximum interest rate
allowed by applicable law.
(f) In the event of termination or repossession of the Subleased
Premises for an event of default, Sublessor shall not have any obligation to
relet or attempt to relet the Subleased Premises, or any portion thereof, but
Sublessor shall have the option to relet, or attempt to relet, and in the event
of reletting, Sublessor may relet the whole, or any portion of the Subleased
Premises for any period, to any Sublessee and for any use or purpose. Sublessor
promises to make reasonable efforts to relet after an event of default.
SECTION 10.3 PAYMENT BY SUBLESSEE, NON-WAIVER - Upon any Event of
Default, Sublessee shall pay to Sublessor upon demand all costs incurred by
Sublessor (including court costs and reasonable attorneys' fees and expenses) in
(i) obtaining possession of the Subleased Premises, (ii) removing or storing
Sublessees or any other occupant's property, (iii) repairing, restoring,
altering, remodeling, or otherwise putting the Subleased Premises into condition
acceptable to a new Sublessee, (iv) if Sublessee is dispossessed of the
Subleased Premises and this Sublease is not terminated, reletting all or any
part of the Subleased Premises (including brokerage commissions, cost of tenant
finish work, and other costs incidental to such reletting), (v) performing
Sublessee obligation which Sublessee failed to perform, and (vi) enforcing, or
advising Sublessor of its rights, remedies, and recourse arising out of the
Event of Default.
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<PAGE> 20
b. No Waiver - Sublessor's acceptance of Rent or partial payment
thereof following an Event of Default shall not waive Sublessor's rights
regarding such Event of Default. No waiver by Sublessor of any violation or
breach of any of the terms contained herein shall waive Sublessor's rights
regarding any future violation of such term. All remedies herein given to
Sublessor, including all those not set forth but provided by law, shall be
cumulative and the exercise of one or more of such remedies by Sublessor shall
not exclude the exercise of any other consistent remedy, nor shall any waiver by
Sublessor, express or implied, or any breach of any term, covenant or condition
hereof, be deemed a waiver of such term, covenant or condition hereof, or any
subsequent breach of the same or any other term, covenant or condition hereof.
Failure of Sublessor to declare any default upon occurrence thereof, or delay in
taking action with respect thereto, shall not waive such default, but Sublessor
shall have the right to declare such default at any time and take such action as
may be authorized hereunder.
SECTION 10.4, SURRENDER OF PREMISES - No act by Sublessor shall be
deemed an acceptance of surrender of the Premises, and no agreement to accept a
surrender of the Subleased Premises shall be valid unless it is in writing and
signed by Sublessor. At the expiration or termination of this sublease,
Sublessee shall deliver to Sublessor the Premises with all improvements located
therein or thereon in good repair and condition, reasonable wear and tear (and
condemnation and fire or other casualty damage not caused by Sublessee, as to
which Section 7.1 and 8.1 shall control) excepted, and shall deliver to
Sublessee all keys to the Subleased Premises. Sublessee (i) may remove all trade
fixture, furniture, and personal property placed in the Subleased Premises by
Sublessee provided that Sublessee has performed all its obligations hereunder,
(ii) shall remove from the Subleased Premises such alterations, additions,
improvements, trade fixture, equipment, furniture, signs, wiring and other
property as Sublessor may request, and (iii) shall remove from the Subleased
Premises all materials or substances whose handling, storage, use or disposal is
regulated or restricted by any law (including without limitation any
environmental or health law) placed, or permitted to be placed, in or on the
Subleased Premises by Sublessee. Sublessee shall repair all damage caused by
such removal. Without limiting Sublessee's obligations to remove such items, all
items not so removed shall be deemed to have been abandoned by Sublessee and may
be appropriated, sold, stored, destroyed, or otherwise disposed of by Sublessor
without notice to Sublessee and without any obligation to account for such
items.
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<PAGE> 21
ARTICLE XI
SECTION 11.1, HOLDING OVER - If Sublessee fails to vacate the Subleased
Premises at the end of the Term, then Sublessee shall be a tenant at will and,
in addition to all other damages and remedies to which Sublessor may be entitled
for such holding over, Sublessee shall pay, in addition to the other Rent, a
daily Base Rental equal to 150% of the daily Base Rental payable during the last
month of the Term, and Sublessee will vacate the Subleased Premises and deliver
the same to Sublessor upon Sublessor's delivery of notice to Sublessee to vacate
said Subleased Premises.
If any property not belonging to Sublessor or its Landlord remains at
the Subleased Premises after the expiration of ten (10) days following the
termination of this Sublease, Sublessee hereby authorizes Sublessor to make such
disposition of such property as Sublessor may desire without liability for
compensation or damages to Sublessee in the event such property is the property
of Sublessee. In the event such property is the property of someone other than
Sublessee, Sublessee agrees to indemnify and hold Sublessor harmless from all
suits, actions, liabilities, loss, damages, or expenses in connection with, or
incident to any removal, exercise of dominion over and/or disposition of such
property by Sublessor. In the event of any unauthorized holding over, Sublessee
shall indemnify Sublessor against all claims for damages by any other tenant to
whom Sublessor may have subleased all or any part of the Subleased Premises
covered hereby, effective upon the termination of this Sublease and against all
claims for damages by Sublessor's Landlord for failure to vacate the premises
upon termination of the Sublease, or otherwise.
SECTION 11.2, CERTAIN RIGHTS RESERVED BY SUBLESSOR - Provided that the
exercise of such rights do not unreasonably interfere with Sublessee's occupancy
of the Subleased Premises, Sublessor and Landlord shall have the following
rights:
(a) To make inspections, repairs, alterations, additions, changes or
improvements, whether structural or otherwise, in and about the Subleased
Premises and the Building, or any part thereof; to enter upon the Subleased
Premises and, during the continuance of any such work, to temporarily close
doors, entryways, public space, and corridors in the Building; and, if required
by law, to change the arrangement and location of entrances of passageways,
doors, and doorways, corridors, elevators, stairs, restrooms, or other public
parts of the Building; and
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<PAGE> 22
(b) Within 120 days of the termination of the Sublease or at any time
after an event of default, to enter the Subleased Premises at reasonable hours
to show the Subleased Premises to prospective purchasers, lenders, or tenants.
ARTICLE XII
SECTION 12.1, SERVICES - Subject to the rules and regulations referred
to herein, Sublessor shall furnish the following services during the Sublease
term:
(1) Air conditioning and heating at such temperatures and in such
amounts as are considered to be standard office conditions for similar office
buildings in the Houston area during the standard building time, which shall be
7:00 o'clock a.m. to 7:00 o'clock p.m., Monday through Friday, and on Saturdays
from 8:00 o'clock a.m. until 1:00 o'clock p.m., but not on Sundays, New Years
Day, Independence Day (July 4th), Labor Day, Thanksgiving or Christmas.
Sublessee shall reimburse sublessor for the cost of all services in excess of
the above building standard services at Sublessor's standard rate as published
by Sublessor and delivered to Sublessee from time to time, for excess or
overtime service, whichever is applicable.
(2) Water for drinking, lavatory, toilet and laboratory operating
purposes.
(3) Routine maintenance and electric lighting service for all public
areas and special service areas of the Building in the manner and to the extent
deemed by Sublessor to be standard.
(4) Standard building janitorial services on a five (s) day week basis,
provided, however, if Sublessee's floor covering or other improvements is other
than building standard, Sublessee shall pay the additional cleaning cost
attributable thereto as additional rent. Sublessee shall pay the additional rent
upon presentment of a statement therefor by Sublessor, and Sublessee's failure
to pay shall constitute default hereunder. Standard building janitorial services
within the Subleased Premises shall be limited to vacuuming carpets, mopping
building standard linoleum or tile floors, and removing trash from the
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<PAGE> 23
Subleased Premises. Removal of trash shall not include removal of bio-medical
waste or hazardous materials which shall be the responsibility of Sublessee.
(5) Elevator service for access to and egress from the Building and the
Subleased Premises.
(6) Proper facilities to furnish sufficient electric power for building
standard lighting, typewriters, dictating equipment, calculating machines and
other machines of similar low electrical consumption, but not including
electricity required for electronic data processing equipment, special lighting
in excess of building standard, or any other item of electrical equipment which
singly consumes more than 0.5 kilowatts per hour at rate capacity or requires a
voltage other than 120 volts, single phase, provided, however, such facilities
may include sufficient power for copying machines and dedicated circuits as may
be provided in Exhibit "C". Notwithstanding the above, Sublessor will continue
to provide, at its expense, electric service at least equal to the level of
service provided to the prior subtenant, GeneMedicine.
Sublessee shall pay to Sublessor monthly as billed, such charges as may be
separately metered or as Sublessor's engineer may compute for any electrical
service in excess of that stated above.
(7) Replacement of fluorescent bulbs in building standard ceiling
mounted fixtures installed by Sublessor and incandescent bulb replacement in all
public areas of the Building.
(8) Maintain the Building and the common areas in clean, sanitary, safe
and operating condition.
(9) Building standard security services, including at least limiting
access to the building after business hours (provided that Sublessee, its
employees, representatives and invitees shall have access to the Subleased
Premises at all times).
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<PAGE> 24
SECTION 12.2. INTERRUPTION OF SERVICES - No interruption or malfunction
of any such services shall constitute an eviction or disturbment of Sublessee's
use and possession of the Subleased Premises or Building, or a breach by
Sublessor of any of its obligations hereunder, or render Sublessor liable for
damages or entitle Sublessee to be relieved from any obligations hereunder,
(including the obligation to pay rent) or grant Sublessee any right of set-off
or recoupment. In the event of any interruption, however, Sublessor shall use
reasonable diligence to restore such service and if efforts are not undertaken
by Sublessor to restore such service within one (1) working day of such
interruption, Sublessee may, after giving written notice to Sublessor, restore
such service itself and bill Sublessor for the reasonable costs and expenses
incurred by Sublessee in restoring such service. Sublessee is authorized, in the
event of any power interruption, to install and operate one or more electricity
generators until electric service is fully restored.
ARTICLE XIII
SECTION 13.1, HANDLING OF BIO-MEDICAL AND HAZARDOUS MATERIALS -
Sublessee, at its own cost and expense, shall be required to dispose of all
bio-medical waste, hazardous waste, and hazardous materials that are used,
generated, or come into Sublessee's possession at the Subleased Premises.
Sublessee covenants and agrees that the handling and disposal of all bio-medical
waste, hazardous waste and hazardous materials by Sublessee at the Subleased
Premises and/or Building, shall be handled and disposed of in compliance with
all laws, ordinances, rules, orders and regulations of all applicable state,
federal, municipal or other agencies or bodies having jurisdiction thereof,
relating to the use, handling, or disposal of bio-medical waste, hazardous
materials and hazardous waste. Sublessee covenants and agrees to indemnify and
hold harmless Sublessor from any claims, liability or damages resulting from
Sublessee's failure to perform its obligations pursuant to this Section 13.1.
ARTICLE XIV
SECTION 14.1. SUBLESSOR TRANSFER - Sublessor may transfer any of its
rights under this Sublease. If Sublessee assigns its rights under this Sublease,
then Sublessor shall thereby be released from any obligation hereunder arising
from and after the day of the transfer, provided that the assignee assumes
Sublessor's obligation hereunder in writing.
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<PAGE> 25
SECTION 14.2, FORCE MAJEURE - Other than for Sublessee's monetary
obligations under this Sublease and obligations which can be performed by the
payment of money (e.g. maintaining insurance), whenever a period of time is
herein prescribed for action to be taken by either party hereto, such party
shall not be liable or responsible for, and there shall be excluded from the
computation for any such period of time, any delays due to strikes, riots, acts
of God, shortages of labor or materials, wars, governmental laws, regulations,
or restriction, or any other causes of any kind whatsoever which are beyond the
control of such party.
SECTION 14.3. ESTOPPEL CERTIFICATE - From time to time, Sublessee shall
furnish to any party designated by Sublessor or Sublessor's Landlord, within 10
days after Sublessor has made a request therefor, a certificate signed by
Sublessee confirming and containing such factual certifications and
representations as to this sublease, if true, as Sublessor may reasonably
request.
SECTION 14.4, NOTICES - All notices and other communications given
pursuant to this Sublease shall be in writing and shall be (i) mailed by first
class, United States Mail, Postage prepaid, certified, with return receipt
requested, and addressed to the parties hereto at the address specified next to
their signature block, (ii) hand delivered to the intended address, or (iii)
sent by prepaid telegram, cable facsimile transmissions, or telex followed by a
confirmatory letter. All notices shall be effective upon delivery to the address
of the addressee. The parties hereto may change their addresses by giving notice
thereof to the other in conformity with this provision.
SECTION 14.5, SEPARABILITY - If any clause or provision of this
Sublease is illegal, invalid, or unenforceable under present or future laws,
then the remainder of this Sublease shall not be affected thereby and in lieu of
such clause or provision, there shall be added as a part of this Sublease a
clause or provision as similar in terms to such illegal, invalid or
unenforceable clause or provision as may be possible and be legal, valid, and
enforceable.
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<PAGE> 26
SECTION 14.6, AMENDMENTS AND BINDING EFFECT - This Sublease may not be
amended except by instrument in writing signed by Sublessor and Sublessee. No
provisions of this Sublease shall be deemed to have custom or practice which may
evolve between the parties if the administration of the terms hereof shall waive
or dismiss the right of either party to insist upon their performance by the
other party in strict accordance with the terms hereof. The terms and conditions
contained in this Sublease shall inure to the benefit of and be binding upon the
parties hereto, and (subject to Section 1.5 hereof) upon their respective
successors as assigns. This Sublease is for the sole benefit of Sublessor and
Sublessee, and other than Sublessor's Landlord and the Mortgagee of Sublessor's
Landlord, no third party shall be deemed a third party beneficiary hereof.
SECTION 14.7, NO MERGER - There shall be no merger of the leasehold
estate hereby created with the fee estate in the Subleased Premises of any party
thereof if the same person acquires or holds, directly or indirectly, this
Sublease or any interest in this Sublease and the fee estate in the Subleased
Premises, or any interest in such fee estate.
SECTION 14.8, NO OFFER - The submission of this sublease to Sublessee
shall not be construed as an offer, and Sublessee shall not have any rights
under this Lease unless Sublessor executes a copy of this Sublease and delivers
it to Sublessee.
SECTION 14.9, EXHIBITS All exhibits and attachments hereto are
incorporated herein by this reference.
Exhibit A - Diagram of Subleased Premises
Exhibit B - Property Description
Exhibit C - Personal Property and Fixtures
Exhibit D - Copy of Main Lease
Exhibit E - Building Rules and Regulations
Exhibit F - Landlord's Consent
Exhibit G - Exceptions to Title of the Leased Premises
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<PAGE> 27
Any other provision of this Sublease Agreement notwithstanding, the
parties acknowledge that such Exhibits are not attached hereto at the time this
Sublease is being signed by the parties. Sublessor shall provide such Exhibits
to Sublessee on or before June 1, 1995, and Sublessee shall have until June 15,
1995, to review and approve same. Should Sublessor fail to deliver said Exhibits
to Sublessee on or before June 1, 1995, or should Sublessee fail to approve the
matters contained on such Exhibits by June 15, 1995, then Sublessee may, at it
option, terminate this Sublease.
SECTION 14.10, ENTIRE AGREEMENT - This Sublease constitutes the entire
agreement between Sublessor and Sublessee regarding the subject matter hereof
and supersedes all oral statements and prior writings relating thereto, and
specifically supersedes a prior sublease between the parties covering space on
the second floor of the same building, which prior lease is null and void.
Except for those set forth in this Sublease, no representations, warranties, or
agreements have been made by Sublessor or Sublessee to the other with respect to
this Lease or the obligations of Sublessor or Sublessee in connection therewith.
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<PAGE> 28
SUBLESSOR AND SUBLESSEE EXPRESSLY DISCLAIM ANY IMPLIED WARRANTY
THAT THE PREMISES ARE SUITABLE FOR SUBLESSEE'S INTENDED COMMERCIAL
PURPOSE.
DATED as of the date first above written.
SUBLESSEE:
INTROGEN THERAPEUTICS, INC. ADDRESS:
BY: /s/ David Nance 301 Congress Avenue, Suite 2025
------------------------------ Austin, Texas 78701
ITS: President
Attention: David Nance
SUBLESSOR:
BEE-MAC REFERENCE LABORATORIES, INC ADDRESS:
BY: /s/ [illegible] 2550 Holly Hall
------------------------------ Houston, Texas 77054
ITS: Vice President
Attention:
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<PAGE> 1
Exhibit 10.9B
THE STATE OF TEXAS )
)
COUNTY OF HARRIS )
ADDENDUM TO SUBLEASE AGREEMENT
This addendum is to become part of the sublease agreement entered into
as of the 23rd day of January, 1995 by and between BEE-MAC REFERENCE
LABORATORIES, INC., (the "Sublessor") and Introgen Therapeutics, Inc., (the
"Sublessee").
WITNESSETH
Article I Section 1.1 of the sublease agreement is hereby modified to
add to the subleased premises as follows:
In addition to the premises described above, approximately 5099 square
feet of Rentable Area being outlined in red on Exhibit A and being located on
the 2nd floor of the building located at 8080 North Stadium Drive, Houston,
Texas, such building and the land described together with other improvements
thereon, being hereinafter called "Building" and being a portion of the premises
leased by Sublessor pursuant to the terms of the lease dated as of May 15, 1992
between Texas Children's Hospital, Landlord, therein (hereinafter referred to in
this Sublease as "Landlord"), and BEE-MAC REFERENCE LABORATORIES, INC., Tenant
therein (hereinafter referred to in this Sublease as "Sublessor"). The above
described subleased premises shall hereinafter be referred to as "Laboratory
Subleased Premises", and collectively all the described subleased premises shall
hereinafter be referred to as "Subleased Premises".
In addition to the premises described above, approximately 2320 square
feet of Rentable Area being outlined in red on Exhibit B and being located on
the 2nd floor of the building located at 8080 North Stadium Drive, Houston,
Texas, such building and the land described together with other improvements
thereon, being hereinafter called "Building" and being a portion of the premises
leased by Sublessor pursuant to the terms of the lease dated as of May 15, 1992
between Texas Children's Hospital, Landlord, therein (hereinafter referred to in
this Sublease as "Landlord"), and BEE-MAC REFERENCE LABORATORIES, INC., Tenant
therein (hereinafter referred to in this Sublease as "Sublessor"). The above
described subleased premises shall hereinafter be referred to as "Office
Subleased Premises", and collectively all the described subleased premises shall
hereinafter be referred to as "Subleased Premises".
<PAGE> 2
Article III Section 3.1 is hereby amended to read as follows:
Section 3. 1 (a), Base Rental - In addition to the base rental cited
above, and as a part of the consideration for execution of this Addendum to the
Sublease with regard to the Laboratory Subleased Premises and for the Sublease
and use of the Subleased Premises, for and during the term of the Sublease,
Sublessee covenants and promises to pay to the order of Sublessor at 2550 Holly
Hall, Houston, Texas, or at such other address as Sublessor shall designate, a
total sum of $163168.00 as additional base rent, payable at $1098.00 per month
for the term of the sublease.
Section 3.1(b), Base Rental - In addition to the base rental cited
above, and as a part of the consideration for execution of this Addendum to the
Sublease with regard to the Office Subleased Premises and for the Sublease and
use of the Subleased Premises, for and during the term of the Sublease,
Sublessee covenants and promises to pay to the order of Sublessor at 2550 Holly
Hall, Houston, Texas, or at such other address as Sublessor shall designate, a
total sum of $55680 as additional base rent, payable at $3480 per month for the
term of the sublease.
All other terms and conditions of the sublease remain unchanged.
EXECUTED in multiple originals as of the day and year first above
written.
Sublessor: Sublessee:
BEE-MAC REFERENCE INTROGEN THERAPEUTICS, INC.
LABORATORIES, INC.
By: /s/ John Edwards By: /s/ James W. Albrecht, Jr. 11-1-95
-------------------------------- -----------------------------------
ITS: Vice President ITS: Chief Financial Officer
-------------------------------
ADDRESS:2550 Holly Hall ADDRESS:8080 North Stadium Drive,
Houston, TX 77054 Suite 1200
Houston, TX 77054
<PAGE> 1
EXHIBIT 10.10
LEASE AGREEMENT
THE STATE OF TEXAS )
COUNTY OF HARRIS )
THIS LEASE AGREEMENT ("Lease") made and entered into as of this 7th day
of June, 1996, by and between PLAZA DEL ORO BUSINESS CENTER (hereinafter called
"Landlord") and Introgen Therapeutics, Inc., a Delaware corporation and its
subsidiaries and affiliates (hereinafter called "Tenant").
W I T N E S S E T H
ARTICLE I
A. Leased Premises. Subject to and upon the terms and conditions set
forth herein, and each in consideration of the duties, covenants and agreements
of the other hereunder, Landlord hereby leases, demises and lets to Tenant and
Tenant hereby leases from Landlord those certain premises consisting of a space
containing an area of 2,405 square feet, more or less, (hereinafter called the
"Leased Premises") in the building known as Building A (hereinafter called the
"Building") located upon the lot, tract or parcel of land situated in Harris
County, Texas, more particularly described by metes and bounds on Exhibit "A"
attached hereto and made a part hereof for all purposes and presently designated
as PLAZA DEL ORO BUSINESS CENTER, an office-warehouse center (hereinafter called
the "Center") consisting of the building and four (4) other buildings
(hereinafter called the "Other Buildings"), all as shown on the site plan
attached hereto as Exhibit "B" and made a part hereof for all purposes. The
Leased Premises are outlined in red on the building plan attached hereto as
Exhibit "C" and made a part hereof for all purposes.
B. Use in Common. Subject to and upon the terms and conditions set
forth herein, the use and occupancy by Tenant of the Leased Premises shall
include the use in common with other tenants in the Building and the Other
Buildings, and their employees, agents, contractors, guests and invitees, of the
common areas of the Center (hereinafter called the "Common Areas") including,
without limitation, the sidewalks, landscaped areas, service areas, automobile
driveways, service driveways, access roads and parking areas shown on Exhibit
"B", and the easements and rights of way appurtenant to the center.
ARTICLE II
A. Term. Subject to and upon the terms and conditions set forth herein,
this Lease shall continue in force for a term of One (1) year (hereinafter
called the "Term"), commencing on the 15th day of June, 1996, and expiring on
the 31st day of June, 1997. In the event that the Leased Premises should not be
ready for occupancy by the said commencement date for any reason, Landlord shall
not
<PAGE> 2
be liable or responsible for any claims, damages or liabilities in connection
therewith or by reason thereof and the commencement date of this Lease shall be
the date that the Leased Premises become ready for occupancy by Tenant in
accordance with Paragraph F(2) of Article III hereof or the date Tenant accepts
the Leased Premises, whichever shall first occur. In such event Landlord and
Tenant will, at the request of either, execute a memorandum specifying the
revised commencement date of the Term. In the event the commencement date or
revised commencement date shall be a date other than the first day of a calendar
month, the Term shall be for one (1) full year plus the number of days remaining
in the month in which the Term commences.
B. Use. The Leased Premises are to be used and occupied by Tenant
solely for the purpose of office and laboratory use and no other purpose.
C. Net Rentable Area. As used herein, the term "Net Rentable Area of
the Leased Premises" shall include all space within the demising walls of the
Leased Premises as measured from the mid-point of the demising walls; the term
"Net Rentable Area of the Building" shall mean all space within the exterior
walls of the Building, as measured from the mid-point of said walls; and the
term "Net Rentable Area or the Center" shall mean all space within the exterior
walls of the Building and Other Buildings, as measured from the mid-point of
said walls. Based upon said definitions and for the purposes hereof, the Net
Rentable Area of the Leased Premises shall be deemed to be Seven and Nine One
Hundredths percent (7.9%) of the Net Rentable Area of the Building and the Net
Rentable Area of the Leased Premises shall be deemed to be One and Fifty-Four
One Hundredths percent (1.54%) of the Net Rentable Area of the Center.
D. Base Rental and Security Deposit.
(a) Tenant promises and agrees to pay to Landlord, annually
throughout the Term, subject to adjustments as hereinafter provided, base rental
(hereinafter called the "Base Rental") in the amount of Twenty-four Thousand and
no/100 Dollars ($24,000.00). Base rental shall be due and payable in twelve (12)
equal monthly installments of Two Thousand and no/100 Dollars ($2,000.00) each,
on the first day of each calendar month during each year of the Term, and Tenant
hereby agrees to so pay such rent to Landlord at Landlord's address as provided
herein, monthly in advance, without demand, deduction or set-off. If the Term
commences on other than the first day of a calendar month, Tenant shall pay on
such commencement date a pro rata payment which shall be in addition to the full
monthly installments payable during the Term. In accordance with the terms of
this paragraph D of Article II, payment has been made and receipt is hereby
acknowledged of an amount sufficient to cover Base Rental as due and payable for
the first full calendar month and prorated rent for any prior partial month of
the Term.
(b) In addition, Tenant agrees to deposit with Landlord on the
date hereof the sum of Two Thousand and no/100 Dollars ($2,000.00), which sum
shall be held by Landlord, without obligation for interest, as security for the
performance of Tenant's covenants and obligations under this Lease, it being
expressly understood and agreed that such deposit is not an advance rental
deposit or a measure of Landlord's damages in case of Tenant's default. Upon the
occurrence of any event of default by Tenant, Landlord may, from time to time,
without prejudice to any other remedy provided
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<PAGE> 3
herein or provided by law, use such funds to the extent necessary to make good
any arrears of rent or other payments due Landlord hereunder, and any other
damage, injury, expense or liability caused by such event of default; and Tenant
shall pay to Landlord on demand the amount so applied in order to restore the
security deposit to its original amount. Although the security deposit shall be
deemed the property of Landlord, any remaining balance of such deposit shall be
returned by Landlord to Tenant at such time after termination of this Lease that
all of Tenant's obligations under this Lease have been fulfilled.
E. Base Rental Adjustment. Base Rental may be increased or decreased
throughout the Term as follows:
1. For all purposes hereof, "Base Year" shall mean the
calendar year 1995.
2. Base Rental includes a component consisting of the Basic
Cost (as hereinafter defined) and the Basic Cost for the Base Year is hereby
stipulated to be One and 30/100 Dollars ($1.30) per square foot of Net Rentable
Area contained in the Center.
3. Within sixty (60) days after the commencement of each
calendar year (except the Base Year) during the Term, Landlord shall provide
Tenant with a written estimate of the Basic Cost for such calendar year, and the
Base Rental for such calendar year shall be increased by the amount, if any, of
the excess of Tenant's proportionate share of the Basic Cost for the Base Year,
but in no event shall there be any Base Rental Adjustment during the primary
lease term.
4. Within one hundred eighty (180) days after the end of each
calendar year (except the Base Year) of the Term, Landlord shall furnish Tenant
with a statement showing the actual Basic Cost for the calendar year just ended.
An amount equal to the difference between Tenant's proportionate share of the
actual Basic Cost and Tenant's proportionate share of the estimated Basic Cost
for the calendar year just ended shall be paid by Landlord to Tenant or by
Tenant to Landlord, as appropriate, within fifteen (15) days of the delivery of
such statement, to the end that Landlord shall receive, and Tenant shall pay, as
a portion of Base Rental for each calendar year during the Term, Tenant's
proportionate share of any increases in the Basic Cost over the Basic Cost for
the Basic Year. The obligations of Landlord and Tenant regarding any adjustment
for increases in the Basic Cost for the year in which this lease expires or
otherwise terminates shall expressly survive the termination of this Lease.
5. Any adjustment of Base Rental shall operate retroactively
and be effective as of the first day of each calendar year.
6. As an alternative to the procedure described in
subparagraphs 3, 4, and 5 above, Landlord, at its sole option, may elect to
invoice Tenant annually, within one hundred eighty days (180) days after the end
of each calendar year (except the Base Year) during the Term, for the amount, if
any, of the excess of Tenant's proportionate share of the Basic Cost for the
calendar year just ended over the Basic Cost for the Base Year, and Tenant shall
pay said amount as additional rent within fifteen (15) days after receipt of
such invoice from Landlord.
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7. For all purposes hereof, "Tenant's proportionate share"
shall be that proportion which the Net Rentable Area of the Leased Premises
bears to the Net rentable area of the Center.
8. Notwithstanding anything contained herein to the contrary,
in no event shall Base Rental be reduced below the amounts specified in Article
II, Paragraph D hereof.
F. Past Due Rent and Charges. Landlord shall be entitled to collect a
late charge of $5.00 for each day from the date due until the date paid on all
installments of Base Rental or other charges payable by Tenant hereunder which
are not paid within five (5) days after the date due. In addition, all
installments of Base Rental or other charges payable by Tenant hereunder which
are not paid within thirty (30) days after the date due shall bear interest at
the rate of eighteen percent (18%) per annum from the date due until the date
paid. Any election of Landlord to accept the payment of past due installments of
Base Rental and/or other charges payable by Tenant hereunder without the payment
of the late charge and/or interest described herein shall not be deemed a waiver
of Landlord's right to collect said late charge and/or interest in the event of
any subsequent past due installment or installments of Base Rental and/or other
charges payable by Tenant hereunder.
G. Basic Cost. As used herein, the term "Basic Cost" shall consist of
the following:
1. Cost of Landlord's fire and extended coverage and liability
insurance applicable to the Center and the buildings therein;
2. All general and special taxes, except taxes based on
income, impositions, assessments and governmental charges, or any substitutions
in lieu thereof, imposed upon the Center and buildings therein, whether federal,
state, county or municipal, and whether by taxing districts or authorities
presently existing or by others subsequently created; and
3. Common Area Maintenance Costs, as defined in Article III,
Paragraph C hereof.
H. Audit. Tenant, at its expense, shall have the right, once each
calendar year, upon thirty (30) days prior written notice to Landlord, to audit
Landlord's books and records relating to this Lease for the Base Year and any
calendar year thereafter.
ARTICLE III
Landlord covenants and agrees with Tenant:
A. Utilities. To provide, at Landlord's cost, normal water, sanitary
sewer, electricity and gas connections to the Leased Premises from the nearest
water, sanitary sewer, electric and gas mains, laterals and/or trunk lines
serving the Center. Any interruptions or cessation of said services shall not
render Landlord liable in any respect for injury, damage or loss to persons or
property, except in the case of said interruption being caused by Landlords
negligent acts, shall not be
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construed as an eviction of Tenant, shall not work an abatement of rent, and
shall not relieve Tenant from fulfillment of any covenant or agreement hereof.
B. Maintenance and Repairs to Building. Subject to the provisions of
Article IV, provisions Paragraph C and Article V, Paragraph F hereof, to make,
at Landlord's expense, all repairs and replacements, structural or otherwise,
necessary to keep the roof, foundation and the structural soundness of the
exterior walls of the Building in good repair; provided, however, that the term
"exterior walls" as used herein shall not include any items for which Tenant is
responsible under Article IV, Paragraph C, and nothing contained in this Article
III, Paragraph B shall require Landlord to paint the interior of the Leased
Premises or the interior of the Building or to make any other repairs or
replacements to the Building at any time except when such other repairs and
replacements are required under this Article III, Paragraph B, or under the
provisions of Article V, Paragraph F hereof. Landlord's liability hereunder
shall be limited to the cost of such repairs. Any entry for the purpose of
making such repairs shall not affect Tenant's obligations under this Lease and
shall not constitute any ground for abatement of any rentals or other charges
payable by Tenant hereunder, and Tenant hereby expressly waives all claims for
inconveniences, disturbance, interruption and/or loss of Tenants business or
other damages due to said entry, unless caused by the gross negligence of
Landlord or its agents.
C. Common Area Maintenance and Repairs. To keep swept in a neat, clean
condition the common areas, untidiness due to normal and usual use only
excepted, and in addition, to (i) repair the Common Areas, including, without
limitation, surface of the driveways, sidewalks, service areas, and parking
areas, (ii) keep the parking and service areas stripped, and (iii) maintain the
landscaped areas, including landscape replacement. Said maintenance and repairs
shall include, as more specifically set forth below, all repairs and
replacements and the supplies and materials therefor, which in Landlord's
reasonable judgment are necessary to preserve the utility of the Common Areas in
the condition same were in at the time of completion, reasonable wear and tear
only excepted.
As used herein, "Common Area Maintenance Costs" shall mean all
costs and expenses of every kind paid or incurred during the Term in connection
with the operation and upkeep of Common Areas, including, without limitation,
sidewalks, landscaped areas, service areas, automobile driveways, service
driveways, parking areas, signs, lighting, sweeping, cleaning, draining and
striping the parking and service areas, and where necessary, the cost of
replacing any of said common facilities, and the cost of policing and protecting
same. In addition to the foregoing, and without limiting the generality thereof,
the Common Area Maintenance Costs shall include: wages paid to employees or
contractors of Landlord hired for the purpose of maintaining the Common Areas,
premiums for common area workmen's compensation and common area employees'
liability insurance, common area unemployment taxes, common area Social Security
taxes, personal property taxes for Common Areas, common area licenses and
permits, common area supplies, electricity, lighting fixtures and bulbs, and
rentals paid for equipment rented or leased or used in the operation and
maintenance thereof and a fee to be paid Landlord, or Landlord's designee, for
the administrative expense of maintaining the Common Areas, provided that said
fee shall not exceed five percent (5%) of all other common Area Maintenance
Costs for any calendar year.
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D. Keys. To furnish Tenant, free of charge, with two (2) keys for each
door entering the Leased Premises. Additional keys will be furnished at a charge
by Landlord equal to its cost plus fifteen percent (15%) on an order signed by
Tenant or Tenant's authorized representative. All such keys shall remain the
property of Landlord. No additional locks shall be allowed on any door of the
Leased Premises without the written consent of Landlord, and in the event
Landlord gives its consent, Tenant shall furnish Landlord a key for each such
additional lock upon the installation thereof. Tenant shall not make, or permit
to be made, any duplicate keys except those furnished by Landlord. Upon
termination of this Lease, Tenant shall surrender to Landlord all keys to the
Leased Premises and give to Landlord the combination of all locks for safes,
safe cabinets and vault doors, if any, in the Leased Premises.
E. Signs. That Tenant shall have the right to install sign letters,
numerals, emblems, trademarks, insignia or other designs upon certain areas and
spaces designated by Landlord on the Leased Premises in accordance with the sign
criteria set forth in Exhibit "D" attached hereto and made a part hereof for all
purposes.
F. Construction. That the condition of the Leased Premises as of the
date of this Lease is such that the Shell of the Building (as hereinafter
defined) and certain Leasehold Improvements are completed. In this connection,
Landlord and Tenant have agreed and do hereby agree as follows:
1. The definitions set out below apply to the following terms
as those terms are used in this Lease, unless the context clearly requires a
different meaning:
(a) "Shell of Building" means the building,
consisting of beams, structural steel, exterior walls, roof, paint on exterior
walls and trim, interior finish and paint in certain areas of the Building that
are common to the Building as a whole, such as entries and corridors exterior to
the Leased Premises and certain utility service lines, including electrical and
sanitary sewer service to the Building, sidewalks, parking area and other common
areas and facilities, all as shown on the approved plans and specifications (as
hereinafter defined).
(b) "Leasehold Improvements" means all existing
improvements as shown on the architectural floor plan attached hereto as
"Exhibit "E" and made a part hereof for all purposes and any other improvements
required by Tenant and approved by Landlord.
2. Subject to the foregoing terms and agreements of this
Lease, Tenant agrees to complete any additional improvements in a good and
workmanlike manner and in accordance with the plans and specifications furnished
by Tenant and approved by Landlord. All improvements or changes in addition to
the existing Leasehold Improvements on Exhibit "E" shall be for Tenant's account
and Tenant shall pay the cost thereof. Tenant agrees that upon expiration of
this lease, at Landlord's request Tenant shall, at Tenant's expense, cause the
removal of any portion of any additional leasehold improvements made by Tenant,
and repair any affected part of the existing leasehold improvements.
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<PAGE> 7
3. The rights of Tenant in and to the Leasehold Improvements,
when completed, shall be limited to Tenant's leasehold estate therein, which is
a possessory right, subject to all of the terms and conditions of this Lease,
and the Leasehold Improvements shall constitute a part of the fee remainder,
subject to Tenant's right of possession and use during the Term, and
notwithstanding that Tenant may have contributed to the initial cost or to the
subsequent repair or replacement thereof. Under no circumstances shall Tenant's
rights in the Leasehold Improvements entitle Tenant to collaterally assign,
grant a security interest in or remove the Leasehold Improvements, or any part
thereof, at any time during the Term.
G. Quiet Enjoyment. That so long as Tenant shall pay all Base Rental,
additional rent and other charges payable by Tenant hereunder, and shall observe
and abide by all reasonable regulations regarding use of the Center, the
Building, the Other Buildings and the Common Areas, and shall observe and
perform all of the covenants on Tenant's part to be observed and performed
hereunder, then, subject to the limitations upon the title to the Center set
forth on Exhibit "G" attached hereto and made a part hereof for all purposes,
Tenant shall peaceably and quietly hold and enjoy the Leased Premises for the
entire term without interruption by Landlord or any person or persons lawfully
or equitably claiming by, through or under Landlord. It is understood and agreed
that this covenant and any and all other covenants of Landlord contained in this
Lease shall be binding upon Landlord and its successors and assigns only with
respect to breaches occurring during its and their respective ownership of the
Landlord's interest hereunder. In addition, Tenant specifically agrees to look
solely to Landlord's interest in the Center for the recovery of any judgment
from Landlord, it being expressly agreed and understood that Landlord shall
never be personally liable for any such judgment.
H. Parking. Tenant shall have the right to six (6) parking spaces
located in the Center as shown in Exhibit B hereto. Landlord may designate
additional parking at an easement adjacent to Building B and at the rear of
Tenants Leasehold. Landlord reserves the right from time to time to assign, or
reassign, the location of such parking spaces in any manner that Landlord in
Landlord's sole discretion, deems more beneficial to the operation of the
Center. Tenant agrees that it will employ reasonable efforts to prevent the use
by Tenant's employees and visitors of any parking spaces allocated to other
tenants. Landlord reserves the right to promulgate rules and regulations for the
use of all parking areas at any time during the term of this Lease.
ARTICLE IV
Tenant covenants and agrees with Landlord:
A. Payment. To pay all Base Rental, additional rental and other charges
provided to be paid to Landlord hereunder at the times and in the manner herein
provided.
B. Utility Payments. To pay all charges for water, sanitary sewer,
electricity, gas and telephone service used in, on or about the Leased Premises
and all maintenance charges for said utilities as follows:
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<PAGE> 8
1. Tenant promises and agrees to pay directly to the utility
companies, within thirty (30) days after receipt statement
for services, all charges for electricity, gas and
telephone service used in, on or about the Leased Premises
and all maintenance charges therefor.
2. Tenant promises and agrees to pay Landlord, within ten (10)
days after receipt of Landlord's statement therefor,
Tenant's proportionate share of all charges for water and
sanitary sewer services furnished to the Building provided,
however, that landlord reserves the right, at its sole
option, to install a separate flow meter on and for the
Leased Premises, and in such event, Tenant promises and
agrees to pay to Landlord within ten (10) days after
receipt of Landlord's statement therefore all charges for
water and sanitary sewage services furnished to the Leased
Premises. For purposes of the forgoing, Tenant's
proportionate share of all water and sanitary sewer charges
furnished to the Building shall be that proportion which
the Net Rentable area of the Leased Premises bears to the
Net Rentable Area of the Building, less any portion thereof
separately metered.
C. Repairs and replacements. To make, at its sole cost and expense, all
repairs and replacements to the Building (except repairs and replacements for
which Landlord is expressly obligated under Article III, Paragraph B) and the
Leased Premises, and the fixture, appurtenances and equipment therein, as and
when needed to preserve them in good working order and condition.
Notwithstanding Landlord's obligations under Article III Paragraph B any damage
or injury to the Leased premises and to its fixtures, appurtenances and
equipment caused by Tenant's negligence or the negligence of Tenant's employees,
agents contractors, guests or invitees, or moving property in or out of the
Building by installation or removal of furniture, fixtures or other property,
shall be repaired or replaced promptly by Tenant at its sole cost and expense,
which repairs and replacements shall be in quality and class equal to the
original work or installations.
Without limiting the generality of the foregoing, Tenant shall, at its
sole cost and expense, repair and/or replace all damaged windows, glass and
plate glass, doors, any specific office or warehouse front, interior walls, any
finish conditioning equipment and systems in and for the Leased Premises, water,
sanitary sewer, electricity and gas lines to the point of connection to the
Leased Premises (provided that any damage to the mains, laterals or trunk lines
from the point of connection to the Leased Premises caused by the Tenant or its
employees, agents, contractors, guests or invitees, shall be Tenant's
responsibility), plumbing and electrical work and fixtures, and shall suffer and
permit no waste; provided however, that Tenant shall not be obligated to repair
any damage caused by fire, tornado, or other casualty covered by fire and
extended coverage provisions of Landlord's fire and extended coverage insurance
policy.
If Tenant fails to perform Tenant's obligations under this Article IV,
Paragraph C, Landlord may, at Landlord's option, enter upon the Leased Premises
after ten (10) days prior written notice to Tenant, and cause all necessary
repairs and/or replacements to be made, and the cost thereof shall be due and
payable to Landlord within ten (10) days after receipt of Landlord's statement
therefor.
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D. Tenant's Property and Liens. That Tenant shall be responsible for
and shall pay, before same become delinquent, all federal, state, country, and
municipal taxes assessed against any leasehold interest and all personal
property of any kinds owned by or placed in, on or about the Leased premises by
Tenant during the Term, including, without limitation, any additional leasehold
improvements or alterations made by Tenant, and all furnishings, equipment,
trade fixtures, inventory, and merchandise of Tenant. Tenant shall neither
permit nor suffer an involuntary lien to be filed or affixed against the Leased
Premises, any part thereof or any fixture attached thereto, whether same be
movable or not, and shall not voluntarily grant any lien or security interest
therein. In the event any such voluntary or involuntary lien, including, without
limitation, any mechanic's lien and tax lien, shall be filed and/or affixed
against the Leased Premises, any part thereof of any fixture attached thereto,
including, without limitation, items of work and improvement comprising the
interior (notwithstanding that same may or might constitute a part of the fee
remainder), and Tenant has not caused same to be released and discharged of
record within twenty (20) days after notice and demand by Landlord for the
release and discharge thereof, Landlord may, at its option, pursue the rights
and remedies provided in Article V, Paragraph H hereof without the necessity of
any further notice or demand, or Landlord may cause same to be vacated or
released either by paying the amount claimed to be due or by procuring the
release of such lien by giving security or in such other manner provided by law.
If Landlord elects to effect the release and discharge of record of such lien,
Tenant shall repay to Landlord, immediately upon demand, all such sums disbursed
or deposited by Landlord pursuant to the foregoing provision of this paragraph.
Nothing contained herein, however, shall imply any consent or agreement on the
part of Landlord or anyone holding under Landlord to subject Landlord's interest
to liability under any mechanics or other lien law, regardless of whether the
performance of the furnishing of such work, labor, services or materials to
Tenant or anyone holding under Tenant shall have been consented to by Landlord.
All furnishings, equipment, trade fixtures and any other property
necessary for the proper operation of Tenant's business shall be furnished and
installed by Tenant at its sole cost and expense unless specifically provided to
the contrary herein. All property stored or warehoused at the Leased Premises
shall be stored or warehoused at the risk of Tenant only, and Tenant shall hold
Landlord harmless from any claims arising out of damage to the same, including
subrogation claims by Tenant's insurer, if any, unless such damage shall be
caused by the gross negligence of Landlord.
E. Surrender. Not to commit or allow any waste or damage to be
committed on any portion of the Leased Premises, the Building, the Other
Buildings, or the Center, and at the expiration or earlier termination of this
Lease, to surrender the Leased Premises to Landlord in as good condition as at
the date of possession by Tenant, ordinary wear and tear expected; and upon such
expiration or earlier termination of this Lease, Landlord shall have the right
to re-enter and resume possession of the Leased Premises.
F. Assign and Sublet. Not to assign this Lease or sublet the Leased
Premises, or any portion thereof, without the prior written consent of Landlord,
and any attempted assignment or subletting without such consent, whether express
or by operation of law, shall be void. Landlord and Tenant specifically agree
that in the event of any approved assignment or subletting, the rights of any
such assignee or subtenant of Tenant herein to the use and occupancy of the
Leased Premises shall be
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subject to all of the terms, conditions and provisions of this Lease, including,
without limitation, restrictions on use and the covenant to pay Base Rental,
additional rent and other charges payable by Tenant hereunder, and Landlord may
collect Base Rental, additional rent and other charges payable by Tenant
hereunder directly from such assignee or subtenant and apply the amount so
collected to the rents herein reserved. Any consent to or recognition of any
such assignment or subletting, or a release of Tenant, or any guarantor or
Tenant's performance hereunder, from further performance by Tenant of covenants
undertaken to be performed by Tenant herein, and Tenant will remain liable and
responsible for all rents and other obligations herein imposed upon Tenant. In
the event Landlord shall sell or convey the Leased Premises, the grantee shall
take such property subject to the terms hereof and shall be subrogated to all
for the rights and privileges of Landlord hereunder.
G. Alterations. Not to make or allow to be made any alterations or
physical additions in or to the Leased Premises without first obtaining the
written consent of Landlord. Upon the termination of this Lease by lapse of time
or otherwise, all such alterations, physical additions or improvements, and/or
fixtures furnished and installed by Tenant which are permanently attached to the
Leased Premises, including all heating and air conditioning equipment, shall, at
Landlord's option, become a part of the fee remainder; or in the alternative,
Landlord may require Tenant to remove such property, as well as Tenant's
moveable personal property, promptly upon the termination of this Lease and
repair, at Tenant's sole expense, any damage to the Leased Premises caused
thereby and Tenant's obligation to so repair shall expressly survive the
terminate of this Lease.
H. Lawful use. Not to occupy or use, or permit the occupancy or use of,
the Leased Premises or any portion thereof for any purpose other than that
stated in Paragraph B of Article II hereof and in no event for any business or
purpose which is unlawful, disreputable or deemed to be extra hazardous on
account of fire, or permit anything to be done which would in any way increase
the rate of fire insurance coverage on the Building and/or its contents.
I. Rules. To comply with all reasonable laws, ordinances, orders, rules
and regulations (state, federal, municipal and other agencies or bodies having
any jurisdiction thereof) in effect now or in the future, relating to the use,
condition or occupancy of the Leased Premises. Tenant will comply with all rules
of the Building, the Other Buildings and the Center, which may be adopted by
Landlord from time to time for the safety, care and cleanliness of the Leased
Premises, the Building, the Other Buildings and the Center, and for preservation
for good order therein, all of which will be sent by Landlord to Tenant in
writing and shall be thereafter carried out and observed by Tenant.
J. Entry. To permit Landlord or its agents or representatives the right
of entry into and upon any part of the Leased Premises at all reasonable hours
to inspect same, clean or make repairs, alterations or additions thereto, as
Landlord may deem necessary or desirable, and Tenant shall not be entitled to
any abatement or reduction of rent by reason of such entry. During the period
that is six (6) months prior to the expiration of the Term, Landlord and
Landlord's authorized agents and representatives shall have the right to enter
the Leased Premises at any time during reasonable business hours for the purpose
of showing the Leased Premises and shall have the right to erect on the Leased
Premises a suitable sign indicating the Leased Premises are available.
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<PAGE> 11
K. Nuisance. To conduct its business and control its agents, employees,
contractors, invitees and guests in such manner as not to create any nuisance or
to interfere with, annoy or disturb any other tenant or Landlord in its
operation of the Building, the Other Buildings and the Center.
ARTICLE V
Landlord and Tenant mutually covenant and agree as follows:
A. Subordination. This Lease is expressly subject, subordinate and
inferior to the matters referred to on Exhibit "G" hereto, as presently or
hereafter affecting the Building, the Other Buildings or Center, and any future
expansion thereof or additions thereto, and to any first mortgage, deed of
trust, security agreement or other lien or encumbrance whatever resulting from
any method of financing or refinancing, presently or henceforth placed upon the
Building or Center, and any future expansion thereof or additions thereto, and
to all advances of money or other value heretofore or hereafter made upon the
Building, the Other Buildings or Center, and to any future expansion thereof or
additions thereto; provided, however, the foregoing provisions of this Paragraph
A of Article V to the contrary notwithstanding, if Landlord or the holder of any
such mortgage, deed of trust, security agreement or other lien or encumbrance
shall elect to make this lease superior, then this lease shall be deemed
superior to any such mortgage, deed or trust, security agreement or other lien
or encumbrance. Without limiting the generality or effect of the foregoing
provisions of this Paragraph A of Article V, Tenant covenants and agrees,
promptly upon request of Landlord, to execute and deliver in the recordable form
provided by Landlord, an acknowledgment of Lease subordination or superiority,
as the case may be, according to the election made by Landlord, or the holder of
such mortgage, deed of trust, security agreement or other lien or encumbrance as
hereinabove provided. Subject to the foregoing provisions of this Paragraph A of
Article V, Landlord reserves the right, without notice to or consent of Tenant,
to assign, pledge or mortgage this Lease and/or any and all rents hereunder as
security for the payment of any mortgage loan, deed of trust loan or other
method of financing or refinancing.
B. Non-Disturbance. In the event any such mortgage is foreclosed, or in
the event of exercise of the power of sale under any such deed of trust, the
purchaser at said foreclosure or trustee's sale shall be considered the landlord
hereunder and shall be deemed to assume and to agree to perform the duties of
Landlord hereunder, and so long as Tenant complies with all of the terms and
provisions of this Lease, and is not in default hereunder, this lease shall not
be affected by said foreclosure or trustee's sale, and said purchaser shall
recognize Tenant's rights to continue to rights hereunder, and Tenant will
attorn to said purchaser and will recognize said purchaser as the owner and
landlord under this Lease.
C. Eminent Domain - Total Taking. In the event of a taking of the Lease
Premises or damage related to the exercise of the power of eminent domain by any
agency, authority, public utility, person, or corporation or entity empowered to
condemn property ("Taking") of the entire Leased Premises or so much thereof as
to prevent or substantially impair their use by Tenant during the Lease term (i)
the rights of Tenant under the Lease and the leasehold estate of Tenant in and
to the Premises shall cease and terminate as of the date upon which title to the
Premises, or a portion
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thereof, passes to and vests in the condemner or the effective date of any order
for possession if issued prior to the date title vests in the condemner ("Date
of Taking"), (ii) Landlord shall refund to Tenant any prepaid rent, (iii) Tenant
shall pay to Landlord any rent to charges due Landlord under the Lease, each
prorated as of the Date of Taking, (iv) Tenant shall receive from the Award
those portions of the Award attributable to relocation of Tenant, improvements
to the Premises made and paid for by Tenant and trade fixtures, equipment, and
furniture of Tenant, and (v) the remainder of the Award shall be paid to and be
the property of the Landlord.
D. Eminent Domain - Partial Taking. In the event a portion of the
leased premises shall be taken for any public or quasi-public use under any
governmental law, ordinance or regulation, or by right of eminent domain or by
purchase in lieu thereof, and this Lease is not terminated as provided in
Article V, Paragraph C above, Lessor may, at Lessor's sole risk and expense,
restore and reconstruct the building and other improvements and on the leased
premises to the extent necessary to make it reasonably tenantable. The rent
payable under this Lease during the unexpired portion of the term shall be
adjusted to such an extent as may be fair and reasonable under the
circumstances. Lessee shall have no claim to the condemnation award.
E. Holding over. In the event of holding over by Tenant after
expiration or earlier termination of this Lease without the written consent of
Landlord, Tenant shall pay as liquidated damages double rent for the entire
holdover period. No holding over by Tenant after the Term shall operate to
extend the Term and, in the event of any unauthorized holding over, Tenant shall
indemnify Landlord against any and all claims for damages or loss resulting
therefrom, including, but not limited to, claims by any other tenant to whom
Landlord may have leased all or any part of the Leased Premises covered hereby
effective upon the expiration or earlier termination of this Lease. Any holding
over with the consent of the Landlord in writing shall thereafter constitute
this Lease a tenancy from month to month.
F. Destruction. In the event of a fire or other casualty in the Leased
Premises or the Building, Tenant shall immediately give notice thereof to
Landlord. If the Leased Premises shall be partially destroyed by fire or other
casualty so as to render the Leased Premises untenantable, Base Rental shall
abate thereafter until such time as the Leased Premises are made tenantable by
Landlord; provided, however, that if the Leased Premises are so partially
destroyed but are only rendered partially untenantable, there shall only be a
partial abatement of Base Rental corresponding to the time and extent the Leased
Premises or any other part of the Building shall be so damaged that Landlord
shall decide not to rebuild, then Landlord shall have the right, at its sole
option, to terminate this Lease and upon notice thereof from Landlord and upon
payment of all Base Rental and additional rental owed up to the time of
destruction, this Lease shall cease and come to an end.
G. Conveyance by Landlord. Landlord shall have the right to sell,
transfer, or assign, in whole or in part, all its rights and obligations
hereunder, and all or any part of its interest in the Building, the Other
Buildings and the Center. In the event of any such conveyance, the grantee shall
take the property subject to the terms of this Lease and shall be subrogated to
all of the rights of the Landlord hereunder and in such event, no further
liability or obligation shall thereafter accrue against Landlord hereunder.
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H. Default. In the event of any failure of Tenant to pay any rent
reserved herein or any other payment or charge due hereunder in the time and
manner provided herein, or in the event Tenant shall violate, neglect, fail to
observe, keep or perform any covenant, agreement or stipulation herein contained
on Tenant's part to be observed, kept or performed, which default shall continue
(1) for ten (10) days after notice of failure to pay rent or other payment or
charge, or (2) for thirty (30) days after notice of default on account of any
failure to perform or keep any other of the terms, conditions or covenants of
this Lease (which notice in either instance shall be given by Landlord to Tenant
in writing), or if Tenant, or any guarantor of Tenant's performance under this
Lease, shall become bankrupt or insolvent, or file any debtor proceedings or
take or have taken against them, or either of them in any court, pursuant to any
state or federal statute, a petition in bankruptcy or insolvency or
reorganization or for the appointment of a receiver or trustee of all or a
portion of Tenant's or any such guarantor's property, or if Tenant or any such
guarantor petitions for or enters into an arrangement, or if Tenant shall
abandon the Leased Premises or suffer this Lease to be taken under any writ of
execution, then, in addition to all other remedies and courses of action now and
hereafter provided by law, Landlord shall have the immediate right to re-enter
the Leased Premises and remove all personal and property therefrom, and such
property may be removed and stored in a public warehouse or elsewhere at the
cost of, and for the account of, Tenant, all without service of notice or resort
to legal process and without being deemed guilty of trespass, or becoming liable
for any loss or damage which may be occasioned thereby.
I. Re-entry. Should Landlord elect to re-enter, as provided above, or
should Landlord take possession of the Leased premises pursuant to legal
proceedings or pursuant to any notice provided by law, Landlord may either
terminate this Lease or Landlord may from time to time thereafter make such
alterations or repairs as may be necessary in order to relet the Leased Premises
or any portion thereof, and Landlord may relet the Leased Premises or any
portion thereof for such term or terms (not to extend beyond the Term), and for
such rental or rentals and upon such other agreements and conditions as
Landlord, in its sole discretion, may deem advisable; and upon such reletting,
all rentals actually received by Landlord from such reletting shall be applied,
first, to the payment of any sum other than rent due hereunder; second to the
payment of any cost and expense of reletting, including brokerage, attorney's
fees and the cost of alterations and repairs; third, to the payment of any rent
due and unpaid hereunder; and finally, the residue, if any, shall be held by
Landlord and applied in payment of future rent, as the same may become due and
payable hereunder. If such rentals received from such reletting during any month
be less than that agreed to be paid hereunder by Tenant during that month,
Tenant shall pay any such deficiency to Landlord, such deficiency to be
calculated and paid months. No such re-entry shall be constructed as an election
by Landlord to terminate this Lease unless a written notice of such intention is
given to tenant.
J. Termination. Notwithstanding any prior election to terminate,
Landlord may, at any time subsequent to such re-entry, elect to terminate this
Lease on account of such previous breach, and in the event of any such
termination, whether subsequent to re-entry or contemporaneous therewith, in
addition to any other remedy it may have, Landlord may recover from Tenant all
damages incurred by reason of such breach, including reasonable attorney's fees
and actual cost incurred in recovering possession of the Leased Premises, and
including a sum equal to the excess, if any, of the amount of Base Rental and
additional rent reserved in this Leased Premises for such
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<PAGE> 14
period, all of which amounts shall be immediately due and payable from Tenant to
Landlord. For the purpose of determining the rent which would be payable by
tenant hereunder subsequent to default, the annual rent for each year of the
unexpired portion of the Term shall be equivalent to the average Base Rental and
additional rent paid by Tenant from the commencement of the Term to the time of
default, or during the preceding three (3) calendar years, whichever period is
shorter.
K. Attorney's Fees. In the event either Landlord or Tenant files suit
to enforce any covenant of this Lease, the party against whom final,
non-appealable judgement is rendered shall pay all costs and expenses of suit
incurred by the prevailing party, including such reasonable attorney's fees as
shall be fixed by the court.
L. Cumulative. The rights and remedies hereinabove provided Landlord in
the event of any default by Tenant, or in the event of any act, omission, or set
of circumstances constituting default hereunder, as hereinabove provided, shall
be cumulative and not exclusive, one of the other, and further provided, each of
said rights and remedies shall be cumulative of and without prejudice to the
rights, remedies and causes of action provided Landlord by law, present or
future.
M. Waiver. One or more waivers of any breach or violation of any
agreement, covenant or conditions herein contained shall not be deemed to be a
waiver of any subsequent violation or breach of the same or any other covenant
or condition herein contained, and the consent or approval by either party to
any act by the other, which act requires the consent or approval of the other
party, shall not be deemed to waive or render unnecessary the future requirement
of consent or approval to the same or similar act; and the subsequent acceptance
of rent or other charges hereunder shall not be deemed to be a waiver of any
preceding breach by Tenant, other than the failure of Tenant to pay the
particular rent or other charges so accepted, regardless of Landlord's knowledge
of such preceding breach at the time of acceptance of said rent or other
charges. No express covenant, term or condition of this Lease shall be deemed to
have been waived by either party, unless such waiver be in writing.
N. Landlord's Fire Insurance. At all times during the Term, Landlord
shall cause to be maintained a policy or policies of fire and extended coverage
insurance, issued by and binding upon some licensed insurance company, covering
the Building, including the Leased Premises and Leasehold Improvements
(exclusive of contents), in an amount equal to not less than eighty percent
(80%) of the replacement cost thereof. Such insurance shall insure Landlord (and
other persons, firms or corporations as may be designated by Landlord) against
the losses provided for in said policy or policies subject to the terms and
provisions of this Lease and any first mortgage or deed of trust covering the
Building; and Tenant shall have no interest in said policy or policies or
proceeds therefrom. Landlord shall not be obligated to insure any furnishings,
equipment, trade fixtures, or other personal property which Tenant may place or
cause to be placed upon the Leased Premises, or any improvements which Tenant
may construct therein.
O. Landlord's Liability Insurance. Likewise, Landlord shall cause to be
maintained a policy or policies of comprehensive general liability insurance
issued by and binding upon some licensed insurance company, insuring Landlord
(and such other persons, firms or corporations as may
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<PAGE> 15
be designated by Landlord) against loss of life, bodily injury and/or property
damage with respect to the Common Areas and the operation of the Center, subject
to the terms and provision of this Lease and any first mortgage or deed of trust
covering the Center; and Tenant shall have no interest in said policy or
policies or proceeds therefrom.
P. Tenant's Fire Insurance. At all times during the Term, Tenant shall
keep the trade fixtures, equipment, furnishings, fixtures, improvements and any
other personal property furnished and installed by Tenant insured against loss
or damage by fire or other casualty, with fire and extended coverage insurance
in an amount equal to ninety percent (90%) of the replacement cost thereof,
written by one or more responsible insurance companies approved by Landlord and
licensed to do business in the State of Texas, which insurance companies shall
be rated not less than A+10 by Best Guide Rating, insurance Tenant, and naming
as additional insured Landlord and such other persons, firms or corporations as
are designated by Landlord. Each such policy shall be noncancellable for any
cause without first giving Landlord ten (10) days prior written notice.
Q. Tenant's Liability Insurance. Likewise, Tenant shall maintain in
force during the Term a policy or policies of comprehensive public liability
insurance, including property damage, written by one or more responsible
insurance companies approved by Landlord and licensed to do business in Texas,
which insurance companies shall be rated not less than A+10 by Best Guide
Rating, insurance Tenant, and naming as additional insured Landlord and such
other persons, firms, or corporations as are designated by Landlord, against
loss of life, bodily injury and/or property damage with respect to the Leased
premises and the business operated therein by Tenant, in which the limit of
public liability shall not be less than FIVE HUNDRED THOUSAND AND NO/100 DOLLARS
($500,000.00) single limit bodily injury and in which the limit of property
damage liability shall be not less than ONE HUNDRED THOUSAND AND NO/100 DOLLARS
($100,000.00). Each such policy shall be noncancellable for any cause without
first giving Landlord ten (10) days prior written notice.
R. Policies. Tenant shall deliver a copy of each such policy, or a
certificate or said insurance, to Landlord on or before the commencement date of
the Term.
S. Hold Harmless. Tenant shall indemnify and save Landlord harmless
from and against (i) any and all costs, liability or expense arising out of the
claim of any person or persons on account of any occurrence in, on or at the
Leased Premises, Building, Other Buildings or Center resulting from the
occupancy or use of the Leased Premises by Tenant, or by any person or persons
holding under Tenant (including, without limitation and for purposes of this
Paragraph S of Article V, Tenant's guests, invitees, agents, contractors,
employees, servants, subtenants or assignees), except however, for losses or
damage caused by Landlord's gross negligence or willful misconduct; (ii) any
penalty, damage or charge incurred or imposed by reason of any violation of law
or ordinance by Tenant or any person or persons holding under Tenant; and (iii)
any and all costs, liability or expense arising out of the claim of Tenant or
any person or persons holding under tenant on account of any occurrence in, or
on or at the Leased Premises, Building, Other Buildings or Center, except
however, for losses or damage caused by Landlord's gross negligence or willful
misconduct. Further, Landlord shall not be liable or responsible to Tenant for
any loss or damage to any property or person resulting from theft, fire, act of
God, public enemy, injunction, riot, strike, insurrection, war, court order,
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<PAGE> 16
requisition or order of governmental body or authority, or from the acts or
omissions of occupants of other space in the Building or Other Buildings; or for
any damage or inconvenience which may arise through repair or alteration of any
part of the Building, Other Buildings or Center, or failure to make any such
repairs, or through operations in the construction of any public or quasi-public
work.
T. Waiver of Subrogation. Anything in this Lease to the contrary
notwithstanding, Landlord and Tenant each hereby waives any and all rights of
recover, claim, action or cause of action, against the other, its agents,
officers or employees for any loss or damage to or loss of any part of the
Leased Premises or any improvements thereto, or for damage to or loss of any
personal property of such party therein, by reason of fire, the elements, or any
other perils to the extent against which such matters are insured under the
terms of the standard fire and extended coverage insurance policies required
hereunder, regardless of cause or origin, including negligence of the other
party hereto, its agents, officers or employees, and each party hereto covenants
that to the extent permitted by the laws and insurance regulations of the State
of Texas, without penalty or extra premium charge on account thereof, no insurer
shall hold any right of subrogation against such other party, but only to the
extent that such waiver would not have the effect of invalidating any insurance
coverage of Landlord or Tenant.
U. Landlord's Lien. In consideration of the mutual benefits arising
under this Lease, Tenant hereby grants to Landlord a lien and security interest
in all property of Tenant now or hereafter placed in or on the Leased Premises,
including, but not limited to, all fixtures, equipment, furnishings and other
articles of personal property and such property shall be and remain subject to
such lien and security interest of Landlord for payment of all rent and other
sums agreed to be paid by Tenant herein; provided however, that Landlord hereby
subordinates its lien and security interest to any lien or security interest
which may attached Tenant's personal property in favor of any third party
providing financing to Tenant. Landlord will provide Subordination Agreements
reasonably acceptable to all such third party creditors. Said lien and security
interest shall in addition to and cumulative of Landlord's liens provided by
law. This Lease shall constitute a security agreement under the Texas Uniform
Commercial Code so that Landlord shall have and may enforce said security
interest and Tenant agrees to execute, as debtor, such financing statement or
statements as Landlord, as secured party, may now or hereafter reasonably
request in order that such security interest or interests may be perfected
pursuant to said Code. Landlord may at its election at any time file a copy of
this Lease as a financing statement for this purpose, the addresses given in
Paragraph D of Article VI hereof shall be deemed to be the addresses of Landlord
and Tenant. Landlord, as secured party shall be entitled to all of the rights
and remedies afforded a secured party under the Texas Uniform Commercial Code,
which rights and remedies shall be in addition to and cumulative of the
Landlord's liens and rights provided by law or by the other terms and provisions
of this Lease.
ARTICLE VI
Landlord and Tenant further covenant and agree as follows:
A. Successors and Assigns. This Lease shall be binding upon and inure
to the benefit of the successors and assigns of Landlord, and shall be binding
upon and inure to the benefit of Tenant,
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<PAGE> 17
its successors, heirs, executors, administrators or legal representatives, and
to the extent assignment may be approved by Landlord, hereunder, Tenant's
assigns.
B. Certifications. Landlord and Tenant respectively agree at any time
and from time to time during the Term, upon not less than ten (10) days prior
written request therefor from the other said party, to execute, acknowledge and
deliver unto the requesting party a statement or statements, in writing,
certifying (if such be true) that this Lease is unmodified and in good standing
(or if modified, then in good standing as modified, stating the modification),
and the date or dates, if any, to which Base Rental, additional rent or other
charges hereunder, if any, have been paid in advance, it being the intention of
the parties hereto that any such statement may be relied upon by any prospective
purchaser, mortgagee or assignee of any mortgagee of the Leased Premises, the
Building, Other Buildings, Center or any part thereof, by any other tenant in
the Building or by any approved assignee or subtenant of the Tenant herein.
C. Memorandum of Lease. Promptly after the commencement date of the
Term, Landlord and Tenant may, in accordance with Paragraph A of Article II,
execute a memorandum or short form of this Lease Agreement, in recordable form,
acknowledging Tenant's acceptance of the Leased Premises for all purposes herein
provided and specifying the commencement date and the termination date of the
Term, and said agreement shall be recorded, at Landlord's option, in the Office
of the County Clerk of Harris County, Texas, but this Lease itself shall not be
recorded.
D. Notices. All notices required or permitted to be given hereunder by
either party hereto to the other said party, shall be deemed sufficiently given
or made as of the date when mailed by United States Registered Mail, Return
Receipt Requested, adequate postage prepaid, to their respective addresses as
follows:
Landlord Tenant
- --------------------------------------------------------------------------------
Sam H. Hawkins / dba Introgen Therapeutics, Inc.
Plaza del Oro Business Center 8080 North Stadium Blvd.
8012 El Rio Suite 1200
Houston, Texas 88054 Houston, Texas 77054
Attn: David Enloe
Either party hereto may, by notice to the other party in the manner
hereinabove provided, change its mailing address.
E. Payments. No payment made by Tenant or received by Landlord in an
amount less than the monthly installment of Base Rental, any additional rent or
other charges payable by Tenant hereunder shall be deemed to be other than on
account of the earliest stipulated Base Rental, additional rent or other charges
payable by Tenant hereunder, nor shall any endorsement or statement on any check
or any letter accompanying any check or payment as such sum be deemed an accord
and satisfaction, and Landlord may accept any such check or payment without
prejudice to Landlord's
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<PAGE> 18
right to recover the balance of such sum or to pursue any other remedy in this
Lease or by law provided Landlord. All payments due hereunder shall be deemed
made on the date received by Landlord and not on the date mailed.
F. Entire Agreement. This Lease, together with the Exhibits aforesaid,
and the rider or riders, if any, attached hereto and forming a part hereof,
contain and set forth the entire agreement and understanding between the parties
hereto concerning the Leased Premises, and there are no covenants, promises,
agreements, conditions or understandings either oral or written, between said
parties other than as herein expressly set forth. Except as herein otherwise
provided, no subsequent alteration, amendment, change or addition to this Lease
shall be binding upon either party hereto, unless reduced to writing and signed
by both Landlord and Tenant.
G. No Partnership. Landlord does not become a partner of Tenant in the
conduct of its business or otherwise, or a joint venturer or a member of a joint
enterprise with Tenant by virtue of this Lease.
H. Force Majeure. In the event either party hereto shall be delayed,
hindered or prevented from the performance of any act required hereunder by
reason of strike, lockouts, labor disputes, labor troubles, inability to procure
materials, failure of power, restrictive governmental laws or regulations,
riots, insurrection, war or other reason of like nature not the fault of the
party so delayed, then the performance of such acts shall be excused for the
period of the delay and the period for the performance of any such act shall be
extended for a period equivalent to the period of such delay; provided that if
for any reasons set forth in this Article VI (H), Landlord should be unable to
provide peaceful occupancy of the premises together with the services Landlord
is obligated to provide herein, then Tenant shall be excused from paying rent
for so long as such occupancy or services are not available.
I. Captions. The captions, paragraph numbers and article numbers
appearing in this Lease are inserted only as a matter of convenience and in no
way define, limit, construe or describe the scope or intent of such sections or
articles, nor in anyway affect this Lease.
J. Pronouns. The word "Tenant" shall be deemed and taken to mean each
and every person or party mentioned as a Tenant herein, be the same one or more;
and if there shall be more than one Tenant any notice required or permitted by
the terms of this Lease may be given by or to any one thereof and shall have the
same force and effect as if given by or to all thereof. The use of the neuter
singular pronoun to refer to Landlord or Tenant shall be deemed a proper
reference even though Landlord or Tenant may be an individual, a partnership, a
corporation, or group of two or more individuals or corporations. The necessary
grammatical changes required to make the provisions of this Lease apply in the
plural sense where there is more than on Landlord or Tenant, and to either
corporations, associations, partnerships or individuals, males or females, shall
in all instances be assumed as though in each case fully expressed.
K. Brokerage. Each party hereto represents and warrants unto the other
that there are no claims of brokerage commissions or finder's fees in connection
with the negotiation or execution of
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<PAGE> 19
this Lease except that agreement between Tenant and Colliers Appelt Womack dated
the 26th of May, 1996, and each of the parties hereto agrees to indemnify and
save the other harmless from and against all liabilities arising from any other
claim, including without limitation, cost of attorney's fees in connection
therewith.
L. Severability. If any provision, covenant or condition of this Lease
or the application thereof to any person or circumstance shall, to any extent,
be invalid or unenforceable, the remainder of this Lease, or the application of
such provision, covenant or condition to person or circumstances other than
those as to which it is held invalid or unenforceable, shall not be affected
thereby and each provision, covenant or condition of this Lease shall be valid
and shall be enforced to the fullest extent permitted by law.
M. Survival. Any representation, warranty, covenant or agreement
contained herein which contemplated performance after the expiration or
termination of this Lease shall be deemed to survive such expiration or
termination.
N. No Personal Liability. Tenant agrees to look solely to Landlord's
interest in the Development for the recovery of any judgement from Landlord, it
being agreed that Landlord shall never be personally liable for any such
judgement.
O. Option to Extend. Tenant is hereby granted an option to extend the
term of this lease for a six (6) month period upon the same terms and conditions
as herein contained, provided, Tenant gives Landlord written notice at lease
sixty (60) days prior to the expiration of the initial term of its election to
exercise the option. If the term hereof is so extended then the rental to be
paid for the six (6) month option term shall be an amount equal to the rental
provided to be paid for the initial terms hereunder.
P. Leasehold Repairs: Landlord agrees to patch existing holes in walls,
touch up paint and replace existing carpet prior to occupancy by Tenant.
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<PAGE> 20
EXECUTED, as of the day, month and year first hereinabove written.
Sam H. Hawkins, dba
PLAZA DEL ORO BUSINESS CENTER
By: /s/ SAM H. HAWKINS
-------------------------------
Landlord
INTROGEN THERAPEUTICS, INC.
By: /s/ DAVID NANCE
-------------------------------
Name: David Nance
Title: President
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<PAGE> 21
EXHIBIT A
SURVEY OF 464,366 SQUARE FEET OR 10.6604 ACRES OUT OF UNRESTRICTED RESERVE "A"
OF PLAZA DEL ORO, SECTION 6, AS RECORDED IN VOLUME 264, PAGE 51, HARRIS COUNTY
MAP RECORDS; SAID 10.6604 ACRES BEING PART OF A CERTAIN 6.6135 ACRE TRACT
DESCRIBED IN DEED RECORDED UNDER HARRIS COUNTY CLERK'S FILE NO. H161823, ALL OF
A CERTAIN 2.6474 ACRE TRACT DESCRIBED IN DEED RECORDED UNDER CLERK'S FILE NO.
J157466, AND PART OF A CERTAIN 7.9752 ACRE TRACT DESCRIBED IN DEED RECORDED
UNDER CLARK'S FILE NO. H161825, OFFICIAL PUBLIC RECORDS OF REAL PROPERTY,
LOCATED IN THE P.W. ROSE SURVEY, ABSTRACT NO. 645, HARRIS COUNTY, TEXAS:
BEGINNING at a 5/8 iron rod found for the northwest corner of Unrestricted
Reserve "A" of Plaza Del Oro Section 6 and the southwest corner of Lot 8, Block
42 of Institute Place as recorded in Volume 4, Page 32, Harris County Map
Records, said point being in the east line of a 100 foot wide Houston and Great
Northern Railroad Company easement as described in Volume 10, Page 612, Harris
County Deed Records, and the north line of a 60 foot wide railroad easement as
described in Volume 2646, Page 414, Harris County Deed Records;
THENCE S 72 deg 16 min. 04 sec. E, along a common line, being the south line of
Block 42 and 43 of said Institute Place and the north lines of Unrestricted
Reserve "A" of Plaza Del Oro Section 6 and said 60 foot wide railroad easement,
458.34 feet to a 1/2 inch iron rod set for the northeast corner of the herein
described tract;
THENCE S 17 deg. 43 min. 56 sec. W, 404.82 feet to a 1/2 inch iron rod set in
the north line of El Camino (60 feet wide);
THENCE in a southwesterly direction with the north line of El Rio along a curve
to the left having a radius of 85.00 feet and a central angle of 70 deg. 55 min.
30 sec., for an arc distance of 105.22 feet to a 1/2 inch iron rod set for the
point of tangency;
THENCE S 17 deg. 25 min. 00 sec. W, along the west line of El Rio 612.34 feet to
a 5/8 inch iron rod found for the southeast corner of the herein described
tract;
THENCE N 72 deg. 35 min. 00 sec. W, along the north line of a certain 3.365 acre
tract described in deed dated December 11, 1981 to State Farm Mutual Automobile
Insurance Company recorded under Clerk's File No. H261112, 400.00 feet to a 5/8
inch iron rod found in the common line between the above mentioned Houston and
Great Northern Railroad Company 100 foot wide easement and Unrestricted Reserve
"A" of Plaza Del Oro Section 6 for the southwest corner of the herein described
tract;
THENCE N 17 deg. 25 min. 00 sec. E, along the east line of said 100 foot
railroad easement, 940.53 feet to a 1/2 inch iron rod set for the point of
curvature of a curve to the right;
THENCE in a northeasterly direction with said common line along a curve to the
right having a radius of 11,409.22 feet and a central angle of 0 deg. 48 min. 03
sec., for an arc distance of 159.47 feet to the POINT OF BEGINNING and
containing 464,366 square feet or 10.6604 acres of land.
<PAGE> 22
EXHIBIT B
[PLAN OF PREMISES]
<PAGE> 23
EXHIBIT C
[PLAN OF PREMISES]
<PAGE> 24
EXHIBIT D
["SIGN CRITERIA"]
<PAGE> 25
EXHIBIT E
[PLAN OF PREMISES]
<PAGE> 1
Exhibit 10.11
PATENT AND TECHNOLOGY LICENSE AGREEMENT
THIS AGREEMENT ("AGREEMENT") is made by and between the BOARD OF REGENTS
("BOARD") of THE UNIVERSITY OF TEXAS SYSTEM ("SYSTEM"), an agency of the State
of Texas, whose address is 201 West 7th Street, Austin, Texas 78701, THE
UNIVERSITY OF TEXAS M.D. ANDERSON CANCER CENTER ("MDA"), a component institution
of the SYSTEM and INTRON THERAPEUTICS, INC., a Texas corporation having a
principal place of business located at 301 Congress, Suite 2025, Austin, Texas
78701 ("LICENSEE").
RECITALS
A. BOARD owns certain PATENT RIGHTS and TECHNOLOGY RIGHTS related to LICENSED
SUBJECT MATTER, which were developed at MDA, a component institution of
the SYSTEM.
B. BOARD desires to have the LICENSED SUBJECT MATTER developed and used for
the benefit of LICENSEE, the inventor, BOARD, and the public as outlined
in the Intellectual Property Policy promulgated by the BOARD.
C. The LICENSED SUBJECT MATTER was the subject of an OPTION AGREEMENT between
MDA and the Texas Biomedical Development Partners ("TBDP"), dated December
15, 1992, a copy of which is attached hereto as Exhibit 1 for approval by
BOARD, granting TBDP the option to negotiate a license from BOARD to the
LICENSED SUBJECT MATTER in consideration for an option fee and commitment
of research support.
D. TBDP exercised its option under the OPTION AGREEMENT in a timely manner by
virtue of the letter dated June 17, 1993, a copy of which is attached
hereto as Exhibit 2 for approval by BOARD, and further assigned TBDP's
right and obligations under the OPTION AGREEMENT (Exhibit 1) to LICENSEE,
thereby granting permission to BOARD to execute this LICENSE AGREEMENT
with LICENSEE.
E. The LICENSED SUBJECT MATTER was also the subject of SPONSORED RESEARCH
AGREEMENTS between MDA and the TBDP, entitled "Development of Therapeutic
Treatment and Prevention of Lung Cancer" (SR93-04) and "Clinical Protocol
for Modification of Oncogene and Tumor Suppressor Gene Expression in
Nori-Small Cell Lung Cancer (CS93-27), respectively, and a copy of each is
attached hereto as Exhibits 3 and 4 (the "RESEARCH AGREEMENTS").
F. The RESEARCH AGREEMENTS have been assigned by TBDP to LICENSEE by virtue
of a letter dated November 26, 1993, a copy of which is attached hereto as
Exhibit 5 for approval by BOARD.
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<PAGE> 2
G. LICENSEE is a company which was formed to develop and commercially exploit
the inventions of LICENSED SUBJECT MATTER, and LICENSEE, therefore, wishes
to obtain a license from BOARD to practice LICENSED SUBJECT MATTER.
NOW, THEREFORE, in consideration of the mutual covenants and premises herein
contained, the parties hereto agree as follows:
I. EFFECTIVE DATE
1.1 This AGREEMENT shall be effective as of July 20, 1994 ("EFFECTIVE DATE"),
subject to approval by BOARD.
II. DEFINITIONS
As used in this AGREEMENT, the following terms shall have the meanings
indicated:
2.1 LICENSED FIELD shall mean all fields of use of the LICENSED SUBJECT
MATTER.
2.2 LICENSED SUBJECT MATTER shall mean inventions and discoveries covered by
PATENT RIGHTS or TECHNOLOGY RIGHTS within LICENSED FIELD.
2.3 PATENT RIGHTS shall mean any and all rights of BOARD in and to:
(a) the patents and patent applications described in Schedule A
hereto (the "Existing Patent Rights") and all patents anywhere in the
world issuing thereon;
(b) any patent or patent application of any kind anywhere in the
world that claims or discloses any invention that is claimed in any of the
Existing Patent Rights, or that takes priority from an application within
the Existing Patent Rights or derives from an application from which any
of the Existing Patent Rights derived;
(c) all divisions, continuations, continuations-in-part, patents of
addition, patents, substitutions, registrations, reissues, reexaminations
or extensions of any kind with respect to any of the applications and
patents described in (a) or (b) above. From time to time during the term
of this AGREEMENT, upon request by either party, LICENSEE and BOARD shall
promptly update Schedule A hereto to include all patent applications and
patents that are then within the PATENT RIGHTS.
2.4 TECHNOLOGY RIGHTS shall mean BOARD's rights in any technical information,
know-how, process, procedure, composition, biological materials, device,
method, formula, protocol, technique, software, design, drawing or data
relating to LICENSED FIELD and made or developed by Dr. Jack A. Roth or
others working in his lab or under his supervision or direction, whether
or not covered by PATENT RIGHTS, which is reasonably necessary for
practicing an invention at any time covered by PATENT RIGHTS.
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2.5 LICENSED PRODUCT shall mean any product, component or material the
manufacture, use or sale of which would infringe a VALID CLAIM.
2.6 LICENSED TERRITORY shall mean the entire world.
2.7 SALE or sold shall mean the transfer or disposition of a LICENSED PRODUCT
for value to a party other than LICENSEE or an AFFILIATE, which transfer
or disposition would, but for the rights and license granted hereunder,
infringe a VALID CLAIM in the country for which such LICENSED PRODUCT is
transferred or disposed.
2.8 NET SALES shall mean the gross revenues received by LICENSEE, its
AFFILIATES or SUBLICENSEES, from the SALE of LICENSED PRODUCTS less sales
and/or use taxes actually paid, import and/or export duties actually paid,
outbound transportation prepaid or allowed, and amounts allowed or
credited due to returns (not to exceed the original billing or invoice
amount).
2.9 AFFILIATE shall mean any business entity more than 50% owned by LICENSEE,
or any business entity that is more than 50% owned by a business entity
that owns more than 50% of LICENSEE.
2.10 VALID CLAIM shall mean either (a) a claim of an issued and unexpired
patent included within the PATENT RIGHTS, which has not been held
unenforceable, unpatentable or invalid by a court or other governmental
agency of competent jurisdiction, and which has not been admitted to be
invalid or unenforceable through reissue, disclaimer or otherwise, or (b)
a pending claim in a patent application within the PATENT RIGHTS, provided
that if such pending claim has not issued as a claim or an issued patent
within the PATENT RIGHTS within [*] after the filing date from which such
patent application takes priority, such pending claim shall not be a VALID
CLAIM for purposes of this AGREEMENT unless and until, subsequent to [*]
period, such pending claim is issued as a claim of an issued and unexpired
patent included within the PATENT RIGHTS as set forth in (a) above. In the
event that a claim of an issued and unexpired patent within the PATENT
RIGHTS is held by a court or other governmental agency of competent
jurisdiction to be unenforceable, unpatentable or invalid, and such
holding is reversed on appeal by a higher court or agency of competent
jurisdiction, such claim shall be reinstated thereafter as a VALID CLAIM
hereunder.
2.11 SUBLICENSEE shall mean any third party to whom LICENSEE has granted a
sublicense under the PATENT RIGHTS to make and sell LICENSED PRODUCTS,
with respect to LICENSED PRODUCTS made and sold by such SUBLICENSEE. As
used herein, "SUBLICENSEE" shall also mean a third party to whom LICENSEE
has granted the exclusive right to distribute LICENSED PRODUCTS supplied
by LICENSEE, provided that such third party is responsible for all
marketing and promotion of the subject LICENSED PRODUCTS within its
exclusive territory.
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III. WARRANTY: SUPERIOR-RIGHTS
3.1 Except for the rights, if any, of the Government of the United States as
set forth hereinbelow, BOARD represents and warrants its belief that it is
the owner of the entire right, title, and interest in and to LICENSED
SUBJECT MATTER, and that it has the sole right to grant licenses
thereunder, and that it has not granted licenses thereunder to any other
entity that would restrict rights granted hereunder except as stated
herein. In addition, BOARD represents and warrants that it owns and will
own all right, title and interest in and to the patent applications listed
in Exhibit A as of the Effective Date, and all patents that will issue
thereon; and that the patents listed on Exhibit A comprise all patents and
applications owned by BOARD or MDA that claim inventions of any of the
inventors listed therein which pertain to the p53 gene or K-ras or gene
therapy.
3.2 LICENSEE understands that the LICENSED SUBJECT MATTER may have been
developed under a funding agreement with the Government of the United
States of America and, if so, that the Government may have certain rights
relative thereto. This AGREEMENT is explicitly made subject to the
Government's rights under any such agreement and any applicable law or
regulation, including P.L. 96-517 as amended by P.L. 98-620. To the extent
that there is a conflict between any such agreement, applicable law or
regulation and this Agreement, the terms of such Government agreement,
applicable law or regulation shall prevail.
3.3 BOARD, by this AGREEMENT, makes no representation as to the patentability,
validity, and/or breadth of the inventions contained in the PATENT RIGHTS.
BOARD, by this AGREEMENT, makes no representation as to whether there are
any patents now held, or which will be held, by others or by BOARD in the
LICENSED FIELD, nor does BOARD make any representation that the inventions
contained in PATENT RIGHTS do not infringe any other patents now held or
that will be held by others or by BOARD.
IV. LICENSE
4.1 BOARD hereby grants to LICENSEE a royalty-bearing, exclusive license under
the LICENSED SUBJECT MATTER to manufacture, have manufactured, use and/or
sell LICENSED PRODUCTS, to practice any method, process or procedure and
to otherwise exploit the LICENSED SUBJECT MATTER, within LICENSED
TERRITORY for use within LICENSED FIELD. Subject to Paragraph 5.8 herein,
such license shall extend to BOARD's undivided interest in any LICENSED
SUBJECT MATTER developed during the term of this AGREEMENT and jointly
owned by BOARD and LICENSEE. This grant shall be subject to Paragraph 3.2,
hereinabove, the payment by LICENSEE to BOARD of all consideration as
provided in this AGREEMENT, including the timely payment of all amounts
due during the term of this Agreement under any sponsored research
agreement covering the Licensed Subject Matter between MDA and LICENSEE
(including but not limited to the RESEARCH AGREEMENTS, reimbursement of
MDA's patent expenses as set forth in Paragraph 5.7 below, and shall be
further subject to rights retained by BOARD and MDA to:
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(a) Publish the general scientific findings from research related to
LICENSED SUBJECT MATTER; and
(b) Use any information contained in LICENSED SUBJECT MATTER for
research, teaching, patient care, and other educationally-related
purposes.
Notwithstanding the foregoing, the license granted in this Section 4.1
under TECHNOLOGY RIGHTS not covered by any PATENT RIGHTS shall be
non-exclusive for all applications that do not pertain in any way to the
p53 gene, the k-ras gene, or mutations thereof, the genetic or functional
inhibition or promotion thereof; the translation or transcription pathways
of such genes or mutations thereof, or any protein or molecule expressed
by such genes or mutations thereof.
4.2 LICENSEE shall have the right to extend the license granted herein to any
AFFILIATE provided that such AFFILIATE consents in writing, with copy to
BOARD, to be bound by this AGREEMENT to the same extent as LICENSEE.
4.3 The license granted under Paragraph 4.1 above shall include the rights to
grant and authorize sublicenses within the scope of the right and license
granted to LICENSEE. LICENSEE shall monitor the operations of its
SUBLICENSEES in connection with the obligations of LICENSEE pursuant to
this AGREEMENT, and shall use reasonable efforts to ensure that such
SUBLICENSEES comply fully with such obligations. LICENSEE shall promptly
inform BOARD of the name and address of each such SUBLICENSEE, and subject
to any obligations of confidentiality to the SUBLICENSEE, shall provide
MDA a copy of the sublicense agreement.
V. PAYMENTS AND REPORTS
5.1 In consideration of rights granted by BOARD to LICENSEE under this
AGREEMENT, LICENSEE agrees to pay MDA the following:
(a) [*] of NET SALES attributed to SALES of LICENSED PRODUCTS by
LICENSEE, AFFILIATES and SUBLICENSEES; and
(b) For any advance payment received by LICENSEE from a third party
pursuant to a sublicense, marketing, distribution, or franchise
agreement, other than amounts paid to LICENSEE in reimbursement of
development or other costs, as provided for in Article 4.3 hereof
and which is creditable against future royalties to be received by
LICENSEE:[*] of said advance payment.
(c) LICENSEE will not be obligated to pay MDA any portion of any
advanced payment received by LICENSEE from a third party [*].
(d) If LICENSEE desires to fund sponsored research, and particularly
where LICENSEE receives R&D money in lieu of or in addition to
royalty revenues pursuant to a sublicense, LICENSEE shall give good
faith consideration to funding such proposals at MDA.
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5.2 In the event that more than one patent within the PATENT RIGHTS is
applicable to any LICENSED PRODUCT subject to royalties under this Article
V, then only one royalty shall be paid to MDA in respect of such quantity
of the LICENSED PRODUCTS and in any event no more than one royalty will be
payable hereunder with respect to any particular LICENSED PRODUCT unit. In
addition:
(a) No royalty shall be payable under Paragraph 5.1 above with respect
to the SALE of LICENSED PRODUCTS between or among LICENSEE,
AFFILIATES and SUBLICENSEES, provided that such LICENSED PRODUCTS
are to be resold to unrelated third parties, or with respect to any
fees or other payments paid between or among LICENSEE and
AFFILIATES; nor shall a royalty be payable under Paragraph 5.1 with
respect to SALES of LICENSED PRODUCTS for use in clinical trials or
as samples.
(b) In the event that a LICENSED PRODUCT is sold in combination as a
single product, or in a kit, with another product or component and
no royalty would be due hereunder on the sale of such other product
or component alone, then NET SALES from such combination sales for
purposes of calculating the amounts due under this Article V shall
be as reasonably allocated by LICENSEE between such LICENSED PRODUCT
and such other product or components, based upon their relative
importance and proprietary protection as commercially reasonable.
5.3 During the Term of this AGREEMENT and for [*] thereafter, LICENSEE shall
keep complete and accurate records if its SALES and NET SALES of LICENSED
PRODUCTS and other income subject to royalties hereunder and all revenues
received from all SUBLICENSEES to enable the royalties payable hereunder
to be determined. LICENSEE shall permit BOARD or its representatives, at
BOARD's expense, to periodically examine its books, ledgers, and records
during regular business hours for the purpose of and [*] are determined to
have been underpaid LICENSEE shall pay the cost of such examination, and
accrued interest at the highest allowable rate.
5.4 Within [*] after March 31, June 30, September 30, and December 31,
LICENSEE shall deliver to BOARD and MDA a true and accurate report, giving
such particulars of the business conducted, if any, by LICENSEE, including
all revenues received from all SUBLICENSEES, during the preceding three
(3) calendar months under this AGREEMENT as are pertinent to an account
for payments hereunder. Such report shall include at least (a) the
quantities of LICENSED SUBJECT MATTER that it has produced; (b) the total
SALES, (c) the calculation of royalties thereon; and (d) the total
royalties so computed and due BOARD. Simultaneously with the delivery of
each such report, LICENSEE shall pay to BOARD the amount, if any, due for
the period of such report. If no payments are due, it shall be so
reported.
5.5 Upon the request of BOARD or MDA but not more often than once per calendar
year, LICENSEE shall deliver to BOARD and MDA a written report as to
LICENSEE's efforts and accomplishments during the preceding year in
commercializing LICENSED SUBJECT MATTER
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in various parts of the LICENSED TERRITORY and its commercialization plans
for the upcoming year.
5.6 All amounts payable hereunder by LICENSEE shall be payable in United
States funds. Checks shall be made payable to The University of Texas M.D.
Anderson Cancer Center. Any withholding or other tax that LICENSEE, an
AFFILIATE, or a SUBLICENSEE are required by law to withhold shall be
deducted from royalties owing to MDA hereunder and promptly paid to the
taxing authority. If royalties paid to LICENSEE or an AFFILIATE by a
SUBLICENSEE on NET SALES of LICENSED PRODUCTS are reduced for withholding
or similar taxes, LICENSEE may deduct a portion of such tax from the
royalties payable to UNIVERSITY with respect to such Net Sales; the
portion to be so deducted shall equal the amount of the tax multiplied by
the fraction B/A, where "A" equals the gross royalty payable to LICENSEE
on such Net Sales prior to the withholding or similar tax, and "B" equals
the gross royalty payable to UNIVERSITY on such Net Sales prior to the
reduction under this Section 5.6. In regard to any tax so deducted,
LICENSEE shall furnish UNIVERSITY with proper evidence of the taxes paid.
In the event that LICENSEE realizes a reduction in its U.S. tax liability
by reason of a foreign tax credit with respect to withholding taxes so
deducted from royalties payable to MDA hereunder, LICENSEE shall pay to
MDA the amount of such reduction in its U.S. tax liability.
5.7 LICENSEE shall reimburse MDA [*] in filing, prosecuting, enforcing and
maintaining PATENT RIGHTS exclusively licensed hereunder and which were
not already reimbursed pursuant to the Option Agreement in Exhibit I
hereto, and shall pay all such future expenses so long as and in such
countries as [*]. In the event that LICENSEE notifies MDA that it does not
wish to reimburse further expenses of prosecuting or maintaining any
application or patent within the PATENT RIGHTS in any country, LICENSEE
shall not be responsible for any such expenses with respect to such
application or patent after MDA's receipt of such notice, and LICENSEE's
license under Paragraph 4.1 above shall become nonexclusive with respect
to such application (and any patent issuing thereon) or patent in such
country. MDA will invoice LICENSEE on a quarterly basis beginning October
1, 1994,[*].
5.8 No payments due or royalty rates under this AGREEMENT shall be reduced as
the result of co-ownership of LICENSED SUBJECT MATTER by BOARD and
LICENSEE.
5.9 It is understood that royalties shall be due under 5.1(a) above only on
SALES of LICENSED PRODUCTS, the SALE of which [*]. However, if the SALE of
a LICENSED PRODUCT [*], LICENSEE shall pay royalties hereunder on all
sales of such LICENSED PRODUCT in any country, regardless of whether the
sale of such product in such country would infringe a VALID CLAIM. [*]
5.10 Effective upon written notice to MDA, LICENSEE may convert the license
granted to LICENSEE under Paragraph 4.1 with respect to any patent or
application within the PATENT RIGHTS to a non-exclusive license. Following
such notice, the amounts to be paid to MDA under Paragraph 5.1 above with
respect to any VALID CLAIMS within such patent or application, after any
other adjustment under this AGREEMENT, shall be [*].
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VI. PATENTS AND INVENTIONS
6.1 If [*] it is agreed by BOARD and LICENSEE that a new patent application
should be filed for LICENSED SUBJECT MATTER, [*] will prepare and file
appropriate patent applications, and [*] will pay the cost of searching,
preparing, filing, prosecuting and maintaining same, subject to Paragraph
5.7 above. [*] shall provide [*] with a copy of the new patent application
for which [*] has paid the cost of filing, as well as copies of any
documents received or filed during prosection thereof. [*] shall consult
with [*] in a timely manner concerning (i) scope and content of all patent
applications within the PATENT RIGHTS prior to filing such patent
applications, and (ii) content of and proposed responses to official
actions of the United States Patent and Trademark Office and foreign
patent offices during prosecution of any patent applications within the
PATENT RIGHTS. For purposes of this Paragraph 6.1, "timely" shall mean
sufficiently in advance of any decision by [*] or any deadline imposed
upon written response by [*] so as to allow [*] to meaningfully review
such decision or written response and also provide comments to [*] in
advance of such decision or deadline to allow comments of [*] respect to
the PATENT RIGHTS to be considered and incorporated into [*] decision or
written response.
6.2 With respect to the filing of any patent application within the PATENT
RIGHTS, or the prosecution of any patent application within the PATENT
RIGHTS, or the maintenance of any patent within the PATENT RIGHTS, if [*]
elects not to file for or continue prosecution of any such patent
application or maintain any such patent,[*] shall promptly notify [*] in
writing sufficiently in advance of any deadline to enable [*] to file for
or continue prosecution of such patent application and/or maintain such
patent, and in such event [*] (or its designee) may at its discretion
pursue such filing, prosecution and/or maintenance of its own expense in
[*] name.
VII. INFRINGEMENT AND DEFENSE
7.1 LICENSEE agrees, itself or through its designee, to use reasonable efforts
generally to enforce the PATENT RIGHTS with respect to substantial
continuing infringements of the PATENT RIGHTS within the LICENSED FIELD,
by initiating legal action, sublicensing the infringing activities or
otherwise. It is understood, however, that such obligation shall not be
deemed to require LICENSEE to take such actions with respect to each such
infringement, and LICENSEE may take into account reasonable strategic and
other considerations in determining which infringers to take action
against, as well as when and whether to do so. If LICENSEE or its designee
commences an action to enforce the PATENT RIGHTS, LICENSEE shall have the
right during the pendency of the action [*]. Any amounts recovered from
third parties by LICENSEE or a SUBLICENSEE with respect to the PATENT
RIGHTS in such action or proceeding shall be applied [*]
7.2 In the event that [*] does not fulfill its obligations under Paragraph 7.1
above,[*] shall have the right to enforce the PATENT RIGHTS relating to
infringement by such a substantial infringer on behalf of [*]; and in such
event [*] shall have the right [*]. Any amounts recovered or received
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from third parties by [*] with respect to the PATENT RIGHTS in such
action, proceeding or license shall be retained by [*].
7.3 In the event that LICENSEE, an AFFILIATE or SUBLICENSEE receives a claim
from a third party alleging an infringement of intellectual property
rights of a third party based upon the manufacture, sale or use of a
LICENSED PRODUCT, LICENSEE shall have the right [*].
7.4 In any suit or dispute involving the enforcement or defense of PATENT
RIGHTS, the parties shall cooperate fully, including without limitation,
subject to the statutory authority of the Attorney General of the State of
Texas as applicable to BOARD and MDA, by joining as a party plaintiff and
executing such documents as the party prosecuting such suit, action or
other proceeding may reasonably request, all at such requesting party's
expense. Upon the request and at the expense of the party bringing suit,
the other party shall make available to the party bringing suit at
reasonable times and under appropriate conditions all relevant personnel,
records, papers, information, samples, specimens, and the like which are
in its possession.
VIII. PATENT MARKING
8.1 LICENSEE agrees that all packaging containing individual LICENSED
PRODUCT(S), and documentation therefor, sold by LICENSEE, AFFILIATES and
SUBLICENSEES of LICENSEE will be marked permanently and legibly with the
number of the applicable patent(s) licensed hereunder in accordance with
each country's patent laws, including Title 35, United States Code.
IX. INDEMNIFICATION
9.1 LICENSEE shall hold harmless and indemnify BOARD, SYSTEM, MDA, its
Regents, officers, employees, students, and agents from and against any
claims, demand, or causes of action whatsoever, including without
limitation those arising on account of any injury or death of persons or
damage to property, caused by, or arising out of, or resulting from, the
exercise or practice of the license granted hereunder by LICENSEE or its
officers, employees, agents or representatives.
9.2 BOARD shall, to the extent authorized under the Constitution and the laws
of the State of Texas, hold LICENSEE harmless from liability resulting
from the negligent acts or omissions of BOARD or MDA, their agents or
employees pertaining to the activities to be carried out pursuant to the
obligations of this AGREEMENT; provided, however, that BOARD shall not
hold LICENSEE harmless from claims arising out of the negligence of
LICENSEE, its officers, agents or any person or entity not subject to
BOARD's or MDA's supervision or control.
X. USE OF BOARD AND COMPONENTS NAME
10.1 (A) In accordance with BOARD policy, LICENSEE shall not use
the name of BOARD, SYSTEM or BOARD, except as described in
10.1 (B), below.
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(B)(i) LICENSEE may use the name of MDA, BOARD, or SYSTEM only when
indicating, as a factual matter, that MDA, BOARD, or SYSTEM is
a licensor of LICENSEE under this AGREEMENT and only in
connection with either or both of the following:
(a) communications associated with LICENSEE's financing
activities; and
(b) communications (other than promotions and
advertisements) directed to describing or responding to
inquiries concerning the business, technology, products,
services and associated activities of LICENSEE.
(c) in all such communications, LICENSEE shall limit such
use, in substance, to stating that a LICENSED PRODUCT or
other LICENSED SUBJECT MATTER was invented by the
inventor thereof as an employee of MDA and/or that MDA
and/or BOARD is the licensor thereof. In no event shall
LICENSEE use the name of MDA, SYSTEM or BOARD in product
advertising or on product packaging or labels affixed to
any products. Communications in accordance with this
Section 10.1(B) shall not be deemed a breach of Section
6 of either of the RESEARCH AGREEMENTS.
(ii) LICENSEE may otherwise use the name of MDA, BOARD, or SYSTEM
when and as required by applicable law, rules and regulations,
or upon written consent of the party the use of whose name is
requested.
XI. CONFIDENTIAL INFORMATION
11.1 BOARD and LICENSEE each agree that all information contained in documents
marked "confidential" which are forwarded to one by the other shall be
received in strict confidence, used only for the purposes of this
AGREEMENT, and not disclosed by the recipient party (except as required by
law or court order), its agent or employees without the prior written
consent of the other party, unless such information (a) was in the public
domain at the time of disclosure, (b) later became part of the public
domain through no act or omission of the recipient party, its employees,
agents, successors or assigns, (c) was lawfully disclosed to the recipient
party by a third party having the right to disclose it, (d) was already
known by the recipient party at the time of disclosure, (e) was
independently developed or (f) is required to be submitted to a government
agency or as otherwise required by law. Notwithstanding the foregoing or
any provision of the RESEARCH AGREEMENTS, LICENSEE may disclose any
LICENSED SUBJECT MATTER comprising confidential information of BOARD to
third parties pursuant to a reasonable confidentiality agreement, and
otherwise as is reasonably necessary to exploit the LICENSED SUBJECT
MATTER as contemplated in this AGREEMENT.
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11.2 Each party's obligation of confidence hereunder shall be fulfilled by
using at least the same degree of care with the other party's confidential
information as it uses to protect its own confidential information. This
obligation shall exist while this AGREEMENT is in force and for a period
of three (3) years thereafter.
XII. ASSIGNMENT
12.1 This AGREEMENT may not be assigned by LICENSEE without the prior written
consent of BOARD; provided that, at any time after eighteen (18) months
after the Effective Date, LICENSEE may assign this AGREEMENT without such
consent to a party that acquires substantially all of the business or
assets of LICENSEE to which this AGREEMENT pertains, so long as LICENSEE
notifies BOARD and the assignee agrees in writing to be bound by the terms
of this AGREEMENT.
XIII. DUE DILIGENCE
13.1 BOARD shall have a right [*] from the EFFECTIVE DATE to terminate the
exclusivity of the license granted by BOARD to LICENSEE pursuant to
Paragraph 4.1 in any national political jurisdiction within the LICENSED
TERRITORY at any time upon written notice to LICENSEE if LICENSEE fails to
provide written evidence,[*]; provided that termination of such
exclusivity shall not occur unless and until a court of competent
jurisdiction has determined in a suit filed by LICENSEE within [*].
XIV. TERM, TERMINATION, AND DEFAULT
14.1 The term of this AGREEMENT shall extend from the Effective Date set forth
hereinabove to the full end of the term or terms for which PATENT RIGHTS
have not expired and if only TECHNOLOGY RIGHTS are licensed and no PATENT
RIGHTS are applicable, for a term of fifteen (15) years. Notwithstanding
the above, upon the expiration, but not an earlier termination of this
AGREEMENT, LICENSEE shall have a non-exclusive, fully paid-up right and
license under the LICENSED SUBJECT MATTER to use and otherwise exploit the
TECHNOLOGY RIGHTS.
14.2 This AGREEMENT will earlier terminate:
(a) upon the expiration of thirty (30) days written notice from BOARD if
LICENSEE shall become bankrupt and/or if the business of LICENSEE
shall be placed in hand of a receiver, assignee, or trustee, whether
by voluntary act of LICENSEE or otherwise;
(b) (i) [*] written notice from BOARD if LICENSEE shall breach or
default on the payment obligations of Article V, or use of name
obligations of Article X; or (ii) upon [*] written notice if
LICENSEE shall breach or default any other obligation under this
AGREEMENT; provided, however, LICENSEE may avoid such termination if
before the end of the applicable period LICENSEE notifies BOARD that
such breach has been cured
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and states the manner of such cure. However, if LICENSEE disputes
such breach in writing within such [*] period, BOARD shall not have
the right to terminate this AGREEMENT unless and until a court of
competent jurisdiction has determined, in a suit filed by LICENSEE
within [*] period, that this AGREEMENT was materially breached, and
LICENSEE fails to cure such breach within [*] after such
determination;[*].
(c) In its entirety or as to any particular patent application or patent
within the PATENT RIGHTS, upon LICENSEE's sixty (60) days prior
written notice to BOARD. From and after the effective date of a
termination under this Paragraph 15.2(c) with respect to a
particular patent application or patent, such patent application and
patent in the particular country shall cease to be within the PATENT
RIGHTS for all purposes of this AGREEMENT. Upon a termination of
this AGREEMENT in its entirety under this Paragraph 15.2(c), all
rights and obligations of LICENSEE and BOARD shall terminate, except
as provided below.
14.3 Upon termination of this AGREEMENT for any cause, nothing herein shall be
construed to release either party of any obligation matured prior to the
effective date of such termination. LICENSEE may, after the effective date
of such termination, sell all LICENSED PRODUCT and parts therefore that it
may have on hand at the date of termination, provided that it pays earned
royalty thereon as provided in this AGREEMENT.
14.4 Articles IX, X, and XI, shall survive the expiration and any termination
of this AGREEMENT. In addition, upon termination of this AGREEMENT, any
and all existing sublicenses shall survive; provided that such
SUBLICENSEES promptly agree in writing to be bound by the applicable terms
of this AGREEMENT. Except as otherwise provided in this Article XV, all
rights and obligations of the parties under this AGREEMENT shall terminate
upon the expiration or termination of this AGREEMENT.
XV. GENERAL
15.1 This AGREEMENT constitutes the entire and only AGREEMENT between the
parties for LICENSED SUBJECT MATTER and all other prior negotiations,
representations, agreements (including that certain PATENT AND TECHNOLOGY
LICENSE AGREEMENT between the parties hereto executed on April 21, 1994
but not approved by BOARD) and understandings are superseded hereby. No
agreements altering or supplementing the terms hereof may be made except
by means of a written document signed by the duly authorized
representatives of the parties.
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15.2 Any notice required by this AGREEMENT shall be given by prepaid, first
class, certified mail, return receipt requested, and addressed in the case
of BOARD to:
BOARD OF REGENTS
The University of Texas System
201 West Seventh Street
Austin, Texas 78701
ATTENTION: Office of General Counsel
with a copy to: The University of Texas
M.D. Anderson Cancer Center
Office of Technology Development
1020 Holcombe Boulevard, Suite 1405
Houston, Texas 77030
ATTENTION: William J. Doty
or in the case of LICENSEE to: Intron Therapeutics, Inc.
301 Congress, Suite 2025
Austin, Texas 78701
ATTENTION: Mr. David Nance
with a copy to: Kenneth A. Clark, Esq.
Wilson, Sonsini, Goodrich & Rosati
650 Page Mill Road
Palo Alto, California 94304
or such other address as may be given from time to time under the terms of
this notice provision.
15.3 LICENSEE shall comply with all applicable federal, state and local laws
and regulations in connection with its activities pursuant to this
AGREEMENT.
15.4 This AGREEMENT shall be construed and enforced in accordance with the laws
of the United States of America and of the State of Texas.
15.5 Failure of BOARD to enforce a right under this AGREEMENT shall not act as
a waiver of that right or the ability to later assert that right relative
to the particular situation involved.
15.6 Headings included herein are for convenience only and shall not be used to
construe this AGREEMENT.
15.7 If any provision of this AGREEMENT shall be found by a court to be void,
invalid or unenforceable, the same shall be reformed to comply with
applicable law or stricken if not so conformable, so as not to affect the
validity or enforceability of this AGREEMENT.
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IN WITNESS WHEREOF, parties hereto have caused their duly authorized
representatives to execute this AGREEMENT.
THE UNIVERSITY OF TEXAS BOARD OF REGENTS OF THE
M.D. ANDERSON CANCER CENTER UNIVERSITY OF TEXAS SYSTEM
By: /s/ DAVID J. BACHRACH By: /s/ THOMAS G. RICKS
--------------------------------- -----------------------------------
David J. Bachrach Thomas G. Ricks
Executive Vice President Vice Chancellor for
for Administration and Finance Asset Management
APPROVED AS TO CONTENT: APPROVED AS TO FORM:
By: /s/ WILLIAM J. DOTY By: /s/ DUDLEY R. DOBIE, JR.
--------------------------------- -----------------------------------
William J. Doty Dudley R. Dobie, Jr.
Director, Technology Development Manager, Intellectual Property
INTRON THERAPEUTICS, INC.
By: /s/ DAVID G. NANCE
---------------------------------
David G. Nance
President
-14-
<PAGE> 15
ATTACHMENT A
Patent and technology rights for U.S. and Foreign Patent Application entitled:
[*]
<PAGE> 16
EXHIBIT 1
OPTION AGREEMENT
December 15, 1992
Mr. David Nance
Managing Partner
Texas Biomedical Development Partners
301 Congress Avenue, 14th Floor
Austin, Texas 78701
RE: [*]
Dear Mr. Nance:
In accordance with our recent conversation, I am pleased to inform you that The
University of Texas M.D. Anderson Cancer Center (MDA) hereby extends an option
to Texas Biomedical Development Partners (TBDP) to negotiate a license to the
above captioned technology.
This option comprises a promise by MDA not to offer the above-cited technology
to others during a prescribed period of time and a promise to negotiate in good
faith for the grant of a license. It does not in any way constitute a license in
itself. This option is personal to and not assignable by TBDP.
If accepted by your signature below, this option will become active as of
December 10, 1992 and will expire on the latter of June 10, 1994 or within 90
days after completion of the Sponsored Research contemplated herein. If the
notice by TBDP to exercise their option to negotiate a license has not been
received by MDA by June 30, 1994, or 90 days after the completion of the
referenced sponsored research, then MDA will thereafter be free to seek other
prospective licenses for this technology with no further consideration due TBDP.
Should MDA receive written notification from TBDP exercising said option on or
before June 30, 1994, or 90 days subsequent to the completion of the referenced
sponsored research, the parties agree to negotiate a license to the captioned
matter in good faith, consistent with the attached form of agreement (Attachment
A hereto) and consistent with the following terms:
[*]
Should TBDP exercise its option in the time and manner provided herein and
should TBDP and MDA fail to reach agreement on license terms by July 31, 1994,
then MDA will thereafter be free to seek other
<PAGE> 17
Mr. David Nance EXHIBIT 1
December 15, 1992
Page 2
prospective licensees with no further consideration due TBDP, except MDA agrees
to use reasonable efforts to secure reimbursement of TBDP's direct costs
hereunder from said licensee.
It is agreed between the parties that the consideration for this option is [*]
option fee, plus a commitment of up to [*] for Phase I Clinical Trials and [*]
for basic research (subject to internal approval by MDA, approval by TBDP, and a
definitive Sponsored Research Agreement mutually agreed to and executed by the
parties) on the captioned matter. The [*] option fee, payable upon execution of
this Option Agreement by TBDP, will be applied by MDA as a credit against any
future payments for reimbursement of patent expenses due under a license
agreement subsequently entered into pursuant hereto. The option fee is only
refundable to TBDP in the event that MDA elects not to perform the referenced
research and thereby terminates this Option Agreement. MDA agrees to notify TBDP
of MDA's intention, if any, to terminate this Option Agreement within a
reasonable period of time.
If the provisions of this Option Agreement are satisfactory to you, then please
indicate your acceptance of these terms by signing and returning the enclosed
copy of this letter.
Very truly yours,
/s/ WILLIAM J. DOTY
--------------------------------------
William J. Doty
Director, Technology Development
WJD:ipm
cc: Jack A. Roth, M.D.
Tapas Mukhopadhyay, Ph.D.
Michael A. Tainsky, Ph.D.
AGREED TO BY TEXAS BIOMEDICAL DEVELOPMENT PARTNERS
By: /s/ DAVID NANCE
------------------------------------
David Nance
Managing Partner
Date: 12-17-92
-2-
<PAGE> 18
EXHIBIT 2
June 17, 1993
Mr. William J. Doty
Director
Technology Development
The University of Texas
M.D. Anderson Cancer Center
1515 Holcombe Boulevard
Houston, TX 77030
FAX (713) 794-1356
Re: [ * ] and Option Agreement for "Methods and Compositions for
Retroviral Vector Mediated Transduction", Jack A. Roth,
M.D., et al., dated December 15, 1992.
Dear Bill:
This is to inform you that Texas Biomedical Development Partners (TBDP)
wishes to exercise the above referenced options and to immediately begin
preparation of a License Agreements as contemplated in the Option Agreements.
Further, TBDP wishes to assign its rights and responsibilities under the
respective Option Agreements and under the prospective License Agreements to new
corporations established to commercialize the technologies optioned and/or
supported by Sponsored Research Agreements with TBDP.
Respecting the technologies and research associated with the laboratory of
[*]
Respecting the technologies and research associated with the laboratory of
Dr. Roth, the new company is Intron Therapeutics Inc., a Delaware Corporation .
If you have any questions please do not hesitate to call.
I look forward to working with you to document and expedite the License
Agreements.
Yours very truly,
/s/ DAVID NANCE
--------------------------------------
David Nance
Managing Partner
<PAGE> 19
EXHIBIT 3
[SR 93-04 SPONSORED
RESEARCH AGREEMENT]
<PAGE> 20
EXHIBIT 4
[CS 93-27 SPONSORED RESEARCH
AGREEMENT FOR CLINICAL STUDY]
<PAGE> 21
EXHIBIT 5
November 26, 1993
Mr. Michael J. Best
Chief Financial officer
The University of Texas
M.D. Anderson Cancer Center
1515 Holcombe Boulevard
Houston, TX 77030
RE: Sponsored Research Agreement (SR93-04), "Development of Therapeutic
Treatment and Prevention of Lung Cancer", and Sponsored Research Agreement
(CS93-27), "Clinical Protocol for Modification of Oncogene and Tumor
Suppressor Gene Expression in Non-Small Cell Lung Cancer (NSCLC)".
Dear Mr. Best:
Pursuant to Article 11 of the above referenced sponsored research agreements,
Texas Biomedical Development Partners herewith provides notification that it has
assigned substantially all of its business respecting the subject sponsored
research agreements to Intron Therapeutics, Inc.
Please contact me if you have any questions.
Sincerely,
/s/ DAVID NANCE
- -------------------
David Nance
Managing Partner
cc: Jack A. Roth, M.D.
William J. Doty
Donna S. Gilberg, CPA
<PAGE> 1
Exhibit 10.12
CS93-27
SPONSORED RESEARCH AGREEMENT FOR CLINICAL STUDY
Agreement, made this 11th day of February, 1993, by and between THE
UNIVERSITY OF TEXAS M.D. ANDERSON CANCER CENTER (hereinafter referred to as
"CANCER CENTER"), a component institution of The University of Texas System
(hereinafter referred to as "SYSTEM"), located in Houston, Texas, and Texas
Biomedical Development Partners (hereinafter referred to as "SPONSOR"), located
in Austin, Texas.
WITNESSETH:
WHEREAS, CANCER CENTER has research facilities and situations which
would allow clinical investigation and study of the "Clinical Protocol for
Modification of Oncogene and tumor Suppressor Gene Expression in Non-Small Cell
Lung Cancer (NSCLC)" as described in Exhibit I hereinafter referred to as
("Research"), a copy of which is attached hereto and incorporated herein by
reference; and
WHEREAS, both SPONSOR and CANCER CENTER consider it necessary and
desirable and desirable to perform the Research;
NOW, THEREFORE, the parties agree as follows:
1. Evaluation. SPONSOR agrees to engage the services of CANCER CENTER as an
independent contractor to perform the Research. The Research will be under the
supervision of Jack A. Roth, M.D. (Principal Investigator) at CANCER CENTER,
with the assistance of appropriate associates and colleagues at CANCER CENTER as
may be required.
2. Research. CANCER CENTER agrees as an independent contractor to conduct the
Research. Such Research was originally approved by CANCER CENTER in accordance
with CANCER CENTER policy and may be subsequently amended only in accordance
with CANCER CENTER policy and the written agreement of CANCER CENTER and SPONSOR
as provided for in Article 15 herein below.
3. Invention and Patents.
a. For all purposes herein, "Invention" shall mean any discovery,
concept or idea whether or not patentable or copyrightable, which (i) arises out
of work performed pursuant to the obligations of this Agreement; (ii) is
conceived and reduced to practice during the term of the Agreement as defined in
Article 13 hereinbelow; and (iii) includes but is not limited to processes,
methods, software, formulae, techniques, compositions of matter, devices, and
improvements thereof and know-how relating thereto. Inventions made solely by
the Principal Investigator and/or other CANCER CENTER personnel as identified in
Article 1 hereinabove or agents of CANCER CENTER shall be the sole property of
CANCER CENTER.
b. In the event that an Invention is made, CANCER CENTER agrees to
include such Invention in the Option Agreement of December 17, 1992 (attached
hereto as Exhibit III) previously
<PAGE> 2
entered in to by CANCER CENTER and SPONSOR and give notice of such Invention to
SPONSOR within thirty (30) days of the identification of such Invention.
4. Confidentiality. In the course of work performed pursuant to the Research
under this Agreement, should either party provide confidential information to
the other party, the recipient party shall, until three (3) years after the
termination of this Agreement, maintain the confidentiality of that information
as it maintains the confidentiality of its own confidential information, and
shall not disclose such confidential information to any other party, nor shall
the recipient party disclose the disclosing party's confidential information to
the recipient's employees other than those employees having a "need-to-know."
Confidential information shall be clearly marked as such. If disclosed orally,
the party making the disclosure shall be responsible for clearly informing the
recipient party of the confidentiality of the information disclosed.
Notwithstanding the other provisions of this paragraph, nothing disclosed
hereunder shall be construed as confidential information which:
a. is or becomes available to the public (except by a breach of this
Agreement by a party hereto);
b. is rightfully received from another party not under obligation of
confidentiality to the disclosing party;
c. is not known by the recipient party, or is independently developed
by the recipient party by persons without access to the confidential
information;
d. is approved for release by the party designating the information as
confidential;
e. is not identified as confidential at the time of disclosure;
f. is not in writing or physical form at time of disclosure or reduced
to a written or physical form and identified as confidential within thirty (30)
days of disclosure; or
g. is required to be disclosed under the laws of the United States of
America or the State of Texas or other governmental bodies, provided that the
parties shall first exhaust all reasonable measures available to protect the
confidentiality of such information upon disclosure.
5. Publication Rights. Notwithstanding the provisions of Article 4 of this
Agreement, CANCER CENTER may publish scientific papers relating to the
collaborative research performed under this Agreement. In the event that CANCER
CENTER wishes to publish, CANCER CENTER shall notify SPONSOR of its desire to
publish [ * ] in advance of publication and shall furnish to SPONSOR a written
description of the subject matter of the publication in order to permit SPONSOR
to review and comment thereon.
6. Publicity. CANCER CENTER acknowledges SPONSOR'S intention to distribute
periodically information releases and announcements to the news media regarding
the progress of research hereunder. SPONSOR shall not release such materials
containing the name of CANCER CENTER or any of its employees without prior
written approval by an authorized representative of CANCER CENTER, and
-2-
<PAGE> 3
said approval shall not be unreasonably withheld. Should CANCER CENTER reject
the news release, CANCER CENTER and SPONSOR agree to discuss the reasons for
CANCER CENTER's rejection, and every effort shall be made to develop an
appropriate informational news release within the bounds of accepted academic
practices. SPONSOR reserves the same right in the event that CANCER CENTER
desires to distribute a news release concerning the research program. Nothing
herein shall be construed as prohibiting CANCER CENTER or SPONSOR from reporting
on this study to a governmental agency.
7. Responsibility. The parties each agree to assume individual responsibility
for the actions and omissions of their respective employee, agents and assigns
in conjunction with this evaluation.
8. Independent Contractor. SPONSOR will not have the right to direct or control
the activities of CANCER CENTER in performing the services provided herein, and
CANCER CENTER shall perform services hereunder only as an independent
contractor, and nothing herein contained shall be construed to be inconsistent
with this relationship or status. Under no circumstances shall CANCER CENTER be
considered to be an employee or agent of SPONSOR. This Agreement shall not
constitute, create or in any way be interpreted as a joint venture, partnership
or formal business organization of any kind.
9. Title to Equipment. CANCER CENTER shall retain title to all equipment
purchased and/or fabricated by it with funds provided by SPONSOR under this
Agreement.
10. Survivorship. The provisions of Articles 3, 4, 5, 6, and 12 shall survive
any expiration or termination of this Agreement.
11. Assignment. This Agreement may not be assigned by either party without the
prior written consent of the other party; provided, however, that SPONSOR may
assign this Agreement to any purchaser or transferee of all or substantially all
of SPONSOR's business upon prior written notice to CANCER CENTER.
12. Indemnification. CANCER CENTER shall, to the extent authorized under the
Constitution and the laws of the State of Texas, hold SPONSOR harmless from
liability resulting from the negligent acts or omissions of CANCER CENTER, its
agents or employees pertaining to the activities to be carried out pursuant to
the obligations of this Agreement; provided, however, that CANCER CENTER shall
not hold SPONSOR harmless from claims arising out of the negligence of SPONSOR,
its officers, agents or any person or entity not subject to CANCER CENTER's
supervision or control.
SPONSOR shall indemnify and hold harmless SYSTEM, CANCER CENTER, their regents,
officers, agents and employees from any liability or loss resulting from
judgments or claims against them arising out of the activities to be carried out
pursuant to the obligations of this Agreement or the use by SPONSOR of the
results of the Research, provided, however, that the following is excluded from
SPONSOR's obligation to indemnify and hold harmless:
a. the negligent failure of CANCER CENTER to comply with any applicable
governmental requirements; or
-3-
<PAGE> 4
b. the negligence or willful malfeasance by a regent, officer, agent or
employee of CANCER CENTER or SYSTEM.
13. Award. SPONSOR agrees to pay CANCER CENTER a fee of [ * ]. This fee, as
shown [ * ] in Exhibit II, which is attached hereto and is incorporated herein
by reference, for information only, shall be payable [ * ].
14. Basic Term. This Agreement shall become effective as of the date first
hereinabove written and unless earlier terminated as hereinafter provided, shall
continue in force for a period of Eighteen (18) months after the same.
15. Default and Termination. In the event that either party to this Agreement
shall be in default of any of its material obligations hereunder and shall fail
to remedy such default within [*] after receipt of written notice thereof, the
party not in default shall have the option of terminating this Agreement by
giving written notice thereof, notwithstanding anything to the contrary
contained in this Agreement. Termination of this Agreement shall not affect the
rights and obligations of the parties which accrued prior to the effective date
of termination. SPONSOR shall pay CANCER CENTER for all reasonable expenses
incurred or committed to be expended as of the effective termination date,
subject to the maximum amount as specified in Article 13.
16. Entire Agreement. The parties acknowledge that this Agreement and the
attached Exhibits hereto represent the sole and entire Agreement between the
parties hereto pertaining to the Research and that such supersedes all prior
Agreements, understandings, negotiations and discussions between the parties
regarding same, whether oral or written. There are no warranties,
representations or other Agreements between the parties in connection with the
subject matter hereof except as specifically set forth herein. No supplement,
amendment, alteration, modification, waiver or termination of this Agreement
shall be binding unless executed in writing by the parties hereto.
17. Reform of Agreement. If any provision of this Agreement is, becomes or is
deemed invalid, illegal or unenforceable in any United States jurisdiction, such
provision shall be deemed amended to conform to applicable laws so as to be
valid and enforceable; or if it cannot be so amended without materially altering
the intention of the parties, it shall be stricken, and the remainder of this
Agreement shall remain in full force and effect.
18. Notices. Any notices, statements, payments, or reports required by this
Agreement shall be considered given if sent by United States Certified Mail,
postage prepaid and addressed as follows:
If to CANCER CENTER:
Michael J. Best
Chief Financial Officer
The University of Texas M.D. Anderson Cancer Center
1515 Holcombe Blvd.
Houston, Texas 77030
-4-
<PAGE> 5
If to SPONSOR:
David Nance
Managing Partner
Texas Biomedical Development Partners
100 Congress Avenue, Suite 200
Austin, Texas 78701
19. Captions. The captions in this Agreement are for convenience only and shall
not be considered a part of or affect the construction or interpretation of any
provision of this Agreement.
20. Governing Law. This Agreement shall be governed and interpreted in
accordance with the substantive laws of the State of Texas and with applicable
laws of the United States of America.
-5-
<PAGE> 6
IN WITNESS WHEREOF, CANCER CENTER and SPONSOR entered into this
Agreement effective as of the date first hereinabove written and have executed
three (3) originals each of which are of equal dignity.
TEXAS BIOMEDICAL DEVELOPMENT THE UNIVERSITY OF TEXAS
PARTNERS M.D. ANDERSON CANCER CENTER
By: /s/ DAVID NANCE By /s/ MICHAEL J. BEST
------------------------------- ---------------------------------
David Nance Michael J. Best
Managing Partner Chief Financial Officer
I have read this agreement
and understand my
obligations hereunder: CONTENT APPROVED:
By: /s/ JACK A. ROTH By: /s/ DONNA S. GILBERG
------------------------------- ---------------------------------
Jack A. Roth, M.D. Donna S. Gilberg, CPA
Principal Investigator Manager, Sponsored Agreements
FORM APPROVED:
By: /s/ CHARLES M. BALCH By: /s/ MATTHEW E. BURR
------------------------------- ---------------------------------
Charles M. Balch, M.D. Matthew E. Burr, J.D.
Head, Division of Surgery Legal Services Officer
-6-
<PAGE> 7
BUDGET FOR PROTOCOL
[ * ]
-7-
<PAGE> 8
AMENDMENT NO. 1
TO
RESEARCH AGREEMENT
This Amendment No. 1 to Research Agreement ("AMENDMENT") is made and
entered into as of July 20, 1994 by and between INTRON THERAPEUTICS, INC., a
Delaware Corporation ("SPONSOR") and THE UNIVERSITY OF TEXAS M.D. ANDERSON
CANCER CENTER ("CANCER CENTER"), a component institution of the University of
Texas System ("SYSTEM").
RECITALS
1. SPONSOR and CANCER CENTER entered into a SPONSORED RESEARCH AGREEMENT FOR
CLINICAL STUDY, number CS 93-27, dated as of February 11, 1993 (the "RESEARCH
AGREEMENT').
2. SPONSOR, CANCER CENTER and the Regents of the University of Texas System have
entered into a PATENT AND TECHNOLOGY LICENSE AGREEMENT dated as of July 20, 1994
(the "LICENSE AGREEMENT").
3. CANCER CENTER and SPONSOR wish to extend the term of the RESEARCH AGREEMENT,
acknowledge that the RESEARCH to be conducted thereunder will include matters
beyond the clinical trial protocol attached to the RESEARCH AGREEMENT as
originally executed, and that SPONSOR will have the option to include within the
LICENSED SUBJECT MATTER under the LICENSE AGREEMENT any intellectual property
that is made in the course of performing under the RESEARCH.
NOW, THEREFORE, it is hereby agreed as follows:
a. DEFINITIONS. Any capitalized terms that are not otherwise defined
herein shall be as in the RESEARCH AGREEMENT or the LICENSE AGREEMENT. In
addition, for all purposes of this AGREEMENT, the term "RESEARCH" shall be
deemed to include all work of CANCER CENTER personnel in performing the clinical
trial described int he protocol attached as Exhibit 1 and as modified from time
to time, as well as any work that is performed by Dr. Jack A. Roth or other
CANCER CENTER personnel comprising additional research projects described in
Attachment A-n, where n represents the ordinal number of a particular project.
b. Invention and Patents. Section 3 of the RESEARCH AGREEMENT shall be
amended as follows:
1. So much of Section 3(a) of the RESEARCH AGREEMENT as reads
"(i) arises out of work performed pursuant to the obligations of this AGREEMENT'
is hereby amended to read "(i) arises out of the Research;".
2. Paragraph (b) of Section 3 is hereby deleted and replaced
in its entirety with the following:
<PAGE> 9
"b. In the event that an Invention is made, CANCER CENTER
shall notify SPONSOR, which notice shall reference
this Section 3 and include a description of the
Invention in reasonable detail. SPONSOR shall have
the-option to include all worldwide patent rights
with respect to such Invention within the "EXISTING
PATENT RIGHTS" under Section 2.3(a) of the LICENSE
AGREEMENT," and to include related information,
know-how, biological materials and the like within
the TECHNOLOGY RIGHTS under the LICENSE AGREEMENT. To
exercise such option with respect to any particular
Invention, SPONSOR shall so notify CANCER CENTER
within 120 days after receipt of CANCER CENTER's
notice thereof as described above. Promptly following
such exercise, the parties shall revise Schedule A to
the LICENSE AGREEMENT to reflect the additional
patent applications so included. CANCER CENTER
warrants to SPONSOR that CANCER CENTER has the right
to grant to SPONSOR the option and rights
contemplated in this Section 3 and that upon exercise
of the option described herein with respect to any
Invention, all worldwide patent rights therein will
be included under the LICENSE AGREEMENT."
c. Term. Section 14 of the RESEARCH AGREEMENT is hereby amended by
adding to the end thereof the following: "Following such initial Eighteen (18)
month period, unless earlier terminated as provided in Section 15, this
Agreement shall continue in full force and effect until terminated by either
party for any reason on ninety (90) days prior written notice to the other
party."
d. Other. Except as expressly provided in this AMENDMENT, all other
terms, conditions and provisions of the RESEARCH AGREEMENT shall continue in
effect as provided therein.
IN WITNESS WHEREOF, CANCER CENTER and SPONSOR entered into this
AMENDMENT effective as of the date first hereinabove written and have executed
three (3) originals each of which are of equal dignity.
-2-
<PAGE> 10
IN WITNESS WHEREOF, each of the parties has executed this Amendment as
of the date first above written.
TEXAS BIOMEDICAL DEVELOPMENT THE UNIVERSITY OF TEXAS
PARTNERS M.D. ANDERSON CANCER CENTER
By: /s/ DAVID NANCE By /s/ MICHAEL J. BEST
------------------------------- ---------------------------------
David Nance Michael J. Best
Managing Partner Chief Financial Officer
I have read this agreement
and understand my
obligations hereunder: CONTENT APPROVED:
By: /s/ JACK A. ROTH By: /s/ DONNA S. GILBERG
------------------------------- ---------------------------------
Jack A. Roth, M.D. Donna S. Gilberg, CPA
Principal Investigator Manager, Sponsored Agreements
FORM APPROVED:
By: /s/ HELMUTH GOEPFERT By: Not applicable
------------------------------- ---------------------------------
Helmuth Goepfert, M.D. Matthew E. Burr, J.D.
Head, Division of Surgery and Legal Services Officer
Anesthesiology (Ad interim)
-3-
<PAGE> 11
EXHIBIT 1
PROTOCOL
-4-
<PAGE> 12
AMENDMENT NO. 2
TO
CLINICAL STUDY AGREEMENT
STATE OF TEXAS
COUNTY OF HARRIS
AMENDMENT, effective this 1st day of January, 1995, between THE
UNIVERSITY OF TEXAS M.D. ANDERSON CANCER CENTER (hereinafter referred to
as"CANCER CENTER"), a component of THE UNIVERSITY OF TEXAS SYSTEM (hereinafter
referred to as "SYSTEM") located at Houston, Texas, and INTROGEN THERAPEUTICS,
formerly Intron Therapeutics, Inc. (hereinafter referred to as "SPONSOR"), of
the Clinical Study Agreement made by these parties and dated the 11th day of
February, 1993 and amended the 20th day of July, 1994, regarding research on the
evaluation and study of the "Clinical Protocol for Modification of Tumor
Supressor Gene Expression in Non-Small Cell Lung Cancer with a Retroviral Vector
Expressing Wildtype (normal) p53).
1. CANCER CENTER and SPONSOR agree that the period of work identified in the
original Clinical Study Agreement shall be extended to the later of February 29,
1996 or the completion of the project.
2. CANCER CENTER and SPONSOR agree that the work to be done during this extended
work period will be performed according to the procedures described in the
revised workscope, the title of which is "Clinical Protocol for Modification of
Tumor Supressor Gene Expression in Non-Small Cell Lung Cancer with a Retroviral
Vector Expressing Wildtype (normal) p53", a copy of which is attached hereto as
Exhibit I and incorporated herein by reference. The workscope has been amended
and approved in accordance with institutional policy. The Clinical Study
Agreement may be extended by the SPONSOR upon notification to CANCER CENTER and
Investigator to provide CANCER CENTER and Investigator with the funds needed to
complete the research provided the research is within the workscope as herein
described.
3. CANCER CENTER and SPONSOR agree that the specific additional costs associated
with this work [ * ].
4. SPONSOR and CANCER CENTER agree that payment of amounts by SPONSOR shall be
made [ * ].
OTHERWISE, the terms and provisions of the original Agreement executed
on the 11th day of February, 1993 and amended on the 20th day of July, 1994 by
and between the parties hereto shall remain in full force and effect, provided,
however, that in the event of a conflict in the terms and conditions between
this Amendment No. 2 and the Clinical Study Agreement, the terms and conditions
of this Amendment shall prevail.
<PAGE> 13
IN WITNESS WHEREOF, the parties have executed two (2) original
counterparts of this Amendment No. 2, each of which are of equal dignity and
effective as of the date first hereinabove written.
INTROGEN THERAPEUTICS THE UNIVERSITY OF TEXAS
M.D. ANDERSON CANCER CENTER
By: /s/ DAVID NANCE By /s/ DONNA S. GILBERG
------------------------------- ----------------------------------
David Nance Donna S. Gilberg, CPA
President Manager, Sponsored Programs
Date: 6/24/95 Date: 6/22/95
----------------------------- -------------------------------
I have read this agreement and
understand my obligations hereunder:
By: /s/ JACK A. ROTH
----------------------------------
Jack A. Roth, M.D.
Principal Investigator
By: /s/ HELMUTH GOEPFERT
----------------------------------
Helmuth Goepfert, M.D.
Ad Interim Head, Div. of Surgery
Payment Mailing Address:
The University of Texas
M.D. Anderson Cancer Center
Attn.: Manager, Sponsored Programs
P.O. Box 297402
Houston, Texas 77297
Tax ID: 74-6001118-A1
-2-
<PAGE> 14
EXHIBIT 2
BUDGET
[ * ]
-3-
<PAGE> 15
AMENDMENT NO. 3
TO
CLINICAL STUDY AGREEMENT
AMENDMENT, effective this 31st day of December, 1995, between THE
UNIVERSITY OF TEXAS M.D. ANDERSON CANCER CENTER (hereinafter referred to as
"CANCER CENTER"), a component of THE UNIVERSITY OF TEXAS SYSTEM (hereinafter
referred to as "SYSTEM") located at Houston, Texas, and INTROGEN THERAPEUTICS
(hereinafter referred to as "SPONSOR"), of the Sponsored Research Agreement made
by these parties and dated the 11th day of February, 1993 and subsequently
amended, regarding research on the evaluation and study of the tumor suppressor
gene expression in non-small cell lung cancer.
1. CANCER CENTER and SPONSOR agree that the period of work identified in the
original Clinical Study Agreement shall be extended to December 31, 1996.
Thereafter, this Agreement can be extended for additional annual periods upon
the mutual written consent of CANCER CENTER and SPONSOR.
2. CANCER CENTER and SPONSOR agree that the work to be done during this extended
work period will be performed according to the procedures described in the
additional Protocol, the title of which is "Modification of Tumor Suppressor
Gene Expression and Induction of Apoptosis in Non-Small Cell Lung Cancer (NSCLC)
with an Adenovirus Vector Expressing Wildtype p53 and Cisplatin," a copy of
which is attached hereto as Exhibit I and incorporated herein by reference. The
Protocol has been approved in Accordance with institutional policy.
3. Award. During the term of this Amendment as set forth herein and in
consideration for CANCER CENTER's performance of the Protocol, SPONSOR agrees to
pay CANCER CENTER a fee [ * ].
4. ACCESS TO INFORMATION. All results of and information arising from the
Research shall be made available and accessible to SPONSOR by CANCER CENTER.
SPONSOR shall have the right to obtain copies or duplicates of such results and
information on a timely basis, in either written or electronic form, upon
SPONSOR giving CANCER CENTER reasonable notice of SPONSOR's desire to obtain
such results and information.
OTHERWISE the terms and provisions of the original Agreement executed
on the 11th day of February, 1993 and subsequently amended by and between the
parties hereto shall remain in full force and effect, provided, however, that in
the event of a conflict in the terms and conditions between this Amendment No. 3
and the Clinical Study Agreement, the terms and conditions of this Amendment
shall prevail.
<PAGE> 16
IN WITNESS WHEREOF, the parties have executed two (2) original
counterparts of this Amendment No. 3, each of which are of equal dignity and
effective as of the date first hereinabove written.
INTROGEN THERAPEUTICS THE UNIVERSITY OF TEXAS
M.D. ANDERSON CANCER CENTER
By: /s/ DAVID NANCE By /s/ DONNA S. GILBERG
------------------------------- ----------------------------------
David Nance Donna S. Gilberg, CPA
President Manager, Sponsored Programs
Date: 6/22/95 Date: 6/22/95
----------------------------- -------------------------------
I have read this agreement and
understand my obligations hereunder:
By: /s/ JACK A. ROTH
----------------------------------
Jack A. Roth, M.D.
Principal Investigator
By: /s/ HELMUTH GOEPFERT
----------------------------------
Helmuth Goepfert, M.D.
Ad Interim Head, Div. of Surgery
Payment Mailing Address:
The University of Texas
M.D. Anderson Cancer Center
Attn.: Manager, Sponsored Programs
P.O. Box 297402
Houston, Texas 77297
Tax ID: 74-6001118-A1
-2-
<PAGE> 17
PROTOCOL
[ * ]
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<PAGE> 1
Exhibit 10.13
SR 95-012
SPONSORED RESEARCH AGREEMENT
Agreement, made this 21th day of September, 1995, by and between THE
UNIVERSITY OF TEXAS M.D. ANDERSON CANCER CENTER (hereinafter referred to as
"CANCER CENTER"), a component institution of The University of Texas System
(hereinafter referred to as "SYSTEM"), located in Houston, Texas, and Introgen
Therapeutics (hereinafter referred to as "SPONSOR"), located in Austin, Texas.
WITNESSETH:
WHEREAS, SPONSOR is the licensee of the Adenovirus Vector Expression
Wild-Type p53 which has potential utilization in patient care and treatment; and
WHEREAS, CANCER CENTER has research facilities and situations which
would allow clinical investigation and study of the "Modification of Tumor
Suppressor Gene Expression in Head and Neck Squamous Cell Carcinoma (HSCC) with
an Adenovirus Vector Expression Wild-Type p53" as described in Exhibit I
hereinafter referred to as ("Research"), a copy of which is attached hereto and
incorporated herein by reference; and
WHEREAS, both SPONSOR and CANCER CENTER consider it necessary and
desirable and desirable to perform the Research;
NOW, THEREFORE, the parties agree as follows:
1. Evaluation. SPONSOR agrees to engage the services of CANCER CENTER as an
independent contractor to perform the Research. The Research will be under the
supervision of Gary L. Clayman, M.D. (Principal Investigator) at CANCER CENTER,
with the assistance of appropriate associates and colleagues at CANCER CENTER as
may be required.
2. Research. CANCER CENTER agrees as an independent contractor to conduct the
Research. Such Research was originally approved by CANCER CENTER in accordance
with CANCER CENTER policy and may be subsequently amended only in accordance
with CANCER CENTER policy and the written agreement of CANCER CENTER and SPONSOR
as provided for in Article 16 herein below.
3. Invention and Patents.
a. For all purposes herein, "Invention" shall mean any discovery,
concept or idea whether or not patentable or copyrightable, which (i) arises out
of work performed pursuant to the obligations of this Agreement; (ii) is
conceived and reduced to practice during the term of the Agreement as defined in
Article 14 hereinbelow; and (iii) includes but is not limited to processes,
methods, software, formulae, techniques, compositions of matter, devices, and
improvements thereof and know-how relating thereto. Inventions made solely by
the Principal Investigator and/or other CANCER CENTER personnel as identified in
Article 1 hereinabove or agents of CANCER CENTER shall be the sole property of
<PAGE> 2
CANCER CENTER. Inventions made jointly by employees or agents of CANCER CENTER
and SPONSOR shall be jointly owned by CANCER CENTER and SPONSOR.
b. In the event that an Invention is made, either solely by employees
ro agents of CANCER CENTER or jointly by employees or agents of CANCER CENTER
and SPONSOR, CANCER CENTER and SPONSOR agree to give notice of such Invention to
each other within thirty (30) days of the identification of such Invention.
Within thirty (30) days of notice of Invention, CANCER CENTER and SPONSOR will
thereupon exert their best reasonable efforts in cooperation with each other to
investigate, evaluate and determine to the mutual satisfaction of both parties,
the disposition of rights to the Invention, including whether, by whom, and
where any patent applications are to be filed.
c. If, after consultation with SPONSOR, it is agreed by the parties
that a patent application should be filed, CANCER CENTER will prepare and file
appropriate United States and foreign patent applications on Inventions made
under this Agreement, and SPONSOR will pay the cost of preparing, filing and
maintenance thereof. If SPONSOR notified CANCER CENTER that it does not intend
to pay the costs of an application, or if SPONSOR does not respond or make an
effort to agree with CANCER CENTER on the disposition of rights to the
INVENTION, THEN cancer center MAY FILE SUCH APPLICATION AT ITS OWN EXPENSE, AND
sponsor shall have no rights to such Invention. CANCER CENTER will provide
SPONSOR a copy of the application filed for which SPONSOR has paid the cost of
filing, as well as copies of any documents received or filed during prosecution
thereof. SPONSOR agrees to maintain any such application in confidence until it
is published by CANCER CENTER or by the respective patent office.
d. Under the terms the "Patent and Technology License Agreement between
CANCER CENTER and Introgen (Intron) Therapeutics" dated effective July 20, 1994,
CANCER CENTER hereby licenses to SPONSOR an exclusive, world-wide,
royalty-bearing license to invention (as well as patent applications, patents,
and copyrights thereon) for commercial purposes, provided that SPONSOR shall pay
all costs and expenses associated with patent and copyright filing, prosecution,
issuance, and maintenance. SPONSOR shall have thirty (30) days from written
notice of Invention from CANCER CENTER pursuant to Article 3(b) hereinabove, to
give written notice to CANCER CENTER to include any invention in the above
referenced licensed agreement.
4. Confidentiality. Because CANCER CENTER and SPONSOR will be cooperating with
each other in this Research, and because each may reveal to the other in the
course of this Research certain confidential information, CANCER CENTER and
SPONSOR agree to hold any confidential information which (a) is obtained during
the course of this work and (b) is related thereto and (c) is marked as
"CONFIDENTIAL" in confidence, and each party will not disclose same to any third
party without the express written consent of the other party to this Agreement.
This requirement shall remain in force for a period of three (3) years following
completion of work under this Agreement. Nothing in this paragraph shall in any
way restrict the rights of either CANCER CENTER or SPONSOR to use, disclose or
otherwise deal with any information which:
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<PAGE> 3
a. can be demonstrated to have been in public domain as of the
effective date of this Agreement or comes into the public domain through the
term of this Agreement through no act of the recipient; or
b. can be demonstrated to have been known to the recipient prior to the
execution of this Agreement; or
c. can be demonstrated to have been rightfully received by the
recipient after disclosure under this Agreement from a third party who did not
require the recipient to hold it in confidence or limit its use and who did not
acquire it, directly or indirectly, under obligation of confidentiality to the
disclosing party; or
d. shall be required for disclosure to Federal regulatory agencies
pursuant to approval for use; or
e. is independently invented by researchers of the recipient, which in
the case of CANCER CENTER includes SYSTEM, who have not had access to the
information provided to the recipient hereunder.
Nothing herein is intended to give SPONSOR the right to use for any purpose
pre-existing confidential information of CANCER CENTER. Notwithstanding the
confidentiality obligations of this Agreement, nothing herein shall prevent
CANCER CENTER and any other component of SYSTEM from using any information
generated hereunder for ordinary research and educational purposes of a
university.
5. Publication Rights. Notwithstanding the provisions of Article 4 of this
Agreement, CANCER CENTER may publish scientific papers relating to the
collaborative research performed under this Agreement. In the event that CANCER
CENTER wishes to publish, CANCER CENTER shall notify SPONSOR of its desire to
publish [*] in advance of publication and shall furnish to SPONSOR a written
description of the subject matter of the publication in order to permit SPONSOR
to review and comment thereon.
6. Publicity. CANCER CENTER acknowledges SPONSOR'S intention to distribute
periodically information releases and announcements to the news media regarding
the progress of research hereunder. SPONSOR shall not release such materials
containing the name of CANCER CENTER or any of its employees without prior
written approval by an authorized representative of CANCER CENTER, and said
approval shall not be unreasonably withheld. Should CANCER CENTER reject the
news release, CANCER CENTER and SPONSOR agree to discuss the reasons for CANCER
CENTER's rejection, and every effort shall be made to develop an appropriate
informational news release within the bounds of accepted academic practices.
SPONSOR reserves the same right in the event that CANCER CENTER desires to
distribute a news release concerning the research program. Nothing herein shall
be construed as prohibiting CANCER CENTER or SPONSOR from reporting on this
study to a governmental agency.
7. Responsibility. The parties each agree to assume individual responsibility
for the actions and omissions of their respective employee, agents and assigns
in conjunction with this evaluation.
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<PAGE> 4
8. Independent Contractor. SPONSOR will not have the right to direct or control
the activities of CANCER CENTER in performing the services provided herein, and
CANCER CENTER shall perform services hereunder only as an independent
contractor, and nothing herein contained shall be construed to be inconsistent
with this relationship or status. Under no circumstances shall CANCER CENTER be
considered to be an employee or agent of SPONSOR. This Agreement shall not
constitute, create or in any way be interpreted as a joint venture, partnership
or formal business organization of any kind.
9. Title to Equipment. CANCER CENTER shall retain title to all equipment
purchased and/or fabricated by it with funds provided by SPONSOR under this
Agreement.
10. Survivorship. The provisions of Articles 3, 4, 5, 6, and 12 shall survive
any expiration or termination of this Agreement.
11. Assignment. This Agreement may not be assigned by either party without the
prior written consent of the other party; provided, however, that SPONSOR may
assign this Agreement to any purchaser or transferee of all or substantially all
of SPONSOR's business upon prior written notice to CANCER CENTER.
12. Indemnification. CANCER CENTER shall, to the extent authorized under the
Constitution and the laws of the State of Texas, hold SPONSOR harmless from
liability resulting from the negligent acts or omissions of CANCER CENTER, its
agents or employees pertaining to the activities to be carried out pursuant to
the obligations of this Agreement; provided, however, that CANCER CENTER shall
not hold SPONSOR harmless from claims arising out of the negligence of SPONSOR,
its officers, agents or any person or entity not subject to CANCER CENTER's
supervision or control.
SPONSOR shall indemnify and hold harmless SYSTEM, CANCER CENTER, their regents,
officers, agents and employees from any liability or loss resulting from
judgments or claims against them arising out of the activities to be carried out
pursuant to the obligations of this Agreement or the use by SPONSOR of the
results of the Research, provided, however, that the following is excluded from
SPONSOR's obligation to indemnify and hold harmless:
a. the negligent failure of CANCER CENTER to comply with any applicable
governmental requirements; or
b. the negligence or willful malfeasance by a regent, officer, agent or
employee of CANCER CENTER or SYSTEM.
13. Award. SPONSOR agrees to pay CANCER CENTER a fee equal to [ * ]. This fee,
as shown [ * ] in Exhibit II, which is attached hereto and is incorporated
herein by reference, for information only, shall be paid by Sponsor at such
times and in such amounts as mutually agreed upon between Sponsor and Cancer
Center, but at a minimum in the following amounts on the following dates:
[ * ]
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<PAGE> 5
14. Basic Term. This Agreement shall become effective as of the date first
hereinabove written and unless earlier terminated as hereinafter provided, shall
continue in force for a period of Five (5) years after the same.
15. Default and Termination. In the event that the patient enrollment and
treatment is completed earlier than estimated, SPONSOR may terminate the
agreement provided that all costs and fees as herein agreed have been paid by
SPONSOR. In the event that FDA or NIH or other governing regulatory agency
requests the clinical study herein contemplated be halted or suspended, then
SPONSOR and CANCER CENTER agree to terminate this Agreement
16. Entire Agreement. The parties acknowledge that this Agreement and the
attached Exhibits hereto represent the sole and entire Agreement between the
parties hereto pertaining to the Research and that such supersedes all prior
Agreements, understandings, negotiations and discussions between the parties
regarding same, whether oral or written. There are no warranties,
representations or other Agreements between the parties in connection with the
subject matter hereof except as specifically set forth herein. No supplement,
amendment, alteration, modification, waiver or termination of this Agreement
shall be binding unless executed in writing by the parties hereto.
17. Reform of Agreement. If any provision of this Agreement is, becomes or is
deemed invalid, illegal or unenforceable in any United States jurisdiction, such
provision shall be deemed amended to conform to applicable laws so as to be
valid and enforceable; or if it cannot be so amended without materially altering
the intention of the parties, it shall be stricken, and the remainder of this
Agreement shall remain in full force and effect.
18. Notices. Any notices, statements, payments, or reports required by this
Agreement shall be considered given if sent by United States Certified Mail,
postage prepaid and addressed as follows:
If to CANCER CENTER:
Donna S. Gilberg, CPA
Manager, Sponsored Programs
The University of Texas M.D. Anderson Cancer Center
1515 Holcombe Blvd.
Houston, Texas 77030
If to SPONSOR:
David Nance
Managing Partner
Texas Biomedical Development Partners
301 Congress Avenue, Suite 2025
Austin, Texas 78701
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<PAGE> 6
19. Captions. The captions in this Agreement are for convenience only and shall
not be considered a part of or affect the construction or interpretation of any
provision of this Agreement.
20. Governing Law. This Agreement shall be governed and interpreted in
accordance with the substantive laws of the State of Texas and with applicable
laws of the United States of America.
-6-
<PAGE> 7
IN WITNESS WHEREOF, CANCER CENTER and SPONSOR entered into this
Agreement effective as of the date first hereinabove written and have executed
two (2) originals each of which are of equal dignity.
THE UNIVERSITY OF TEXAS
INTROGEN THERAPEUTICS M.D. ANDERSON CANCER CENTER
By: /s/ DAVID NANCE By /s/ DONNA S. GILBERG
--------------------- -----------------------------------------
David Nance Donna S. Gilberg, CPA
Managing Partner Manager, Sponsored Programs
I have read this agreement and
understand my obligations hereunder:
By: /s/ GARY L. CLAYMAN
----------------------------------------
Gary L. Clayman, D.D.S., M.D.
Principal Investigator
By: /s/ HELMUTH GOEPFERT
----------------------------------------
Helmuth Goepfert, M.D.
Ad interim Head, Division of Surgery
Payment Mailing Address:
The University of Texas
M.D. Anderson Cancer Center
Attn.: Manager, Sponsored Programs
P.O. Box 297402
Houston, Texas 77297
Tax ID: 74-6001118-A1
-7-
<PAGE> 8
PROTOCOL
[ * ]
-8-
<PAGE> 9
AMENDMENT NO. 1
TO
RESEARCH AGREEMENT
AMENDMENT, effective this 1st day of October, 1995, between THE
UNIVERSITY OF TEXAS M.D. ANDERSON CANCER CENTER (hereinafter referred to as
"CANCER CENTER"), a component of THE UNIVERSITY OF TEXAS SYSTEM (hereinafter
referred to as "SYSTEM") located at Houston, Texas, INTROGEN THERAPEUTICS
(hereinafter referred to as "SPONSOR"), of the Sponsored Research Agreement made
by these parties and dated the 21st day of September, 1995, regarding research
on the evaluation and study of the "Modification of Tumor Suppressor Gene
Expression in Head and Neck Squamous Cell Carcinoma (HSCC) with an Adenovirus
Vector Expression Wild-Type p53".
1. CANCER CENTER and SPONSOR agree that the Confidentiality provision addressed
in Paragraph 4(d) of the original Agreement be revised to the following:
d. Shall be required to be disclosed by law or regulation,
including without Stations for disclosure to Federal
regulatory agencies pursuant to approval for use; or
2. CANCER CENTER and SPONSOR agree that the Award and payment schedule addressed
in Paragraph 13 of the original Agreement be revised to the following:
AWARD. During the basic term of this Agreement as set forth below and
in consideration for CANCER CENTER's performance of the Research,
SPONSOR agrees to pay CANCER CENTER a fee equal to [ * ]:
a. SPONSOR will pay CANCER CENTER [ * ].
b. SPONSOR will pay CANCER CENTER's [ * ].
[ * ]
A third party clinical research organization ("CRO") may be engaged to
assist in conducting the Research, either at the request of CANCER CENTER or
SPONSOR. In that event, [ * ].
3. CANCER CENTER and SPONSOR agree that the Basic Term addressed in Paragraph 14
of the original Agreement be revised to the following:
BASIC TERM. This Agreement becomes effective as of the date first
written above and continues in force through December 31, 1996.
Thereafter, this Agreement can be extended for additional annual
periods upon the mutual written consent of CANCER CENTER and SPONSOR.
<PAGE> 10
4. ACCESS TO INFORMATION. All results of and information arising from the
Research shall be made available and accessible to SPONSOR by CANCER CENTER
SPONSOR shall have the right to obtain copies or duplicates of such results and
information on a timely basis, in either written or electronic form, upon
SPONSOR giving CANCER CENTER reasonable notice of SPONSOR's desire to obtain
such results and information.
OTHERWISE, the terms and provisions of the original Agreement entered
into on the 21st day of September, 1995 by and between the parties hereto shall
remain in full force and effect, provided, however, that in the event of a
conflict in the terms and conditions between this Amendment No. 1 and the
Sponsored Research Agreement, the terms and conditions of this Amendment shall
prevail.
IN WITNESS WHEREOF, the parties have executed two (2) original
counterparts of this Amendment No. 2, each of which are of equal dignity and
effective as of the date first hereinabove written.
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<PAGE> 11
IN WITNESS WHEREOF, the parties have executed two (2) original
counterparts of this Amendment No. 2, each of which are of equal dignity and
effective as of the date first hereinabove written.
INTROGEN THERAPEUTICS THE UNIVERSITY OF TEXAS
M.D. ANDERSON CANCER CENTER
By: /s/ DAVID NANCE By /s/ DONNA S. GILBERG
----------------- ----------------------------------------
David Nance Donna S. Gilberg, CPA
President Manager, Sponsored Programs
Date: /12/28/95 Date: 12/31/95
I have read this agreement and understand my
obligations hereunder:
By: /s/ GARY L. CLAYMAN
----------------------------------------
Gary L. Clayman, D.D.S., M.D.
Principal Investigator
By: /s/ HELMUT GOEPFERT
----------------------------------------
Helmuth Goepfert, M.D.
Ad Interim Head, Division of Surgery
Payment Mailing Address:
The University of Texas
M.D. Anderson Cancer Center
Attn.: Manager, Sponsored Programs
P.O. Box 297402
Houston, Texas 77297
Tax ID: 74-6001118-A1
-3-
<PAGE> 1
Exhibit 10.14
SR 93-04
SPONSORED RESEARCH AGREEMENT
Agreement, made this 11th day of February, 1993, by and by and between
THE UNIVERSITY OF TEXAS M.D. ANDERSON CANCER CENTER (hereinafter referred to as
"CANCER CENTER"), a component institution of The University of Texas System
(hereinafter referred to as "SYSTEM"), located in Houston, Texas, and Texas
Biomedical Development Partners (hereinafter referred to as "SPONSOR"), located
in Austin, Texas.
WITNESSETH:
WHEREAS, CANCER CENTER has research facilities and situations which
would allow investigation and study of the "Development of Therapeutic Treatment
and Prevention of Lung Cancer" an described in Exhibit I hereinafter referred to
as ("Research"), a copy of which in attached hereto and incorporated herein by
reference; and
WHEREAS, both SPONSOR and CANCER CENTER consider it necessary and
desirable to perform the Research;
NOW, THEREFORE , the parties agree as follows:
1. Evaluation. SPONSOR agrees to engage the services of CANCER CENTER
as an independent contractor to perform the Research. The Research will be under
the supervision of Jack A. Roth, M.D. (Principal Investigator) at CANCER CENTER,
with the assistance of appropriate associates and colleagues at CANCER CENTER as
may be required.
2. Research. CANCER CENTER agrees as an independent contractor to
conduct the Research. Such Research was originally approved by CANCER CENTER in
accordance with CANCER CENTER policy and may be subsequently amended only in
accordance with CANCER CENTER policy and the written agreement of CANCER CENTER
and SPONSOR as provided for in Article 15 herein below.
3. Invention and Patents.
a. For all purposes herein, "Invention" shall mean any
discovery, concept or idea whether or not patentable or copyrightable, which (i)
arises out of work performed pursuant to the obligations of this Agreement; (ii)
is conceived and reduced to practice during the term of the Agreement as defined
in Article 13 herein below; and (iii) includes but is not limited to processes,
methods, software, formula, techniques, compositions of matter, devices, and
improvements thereof and know-how relating thereto. Inventions made solely by
the Principal investigator and/or other CANCER CENTER personnel
as identified in Article I hereinabove or agents of CANCER CENTER shall be the
sole property of CANCER CENTER.
<PAGE> 2
b. In the event that an invention is made, CANCER CENTER
agrees to include such invention in the option Agreement of December 17, 1992
(attached hereto as Exhibit II) previously entered into by CANCER CENTER and
SPONSOR and give notice of such Invention to SPONSOR within thirty (30) days of
the identification of such Invention.
4. Confidentiality. In the course of work performed pursuant to the
Research under this Agreement, should either party provide confidential
information to the other party, the recipient party shall, until three (3) years
after the termination of this Agreement, maintain the confidentiality of that
information as it maintains the confidentiality of its own confidential
information, and shall not disclose such confidential information to any other
party, nor shall the recipient party disclose the disclosing party's
confidential information to the recipient's employees other than those employees
having a "need-to-know". Confidential information shall be clearly marked as
such. If disclosed orally, the party making the disclosure shall be responsible
for clearly informing the recipient party of the confidentiality of the
information disclosed. Notwithstanding the other provisions of this paragraph,
nothing disclosed hereunder shall be construed as confidential information
which:
a. is or becomes available to the public (except by a breach
of this Agreement by a party hereto);
b. is rightfully received from another party not under
obligation of confidentiality to the disclosing party;
c. is not known by the recipient party, or is independently
developed by the recipient party by persons without access to the confidential
information;
d. is approved for release by the party designating the
information an confidential;
e. is not identified as confidential at the time of
disclosure;
f. is not in writing or physical form at time of disclosure or
reduced to a written or physical form and identified as confidential within
thirty (30) days of disclosure; or
g. is required to be disclosed under the laws of the United
States of America or the State of Texas or other governmental bodies, provided
that the parties shall first exhaust all reasonable measures available to
protect the confidentiality of such information upon disclosure.
5. Publication Rights. Notwithstanding the provisions of Article 4 of
this Agreement, CANCER CENTER may publish scientific papers relating to the
collaborative research performed under this Agreement. In the event that CANCER
CENTER wishes to publish, CANCER CENTER shall notify SPONSOR of its desire to
publish [*] in advance of publication and shall furnish to SPONSOR a written
description of the subject matter of the publication in order to permit SPONSOR
to review and comment thereon.
-2-
<PAGE> 3
6. Publicity. CANCER CENTER acknowledges SPONSOR's intention to
distribute periodically informational releases and announcements to the news
media regarding the progress of research hereunder. SPONSOR shall not release
such materials containing the name of CANCER CENTER or any of its employees
without prior written approval by an authorized representative of CANCER CENTER,
and said approval shall not be unreasonably withheld. Should CANCER CENTER
reject the news release, CANCER CENTER and SPONSOR agree to discuss the reasons
for CANCER CENTER's rejection, and every effort shall be made to develop an
appropriate informational news release within the bounds of accepted academic
practices. SPONSOR reserves the same right in the event that CANCER CENTER
desires to distribute a news release concerning the research program. Nothing
herein shall be construed as prohibiting CANCER CENTER or SPONSOR from reporting
on this study to a governmental agency.
7. Responsibility. The parties each agree to assume individual
responsibility for the actions and omissions of their respective employees,
agents and assigns in conjunction with this evaluation.
8. Independent Contractor. SPONSOR will not have the right to direct or
control the activities of CANCER CENTER in performing the services provided
herein, and CANCER CENTER shall perform services hereunder only as an
independent contractor, and nothing herein contained shall be construed to be
inconsistent with this relationship or status. Under no circumstances shall
CANCER CENTER be considered to be an employee or agent of SPONSOR. This
Agreement shall not constitute, create or in any way be interpreted as a joint
venture, partnership or formal business organization of any kind.
9. Title to Equipment. CANCER CENTER shall retain title to all
equipment purchased and/or fabricated by it with funds provided by SPONSOR under
this Agreement.
10. Survivorship. The provisions of Article 3, 4, 5, 6, and 12 shall
survive any expiration or termination of this Agreement.
11. Assignment. This Agreement may not be assigned by either party
without the prior written consent of the other party; provided, however, that
SPONSOR may assign this Agreement to any purchaser or transferee of all or
substantially all of SPONSOR's business upon prior written notice to CANCER
CENTER.
12. Indemnification. CANCER CENTER shall, to the extent authorized
under the Constitution and the laws of the State of Texas, hold SPONSOR harmless
from liability resulting from the negligent acts or omissions of CANCER CENTER,
its agents or employees pertaining to the activities to be carried out pursuant
to the obligations of this Agreement; provided, however, that CANCER CENTER
shall not hold SPONSOR harmless from claims arising out of the negligence of
SPONSOR, its officers, agents or any person or entity not subject to CANCER
CENTER supervision or control.
SPONSOR shall indemnify and hold harmless SYSTEM, CANCER CENTER, their
regents, officers, agents and employees from any liability or loss resulting
from judgments or claims against them arising out of the activities to be
carried out pursuant to the obligations of this Agreement or the use by
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<PAGE> 4
SPONSOR of the results of the Research, provided, however, that the following is
excluded from SPONSOR's obligation to indemnify and hold harmless:
a. the negligent failure of CANCER CENTER to comply with
any applicable governmental requirements; or
b. the negligence or willful malfeasance by a regent,
officer, agent or employee of CANCER CENTER or
SYSTEM.
13. Award. SPONSOR agrees to pay CANCER CENTER a fee of [*]. This fee,
as shown [*] in Exhibit 1, which is attached hereto and is incorporated herein
by reference, for information only, shall be payable [*].
14. Basic Term. This Agreement shall become effective as of the date
first herein above written and unless earlier terminated as hereinafter
provided, shall continue in force for a period of Eighteen (18) months after the
same.
15. Default and Termination. In the event that either party to this
Agreement shall be in default of any of its material obligations hereunder and
shall fail to remedy such default within [*] after receipt of written notice
thereof, the party not in default shall have the option of terminating this
Agreement by giving written notice thereof, notwithstanding anything to the
contrary contained in this Agreement. Termination of this Agreement shall not
affect the rights and obligations of the parties which accrued prior to the
effective date of termination. SPONSOR shall pay CANCER CENTER for all
reasonable expenses Incurred or committed to be expanded as of the effective
termination date, subject to the maximum amount as specified in Article 13.
16. Entire Agreement. The parties acknowledge that this Agreement and
the attached Exhibits hereto represent the sole and entire Agreement between the
parties hereto pertaining to the Research and that such supersedes all prior
Agreements, understandings, negotiations and discussions between the parties
regarding same, whether oral or written. There are no warranties,
representations or other Agreements between the parties in connection with the
subject matter hereof except as specifically set forth herein. No supplement,
amendment, alteration, modification, waiver or termination of this Agreement
shall be binding unless executed in writing by the parties hereto.
17. Reform of Agreement. If any provision of this Agreement is, or in
doomed invalid, illegal or unenforceable in any United States jurisdiction, such
provision shall be deemed amended to conform to applicable laws so as to be
valid and enforceable; or if it cannot be so amended without materially altering
the Intention of the parties, it shall be stricken, and the remainder of this
Agreement shall remain in full force and affect.
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<PAGE> 5
18. Default and Termination. Any notices, statements, payments, or
reports by this Agreement shall be considered given if sent by United States
Certified Mail, postage prepaid and addressed as follows:
If to CANCER CENTER:
Michael J. Sent
Chief Financial officer
The University of Texas M.D. Anderson Cancer Center 1515 Holcombe Blvd.
Houston, Texas 77030
If to SPONSOR
David Nance
Managing Partner
Texas Biomedical Development Partners
100 Congress Avenue, Suite 200 Austin, Texas 78701
19. Caption. The captions in this Agreement are for convenience only
and shall not be considered a part of or affect the construction or
interpretation of any provision of this Agreement.
20. Governing Law. This Agreement shall be governed and interpreted in
accordance with the substantive laws of the State of Texas and with applicable
laws of the United States of America.
-5-
<PAGE> 6
IN WITNESS WHEREOF, CANCER CENTER and SPONSOR entered into this
Agreement effective as of the date first herein above written and have executed
three (3) originals each of which are of equal dignity.
TEXAS BIOMEDICAL DEVELOPMENT THE UNIVERSITY TEXAS
PARTNERS M.D. ANDERSON CANCER CENTER
By:/s/ DAVID NANCE By:/s/MICHAEL J. BEST
- --------------------------------------- ------------------------------
David Nance Michael J. Best
Managing Partner Chief Financial Officer
I have read this agreement and
understanding my obligations hereunder: CONTENT APPROVED:
By:/s/ JACK A. ROTH By:/s/ DONNA S. GILBERG
- --------------------------------------- ------------------------------
Jack A. Roth, M.D. Donna S. Gilberg, CPA
Principal Investor Manager, Sponsored Agreements
FORM APPROVED:
By:/s/ CHARLES M. BALCH By:/s/ MATTHEW E. BURR
- --------------------------------------- ------------------------------
Charles M. Balch, M.D. Matthew E. Burr, J.D.
Head, Division of Surgery Legal Services Officer
-6-
<PAGE> 7
EXHIBIT I
[*]
<PAGE> 8
AMENDMENT NO. 1
TO
RESEARCH AGREEMENT
This Amendment No. 1 to Research Agreement ("AMENDMENT") is made and
entered into as of July 20, 1994 by and between INTRON THERAPEUTICS, INC., a
Delaware Corporation ("SPONSOR") and THE UNIVERSITY OF TEXAS M.D. ANDERSON
CANCER CENTER ("CANCER CENTER"), a component institution of the University of
Texas System ("SYSTEM").
RECITALS
A. SPONSOR and CANCER CENTER entered into a SPONSORED RESEARCH
AGREEMENT, number SR 93-04, dated as of February 11, 1993 (the "RESEARCH
AGREEMENT").
B. SPONSOR, CANCER CENTER and the Regents of the University of Texas
System have entered into a PATENT AND TECHNOLOGY LICENSE AGREEMENT dated as of
July 20, 1994 (the "LICENSE AGREEMENT").
C. CANCER CENTER and SPONSOR wish to extend the term of the RESEARCH
AGREEMENT, acknowledge that the RESEARCH to be conducted thereunder will include
matters beyond the study outline attached to the RESEARCH AGREEMENT as
originally executed, and that SPONSOR will have the option to include within the
LICENSED SUBJECT MATTER under the LICENSE AGREEMENT any intellectual property
that is made in the course of performing under the RESEARCH.
NOW, THEREFORE, it is hereby agreed as follows:
21. DEFINITIONS. Any capitalized terms that are not otherwise
defined herein shall be defined in the RESEARCH AGREEMENT or the LICENSE
AGREEMENT. In addition, for all purposes of the RESEARCH AGREEMENT, the term
"RESEARCH" shall be deemed to include all work of CANCER CENTER personnel in
performing the study described in Exhibit I to RESEARCH AGREEMENT as originally
executed and as modified from time to time, as well as any work that is
performed by Dr. Jack A. Roth or other CANCER CENTER personnel comprising
additional research projects described in Attachment A-n, where n represents the
ordinal number of a particular project.
22. Invention and Patents. Section 3 of the RESEARCH AGREEMENT
shall be amended as follows:
(a) So much of Section 3(a) of the RESEARCH AGREEMENT
as reads "(i) arises out of work performed pursuant to the obligations of this
AGREEMENT' is hereby amended to read "(i) arises out of the Research;"
<PAGE> 9
(b) Paragraph (b) of Section 3 is hereby deleted and
replaced in its entirety with the following:
"b. In the event that an Invention is made, CANCER CENTER
shall notify SPONSOR, which notice shall reference
this Section 3 and include a description of the
Invention in reasonable detail. SPONSOR shall have
the option to include all worldwide patent rights
with respect to such Invention within the "EXISTING
PATENT RIGHTS" under Section 2.3(a) of the LICENSE
AGREEMENT,' and to include related information,
know-how, biological materials and the like within
the TECHNOLOGY RIGHTS under the LICENSE AGREEMENT. To
exercise such option with respect to any particular
Invention, SPONSOR shall so notify CANCER CENTER
within 120 days after receipt of CANCER CENTER's
notice thereof as described above. Promptly following
such exercise, the parties shall revise Schedule A to
the LICENSE AGREEMENT to reflect the additional paten
applications so included. CANCER CENTER warrants to
SPONSOR that CANCER CENTER has the right to grant to
SPONSOR the option and rights contemplated in this
Section 3 and that upon exercise of the option
described herein with respect to any Invention, all
worldwide patent rights therein will be included
under the LICENSE AGREEMENT.'
23. Term. Section 14 of the RESEARCH AGREEMENT is hereby
amended by adding to the end thereof the following: "Following such initial
Eighteen (18) month period, unless earlier terminated as provided in Section 15,
this Agreement shall continue in full force and effect until terminated by
either parry for any reason on ninety (90) days prior written notice to the
other party."
24. Other. Except as expressly provided in this AMENDMENT, all
other terms, conditions and provisions of the RESEARCH AGREEMENT shall continue
in effect as provided therein.
IN WITNESS WHEREOF, CANCER CENTER and SPONSOR entered into this
AMENDMENT effective as of the date first hereinabove written and have executed
(3) originals each of which are of equal dignity.
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<PAGE> 10
IN WITNESS WHEREOF, each of the parties has executed this Amendment as
of the date first above written.
TEXAS BIOMEDICAL DEVELOPMENT THE UNIVERSITY OF TEXAS
PARTNERS M.D. ANDERSON CANCER CENTER
By:/s/ DAVID NANCE By:/s/ MICHAEL J. BEST
- ----------------------------------- -------------------------
David Nance Michael J. Best
Managing Partner Chief Financial Officer
I have read this agreement and
understand my obligations
hereunder: CONTENT APPROVED:
By:/s/ JACK A. ROTH By:/s/ DONNA S. GILBERG
- ----------------------------------- -------------------------
Jack A. Roth, M.D. Donna S. Gilberg, CPA
Principal Investor Manager, Sponsored
Agreements
FORM APPROVED:
By:/s/ HELMUTH GOEFERT By:NOT APPLICABLE
- ----------------------------------- -------------------------
Helmuth Goefert, M.D. Matthew E. Burr, J.D.
Head, Division of Legal Services Officer
Surgery and Anesthesiology
(Ad interim)
-3-
<PAGE> 11
AMENDMENT NO. 2
TO
SPONSORED RESEARCH AGREEMENT
STATE OF TEXAS
COUNTY OF HARRIS
AMENDMENT, effective this lst day of January, 1995, between THE
UNIVERSITY OF TEXAS M.D. ANDERSON CANCER CENTER (hereinafter referred to as
"CANCER CENTER"), a component of THE UNIVERSITY OF TEXAS SYSTEM (hereinafter
referred to as "SYSTEM") located at Houston, Texas, and INTROGEN THERAPEUTICS,
formerly Intron Therapeutics, Inc. ((hereinafter referred to as "SPONSOR"), of
the Sponsored Research Agreement made by these parties and dated the 11th day of
February, 1993 and amended the 20th day of July, 199_, regarding research on the
evaluation and study of the "Development of Therapeutic Treatrnent and
Prevention of Lung Cancer".
1. CANCER CENTER and SPONSOR agree that the period of work
identified the original Sponsored Research Agreement shall be
extended to the latter of February 29, 1996 or the completion
of the project.
2. CANCER CENTER and SPONSOR agree that the work to be done
during this extended work period will be performed according
to the procedures described in the revised workscope, the
title of which is "Development of Gene Therapeutic Treatment
and Prevention for Cancer", a copy of which is attached hereto
as Exhibit I and incorporated herein by reference. The
workscope has been amended and approved in accordance with
institutional policy. The sponsored research agreement may be
extended by the Sponsor upon notification to CANCER CENTER and
Investigator to provide CANCER CENTER and Investigator with
the funds needed to complete the research provided the
research is within the workscope as herein described.
3. CANCER CENTER and SPONSOR agree that the specific additional
costs associated with this work shall be [*].
4. CANCER CENTER acknowledges that [*].
OTHERWISE, the terms and provisions of the original Agreement executed
on the 11th of February, 1993 and amended on the 20th day of July, 1994 by and
between the parties shall in full force and effect, provided, however, that in
the event of a conflict in the terms and conditions between this Amendment No. 2
and the Sponsored Research Agreement, the terms and conditions of this Amendment
shall prevail.
<PAGE> 12
IN WITNESS WHEREOF, the parties have executed two (2) original
counterparts of this Amendment No. 2, each of which are of equal dignity and
effective a of the date first hereinabove written.
SPONSOR THE UNIVERSITY OF TEXAS SYSTEM
M.D. ANDERSON CANCER CENTER
BY:/s/ DAVID NANCE BY:/s/ MICHAEL J. BEST
- ----------------------------------- --------------------------------------
David Nance Michael J. Best
President Chief Financial Officer
Introgen Therapeutics, Inc.
I have read this amendment and understand
my obligations hereunder:
BY:/s/ JACK A. ROTH
--------------------------------------
Jack A. Roth, M.D.
Principal Investigator
BY:/s/ HELMUTH GOEPFERT
--------------------------------------
Helmuth Goepfert, M.D.
Ad Interim Head, Div. of Surgery
CONTENT APPROVED:
BY:/s/ DONNA S. GILBERG
--------------------------------------
Donna S. Gilberg, CPA
Manager, Sponsored Programs
Payment Mailing Address:
The University of Texas
M.D. Anderson Cancer Center
Attention: Manager, Sponsored Programs
P.O. Box 297402
Houston, Texas 77297
Tax ID: 74-6001118-A1
-2-
<PAGE> 13
EXHIBIT I
[*]
<PAGE> 14
AMENDMENT NO. 3
TO
SPONSORED RESEARCH AGREEMENT
AMENDMENT, effective this 31st day of December, 1995, between THE
UNIVERSITY OF TEXAS M.D. ANDERSON CANCER CENTER (hereinafter referred to as
"CANCER CENTER"), a component of THE UNIVERSITY OF TEXAS SYSTEM (hereinafter
referred to as "SYSTEM") located at Houston, Texas, and INTROGEN THERAPEUTICS
(hereinafter referred to as "SPONSOR"), of the Sponsored Research Agreement made
by these parties and dated the 11th day of February, 1993 and subsequently
amended, regarding research on the evaluation and study of the "Development of
Therapeutic Treatment and Prevention of Lung Cancer".
1. CANCER CENTER and SPONSOR agree that the period of work
identified in the Original Sponsored Research Agreement shall
be extended to December 31, 1996.
2. CANCER CENTER and SPONSOR agree that the work to be done
during this extended work period will be performed according
to the procedures described in the revised workscope, the
title of which is "Development of Gene Therapeutic Treatment
and Prevention for Cancer", a copy of which is attached hereto
as Exhibit I and incorporated herein by reference. The
workscope has been amended and approved in accordance with
institutional Policy.
3. CANCER CENTER and SPONSOR agree that the specific additional
costs associated with this work shall be [*].
4. CANCER CENTER and SPONSOR agree that the fee of [*].
5. Access to Information. All results of and information arising
from the Research shall be made available and accessible to
SPONSOR by CANCER CENTER. SPONSOR shall have the right to
obtain copies or duplicates of such results and information on
a timely basis, in either written or electronic form, upon
SPONSOR giving CANCER CENTER reasonable notice of SPONSOR"s
desire to obtain such results and information.
OTHERWISE, the terms and provisions of the original Agreement executed
on the 11th day of February, 1993 and subsequently amended by and between the
parties hereto shall remain in full force and effect, provided, however, that in
the event of a conflict in the terms and conditions between this Amendment No. 3
and the Sponsored Research Agreement the terms and conditions of this Amendment
shall prevail.
<PAGE> 15
IN WITNESS WHEREOF, the parties have executed two (2) original
counterparts of this Amendment No. 3, each of which are of equal dignity and
effective as of the date first hereinabove written.
INTROGEN THERAPEUTICS, INC. THE UNIVERSITY OF TEXAS
M.D. ANDERSON CANCER CENTER
BY:/s/ DAVID NANCE BY:/s/ MICHAEL J. BEST
------------------------------- ---------------------------------
David Nance Michael J. Best
President Chief Financial Officer
Introgen Therapeutics, Inc.
I have read this
amendment and
understand my
obligations hereunder:
BY:/s/ JACK A. ROTH
---------------------------------
Jack A. Roth, M.D.
Principal Investigator
BY:/s/ HELMUTH GOEPFERT
---------------------------------
Helmuth Goepfert, M.D.
Ad Interim Head, Div. of Surgery
PAYMENT MAILING ADDRESS:
The University of Texas
M.D. Anderson Cancer Center
Atten: Manager, Sponsored Programs
P.O. Box 297402
Houston, Texas 77297
Tax ID: 74-6001118-Al
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<PAGE> 16
EXHIBIT I
[*]
<PAGE> 1
Exhibit 10.15
LS95-035
SPONSORED LABORATORY STUDY AGREEMENT
THIS Agreement is made this 21st day of September, 1995, between The
University of Texas M.D. Anderson Cancer Center, 1515 Holcombe Boulevard,
Houston, Texas 77030 ("Institution"), a component of The University of Texas
System ("System"), and Introgen Therapeutics, 301 Congress Avenue, Suite 2025,
Austin, Texas 78701 ("Sponsor"), to conduct a laboratory study and evaluation
("Study"). Institution and Sponsor agree as follows:
1. PROTOCOL
1.1 Institution agrees to use its best efforts to conduct the
Study, as an independent contractor, in accordance with
Institutional policy, applicable laws and regulations and the
Project, "Over-expression of WT-p53 Protein by Ad5cmv-p53 in
Human Gliomas", as described in Exhibit A attached hereto and
incorporated herein. The Study will be supervised by W.K.
Alfred Yung, M.D. ("Principal Investigator"), at Institution,
with assistance from associates and colleagues as required.
1.2 Sponsor agrees to engage the services of Institution to
conduct the Study and further agrees to provide at no cost to
Institution the Study material for the conduct of the Study.
2. AWARD
2.1 In consideration for performance of the Study by Institution,
Sponsor shall pay Institution [*]
3. TERM
3.1 This Agreement shall continue in force until the earlier of
completion of the Study as upon by the parties or Twelve (12)
months from the date set forth above; provided, however, that
either party may terminate the Agreement by giving thirty (30)
days advance notice to the other.
3.2 Upon early termination of this Agreement, Sponsor shall be
liable for all reasonable costs incurred or obligated by
Institution at the time of such termination, subject to the
maximum amount specified in Article 2. Sponsor shall pay
Institution for such costs within thirty (30) days of receipt
of an invoice for same.
3.3 Upon termination of this Agreement, Institution shall return
Sponsor's materials and equipment to Sponsor.
<PAGE> 2
4. INDEMNIFICATION
4.1 Institution shall, to the extent authorized under the
Constitution and laws of the State of Texas, indemnify and
hold Sponsor harmless from liability resulting from the
negligent acts or omissions of Institution, its agents or
employees pertaining to the activities to be carried out
pursuant to the obligations of this Agreement; provided,
however, that Institution shall not hold Sponsor harmless from
claims arising out of the negligence or willful malfeasance of
Sponsor, its officers, agents, or employees, or any person or
entity not subject to Institution's supervision or control.
4.2 Sponsor shall indemnify and hold harmless System, Institution,
their Regents, officers, agents and employees from any
liability or loss resulting from judgments or claims against
them arising out of the activities to be carried out pursuant
to the obligation of this Agreement, including but not limited
to the use by Sponsor of the results of the Study; provided,
however, that the following is excluded from Sponsor's
obligation to indemnify and hold harmless:
a. the negligent failure of Institution to
comply with any applicable governmental
requirements or to adhere to the terms of
the Protocol; or
b. the negligence or willful malfeasance by a
Regent, officer, agent, or employee of
Institution or System.
5. PUBLICATION AND CONFIDENTIALITY
5.1 The parties reserve the right to publish or otherwise make
public the data resulting from the Study. The party so wishing
to publish or make public shall submit any such manuscript or
release to the other party for comment prior to publication or
release.
5.2 Except as otherwise required by law or regulation, neither
party shall release or distribute any materials or information
containing the name of the other party or any of its employees
without prior written approval by an authorized representative
of the nonreleasing party, but such approval shall not be
unreasonably withheld.
5.3 Each party shall hold in confidence for three (3) years after
the termination of this Agreement any confidential information
identified as confidential and obtained from the other party
during the course of this Study. Nothing herein, however,
shall prevent Institution or any other component of System
from using any information generated hereunder for ordinary
research and educational purposes of a university.
6. INTELLECTUAL PROPERTY RIGHTS
6.1 For all purposes herein, "Invention" shall mean any discovery,
concept or idea whether or not patentable or copyrightable,
which (i) arises out of work performed pursuant to the
-2-
<PAGE> 3
obligations of this Agreement; (ii) is conceived and reduced
to practice during the term of the Agreement as defined in
Article 3 hereinabove; and (iii) includes but is not limited
to processes, methods, software, formulae, techniques,
compositions of matter, devices, and improvements thereof and
know-how relating thereto. Inventions made solely by the
Principal Investigator and/or other Institution personnel as
identified in Article I hereinabove or agents of Institution
shall be the sole property of Institution. Inventions made
jointly by employees or agents of Institution and Sponsor
shall be jointly owned by Institution and Sponsor.
6.2 In the event that an Invention is made, either solely by
employees or agents of Institution or jointly by employees or
agents of Institution and Sponsor, Institution and Sponsor
agree to give notice of such Invention to each other within
thirty (30) days of the identification of such Invention.
Within thirty (30) days of notice of Invention, Institution
and Sponsor will thereupon exert their best reasonable efforts
in cooperation with each other to investigate, evaluate and
determine to the mutual satisfaction of both parties, the
disposition of rights to the Invention, including whether, by
whom, and where any patent applications are to be filed.
6.3 If, after consultation with Sponsor, it is agreed by the
parties that a patent application should be filed, Institution
will prepare and file appropriate United States and foreign
patent applications on Inventions made under this Agreement,
and Sponsor will pay the cost of preparing, filing and
maintenance thereof If Sponsor notifies Institution that it
does not intend to pay the costs of an application, or if
Sponsor does not respond or make an effort to agree with
Institution on the disposition of rights to the Invention,
then Institution may file such application at its own expense,
and Sponsor shall have no rights to such Invention.
Institution will provide Sponsor a copy of the application
filed for which Sponsor has paid the cost of filing, as well
as copies of any documents received or filed during
prosecution thereof. Sponsor agrees to maintain any such
application in confidence until it is published by Institution
or by the respective patent office.
6.4 Under the terms of the "Patent and Technology License
Agreement between Institution and Introgen (Intron)
Therapeutics" dated effective July 20, 1994, Institution
hereby licenses to Sponsor an exclusive, world-wide,
royalty-bearing license to Invention (as well as patent
applications, patents, and copyrights thereon) for commercial
purposes, provided that Sponsor shall pay all costs and
expenses associated with patent and copyright filing,
prosecution, issuance, and maintenance. Sponsor shall have
thirty (30) days from written notice of Invention from
Institution pursuant to Section 6.2 hereinabove, to give
written notice to Institution to include any invention in the
above referenced licensed agreement.
-3-
<PAGE> 4
7. GENERAL
7.1 This Agreement, including the attached Exhibit A and B,
constitutes the entire and only Agreement between the parties
relating to the Study, and all prior negotiations,
representations, agreements, and understandings are superseded
hereby. No agreements altering or supplementing the terms
hereof, including the exhibits attached hereto, may be made
except by a written document signed by the duly authorized
representatives of the parties.
7.2 Any conflicts between the Protocol and this Agreement are
controlled by this Agreement.
7.3 This Agreement shall be construed and enforced in accordance
with the laws of the State of Texas.
7.4 This Agreement anticipates educational training and may
involve health science postgraduates and other students of the
Institution.
-4-
<PAGE> 5
IN WITNESS WHEREOF, Institution and Sponsor hereby enter into this
Agreement, effective as of the date first set forth above, and execute two (2)
original counterparts.
Introgen Therapeutics The University of Texas
M.D. Anderson Cancer Center
By: /s/ DAVID G. NANCE By: /s/ DONNA S. GILBERG
------------------ -------------------------------
David G. Nance Donna S. Gilberg, CPA
President Manager, Sponsored Programs
Date: 21 September 1995 Date: October 3, 1995
I have read this agreement and
understand my obligations hereunder:
By: /s/ W.K. ALFRED YOUNG
-------------------------------
W.K. Alfred Yung, M.D.
Principal Investigator
By: /s/ VICTOR A. LEVIN
-------------------------------
Victor A. Levin, M.D.
Chairman, Department of
Neuro-Oncology
By: /s/ ROBERT C. BAST, JR.
-------------------------------
Robert C. Bast, Jr., M.D.
Head, Division of Medicine
Make Payment to:
The University of Texas
M.D. Anderson Cancer Center
Attn: Manager, Sponsored Programs
P.O. Box 297402
Houston, TX 77297
Tax I.D. 74 6001118 A1
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<PAGE> 6
EXHIBIT A
[*]
<PAGE> 1
Exhibit 10.16
SR 96-004
SPONSORED RESEARCH AGREEMENT
This Agreement, is made this 17th day of January, 1996 ("Effective
Date"), by and between THE UNIVERSITY OF TEXAS M.D. ANDERSON CANCER CENTER
(hereinafter referred to as "CANCER CENTER"), a component institution of The
University of Texas System (hereinafter referred to as "SYSTEM"), located in
Houston, Texas, and Introgen Therapeutics, Inc. (hereinafter referred to as
"SPONSOR"), located in Austin, Texas.
WITNESSETH:
WHEREAS, SPONSOR, CANCER CENTER and the Regents of the University of
Texas System are negotiating a PATENT AND TECHNOLOGY LICENSE AGREEMENT (the
"LICENSE AGREEMENT") and have executed an Option Agreement regarding the same.
WHEREAS, CANCER CENTER and SPONSOR acknowledge that the RESEARCH to be
conducted hereunder includes (i) the Research Plan as described in Exhibit I, a
copy of which is attached hereto and incorporated herein by reference, including
all work of CANCER CENTER personnel in performing the work described in Exhibit
I, and (ii) all work that is performed by CANCER CENTER personnel comprising
additional research projects described in Attachment A-n, where n represents the
ordinal number of a particular project, or other work performed using funds
provided by SPONSOR (hereinafter referred to collectively as "RESEARCH");
WHEREAS, SPONSOR and CANCER CENTER consider it necessary and desirable
to perform the RESEARCH, and
NOW, THEREFORE, the parties agree as follows:
1. Evaluation. SPONSOR agrees to engage the services of CANCER CENTER as
an independent contractor to perform the RESEARCH. The RESEARCH will be
under the supervision of Sue-Haw Lin, Ph.D. (Principal Investigator) at
CANCER CENTER, with the assistance of appropriate associates and
colleagues at CANCER CENTER as may be required.
2. Research. CANCER CENTER agrees as an independent contractor to conduct
the RESEARCH. Such RESEARCH has been approved by CANCER CENTER in
accordance with CANCER CENTER policy and may be subsequently amended
only in accordance with CANCER CENTER policy and with the written
agreement of CANCER CENTER and SPONSOR as provided for in Article 16
herein below.
3. Invention and Patents.
a. For all purposes herein, "Invention" shall mean any discovery,
concept or idea whether or not patentable, including without
limitation, biological materials, which arises out of or is
made, conceived, or reduced to practice in connection with the
RESEARCH.
<PAGE> 2
Inventions made solely by the Principal Investigator and/or
other CANCER CENTER PERSONNEL as identified in Article I
hereinabove or agents of CANCER CENTER shall be the sole
property of CANCER CENTER.
b. In the event that an Invention is made, CANCER CENTER shall
notify SPONSOR, which notice shall reference this Section 3
and include a description of the Invention in reasonable
detail. SPONSOR shall have the option to include all worldwide
patent rights with respect to such Invention within the
"EXISTING PATENT RIGHTS" under Section 2.3(a) of the LICENSE
AGREEMENT, and to include related information, know-how,
biological materials and the like within the TECHNOLOGY RIGHTS
under the LICENSE AGREEMENT. To exercise such option with
respect to any particular Invention, SPONSOR shall so notify
CANCER CENTER within sixty (60) days after receipt of CANCER
CENTER's notice thereof as described above. Promptly following
such exercise, the parties shall revise Schedule A to the
LICENSE AGREEMENT to reflect the additional patent
applications and patents so included. CANCER CENTER warrants
to SPONSOR that CANCER CENTER has the right to grant to
SPONSOR the option and right contemplated in this Section 3
and that upon exercise of the option described herein with
respect to any Invention, all worldwide patent rights therein
will be included under the LICENSE AGREEMENT.
4. Confidentiality. In the course of work performed pursuant to the
RESEARCH under this Agreement, should either party provide confidential
information to the other party, the recipient party shall, until five
(5) years after the termination of this Agreement, maintain the
confidentiality of that information as it maintains the confidentiality
of its own confidential information, and shall not disclose such
confidential information to any other party, nor shall the recipient
party disclose the disclosing party's confidential information to the
recipients employees other than those employees having a
"need-to-know". Confidential information shall be clearly marked as
such. If disclosed orally, the party making the disclosure shall be
responsible for clearly informing the recipient party of the
confidentiality of the information disclosed. Notwithstanding the other
provisions of this paragraph, nothing disclosed hereunder shall be
construed as confidential information which:
a. is or becomes available to the public (except by a breach of
this Agreement by a party hereto);
b. is rightfully received from another party not under obligation
of confidentiality to the disclosing party,
c. is not known by the recipient party, or is independently
developed by the recipient party by persons without access to
the confidential information;
d. is approved for release by the party designating the
information as confidential;
e. is not identified as confidential at the time of disclosure;
-2-
<PAGE> 3
f. is not in writing or physical form at time of disclosure or
reduced to a written or physical form and identified as
confidential within thirty (30) days of disclosure; or
g. is required to be disclosed under the laws or other government
regulations of the United States of America or the State of
Texas or other governmental bodies, provided that the parties
shall first exhaust all reasonable measures available to
protect the confidentiality of such information upon
disclosure.
Notwithstanding the foregoing, it is understood that SPONSOR may use
and disclose any information provided to it hereunder that relates to licensed
subject matter (as such term is defined in the LICENSE AGREEMENT).
5. Publication Rights. CANCER CENTER my publish scientific papers relating
to the collaborative RESEARCH performed under this Agreement; provided
that such publication will not disclose SPONSOR's confidential
information which may not be disclosed pursuant to Paragraph 4. [*]
prior to any such publication, CANCER CENTER shall provide SPONSOR with
a draft of the proposed publication and afford SPONSOR the opportunity
to comment and if applicable, file a patent application prior to
publication. Upon SPONSOR's request, CANCER CENTER will withhold
publication and disclosure for a period of ninety (90) days from the
date SPONSOR receives the proposed publication from CANCER CENTER if
SPONSOR believes that such action is necessary to file patent
applications.
6. Publicity. CANCER CENTER acknowledges SPONSOR's intention to distribute
periodically informational releases and announcements to the news media
regarding the progress of research hereunder. SPONSOR shall not release
such materials containing the name of CANCER CENTER or any of its
employees without prior written approval by an authorized
representative of CANCER CENTER and said approval shall not be
unreasonably withheld. Should CANCER CENTER reject the news release,
CANCER CENTER and SPONSOR agree to discuss the reasons for CANCER
CENTER's rejection, and every effort shall be made to develop an
appropriate informational news release within the bounds of accepted
academic practices. SPONSOR reserves the same right in the event that
CANCER CENTER desires to distribute a news release concerning the
RESEARCH. Nothing herein shall be construed as prohibiting CANCER
CENTER or SPONSOR from reporting on this study to a governmental
agency.
7. Responsibility. The parties each agree to assume individual
responsibility for the actions and omissions of their respective
employees, agents and assigns in conjunction with this Agreement.
8. Independent Contractor. SPONSOR will not have the right to direct or
control the activities of CANCER CENTER in performing the services
provided herein, and CANCER CENTER shall perform services hereunder
only as an independent contractor, and nothing herein contained shall
be construed to be inconsistent with this relationship or status. Under
no
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<PAGE> 4
circumstances shall CANCER CENTER be considered to be an employee or
agent of SPONSOR. This Agreement shall not constitute, create or in any
way be interpreted as a joint venture, partnership, or formal business
organization of any kind.
9. Title to Equipment. CANCER CENTER shall retain title to all equipment
purchased and/or fabricated by it with funds provided by SPONSOR under
this Agreement.
10. Survivorship. The provisions of Article 3, 4, 5, 6, and 12 shall
survive any expiration or termination of this Agreement.
11. Assignment. This Agreement may not be assigned by either party without
the prior written consent of the other party; provided, however, that
SPONSOR may assign this Agreement to any purchaser or transferee of all
or substantially all of SPONSOR'S business pertaining to the subject
matter hereof upon prior written notice to CANCER CENTER.
12. Indemnification. CANCER CENTER shall, to the extent authorized under
the Constitution and the laws of the State of Texas, hold SPONSOR
harmless from liability resulting from the negligent acts or omissions
of CANCER CENTER, its agents or employees pertaining to the activities
to be carried out pursuant to the obligations of this Agreement;
provided, however, that CANCER CENTER shall not hold SPONSOR harmless
from claim arising out of the negligence of SPONSOR, its officers,
agents or any person or entity not subject to CANCER CENTER's
supervision or control.
SPONSOR shall indemnify and hold harmless SYSTEM, CANCER CENTER, their
regents, officers, agents and employees from any liability or loss
resulting from judgments or claims against them arising out of the
activities to be carried out pursuant to the obligations of this
Agreement or the use by SPONSOR of the results of the RESEARCH,
provided, however, that the following is excluded from SPONSOR's
obligation to indemnify and hold harmless:
a. the negligent failure of CANCER CENTER to comply with any
applicable governmental requirements; or
b. the negligence or willful malfeasance by a regent, officer,
agent or employee of CANCER CENTER or SYSTEM.
13. Award. SPONSOR agrees to pay CANCER CENTER a fee of [*]. This fee, as
shown [*] in Exhibit III, which is attached hereto and is incorporated
herein by reference, for information only, shall be payable [*].
14. Basic Term. This Agreement shall become effective as of the date first
hereinabove written and unless earlier terminated as hereinafter
provided, shall continue in force for a period of eighteen (18) months
after the same; provided that either party may terminate this Agreement
at any time upon thirty (30) days prior written notice to the other
party. Following such initial eighteen (18) month period, unless
earlier terminated as provided in Section 15, this
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<PAGE> 5
Agreement shall continue in full force and effect for such additional
time period as the parties may agree in writing until terminated by
either party for any reason on thirty (30) days prior written notice to
the other party.
15. Default and Termination. In the event that either party to this
Agreement shall be in default of any of its material obligations
hereunder and shall fail to remedy such default within [*] after
receipt of written notice thereof the party not in default shall have
the option of terminating this Agreement by giving written notice
thereof notwithstanding anything to the contrary contained in this
Agreement. Termination of this Agreement shall not affect the rights
and obligations of the parties which accrued prior to the effective
date of termination. SPONSOR shall pay CANCER CENTER for all reasonable
expenses incurred or committed to be expended as of the effective
termination date, in accordance with mutually agreed plans for
RESEARCH, subject to the maximum amount as specified in Article 13.
16. Entire Agreement. The parties acknowledge that this Agreement and the
attached Exhibits hereto represent the sole and entire Agreement
between the parties hereto pertaining to the RESEARCH and that such
supersedes all prior Agreements, understandings, negotiations and
discussions between the parties regarding same, whether oral or
written. There are no warranties, representations or other Agreements
between the parties in connection with the subject matter hereof except
as specifically set forth herein. No supplement amendment, alteration,
modification, waiver or termination of this Agreement shall be binding
unless executed in writing by the parties hereto.
17. Reform of Agreement. If any provision of this Agreement is, becomes or
is deemed invalid, illegal or unenforceable in any United States
jurisdiction, such provision shall be deemed amended to conform to
applicable laws so as to be valid and enforceable; or if it cannot be
so amended without materially altering the intention of the parties, it
shall be stricken, and the remainder of this Agreement shall remain in
full force and effect.
18. Notices. Any notices, statements, payments, or reports required by this
Agreement shall be considered given if sent by United States Certified
Mail, postage prepaid and addressed as follows:
If to CANCER CENTER:
Donna S. Gilberg, CPA
Manager, Sponsored Programs
The University of Tom M.D. Anderson Cancer Center
1515 Holcombe Blvd.
Houston, Texas 77030
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<PAGE> 6
If to SPONSOR:
David Nance
President
Introgen Therapeutics, Inc.
301 Congress Avenue, Suite 2025
Austin, Texas 78701
19. Captions. The captions in this Agreement are for convenience only and
shall not be considered a part of or affect the construction or
interpretation of any provision of this Agreement.
20. Governing Law. This Agreement shall be governed and interpreted in
accordance with the substantive laws of the State of Texas and with
applicable laws of the United States of America.
IN WITNESS WHEREOF, CANCER CENTER and SPONSOR entered into this
Agreement effective as of the date first hereinabove written and have executed
three (3) originals each of which are of equal dignity.
INTROGEN THERAPEUTICS, INC. THE UNIVERSITY OF TEXAS
M.D. ANDERSON CANCER CENTER
BY: /s/DAVID NANCE BY: /s/ DONNA S. GILBERG
___________________________ ----------------------------
David Nance Donna S. Gilberg, CPA
President Manager, Sponsored Programs
DATE: 1-17-96 DATE: 1-17-96
__________________________ ---------------------------
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<PAGE> 7
I have read this agreement and understand my
obligations hereunder:
BY: /s/ SUE-HWA LIA
-------------------------------------
Sue-Hwa Lia, Ph.D.
Principal Investigator
BY: /s/ RALPH B. ARLINGHAUS
-------------------------------------
Ralph B. Arlinghaus, Ph.D.
Chairman, Dept. of Molecular
Pathology
BY: /s/ JOHN G. BATSAKIS
-------------------------------------
John G. Batsakis, M.D.
Head, Division of Pathology
Mail Payment To:
The University of Texas
M.D. Anderson Cancer Center
Atten: Manager, Sponsored Programs
P.O. Box 297402
Houston, Texas 77297
Tax I.D.: 74-6001118-A1
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<PAGE> 8
EXHIBIT
[*]
<PAGE> 1
Exhibit 10.17
SPONSORED RESEARCH AGREEMENT
THIS SPONSORED RESEARCH AGREEMENT (the "Agreement") is made as of March
29, 1996 ("Effective Date") by and between Sidney Kimmel Cancer Center ("SKCC")
and Introgen Therapeutics, Inc., a Delaware corporation duly organized and
existing under the laws of Delaware ("Sponsor").
RECITALS
A. SKCC desires to conduct certain research hereinafter described, and
Sponsor is willing to advance funds for purposes of such research.
B. As a benefit of funding such research, Sponsor desires to obtain the
exclusive rights to certain inventions made during the course of such research
pursuant to the License Agreement entered into between the parties of even date
with this Agreement (the "License Agreement").
NOW THEREFORE, in consideration of the mutual covenants and promises
herein contained, SKCC and Sponsor agree as follows:
ARTICLE 1
RESEARCH PROGRAM
1.1 General.
(a) Within forty-five (45) days of the Effective Date, the
parties will agree by mutual consent on a research program that will be set
forth in Attachment A hereto (the "Research Program"). SKCC will use its
reasonable efforts to conduct the Research Program in accordance with the
description set forth in Attachment A, and will furnish the facilities necessary
to carry out said Research Program. The Research Program will be under the
direction of [*] (the "Principal Investigator") and will be conducted at Sidney
Kimmel Cancer Center. The Research Program may be modified from time to time
with the consent of Sponsor and the Principal Investigator.
(b) Except as the parties may otherwise agree, it is
understood that the Research Program will not include: [*] licensed or assigned
to [*] as amended prior to the Effective Date. [*].
1.2 Period. The Research Program shall be performed during the period
commencing on the Effective Date and continuing for [*] thereafter. The duration
of the Research Program period may be extended by written agreement between
Sponsor, SKCC and the Principal Investigator.
<PAGE> 2
1.3 Records. SKCC will ensure that the Principal Investigator and other
personnel assisting in the Research Program will keep accurate financial and
scientific records relating to the Research Program and will make such records
available to Sponsor or Sponsor's authorized representative throughout the term
of this Agreement during normal business hours upon reasonable notice. It is
understood that such records shall include detailed, witnessed laboratory
notebooks sufficient to document any inventions made in the course of the
Research Program. Upon request by Sponsor and at Sponsor's expense, SKCC agrees
promptly to provide copies of all such materials to Sponsor, in whatever
condition maintained by the Principal Investigator and his staff.
1.4 Disclaimer. SKCC does not guarantee that any patentable inventions
will result from the Research Program, that the claims of any patent obtained
will cover Sponsor's commercial interests, or that any such patent will be free
of dominance by other patents, including those based upon inventions made by
other SKCC faculty independent of the Research Program.
1.5 Use of Funds. All funds provided by Sponsor shall be used only in
accordance with the Research Program.
ARTICLE 2
COMPENSATION
2.1 Payments. As consideration for the performance by SKCC of its
obligations under this Agreement, Sponsor will pay SKCC [*]. Beginning with the
first calendar month commencing after the date of this Agreement, and continuing
for two years, Sponsor shall pay to SKCC the amounts referenced above at such
times and in such amounts as deemed necessary and appropriate to achieve the
objectives of this Agreement, with such payments being made, [*].
2.2 Handling. SKCC shall use the funds provided by Introgen for wages
and supplies, and such other operating expenses as SKCC and Sponsor mutually
approve, which are incurred directly in the performance of the Research Program.
It is understood that funds of the Research Program which are not used in a
particular month may be used in subsequent periods during the term of this
Agreement [*].
ARTICLE 3
CONSULTATION AND REPORTS
3.1 Designated Representative. Sponsor's designated representative for
consultation and communications with the Principal Investigator shall be David
G. Nance, President & CEO of Sponsor, or such other person as Sponsor may from
time to time designate in writing to SKCC and the Principal Investigator.
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<PAGE> 3
3.2 Coordination. The parties acknowledge that Sponsor will also
conduct activities related to the research to be performed by SKCC under the
Research Program. To ensure that such activities remain coordinated, Sponsor
shall meet or consult with the Principal Investigator periodically to establish
and revise priorities for work to be performed under the Research Program,
including the research experiments and other steps to be taken by Principal
Investigator in pursuit of those priorities, all under the provisions of Section
1.1 above. Unless otherwise agreed, such meetings or consultations shall take
place [*], and the Principal Investigator shall conduct the Research Program in
all respects in accordance with the priorities and steps so established by
mutual agreement of the parties pursuant to Section 1.1 above.
3.3 Reports. The Principal Investigator shall submit to Sponsor [*] a
written technical report summarizing in reasonable detail the research and
results obtained therefrom during the prior [*] period relating to research in
connection with the Research Program. [*], the Principal Investigator shall
submit to Sponsor a final written technical report of all activities undertaken
and all accomplishments achieved in connection with the Research Program. In
addition, [*] of the Research Program, SKCC's Office of Accounting shall submit
to Sponsor a final financial report of income and expenses of the Research
Program [*].
ARTICLE 4
PUBLICITY
Except as required by law or in the normal course of business
identification, neither SKCC nor Sponsor shall issue any press release or make
any other written statements in connection with work performed under this
Agreement intended for use in the public media in a manner suggesting any
endorsement by the other, without approval of such other party, which approval
shall not be unreasonably withheld. Both Sponsor and SKCC, however, shall
acknowledge Sponsor's support of the Research Plan under this Agreement in
scientific publications and other scientific communications. In any other
statements, the parties shall describe the scope and nature of their
participation accurately and appropriately.
ARTICLE 5
PUBLICATION AND ACADEMIC RIGHTS
5.1 Ownership. Subject to Section 7.1 below, SKCC retains all ownership
rights with respect to inventions, data, results and other proprietary
information developed by SKCC personnel during the course of the Research
Program. Subject to the rights granted to Sponsor pursuant to this Agreement and
the License Agreement and to Article 6 below, SKCC shall have the right to
publish or otherwise disclose all technical reports, information and/or data
developed by SKCC personnel during the course of the Research Program. Subject
to Article 6 below, Sponsor shall have the right
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<PAGE> 4
to use, disclose and exploit such reports, data and information for so long as
the license granted to Sponsor under Section 3.1(b) of the License Agreement
remains in effect.
5.2 Publication. To avoid loss of patent rights as a result of
premature public disclosure of patentable information, SKCC, the Principal
Investigator and his staff each agree to submit to Sponsor, [*] to submission
for publication or disclosure, materials intended for publication or disclosure
relating to technical reports, data, or information developed by the Principal
Investigator or other SKCC personnel during the course of or as a follow-up to
the Research Program. Sponsor shall notify SKCC [*] of such materials whether or
not Sponsor desires SKCC to file a patent application on any invention disclosed
in such materials pursuant to the License Agreement. In the event that Sponsor
desires to file such a patent application, the Principal Investigator shall
withhold publication and disclosure of such materials [*] from the date of
receipt of such materials by Sponsor. Further, if Sponsor believes that such
material contains Confidential Information (as defined in Section 6 below) of
Sponsor, SKCC, the Principal Investigator and his staff each agree [*].
ARTICLE 6
CONFIDENTIAL INFORMATION
The parties may, from time to time, in connection with the License
Agreement and the Research Program, disclose to each other Confidential
Information. "Confidential Information" shall mean any information disclosed
orally, in writing or otherwise by one party (the "Disclosing Party") to the
other party (the "Receiving Party"). The Receiving Party shall not use
Confidential Information of the Disclosing Party except as expressly authorized
in this Agreement or the License Agreement, and shall use its best efforts to
prevent the disclosure of the Disclosing Party's Confidential Information to
third parties; provided that the Receiving Party's obligations under this
Article 6 shall not apply to Confidential Information that:
(i) is in the Receiving Party's possession at the
time of disclosure thereof as demonstrated by documentary evidence;
(ii) is or later becomes part of the public domain
through no fault of the Receiving Party's personnel;
(iii) is received from a third party having no
obligations of confidentiality to the Disclosing Party; or
(iv) is developed independently by the Receiving
Party without access to the Disclosing Party's Confidential Information.
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<PAGE> 5
Notwithstanding the foregoing, the parties acknowledge and agree that
any Licensed Subject Matter (as defined in the License Agreement) may be used
and disclosed to third parties by Licensee pursuant to the License Agreement.
ARTICLE 7
PATENTS RIGHTS AND TECHNOLOGY RIGHTS
7.1 Ownership. SKCC shall own all right, title and interest in and to
any inventions conceived or first reduced to practice by SKCC personnel during
the term of this Agreement in the course of performing the Research Program, to
the extent that such SKCC personnel would be an inventor thereof under U.S.
patent law. Patent rights to inventions that are made jointly by employees of
SKCC and Sponsor shall be owned jointly. For purposes of this Section 7.1
whether an invention is made "jointly" shall be determined under principles of
inventorship in accordance with U.S. patent law, and "joint ownership" means
that, subject to any royalties owing under the License Agreement, each party is
free to exploit such patent rights and authorize others to do so, with no
obligation to account to the other party, for profits or otherwise or to obtain
the consent of the other party.
7.2 Notice. SKCC shall notify Sponsor promptly in writing of all
discoveries and inventions disclosed to SKCC by Principal Investigator, [*] or
other SKCC personnel under [*] supervision that arise out of or in connection
with the Research Program during the term of this Agreement. The filing for,
prosecution of applications and maintenance of patents on such inventions shall
be handled in accordance with Article 9 of the License Agreement.
7.3 Assignments. SKCC shall have in place or obtain appropriate written
agreements from all personnel involved in the Research Program, such agreements
to require that all discoveries and inventions first conceived or reduced to
practice as a result of or in connection with research conducted at SKCC shall
be reported promptly and assigned to SKCC.
ARTICLE 8
INDEPENDENT CONTRACTOR
For the purposes of this Agreement and all services to be provided
hereunder, the parties shall be, and shall be deemed to be, independent
contractors and not agents or employees of the other party. Neither party shall
have authority to make any statements, representations or commitments of any
kind, or to take any action which shall be binding on the other party, except as
may be expressly provided for herein or authorized in writing.
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<PAGE> 6
ARTICLE 9
TERM AND TERMINATION
9.1 Term. The term of this Agreement shall commence on the Effective
Date and extend for [*], unless sooner terminated in accordance with the
provisions of this Article 9.
9.2 Termination by Sponsor. In the event that Sponsor determines, at
any time [*], that the Research Program is no longer academically, technically
or commercially feasible or desirable, Sponsor shall have the right to terminate
this Agreement [*].
9.3 Termination for Breach. In the event that either party to this
Agreement shall be in breach or default of an obligation under this Agreement
and shall fail to remedy such breach or default within [*], the other party to
this Agreement shall be entitled to terminate this Agreement [*].
9.4 Consequences of Termination. Termination or cancellation of this
Agreement shall not affect the rights and obligations of the parties accrued
prior to termination; nor shall a termination of this Agreement affect the
parties' rights or obligations under the License Agreement except as provided in
Section 5.3.2 of the License Agreement.
9.5 Survival. The following sections of this Agreement shall survive
expiration or termination of this Agreement for any reason: Sections 2.2 and
3.3, and Articles 4, 5, 6, 7, 9 and 10.
ARTICLE 10
GENERAL
10.1 Assignment. This Agreement may not be assigned or transferred by
either party without the prior written consent of the other party; provided,
however, that Sponsor may assign or transfer its rights and obligations under
this Agreement to a successor to all or substantially all of its assets or
business relating to this Agreement, whether by sale, merger, operation of law
or otherwise upon written notice to SKCC.
10.2 Entire Agreement. This Agreement constitutes the entire and only
agreement between the parties relating to the subject matter hereof, and all
prior negotiations, representations, agreements and understandings are
superseded hereby. No agreements altering or supplementing the terms hereof may
be made except by means of a written document signed by the duly authorized
representatives of the parties.
10.3 Notices. Any notice required by this Agreement shall be given by
prepaid, first class, certified mail, return receipt requested, addressed to:
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<PAGE> 7
If to SKCC: David Wood
Sidney Kimmel Cancer Center
3099 Science Park Road
San Diego, CA 92121
If to Licensee: David G. Nance, President
Introgen Therapeutics, Inc.
301 Congress Avenue
Suite 2025
Austin, TX 78701
or at such other addresses as may be given from time to time in accordance with
the terms of this notice provision.
10.4 Governing Law. This Agreement shall be governed by, construed, and
enforced in accordance with the laws of the State of Texas, without regard to
conflicts of laws.
10.5 Headings. The headings of the several sections of this Agreement
are intended for convenience of reference only and are not intended to be a part
of or to affect the meaning or interpretation of this Agreement.
10.6 Severability. If any provision of this Agreement shall be found by
a court to be void, invalid or unenforceable, the same shall be reformed to
comply with applicable law or stricken if not so conformable, so as not to
affect the validity or enforceability of the remainder of this Agreement.
10.7 Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original, but both of which together shall
constitute one and the same instrument.
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<PAGE> 8
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized representatives.
INTROGEN THERAPEUTICS, INC. SIDNEY KIMMEL CANCER CENTER
("Sponsor") ("SKCC")
By: /s/ DAVID G. NANCE By: /s/ DAVID E. WOOD
-------------------- ------------------------
Print Name: David G. Nance Print Name: David E. Wood
Title: President Title: Executive Vice President
Date: March 29, 1996 Date: March 29, 1996
-8-
<PAGE> 9
ATTACHMENT A
RESEARCH PROGRAM
[*]
<PAGE> 1
EXHIBIT 10.18
LICENSE AGREEMENT
This License Agreement ("Agreement") is made as of March 29, 1996 (the
"Effective Date") by and between the Sidney Kimmel Cancer Center ("SKCC") and
Introgen Therapeutics, Inc. ("Licensee"), a corporation duly organized and
existing under the laws of Delaware.
R E C I T A L S:
A. SKCC owns certain Patent Rights and Related Technology (as defined
below).
B. Licensee and SKCC have entered into a Research Agreement of even
date herewith, pursuant to which Licensee has agreed to fund certain research
conducted by SKCC (the "Research Agreement").
C. Licensee wishes to obtain a license from SKCC to the Patent Rights
and Related Technology, and other subject matter resulting from research
conducted pursuant the Research Agreement, all on the terms and conditions set
forth below.
NOW, THEREFORE, in consideration of the mutual covenants and premises
herein contained, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
As used in this Agreement, the following terms shall have the meanings
indicated:
1.1 "Licensed Product" shall mean any product, the manufacture, use or
sale of which would infringe a Valid Claim.
1.2 "Licensed Subject Matter" shall mean inventions, discoveries and
other subject matter covered by Patent Rights or within the Related Technology.
1.3 "Net Sales" shall mean the gross revenues actually received by
Licensee, its Affiliates and Sublicensees from sales of a Licensed Product,
which sales would, but for the license granted hereunder, infringe a Valid Claim
in the country for which the Licensed Product is made or sold, less (a) normal
and customary rebates, cash and trade discounts or the like actually given, (b)
sales, use and/or other taxes or duties actually paid, (c) outbound shipping and
insurance charges actually paid, (d) import and/or export duties actually paid,
and (e) amounts credited due to actual returns.
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<PAGE> 2
1.4 "Patent Rights" shall mean any and all rights in and to:
(a) the patent applications listed in Exhibit A ("Existing
Applications"), any foreign counterparts of such Existing Applications
and any patent or application anywhere in the world that is owned or
controlled by SKCC to the extent such patent or application claims and
discloses subject matter which could have been claimed in the Existing
Applications.
(b) any patent or patent application of any kind anywhere in
the world that is owned or controlled by SKCC that claims and discloses
any invention that is conceived (and evidenced in writing) or reduced
to practice by [*], which inventions are made in the course of
performing the Research Program during the term of the Research
Agreement (as the Research Program is defined in Section 1.1 of the
Research Agreement). It is understood that the Research Program shall
not include subject matter to the extent such subject matter consists
of [*] licensed or assigned to [*] under certain License and Sponsored
Research Agreements [*] as amended prior to the Effective Date. [*].
(c) all divisions, continuations, substitutions,
registrations, reissues, reexaminations or extensions of any kind with
respect to any of the foregoing.
(d) continuations-in-part of any of the foregoing applications
and patents issuing on such continuations-in-part, patents of addition,
and all reissues, renewals and extensions of such patents and patents
of addition, shall also be within the Patent Rights, but only to the
extent the same claim and disclose subject matter that could have been
claimed in the patents or applications described in (a), (b) or (c)
above. Accordingly, it is understood that new subject matter that could
not have been claimed in the patents or applications described in (a),
(b) or (c) above shall not be within the Patent Rights.
In the event that SKCC is a joint owner of an invention by reason of the fact
that an employee or consultant of Licensee is a joint inventor of such an
invention, it is understood that the Patent Rights include only SKCC's rights as
a joint owner of the patents and patent applications that claim such joint
invention. In addition, the Patent Rights shall not include patents or
applications described in 1.4(b) above, to the extent [*] are not required to
assign the same to SKCC; nor shall the Patent Rights be deemed to include any
patent or application owned by Licensee, or licensed to Licensee by a third
party. From time to time during the term of this Agreement, upon request by
either party, Licensee and Sponsor shall promptly update Exhibit A hereto to
include all patent applications and patents that are within the Patent Rights.
1.5 "Research Program" shall mean the Research Program conducted by
SKCC personnel pursuant to the Research Agreement.
1.6 "Affiliate" shall mean any corporation or other entity that is
directly or indirectly controlling, controlled by or under common control with
Licensee. For the purpose of this definition, "control" shall mean the direct or
indirect ownership of more than fifty percent (50%) of the shares of
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<PAGE> 3
the subject entity entitled to vote in the election of directors (or, in the
case of an entity that is not a corporation, for the election of the
corresponding managing authority).
1.7 "Related Technology" shall mean any and all technical information,
know-how, process, procedure, composition, device, method, formula, protocol,
technique, design, drawing, data or other subject matter owned or controlled by
SKCC directly made in the course of performing the Research Program.
1.8 "Sublicensee" shall mean a third party to whom Licensee has granted
the right to manufacture and sell Licensed Products, with respect to Licensed
Products made and sold by such third party.
1.9 "Valid Claim" shall mean (a) a claim of an issued and unexpired
patent included within the Patent Rights, which has not been held unenforceable,
unpatentable or invalid by a court or other governmental agency of competent
jurisdiction, and (b) a pending claim of a patent application included within
the Patent Rights for [*] from the first date from which such application takes
priority for filing purposes. In the event that a claim of an issued and
unexpired patent within the Patent Rights is held by a court or other
governmental agency of competent jurisdiction to be unenforceable, unpatentable
or invalid, and such holding is reversed on appeal by a higher court or agency
of competition jurisdiction, such claim shall be reinstated thereafter as a
Valid Claim hereunder.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
2.1 Warranties. SKCC represents and warrants that (a) SKCC is and shall
be the owner of the entire right, title, and interest in and to the Patent
Rights; (b) SKCC has the sole right and authority to enter into this Agreement
and grant the rights and licenses hereunder; (c) SKCC has not previously granted
and will not grant any rights in the Licensed Subject Matter that are
inconsistent with the rights and licenses granted to Licensee or contemplated
herein; (d) SKCC has obtained written agreements from all personnel associated
with SKCC who will perform work in connection with the Research Program, which
agreements assign to SKCC all patent rights in any invention conceived or
reduced to practice by such personnel in the course of performing research at
SKCC. SKCC makes no representations or warranties as to the (i) validity or
scope of the Patent Rights, or (ii) except as provided below, freedom of
Licensed Products from infringement of third party proprietary rights. SKCC
assumes no obligation to bring or prosecute actions against third parties for
patent infringement.
2.2 Representation to Knowledge. In addition, SKCC represents that to
the best knowledge of [*] and the technology transfer office at SKCC, as of the
Effective Date: (a) exercise of the license granted hereunder will not infringe
the rights of any third party to any patent, patent
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<PAGE> 4
application, invention or any other proprietary right; provided that no
representation is made with respect to any patents (i) of which Dr. Jack Roth is
an inventor, or (ii) listed on Exhibit D attached hereto or claiming subject
matter described in the publications listed on Exhibit D; (b) SKCC does not own
or control rights to any patent, patent application or invention that relates to
the subject matter of the Existing Applications, or the practice of which would
be infringed by Licensee's exercise of the license granted hereunder; and (c)
except for the Existing Applications, the applications listed on Exhibit B
hereto and the inventions disclosed therein, SKCC does not own or control rights
to any patent, patent application or invention pertaining to gene or cell
therapy. The parties acknowledge and agree that any representations made in this
Section 2.2 are made with respect to the best knowledge of [*] and the
technology transfer office at SKCC as of the Effective Date and not with respect
to any knowledge of the foregoing parties acquired after the Effective Date. As
to subsection (a) above, it is understood among the parties that SKCC has not
conducted a patent search with respect to the Patent Rights.
2.3 Disclaimer. EXCEPT AS PROVIDED IN THIS ARTICLE 2, NEITHER PARTY
MAKES ANY REPRESENTATIONS OR WARRANTIES OTHER THAN THOSE EXPRESSLY STATED IN
THIS AGREEMENT, AND SPECIFICALLY, SKCC MAKES NO EXPRESS OR IMPLIED WARRANTIES OF
NONINFRINGEMENT, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
ARTICLE 3
LICENSE
3.1 Grant.
(a) Patent Rights. SKCC hereby grants to Licensee a worldwide,
royalty-bearing, exclusive license under the Patent Rights to manufacture, have
manufactured, use, sell, import and export Licensed Products, to practice any
method, process or procedure claimed in the Patent Rights, and to otherwise
exploit the Patent Rights.
(b) Related Technology. SKCC also hereby grants to Licensee a
worldwide nonexclusive license under the Related Technology to manufacture, have
manufactured, use, sell, import and export Licensed Products and to otherwise
exploit the Related Technology. It is understood that this Section 3.1(b) shall
not be deemed to limit Introgen's rights under Section 3.1(a) above.
3.2 Sublicenses. Licensee may grant and authorize sublicenses within
the scope of the licenses granted to Licensee pursuant to this Agreement.
Licensee shall include or reference in all sublicense agreements at a minimum
terms and conditions substantially similar to those listed in Exhibit C attached
hereto. Licensee shall promptly inform SKCC of each such sublicense.
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<PAGE> 5
3.3 Reservation of Rights. The licenses granted in this Article 3 are
subject to a reserved nonexclusive license in SKCC to use the Patent Rights
solely for its own educational and non- commercial research purposes.
ARTICLE 4
PAYMENTS AND REPORTS
4.1 Patent Expenses. Within thirty (30) days after execution of this
Agreement, Introgen shall reimburse SKCC for the documented expenses paid by
SKCC prior to the Effective Date to outside patent counsel and government patent
offices with respect to the preparation, filing and prosecution of the Existing
Applications; provided that such amounts to be reimbursed shall not exceed [*].
4.2 Base Royalty. In consideration of the rights and licenses granted
by SKCC to Licensee under this Agreement, except as otherwise provided in this
Article 4, Licensee agrees to pay to SKCC as running royalties the following
percentage of Net Sales from Licensed Products sold by Licensee, its Affiliates
and Sublicensees:
(a) Subject to paragraph (b) below, the following percentage
of cumulative Net Sales of all Licensed Products:
[*] of the first [*] in cumulative Net Sales
[*] oF [*] in cumulative Net Sales
[*] of Net Sales over [*]
(b) Notwithstanding paragraph (a) above, if the Valid Claims
that cover a Licensed Product are dominated (to the extent such Valid
Claims cover such Licensed Product) by claims of an issued patent owned
or controlled by Licensee (other than the Patent Rights), the royalty
on Net Sales of such Licensed Products shall be reduced to [*] of such
Net Sales. The parties shall endeavor to mutually agree as to whether
the particular Valid Claims are so dominated.
In the event that the only Valid Claims which cover the sale of a Licensed
Product in a particular country are claims of a patent or application with
respect to which one or more employees or contractors of Licensee or a third
party are joint inventors, the royalty rates specified above on sales of such
Licensed Product in such country shall be reduced by [*].
4.3 Royalty Term. The running royalties under Section 4.2 shall be
payable only for sales of Licensed Products by Licensee, Affiliates or
Sublicensees in a county after the date of the first commercial sale of such
Licensed Product in the particular country until the expiration of the last to
expire of the patents within the Patent Rights.
-5-
<PAGE> 6
4.4 Multiple Royalties. If Licensee, its Affiliate or Sublicensee is
required to pay to non- Affiliate third parties royalties with respect to a
Licensed Product under agreements entered into after the Effective Date for
patent rights or other technologies which Licensee, its Affiliate or
Sublicensee, in its reasonable judgment, determines are desirable to license or
acquire with respect to such Licensed Product, and the total of such third party
royalties and the royalties to be paid by Licensee to SKCC would exceed [*] on
sales of such Licensed Products by Licensee and/or Affiliates or [*] on sales of
such Licensed Products by Sublicensees, the amounts to be paid under Section 4.2
shall be reduced in accordance with the following formulas:
(a) Royalties payable on sales by Licensee and/or Affiliates
of such Licensed Products shall equal the amount calculated in
accordance with Section 4.2, multiplied by the fraction [*], where "X"
equals the total percentage of Net Sales payable as royalties to SKCC
and such third parties on such sales (prior to the adjustment
hereunder and any similar adjustment in the amount to be paid to such
third parties).
(b) Royalties payable on sales by Licensee's Sublicensees of
such Licensed Products shall equal the amount calculated in accordance
with Section 4.2, multiplied by the fraction [*], where "X" equals the
total percentage of Net Sales payable as royalties to SKCC and such
third parties on sales by Licensee's Sublicensees of Licensed Products
(prior to the adjustment hereunder and any similar adjustment in the
amount to be paid to such third parties).
Notwithstanding the foregoing, the reductions in (a) and (b) above shall not
reduce by more than [*] the amounts otherwise payable under this Agreement to
SKCC with respect to a Licensed Product, after taking any other adjustments
hereunder into account. It is understood the adjustment in this Section 4.4
shall not apply to increase the amounts payable under Section 4.2.
4.5 Single Royalty; Non-Royalty Sales. In the event that more than one
patent within the Patent Rights is applicable to any Licensed Product subject to
royalties under this Article 4, then only one royalty shall be paid to SKCC in
respect of such Licensed Product. It is understood that royalties shall only be
payable under this Article 4 with respect to Licensed Products whose manufacture
or sale would infringe a Valid Claim in the country for which such Licensed
Product is made or sold. No royalty shall be payable under Section 4.2 above
with respect to sales of Licensed Products among Licensee and Affiliates for
resale; and in no event shall more than one royalty be due hereunder with
respect to any Licensed Product unit; nor shall a royalty be payable under
Section 4.2 with respect to sales of Licensed Products for use in research
and/or development, in clinical trials or as samples.
4.6 Combination Products. In the event that a Licensed Product is sold
in combination as a single product with another product, component or service
for which no royalty would be due hereunder if sold separately, Net Sales from
such combination sales for purposes of calculating the amounts due under this
Article 4 shall be reasonably allocated between such Licensed Product and such
other product, component and/or service. Without limiting the foregoing, it is
understood and
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<PAGE> 7
agreed that in no event shall Net Sales include amounts charged for surgical
procedures, hospital stays or other charges not specifically made for the sale
of Licensed Products. The parties will endeavor to mutually agree upon the
reasonable allocations described above.
4.7 Records. Licensee shall keep complete and accurate records of its
Net Sales in sufficient detail to enable the royalties payable hereunder to be
determined. Licensee shall also keep reports of Net Sales made by its
Sublicensees and Affiliates. Upon SKCC's written request, but not more
frequently than once per calendar year, Licensee shall permit representatives or
agents of SKCC, at SKCC's expense, to examine such records during Licensee's
regular business hours for the purpose of and to the extent necessary to verify
any report required under this Agreement with respect to Net Sales received not
more than three (3) years prior to the date of SKCC's request. Notwithstanding
any of the foregoing, inspections of the records of Sublicensees shall be
limited to the extent that Licensee has the right to authorize SKCC to make such
inspection; provided that, if Licensee does not have the right to authorize SKCC
to make such an inspection, upon SKCC's request, Licensee shall exercise its own
right to inspect the Sublicensee's records at SKCC's expense (such expenses to
be approved in advance by SKCC) and shall share with SKCC the results of such
inspections. Licensee shall have the right to have its representative
participate in such inspection. In the event that the amounts due to SKCC are
determined to have been underpaid, Licensee shall pay to SKCC any amount due and
unpaid, together with interest on such amount at the prime rate in effect at
Bank of America NT&SA, San Francisco, California, or at the maximum rate
permitted by law, whichever is lower. In the event the inspection establishes an
underpayment greater than [*] for the period covered by the inspection, Licensee
agrees to pay the reasonable out-of-pocket costs of such inspection.
4.8 Reports. Beginning with the first accrual of Net Sales on which a
royalty is due hereunder, Licensee shall provide to SKCC a [*] royalty report,
as follows: Within [*] after the end of each [*], Licensee shall deliver to SKCC
a true and accurate report, giving such particulars of the business conducted by
Licensee, Affiliates and its Sublicensees, if any, during such [*] as are
pertinent to an account for payments hereunder. Such report shall be reasonably
detailed and shall include at least (a) the total of Net Sales; (b) the
calculation of royalties; and (c) the total royalties so calculated and due
SKCC. To the extent consistent with Licensee's internal reporting procedures,
Licensee shall make good faith efforts to reflect in its reports hereunder Net
Sales on a product-by-product and country-by-country or territory-by-territory
basis. Simultaneously with the delivery of each such report, Licensee shall pay
to SKCC the total royalties, if any, due to SKCC for the period of such report.
If no royalties are due, Licensee shall so report. SKCC shall not provide to
third parties any information contained in reports provided to Licensee
hereunder, or learned by SKCC under Section 4.7 above; provided that SKCC may
have such reports reviewed by its accountants and legal advisors. Licensee
agrees to forward to SKCC, on an annual basis, a copy of all reports of Net
Sales received by Licensee from its Sublicensees during the preceding twelve
(12) month period as shall be pertinent to a royalty accounting under said
sublicense agreements. Such reports may be redacted to omit any information not
necessary to determine Net Sales or amounts due to SKCC hereunder.
-7-
<PAGE> 8
4.9 Payments. All amounts payable hereunder by Licensee shall be
payable in United States Dollars. If any currency conversion shall be required
in connection with the payment of royalties hereunder, such conversion shall be
made by using the exchange rates used by Licensee in calculating Licensee's own
revenues for financial reporting purposes. Any withholding or other tax that
Licensee or any of its Affiliates are required by law to withhold and pay on
behalf of SKCC shall be deducted from said royalties and promptly paid to the
taxing authority.
4.10 Conversion. Effective upon [*], Licensee may convert the license
granted to Licensee under Section 3.1(a) to a [*]; provided, however, Licensee
may not convert the license as provided under this Section 4.10 with respect to
[*]. In the event of conversion, the amounts to be paid to SKCC under this
Article 4 following the effective date of such notice after any adjustment shall
be [*], to the extent such payments are made with respect to Valid Claims within
such patent for which the license is so converted.
ARTICLE 5
TERM AND TERMINATION
5.1 Term. Unless terminated earlier pursuant to this Article 5, the
term of this Agreement shall commence on the Effective Date and continue in full
force and effect until expiration, revocation or invalidation of the last patent
or the abandonment of the last application within the Patent Rights, whichever
is later. Licensee's license with respect to the Related Technology shall
survive this Agreement except upon a termination by SKCC under Section 5.3.2
below.
5.2 Termination for Breach. In the event of a material breach of this
Agreement (including a material breach of warranty), the nonbreaching party
shall be entitled to terminate this Agreement by written notice to the breaching
party, if such breach is not cured within [*] after written notice is given by
the nonbreaching party to the breaching party specifying the breach. However, if
the party alleged to be in breach of this Agreement disputes such breach within
such [*] period, the nonbreaching party shall not have the right to terminate
this Agreement unless it has been determined pursuant to an arbitration under
Section 11.9 below that this Agreement was materially breached, and the
breaching party fails to comply with its obligations hereunder within [*] after
such determination. The right to terminate under this Section 5.2 shall be in
addition to, and not in lieu of, any other rights or remedies the nonbreaching
party may have under this Agreement, whether at law or in equity. Any
termination of this Agreement under this Section 5.2 by SKCC shall not relieve
Licensee of any obligation to pay any fees owed to SKCC nor impair any right of
SKCC that accrues prior to the effective date of such termination.
5.3 Termination Upon Notice.
5.3.1 By Licensee. Licensee may terminate this Agreement, in
its entirety or as to any particular patent or application within the Patent
Rights, or as to any particular Licensed Product,
-8-
<PAGE> 9
at any time by [*]. From and after the effective date of a termination under
this Section 5.3 with respect to a particular patent or application, such
patent(s) and application(s) in the particular country shall cease to be within
the Patent Rights for all purposes of this Agreement, and all rights and
obligations of Licensee with respect to such patent(s) and application(s) shall
terminate; from and after the effective date of a termination under this Section
5.3 with respect to a particular Licensed Product, the license granted to
Licensee under Section 3.1 shall terminate with respect to such Licensed
Product. Upon a termination of this Agreement in its entirety under this Section
5.3.1, all rights and obligations of the parties shall terminate, except as
provided in Section 5.4 below; provided that following such termination,
Licensee shall pay all patent expenses and royalties for the Patent Rights,
which in each case were due hereunder and accrued prior to the effective date of
such termination.
5.3.2 By SKCC. SKCC may terminate this Agreement upon [*]
provided that SCKK so terminates this Agreement in such event within [*]. Upon
termination of this Agreement by SKCC under this Section 5.3.2, all of the
licenses granted to Licensee under this Agreement shall immediately terminate.
5.4 Survival.
(a) Termination of this Agreement for any reason shall not
release either party hereto from any liability which at the time of such
termination has already accrued to the other party.
(b) In the event this Agreement is terminated for any reason,
Licensee and its Affiliates shall have the right to sell or otherwise dispose of
the stock of any products then on hand, all subject to the payment to SKCC of
fees and royalties pursuant to Article 4 hereof. Upon termination of this
Agreement by SKCC for any reason (other than a termination by SKCC under Section
5.3.2 above), any sublicense granted by Licensee hereunder shall survive,
provided that upon request by SKCC, such Sublicensee promptly agrees in writing
to be bound by the applicable terms of this Agreement.
(c) Articles 1, 2.3, 4.7, 4.8, 5, 7, 8, 10 and 11 shall
survive the expiration and any termination of this Agreement. Except as
otherwise provided in this Article 5, all rights and obligations of the parties
under this Agreement shall terminate upon the expiration or termination of this
Agreement. In addition, any termination of this Agreement shall not relieve
Licensee of any payment obligations to SKCC that accrue prior to the effective
date of such termination.
-9-
<PAGE> 10
ARTICLE 6
INFRINGEMENT
6.1 Enforcement. Licensee shall have the exclusive right (itself or
through others), at its sole option, to bring suit to enforce the Patent Rights.
All recoveries in such suit (whether initiated by Licensee or its designee, or
brought as a counterclaim in a suit commenced by a third party) will [*].
6.2 Defense. If Licensee or a Sublicensee, distributor or other
customer is sued by a third party charging infringement of patent rights that
dominate a claim of the Patent Rights or that cover the development,
manufacture, use, distribution or sale of a Licensed Product, Licensee will
promptly notify SKCC. As between the parties to this Agreement, [*] will be
entitled to control the defense in any such action(s) and [*]. If Licensee is
required to pay a royalty or other amount to a third party to make and/or sell a
Licensed Product as a result of a final judgment or settlement, [*].
6.3 Cooperation. In any suit, action or other proceeding in connection
with enforcement and/or defense of the Patent Rights, [*]. Upon the request of
and, at the expense of [*] shall make available at reasonable times and under
appropriate conditions all relevant personnel, records, papers, information,
samples, specimens and other similar materials [*]. Any such cooperation
provided by [*] shall be subject to reimbursement by [*] for reasonable
out-of-pocket expenses.
ARTICLE 7
INDEMNIFICATION
Licensee shall defend, hold harmless and indemnify SKCC, its officers,
directors, employees and agents from and against amounts paid to third parties
as a result of any claims, liabilities, expenses (including reasonable
attorneys' fees), demands, or causes of action whatsoever caused by, or arising
out of, or resulting from, the exercise or practice of the rights and license
granted under this Agreement by Licensee; provided that (a) Licensee receives
prompt notice of any such claim, demand or cause of action, (b) Licensee shall
not be obligated with respect to any settlement unless Licensee consents in
writing to such settlement, and (c) Licensee shall have the exclusive right to
defend any such claim, demand or cause of action.
ARTICLE 8
USE OF SKCC NAME
Except as required by law or in the normal course of business
identification, neither Licensee or SKCC shall issue any press release or other
public statements in connection with this Agreement
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<PAGE> 11
intended for use in the public media in a manner suggesting any endorsement by
the other of Licensee or SKCC, respectively, without the approval of such other
party, which approval shall not be unreasonably withheld.
ARTICLE 9
PATENTS AND INVENTIONS
9.1 Prosecution by[*]. [*] shall have the right, at its option, to
control the filing for, prosecution and maintenance of the Patent Rights. If [*]
elects not to control the filing for, prosecution and maintenance of the Patent
Rights, [*] shall have the right to do so at its expense. As used herein,
"prosecution and maintenance" of patents and patent applications shall be deemed
to include, without limitation, the conduct of interferences or oppositions,
and/or requests for re- examinations, reissues or extensions of patent terms.
[*] reasonably informed as to the status of the Patent Rights. [*] in a timely
manner concerning (i) the scope and content of all patent applications within
the Patent Rights, and (ii) content of and proposed responses to official
actions of the United States Patent and Trademark Office and foreign patent
offices during the prosecution of any patent applications within the Patent
Rights. For purposes of this Section 9.1, "timely" shall mean sufficiently in
advance of any decision by [*] or any deadline imposed upon the written response
by [*] so as to allow [*] to meaningfully review such decision or written
response and also provide comments to [*] in advance of such decision or
deadline to allow comments of [*] with respect to the Patent Rights to be
considered and incorporated into [*] decision or written response. [*] of any
election not to pursue the prosecution or maintenance of a patent application or
patent within the Patent Rights reasonably in advance of any applicable
deadlines.
9.2 Payments by [*].
9.2.1 From and after the Effective Date, [*] for all
reasonable costs associated with prosecuting and maintaining the patents within
the Patent Rights; provided, that [*] prior approval shall be required for any
costs in excess of [*], other than any previously approved costs, which approval
shall not be withheld unreasonably. If [*] for the prosecution and maintenance
of an application or patent within the Patent Rights, in any country it shall
promptly notify [*]. If [*] with respect to an application or patent within the
Patent Rights in [*] the subject patent or patent application, respectively,
shall cease to be within the Patent Rights in such country for purposes of this
Agreement. If [*] with respect to an application or patent within the Patent
Rights in any country other than those listed in the preceding sentence, the
license granted to Licensee under such application or patent (as the case may
be) shall [*].
9.2.2 It is understood that a potential exists that subject
matter covered by the Patent Rights may overlap with subject matter covered by
certain other patent rights owned or controlled by Licensee. Although the
parties are not aware of the extent of such overlap, if any, as of the Effective
Date, in the course of prosecuting the patents it is anticipated that such an
overlap may become
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<PAGE> 12
known. Both SKCC and Licensee desire to resolve any such issues amicably, and
therefore agree to use good faith efforts to resolve, without the expense and
resources of formal adversary proceedings, any issues that may arise with
respect to such overlapping subject matter. So that SKCC will not have an undue
advantage in resolving such issues, it is agreed [*].
ARTICLE 10
CONFIDENTIAL INFORMATION
The parties acknowledge and agree that Exhibits A and B contain
confidential information of SKCC. Licensee agrees not to use such confidential
information except as expressly authorized in this Agreement or the Research
Agreement, and shall use reasonable efforts to prevent the disclosure of such
confidential information to third parties; provided, that Licensee may disclose
such confidential information to third parties if Licensee discloses such
confidential information with the same degree of protection that Licensee uses
when it discloses its own confidential information. Notwithstanding the
foregoing, Licensee shall not disclose the contents of Exhibit B to a third
party without SKCC's approval.
ARTICLE 11
GENERAL
11.1 Obligation to Exploit. Licensee shall [*] bring Licensed Products
to market and to meet the market demand therefor.
11.2 Complete Agreement. This Agreement, together with the Research
Agreement, constitutes the entire understanding and only agreement between the
parties with respect to the subject matter hereof and supersedes any and all
prior negotiations, representations, agreements, and understandings, written or
oral, that the parties may have reached with respect to the subject matter
hereof. No agreements altering or supplementing the terms hereof may be made
except by means of a written document signed by the duly authorized
representatives of each of the parties hereto. It is understood that the
Research Agreement is separate and independent from this Agreement.
11.3 No Implied Obligations. Licensee's sole obligation to exploit the
Licensed Subject Matter is as set forth in Section 11.1. Nothing in this
Agreement shall be deemed to require Licensee to otherwise exploit the Licensed
Subject Matter nor prevent Licensee from commercializing products similar to or
competitive with a Licensed Product.
11.4 Assignment. This Agreement may not be assigned by either party
without the prior written consent of the other party, except to a party that
succeeds to all or substantially all of such party's business or assets relating
to this Agreement whether by sale, merger, operation of law or
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<PAGE> 13
otherwise; provided that such assignee or transferee agrees in writing to be
bound by the terms and conditions of this Agreement. SKCC may assign its right
to receive payments hereunder upon prior written notice to Licensee.
11.5 Force Majeure. In the event either party hereto is prevented from
or delayed in the performance of any of its obligations hereunder by reason of
acts of God, war, strikes, riots, storms, fires, or any other cause whatsoever
beyond the reasonable control of the party, the party so prevented or delayed
shall be excused from the performance of any such obligation to the extent and
during the period of such prevention or delay.
11.6 Notices. Any notice or other communication required by this
Agreement shall be made in writing and given by prepaid, first class, certified
mail, return receipt requested, and shall be deemed to have been served on the
date received by the addressee at the following address or such other address as
may from time to time be designated to the other party in writing:
If to SKCC: David Wood
Sidney Kimmel Cancer Center
3099 Science Park Road
San Diego, CA 92121
If to Licensee: David G. Nance, President
Introgen Therapeutics, Inc.
301 Congress Avenue
Suite 2025
Austin, TX 78701
11.7 Compliance with Law. Licensee shall comply with all applicable
federal, state and local laws and regulations in connection with its activities
pursuant to this Agreement.
11.8 Governing Law. This Agreement shall be governed by, and construed
and interpreted in accordance with, the laws of Texas, without regard to
conflicts of laws principles.
11.9 Dispute Resolution. Any controversy or claim arising out of or
relating to this Agreement, or the existence, validity, breach or termination of
this Agreement, whether during or after its term, will be reasonably promptly
and finally settled by arbitration in accordance with the Commercial Arbitration
Rules of the American Arbitration Association, as modified or supplemented
below:
(a) The arbitration proceeding will take place in Austin,
Texas if a proceeding is brought by SKCC or in San Diego, California if a
proceeding is brought by Licensee.
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<PAGE> 14
(b) The arbitral award will be the exclusive remedy of the
parties for all claims, counterclaims, issues or accounting presented or pled to
the arbitrators. The award will include reasonable attorneys fees and costs.
(c) Nothing in this Section 11.9 will prevent a party from
seeking injunctive relief against the other party from any judicial or
administrative authority pending the resolution of a dispute by arbitration.
11.10 No Waiver. A waiver, express or implied, by either SKCC or
Licensee of any right under this Agreement or of any failure to perform or
breach hereof by the other party hereto shall not constitute or be deemed to be
a waiver of any other right hereunder or of any other failure to perform or
breach hereof by such other party, whether of a similar or dissimilar nature
thereto.
11.11 No Consequential Damages. IN NO EVENT SHALL EITHER PARTY BE
LIABLE FOR SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES ARISING OUT OF ANY
BREACH OF THIS AGREEMENT; PROVIDED, THAT IF SKCC IS OBLIGATED TO PAY SUCH
DAMAGES TO THIRD PARTIES UNDER ARTICLE 7, LICENSEE SHALL BE LIABLE FOR SUCH
DAMAGES TO THE EXTENT PROVIDED IN ARTICLE 7.
11.12 Headings. Headings included herein are for convenience only, do
not form a part of this Agreement and shall not be used in any way to construe
or interpret this Agreement.
11.13 Severability. If any provision of this Agreement shall be found
by a court to be void, invalid or unenforceable, the same shall be reformed to
comply with applicable law or stricken if not so conformable, so as not to
affect the validity or enforceability of the remainder of this Agreement.
11.14 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but both of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized representatives to execute this Agreement.
SIDNEY KIMMEL CANCER CENTER INTROGEN THERAPEUTICS, INC.
("SKCC") ("Licensee")
By:/s/ DAVID WOOD By:/s/ DAVID NANCE
------------------------------- -------------------------------------
Name: David Wood Name: David Nance
----------------------------- -----------------------------------
Title: Executive Vice President Title: President
---------------------------- ----------------------------------
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<PAGE> 15
EXHIBIT A
PATENT RIGHTS
[*]
<PAGE> 16
EXHIBIT B
EXISTING PATENT RIGHTS
[*]
<PAGE> 17
EXHIBIT C
MINIMUM TERMS AND CONDITIONS OF SUBLICENSE AGREEMENTS
Licensee shall include or reference in any sublicense agreement at a minimum
terms and conditions between Licensee and the Sublicensee substantially similar
to the following:
1. The terms contained in [*]; and
2. The following disclaimer:
SUBLICENSEE ACKNOWLEDGES AND AGREES THAT THE LICENSED SUBJECT
MATTER IS SUBJECT TO THE TERMS OF A LICENSE AGREEMENT (THE
"LICENSE AGREEMENT") BETWEEN SIDNEY KIMMEL CANCER CENTER
("SKCC") AND LICENSEE. SKCC MAKES NO REPRESENTATIONS AND
EXTENDS NO WARRANTIES TO SUBLICENSEE OF ANY KIND, EITHER
EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO WARRANTIES OF
NONINFRINGEMENT OF THIRD PARTY PROPRIETARY RIGHTS,
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, AND
VALIDITY OF PATENT RIGHT CLAIMS, ISSUED OR PENDING.
<PAGE> 18
EXHIBIT D
PUBLICATIONS
[*]
<PAGE> 1
EXHIBIT 10.19
CONSULTING AGREEMENT
This Consulting Agreement ("Agreement") is made by and between Intron
Therapeutics, Inc., a Delaware corporation ("Intron") and Jack A. Roth, M.D.
("Consultant") on this 1st day of October 1994.
BACKGROUND
WHEREAS, Intron owns rights (the "Licensed Subject Matter") under a
Patent and Technology License Agreement ("License Agreement") between Intron and
the Board of Regents of The University of Texas System (the "Board") relating to
certain patent applications and technology owned by the Board and invented in
whole or in part by Consultant;
WHEREAS, Intron intends to continue development of the Licensed Subject
Matter, with a view towards ultimate commercialization thereof, and plans to
expend significant sums of money in that endeavor;
WHEREAS, Intron believes that continued work by Consultant in the
process of development, exploitation and commercialization of the Licensed
Subject Matter, as well as Consultant's promise not to compete with Intron with
respect to the Licensed Subject Matter as set forth herein, are crucial to the
ultimate success of the enterprise;
WHEREAS, Consultant is willing to commit his technical knowhow,
knowledge, experience, and expertise to assist and support Intron in
development, exploitation and commercialization of the Licensed Subject Matter,
on the terms and conditions provided herein.
NOW, THEREFORE, for and in consideration of the monetary payments and
the covenants from each party to the other set forth below, the parties hereto
agree as follows:
AGREEMENTS
ARTICLE I.
1.1 Technical Know-how and Expertise. Consultant understands and
acknowledges that Intron is making substantial expenditures for the acquisition,
development and commercialization of the Licensed Subject Matter, and that
endeavor. Consultant's technical know-how, expertise and assistance is important
to Intron in that Consultant acknowledges that Intron would not enter License
Agreement without also obtaining Consultant's agreement to assist Intron in
development and commercialization of the Licensed Subject Matter, including
improving upon the technology and possibly obtaining additional patents, as well
as extension and continuations of the patent already applied for or obtained; as
well as Consultant's non-competition agreement set out in Section 3.01 hereof.
During the term of this Agreement, Consultant agrees to provide his technical
knowledge and expertise relevant to the Licensed Subject Matter, to serve as
Chairman of Intron's Board of Scientific Advisors, if Intron appoints such a
board, and to use reasonable efforts to assist in development and
commercialization of the Licensed Subject Matter by Intron. Consultant will
devote such time and
<PAGE> 2
effort in such endeavor as is reasonably required by Intron, consistent with
Consultant's obligations to The University of Texas M.D. Anderson Cancer Center.
1.2 Compensation. In consideration for his loyalty, services, technical
know-how, expertise and assistance, and for the confidentiality and
non-competition agreements described below, Intron will pay to Consultant
$20,000 upon the execution of this Agreement and the following sums during each
year of this Agreement:
<TABLE>
<CAPTION>
YEAR AMOUNT
<S> <C>
1st $30,000
2nd $75,000
3rd $100,000
4th $125,000
5th through seventh $130,000 per year
8th $165,000
9th $181,500
10th and 11th years $200,000 per year
12th and 13th years $200,000 per year
14th and 15th years $200,000 per year
</TABLE>
The above compensation amounts notwithstanding, at the beginning of the
twelfth and fourteenth years, the Annual compensation shall be adjusted upward
to reflect the upward change, if any, in the United States Bureau of Labor
Statistics Consumer Price Index ("CPI") between the tenth Anniversary of the
Effective Date and the date of such adjustments. Such compensation shall be
calculated using the following formula:
CPI at Adjustment Date
--------------------------- X 200,000
CPI at l0th Anniversary
At each relevant point, the CPI shall be most recent CPI announced by the United
States Bureau of Labor Statistics.
Such annual compensation will commence upon the Effective Date (as
herewith defined). The Effective Date shall be the date that both of the
following have occurred: (1) a binding definitive Development and Marketing
Agreement or similar agreement between Intron and Rhone-Poulenc Rorer ("RPR") is
executed, and (2) the License Agreement has been approved by the Board of
Regents of The University of Texas System. The annual compensation shall be paid
in twelve equal monthly installments. The first installment shall be paid on the
first day of the first month beginning after the Effective Date, and a like
installment shall be paid on the first day of each month thereafter.
-2-
<PAGE> 3
ARTICLE II.
Confidentiality. Consultant understands and acknowledges that in
connection with development and commercialization of the Licensed Subject
Matter, Intron will from time to time provide him with confidential information,
including, but not limited to, scientific and technical information regarding
the Licensed Subject Matter, new discoveries and improvements upon the Licensed
Subject Matter, procedures, methods, protocols, software, devices,
specifications, data, know-how, patents, process descriptions, experimental
techniques, designs of products and things, product samples, trade secrets,
business plans, financial data, and other confidential information (all of which
is hereinafter referred to as the "Confidential Information"). Consultant agrees
to maintain the confidentiality of all Confidential Information and that
Consultant will not disclose any Confidential Information to any third party nor
use it other than as prescribed in written agreements between Consultant and
Intron, except as Intron may otherwise authorize in writing, and under the terms
and conditions of such written authorization. Consultant agrees to use
reasonable efforts to safeguard all documents containing Confidential
Information. Consultant may make copies of such documents only to the extent
necessary for performance of his obligations as prescribed in this Agreement and
other written agreements between Intron and Consultant. Consultant shall use
reasonable efforts to prevent access to all such documents by third parties. On
completion of his obligations, to Intron, Consultant agrees to return to Intron
all such documents containing Confidential Information. However, should
Consultant desire to retain such documents and receives Intron's written
approval therefor, Consultant shall continue to treat the retained documents in
accordance with the terms of this Agreement.
Intron and Consultant agree that, the above definitions
notwithstanding, the following shall not constitute "Confidential Information":
(a) Information which, after disclosure or acquisition hereunder,
lawfully enters the public domain, except where such entry is the
result of Consultant's breach of this Agreement.
(b) Information, other than that obtained from third parties,
which, prior to disclosure or acquisition hereunder, was already
lawfully in Consultant's possession either without limitation on
disclosure to others or which subsequently becomes free of such
limitation.
(c) Information obtained by Consultant from a third party who is
lawfully in possession of such information and not subject to a
contractual or fiduciary relationship with Consultant or any of
his affiliates with respect to such information. Consultant may
use and disclose such information in accordance with the terms
under which it was provided by such third party.
(d) Information which Consultant can establish was independently
developed by Consultant.
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<PAGE> 4
(e) information shall not be deemed to be within the foregoing
categories merely because such information is embraced by more
general information lawfully in the public domain or in
Consultant's possession. In addition, any combination of features
shall not be deemed to be within the foregoing categories merely
because individual features lawfully are in the public domain or
in Consultant's possession.
Consultant's obligations under this section shall continue during the
term hereof and for five (5) years after termination of this Agreement for any
reason.
ARTICLE III.
Non-Competition Agreement. As stated above, Consultant's technical
expertise, knowledge, experience, and loyalty are crucial to the development and
commercialization of the Licensed Subject Matter and of material value to
Intron. Likewise, Consultant's agreement to refrain from competing or assisting
others in competition with Intron's development and commercialization of the
Licensed Subject Matter and other gene therapy technologies, products, know how,
and applications, whether now existing or developed during the term of this
Agreement or within three years thereafter, and whether developed by Consultant
or others on behalf of Intron during the term of this Agreement or within three
years thereafter, (collectively, "Gene Therapy Technology") is of material value
to Intron. Therefore, Consultant covenants and agrees that during the term of
this Agreement, and for a period of three years thereafter, Consultant will not,
within the Designated Area (defined below), engage in any activity which
directly or indirectly is competitive with Intron's commercial exploitation of
Gene Therapy Technology, or assist others in competition with Intron's
commercial exploitation of Gene Therapy Technology. The "Designated Area" shall
mean the area of the United States of America, Canada, Mexico, Brazil,
Argentina, the European Economic Community, (EEC), (including, without
limitation, England, France, Italy, Germany, Spain, Belgium, Austria), Japan,
South Korea, Turkey, China (PRC) and each other country in which Intron, its
partners, joint venturers, sub-licensees, or anyone practicing or exploiting
Gene Therapy Technology, by, through, or under Intron and made known to
Consultant by Intron, is at the time of such activities by Consultant,
exploiting or attempting to exploit Gene Therapy Technology. Consultant
understands and acknowledges that Intron or others acting through Intron
presently intend to commercialize and exploit Gene Therapy Technology in each of
the countries expressly named above. Notwithstanding the above, Consultant shall
be free to engage in scientific research and development in gene therapy;
provided it is for purely academic and scholarly purposes, and not for
commercial use or application. Should the products of such research and
development ever have commercial application or value, Intron shall have the
right to develop and commercialize such research and any products and
applications derived therefrom for its benefit.
ARTICLE IV.
4.1 Default by Intron. Failure of Intron to timely pay any sum
due Consultant hereunder, or material breach of any covenant of Intron
hereunder, shall, after Consultant has given notice and opportunity to cure as
provided below, constitute default. Upon default by Intron, Consultant may,
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<PAGE> 5
at his option, terminate this Agreement, or exercise any other remedy which may
be available to Consultant, at law or in equity, in which case the terms and
provisions of Article III shall become null and void without any further force
or effect.
4.2. Default by Consultant. Material breach of any provision hereof by
Consultant shall, after Intron has given notice and opportunity to cure as
provided below, constitute default. Upon default by Consultant, Intron may, at
its option, terminate this Agreement, or exercise any other remedy which may be
available to it, at law or in equity.
4.3 Notice of Default. Any other provision hereof notwithstanding,
neither Intron nor Consultant shall be deemed in default under this Agreement
unless the non-defaulting party has first given the defaulting party thirty days
written notice of such default with the opportunity to cure same, and the
defaulting party has failed to cure its default within that period.
ARTICLE V.
5.1 Term and Termination. This Agreement shall commence upon the
Effective Date and continue until the first to occur of the following:
(a) Termination due to default, as provided in Article IV hereof;
(b) Fifteen years from the date hereof; or
(c) At Intron's option, inability of Consultant to perform his
duties stated herein due to physical disability or mental
disability or death; or
(d) Termination by Intron for good cause, including any illegal,
dishonest, or unethical act or omission by Consultant with respect
to Intron or his duties hereunder, after Intron has provided
Consultant notice of such act and opportunity to cure, as provided
in Section 4.03; or
(e) Termination by Intron without cause, as provided in Article VI
hereof; or
(f) Termination by mutual written agreement of the parties.
Article II, relating to confidentiality, shall survive termination of
this Agreement for any reason, according to the terms of Article II. Article
III, relating to non-competition, shall survive termination of this Agreement,
according to the terms of Article III, except in the event of termination due to
a default by Intron pursuant to Section 4.01. Upon the termination of this
Agreement for any reason, Consultant shall be entitled to all compensation
accrued as of the date of termination, subject to any right of setoff which
Intron may have.
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<PAGE> 6
For purposes of this Agreement, the term "disability" shall mean a
condition, illness, injury or defect which makes or is reasonably expected to
make Consultant unable to continue performance of his duties hereunder for a
period exceeding one year.
ARTICLE VI.
Additional Termination Rights of Intron
6.1 Termination of Agreement Without Cause. Intron may unilaterally and
without cause terminate this Agreement provided that: (a) Intron gives
Consultant written notice at least one year in advance of the effective date of
such termination and (b) such termination shall not become effective sooner than
the third anniversary of the Effective Date of this Agreement. In the event of
termination under this Section 6.01, the non-competition provisions of Article
III shall continue only for so long as Intron continues to pay Consultant's
compensation under Section 1.02 hereof, up to eighteen years beyond the
Effective Date hereof, and the confidentiality obligations of Article II shall
continue for so long as Intron continues to pay Consultant's compensation under
Section 1.02, and for five (5) years thereafter.
6.2 Termination of Consultant's Duty to Provide Services,. Intron may
terminate Consultant's duty to provide services hereunder, without altering any
other right or obligation of either party under this Agreement, provided that:
(a) Intron gives Consultant written notice at least one year in advance of the
Effective Date of such termination, and (b) such termination shall not become
effective sooner than the third anniversary of the Effective Date of this
Agreement. Without limiting the foregoing sentence, termination under this
Section 6.02 will act affect Intron's obligation to pay compensation pursuant to
Article I, or Consultant's obligations of confidentiality and non-competition
under Articles II and III. Termination of Consultant's duties under this
Section 6.02 shall not prejudice any right of Intron or Consultant to
terminate this Agreement under Section 6.01 or any other section of this
Agreement.
6.3 Termination for Failure to Commence Phase I Clinical Studies.
Intron may, at its option, terminate this Agreement if Intron fails to commence
the first Phase I Clinical Study involving products or technologies involved in
the License Agreement before the first anniversary of the Effective Date, for
any reason. In this event, Consultant's obligations of confidentiality under
Article II shall continue as provided therein, and Consultant's, Non-Competition
obligations under Article III shall continue only for so long as Intron pays
Consultant's compensation under Section 1.02 hereof.
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<PAGE> 7
ARTICLE VII.
Miscellaneous.
7.1 Notice. For purposes of this Agreement, notices and all other
communications provided for herein shall be in writing and shall be deemed to
have been duly given when personally delivered or when mailed by United States
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
If to Intron:
Intron Therapeutics, Inc.
c\o Mr. David G. Nance
301 Congress Avenue, Suite 2025
Austin, Texas 78701
With a copy to:
Mr. Rodney Varner
Wilson & Varner, L.L.P.
Attorneys at Law
301 Congress Avenue, Suite 2025
Austin, Texas 78701
If to Consultant, at the address identified on the signature page
hereof, or to such other address as either party may furnish to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
7.2 Applicable Law. The substantive laws of the State of Texas,
excluding any law, rule or principle which might refer to the substantive law of
another jurisdiction, will govern the interpretation, validity and effect of
this Agreement without regard to the place of execution or the place for
performance thereof. This Agreement is to be at least partially performed in
Harris County, Texas, and, as such, Intron and Consultant agree that personal
jurisdiction and venue shall proper with the state or federal courts situated in
Harris County, Texas, to hear such disputes arising under this agreement.
7.3 No waiver. No failure by either party hereto at any time to give
notice of any breach by the other party of, or to require compliance with, any
condition or provision of this Agreement shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or subsequent
time.
7.4 Severability. If a court of competent jurisdiction determines that
any provision of this Agreement is invalid or unenforceable, then the invalidity
or unenforceability of that provision shall not affect the validity or
enforceability of any other provision of this Agreement, and all other
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<PAGE> 8
provisions shall remain in full force and effect. Further, such provision shall
be reformed and construed to the extent permitted by law so that it may be
valid, legal and enforceable to the maximum extent possible.
7.5 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together will constitute one and the same Agreement.
7.6 Headings. This section headings have been inserted for purposes of
convenience and shall not be used for interpretive purposes.
7.7 Assignment. This Agreement may not be assigned by Intron without
Consultant is written consent, unless such assignment is made in connection with
a corporate merger or reorganization, or transfer of substantially all of the
assets of Intron, in which event assignment shall be permitted. Consultant's
unique knowledge and expertise being a fundamental consideration for this
Agreement, neither this Agreement nor any benefit hereof shall be assigned by
Consultant without Intron's written consent. Any attempted assignment by a party
in violation hereof shall be null and void.
7.8 Successors: Third Party Beneficiary. This Agreement shall inure to
the benefit of the lawful successors and assigns of Intron and be binding upon
the lawful successors and assigns of Intron, and be binding upon and inure to
the benefit of Consultant and his personal representatives, successors and
assigns.
7.9 Entire Agreement. This Agreement constitutes the entire agreement
of the parties with regard to the subject matter hereof, and contains all the
covenants, promises, and representations, warranties and agreements between the
parties with respect to the subject matter hereof. Each party to this Agreement
acknowledges that no representation, inducement, promise or agreement, oral or
written, with regard to the subject matter hereof, has been made by either
party, or by anyone acting on behalf of either party, which is not embodied
herein, and that no agreement, statement or promise relating to the subject
matter hereof which is not contained in this Agreement or in such other
agreements shall be valid and binding.
7.10 Amendments. No amendment or modification to this Agreement will be
effective unless it is in writing and signed by the parties.
7.11 Injunctive Relief. In view of the inadequacy of money damages, if
Consultant shall fail to comply with any provisions of this Agreement,
(particularly, without limitation, Articles II or III hereof) Intron shall be
entitled, to the extent permissible by law, to injunctive relief in the case of
the violation, or attempted or threatened violation, by Consultant, of any such
provision, or to a decree compelling specific performance by Consultant, of any
such provision, or to any other remedies legally available.
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<PAGE> 9
7.12 Tax Representations Consultant acknowledges that Intron has made
no warranties or other representations to Consultant with respect to the income
tax consequences of the transactions contemplated by this Agreement and
Consultant is in no manner relying on Intron or its representatives for an
account of such tax consequences.
7.13 Further Assurances. The parties agree to execute such further
instruments and to take such further action as may reasonably be necessary to
carry out the intent of this Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered as of the day and year first above written.
INTRON THERAPEUTICS, INC.
By /s/ DAVID G. NANCE
--------------------------------
David G. Nance, President
/s/ JACK A. ROTH
------------------------------------
Jack A. Roth, M.D.
Address:
1515 Holcombe Blvd., Box 109
Houston, TX 77030
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<PAGE> 1
EXHIBIT 10.20
CONSULTING AGREEMENT
This Consulting Agreement (this "Agreement") is entered into by and
between E J Financial Enterprises, Inc., a Delaware corporation ("Consultant")
and Intron Therapeutics, Inc., a Delaware corporation ("Intron").
1. Term of Agreement. This Agreement shall commence on the effective
date hereof (the "Commencement Date"), and continue thereafter until the earlier
of the third anniversary of the Commencement Date or until termination by Intron
upon thirty (30) days written notice. This Agreement shall be automatically
renewed for an additional one year term upon the third anniversary and each
subsequent anniversary hereof, unless either party gives notice of termination
before such anniversary.
2. Duties and Responsibilities. During the term hereof, Consultant will
provide assistance to Intron in licensing, business development, and financial
services. Consultant agrees to make available to Intron the services of its
employee Mahendra Shah to assist with business development, license negotiation,
market analysis, and general corporate development. Consultant agrees to make
Dr. Shah available to serve as vice president of Intron, or in such other
capacity as may be designated by Intron's board of directors. Consultant further
agrees to make its employee Tim Kelly available to provide accounting and
financial services to Intron, and to serve as the Chief Financial officer of
Intron, or in such other capacity as may be designated by Intron's board of
directors. Consultant understands and recognizes that Intron is a newly formed
corporation which could not afford the full time services of professionals such
as Dr. Shah and Mr. Kelly without Consultant's agreement as herein provided.
3. Compensation. Consultant shall receive and Intron shall pay to
Consultant during the term of this Agreement a fee of $150,000 per calendar
year, paid quarterly. Upon mutual agreement between Consultant and Intron, such
compensation may be paid all or in part in Intron stock or stock options, at
such valuation as may be agreed by the parties. Failure of the Intron to pay any
installment when due shall not be deemed a waiver of such amount, which will
accrue and continue as a liability of Intron to Consultant. Consultant agrees
that Dr. Shah and Mr. Kelly will be employees of Consultant and not of Intron,
and Intron will not withhold federal income taxes, federal or state unemployment
taxes, social security taxes, or other amounts from Consultant's fees, and
Consultant shall be solely responsible for Consultant's tax obligations. In the
event this Agreement is terminated on a date other than an anniversary,
compensation shall be pro-rated based upon the time in which it is in effect
during the year.
4. Business Expenses. Consultant shall be reimbursed for reasonable and
necessary business expenses incurred in the performance of services hereunder.
Consultant shall keep accurate records and receipts reflecting, expenses so
incurred and shall furnish Intron with any and all supporting documentation of
such expenses at the request of Intron.
5. Non-Disclosure Agreement. Consultant hereby expressly acknowledges
that pursuant to the relationship established by this Agreement, Consultant may
obtain or be given access to certain information, documents and records of a
confidential or proprietary nature with respect to Intron and/or its business,
prospects, customers, agents, competitors and suppliers. Consultant further
<PAGE> 2
acknowledges that the unauthorized use or disclosure of any such information
both during and after the term of this Agreement could seriously damage and
interfere with Intron's business and business prospects. Accordingly, Consultant
hereby expressly covenants and agrees with Intron that it is in a fiduciary
relationship with Intron, and as such, shall treat all information, records and
confidences, including but not limited to prospect and customer lists, computer
software and programs, patents, patent applications, contracts and all other
written documents pertaining to any business of Intron, and any other agreements
between Intron and its employees, agents or contractors, all support data
related to or used in conjunction with the business of Intron, and any other
information which Intron has provided to or which Consultant may obtain or
generate in fulfilling its services under this Agreement as CONFIDENTIAL AND
PROPRIETARY in nature. Consultant further covenants and agrees not to copy,
reproduce, disclose or distribute any such materials or information at any time
without Intron's prior written consent, which consent may be withdrawn at any
time. Consultant further agrees that upon termination of this Agreement it will
not at any time disclose to any third party any of the information described
above. Consultant agrees that all of the aforementioned information and
materials are the exclusive property of Intron and Consultant agrees not use or
disclose such confidential information at any time either prior to or after
termination of this Agreement except as specifically provided for herein.
Consultant agrees that Intron shall be entitled to an injunction to restrain
Consultant from the commission of any of the acts prohibited by this paragraph;
provided, however, that nothing herein shall be construed as prohibiting Intron
from pursuing any other remedies available to it for breach or any threatened
breach by Consultant of the provisions of this paragraph and the fiduciary
relationship described herein. This covenant shall be effective immediately upon
execution hereof, and shall be applicable to all such documents and information
given or disclosed to Consultant prior to or after the date of execution hereof.
6. Employees Bound. Consultant will cause each of its employees who has
access to confidential information of Intron to execute a written agreement for
the benefit of Intron containing the confidentiality and non-competitive
provisions of Paragraphs 5 and 6 hereof.
7. Conflicts of Interest. Intron recognizes that Consultant is involved
in many for-profit activities and that Dr. Shah and Mr. Kelly have many business
responsibilities other than those undertaken herein. Consultant shall be free to
continue all of such activities, subject to Paragraphs 5 and 6 hereof.
8. Entire Agreement. This Agreement supersedes any and all other
agreements, either oral or written, between the parties hereto with respect to
the subject matter hereof and contains all of the covenants and agreements
between the parties hereto with respect to the subject matter hereof and
contains all of the covenants and agreements between the parties with respect
hereto.
9. Modification. No change or modification of this Agreement shall be
valid or binding upon the parties hereto, nor shall any waiver of any term or
condition in the future be so binding, unless such change or modification or
waiver shall be in writing and signed by the parties hereto.
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10. Governing Law. This Agreement and the rights and obligations of the
parties hereto, shall be governed by and construed in accordance with the laws
of the State of Texas and shall be performable in Travis County, Texas.
11. Counterparts. This Agreement may be executed in counterparts, each
of which shall constitute an original, but all of which shall constitute one and
the same document.
12. Costs. If any action at law or in equity is necessary to enforce or
interpret the terms of this Agreement, the prevailing party shall be entitled to
reasonable attorneys' fees, costs and necessary disbursements in addition to any
other relief to which he or it may be entitled.
13. Estate. If Consultant dies prior to the expiration of the term of
this Agreement, any moneys that may be due him from the Intron under this
Agreement as of the date of his death shall be paid to his estate.
14. Assignment. Intron shall have the right to assign this Agreement to
its successors or assigns, provided that all covenants and agreements contained
herein shall be enforceable against Intron's successors or assigns. The terms
"successors" and "assigns" shall include any person, corporation, partnership or
other entity that buys all or substantially all of Intron's assets or all of its
stock, or with which Intron merges or consolidates. The rights, duties and
benefits to Consultant hereunder are personal to Consultant, and no such right
or benefit may be assigned by Consultant.
15. Binding Effect. This Agreement shall be binding upon the parties
hereto, together with their respective executors, administrators, successors,
personal representatives, heirs and assigns.
16. Waiver of Breach. The waiver by Consultant of a breach of any
provision of this Agreement by Consultant shall not operate or be construed as a
waiver of any subsequent breach by Consultant.
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<PAGE> 4
IN WITNESS WHEREOF, the parties hereto have executed this Agreement to
be effective as of July 1, 1994.
CORPORATION:
INTRON THERAPEUTICS, INC.
/s/ DAVID NANCE
-------------------------------------
David Nance, President
CONSULTANT:
E J FINANCIAL ENTERPRISES
By: /s/ JOHN N. KAPOOR
---------------------------------
Its: President
---------------------------------
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<PAGE> 1
EXHIBIT 10.21
SERVICE AGREEMENT
This Service Agreement ("Agreement") is entered into by and between
Intron Therapeutics, Inc., a Delaware corporation, ("Intron") and Domecq
Technologies, Inc., a Texas corporation ("Domecq").
1. Term of Service. Intron hereby employs Domecq and Domecq hereby
accepts retainer with Intron beginning on July 1, 1994, the ("Commencement
Date") and ending on the earlier of the third anniversary of the Commencement
Date or termination of this agreement as provided in Section 6 hereof. This
Agreement shall be automatically renewed for an additional one year term upon
the third anniversary and each subsequent anniversary hereof, unless either
party gives notice of termination before such anniversary.
2. Duties and Responsibilities. During the term hereof, Domecq shall be
retained to provide services by and for the benefit of Intron. Domecq agrees to
provide the services of David G. Nance ("Nance") to serve Intron as president
and chief executive officer, or in such other capacity as designated by Intron's
board of directors. Nance shall devote such time and attention as Nance
determines may in good faith be required by Intron for the performance of those
duties designated by Intron from time to time, which duties shall initially
include managing and operating the corporation. Intron recognizes that Nance is
engaged in other business activities, including, but not limited to, serving as
managing partner of Texas Biomedical Development Partners, as officer and
director of Technology Capital Corporation, President of Domecq Technologies,
Inc., and as an officer, director, partner or trustee of other entities. Nance
shall be permitted to continue these activities.
3. Compensation. Domecq shall receive and Intron shall pay to Domecq
during the term of this Agreement the amount of $175,000 per calendar year,
payable in semi-monthly installments. Upon mutual agreement by Intron and
Domecq, all or part of said compensation may be paid in Intron's stock or
options for such stock, at such valuation as may be agreed by the parties.
Failure of Intron to pay any amount due hereunder shall not be deemed a waiver
of such payment, which amount shall accrue and continue as a liability of Intron
to Domecq.
4. Business Expenses. Domecq or Nance shall be reimbursed for
reasonable business expenses incurred in the performance of services hereunder
at such times and in such amounts as shall be determined to be reasonable by
Intron. Domecq or Nance shall keep accurate records and receipts reflecting
expenses so incurred and shall furnish Intron with any and all supporting
documentation of such expenses at the request of Intron.
5. Vacations and Sick Leave. During the term of this Agreement, Nance
shall be entitled to reasonable periods of vacation and sick leave with full
payment as determined by Intron from time to time.
<PAGE> 2
6. Termination of Agreement.
a . This Agreement and Domecq's retainer with Intron shall terminate
upon the occurrence of any of the following events:
(i) Termination by Intron for a cause;
(ii) Death of Nance; or
(iii) Permanent Disability (as defined herein) of Nance.
b. For purposes of this Section 6, termination "for cause" shall
include:
(i) Willful misconduct or breach of his fiduciary duties to
Intron established by clear and convincing evidence;
(ii) intentional failure to perform stated duties;
(iii) willful and knowing violation of any law, rule, or
regulation involving moral turpitude; or
(iv) A material and intentional breach of any provision of
this Agreement.
c. For purposes of this Section 6, "Permanent Disability" shall mean
when the Intron in its reasonable discretion shall find, on the basis of clear
and convincing medical evidence, that Nance, because of a mental or physical
condition, is unable to carry out the duties of his employment with Intron and
that such condition will in reasonable medical probability continue during the
remainder of Nance's life.
7. Non-Disclosure Agreement. Domecq and Nance hereby expressly
acknowledge that pursuant to this Service Agreement, Domecq or Nance may obtain
or be given access to certain information, documents and records of a
confidential or proprietary nature with respect to the Intron and its business,
prospects, licensors, customers, agents competitors and suppliers. Domecq and
Nance further acknowledge that the unauthorized use or disclosure of any such
information both during and after the term of this Agreement could seriously
damage and interfere with Intron's business and business prospects. Accordingly,
Domecq and Nance hereby expressly covenant and agree with Intron, that Domecq
and Nance are in a fiduciary relationship with Intron, and as such, shall treat
all information, records and confidences, including but not limited to prospect
and customer lists, computer software and programs, contracts (including this
Agreement) patent applications, patents and all other written documents
pertaining to any business of Intron, and any other agreements between Intron
and its respective employees, agents, or contractors, all support data related
to or used in conjunction with the business of Intron, and any other information
which Intron has provided to or which Domecq or Nance may obtain or generate or
may have already obtained or generated in organizing and starting Intron or in
fulfilling Domecq's services under this
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<PAGE> 3
Agreement as CONFIDENT AND PROPRIETARY in nature. Domecq and Nance further
covenant and agree not to copy, reproduce, disclose or distribute any such
materials or information at any time without Intron's prior written consent,
which consent may be withdrawn at any time. Domecq further agrees that upon
termination of this Agreement Domecq and Nance will not at any time disclose to
any third party any of the information described above. Domecq agrees that all
of the aforementioned information and materials are the exclusive property of
Intron and agrees not to use or disclose such confidential information at any
time either prior to or after the termination of this Agreement except as
specifically provided for herein. Domecq agrees that Intron shall be entitled to
an injunction to restrain Domecq and Nance from the commission of any of the
acts prohibited by this paragraph; provided, however, that nothing herein shall
be construed as prohibiting Intron from pursuing any other remedies available to
it for any breach or any threatened breach by Domecq of the provisions of this
paragraph and the fiduciary relationship described herein. This covenant shall
be effective immediately upon execution hereof, and shall be applicable to all
such documents and information given or disclosed to Domecq prior to or after
the date of execution hereof.
8. Indemnity. Should any claim or cause of action be asserted against
Domecq arising out of or in connection with any act or omission of Domecq or
Nance which occurs during or as a result of performance by Domecq or Nance of
duties and provided that the act or omission occurred or is alleged to have
occurred while Domecq or Nance were acting in good faith within the scope of
service to Intron, and not contrary to any instructions or policy of Intron,
Intron will indemnify and hold harmless Domecq and Nance from all reasonable
costs and expenses incurred in connection with such claim, including, but not
limited to, attorney's fees and costs of court.
9. Entire Agreement. This Agreement supersedes any and all other
agreements, either oral or written, between the parties hereto with respect to
the subject matter hereof and contains all of the covenants and agreements
between the parties with respect hereto.
10. Modification. No change or modification of this Agreement shall be
valid or binding upon the parties hereto, nor shall any waiver of any term or
condition in the future be so binding, unless such change or modification or
waiver shall be in writing and signed by the parties hereto.
11. Governing Law. This Agreement and the rights and obligations of the
parties hereto, shall be governed by and construed in accordance with the laws
of the State of Texas shall be performable in Travis County, Texas.
12. Counterparts. This Agreement may be executed in counterparts, each
of which shall constitute an original, but all of which shall constitute one in
the same document.
13. Costs. If any action at law or in equity is necessary to enforce or
interpret the terms of this Agreement, the prevailing party shall be entitled to
reasonable attorney's fees, costs and necessary disbursements in addition to any
other relief to which he or it may be entitled.
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<PAGE> 4
14. Estate. If Nance dies prior to the expiration of the term of
employment, any moneys or corporate shares that may be due him from the Intron
under this Agreement as of the date of his death shall be paid to Domecq.
15. Assignment. Intron shall have the right to assign this Agreement to
its successors or assigns, provided that all covenants and agreements contained
herein shall be enforceable against Intron's successors or assigns. The terms
"successors" and "assigns" shall include any person, corporation, partnership or
other entity that buys all or substantially all of Intron's assets or all of its
stock, or with which Intron merges or consolidates. The rights, duties and
benefits to Domecq hereunder are personal to Domecq, and no such right or
benefit may be assigned by Domecq.
16. Binding Effect. This Agreement shall be binding upon the parties
hereto, together with their respective executors, administrators, successors,
personal representatives, heirs and assigns.
17. Waiver of Breach. The waiver by a party of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
subsequent breach.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement to
be effective July 1, 1994, (the "Commencement Date").
INTRON THERAPEUTICS, INC.
By: /s/ JOHN N. KAPOOR
-----------------------------------
John N. Kapoor, Director
DOMECQ TECHNOLOGIES, INC.
By: /s/ DAVID G. NANCE
-----------------------------------
David G. Nance, President
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EXHIBIT 10.22
================================================================================
COLLABORATION AGREEMENT
(p53 PRODUCTS)
BY AND BETWEEN
RHONE-POULENC RORER PHARMACEUTICALS, INC.
AND
INTROGEN THERAPEUTICS, INC.
OCTOBER 7, 1994
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
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<S> <C> <C>
1. DEFINITIONS..................................................................................................1
2. NORTH AMERICAN DEVELOPMENT...................................................................................5
2.1 Early Stage Development Program...................................................................5
2.2 Collaboration Products............................................................................5
2.3 Development Activities............................................................................5
2.4 Reports and Records...............................................................................6
2.5 Review of Publication.............................................................................7
3. DEVELOPMENT COMMITTEE........................................................................................8
3.1 Development Committee.............................................................................8
3.2 Membership........................................................................................8
3.3 Development Committee Meetings....................................................................8
3.4 North American Plans and Budgets..................................................................8
3.5 Plans for Later Stage Development.................................................................9
3.6 Decision Making...................................................................................9
4. EARLY STAGE DEVELOPMENT PROGRAM FUNDING......................................................................9
4.1 Funding of Early Stage Development Program........................................................9
4.2 Term of Early Stage Development Program..........................................................10
4.3 Excess Early Stage Development Program Costs.....................................................10
4.4 Capital Equipment................................................................................10
4.5 Payments.........................................................................................10
5. COLLABORATION PRODUCT DEVELOPMENT OUTSIDE THE EARLY STAGE
DEVELOPMENT PROGRAM.........................................................................................11
5.1 RPRP Territory...................................................................................11
5.2 Co-Exclusive Territory...........................................................................11
5.3 Other Territory..................................................................................11
5.4 Use of Clinical Data.............................................................................11
5.5 Development Committee Review.....................................................................12
5.6 Further Studies..................................................................................12
6. EXCLUSIVITY.................................................................................................12
6.1 Option to Commercialize..........................................................................12
6.2 Exclusivity......................................................................................13
</TABLE>
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TABLE OF CONTENTS
(CONTINUED)
<TABLE>
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7. MARKETING RIGHTS............................................................................................13
7.1 RPRP Territory...................................................................................13
7.2 Co-Exclusive Territory...........................................................................13
7.3 North America....................................................................................13
7.4 Other Territory..................................................................................14
7.5 Sublicensees.....................................................................................14
7.6 Covenants........................................................................................14
8. ROYALTIES...................................................................................................14
8.1 Running Royalties................................................................................14
8.2 Royalty Offset...................................................................................15
9. THIRD PARTY ROYALTIES.......................................................................................17
9.1 RPRP Obligations.................................................................................17
9.2 Introgen Obligations.............................................................................17
9.3 North America....................................................................................17
9.4 Efforts to Obtain Sublicense Rights..............................................................18
10. PAYMENTS; BOOKS AND RECORDS.................................................................................18
10.1 Royalty Reports and Payments.....................................................................18
10.2 Payment Method...................................................................................18
10.3 Late Payment.....................................................................................18
10.4 Currency Conversion..............................................................................18
10.5 No Withholding Taxes.............................................................................19
10.6 Records; Inspection..............................................................................19
11. DUE DILIGENCE...............................................................................................19
11.1 Due Diligence....................................................................................19
12. MANUFACTURING RIGHTS........................................................................................19
12.1 RPRP Territory...................................................................................19
12.2 Co-Exclusive Territory...........................................................................19
12.3 North America....................................................................................2-
12.4 Other Territory..................................................................................2-
12.5 Supply Agreements................................................................................2-
13. LICENSE GRANTS..............................................................................................2-
13.1 Grant to RPRP....................................................................................2-
13.2 Grant to Introgen................................................................................21
13.3 Grant to Joint Venture...........................................................................21
</TABLE>
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TABLE OF CONTENTS
(CONTINUED)
<TABLE>
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13.4 Sublicenses......................................................................................21
13.5 Improvements by Introgen.........................................................................21
13.6 No Rights Beyond Collaboration Products..........................................................21
14. INTELLECTUAL PROPERTY.......................................................................................22
14.1 Ownership of Inventions..........................................................................22
14.2 Patent Prosecution...............................................................................22
14.3 Defense of Third Party Infringement Claims.......................................................23
14.4 Enforcement......................................................................................24
15. REPRESENTATIONS AND WARRANTIES..............................................................................24
15.1 Warranties.......................................................................................24
15.2 Disclaimer of Warranties.........................................................................25
15.3 Effect of Representations and Warranties.........................................................25
16. CONFIDENTIALITY.............................................................................................25
16.1 Confidential Information.........................................................................25
16.2 Permitted Disclosures............................................................................26
17. INDEMNIFICATION.............................................................................................26
17.1 Indemnification of Introgen......................................................................26
17.2 Indemnification of RPRP..........................................................................26
17.3 Procedure........................................................................................27
18. TERM AND TERMINATION........................................................................................27
18.1 Term.............................................................................................27
18.2 Termination for Cause............................................................................28
18.3 Termination for Convenience by RPRP..............................................................28
18.4 Effect of Breach or Termination..................................................................28
18.5 Survival.........................................................................................29
19. MISCELLANEOUS...............................................................................................30
19.1 Governing Law....................................................................................30
19.2 Force Majeure....................................................................................30
19.3 No Implied Waivers; Rights Cumulative............................................................30
19.4 Independent Research.............................................................................30
19.5 Independent Contractors..........................................................................30
19.6 Notices..........................................................................................30
19.7 Assignment.......................................................................................31
19.8 Modification.....................................................................................31
</TABLE>
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TABLE OF CONTENTS
(CONTINUED)
<TABLE>
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19.9 Severability.....................................................................................31
19.10 Non-Disclosure...................................................................................31
19.11 Entire Agreement.................................................................................32
19.12 Counterparts.....................................................................................32
19.13 Headings.........................................................................................32
19.14 Patent Marking...................................................................................32
19.15 Export Laws......................................................................................32
EXHIBITS
A - Existing Introgen Licensed Patents
B - European Countries
C - Initial Program Plan and Budget
</TABLE>
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<PAGE> 6
COLLABORATION AGREEMENT
(P53 PRODUCTS)
This AGREEMENT (the "Agreement"), effective as of October 7, 1994 (the
"Effective Date"), is made by and between Rhone-Poulenc Rorer Pharmaceuticals
Inc., a Pennsylvania corporation having offices at 500 Arcola Road, P.O. Box
1200, Collegeville, Pennsylvania 19426-0107 ("RPRP"), and Introgen Therapeutics,
Inc., a Delaware corporation having offices at 301 Congress Avenue, Suite 2025,
Austin, Texas 78701 ("Introgen").
RECITALS
A. Introgen has established expertise related to gene therapy and RPRP
has established a major research program in the field of gene therapy for the
treatment of human cancer.
B. The parties desire to establish a collaborative relationship to
develop and commercialize novel gene therapy products as set forth below.
C. Introgen and RPRP's parent, Rhone-Poulenc Rorer Inc., have also
entered into a Stock Purchase Agreement of even date herewith, pursuant to which
RPRP is acquiring Introgen Preferred Stock.
NOW THEREFORE, for and in consideration of the covenants, conditions,
and undertakings hereinafter set forth, it is agreed by and between the parties
as follows:
1. DEFINITIONS
1.1 "Affiliate" shall mean any entity which controls, is controlled or
is under common control with RPRP or Introgen. An entity shall be regarded as in
control of another entity if it owns or controls at least thirty-five percent
(35%) of the shares of the subject entity entitled to vote in the election of
directors (or, in the case of an entity that is not a corporation, for the
election of the corresponding managing authority). A "Controlled Affiliate"
shall mean an entity that is controlled by a party wherein such percentage is at
least fifty percent (50%).
1.2 "Co-Exclusive Territory" shall mean Japan, North and South Korea,
Taiwan, the People's Republic of China and India.
1.3 "Collaboration Products" shall mean the gene therapy products
within the Field which are being developed by Introgen and RPRP from time to
time pursuant to the Early Stage Development Program, as specified in the
Program Plan and Budget in effect at the time, and as further defined in
Section 6.1 below.
<PAGE> 7
1.4 "Development Committee" shall have the meaning set forth in Article
3 herein.
1.5 "Early Stage Development" shall mean that part of the Early Stage
Development Program comprising the research, preclinical and clinical activities
with respect to approved Collaboration Products in North America through the
completion of Phase I clinical trials.
1.6 "Early Stage Development Program" shall have the meaning set forth
in Section 2.1 herein.
1.7 "Early Stage Development Program Costs" shall mean all direct and
indirect costs incurred by Introgen in conducting the Early Stage Development
Program in accordance with the applicable approved Program Plan and Budget.
1.8 "Field" shall mean gene therapy products for the treatment or
prevention of disease through the delivery to patient's cells of a gene or
portion thereof, including without limitation, transcriptional or translational
control sequences, via in vivo viral vectors and/or non-viral delivery systems,
which result in [*]
1.9 "FDA" means the U.S. Food and Drug Administration.
1.10 "IND" shall mean an investigational New Exemption for a
Collaboration Product, as defined in the U.S. Food, Drug and Cosmetic Act and
the regulations promulgated thereunder.
1.11 "Introgen Technology" shall mean Introgen Patents, Introgen
Licensed Patents and Introgen Know-how.
1.11.1 "Introgen Patents" shall mean all patents and
reissues, renewals and extensions thereof, and patent applications therefor, and
any divisions, continuations, in whole or in part, thereof, which claim a
process, composition of matter, or method of treatment used in the manufacture,
sale or use of a Collaboration Product and that are owned by Introgen or its
Controlled Affiliates during the term of this Agreement.
1.11.2 "Introgen Know-How" shall mean confidential
information and materials, including, but not limited to, pharmaceutical,
chemical, biological and biochemical products, technical and non-technical data,
and information relating to the results of tests, assays, methods and processes,
and drawings, plans, diagrams, specifications and/or other documents containing
said information and data, discovered, developed or acquired by Introgen or its
Controlled Affiliates during the term of this Agreement to the extent such
relates to the manufacture, sale or use of a Collaboration Product and to the
extent that Introgen or its Controlled Affiliates have the right to license or
sublicense the same.
1.11.3 "Introgen Licensed Patents" shall mean all patents
and reissues, renewals and extensions thereof, and patent applications therefor,
and any divisions, continuations, in whole or in part, thereof, which claim a
process, composition of matter, or method of treatment used in the manufacture,
sale or use of a Collaboration Product, that are the subject of a license or
license option
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<PAGE> 8
to Introgen or its Controlled Affiliates, in each case to the extent that
Introgen or its Controlled Affiliate has the right to license or sublicense the
same during the term of this Agreement. Introgen Licensed Patents as of the
Effective Date are listed on attached Exhibit A.
1.12 "Joint Venture" shall have the meaning set forth in Section 7.3.1
of this Agreement.
1.13 "Later Stage Clinical Development" shall mean all clinical
research and regulatory affairs necessary to obtain all governmental approvals
required to market each Collaboration Product for a particular indication in
North America following the Early Stage Development for such Collaboration
Product for such indication.
1.14 "Manufacturing Costs" with respect to units of a Collaboration
Product means (i) those costs associated with manufacture of such units which
would be viewed by the manufacturing party's independent auditor as costs that
could be capitalized on the balance sheet as inventory and would include all raw
material (including normal scrap) and actual direct labor costs and a proper
accounting of actual manufacturing overhead allocated to such units. It would
exclude any excess capacity, excess direct labor inefficiencies, unusable
material, or any other costs related to such units not deemed to add value or
not deemed to be ongoing in the production process for such product; and (ii)
with respect to portions acquired from a non-Affiliate vendor, the amounts paid
to the vendor.
1.15 "Net Sales" shall mean the total amount invoiced to third parties
in connection with sales or use of Collaboration Products by RPRP, its
Affiliates or its permitted Sublicensees, less the following reasonable and
customary accrual-basis deductions to the extent applicable to such invoiced
amounts in accordance with U.S. generally accepted accounting practices, as
consistently applied by both RPRP and RPR Inc. for financial reporting purposes:
(i) all trade, cash and quantity credits, discounts, refunds or rebates
(including without limitation Medicaid rebates); (ii) amounts for claims,
allowances or credits for returns; retroactive price reductions; chargebacks;
and (iii) packaging, handling fees and prepaid freight, sales taxes, duties and
other governmental charges (including value added tax), but excluding what is
commonly known as income taxes), in each case if charged separately on the
invoice and paid by the customer. For the removal of doubt, Net Sales shall not
include sales by RPRP to its Affiliate or its permitted Sublicensees for resale.
A "sale" shall also include a transfer or other disposition for consideration
other than cash, in which case such consideration shall be valued at the fair
market value thereof. Transfers or dispositions for charitable or promotional
purposes or for pre-clinical, clinical, regulatory or governmental purposes
prior to receiving marketing approval are not considered a "sale;" provided that
such transfers or dispositions are at a price less than [*] over RPRP's
Manufacturing Cost for the units so transferred or disposed.
1.16 "North America" shall mean Canada, the United States (and its
territories and possessions including the commonwealth of Puerto Rico) and
Mexico.
1.17 "PLA" and "ELA" means a Product License Application and an
Establishment License Application, respectively, as defined in the Public Health
Service Act, Biological Products and the regulations promulgated thereunder,
viz. 21 CFR Part 600, or its foreign equivalents.
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1.18 "Phase I" means Phase I clinical trials as prescribed by
applicable FDA Regulations.
1.19 "Product Plan and Budget" shall have the meaning set forth in
Section 3.4.2 below.
1.20 "Program Plan and Budget" shall have the meaning set forth in
Section 3.4.1 hereof.
1.21 "RPR Inc." shall mean Rhone-Poulenc Rorer, Inc., a Pennsylvania
Corporation.
1.22 "RPRP Development Costs" shall have the meaning set forth in
Section 7.3.3 below.
1.23 "RPRP Technology" shall mean RPRP Patents, RPRP Licensed Patents
and RPRP know-how.
1.23.1 "RPRP Patents" shall mean all patents and reissues,
renewals and extensions thereof, and patent applications therefor, and any
divisions, continuations, in whole or in part, thereof, which claim a process,
composition of matter, or method of treatment used in the manufacture, sale or
use of a Collaboration Product and that are owned by RPRP, RPR Inc. or their
Controlled Affiliates during the term of this Agreement.
1.23.2 "RPRP Know-How" shall mean confidential information
and materials, including, but not limited to, pharmaceutical, chemical,
biological and biochemical products, technical and non-technical data, and
information relating to the results of tests, assays, methods and processes, and
drawings, plans, diagrams, specifications and/or other documents containing said
information and data, discovered, developed or acquired by RPRP or its
Controlled Affiliates during the term of this Agreement to the extent such
relates to the manufacture, sale or use of a Collaboration Product and to the
extent that RPRP, RPR Inc. or their Controlled Affiliates have the right to
license or sublicense the same.
1.23.3 "RPRP Licensed Patents" shall mean all patents and
reissues, renewals and extensions thereof, and patent applications therefor, and
any divisions, continuations, in whole or in part, thereof, which claim a
process, a composition of matter, or method of treatment used in the
manufacture, sale or use of a Collaboration Product, that are the subject of a
license or license option to RPRP, RPR Inc. or their Controlled Affiliates and
to the extent that RPRP, RPR Inc. or their Controlled Affiliates have the right
to license or sublicense the same during the term of this Agreement.
1.24 "RPRP Territory" means those Eastern and Western European
countries set forth on Exhibit B hereto.
1.25 "Other Territory" shall mean [*]
1.26 "Sublicensee" shall mean, with respect to a particular
Collaboration Product, a third party to whom Introgen or RPRP has granted a
license or sublicense under the RPRP Technology and/or Introgen Technology to
make, use and sell such Collaboration Product. As used in this
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Agreement, "Sublicensee" shall also include a third party to whom Introgen or
RPRP has granted the right to distribute such Collaboration Product, provided
that such third party is responsible for the marketing and promotion of such
products within the applicable territory.
1.27 "Term of the Early Stage Development Program" shall be that period
of time described in Section 4.2 below.
2. NORTH AMERICAN DEVELOPMENT
2.1 Early Stage Development Program. Subject to the terms and
conditions set forth herein, RPRP and Introgen shall cooperate with respect to
the Early Stage Development of Collaboration Products in accordance with an
"Early Stage Development Program" for North America which shall be carried out
in accordance with a Program Plan and Budget prepared and approved on an annual
basis in accordance with Article 3.4 hereof. The Early Stage Development Program
shall include all of the approved Program Plans and Budgets in effect from time
to time. The activities conducted in connection with the Early Stage Development
Program will be overseen and administered by the Development Committee, pursuant
to Article 3 below. Introgen shall use its best efforts to conduct the Early
Stage Development in accordance with such Program Plan and Budget and within the
time schedules contemplated therein.
2.2 Collaboration Products. The Initial Collaboration Products to be
developed hereunder will contain or employ Introgen's Retroviral p53
Transduction Vector and/or its Adenoviral p53 Transduction Vector. From time to
time, upon agreement of RPRP and Introgen, new projects may be added to the
Early Stage Development Program to be developed as Collaboration Products. Such
projects may include RPRP or Introgen products. It is understood that RPRP may
terminate its support for the development for any Collaboration Product as
provided in Section 18.3.2 below or as otherwise agreed by the parties.
2.3 Development Activities.
2.3.1 Early Stage Development Program. Introgen will be
responsible for conducting, directly or through third parties, all development
of each new project and each Collaboration Product in North America through the
completion of Early Stage Development in accordance with the Program Plan and
Budget in effect from time to time. As soon as possible after completion of the
necessary preclinical studies required by the applicable Product Plan and Budget
for a Collaboration Product, Introgen shall be responsible for preparing, with
the cooperation of RPRP, a data package for each Collaboration Product
sufficient to meet IND requirements of the FDA.
2.3.2 Later Stage Clinical Development.
(a) In addition to the Early Stage Development
Program, RPRP and Introgen will cooperate in the Later Stage Clinical
Development of each Collaboration Product; provided, RPRP will be primarily
responsible for conducting all such Later Stage Clinical Development, at RPRP's
expense. Introgen shall be consulted and fully informed with respect to such
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<PAGE> 11
Later Stage Clinical Development at all times through its representatives on the
Development Committee. All Later Stage Clinical Development shall be monitored
and managed by the Development Committee; [*].
(b) It is anticipated that RPRP will establish a
committee of independent experts (the "External Review Committee") to provide
advice with respect to Later Stage Clinical Development. The Chief Scientific
Officer of Introgen, or other designee of Introgen, if a clinician of recognized
stature, shall serve on and chair the External Review Committee; otherwise, RPRP
and Introgen shall agree on the chair of such External Review Committee. In any
event, Introgen shall have a representative on such External Review Committee.
(c) It is understood that additional preclinical
studies may be required following the completion of Early Stage Development with
respect to a Collaboration Product. The parties anticipate that, where
appropriate, such work will be performed by Introgen and reimbursed by RPRP, as
agreed from time to time by the Development Committee.
2.3.3 FDA Filings. Introgen shall be responsible for the
preparation and filing of all IND's in North America with respect to the
Collaboration Products, which shall be filed in Introgen's name; provided RPRP
shall have a reasonable opportunity to review and comment upon such filings in
advance of their filing. RPRP shall be responsible for all further submissions
to existing INDs once Later Stage Clinical Development has begun, provided that
Introgen is given a reasonable opportunity to review and comment upon such
submissions prior to the filing of such submissions. Introgen shall cooperate in
transferring to RPRP authority for such correspondence. RPRP, at its expense,
shall prepare all PLAs and ELA's for filing in North America with respect to
each Collaboration Product. All such PLA's and ELA's shall be filed in the names
of RPRP and Introgen, to the extent permitted by applicable FDA regulations
(taking into account the supply arrangements under Section 12.3. below), or in
such other manner as the Development Committee approves. In addition, RPRP shall
in all events have the right to file separately a PLA/ELA in its own name to
qualify, as a permitted supply source for the United States, its manufacturing
facility for the RPRP Territory (consistent with Section 12.3. below).
2.4 Reports and Records.
2.4.1 Records. Introgen and RPRP shall maintain records of
the Early Stage Development Program (or cause such records to be maintained) in
sufficient detail and in good scientific manner as will properly reflect all
work done and results achieved in the performance of the Early Stage Development
Program (including all data in the form required under any applicable
governmental regulations). Each party shall allow the other to have prompt
access to all materials and data generated on behalf of such party with respect
to each Collaboration Product at reasonable times and in a reasonable manner.
2.4.2 Introgen Reports. Introgen shall periodically, and not
less often than semi-annually during the term of this Agreement, provide the
Development Committee with a written report summarizing the progress of the
Early Stage Development performed by Introgen with respect
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to each Collaboration Product during the preceding calendar half-year. Unless
otherwise agreed, such reports shall be due on 28 February and 30 August of each
calendar year during the Early Stage Development Program.
2.4.3 RPRP Reports. RPRP shall periodically, and not less
often than semi-annually during the term of this Agreement, provide the
Development Committee with a written report summarizing the progress of the
Later Stage Clinical Development performed by RPRP with respect to each
Collaboration Product during the preceding calendar half-year. Unless otherwise
agreed, such reports shall be due on 28 February and 30 August of each calendar
year during the term of this Agreement.
2.5 Review of Publication. As soon as is practicable prior to the oral
public disclosure, and prior to the submission to any outside person for
publication of a manuscript describing the scientific data resulting from any
stage of the Early Stage Development Program or Later Stage Clinical
Development, Introgen or RPRP, as the case may be, shall disclose to the
Development Committee the disclosure or manuscript to be made or submitted, and
shall allow the Development Committee at least thirty (30) days to determine
whether such disclosure or manuscript contains subject matter for which patent
protection should be sought prior to publication or which the other believes
should be modified to avoid necessary regulatory or commercial difficulties.
With respect to publications by investigators or other third parties, such
publications shall be subject to review by the Development Committee under this
Section 2.5 to the extent that Introgen or RPRP (as the case may be) has the
right to do so.
2.5.1 Publication Rights. After the expiration of thirty
(30) days from the date of mailing such disclosure or manuscript, unless
Introgen or RPRP has received from the other the written notice specified below,
the authoring party shall be free to submit such manuscript for publication or
to publish the disclosed research results in any manner consistent with academic
standards.
2.5.2 Delay of Publication. Prior to the expiration of the
thirty (30) day period specified in this Section 2.5, the Development Committee
may notify the submitting party of its determination that such oral presentation
or manuscript contains objectionable material or material that consists of
patentable subject matter for which patent protection should be sought. The
notified party shall withhold its proposed public disclosure and confer with the
Development Committee to determine the best course of action to take in order to
modify the disclosure or to obtain patent protection. After resolution of the
regulatory or commercial issues, or the filing of a patent application or due
consideration as to whether a patent application can reasonably be filed, the
submitting party shall be free to submit the manuscript and/or make its public
oral disclosure. If the submitting party declines to file an appropriate patent
application pursuant to the request of the Development Committee, then either
Introgen or RPRP may undertake to file such application in accordance with
Article 14 below.
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3. DEVELOPMENT COMMITTEE
3.1 Development Committee. RPRP and Introgen will establish a
Development Committee to oversee, review and coordinate the development of
Collaboration Products worldwide, including the conduct of the Early Stage
Development Program and Later Stage Clinical Development in North America.
3.2 Membership. The Development Committee shall be comprised of an
equal number of representatives from each of RPRP and Introgen, selected by such
parties. The exact number of such representatives shall be three (3) for each of
RPRP and Introgen, or such greater number as the parties may agree. Introgen and
RPRP may replace its Development Committee representatives at any time, with
written notice to the other party. From time to time, the Development Committee
may establish subcommittees to oversee particular projects or activities, and
such subcommittees will be constituted as the Development Committee agrees.
3.3 Development Committee Meetings. During the term of this Agreement,
the Development Committee shall meet every two months, or more often as agreed
by the parties, in Houston, Texas, or such other location as the parties agree.
The parties agree that at least two (2) meetings of the Development Committee
per full calendar year will be held at RPRP's facilities. At its meetings, the
Development Committee will (i) formulate and review the Early Stage Development
Program objectives, (ii) monitor the progress of the Early Stage Development
Program toward those objectives, (iii) review and approve the Program Plan and
Budget, and Product Plans and Budgets, pursuant to Section 3.4 of this
Agreement, and (iv) monitor the progress of both Early Stage Development and
Later Stage Clinical Development. With the consent of the parties, other
representatives of Introgen or RPRP or their Affiliates or Sublicensees, may
attend Development Committee meetings as non-voting observers. With respect to
matters relating to Early Stage Development, Introgen's lead representative
shall chair meetings of the Development Committee, and with respect to matters
relating to Later Stage Clinical Development, RPRP's lead representative shall
chair such meetings. The party whose representatives chair a meeting with
respect to particular matters shall be responsible for preparing the agenda and
minutes for such meetings.
3.4 North American Plans and Budgets.
3.4.1 Program Plan and Budget. Introgen shall be responsible
for preparing reasonably detailed plans and budgets on an annual basis for the
"Program Plan and Budget" through which the Early Stage Development Program will
be carried out. The Program Plan and Budget shall specify the research
objectives and work plan activities of the Early Stage Development Program
research of both parties, and the headcounts and other costs and expenses of
Introgen, including consultants and third party contractors, in connection with
the Early Stage Development Program.
3.4.2 Product Plans and Budgets. In connection with the
Program Plan and Budget, Introgen shall be responsible for developing individual
Product Plans and Budgets with respect to Early Stage Development for each
particular Collaboration Product, which shall contain the research objectives
and work plan activities, headcounts and other costs and expenses with
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<PAGE> 14
respect to each such Collaboration Product (each a "Product Plan and Budget").
Such individual Product Plans and Budgets shall be incorporated into and be a
part of the annual Program Plan and Budget. Following Early Stage Development
with respect to a Collaboration Product, RPRP will be responsible for developing
individual Product Plans and Budgets for Later Stage Clinical Development
pursuant to Section 2.3.2 and 3.5 below.
3.4.3 Annual Review. Attached hereto as Exhibit C is the
initial Program Plan and Budget, which shall be fixed for the period from the
Effective Date through 30 December 1995, unless otherwise agreed. Beginning in
1995, by August 1 of each year during the Early Stage Development Program,
Introgen shall submit to the Development Committee a proposed Program Plan and
Budget for the Early Stage Development Program for the following calendar year.
The Development Committee shall review such proposal as soon as possible and
shall establish and approve no later than October 31 of such year the final
Program Plan and Budget for the next succeeding year.
3.4.4 Periodic Reviews. The Development Committee shall
review the Program Plan and Budget on an ongoing basis and may make changes to
the Program Plan and Budget then in effect; provided, however, the Program Plan
and Budget in effect for a year shall not be modified except as approved by the
Development Committee.
3.5 Plans for Later Stage Development. Concurrently with the submission
and establishment of Product Plans and Budgets for the Early Stage Development
to be conducted under the Early Stage Development Program in accordance with
Section 3.4 above, RPRP shall submit to the Development Committee an outline of
the Product Plan and Budget for Later Stage Clinical Development for each
Collaboration Product in North America. Following RPRP's election to proceed
with Later Stage Clinical Development of a Collaboration Product under Section
6.1 below, RPRP shall submit a reasonably detailed Product Plan and Budget for
such Later Stage Development, and shall keep the Development Committee
reasonably informed as to any material changes to such Product Plan and Budget.
The Development Committee shall review and discuss such Product Plans and
Budgets; [*].
3.6 Decision Making. Except as set forth in Section 2.3.2(a) and 3.5
above, decisions of the Development Committee shall be made by majority
approval. In the event that a deadlock arises within the Development Committee,
the dispute will be referred to Introgen's president and RPRP's Biotech Division
President, who shall meet to resolve the dispute. If such dispute remains
deadlocked, the parties may submit such dispute to arbitration, on mutually
agreed terms.
4. EARLY STAGE DEVELOPMENT PROGRAM FUNDING
4.1 Funding of Early Stage Development Program. During the Term of the
Early Stage Development Program, subject to Sections 4.3 and 4.5 below, RPRP
shall pay to Introgen the budgeted Early Stage Development Program Costs set
forth in the applicable Program Plan and Budget. RPRP may elect to pay for Early
Stage Development Program Costs paid or accrued by Introgen in connection with
the Early Stage Development Program in excess of that provided for in
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the Program Plan and Budget, as approved by the Development Committee. Introgen
shall apply all such funds paid by RPRP toward the Early Stage Development
Program in accordance with the Program Plan and Budget.
4.2 Term of Early Stage Development Program. Subject to Section 18.3
below, the Term of the Early Stage Development Program shall continue from the
Effective Date until October 1, 1997 or such later date as the parties may
agree.
4.3 Excess Early Stage Development Program Costs. Unless otherwise
agreed by the parties, Introgen shall not be obligated to incur nor shall RPRP
be obligated to pay Early Stage Development Program Costs in connection with the
Early Stage Development Program beyond amounts provided for in the approved
Program Plan and Budget.
4.4 Capital Equipment. The Program Plan and Budget may include
reasonable depreciation charges or lease expenses for certain capital equipment
to be purchased or leased by Introgen for use in connection with the Early Stage
Development Program. It is understood that Introgen will be the owner of all
capital equipment purchased by Introgen in connection with the Early Stage
Development Program, whether or not separately identified in the Program Plan
and Budget.
4.5 Payments. Promptly following the Effective Date, and prior to the
beginning of each calendar quarter during the Term of the Early Stage
Development Program, the Development Committee shall approve a spending forecast
for the next quarter, consistent with the Program Plan and Budget then in
effect. On or before October 15, 1994, and the first day of each subsequent
calendar quarter during the Term of the Early Stage Development Program, RPRP
shall pay to Introgen the amount of the approved forecasted amount; provided
that if for any reason the Development Committee does not approve a forecasted
amount prior to the due date, RPRP shall pay to Introgen the amount budgeted for
the quarter in the Program Plan and Budget them in effect. Within thirty (30)
days following the end of each quarter during the Term of the Early Stage
Development Program, Introgen shall provide to RPRP a summary of the Early Stage
Development Program Costs actually incurred by Introgen during such quarter. If
the actual development expenses incurred by Introgen in such quarter are less
than the amounts advanced by RPRP, then the difference will be carried forward
and credited to the next quarterly payment to be advanced. If such Early Stage
Development Program Costs were greater than the amount advanced by RPRP, then
RPRP agrees to pay the difference within thirty (30) days of receiving
Introgen's invoice, provided that in no event shall RPRP be obligated to
reimburse aggregate Program Development Costs in any calendar year in excess of
the aggregate Program Development Costs reflected in the Program Plan and Budget
for such year then in effect.
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5. COLLABORATION PRODUCT DEVELOPMENT OUTSIDE THE EARLY STAGE
DEVELOPMENT PROGRAM
5.1 RPRP Territory. RPRP shall be responsible for, and shall have the
exclusive right to conduct, all clinical development of Collaboration Products
within the Field in the RPRP Territory, at RPRP's own expense.
5.2 Co-Exclusive Territory. RPRP and Introgen shall each have the right
to develop the Collaboration Products within the Field in the Co-Exclusive
Territory, at their own expense, including the right to authorize Sublicensees
permitted under Section 7.5 and 13.4 below to conduct such development.
5.3 Other Territory. [*]
5.4 Use of Clinical Data.
5.4.1 Exchange. RPRP and Introgen shall each have access to
and the right to use for any purpose, including incorporation in any regulatory
filing, any preclinical and/or clinical data with respect to the Collaboration
Product developed by Introgen or RPRP in the course of the Early Stage
Development Program or otherwise (including in the Co-Exclusive Territory or the
RPRP Territory). Introgen and RPRP will provide to the other access to all
regulatory fillings made for clinical trial and marketing approval by Introgen
or RPRP or on their behalf in any country with respect to each Collaboration
Product, together with the underlying pre-clinical and clinical data, at
reasonable times and on reasonable notice, to the extent each has the right to
do so.
5.4.2 Sublicensees. Either Party may provide the IND package
prepared pursuant to Section 2.3.1, or any other clinical or preclinical data
provided under Section 5.4.1, to Sublicensees permitted under Section 7.5 and
13.4 below, except as set forth in this Section 5.4.2 and 5.4.3 below. Introgen
and RPRP shall each use commercially reasonable efforts to obtain from its
permitted Sublicensees reasonable, prompt access to all regulatory filings and
underlying data prepared by or for such Sublicensee with respect to a
Collaboration Product at reasonable times and in a reasonable manner, with the
right to provide such filings and/or access to the other of Introgen and RPRP
and their respective Sublicensees. However, if a prospective licensee is
unwilling to provide such access, the party hereto proposing to enter into the
sublicense (the "Sublicensing Party") may grant the sublicense, but the
Sublicensee shall not have access to clinical data or regulatory filings
provided by the other of Introgen or RPRP (or such other party's Sublicensees).
If the Sublicensee does not allow the Sublicensing Party to provide to the other
of Introgen or RPRP (and their Sublicensees) all clinical data and regulatory
filings made by or on behalf of the Sublicensee with respect to the sublicensed
Collaboration Product, the Sublicensing Party shall not provide to the
Sublicensee access to any such clinical data or regulatory filings of the other
of Introgen or RPRP (or its respective Sublicensees).
5.4.3 Japanese Data. [*].
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5.4.4 Regulatory Requirements. In all agreements with third parties or
Affiliates involving the development of clinical data for a Collaboration
Product, RPRP and Introgen shall require that such third parties and Affiliates
provide RPRP or Introgen (respectively) access to all such data, to the extent
that such data is required to be obtained from such third parties by the FDA
and/or the Commission of Proprietary Medicines of the European Community or the
European Medicines Evaluation Agency.
5.5 Development Committee Review. Notwithstanding Section 5.1 or 5.2,
all protocols for clinical trials to be conducted for Collaboration Products in
any territory shall be submitted for review by the Development Committee prior
to the initiation of such trials and filing such protocols with any health
regulatory agency; and RPRP and Introgen will be bound by the recommendations of
the Development Committee with respect to such protocols. In addition, Introgen
and RPRP shall submit their product registration plans to the Development
Committee for review and comment, and the recommendations of the Development
Committee with respect to such plans shall be binding on Introgen and RPRP. It
is understood, however, that this Section 5.5 only requires that each party
abide by such recommendations as are agreed by the Development Committee, and
does not require that the Development Committee approve protocols or
registration plans.
5.6 Further Studies. In the event that RPRP and Introgen agree that
there are preclinical and/or clinical studies that may be mutually beneficial
with respect to obtaining approval for any Collaboration Products outside North
America. Introgen and RPRP may agree to conduct such studies jointly, on
mutually agreed terms.
6. EXCLUSIVITY
6.1 Option to Commercialize. Following completion of Phase I clinical
trials for a Collaboration Product during the Term of the Early Stage
Development Program, Introgen shall provide to RPRP a report summarizing the
results of such Phase I trials. Within one hundred eighty (180) days following
its receipt of such report, RPRP shall notify Introgen whether RPRP wishes to
proceed with the Later Stage Clinical Development and commercialization of such
Collaboration Product as provided in this Agreement, taking into consideration
the recommendation of the Development Committee. In the event that RPRP does not
so notify Introgen within the one hundred eighty (180) day period, such product
shall cease to be a "Collaboration Product" for all purposes of this Agreement
(but such unelected product shall continue to be subject to Section 6.2 below).
As used in this Section 6.1, "completion of Phase I clinical trials" for a
particular Collaboration Product shall be deemed to occur when Introgen has
dosed all patients called for in the protocol for Phase I clinical trials filed
in the applicable IND, and has either completed all patient follow-up as defined
in such protocol or initiated the next phase of clinical trials. Following
RPRP's election to proceed with the further development and commercialization of
a Collaboration Product under this Section 6.1, the particular Collaboration
Product shall be as defined in the IND therefor filed with the FDA pursuant to
the Early Stage Development Program. After the Term of the Early Stage
Development Program, "Collaboration Products" shall include only those
Collaboration Products that completed Phase I clinical trials during the Term of
the Early Stage Development Program and with respect to which
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RPRP has exercised its right to further develop and commercialize the same
pursuant to this Section 6.1.
6.2 Exclusivity. During the period from the Effective Date until the
tenth anniversary thereof, neither Introgen nor RPRP, RPR Inc. or their
Controlled Affiliates, shall develop or commercialize a product within the
Field, except as a Collaboration Product pursuant to this Agreement.
Notwithstanding the foregoing, it is understood that Introgen may conduct
research and development work on potential products and technologies for use
within the Field outside the Early Stage Development Program; provided that
Introgen may not license to third parties or market any product within the Field
during the ten (10) year period specified in this Section 6.2, without RPRP's
prior approval.
7. MARKETING RIGHTS
7.1 RPRP Territory. RPRP shall have the exclusive right to market, sell
and distribute the Collaboration Products in the RPRP Territory for use within
the Field.
7.2 Co-Exclusive Territory. RPRP and Introgen shall each have the
co-exclusive right to market, sell and distribute Collaboration Products in the
Co-Exclusive Territory for use within the Field, and subject to Article 9, each
may retain any revenues it obtains in the Co-Exclusive Territory as the result
of such activities, without accounting to the other. Each of RPRP and Introgen
may market the Collaboration Product in the Co-Exclusive Territory under such
labels and tradenames as it may elect; provided that neither party shall have
any right to use tradenames or trademarks owned by the other party or by the
Joint Venture described in Section 7.3 below.
7.3 North America. Rights to market, sell and distribute the
Collaboration Products in North America shall be as follows:
7.3.1 Election to Form Joint Venture. Within [*] after the
filing of a PLA for a Collaboration Product in the United States, on request by
Introgen, the parties shall establish a joint commercial operation to market
such Collaboration Product within the Field throughout North America. Such
operation may be a joint venture company or such other arrangement as the
parties mutually agree (the "Joint Venture"). No later than ninety (90) days
after filing of a PLA for a Collaboration Product in the United States, Introgen
and RPRP shall meet to discuss RPRP's preliminary launch, marketing and sales
plans, launch budget projections, Introgen's possible contributions and RPRP's
Development Costs for such Collaboration Product.
7.3.2 Responsibilities and Profit. Introgen and RPRP will
equally share the costs and responsibilities for marketing the Collaboration
Product in North America through the Joint Venture, and will share any profits
from sales of such Collaboration Product in North America [*] basis; provided,
however that [*]. At the time Introgen elects to establish the Joint Venture,
the parties will agree upon the form of each party's contribution (whether
physical resources, funding or otherwise), and each party shall thereafter
provide the agreed contribution.
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7.3.3 RPRP Development Costs. As used in this Section 7.3,
"RPRP Development Costs" shall mean: (i) amounts [*] of such Collaboration
Product [*]; and (ii) [*] to such Later Stage Clinical Development in [*] (on a
proportionate basis based on the percentage of [*]); and (iii) [*] of the
amounts [*] the Collaboration Product outside North America, and [*],
Development Costs shall include [*] of the amounts set forth in (i) and (ii)
above. As used herein, a "pivotal study" shall mean a clinical trial conducted
outside North America that is required to be filed with the FDA in order to
obtain marketing approval in the United States and that is designated as a
"pivotal study" for such purposes by the Development Committee. RPRP Development
Costs ("Costs") shall be adjusted to then-current dollars using the change in
the Consumer Price Index, U.S. Cities Average for All Urban Consumers, as
published by the U.S. Department of Labor, Bureau of Labor Statistics from the
date the Costs are incurred until the date such costs are recouped.
7.3.4 RPRP Exclusive. In the event that Introgen does not
elect to enter into a Joint Venture for marketing of a Collaboration Product in
North America in accordance with 7.3.1 above, or subsequently elects not to
proceed with such Joint Venture, RPRP shall have the exclusive right to market,
sell and distribute such Collaboration Product in North America, subject to the
payment of the amounts set forth in Section 8.1 and Article 9.
7.4 Other Territory. [*]
7.5 Sublicensees. Introgen may authorize Sublicensees to market, sell
and distribute Collaboration Products in the Co-Exclusive Territory and other
territories in which Introgen has the right to market Collaboration Products
under this Agreement; provided that Introgen shall notify RPRP of any
prospective Sublicensee and consult with RPRP prior to so authorizing any such
Sublicensee. Introgen shall not authorize any such Sublicensee to authorize
further Sublicensees to market and sell a Collaboration Product. Unless
otherwise agreed by RPRP and Introgen, RPRP and the Joint Venture shall not
authorize any Sublicensee to market, sell or distribute any Collaboration
Product, provided, however, that either party may market, sell or distribute
through an Affiliate.
7.6 Covenants. It is understood that, with respect to any particular
Collaboration Product, the manufacture, use and sale of such Collaboration
Products by Introgen and/or RPRP in any country may not require a license under
intellectual property rights of the other. Accordingly, notwithstanding that
such a license may not be required, neither Introgen nor RPRP shall market, sell
or distribute a Collaboration Product anywhere in the world except in accordance
with this Agreement, including this Article 7.
8. ROYALTIES
8.1 Running Royalties. RPRP shall pay running royalties to Introgen [*]
of Net Sales by RPRP and its Affiliates (and its Sublicensees permitted under
Sections 7.5 above and 13.4 below) of Collaboration Products [*].
Notwithstanding the above, no royalty will be due to Introgen under this Article
8 with respect to such sales of a Collaboration Product in North America if a
Joint Venture is formed for such Collaboration Products pursuant to Section 7.3
above and such Joint Venture has not terminated.
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8.2 Royalty Offset. RPRP and Introgen understand and recognize that
RPRP is a party to consulting, license and/or research funding agreements (but
not agreements where third party non-government investors finance the research
or development of technology for RPRP) with other commercial and research
institutions ("collaborators") which agreements provide for RPRP's payment of
royalties on products manufactured, used or sold by RPRP based on the
contribution of said collaborators to the discovery and development of said
products. Consequently, it is foreseeable that a Collaboration Product developed
with Introgen may become subject to multiple royalty obligations as the result
of more than one collaborator's contribution to the development of, or ownership
of patent rights covering, the Collaboration Product. In order to avoid the
development of a dispute over royalty entitlements and to provide RPRP with the
incentive to invest in and commercialize products which might otherwise not be
commercialized due to excess royalty obligations, RPRP and Introgen agree that
the royalty rates applicable to any specific Collaboration Product pursuant to
the first sentence of Section 8.1 (the "Introgen Royalty") or pursuant to an
agreement with a third party collaborator not an Affiliate at the time of
agreement or the payment of a royalty (the "Third Party Royalties") may be
reduced to provide reasonable royalty income to each contributing collaborator.
RPRP shall make reasonable and diligent efforts to establish agreements and
amend its existing royalty-bearing agreements with said collaborators so as to
ensure the fair distribution of royalty income based on Collaboration Products
for which more than one royalty claim is made, provided the Introgen Royalty
paid to Introgen shall in no event be adjusted to [*] on a country by country
basis (notwithstanding any other provision of this Agreement). It is understood
that this Section shall not be invoked by RPRP as regards Introgen until the sum
of the Introgen Royalty and Third Party Royalties payable by RPRP for a
Collaboration Product ("Total Royalty") is greater than [*] on a country by
country basis. Thereafter, royalty reduction shall be applied equitably in
accordance with the formula in this Section 8.2, taking into account each
collaborator's minimum royalty rate, to reduce on a percentage basis the royalty
rates specified in all collaborator agreements having an applicable royalty
adjustment provision therein and thereby adjust, to the extent possible, RPRP's
Total Royalty burden to no more than [*] on a country by country basis.
(a) Royalty payment reductions shall be
calculated quarterly, based on the Total Royalties payable by RPRP with respect
to Net Sales for such quarter. Within ninety (90) days after the end of each
calendar year, RPRP and Introgen shall reconcile the calculation of royalty
reductions under this Section 8.2 for the preceding calendar year, based upon
the total Net Sales for such year and the Total Royalties with respect to such
Net Sales. If the amount deducted from the Introgen Royalty exceed the amount of
such reconciled reduction, the difference shall be paid to Introgen within
thirty (30) days; if the amount actually deducted from the Introgen Royalty is
less than the amount of such reconciled reduction, the difference may be applied
by RPRP as a credit against royalties owed to Introgen in the then-current
calendar year, in equal quarterly installments.
(b) Unless a more equitable procedure is agreed
to by all participating parties to whom RPRP owes a royalty on a Collaboration
Product, the reduction in the Introgen Royalty and each of the other Third Party
Royalties shall be calculated and applied to royalty payment obligations on a
country by country basis as follows:
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(i) Calculate the effective overall
Royalty rate for each collaborator (i.e., Introgen and each of
the other collaborators receiving Third Party Royalties) based
on total worldwide Net Sales for the quarter or year, as
applicable ("EFF RATE");
(ii) On a country by country basis,
total the EFF RATE of all collaborators ("TOTAL RATE");
(iii) On a country by country basis,
[*];
If [*] is greater than [*]:
(iv) Calculate the adjustable
portions of [*];
(v) Calculate [*];
(vi) Multiply the [*] for each
collaborator by the [*];
(vii) Subtract the product obtained
in (vi) from the [*] for each collaborator [*]; and
(viii) Calculate for each
collaborator their reduced royalty rate by adding the [*] on a
country by country basis.
(c) Notwithstanding the foregoing calculation,
in no event shall the Introgen Royalty with respect to a Collaboration Product
in any country be reduced by an amount greater than [*] of the amount by which
the Total Royalty for such Collaboration Product in such country exceeds [*]
(prior to any reduction under a provision substantially identical to Section
8.2(b) above). However, it is understood that at such time as third parties have
agreed to be bound by the calculation in this Section 8.2, and Introgen approves
the resulting impact on the Introgen Royalty, Introgen may agree to waive this
paragraph (c).
(d) At least ninety (90) days prior to entering
into any agreement that would require the payment of any royalty to a third
party with respect to a patent right or technology specifically intended for use
in a Collaboration Product, RPRP or Introgen (as the case may be) agrees to
notify the other of such fact and the party with whom it proposes to enter into
such agreement. Following such notice, RPRP and Introgen (respectively) agree to
keep the other reasonably informed as to the progress of its negotiations with
such third party, including the proposed principal terms of the agreement, as
they reasonably progress. It is understood that the terms of the agreement will
not have been finalized at the time of the initial notice under this Section
8.2(c), and that such notice is only to inform the other party of an intention
to enter into such an agreement.
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9. THIRD PARTY ROYALTIES
9.1 RPRP Obligations. RPRP shall be solely responsible for the payment
of any royalties, license fees and milestone or other payments due to third
parties under licenses or similar agreements necessary to allow the manufacture,
use or sale of any Collaboration Product worldwide, except as set forth in 9.3
below and except for royalties due as a result of sales of Collaboration
Products in the Co-Exclusive Territory or the Undesignated Territory by
Introgen, its Affiliates or Sublicensees (other than RPRP). RPRP's
responsibilities hereunder shall include the reimbursement of Introgen for
royalties owed by Introgen on sales of Collaboration Products pursuant to that
certain Patent and Technology License Agreement executed as of April 21, 1994,
between Introgen and the Board of Regents of the University of Texas System (the
"UT Agreement"). It is understood that Introgen intends to have in effect a
subsequent Patent and Technology License Agreement with the University of Texas,
dated as of July 20, 1994 (the "Restated UT Agreement"), which will supersede
the existing UT Agreement, and that when the Restated UT Agreement becomes
effective, the reference in the preceding sentence to the Patent and Technology
Agreement shall mean the Restated UT Agreement. In the event that Introgen
enters into any other license or agreement during the term of this Agreement for
which royalties, license fees or milestone or other payments would be due with
respect to a Collaboration Product, RPRP shall not be obligated to pay any
amounts due with respect to such license or agreement unless RPRP approves such
agreement or license and agrees to pay the same to the extent such relates to
the commercialization of Collaboration Products by RPRP, its Affiliates and
permitted Sublicensees. If RPRP does not so approve any such license or
agreement and agree to pay such amounts, the subject matter covered by such
license or agreement shall not be within the Introgen Technology for purposes of
this Agreement.
9.2 Introgen Obligations. If RPRP enters into a license or agreement
during the term of this Agreement for which royalties would be due with respect
to a Collaboration Product, Introgen shall not be obligated to pay any royalties
due with respect to such license or agreement unless Introgen approves such
license or agreement and agrees to pay the same to the extent such relates to
the commercialization of Collaboration Products by Introgen, its Affiliates and
Sublicensees (other than RPRP), and agrees to pay [*] with respect to the
Collaboration Products that are sold by Introgen, its Affiliates and
Sublicensees in the Co-Exclusive Territory. If Introgen does not so approve any
such license or agreement and agree to pay such the amounts, the subject matter
covered by such license or agreement shall not be within the RPRP Technology for
purposes of this Agreement. Introgen's portion of any such license fees,
milestone payments and other amounts (other than royalties) shall be payable on
the later of the date the amounts are payable by RPRP to the third party or the
first commercial sale of the Collaboration Product by Introgen, its Affiliate or
Sublicensee in the Co-Exclusive Territory.
9.3 North America. In the event that a Joint Venture is formed for a
Collaboration Product in North America pursuant to Section 7.3.1, all royalties
due third parties for the manufacture, use or sale of Collaboration Products in
North America, and [*] of all license fees, milestone payments and other
payments made to third parties under licenses or agreements with respect to
patent rights or technologies incorporated in the Collaboration Products, shall
be deducted from the resulting revenues to the Joint Venture prior to
determining the profits to be shared by
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Introgen and RPRP from such North American sales as set forth in Section 7.3.2;
provided that both RPRP and Introgen approved such license or agreement. If both
RPRP and Introgen do not approve such license or agreement, the patent rights or
technologies covered thereby shall not be included within the Introgen
Technology or RPRP Technology licensed to the Joint Venture.
9.4 Efforts to Obtain Sublicense Rights. If RPRP or Introgen undertakes
to acquire from a third party a technology or patent rights that are intended
for use or application with respect to a Collaboration Product, RPRP and
Introgen (as the case may be) shall use good faith efforts to acquire from such
third party the right to sublicense or otherwise make available to the other
party hereto, such technology or patent rights to the extent the same are to be
used in or applied to Collaboration Products. It is understood, however, that
neither party will be obligated to incur additional costs or hardship in
connection with such efforts to acquire such sublicensing or other rights in
accordance with this Section 9.4.
10. PAYMENTS; BOOKS AND RECORDS
10.1 Royalty Reports and Payments. After the first commercial sale of a
Collaboration Product on which royalties are required, RPRP agrees to make
quarterly written reports to Introgen within [*] after the end of each calendar
quarter, stating in each such report the number, description, and aggregate Net
Sales of the Collaboration Product sold during the calendar quarter upon which a
royalty is payable under Section 8.2 above. Concurrently with the making of such
reports, RPRP shall pay to Introgen royalties at the rate specified in Article
8. In addition, RPRP and Introgen each agree to submit to the other such reports
and payments as are payable to third parties and for which RPRP or Introgen (as
the case may be) are responsible under Article 9 above, at least ten (10) days
prior to the date such reports and payments are due to the third party.
10.2 Payment Method. All payments due under this Agreement shall be
made by bank wire transfer in immediately available funds to an account
designated by the recipient. All payments hereunder shall be made in U.S.
dollars.
10.3 Late Payment. Any payments due under this Agreement which are not
paid within ten (10) days of the date such payments are due shall bear interest
to the extent permitted by applicable law at the prime rate as reported by the
Chase Manhattan Bank, New York, New York, on the date such payment is due, plus
an additional two percent (2%), calculated on the number of days such payment is
delinquent. This Section 10.3 shall in no way limit any other remedies available
to any party.
10.4 Currency Conversion. If any currency conversion shall be required
in connection with the calculation of royalties hereunder, such conversion shall
be made using the selling exchange rate for conversion of the foreign currency
into U.S. Dollars, quoted for current transactions reported in The Wall Street
Journal for the last business day of the calendar quarter to which such payment
pertains.
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10.5 No Withholding Taxes. So that there will be no withholding taxes
applicable to payments by RPRP to Introgen under this Agreement, RPRP agrees
that all amounts to be paid to Introgen hereunder shall be paid directly by RPRP
from accounts of RPRP in the United States to the accounts of Introgen
designated under Section 10.3 above.
10.6 Records; Inspection. Each party and its Affiliates shall keep
complete, true and accurate books of account and records for the purpose of
determining the royalty amounts payable under this Agreement. Such books and
records shall be kept at the principal place of business of such party or its
Affiliate, as the case may be, for at least [*] following the end of the
calendar quarter to which they pertain. Such records will be open for inspection
during such [*] period by a representative or agent of the other party for the
purpose of verifying the royalty statements. Such inspections may be made no
more than once each calendar year, at reasonable times mutually agreed by
Introgen and RPRP. The auditing party's representative or agent will be obliged
to execute a reasonable confidentiality agreement prior to commencing any such
inspection. Inspections conducted under this Section 10.7 shall be at the
expense of the auditing party, unless a variation or error producing an increase
exceeding [*] of the amount stated for any period covered by the inspection is
established in the course of any such inspection, whereupon all costs relating
to the inspection for such period will be paid the party being audited.
11. DUE DILIGENCE
11.1 Due Diligence. RPRP shall use its best efforts to diligently
conduct the Later Stage Clinical Development with respect to at least one
Collaboration Product and to obtain regulatory approvals to market such
Collaboration Product in North America and the RPRP Territory. In addition, RPRP
shall use no less the reasonable efforts to complete Later Stage Clinical Trials
and obtain such approvals for all other Collaboration Products. After obtaining
regulatory approvals for any Collaboration Products in a county within the RPRP
Territory (and if a Joint Venture is not formed with respect to such
Collaboration Product, in a county within North America), RPRP shall launch such
Collaboration Product and use no less than reasonable efforts to promote and
meet the market demand therefor in such county.
12. MANUFACTURING RIGHTS
12.1 RPRP Territory. Except as otherwise provided herein, RPRP shall
have the exclusive right to manufacture Collaboration Products for sale within
the Field in the RPRP Territory.
12.2 Co-Exclusive Territory. Except as provided herein, RPRP and
Introgen shall each have the right to manufacture its respective requirements
for the Collaboration Products distributed in the Co-Exclusive Territory. At
Introgen's option and request, Introgen shall have the right to purchase
Collaboration Products from RPRP for sale in the Co-Exclusive Territory, at a
price equal to [*], such right being subject to RPRP's manufacturing capacity
after providing for RPRP's reasonably anticipated supply requirements. However,
in no case shall the [*] the average selling price of the Collaboration Products
in the country for which Introgen resells such Collaboration Products.
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12.3 North America. Subject to Section 12.3.3 below, Introgen shall
have the exclusive right to supply Collaboration Products for sale in North
America.
12.3.1 Manufacture and Supply. In the event that a Joint
Venture is formed under 7.3.1 above to market a Collaboration Product in North
America, Introgen shall have the exclusive right to supply such Collaboration
Product to the Joint Venture, and except as set forth below, the Joint Venture
shall purchase such Collaboration Product exclusively from Introgen. In the
event that a Joint Venture is not so formed with respect to a Collaboration
Product, Introgen shall have the exclusive right to supply such Collaboration
Product to RPRP for sale in North America, and RPRP shall purchase such
Collaboration Product exclusively from Introgen for sale in North America. At
its option, however, Introgen may forego such rights to manufacture for North
America, in which case RPRP may do so as provided in 12.3.3 below. It is
understood that Introgen may engage subcontractors with respect to the
manufacture of Collaboration Products for supply to the Joint Venture or RPRP.
12.3.2 Transfer Price. Introgen will supply Collaboration
Products to the Joint Venture or RPRP (as the case may be) for sale in North
America at a price equal to [*]; provided, however, that in no case shall the
margin portion of Introgen's transfer price [*] the average selling price of the
Collaboration Products in North America. For purpose of Collaboration Products
used for Later Stage Clinical Development the price will be equal to [*].
12.3.3 [*]
12.4 Other Territory. For countries within the Other Territory, the
party having exclusive marketing rights in any such country shall also have
rights to manufacture Collaboration Products for sale in such country, unless
otherwise agreed by the parties.
12.5 Supply Agreements. Upon request by RPRP or Introgen, the parties
shall enter into a supply agreement on reasonable and customary terms with
respect to the supply arrangements contemplated in Sections 12.2 and 12.3 above.
13. LICENSE GRANTS
13.1 Grant to RPRP. Subject to the terms and conditions of this
Agreement, Introgen hereby grants to RPRP the following licenses and
sublicenses, as the case may be, under the Introgen Technology: (i) to use and
sell Collaboration Products in the Field within the RPRP Territory and the
Co-Exclusive Territory; (ii) to make and have made the Collaboration Products
anywhere in the world solely for sale and use in the Field within the RPRP
Territory and the Co-Exclusive Territory, and subject to Section 12.3.3 above,
in North America; and (iii) subject to Sections 7.3 and 12.3, to use and sell
Collaboration Products in the Field in North America. The foregoing licenses to
use and sell Collaboration Products under (i) and (iii) shall be: (a)
royalty-bearing and exclusive as to the RPRP Territory and North America, and
(b) royalty-free (except as provided in Article 9) and non-exclusive as to the
Co-Exclusive Territory. The license under (ii) to make Collaboration Products
shall be non-exclusive.
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13.2 Grant to Introgen. Subject to the terms and conditions of this
Agreement, RPRP hereby grants to Introgen the following licenses and
sublicenses, as the case may be, under the RPRP Technology: (i) to use and sell
the Collaboration Products in the Field in the Co-Exclusive Territory; (ii) to
make and have made the Collaboration Products anywhere in the world for use and
sale in the Field solely within North America and the Co-Exclusive Territory.
The licenses under (i) above shall be royalty-free and co-exclusive (with RPRP),
and the license under (ii) above shall be royalty-free (except as provided in
Article 9) and non-exclusive.
13.3 Grant to Joint Venture. In the event that a Joint Venture is
formed under Section 7.3 above to market a Collaboration Product in North
America and a license grant is required to operate, Introgen and RPRP shall each
grant and hereby grant to the Joint Venture an exclusive, royalty-free (except
as provided in Article 9) license under the Introgen Technology and the RPRP
Technology (respectively) to use and sell such Collaboration Product in North
America.
13.4 Sublicenses. Introgen shall have the right to grant sublicenses to
third parties of the rights granted by RPRP in Section 13.2 above (including the
co-exclusive rights granted to Introgen under 13.2(i)), provided, however,
Introgen will notify RPRP of any prospective Sublicensee and consult with RPRP
prior to granting any such sublicense. Introgen may not authorize any such
Sublicensee in the Co-Exclusive Territory to grant further sublicenses. Unless
agreed in writing by Introgen and RPRP, neither RPRP nor the Joint Venture may
sublicense the rights granted in Section 13.1 or 13.3 above or otherwise
authorize any Sublicensees to sell or market Collaboration Products.
13.5 Improvements by Introgen.
13.5.1 [*]
13.5.2 "Program Inventions." As used in 13.5.1 above, a
"Program Invention" shall mean any invention that is first conceived and reduced
to practice by employees or contractors of Introgen in the course of performing
the Early Stage Development Program (i.e. as a part of work specifically
identified in a Program Plan and Budget), and for which RPRP has funded under
the Early Stage Development Program a substantial portion of the in vitro and in
vivo testing of such invention under the Development Program.
13.5.3 Period. Introgen's obligations under this Section
13.5 shall terminate five (5) years after the end of the Term of the Early Stage
Development Program.
13.6 No Rights Beyond Collaboration Products. Except as may be agreed
by RPRP and Introgen after the Effective Date, this Article 13, and Articles 7
and 12 above, shall not be deemed to grant to RPRP rights with respect to the
use, in products other than the Collaboration Products, of Introgen Technology
incorporated in such Collaboration Products; nor shall such provisions of this
Agreement be deemed to restrict Introgen's right to exploit any Introgen
Technology in products other than Collaboration Products (subject to Sections
13.5 and 6.2 above).
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14. INTELLECTUAL PROPERTY
14.1 Ownership of Inventions. Inventorship of inventions and other
intellectual property rights conceived and/or reduced to practice in connection
with the Early Stage Development Program shall be determined in accordance with
the patent and other intellectual property laws of the United States. Title to
all inventions and other intellectual property made solely by an Introgen
employee in connection with the Early Stage Development Program shall be owned
by Introgen. Title to all inventions and other intellectual property made solely
by an RPRP employee in connection with the Early Stage Development Program shall
be owned by RPRP. Title to all inventions and other intellectual property made
jointly by employees of Introgen and RPRP in connection the Early Stage
Development Program shall be jointly owned by RPRP and Introgen. Except as
expressly provided in this Agreement, it is understood that neither party shall
have any obligation to account to the other for profits, or to obtain any
approval of the other party to license or exploit a joint invention, by reason
of joint ownership of any such intellectual property.
14.2 Patent Prosecution.
14.2.1 Sole Inventions. Introgen or RPRP, as the case may
be, shall, at its expense, control the preparing, filing, prosecuting and
maintaining the patent applications and patents within the Introgen Technology
and RPRP Technology (respectively) worldwide, in such countries as it deems
appropriate, and conducting any interferences, re-examinations, reissues,
oppositions or requests for patent term extensions relating to the Introgen
Technology and RPRP Technology (respectively) using counsel of its choice.
14.2.2 Joint Inventions. To provide for the most sensible,
efficient and cost effective means to protect inventions that are owned jointly
by RPRP and Introgen under 14.1 above, patent counsel for Introgen and RPRP
shall consult with each other. As a result of such consultation, patent counsel
will be chosen to prepare, file, prosecute and maintain patent applications and
patents worldwide on such joint inventions, and the parties shall share the
costs thereof as reasonably agreed, based upon the relative benefits thereof to
each party.
14.2.3 Prosecution by Other Party. In the event that
Introgen or RPRP, as the case may be (the "Owner"), declines to file or, having
filed, declines to further prosecute and maintain any such patent applications
or patents in accordance with 14.2.1 above, or conduct any interferences or
oppositions, or request any re-examinations, reissues or extensions of patent
term with respect to the Technology it owns in accordance with 14.2.1 above, the
other party shall have the right to file, prosecute and maintain such patent
applications or patents or conduct such interferences, at its own expense, in
the name of the Owner in any country, in which event the Owner of such
Technology shall provide, at the other party's request and expense, all
reasonable assistance. If the Owner of such Technology declines or fails to take
any such actions, such Owner shall notify the other party hereto at least sixty
(60) days prior to the date the next action or filing is due to be taken with
respect to the subject patent application or patent. One-half of all such
expenses shall be deducted from the royalties or profits due to the Owner with
respect to the country in which the patent issues.
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14.2.4 Cooperation. Each of Introgen and RPRP shall keep the
other reasonably informed as to the status of such patent matters, including,
without limitation, by providing the other the opportunity to review and comment
on any documents which will be filed in any patent office, and providing the
other copies of any documents that such party receives from such patent offices,
including notice of all interferences, re-examinations, oppositions or requests
for patent term extensions. Introgen and RPRP shall each cooperate with and
assist the other in connection with such activities, at the others' request and
expense.
14.2.5 Third Party Rights. The foregoing provisions of
this Article 14 shall be subject to and limited by any agreements pursuant to
which Introgen and RPRP, as the case may be, acquired any particular Introgen
Technology or RPRP Technology. It is understood that such agreements may
require, for example, that the licensor party from whom Introgen or RPRP
acquired a license to such Technology control the prosecution of particular
patents and patent applications and does not permit access or an opportunity to
comment on the any documents filed in patent offices.
14.3 Defense of Third Party Infringement Claims.
14.3.1 Infringement Claims. If the production, sale or use
of any Collaboration Product pursuant to this Agreement results in a claim, suit
or proceeding alleging patent infringement against Introgen or RPRP (or their
respective Affiliates or Sublicensees), such party shall promptly notify the
other party hereto in writing setting forth the facts of such claim in
reasonable detail. The party subject to such claim shall have the exclusive
right to defend and control the defense of any such claim, suit or proceeding,
at its own expense, using counsel of its own choice, provided, however, it shall
not enter into any settlement which admits or concedes that any aspect of the
Technology of the other party hereto is invalid or unenforceable without the
prior written consent of such other party. Such party shall keep the other party
hereto reasonably informed of all material developments in connection with any
such claim, suit or proceeding.
14.3.2 Third Party Blocking Patent. If an unexpired third
party patent(s) covering the manufacture, use or sale of a Collaboration Product
exist(s) in a country where the Collaboration Product is being manufactured,
used or sold during the term of this Agreement, and if it should prove in RPRP's
judgment impractical or impossible for it or its sublicensees to continue the
manufacture, use or sale of Collaboration Product in such country without
obtaining a royalty-bearing patent license from such third party, then RPRP
shall have the following options:
(a) RPRP may terminate the continued manufacture
and/or sale of the Collaboration Product in such country upon sixty (60) days'
written notice to Introgen, with Introgen's written consent, whereupon RPRP
shall have no further rights in such country; or
(b) RPRP may obtain a license from such third
party and treat such third party as a "collaborator" for purposes of Section 8
and 9 for such country.
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14.4 Enforcement.
14.4.1 Solely Owned Technology. Subject to 14.4.2 below, in
the event that any Introgen Technology or RPRP Technology necessary for
manufacture, use and sale of a Collaboration Product is infringed or
misappropriated by a third-party in any country in which Introgen or RPRP has
rights to market such Collaboration Product, or is subject to a declaratory
judgment action arising from such infringement in such country, Introgen or RPRP
(respectively) shall promptly notify the other party hereto. The owner of such
Technology shall have the initial right (but not the obligation) to enforce the
Technology it owns, or defend any declaratory judgment action with respect
thereto, at its expense. In the event that the owner of such Technology fails to
initiate a suit to enforce such Technology against a commercially significant
infringement in the Field by a third party within one hundred eighty (180) days
of a request by the other party to do so if such infringement is occurring in a
territory in which the other party (the "Licensee") has the right to market the
subject Collaboration Product, such Licensee may initiate such suit in the name
of the owner of such Technology against such infringement, at the expense of
such Licensee. The party involved in any such claim, suit or proceeding, shall
keep the other party hereto reasonably informed of the progress of any such
claim, suit or proceeding. Any recovery by such party received as a result of
any such claim, suit or proceeding shall be used first to reimburse such party
for all expenses (including attorneys and professional fees) incurred in
connection with such claim, suit or proceeding. If the Party initiating the suit
was the owner of the subject Technology, all of the remainder shall be retained
by such owner, and if applicable, included in Net Sales for purposes of Article
8 if the infringing activities were in a country in which royalties would be due
on sales of a Collaboration Product. If the party initiating the suit is the
Licensee, twenty percent (20%) of the remainder shall be paid to the owner of
the subject Technology and eighty percent (80%) to the Licensee.
14.4.2 Jointly Owned Technology. Notwithstanding 14.4.1
above, in the event that any Technology that is jointly owned by RPRP and
Introgen under Section 14.1 of this Agreement is infringed or misappropriated by
a third party, Introgen and RPRP shall mutually agree upon whether, and, if so,
how, to enforce such Joint Technology or defend such Joint Technology in a
declaratory judgment or similar proceeding.
15. REPRESENTATIONS AND WARRANTIES
15.1 Warranties. Each party warrants and represents to the other
that (i) it has the full right and authority to enter into this Agreement and
grant the rights and licenses granted herein; (ii) it has not previously granted
and will not grant any rights in conflict with the rights and licenses granted
herein; (iii) and there are no existing or threatened actions, suits or claims
pending against it with respect to its Technology or its right to enter into and
perform its obligations under this Agreement and (iv) it has not previously
granted, and will not grant during the term of this Agreement, any right,
license or interest in or to its Technology, or any portion thereof, to
manufacture, sell or use a Collaboration Product that is in conflict with the
rights or licenses granted under this Agreement. RPRP further represents and
warrants that, as of the Effective Date, it is a wholly owned subsidiary of RPR
Inc., and that no other "person" (as defined in the Securities Exchange Act of
1934) owns beneficially more than eighty percent (80%) of the outstanding
capital stock of RPR Inc. Introgen
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further represents and warrants that a true and correct copy of the UT Agreement
and the Restated UT Agreement (as defined in Section 9.1 above) were provided to
RPRP by facsimile from Wilson Sonsini Goodrich & Rosati on September 28, 1994.
15.2 Disclaimer of Warranties. Introgen and RPRP specifically
disclaim any guarantee that the Early Stage or Later Stage Development Program
will be successful, in whole or in part. To the extent that Introgen and RPRP
have complied with Articles 2, 3, 4 and 14.2 hereof, the failure of the parties
to successfully develop Collaboration Products will not constitute a breach of
any representation or warranty or other obligation under this Agreement. Neither
Introgen nor RPRP makes any representation or warranty or guaranty that the
Program Plan and Budget will be sufficient for the successful completion of the
Early Stage Development Program. INTROGEN AND RPRP EXPRESSLY DISCLAIM ANY
WARRANTIES OR CONDITIONS, EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, WITH RESPECT
TO THE EARLY STAGE OR LATER STAGE DEVELOPMENT PROGRAM AND THE INTROGEN AND RPRP
INTELLECTUAL PROPERTY, INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF
MERCHANTABILITY, NONINFRINGEMENT, OR FITNESS FOR A PARTICULAR PURPOSE, VALIDITY
OF INTROGEN OR RPRP TECHNOLOGY, PATENTED OR UNPATENTED, AND NON-INFRINGEMENT OF
THE INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES.
15.3 Effect of Representations and Warranties. It is understood that
if the representations and warranties under this Article are not true and
accurate and Introgen or RPRP incurs liabilities, costs or other expenses as a
result of such falsity, Introgen or RPRP, as the case may be, shall indemnify,
defend and hold the other party harmless from and against any such liabilities,
costs or expenses incurred, provided that the indemnifying party receives prompt
notice of any claim against Introgen or RPRP, as the case maybe, resulting from
or related to such falsity, the cooperation of the indemnified party, as
requested in connection with any such claim, and the sole right to control the
defense or settlement thereof.
16. CONFIDENTIALITY
16.1 Confidential Information. Except as expressly provided herein,
the parties agree that, for the term of this Agreement and for five (5) years
thereafter, the receiving party shall keep completely confidential and shall not
publish or otherwise disclose and shall not use for any purpose any information
furnished to it by the other party hereto pursuant to this Agreement except to
the extent that it can be established by the receiving party by competent proof
that such information:
(a) was already known to the receiving party, other
than under an obligation of confidentiality, at the time of disclosure;
(b) was generally available to the public or otherwise
part of the public domain at the time of its disclosure to the receiving party;
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(c) became generally available to the public or
otherwise part of the public domain after its disclosure and other than through
any act or omission of the receiving party in breach of this Agreement; or
(d) was subsequently lawfully disclosed to the
receiving party by a person other than a party or developed by the receiving
party without reference to any information or materials disclosed by the
disclosing party.
16.2 Permitted Disclosures. Each party hereto may disclose another's
information to the extent such disclosure is reasonably necessary in filing or
prosecuting patent applications, prosecuting or defending litigation, complying
with applicable governmental regulations or otherwise submitting information to
tax or other governmental authorities, making a permitted sublicense or other
exercise of its rights hereunder or conducting clinical trials, provided that if
a party is required to make any such disclosure of another party's confidential
information, other than pursuant to a confidentiality agreement, it will give
reasonable advance notice to the latter party of such disclosure and, save to
the extent inappropriate in the case of patent applications, will use its best
efforts to secure confidential treatment of such information prior to its
disclosure (whether through protective orders or otherwise). Notwithstanding the
foregoing, neither party shall disclose to third parties, clinical data or
regulatory filings received from Introgen or RPRP, except as permitted under
section 5.4 above.
17. INDEMNIFICATION
17.1 Indemnification of Introgen. RPRP shall indemnify each of
Introgen and its Affiliates and the directors, officers, employees, and counsel
of Introgen and such Affiliates and the successors and assigns of any of the
foregoing (the "Introgen Indemnitees"), pay on demand and protect, defend, save
and hold each Introgen Indemnitee harmless from and against, any and all
liabilities, damages, losses, settlements, claims, actions, suits, penalties,
fines, costs or expenses (including, without limitation, reasonable attorneys'
fees and other expenses of litigation) (any of the foregoing, a "Claim")
incurred by any Introgen Indemnitee, arising from or occurring as a result of
(a) activities performed by or on behalf of RPRP in connection with the Later
Stage Clinical Development, (b) activities performed by RPRP in connection with
the development of any Collaboration Product for commercialization outside North
America, (c) third party claims, including without limitation, product liability
claims relating to any Collaboration Products used, sold or otherwise
distributed by RPRP, its Affiliates or Sublicensees, (d) third party claims
relating to any Collaboration Products supplied by Introgen to the Joint
Venture; except in each case to the extent such claim is caused by the
negligence or intentional misconduct of an Introgen Indemnitee. For purposes of
this Section 17.1, it is understood that product liability claims that arise out
of the marketing or use of a Collaboration Product in a country after obtaining
governmental approval to market such Collaboration Product shall not be deemed
to "arise from or occur as a result of" the activities of RPRP described in (a)
above.
17.2 Indemnification of RPRP. Introgen shall indemnify each of RPRP
and its Affiliates and the directors, officers, employees, and counsel of RPRP
and such Affiliates and the successors and assigns of any of the foregoing (the
"RPRP Indemnitees"), pay on demand and protect, defend,
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save and hold each RPRP Indemnitee harmless from and against any and all
liabilities, damages, losses, settlements, claims, actions, suits, penalties,
fines, costs or expenses (including, without limitation, reasonable attorneys'
fees and other expenses of litigation) (any of the foregoing, a "Claim")
incurred by any RPRP Indemnitee, arising from or occurring as a result of (a)
activities performed by or on behalf of Introgen in connection with Early Stage
Development, (b) activities performed by Introgen in connection with the
development of any Collaboration Product for commercialization outside North
America, and (c) third party claims, including without limitation, product
liability claims, relating to any Collaboration Products used, sold or otherwise
distributed by Introgen, its Affiliates or Sublicensees (other than RPRP), or
(d) third party claims relating to any Collaboration Products supplied by RPRP
to Introgen for sale or use by Introgen, its Affiliates or Sublicensees outside
North America, except in each case to the extent such claim is caused by the
negligence or intentional misconduct by an RPRP Indemnitee. For purposes of this
Section 17.2, it is understood that product liability claims that arise out of
the marketing or use of a Collaboration Product in a country after obtaining
governmental approval to market such Collaboration Product shall not be deemed
to "arise from or occur as a result of" the activities of Introgen described in
(a) above.
17.3 Procedure. A party (the "Indemnitee") that intends to claim
indemnification under this Article shall promptly notify the other party (the
"Indemnitor") in writing of any loss, claim, damage, liability or action in
respect of which the Indemnitee or any of its Affiliates, Sublicensees or their
directors, officers, employees or agents intend to claim such indemnification,
and the Indemnitor shall have the right to participate in, and, to the extent
the Indemnitor so desires, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that Indemnitee shall have the
right to retain its own counsel, with the fees and expenses to be paid by the
Indemnitor, if representation of such Indemnitee by the counsel retained by the
Indemnitor would be inappropriate due to actual or potential differing interests
between such Indemnitee and any other party represented by such counsel in such
proceeding. The indemnity agreement in this Article shall not apply to amounts
paid in settlement of any loss, claim, damage, liability or action if such
settlement is effected without the consent of the Indemnitor, which consent
shall not be withheld unreasonably. The failure to deliver written notice to the
Indemnitor within a reasonable time after the commencement of any such action,
if prejudicial to its ability to defend such action, shall relieve such
Indemnitor of any liability to the Indemnitee under this Article but the
omission so to deliver written notice to the Indemnitor shall not relieve it of
any liability that it may have to any Indemnitee otherwise than under this
Article. The Indemnitee under this Article, its employees and agents, shall
cooperate fully with the Indemnitor and its legal representatives in the
investigation of any action, claim or liability covered by this indemnification.
18. TERM AND TERMINATION
18.1 Term. This Agreement shall become effective as of the Effective
Date and, unless earlier terminated pursuant to the other provisions of this
Article, shall continue in full force and effect on a product-by-product and
country-by-country basis, until [*] after the first commercial sale of each
Collaboration Product in such country.
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18.2 Termination for Cause. Either party to this Agreement may
terminate this Agreement in the event the other party shall have materially
breached or defaulted in the performance of any of its material obligations
hereunder, and such default shall have continued for sixty (60) days after
written notice thereof was provided to the breaching party by the non-breaching
party. Any termination shall become effective at the end of such sixty (60) day
period unless the breaching party (or any other party on its behalf) has cured
any such breach or default prior to the expiration of the sixty (60) day period.
18.3 Termination for Convenience by RPRP.
18.3.1 Entire Agreement. RPRP shall have the right to
terminate this Agreement on one hundred eighty (180) days prior written notice
to Introgen, provided such notice of termination may not be given prior to
December 15, 1995.
18.3.2 Individual Products. Upon one hundred eighty (180)
days prior notice to Introgen, RPRP may terminate the development of any
particular Collaboration Product, and RPRP shall have no further payment
obligations with respect to the development of such Collaboration Product
following the effective date of such termination, except as set forth in
18.4.2(b) below. In such event, such product will cease to be a Collaboration
Product for all purposes of this Agreement, and RPRP shall have no further
rights with respect thereto; provided, however, that unless there is at least
one Collaboration Product remaining, such termination shall also be deemed a
termination of this Agreement under 18.3.1 above.
18.4 Effect of Breach or Termination.
18.4.1 Accrued Obligations. Termination of this Agreement
for any reason shall not release any party hereto from any liability which, at
the time of such termination, has already accrued to the other party or which is
attributable to a period prior to such termination nor preclude either party
from pursuing all rights and remedies it may have hereunder or at law or in
equity with respect to any breach of this Agreement.
18.4.2 Wind-Down Expenses.
(a) Following any termination pursuant to Section
18.3.1, RPRP shall reimburse Introgen for all non-cancelable obligations or
commitments incurred by Introgen prior to RPRP's notice of such termination in
the course of performing the Early Stage Development Program, and expenses of
Introgen employees who had been engaged in the performance of the Early Stage
Development Program, which employee expenses are incurred by Introgen during the
six (6) months following the effective date of such termination (including
benefits, a reasonable allocation of overhead, and/or if the employees are
terminated by Introgen, reasonable severance pay); provided that RPRP shall be
responsible only for that portion of such employee expenses equal to the
percentage of such employees' time that was dedicated towards work under the
Early Stage Development Program during the six (6) months prior to RPRP's notice
of termination ("Employee Expenses").
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(b) Following any termination of development of any
particular Collaboration Product pursuant to Section 18.3.2, RPRP shall
reimburse Introgen for all non-cancelable obligations and commitments incurred
by Introgen with respect to such Collaboration Product prior to RPRP's notice of
such termination, and Employee Expenses (as described in 18.3.2(a) above)
incurred by Introgen during the six (6) months following the effective date of
such termination, to the extent that such employees are not reassigned to other
work to be performed under the Early Stage Development Program and funded by
RPRP. Introgen shall use reasonable efforts to mitigate these "wind-down"
expenses by redirecting such obligations and commitments, and employees, to the
furtherance of the continuing Early Stage Development Program and the
development of other Collaboration Products.
18.4.3 Return of Materials. Upon any termination of this
Agreement, Introgen and RPRP shall promptly return to the other all Confidential
Information received from the other (except one copy of which may be retained
for archival purposes).
18.4.4 Stock on Hand. In the event this Agreement is
terminated with respect to Introgen or RPRP for any reason, subject to Articles
8, 9 and Article 10, the terminated party and their respective Affiliates and
Sublicensees, shall have the right to sell or otherwise dispose of the stock of
any Collaboration Product subject to this Agreement then on hand.
18.5 Survival. Section 14.1 and Articles 10, 15, 16, 17, 18 and 19
of this Agreement shall survive expiration or termination of this Agreement for
any reason. In addition, for a period of three (3) years following any
termination of this Agreement prior to the end of the term specified in 18.1
above (other than pursuant to Section 18.2 for material breach by Introgen),
RPRP shall not develop or commercialize directly or through third parties a
product within the Field. In addition:
(a) In the event of a termination under 18.2 above
by reason of a material breach by Introgen, RPRP shall have an exclusive,
worldwide license, with the right to grant sublicenses, under the Introgen
Technology to make, have made, use and sell the Collaboration Products within
the Field, and in addition to the other Articles surviving as set for the above,
Article 9 and Sections 14.3 and 14.4 shall also survive.
(b) In the event of a termination under 18.2 above
by reason of a material breach by RPRP, or by reason of a termination of this
Agreement by RPRP under Section 18.3.1 hereof, Introgen shall have an exclusive,
worldwide license, with the right to grant sublicenses, under the RPRP
Technology to make, have made, use and sell the Collaboration Products, and in
addition to the other Articles surviving as set forth above, Article 9 and
Sections 14.3 and 14.4 shall also survive.
(c) In the event of a termination contemplated
under 18.5(a) or (b), the term "Collaboration Products" shall be deemed to also
include any product within the Field for which an IND was filed under the Early
Stage Development Program but for which Phase I was continuing and not completed
prior to the date of such termination.
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19. MISCELLANEOUS
19.1 Governing Law. This Agreement and any dispute arising from the
performance or breach hereof shall be governed by and construed and enforced in
accordance with, the laws of the State of New York, without reference to
conflicts of laws principles.
19.2 Force Majeure. Nonperformance of any party (except for payment
obligations) shall be excused to the extent that performance is rendered
impossible by strike, fire, earthquake, flood, governmental acts or orders or
restrictions, failure of suppliers, or any other reason where failure to perform
is beyond the reasonable control and not caused by the negligence or intentional
conduct or misconduct of the nonperforming party.
19.3 No Implied Waivers; Rights Cumulative. No failure on the part
of Introgen or RPRP to exercise and no delay in exercising any right under this
Agreement, or provided by statute or at law or in equity or otherwise, shall
impair, prejudice or constitute a waiver of any such right, nor shall any
partial exercise of any such right preclude any other or further exercise
thereof or the exercise of any other right.
19.4 Independent Research. Each party acknowledges and agrees that
Introgen and RPRP shall have the right to engage in their own research and
development activities outside the Field. Neither party shall, by virtue of this
Agreement, have any right, title or interest in or to such independent
activities or to the income or profits derived therefrom.
19.5 Independent Contractors. Nothing contained in this Agreement is
intended implicitly, or is to be construed, to constitute Introgen or RPRP as
partners in the legal sense. No party hereto shall have any express or implied
right or authority to assume or create any obligations on behalf of or in the
name of any other party or to bind any other party to any contract, agreement or
undertaking with any third party.
19.6 Notices. All notices, requests and other communications
hereunder shall be in writing and shall be personally delivered or sent by
registered or certified mail, return receipt requested, postage prepaid, in each
case to the respective address specified below, or such other address as may be
specified in writing to the other parties hereto:
RPRP: Rhone-Poulenc Rorer Pharmaceuticals, Inc.
500 Arcola Road
P.O. Box 1200
Collegeville, Pennsylvania 19426-0107
Attn: President, Cell and Gene Therapy Division
with a copy to: Rhone-Poulenc Rorer, Inc.
500 Arcola Road
P.O. Box 2200
Collegeville, Pennsylvania 19426-0107
-30-
<PAGE> 36
Attn: General Counsel
Introgen: Introgen Therapeutics, Inc.
301 Congress Ave.
Suite 2025
Austin, Texas 78701
Attn: President
with a copy to: Rodney Varner, Esq.
Wilson & Varner, L.L.P.
301 Congress Avenue
Austin, Texas 78701
Wilson Sonsini Goodrich & Rosati
Professional Corporation
650 Page Mill Road
Palo Alto, California 94304-1050
Attention: Kenneth A. Clark, Esq.
19.7 Assignment. This Agreement shall not be assignable by either
party to any third party hereto without the written consent of the other party
hereto; except Introgen may assign this Agreement without RPRP's consent to an
entity that acquires substantially all of the business or assets of Introgen,
and RPRP may assign this Agreement without Introgen's consent to an entity that
acquires substantially all of the business or assets of RPR Inc., in each case
whether by merger, acquisition or sale. The terms and conditions of this
Agreement shall be binding on and inure to the benefit of the permitted
successors and assigns of the parties.
19.8 Modification. No amendment or modification of any provision of
this Agreement shall be effective unless in writing signed by all parties
hereto. No provision of this Agreement shall be varied, contradicted or
explained by any oral agreement, course of dealing or performance or any other
matter not set forth in an agreement in writing and signed by all parties.
19.9 Severability. If any provision hereof should be held invalid,
illegal or unenforceable in any jurisdiction, all other provisions hereof shall
remain in full force and effect in such jurisdiction and shall be liberally
construed in order to carry out the intentions of the parties hereto as nearly
as may be possible. Such invalidity, illegality or unenforceability shall not
affect the validity, legality or enforceability of such provision in any other
jurisdiction.
19.10 Non-Disclosure. Each of the parties hereto agrees: (i) not to
disclose to any third party the financial terms of this Agreement without the
prior written consent of each other party hereto, except to advisors, investors
and others on a need to know basis under circumstances that reasonably ensure
the confidentiality thereof, or to the extent required by law. Without
limitation upon any provision of this Agreement, each of the parties hereto
shall be responsible for the observance by its employees of the foregoing
confidentiality obligations. Notwithstanding the
-31-
<PAGE> 37
foregoing, the parties shall agree upon a press release to announce the
execution of this Agreement, together with a corresponding Q&A outline for use
in responding to inquiries about the Agreement; thereafter, RPRP and Introgen
may each disclose to third parties the information contained in such press
release and Q&A without the need for further approval by the other.
19.11 Entire Agreement. This Agreement together with the Stock
Purchase Agreement entered by the parties of even date herewith, constitute the
entire agreement, both written or oral, with respect to the subject matter
hereof, and supersede all prior or contemporaneous understandings or agreements,
whether written or oral, between Introgen and RPRP with respect to such subject
matter.
19.12 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and all of which
together, shall constitute one and the same instrument.
19.13 Headings. Headings used herein are for convenience only and
shall not in any way affect the construction of or be taken into consideration
in interpreting this Agreement.
19.14 Patent Marking. Introgen and RPRP agree to mark and have their
Affiliates and Sublicensees mark all Collaboration Products they sell or
distribute pursuant to this Agreement in accordance with the applicable statute
or regulations in the country or countries of manufacture and sale thereof.
19.15 Export Laws. Notwithstanding anything to the contrary
contained herein, all obligations of Introgen and RPRP are subject to prior
compliance with United States export regulations and such other United States
laws and regulations as may be applicable, and to obtaining all necessary
approvals required by the applicable agencies of the government of the United
States. Introgen and RPRP shall cooperate with each other and shall provide
assistance to the other as reasonably necessary to obtain any required
approvals.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered in duplicate originals as of the date first above
written.
INTROGEN THERAPEUTICS, INC. RHONE-POULENC RORER
PHARMACEUTICALS INC.
By: /s/ DAVID G. NANCE By: /s/ MICHEL DE ROSEN
------------------------------- --------------------------------
Name: David G. Nance Name: Michel de Rosen
------------------------------ -------------------------------
Title: President Title: President
----------------------------- ------------------------------
-32-
<PAGE> 38
EXHIBIT A
Existing Introgen Licensed Patents
[*]
<PAGE> 39
EXHIBIT B
European Countries
Albania Macedonia
Andorra Malta
Austria Moldavia
Belgium Monaco
Bosnia Montenegro
Bulgaria Netherlands
Croatia Norway
Czech Republic Poland
Denmark Portugal
Finland Rumania
France San Marino
Germany Slovakia
Greece Slovenia
Hungary Spain
Iceland Sweden
Ireland Switzerland
Italy Turkey
Liechtenstein United Kingdom
Luxembourg Vatican City
<PAGE> 40
EXHIBIT C
Initial Program Plan and Budget
[*]
<PAGE> 41
February 13, 1996
Thierry Soursac, M.D., Ph.D.
Rhone-Poulenc Rorer Pharmaceuticals, Inc.
500 Arcola Road
Collegeville, Pennsylvania 19426-0107
Dear Thierry,
In August 1995, Introgen reviewed with RPR and submitted to the Development
Committee a 1996 program budget under the p53 and K-ras collaboration agreements
between our companies (the "Collaboration Agreements"). However, no budget was
approved by the Development Committee prior to the October 31, 1995 deadline set
forth in the Collaboration Agreements. Under these circumstances, Section 3.6 of
the collaboration Agreements provides for approval of a budget by you and me as
presidents of our respective companies. Accordingly, I am submitting this letter
to you as confirmation of our agreement in accordance with that Section 3.6
regarding a 1996 budget.
Introgen's 1996 budget for pre-clinical research and clinical studies performed
under the terms of the Collaboration Agreements is [*]. Subject to the
discussion below, RPR will pay this amount to Introgen during 1996 for that
work. In addition, RPR has budgeted [*] for payment in 1996 under the terms of
the fourth closing set forth in the Series B Preferred Stock Purchase Agreement
and will pay that amount upon the occurrence of that fourth closing.
Collectively, those amounts total [*] and are hereinafter referred to as the
"[*] Budget."
The [*] Budget includes [*] for clinical studies. This clinical study budget is
based on (1) numerous assumptions regarding the manner in which the various
clinical study protocols are performed and administered and (2) third party
insurance reimbursement of a portion of gross clinical study costs determined
based on historical experience. If Introgen's actual net cost of performing
these studies during 1996 exceeds [*] (due, but not limited, to changes in
clinical protocols or insurance reimbursements being less than anticipated) and
such excess costs are approved by the Development Committee, it is our
understanding RPR agrees to pay, during 1966, such clinical study costs in
excess of the [*] budgeted amount. Introgen agrees to use reasonably diligent
efforts to spend clinical study funds efficiently. Accordingly, Introgen agrees
to negotiate or renegotiate clinical study agreements with The University of
Texas M.D. Anderson Cancer Center and other
<PAGE> 42
institutions (if any) which conduct clinical studies in a manner so as to obtain
clinical study services under terms and conditions that Introgen deems prudent
and practical under the circumstances.
The [*] Budget does not include any amounts related to the prospective
collaborative preclinical research or clinical studies performed by or in
cooperation with the National Cancer Institute. If this collaboration is
approved by the Development Committee, it is our understanding that any costs
paid by RPR relative thereto would be in addition to the [*] Budget.
The [*] Budget does not include any costs related to the prospective
establishment, management or operation of a manufacturing facility in Vitry or
elsewhere on a joint venture or other basis between Introgen and RPR, including
any costs associated with having Introgen employees on site in Vitry or
elsewhere. If this joint venture is consummated, it is our understanding that
any costs paid by RPR relative thereto would be in addition to the [*] Budget.
The [*] Budget does not contemplate Introgen providing services for pre-clinical
or clinical support in Japan or Europe. The costs associated with any such work
will be addressed in a separate budget.
It is possible [*] the primary condition for a fifth closing under the Series B
Preferred Stock Purchase Agreement. In such event, RPR will be required to
purchase additional Introgen preferred stock for [*]. It is agreed that RPR will
make this purchase, and any other milestone equity purchases as a result of
satisfaction of the conditions for sixth and subsequent closings, outside the
scope of the [*] Budget and that none of the [*] Budget will be required to be
used to fund these purchases.
In accordance with the Collaboration Agreements, pre-clinical and clinical
expenses will be paid by RPR to Introgen at the beginning of each calendar
quarter. RPR will pay Introgen these expenses in accordance with the following
schedule:
<TABLE>
<CAPTION>
PAYMENT DATE PRE-CLINICAL CLINICAL TOTAL
- ------------ ------------ -------- -----
<S> <C> <C> <C>
January 1, 1996 [*] [*] [*]
April 1, 1996 [*] [*] [*]
July 1, 1996 [*] [*] [*]
October 1, 1996 [*] [*] [*]
Grand Total [*] [*] [*]
</TABLE>
A summary of the 1996 program budget supporting the above payments is attached.
-2-
<PAGE> 43
Please indicate your acknowledgment and agreement regarding the above matters in
the space provided below and return a signed original to me. Do not hesitate to
call if your have any questions.
Sincerely,
/s/ DAVID G. NANCE
------------------------------------
David G. Nance
Chief Executive Officer
Acknowledged and Agreed:
Rhone-Poulenc Rorer Pharmaceuticals, Inc.
By:
/s/ THIERRY SOURSAC
- -----------------------------------------
Thierry Soursac, M.C., Ph.D.
Senior Vice President
Rhone-Poulenc Rorer Pharmaceuticals, Inc.
-3-
<PAGE> 44
October 7, 1994
Introgen Therapeutics, Inc.
301 Congress Avenue
Austin, Texas 78705
Attn: David G. Nance
Gentlemen:
This letter agreement is being entered into in connection with that certain
Collaboration Agreement (p53 Products) and that certain Collaboration Agreement
(K-ras Products), each dated as of October 7, 1994 by and between Introgen
Therapeutics, Inc. ("Introgen") and Rhone-Poulenc Rorer Pharmaceuticals, Inc.
("RPRP") (the "Collaboration Agreements"), and that certain Stock Purchase
Agreement of the same date being entered into between Introgen and Rhone-Poulenc
Rorer Inc. (the "Stock Purchase Agreement"). Any capitalized terms used herein
that are not otherwise defined, shall be as defined in the Collaboration
Agreements.
This will acknowledge our agreement with respect to the following:
1. Non-Reimbursed Expenses. Notwithstanding Article 4 of each
Collaboration Agreement, Introgen agrees to incur, without
reimbursement by RPRP, at least [*] of combined aggregate Early Stage
Development Costs in the Performance of the Early Stage Development
Programs pursuant to the Program Plans and Budgets in effect from time
to time. Introgen shall incur such Costs prior to the end of December
1995 or, if later, the completion of the first Phase I clinical study
initiated under the Early Stage Development Program under either
Collaboration (provided such completion is not later than twelve (12)
months after initiation of such study). In addition, following the
occurrence of the Second Closing and the Third Closing (as defined in
the Stock Purchase Agreement), Introgen shall similarly incur, without
reimbursement therefor by RPRP [*] in such Early Stage Development
Program Costs for each such Closing (i.e. a total of up to an
additional [*] in the aggregate) during the term of the Early Stage
Development Program and within eighteen (18) months after the date such
Closing occurs.
2. Termination for Lack of Funding. RPRP and Introgen
acknowledge and understand that, if the Early Stage Development
Programs under the Collaboration Agreements are successful, the
aggregate amount of Early Stage Development Program Costs to be funded
by RPRP will be in the range of approximately [*] over the three year
period of the Early Stage Development Program. However, both parties
also understand and agree that the precise budget levels and funding
levels will vary, based upon progress
<PAGE> 45
Introgen Therapeutics, Inc.
October 7, 1994
Page 2
and the activities to be undertaken by Introgen, and that RPRP is not
obligated to provide any particular level of funding. To reinforce
RPRP's commitment to the collaboration, however, if at any time the
aggregate amounts of Early Stage Development Program Costs approved by
the Development Committee under both Collaboration Agreements for an
Agreement Year (as defined below) as reflected in the Program Plans and
Budgets then in effect for all Collaboration Products that have not
been terminated, are less than the amounts set forth below for the
corresponding Agreement Year. Introgen shall have a right to terminate
both Collaboration Agreements upon notice to RPRP:
<TABLE>
<CAPTION>
Agreement Year Amount
-------------- ------------------
<S> <C>
Initial Period $ [*]
Year 1 $ [*]
Year 2 $ [*]
Year 3 $ [*]
</TABLE>
The amounts set forth in the table above shall be calculated without
including any Early Stage Development Program Costs associated with the
conduct of clinical trials. As used above "Agreement Year" shall mean
the Initial Period, Year 1, Year 2 or Year 3, as follows: "Initial
Period" shall mean the period from the Effective Date through December
1994; "Year 1" shall mean January through December 1995; "Year 2" shall
mean January through December 1996; and "Year 3" shall mean the
remaining term of the Early Stage Development Program. In the event
that Introgen terminates the Collaboration Agreements in accordance
with this Paragraph 2, such termination shall be deemed a termination
of the Collaboration Agreements by RPRP under Section 18.3.1 of each
such Agreement, and Introgen's notice of termination shall be deemed a
notice of termination delivered by RPRP for purposes of Sections 7.5,
8.3, 9.6, 10.3, 11.6, 12.3, 13.6, 14.3, 15.6, 16.3, 17.6 and 18.3 of
the Stock Purchase Agreement. It is understood that termination of one
of the Collaboration Agreements shall not affect the amounts set forth
above, so long as the other Collaboration Agreement remains in effect.
It is acknowledged and agreed that Introgen, RPRP and Rhone-Poulenc Rorer Inc.
are entering into the Stock Purchase Agreement and the Collaboration Agreement
sin reliance on the understandings set forth in this letter, and that this
letter is intended to be legally binding upon each of the undersigned. The
parties also agree that this letter forms a part of their agreement with respect
to the Stock Purchase Agreement and the Collaboration Agreements,
notwithstanding Section 19.11 of each Collaboration Agreement.
<PAGE> 46
Introgen Therapeutics, Inc.
October 7, 1994
Page 3
If the foregoing accurately reflects our agreement, please sign a copy of this
letter as indicated below. This letter agreement may be signed in one or more
counterparts, all of which together shall constitute one instrument.
Very truly yours,
RHONE-POULENC RORER RHONE-POULENC RORER INC.
PHARMACEUTICALS, INC.
By: /s/ MICHEL DE ROSEN By: /s/ MICHEL DE ROSEN
-------------------------------- ---------------------------------
Name: Michel de Rosen Name: Michel de Rosen
------------------------------ -------------------------------
Acknowledged and Agreed:
INTROGEN THERAPEUTICS, INC.
By: /s/ DAVID G. NANCE
--------------------------------
Name: David G. Nance
------------------------------
<PAGE> 1
EXHIBIT 10.23
===============================================================================
COLLABORATION AGREEMENT
(K-ras PRODUCTS)
BY AND BETWEEN
RHONE-POULENC RORER PHARMACEUTICALS, INC.
AND
INTROGEN THERAPEUTICS, INC.
OCTOBER 7, 1994
===============================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
1. DEFINITIONS....................................................... 1
2. NORTH AMERICAN DEVELOPMENT........................................ 5
2.1 Early Stage Development Program........................ 5
2.2 Collaboration Products................................. 5
2.3 Development Activities................................. 5
2.4 Reports and Records.................................... 6
2.5 Review of Publication.................................. 7
3. DEVELOPMENT COMMITTEE............................................. 8
3.1 Development Committee.................................. 8
3.2 Membership............................................. 8
3.3 Development Committee Meetings......................... 8
3.4 North American Plans and Budgets....................... 8
3.5 Plans for Later Stage Development...................... 9
3.6 Decision Making........................................ 9
4. EARLY STAGE DEVELOPMENT PROGRAM FUNDING........................... 10
4.1 Funding of Early Stage Development Program............. 10
4.2 Term of Early Stage Development Program................ 10
4.3 Excess Early Stage Development Program Costs........... 10
4.4 Capital Equipment...................................... 10
4.5 Payments............................................... 10
5.1 RPRP Territory......................................... 11
5.2 Co-Exclusive Territory................................. 11
5.3 Other Territory........................................ 11
5.4 Use of Clinical Data................................... 11
5.5 Development Committee Review........................... 12
5.6 Further Studies........................................ 12
6. EXCLUSIVITY....................................................... 12
6.1 Option to Commercialize................................ 12
6.2 Exclusivity............................................ 13
6.3 Right of First Discussion in Expanded Field............ 13
7. MARKETING RIGHTS.................................................. 13
7.1 RPRP Territory......................................... 13
7.2 Co-Exclusive Territory................................. 13
7.3 North America.......................................... 14
7.4 Other Territory........................................ 14
</TABLE>
-i-
<PAGE> 3
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
7.5 Sublicensees........................................... 15
7.6 Covenants.............................................. 15
8. ROYALTIES......................................................... 15
8.1 Running Royalties...................................... 15
8.2 Royalty Offset......................................... 15
9. THIRD PARTY ROYALTIES............................................. 17
9.1 RPRP Obligations....................................... 17
9.2 Introgen Obligations................................... 18
9.3 North America.......................................... 18
9.4 Efforts to Obtain Sublicense Rights.................... 18
10. PAYMENTS; BOOKS AND RECORDS....................................... 18
10.1 Royalty Reports and Payments........................... 18
10.2 Payment Method......................................... 19
10.3 Late Payment........................................... 19
10.4 Currency Conversion.................................... 19
10.5 No Withholding Taxes................................... 19
10.6 Records; Inspection.................................... 19
11. DUE DILIGENCE..................................................... 20
11.1 Due Diligence.......................................... 20
12. MANUFACTURING RIGHTS.............................................. 20
12.1 RPRP Territory......................................... 20
12.2 Co-Exclusive Territory................................. 20
12.3 North America.......................................... 20
12.4 Other Territory........................................ 21
12.5 Supply Agreements...................................... 21
13. LICENSE GRANTS.................................................... 21
13.1 Grant to RPRP.......................................... 21
13.2 Grant to Introgen...................................... 21
13.3 Grant to Joint Venture................................. 21
13.4 Sublicenses............................................ 21
13.5 Improvements by Introgen............................... 22
13.6 No Rights Beyond Collaboration Products................ 22
</TABLE>
-ii-
<PAGE> 4
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
14. INTELLECTUAL PROPERTY............................................. 22
14.1 Ownership of Inventions................................ 22
14.2 Patent Prosecution..................................... 23
14.3 Defense of Third Party Infringement Claims............. 24
14.4 Enforcement............................................ 24
15. REPRESENTATIONS AND WARRANTIES.................................... 25
15.1 Warranties............................................. 25
15.2 Disclaimer of Warranties............................... 25
15.3 Effect of Representations and Warranties............... 26
16. CONFIDENTIALITY................................................... 26
16.1 Confidential Information............................... 26
16.2 Permitted Disclosures.................................. 26
17. INDEMNIFICATION................................................... 27
17.1 Indemnification of Introgen............................ 27
17.2 Indemnification of RPRP................................ 27
17.3 Procedure.............................................. 28
18. TERM AND TERMINATION.............................................. 28
18.1 Term................................................... 28
18.2 Termination for Cause.................................. 28
18.3 Termination for Convenience by RPRP.................... 28
18.4 Effect of Breach or Termination........................ 29
18.5 Survival............................................... 30
19. MISCELLANEOUS..................................................... 30
19.1 Governing Law.......................................... 30
19.2 Force Majeure.......................................... 30
19.3 No Implied Waivers; Rights Cumulative.................. 30
19.4 Independent Research................................... 31
19.5 Independent Contractors................................ 31
19.6 Notices................................................ 31
19.7 Assignment............................................. 32
19.8 Modification........................................... 32
19.9 Severability........................................... 32
19.10 Non-Disclosure......................................... 32
19.11 Entire Agreement....................................... 32
19.12 Counterparts........................................... 33
</TABLE>
-iii-
<PAGE> 5
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<S> <C>
19.13 Headings............................................... 33
19.14 Patent Marking......................................... 33
19.15 Export Laws............................................ 33
</TABLE>
EXHIBITS
A - Existing Introgen Licensed Patents
B - European Countries
C - Initial Program Plan and Budget
-iv-
<PAGE> 6
COLLABORATION AGREEMENT
(K-Ras PRODUCTS)
This AGREEMENT (the "Agreement"), effective as of October 7, 1994 (the
"Effective Date"), is made by and between Rhone-Poulenc Rorer Pharmaceuticals
Inc., a Pennsylvania corporation having offices at 500 Arcola Road, P.O. Box
1200, Collegeville, Pennsylvania 19426-0107 ("RPRP"), and Introgen Therapeutics,
Inc., a Delaware corporation having offices at 301 Congress Avenue, Suite 2025,
Austin, Texas 78701 ("Introgen").
RECITALS
A. Introgen has established expertise related to gene therapy and RPRP
has established a major research program in the field of gene therapy for the
treatment of human cancer.
B. The parties desire to establish a collaborative relationship to
develop and commercialize novel gene therapy products as set forth below.
C. Introgen and RPRP's parent, Rhone-Poulenc Rorer Inc., have also
entered into a Stock Purchase Agreement of even date herewith, pursuant to which
RPRP is acquiring Introgen Preferred Stock.
NOW THEREFORE, for and in consideration of the covenants, conditions,
and undertakings hereinafter set forth, it is agreed by and between the parties
as follows:
1. DEFINITIONS
1.1 "Affiliate" shall mean any entity which controls, is controlled or
is under common control with RPRP or Introgen. An entity shall be regarded as in
control of another entity if it owns or controls at least thirty-five percent
(35%) of the shares of the subject entity entitled to vote in the election of
directors (or, in the case of an entity that is not a corporation, for the
election of the corresponding managing authority). A "Controlled Affiliate"
shall mean an entity that is controlled by a party wherein such percentage is at
least fifty percent (50%).
1.2 "Co-exclusive Territory" shall mean Japan, North and South Korea,
Taiwan, the People's Republic of China and India.
1.3 "Collaboration Products" shall mean the gene therapy products
within the Field which are being developed by Introgen and RPRP from time to
time pursuant to the Early Stage Development Program, as specified in the
Program Plan and Budget in effect at the time, and as further defined in Section
6.1 below.
<PAGE> 7
1.4 "Development Committee" shall have the meaning set forth in Article
3 herein.
1.5 "Early Stage Development" shall mean that part of the Early Stage
Development Program comprising the research, preclinical and clinical activities
with respect to approved Collaboration Products in North America through the
completion of Phase I clinical trials.
1.6 "Early Stage Development Program" shall have the meaning set forth
in Section 2.1 herein.
1.7 "Early Stage Development Program Costs" shall mean all direct and
indirect costs incurred by Introgen in conducting the Early Stage Development
Program in accordance with the applicable approved Program Plan and Budget.
1.8 "Expanded Field" shall mean gene therapy products which [*]
1.9 "Field" shall mean gene therapy products for the delivery of a gene
construct to patient cells via in vivo viral vectors or non-viral delivery
systems which expresses a molecule that [*] in each case for the treatment or
prevention of disease.
1.10 "FDA" means the U.S. Food and Drug Administration.
1.11 "IND" shall mean an investigational New Exemption for a
Collaboration Product, as defined in the U.S. Food, Drug and Cosmetic Act and
the regulations promulgated thereunder.
1.12 "Introgen Technology" shall mean Introgen Patents, Introgen
Licensed Patents and Introgen Know-how.
1.12.1 "Introgen Patents" shall mean all patents and
reissues, renewals and extensions thereof, and patent applications therefor, and
any divisions, continuations, in whole or in part, thereof, which claim a
process, composition of matter, or method of treatment used in the manufacture,
sale or use of a Collaboration Product and that are owned by Introgen or its
Controlled Affiliates during the term of this Agreement.
1.12.2 "Introgen Know-How" shall mean confidential
information and materials, including, but not limited to, pharmaceutical,
chemical, biological and biochemical products, technical and non-technical data,
and information relating to the results of tests, assays, methods and processes,
and drawings, plans, diagrams, specifications and/or other documents containing
said information and data, discovered, developed or acquired by Introgen or its
Controlled Affiliates during the term of this Agreement to the extent such
relates to the manufacture, sale or use of a Collaboration Product and to the
extent that Introgen or its Controlled Affiliates have the right to license or
sublicense the same.
1.12.3 "Introgen Licensed Patents" shall mean all patents
and reissues, renewals and extensions thereof, and patent applications therefor,
and any divisions, continuations, in whole or in part, thereof, which claim a
process, composition of matter, or method of treatment used in the
-2-
<PAGE> 8
manufacture, sale or use of a Collaboration Product, that are the subject of a
license or license option to Introgen or its Controlled Affiliates, in each case
to the extent that Introgen or its Controlled Affiliate has the right to license
or sublicense the same during the term of this Agreement. Introgen Licensed
Patents as of the Effective Date are listed on attached Exhibit A.
1.13 "Joint Venture" shall have the meaning set forth in Section 7.3.1
of this Agreement.
1.14 "Later Stage Clinical Development" shall mean all clinical
research and regulatory affairs necessary to obtain all governmental approvals
required to market each Collaboration Product for a particular indication in
North America following the Early Stage Development for such Collaboration
Product for such indication.
1.15 "Manufacturing Costs" with respect to units of a Collaboration
Product means (i) those costs associated with manufacture of such units which
would be viewed by the manufacturing party's independent auditor as costs that
could be capitalized on the balance sheet as inventory and would include all raw
material (including normal scrap) and actual direct labor costs and a proper
accounting of actual manufacturing overhead allocated to such units. It would
exclude any excess capacity, excess direct labor inefficiencies, unusable
material, or any other costs related to such units not deemed to add value or
not deemed to be ongoing in the production process for such product; and (ii)
with respect to portions acquired from a non-Affiliate vendor, the amounts paid
to the vendor.
1.16 "Net Sales" shall mean the total amount invoiced to third parties
in connection with sales or use of Collaboration Products by RPRP, its
Affiliates or its permitted Sublicensees, less the following reasonable and
customary accrual-basis deductions to the extent applicable to such invoiced
amounts in accordance with U.S. generally accepted accounting practices, as
consistently applied by both RPRP and RPR Inc. for financial reporting purposes:
(i) all trade, cash and quantity credits, discounts, refunds or rebates
(including without limitation Medicaid rebates); (ii) amounts for claims,
allowances or credits for returns; retroactive price reductions; chargebacks;
and (iii) packaging, handling fees and prepaid freight, sales taxes, duties and
other governmental charges (including value added tax), but excluding what is
commonly known as income taxes), in each case if charged separately on the
invoice and paid by the customer. For the removal of doubt, Net Sales shall not
include sales by RPRP to its Affiliate or its permitted Sublicensees for resale.
A "sale" shall also include a transfer or other disposition for consideration
other than cash, in which case such consideration shall be valued at the fair
market value thereof. Transfers or dispositions for charitable or promotional
purposes or for pre-clinical, clinical, regulatory or governmental purposes
prior to receiving marketing approval are not considered a "sale;" provided that
such transfers or dispositions are at a price less than [*] RPRP's Manufacturing
Cost for the units so transferred or disposed.
1.17 "North America" shall mean Canada, the United States (and its
territories and possessions including the commonwealth of Puerto Rico) and
Mexico.
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1.18 "PLA" and "ELA" means a Product License Application and an
Establishment License Application, respectively, as defined in the Public Health
Service Act, Biological Products and the regulations promulgated thereunder,
viz. 21 CFR Part 600, or its foreign equivalents.
1.19 "Phase I" means Phase I clinical trials as prescribed by
applicable FDA Regulations.
1.20 "Product Plan and Budget" shall have the meaning set forth in
Section 3.4.2 below.
1.21 "Program Plan and Budget" shall have the meaning set forth in
Section 3.4.1 hereof.
1.22 "RPR Inc." shall mean Rhone-Poulenc Rorer, Inc., a Pennsylvania
Corporation.
1.23 "RPRP Development Costs" shall have the meaning set forth in
Section 7.3.3 below.
1.24 "RPRP Technology" shall mean RPRP Patents, RPRP Licensed Patents
and RPRP know-how.
1.24.1 "RPRP Patents" shall mean all patents and reissues,
renewals and extensions thereof, and patent applications therefor, and any
divisions, continuations, in whole or in part, thereof, which claim a process,
composition of matter, or method of treatment used in the manufacture, sale or
use of a Collaboration Product and that are owned by RPRP, RPR Inc. or their
Controlled Affiliates during the term of this Agreement.
1.24.2 "RPRP Know-How" shall mean confidential information
and materials, including, but not limited to, pharmaceutical, chemical,
biological and biochemical products, technical and non-technical data, and
information relating to the results of tests, assays, methods and processes, and
drawings, plans, diagrams, specifications and/or other documents containing said
information and data, discovered, developed or acquired by RPRP or its
Controlled Affiliates during the term of this Agreement to the extent such
relates to the manufacture, sale or use of a Collaboration Product and to the
extent that RPRP, RPR Inc. or their Controlled Affiliates have the right to
license or sublicense the same.
1.24.3 "RPRP Licensed Patents" shall mean all patents and
reissues, renewals and extensions thereof, and patent applications therefor, and
any divisions, continuations, in whole or in part, thereof, which claim a
process, a composition of matter, or method of treatment used in the
manufacture, sale or use of a Collaboration Product, that are the subject of a
license or license option to RPRP, RPR Inc. or their Controlled Affiliates and
to the extent that RPRP, RPR Inc. or their Controlled Affiliates have the right
to license or sublicense the same during the term of this Agreement.
1.25 "RPRP Territory" means those Eastern and Western European
countries set forth on Exhibit B hereto.
1.26 "Other Territory" shall mean [*]
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1.27 "Sublicensee" shall mean, with respect to a particular
Collaboration Product, a third party to whom Introgen or RPRP has granted a
license or sublicense under the RPRP Technology and/or Introgen Technology to
make, use and sell such Collaboration Product. As used in this Agreement,
"Sublicensee" shall also include a third party to whom Introgen or RPRP has
granted the right to distribute such Collaboration Product, provided that such
third party is responsible for the marketing and promotion of such products
within the applicable territory.
1.28 "Term of the Early Stage Development Program" shall be that period
of time described in Section 4.2 below.
2. NORTH AMERICAN DEVELOPMENT
2.1 Early Stage Development Program. Subject to the terms and
conditions set forth herein, RPRP and Introgen shall cooperate with respect to
the Early Stage Development of Collaboration Products in accordance with an
"Early Stage Development Program" for North America which shall be carried out
in accordance with a Program Plan and Budget prepared and approved on an annual
basis in accordance with Article 3.4 hereof. The Early Stage Development Program
shall include all of the approved Program Plans and Budgets in effect from time
to time. The activities conducted in connection with the Early Stage Development
Program will be overseen and administered by the Development Committee, pursuant
to Article 3 below. Introgen shall use its best efforts to conduct the Early
Stage Development in accordance with such Program Plan and Budget and within the
time schedules contemplated therein.
2.2 Collaboration Products. The Initial Collaboration Products to be
developed hereunder will contain or employ Introgen's Retroviral K-ras related
Transduction Vector and/or its Adenoviral K-ras related Transduction Vector.
From time to time, upon agreement of RPRP and Introgen, new projects may be
added to the Early Stage Development Program to be developed as Collaboration
Products. Such projects may include RPRP or Introgen products. It is understood
that RPRP may terminate its support for the development for any Collaboration
Product as provided in Section 18.3.2 below or as otherwise agreed by the
parties.
2.3 Development Activities.
2.3.1 Early Stage Development Program. Introgen will be
responsible for conducting, directly or through third parties, all development
of each new project and each Collaboration Product in North America through the
completion of Early Stage Development in accordance with the Program Plan and
Budget in effect from time to time. As soon as possible after completion of the
necessary preclinical studies required by the applicable Product Plan and Budget
for a Collaboration Product, Introgen shall be responsible for preparing, with
the cooperation of RPRP, a data package for each Collaboration Product
sufficient to meet IND requirements of the FDA.
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2.3.2 Later Stage Clinical Development.
(a) In addition to the Early Stage Development
Program, RPRP and Introgen will cooperate in the Later Stage Clinical
Development of each Collaboration Product; provided, RPRP will be primarily
responsible for conducting all such Later Stage Clinical Development, at RPRP's
expense. Introgen shall be consulted and fully informed with respect to such
Later Stage Clinical Development at all times through its representatives on the
Development Committee. All Later Stage Clinical Development shall be monitored
and managed by the Development Committee; [*].
(b) It is anticipated that RPRP will establish a
committee of independent experts (the "External Review Committee") to provide
advice with respect to Later Stage Clinical Development. The Chief Scientific
Officer of Introgen, or other designee of Introgen, if a clinician of recognized
stature, shall serve on and chair the External Review Committee; otherwise, RPRP
and Introgen shall agree on the chair of such External Review Committee. In any
event, Introgen shall have a representative on such External Review Committee.
(c) It is understood that additional preclinical
studies may be required following the completion of Early Stage Development with
respect to a Collaboration Product. The parties anticipate that, where
appropriate, such work will be performed by Introgen and reimbursed by RPRP, as
agreed from time to time by the Development Committee.
2.3.3 FDA Filings. Introgen shall be responsible for the
preparation and filing of all IND's in North America with respect to the
Collaboration Products, which shall be filed in Introgen's name; provided RPRP
shall have a reasonable opportunity to review and comment upon such filings in
advance of their filing. RPRP shall be responsible for all further submissions
to existing INDs once Later Stage Clinical Development has begun, provided that
Introgen is given a reasonable opportunity to review and comment upon such
submissions prior to the filing of such submissions. Introgen shall cooperate in
transferring to RPRP authority for such correspondence. RPRP, at its expense,
shall prepare all PLAs and ELA's for filing in North America with respect to
each Collaboration Product. All such PLA's and ELA's shall be filed in the names
of RPRP and Introgen, to the extent permitted by applicable FDA regulations
(taking into account the supply arrangements under Section 12.3. below), or in
such other manner as the Development Committee approves. In addition, RPRP shall
in all events have the right to file separately a PLA/ELA in its own name to
qualify, as a permitted supply source for the United States, its manufacturing
facility for the RPRP Territory (consistent with Section 12.3. below).
2.4 Reports and Records.
2.4.1 Records. Introgen and RPRP shall maintain records of the
Early Stage Development Program (or cause such records to be maintained) in
sufficient detail and in good scientific manner as will properly reflect all
work done and results achieved in the performance of the Early Stage Development
Program (including all data in the form required under any applicable
governmental regulations). Each party shall allow the other to have prompt
access to all materials
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and data generated on behalf of such party with respect to each Collaboration
Product at reasonable times and in a reasonable manner.
2.4.2 Introgen Reports. Introgen shall periodically, and not
less often than semi-annually during the term of this Agreement, provide the
Development Committee with a written report summarizing the progress of the
Early Stage Development performed by Introgen with respect to each Collaboration
Product during the preceding calendar half-year. Unless otherwise agreed, such
reports shall be due on 28 February and 30 August of each calendar year during
the Early Stage Development Program.
2.4.3 RPRP Reports. RPRP shall periodically, and not less
often than semi-annually during the term of this Agreement, provide the
Development Committee with a written report summarizing the progress of the
Later Stage Clinical Development performed by RPRP with respect to each
Collaboration Product during the preceding calendar half-year. Unless otherwise
agreed, such reports shall be due on 28 February and 30 August of each calendar
year during the term of this Agreement.
2.5 Review of Publication. As soon as is practicable prior to the oral
public disclosure, and prior to the submission to any outside person for
publication of a manuscript describing the scientific data resulting from any
stage of the Early Stage Development Program or Later Stage Clinical
Development, Introgen or RPRP, as the case may be, shall disclose to the
Development Committee the disclosure or manuscript to be made or submitted, and
shall allow the Development Committee at least thirty (30) days to determine
whether such disclosure or manuscript contains subject matter for which patent
protection should be sought prior to publication or which the other believes
should be modified to avoid necessary regulatory or commercial difficulties.
With respect to publications by investigators or other third parties, such
publications shall be subject to review by the Development Committee under this
Section 2.5 to the extent that Introgen or RPRP (as the case may be) has the
right to do so.
2.5.1 Publication Rights. After the expiration of thirty (30)
days from the date of mailing such disclosure or manuscript, unless Introgen or
RPRP has received from the other the written notice specified below, the
authoring party shall be free to submit such manuscript for publication or to
publish the disclosed research results in any manner consistent with academic
standards.
2.5.2 Delay of Publication. Prior to the expiration of the
thirty (30) day period specified in this Section 2.5, the Development Committee
may notify the submitting party of its determination that such oral presentation
or manuscript contains objectionable material or material that consists of
patentable subject matter for which patent protection should be sought. The
notified party shall withhold its proposed public disclosure and confer with the
Development Committee to determine the best course of action to take in order to
modify the disclosure or to obtain patent protection. After resolution of the
regulatory or commercial issues, or the filing of a patent application or due
consideration as to whether a patent application can reasonably be filed, the
submitting party shall be free to submit the manuscript and/or make its public
oral disclosure. If the
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submitting party declines to file an appropriate patent application pursuant to
the request of the Development Committee, then either Introgen or RPRP may
undertake to file such application in accordance with Article 14 below.
3. DEVELOPMENT COMMITTEE
3.1 Development Committee. RPRP and Introgen will establish a
Development Committee to oversee, review and coordinate the development of
Collaboration Products worldwide, including the conduct of the Early Stage
Development Program and Later Stage Clinical Development in North America.
3.2 Membership. The Development Committee shall be comprised of an
equal number of representatives from each of RPRP and Introgen, selected by such
parties. The exact number of such representatives shall be three (3) for each of
RPRP and Introgen, or such greater number as the parties may agree. Introgen and
RPRP may replace its Development Committee representatives at any time, with
written notice to the other party. From time to time, the Development Committee
may establish subcommittees to oversee particular projects or activities, and
such subcommittees will be constituted as the Development Committee agrees.
3.3 Development Committee Meetings. During the term of this Agreement,
the Development Committee shall meet every two months, or more often as agreed
by the parties, in Houston, Texas, or such other location as the parties agree.
The parties agree that at least two (2) meetings of the Development Committee
per full calendar year will be held at RPRP's facilities. At its meetings, the
Development Committee will (i) formulate and review the Early Stage Development
Program objectives, (ii) monitor the progress of the Early Stage Development
Program toward those objectives, (iii) review and approve the Program Plan and
Budget, and Product Plans and Budgets, pursuant to Section 3.4 of this
Agreement, and (iv) monitor the progress of both Early Stage Development and
Later Stage Clinical Development. With the consent of the parties, other
representatives of Introgen or RPRP or their Affiliates or Sublicensees, may
attend Development Committee meetings as non-voting observers. With respect to
matters relating to Early Stage Development, Introgen's lead representative
shall chair meetings of the Development Committee, and with respect to matters
relating to Later Stage Clinical Development, RPRP's lead representative shall
chair such meetings. The party whose representatives chair a meeting with
respect to particular matters shall be responsible for preparing the agenda and
minutes for such meetings.
3.4 North American Plans and Budgets.
3.4.1 Program Plan and Budget. Introgen shall be responsible
for preparing reasonably detailed plans and budgets on an annual basis for the
"Program Plan and Budget" through which the Early Stage Development Program will
be carried out. The Program Plan and Budget shall specify the research
objectives and work plan activities of the Early Stage Development Program
research of both parties, and the headcounts and other costs and expenses of
Introgen, including consultants and third party contractors, in connection with
the Early Stage Development Program.
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3.4.2 Product Plans and Budgets. In connection with the
Program Plan and Budget, Introgen shall be responsible for developing individual
Product Plans and Budgets with respect to Early Stage Development for each
particular Collaboration Product, which shall contain the research objectives
and work plan activities, headcounts and other costs and expenses with respect
to each such Collaboration Product (each a "Product Plan and Budget"). Such
individual Product Plans and Budgets shall be incorporated into and be a part of
the annual Program Plan and Budget. Following Early Stage Development with
respect to a Collaboration Product, RPRP will be responsible for developing
individual Product Plans and Budgets for Later Stage Clinical Development
pursuant to Section 2.3.2 and 3.5 below.
3.4.3 Annual Review. Attached hereto as Exhibit C is the
initial Program Plan and Budget, which shall be fixed for the period from the
Effective Date through 30 December 1995, unless otherwise agreed. Beginning in
1995, by August 1 of each year during the Early Stage Development Program,
Introgen shall submit to the Development Committee a proposed Program Plan and
Budget for the Early Stage Development Program for the following calendar year.
The Development Committee shall review such proposal as soon as possible and
shall establish and approve no later than October 31 of such year the final
Program Plan and Budget for the next succeeding year.
3.4.4 Periodic Reviews. The Development Committee shall review
the Program Plan and Budget on an ongoing basis and may make changes to the
Program Plan and Budget then in effect; provided, however, the Program Plan and
Budget in effect for a year shall not be modified except as approved by the
Development Committee.
3.5 Plans for Later Stage Development. Concurrently with the submission
and establishment of Product Plans and Budgets for the Early Stage Development
to be conducted under the Early Stage Development Program in accordance with
Section 3.4 above, RPRP shall submit to the Development Committee an outline of
the Product Plan and Budget for Later Stage Clinical Development for each
Collaboration Product in North America. Following RPRP's election to proceed
with Later Stage Clinical Development of a Collaboration Product under Section
6.1 below, RPRP shall submit a reasonably detailed Product Plan and Budget for
such Later Stage Development, and shall keep the Development Committee
reasonably informed as to any material changes to such Product Plan and Budget.
The Development Committee shall review and discuss such Product Plans and
Budgets; [*].
3.6 Decision Making. Except as set forth in Section 2.3.2(a) and 3.5
above, decisions of the Development Committee shall be made by majority
approval. In the event that a deadlock arises within the Development Committee,
the dispute will be referred to Introgen's president and RPRP's Biotech Division
President, who shall meet to resolve the dispute. If such dispute remains
deadlocked, the parties may submit such dispute to arbitration, on mutually
agreed terms.
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4. EARLY STAGE DEVELOPMENT PROGRAM FUNDING
4.1 Funding of Early Stage Development Program. During the Term of the
Early Stage Development Program, subject to Section 4.3 and 4.5 below, RPRP
shall pay to Introgen the budgeted Early Stage Development Program Costs set
forth in the applicable Program Plan and Budget. RPRP may elect to pay for Early
Stage Development Program Costs paid or accrued by Introgen in connection with
the Early Stage Development Program in excess of that provided for in the
Program Plan and Budget, as approved by the Development Committee. Introgen
shall apply all such funds paid by RPRP toward the Early Stage Development
Program in accordance with the Program Plan and Budget.
4.2 Term of Early Stage Development Program. Subject to Section 18.3
below, the Term of the Early Stage Development Program shall continue from the
Effective Date until October 1, 1997 or such later date as the parties may
agree.
4.3 Excess Early Stage Development Program Costs. Unless otherwise
agreed by the parties, Introgen shall not be obligated to incur nor shall RPRP
be obligated to pay Early Stage Development Program Costs in connection with the
Early Stage Development Program beyond amounts provided for in the approved
Program Plan and Budget.
4.4 Capital Equipment. The Program Plan and Budget may include
reasonable depreciation charges or lease expenses for certain capital equipment
to be purchased or leased by Introgen for use in connection with the Early Stage
Development Program. It is understood that Introgen will be the owner of all
capital equipment purchased by Introgen in connection with the Early Stage
Development Program, whether or not separately identified in the Program Plan
and Budget.
4.5 Payments. Promptly following the Effective Date, and prior to the
beginning of each calendar quarter during the Term of the Early Stage
Development Program, the Development Committee shall approve a spending forecast
for the next quarter, consistent with the Program Plan and Budget then in
effect. On or before October 15, 1994, and the first day of each subsequent
calendar quarter during the Term of the Early Stage Development Program, RPRP
shall pay to Introgen the amount of the approved forecasted amount; provided
that if for any reason the Development Committee does not approve a forecasted
amount prior to the due date, RPRP shall pay to Introgen the amount budgeted for
the quarter in the Program Plan and Budget them in effect. Within thirty (30)
days following the end of each quarter during the Term of the Early Stage
Development Program, Introgen shall provide to RPRP a summary of the Early Stage
Development Program Costs actually incurred by Introgen during such quarter. If
the actual development expenses incurred by Introgen in such quarter are less
than the amounts advanced by RPRP, then the difference will be carried forward
and credited to the next quarterly payment to be advanced. If such Early Stage
Development Program Costs were greater than the amount advanced by RPRP, then
RPRP agrees to pay the difference within thirty (30) days of receiving
Introgen's invoice, provided that in no event shall RPRP be obligated to
reimburse aggregate Program Development Costs in any calendar
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year in excess of the aggregate Program Development Costs reflected in the
Program Plan and Budget for such year then in effect.
5. COLLABORATION PRODUCT DEVELOPMENT OUTSIDE THE EARLY STAGE
DEVELOPMENT PROGRAM
5.1 RPRP Territory. RPRP shall be responsible for, and shall have the
exclusive right to conduct, all clinical development of Collaboration Products
within the Field in the RPRP Territory, at RPRP's own expense.
5.2 Co-Exclusive Territory. RPRP and Introgen shall each have the right
to develop the Collaboration Products within the Field in the Co-Exclusive
Territory, at their own expense, including the right to authorize Sublicensees
permitted under Section 7.5 and 13.4 below to conduct such development.
5.3 Other Territory. [*]
5.4 Use of Clinical Data.
5.4.1 Exchange. RPRP and Introgen shall each have access to
and the right to use for any purpose, including incorporation in any regulatory
filing, any preclinical and/or clinical data with respect to the Collaboration
Product developed by Introgen or RPRP in the course of the Early Stage
Development Program or otherwise (including in the Co-Exclusive Territory or the
RPRP Territory). Introgen and RPRP will provide to the other access to all
regulatory fillings made for clinical trial and marketing approval by Introgen
or RPRP or on their behalf in any country with respect to each Collaboration
Product, together with the underlying pre-clinical and clinical data, at
reasonable times and on reasonable notice, to the extent each has the right to
do so.
5.4.2 Sublicensees. Either Party may provide the IND package
prepared pursuant to Section 2.3.1, or any other clinical or preclinical data
provided under Section 5.4.1, to Sublicensees permitted under Section 7.5 and
13.4 below, except as set forth in this Section 5.4.2 and 5.4.3 below. Introgen
and RPRP shall each use commercially reasonable efforts to obtain from its
permitted Sublicensees reasonable, prompt access to all regulatory filings and
underlying data prepared by or for such Sublicensee with respect to a
Collaboration Product at reasonable times and in a reasonable manner, with the
right to provide such filings and/or access to the other of Introgen and RPRP
and their respective Sublicensees. However, if a prospective licensee is
unwilling to provide such access, the party hereto proposing to enter into the
sublicense (the "Sublicensing Party") may grant the sublicense, but the
Sublicensee shall not have access to clinical data or regulatory filings
provided by the other of Introgen or RPRP (or such other party's Sublicensees).
If the Sublicensee does not allow the Sublicensing Party to provide to the other
of Introgen or RPRP (and their Sublicensees) all clinical data and regulatory
filings made by or on behalf of the Sublicensee with respect to the sublicensed
Collaboration Product, the Sublicensing Party shall not provide to the
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Sublicensee access to any such clinical data or regulatory filings of the other
of Introgen or RPRP (or its respective Sublicensees).
5.4.3 Japanese Data. [*]
5.4.4 Regulatory Requirements. In all agreements with third
parties or Affiliates involving the development of clinical data for a
Collaboration Product, RPRP and Introgen shall require that such third parties
and Affiliates provide RPRP or Introgen (respectively) access to all such data,
to the extent that such data is required to be obtained from such third parties
by the FDA and/or the Commission of Proprietary Medicines of the European
Community or the European Medicines Evaluation Agency.
5.5 Development Committee Review. Notwithstanding Sections 5.1 or 5.2,
all protocols for clinical trials to be conducted for Collaboration Products in
any territory shall be submitted for review by the Development Committee prior
to the initiation of such trials and filing such protocols with any health
regulatory agency; and RPRP and Introgen will be bound by the recommendations of
the Development Committee with respect to such protocols. In addition, Introgen
and RPRP shall submit their product registration plans to the Development
Committee for review and comment, and the recommendations of the Development
Committee with respect to such plans shall be binding on Introgen and RPRP. It
is understood, however, that this Section 5.5 only requires that each party
abide by such recommendations as are agreed by the Development Committee, and
does not require that the Development Committee approve protocols or
registration plans.
5.6 Further Studies. In the event that RPRP and Introgen agree that
there are preclinical and/or clinical studies that may be mutually beneficial
with respect to obtaining approval for any Collaboration Products outside North
America. Introgen and RPRP may agree to conduct such studies jointly, on
mutually agreed terms.
6. EXCLUSIVITY
6.1 Option to Commercialize. Following completion of Phase I clinical
trials for a Collaboration Product during the Term of the Early Stage
Development Program, Introgen shall provide to RPRP a report summarizing the
results of such Phase I trials. Within one hundred eighty (180) days following
its receipt of such report, RPRP shall notify Introgen whether RPRP wishes to
proceed with the Later Stage Clinical Development and commercialization of such
Collaboration Product as provided in this Agreement, taking into consideration
the recommendation of the Development Committee. In the event that RPRP does not
so notify Introgen within the one hundred eighty (180) day period, such product
shall cease to be a "Collaboration Product" for all purposes of this Agreement
(but such unelected product shall continue to be subject to Section 6.2 below).
As used in this Section 6.1, "completion of Phase I clinical trials" for a
particular Collaboration Product shall be deemed to occur when Introgen has
dosed all patients called for in the protocol for Phase I clinical trials filed
in the applicable IND, and has either completed all patient follow-up as defined
in such protocol or initiated the next phase of clinical trials. Following
RPRP's election to proceed with
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the further development and commercialization of a Collaboration Product under
this Section 6.1, the particular Collaboration Product shall be as defined in
the IND therefor filed with the FDA pursuant to the Early Stage Development
Program. After the Term of the Early Stage Development Program, "Collaboration
Products" shall include only those Collaboration Products that completed Phase I
clinical trials during the Term of the Early Stage Development Program and with
respect to which RPRP has exercised its right to further develop and
commercialize the same pursuant to this Section 6.1.
6.2 Exclusivity. During the period from the Effective Date until the
tenth anniversary thereof, neither Introgen nor RPRP, RPR Inc. or their
Controlled Affiliates, shall develop or commercialize a product within the
Field, except as a Collaboration Product pursuant to this Agreement.
Notwithstanding the foregoing, it is understood that Introgen may conduct
research and development work on potential products and technologies for use
within the Field outside the Early Stage Development Program; provided that
Introgen may not license to third parties or market any product within the Field
during the ten (10) year period specified in this Section 6.2, without RPRP's
prior approval.
6.3 Right of First Discussion in Expanded Field. At least one hundred
eighty (180) days prior to commercializing, or granting to any third party a
right or license to commercialize, a product specifically directed for use
within the Expanded Field, Introgen and its Controlled Affiliates shall notify
RPRP, and upon written request by RPRP within thirty (30) days after receiving
such notice, the parties will discuss as mutually convenient a potential
agreement to collaborate with respect to such product, on such terms as may be
agreed. Similarly, at least one (180) days prior to commercializing, or granting
to a third party a right or license to market, a product specifically directed
for use within the Expanded Field, or acquiring a right or license from a third
party with respect to such a product, RPRP shall notify Introgen, and upon
written request by Introgen within thirty (30) days after receiving such notice,
the parties will discuss as mutually convenient a potential agreement to
collaborate with respect to such product, on such terms as may be agreed. RPRP
shall cause RPR, Inc. and their Controlled Affiliates to comply with this
Section 6.3 to the same extent as RPRP is bound by this Section. Each party's
obligations under this Section 6.3 shall terminate on the tenth anniversary of
the Effective Date. If either Introgen or RPRP (as the case may be) does not
request further discussions within thirty (30) days after receiving a notice
from the other party under this Section 6.3, or if after such a request the
parties do not enter into an agreement within the one hundred eighty (180) day
period described above for any reason, the other party shall have no further
obligations under this Section 6.3 with respect to the product or other subject
matter described in its notice.
7. MARKETING RIGHTS
7.1 RPRP Territory. RPRP shall have the exclusive right to market, sell
and distribute the Collaboration Products in the RPRP Territory for use within
the Field.
7.2 Co-Exclusive Territory. RPRP and Introgen shall each have the
co-exclusive right to market, sell and distribute Collaboration Products in the
Co-Exclusive Territory for use within the
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Field, and subject to Article 9, each may retain any revenues it obtains in the
Co-Exclusive Territory as the result of such activities, without accounting to
the other. Each of RPRP and Introgen may market the Collaboration Product in the
Co-Exclusive Territory under such labels and tradenames as it may elect;
provided that neither party shall have any right to use tradenames or trademarks
owned by the other party or by the Joint Venture described in Section 7.3.
7.3 North America. Rights to market, sell and distribute the
Collaboration Products in North America shall be as follows:
7.3.1 Election to Form Joint Venture. Within [*] after the
filing of a PLA for a Collaboration Product in the United States, on request by
Introgen, the parties shall establish a joint commercial operation to market
such Collaboration Product within the Field throughout North America. Such
operation may be a joint venture company or such other arrangement as the
parties mutually agree (the "Joint Venture"). No later than ninety (90) days
after filing of a PLA for a Collaboration Product in the United States, Introgen
and RPRP shall meet to discuss RPRP's preliminary launch, marketing and sales
plans, launch budget projections, Introgen's possible contributions and RPRP's
Development Costs for such Collaboration Product.
7.3.2 Responsibilities and Profit. Introgen and RPRP will
equally share the costs and responsibilities for marketing the Collaboration
Product in North America through the Joint Venture, and will share any profits
from sales of such Collaboration Product in North America [*] basis; provided,
however that [*]. At the time Introgen elects to establish the Joint Venture,
the parties will agree upon the form of each party's contribution (whether
physical resources, funding or otherwise), and each party shall thereafter
provide the agreed contribution.
7.3.3 RPRP Development Costs. As used in this Section 7.3,
"RPRP Development Costs" shall mean: (i) amounts [*] of such Collaboration
Product [*]; and (II) [*] to such Later Stage Clinical Development [*] (on a
proportionate basis based on the percentage of total [*]; and (iii) [*] of the
amounts [*] the Collaboration Product outside North America, and [*],
Development Costs shall include [*] the amounts set forth in (i) and (ii) above.
As used herein, a "pivotal study" shall mean a clinical trial conducted outside
North America that is required to be filed with the FDA in order to obtain
marketing approval in the United States and that is designated as a "pivotal
study" for such purposes by the Development Committee. RPRP Development Costs
("Costs") shall be adjusted to then-current dollars using the change in the
Consumer Price Index, U.S. Cities Average for All Urban Consumers, as published
by the U.S. Department of Labor, Bureau of Labor Statistics from the date the
Costs are incurred until the date such costs are recouped.
7.3.4 RPRP Exclusive. In the event that Introgen does not
elect to enter into a Joint Venture for marketing of a Collaboration Product in
North America in accordance with 7.3.1 above, or subsequently elects not to
proceed with such Joint Venture, RPRP shall have the exclusive right to market,
sell and distribute such Collaboration Product in North America, subject to the
payment of the amounts set forth in Section 8.1 and Article 9.
7.4 Other Territory. [*]
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7.5 Sublicensees. Introgen may authorize Sublicensees to market, sell
and distribute Collaboration Products in the Co-Exclusive Territory and other
territories in which Introgen has the right to market Collaboration Products
under this Agreement; provided that Introgen shall notify RPRP of any
prospective Sublicensee and consult with RPRP prior to so authorizing any such
Sublicensee. Introgen shall not authorize any such Sublicensee to authorize
further Sublicensees to market and sell a Collaboration Product. Unless
otherwise agreed by RPRP and Introgen, RPRP and the Joint Venture shall not
authorize any Sublicensee to market, sell or distribute any Collaboration
Product, provided, however, that either party may market, sell or distribute
through an Affiliate.
7.6 Covenants. It is understood that, with respect to any particular
Collaboration Product, the manufacture, use and sale of such Collaboration
Products by Introgen and/or RPRP in any country may not require a license under
intellectual property rights of the other. Accordingly, notwithstanding that
such a license may not be required, neither Introgen nor RPRP shall market, sell
or distribute a Collaboration Product anywhere in the world except in accordance
with this Agreement, including this Article 7.
8. ROYALTIES
8.1 Running Royalties. RPRP shall pay running royalties to Introgen [*]
of Net Sales by RPRP and its Affiliates (and its Sublicensees permitted under
Sections 7.5 above and 13.4 below) of Collaboration Products [*].
Notwithstanding the above, no royalty will be due to Introgen under this Article
8 with respect to such sales of a Collaboration Product in North America if a
Joint Venture is formed for such Collaboration Products pursuant to Section 7.3
above and such Joint Venture has not terminated.
8.2 Royalty Offset. RPRP and Introgen understand and recognize that
RPRP is a party to consulting, license and/or research funding agreements (but
not agreements where third party non-government investors finance the research
or development of technology for RPRP) with other commercial and research
institutions ("collaborators") which agreements provide for RPRP's payment of
royalties on products manufactured, used or sold by RPRP based on the
contribution of said collaborators to the discovery and development of said
products. Consequently, it is foreseeable that a Collaboration Product developed
with Introgen may become subject to multiple royalty obligations as the result
of more than one collaborator's contribution to the development of, or ownership
of patent rights covering, the Collaboration Product. In order to avoid the
development of a dispute over royalty entitlements and to provide RPRP with the
incentive to invest in and commercialize products which might otherwise not be
commercialized due to excess royalty obligations, RPRP and Introgen agree that
the royalty rates applicable to any specific Collaboration Product pursuant to
the first sentence of Section 8.1 (the "Introgen Royalty") or pursuant to an
agreement with a third party collaborator not an Affiliate at the time of
agreement or the payment of a royalty (the "Third Party Royalties") may be
reduced to provide reasonable royalty income to each contributing collaborator.
RPRP shall make reasonable and diligent efforts to establish agreements and
amend its existing royalty-bearing agreements with said collaborators so as to
ensure the fair distribution of royalty income based on Collaboration Products
for which more than one royalty claim is made, provided the Introgen Royalty
paid to Introgen shall in no event be adjusted to [*] on a country by country
basis
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(notwithstanding any other provision of this Agreement). It is understood that
this Section shall not be invoked by RPRP as regards Introgen until the sum of
the Introgen Royalty and Third Party Royalties payable by RPRP for a
Collaboration Product ("Total Royalty") is greater than [*] on a country by
country basis. Thereafter, royalty reduction shall be applied equitably in
accordance with the formula in this Section 8.2, taking into account each
collaborator's minimum royalty rate, to reduce on a percentage basis the royalty
rates specified in all collaborator agreements having an applicable royalty
adjustment provision therein and thereby adjust, to the extent possible, RPRP's
Total Royalty burden to no more than [*] on a country by country basis.
(a) Royalty payment reductions shall be calculated
quarterly, based on the Total Royalties payable by RPRP with respect to Net
Sales for such quarter. Within ninety (90) days after the end of each calendar
year, RPRP and Introgen shall reconcile the calculation of royalty reductions
under this Section 8.2 for the preceding calendar year, based upon the total Net
Sales for such year and the Total Royalties with respect to such Net Sales. If
the amount deducted from the Introgen Royalty exceed the amount of such
reconciled reduction, the difference shall be paid to Introgen within thirty
(30) days; if the amount actually deducted from the Introgen Royalty is less
than the amount of such reconciled reduction, the difference may be applied by
RPRP as a credit against royalties owed to Introgen in the then-current calendar
year, in equal quarterly installments.
(b) Unless a more equitable procedure is agreed to by
all participating parties to whom RPRP owes a royalty on a Collaboration
Product, the reduction in the Introgen Royalty and each of the other Third Party
Royalties shall be calculated and applied to royalty payment obligations on a
country by country basis as follows:
(i) Calculate the effective overall Royalty
rate for each collaborator (i.e., Introgen and each of the
other collaborators receiving Third Party Royalties) based on
total worldwide Net Sales for the quarter or year, as
applicable ("EFF RATE");
(ii) On a country by country basis, total
the EFF RATE of all collaborators ("TOTAL RATE");
(iii) On a country by country basis, [*];
If [*] is greater than [*]:
(iv) Calculate the adjustable portions of
[*];
(v) Calculate [*];
(vi) Multiply the [*] for each collaborator
by the [*];
(vii) Subtract the product obtained in (vi)
from the [*] for each collaborator [*]; and
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(viii) Calculate for each collaborator their
reduced royalty rate by [*] on a country by country basis.
(c) Notwithstanding the foregoing calculation, in no
event shall the Introgen Royalty with respect to a Collaboration Product in any
country be reduced by an amount greater than [*] of the amount by which the
Total Royalty for such Collaboration Product in such country exceeds [*] (prior
to any reduction under a provision substantially identical to Section 8.2(b)
above). However, it is understood that at such time as third parties have agreed
to be bound by the calculation in this Section 8.2, and Introgen approves the
resulting impact on the Introgen Royalty, Introgen may agree to waive this
paragraph (c).
(d) At least ninety (90) days prior to entering into
any agreement that would require the payment of any royalty to a third party
with respect to a patent right or technology specifically intended for use in a
Collaboration Product, RPRP or Introgen (as the case may be) agrees to notify
the other of such fact and the party with whom it proposes to enter into such
agreement. Following such notice, RPRP and Introgen (respectively) agree to keep
the other reasonably informed as to the progress of its negotiations with such
third party, including the proposed principal terms of the agreement, as they
reasonably progress. It is understood that the terms of the agreement will not
have been finalized at the time of the initial notice under this Section 8.2(c),
and that such notice is only to inform the other party of an intention to enter
into such an agreement.
9. THIRD PARTY ROYALTIES
9.1 RPRP Obligations. RPRP shall be solely responsible for the payment
of any royalties, license fees and milestone or other payments due to third
parties under licenses or similar agreements necessary to allow the manufacture,
use or sale of any Collaboration Product worldwide, except as set forth in 9.3
below and except for royalties due as a result of sales of Collaboration
Products in the Co-Exclusive Territory or the Undesignated Territory by
Introgen, its Affiliates or Sublicensees (other than RPRP). RPRP's
responsibilities hereunder shall include the reimbursement of Introgen for
royalties owed by Introgen on sales of Collaboration Products pursuant to that
certain Patent and Technology License Agreement executed as of April 21, 1994,
between Introgen and the Board of Regents of the University of Texas System (the
"UT Agreement"). It is understood that Introgen intends to have in effect a
subsequent Patent and Technology License Agreement with the University of Texas,
dated as of July 20, 1994 (the "Restated UT Agreement"), which will supersede
the existing UT Agreement, and that when the Restated UT Agreement becomes
effective, the reference in the preceding sentence to the Patent and Technology
Agreement shall mean the Restated UT Agreement. In the event that Introgen
enters into any other license or agreement during the term of this Agreement for
which royalties, license fees or milestone or other payments would be due with
respect to a Collaboration Product, RPRP shall not be obligated to pay any
amounts due with respect to such license or agreement unless RPRP approves such
agreement or license and agrees to pay the same to the extent such relates to
the commercialization of Collaboration Products by RPRP, its Affiliates and
permitted Sublicensees. If RPRP does not so approve any such license or
agreement
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and agree to pay such amounts, the subject matter covered by such license or
agreement shall not be within the Introgen Technology for purposes of this
Agreement.
9.2 Introgen Obligations. If RPRP enters into a license or agreement
during the term of this Agreement for which royalties would be due with respect
to a Collaboration Product, Introgen shall not be obligated to pay any royalties
due with respect to such license or agreement unless Introgen approves such
license or agreement and agrees to pay the same to the extent such relates to
the commercialization of Collaboration Products by Introgen, its Affiliates and
Sublicensees (other than RPRP), and agrees to pay [*] with respect to the
Collaboration Products that are sold by Introgen, its Affiliates and
Sublicensees in the Co-Exclusive Territory. If Introgen does not so approve any
such license or agreement and agree to pay such the amounts, the subject matter
covered by such license or agreement shall not be within the RPRP Technology for
purposes of this Agreement. Introgen's portion of any such license fees,
milestone payments and other amounts (other than royalties) shall be payable on
the later of the date the amounts are payable by RPRP to the third party or the
first commercial sale of the Collaboration Product by Introgen, its Affiliate or
Sublicensee in the Co-Exclusive Territory.
9.3 North America. In the event that a Joint Venture is formed for a
Collaboration Product in North America pursuant to Section 7.3.1, all royalties
due third parties for the manufacture, use or sale of Collaboration Products in
North America, and [*] of all license fees, milestone payments and other
payments made to third parties under licenses or agreements with respect to
patent rights or technologies incorporated in the Collaboration Products, shall
be deducted from the resulting revenues to the Joint Venture prior to
determining the profits to be shared by Introgen and RPRP from such North
American sales as set forth in Section 7.3.2; provided that both RPRP and
Introgen approved such license or agreement. If both RPRP and Introgen do not
approve such license or agreement, the patent rights or technologies covered
thereby shall not be included within the Introgen Technology or RPRP Technology
licensed to the Joint Venture.
9.4 Efforts to Obtain Sublicense Rights. If RPRP or Introgen undertakes
to acquire from a third party a technology or patent rights that are intended
for use or application with respect to a Collaboration Product, RPRP and
Introgen (as the case may be) shall use good faith efforts to acquire from such
third party the right to sublicense or otherwise make available to the other
party hereto, such technology or patent rights to the extent the same are to be
used in or applied to Collaboration Products. It is understood, however, that
neither party will be obligated to incur additional costs or hardship in
connection with such efforts to acquire such sublicensing or other rights in
accordance with this Section 9.4.
10. PAYMENTS; BOOKS AND RECORDS
10.1 Royalty Reports and Payments. After the first commercial sale of a
Collaboration Product on which royalties are required, RPRP agrees to make
quarterly written reports to Introgen within [*] after the end of each calendar
quarter, stating in each such report the number, description, and aggregate Net
Sales of the Collaboration Product sold during the calendar quarter upon which a
royalty is payable under Section 8.2 above. Concurrently with the making of such
reports, RPRP shall
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pay to Introgen royalties at the rate specified in Article 8. In addition, RPRP
and Introgen each agree to submit to the other such reports and payments as are
payable to third parties and for which RPRP or Introgen (as the case may be) are
responsible under Article 9 above, at least ten (10) days prior to the date such
reports and payments are due to the third party.
10.2 Payment Method. All payments due under this Agreement shall be
made by bank wire transfer in immediately available funds to an account
designated by the recipient. All payments hereunder shall be made in U.S.
dollars.
10.3 Late Payment. Any payments due under this Agreement which are not
paid within ten (10) days of the date such payments are due shall bear interest
to the extent permitted by applicable law at the prime rate as reported by the
Chase Manhattan Bank, New York, New York, on the date such payment is due, plus
an additional two percent (2%), calculated on the number of days such payment is
delinquent. This Section 10.3 shall in no way limit any other remedies available
to any party.
10.4 Currency Conversion. If any currency conversion shall be required
in connection with the calculation of royalties hereunder, such conversion shall
be made using the selling exchange rate for conversion of the foreign currency
into U.S. Dollars, quoted for current transactions reported in The Wall Street
Journal for the last business day of the calendar quarter to which such payment
pertains.
10.5 No Withholding Taxes. So that there will be no withholding taxes
applicable to payments by RPRP to Introgen under this Agreement, RPRP agrees
that all amounts to be paid to Introgen hereunder shall be paid directly by RPRP
from accounts of RPRP in the United States to the accounts of Introgen
designated under Section 10.3 above.
10.6 Records; Inspection. Each party and its Affiliates shall keep
complete, true and accurate books of account and records for the purpose of
determining the royalty amounts payable under this Agreement. Such books and
records shall be kept at the principal place of business of such party or its
Affiliate, as the case may be, for at least [*] following the end of the
calendar quarter to which they pertain. Such records will be open for inspection
during such [*] period by a representative or agent of the other party for the
purpose of verifying the royalty statements. Such inspections may be made no
more than once each calendar year, at reasonable times mutually agreed by
Introgen and RPRP. The auditing party's representative or agent will be obliged
to execute a reasonable confidentiality agreement prior to commencing any such
inspection. Inspections conducted under this Section 10.7 shall be at the
expense of the auditing party, unless a variation or error producing an increase
exceeding [*] of the amount stated for any period covered by the inspection is
established in the course of any such inspection, whereupon all costs relating
to the inspection for such period will be paid the party being audited.
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11. DUE DILIGENCE
11.1 Due Diligence. RPRP shall use its best efforts to diligently
conduct the Later Stage Clinical Development with respect to at least one
Collaboration Product and to obtain regulatory approvals to market such
Collaboration Product in North America and the RPRP Territory. In addition, RPRP
shall use no less the reasonable efforts to complete Later Stage Clinical Trials
and obtain such approvals for all other Collaboration Products. After obtaining
regulatory approvals for any Collaboration Products in a county within the RPRP
Territory (and if a Joint Venture is not formed with respect to such
Collaboration Product, in a county within North America), RPRP shall launch such
Collaboration Product and use no less than reasonable efforts to promote and
meet the market demand therefor in such county.
12. MANUFACTURING RIGHTS
12.1 RPRP Territory. Except as otherwise provided herein, RPRP shall
have the exclusive right to manufacture Collaboration Products for sale within
the Field in the RPRP Territory.
12.2 Co-Exclusive Territory. Except as provided herein, RPRP and
Introgen shall each have the right to manufacture its respective requirements
for the Collaboration Products distributed in the Co-Exclusive Territory. At
Introgen's option and request, Introgen shall have the right to purchase
Collaboration Products from RPRP for sale in the Co-Exclusive Territory, at a
price equal to [*], such right being subject to RPRP's manufacturing capacity
after providing for RPRP's reasonably anticipated supply requirements. However,
in no case shall the [*] the average selling price of the Collaboration Products
in the country for which Introgen resells such Collaboration Products.
12.3 North America. Subject to Section 12.3.3 below, Introgen shall
have the exclusive right to supply Collaboration Products for sale in North
America.
12.3.1 Manufacture and Supply. In the event that a Joint
Venture is formed under 7.3.1 above to market a Collaboration Product in North
America, Introgen shall have the exclusive right to supply such Collaboration
Product to the Joint Venture, and except as set forth below, the Joint Venture
shall purchase such Collaboration Product exclusively from Introgen. In the
event that a Joint Venture is not so formed with respect to a Collaboration
Product, Introgen shall have the exclusive right to supply such Collaboration
Product to RPRP for sale in North America, and RPRP shall purchase such
Collaboration Product exclusively from Introgen for sale in North America. At
its option, however, Introgen may forego such rights to manufacture for North
America, in which case RPRP may do so as provided in 12.3.3 below. It is
understood that Introgen may engage subcontractors with respect to the
manufacture of Collaboration Products for supply to the Joint Venture or RPRP.
12.3.2 Transfer Price. Introgen will supply Collaboration
Products to the Joint Venture or RPRP (as the case may be) for sale in North
America at a price equal to [*]; provided, however, that in no case shall the
margin portion of Introgen's transfer price [*] the average selling
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price of the Collaboration Products in North America. For purpose of
Collaboration Products used for Later Stage Clinical Development the price will
be equal to [*].
12.3.3 [*]
12.4 Other Territory. For countries within the Other Territory, the
party having exclusive marketing rights in any such country shall also have
rights to manufacture Collaboration Products for sale in such country, unless
otherwise agreed by the parties.
12.5 Supply Agreements. Upon request by RPRP or Introgen, the parties
shall enter into a supply agreement on reasonable and customary terms with
respect to the supply arrangements contemplated in 12.2 and 12.3 above.
13. LICENSE GRANTS
13.1 Grant to RPRP. Subject to the terms and conditions of this
Agreement, Introgen hereby grants to RPRP the following licenses and
sublicenses, as the case may be, under the Introgen Technology: (i) to use and
sell Collaboration Products in the Field within the RPRP Territory and the
Co-Exclusive Territory; (ii) to make and have made the Collaboration Products
anywhere in the world solely for sale and use in the Field within the RPRP
Territory and the Co-Exclusive Territory, and subject to Section 12.3.3 above,
in North America; and (iii) subject to Sections 7.3 and 12.3, to use and sell
Collaboration Products in the Field in North America. The foregoing licenses to
use and sell Collaboration Products under (i) and (iii) shall be: (a)
royalty-bearing and exclusive as to the RPRP Territory and North America, and
(b) royalty-free (except as provided in Article 9) and non-exclusive as to the
Co-Exclusive Territory. The license under (ii) to make Collaboration Products
shall be non-exclusive.
13.2 Grant to Introgen. Subject to the terms and conditions of this
Agreement, RPRP hereby grants to Introgen the following licenses and
sublicenses, as the case may be, under the RPRP Technology: (i) to use and sell
the Collaboration Products in the Field in the Co-Exclusive Territory; (ii) to
make and have made the Collaboration Products anywhere in the world for use and
sale in the Field solely within North America and the Co-Exclusive Territory.
The licenses under (i) above shall be royalty-free and co-exclusive (with RPRP),
and the license under (ii) above shall be royalty-free (except as provided in
Article 9) and non-exclusive.
13.3 Grant to Joint Venture. In the event that a Joint Venture is
formed under Section 7.3 above to market a Collaboration Product in North
America and a license grant is required to operate, Introgen and RPRP shall each
grant and hereby grant to the Joint Venture an exclusive, royalty-free (except
as provided in Article 9) license under the Introgen Technology and the RPRP
Technology (respectively) to use and sell such Collaboration Product in North
America.
13.4 Sublicenses. Introgen shall have the right to grant sublicenses to
third parties of the rights granted by RPRP in Section 13.2 above (including the
co-exclusive rights granted to Introgen under 13.2(i)), provided, however,
Introgen will notify RPRP of any prospective Sublicensee and
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consult with RPRP prior to granting any such sublicense. Introgen may not
authorize any such Sublicensee in the Co-Exclusive Territory to grant further
sublicenses. Unless agreed in writing by Introgen and RPRP, neither RPRP nor the
Joint Venture may sublicense the rights granted in Section 13.1 or 13.3 above or
otherwise authorize any Sublicensees to sell or market Collaboration Products.
13.5 Improvements by Introgen.
13.5.1 [*]
13.5.2 "Program Inventions." As used in 13.5.1 above, a
"Program Invention" shall mean any invention that is first conceived and reduced
to practice by employees or contractors of Introgen in the course of performing
the Early Stage Development Program (i.e. as a part of work specifically
identified in a Program Plan and Budget), and for which RPRP has funded under
the Early Stage Development Program a substantial portion of the in vitro and in
vivo testing of such invention under the Development Program.
13.5.3 Period. Introgen's obligations under this Section 13.5
shall terminate five (5) years after the end of the Term of the Early Stage
Development Program.
13.6 No Rights Beyond Collaboration Products. Except as may be agreed
by RPRP and Introgen after the Effective Date, this Article 13, and Articles 7
and 12 above, shall not be deemed to grant to RPRP rights with respect to the
use, in products other than the Collaboration Products, of Introgen Technology
incorporated in such Collaboration Products; nor shall such provisions of this
Agreement be deemed to restrict Introgen's right to exploit any Introgen
Technology in products other than Collaboration Products (subject to Sections
13.5 and 6.2 above).
14. INTELLECTUAL PROPERTY
14.1 Ownership of Inventions. Inventorship of inventions and other
intellectual property rights conceived and/or reduced to practice in connection
with the Early Stage Development Program shall be determined in accordance with
the patent and other intellectual property laws of the United States. Title to
all inventions and other intellectual property made solely by an Introgen
employee in connection with the Early Stage Development Program shall be owned
by Introgen. Title to all inventions and other intellectual property made solely
by an RPRP employee in connection with the Early Stage Development Program shall
be owned by RPRP. Title to all inventions and other intellectual property made
jointly by employees of Introgen and RPRP in connection the Early Stage
Development Program shall be jointly owned by RPRP and Introgen. Except as
expressly provided in this Agreement, it is understood that neither party shall
have any obligation to account to the other for profits, or to obtain any
approval of the other party to license or exploit a joint invention, by reason
of joint ownership of any such intellectual property.
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14.2 Patent Prosecution.
14.2.1 Sole Inventions. Introgen or RPRP, as the case may be,
shall, at its expense, control the preparing, filing, prosecuting and
maintaining the patent applications and patents within the Introgen Technology
and RPRP Technology (respectively) worldwide, in such countries as it deems
appropriate, and conducting any interferences, re-examinations, reissues,
oppositions or requests for patent term extensions relating to the Introgen
Technology and RPRP Technology (respectively) using counsel of its choice.
14.2.2 Joint Inventions. To provide for the most sensible,
efficient and cost effective means to protect inventions that are owned jointly
by RPRP and Introgen under Section 14.1 above, patent counsel for Introgen and
RPRP shall consult with each other. As a result of such consultation, patent
counsel will be chosen to prepare, file, prosecute and maintain patent
applications and patents worldwide on such joint inventions, and the parties
shall share the costs thereof as reasonably agreed, based upon the relative
benefits thereof to each party.
14.2.3 Prosecution by Other Party. In the event that Introgen
or RPRP, as the case may be (the "Owner"), declines to file or, having filed,
declines to further prosecute and maintain any such patent applications or
patents in accordance with 14.2.1 above, or conduct any interferences or
oppositions, or request any re-examinations, reissues or extensions of patent
term with respect to the Technology it owns in accordance with 14.2.1 above, the
other party shall have the right to file, prosecute and maintain such patent
applications or patents or conduct such interferences, at its own expense, in
the name of the Owner in any country, in which event the Owner of such
Technology shall provide, at the other party's request and expense, all
reasonable assistance. If the Owner of such Technology declines or fails to take
any such actions, such Owner shall notify the other party hereto at least sixty
(60) days prior to the date the next action or filing is due to be taken with
respect to the subject patent application or patent. One-half of all such
expenses shall be deducted from the royalties or profits due to the Owner with
respect to the country in which the patent issues.
14.2.4 Cooperation. Each of Introgen and RPRP shall keep the
other reasonably informed as to the status of such patent matters, including,
without limitation, by providing the other the opportunity to review and comment
on any documents which will be filed in any patent office, and providing the
other copies of any documents that such party receives from such patent offices,
including notice of all interferences, re-examinations, oppositions or requests
for patent term extensions. Introgen and RPRP shall each cooperate with and
assist the other in connection with such activities, at the others' request and
expense.
14.2.5 Third Party Rights. The foregoing provisions of this
Article 14 shall be subject to and limited by any agreements pursuant to which
Introgen and RPRP, as the case may be, acquired any particular Introgen
Technology or RPRP Technology. It is understood that such agreements may
require, for example, that the licensor party from whom Introgen or RPRP
acquired a license to such Technology control the prosecution of particular
patents and patent applications and does not permit access or an opportunity to
comment on the any documents filed in patent offices.
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14.3 Defense of Third Party Infringement Claims.
14.3.1 Infringement Claims. If the production, sale or use of
any Collaboration Product pursuant to this Agreement results in a claim, suit or
proceeding alleging patent infringement against Introgen or RPRP (or their
respective Affiliates or Sublicensees), such party shall promptly notify the
other party hereto in writing setting forth the facts of such claim in
reasonable detail. The party subject to such claim shall have the exclusive
right to defend and control the defense of any such claim, suit or proceeding,
at its own expense, using counsel of its own choice, provided, however, it shall
not enter into any settlement which admits or concedes that any aspect of the
Technology of the other party hereto is invalid or unenforceable without the
prior written consent of such other party. Such party shall keep the other party
hereto reasonably informed of all material developments in connection with any
such claim, suit or proceeding.
14.3.2 Third Party Blocking Patent. If an unexpired third
party patent(s) covering the manufacture, use or sale of a Collaboration Product
exist(s) in a country where the Collaboration Product is being manufactured,
used or sold during the term of this Agreement, and if it should prove in RPRP's
judgment impractical or impossible for it or its sublicensees to continue the
manufacture, use or sale of Collaboration Product in such country without
obtaining a royalty-bearing patent license from such third party, then RPRP
shall have the following options:
(a) RPRP may terminate the continued manufacture
and/or sale of the Collaboration Product in such country upon sixty (60) days'
written notice to Introgen, with Introgen's written consent, whereupon RPRP
shall have no further rights in such country; or
(b) RPRP may obtain a license from such third party
and treat such third party as a "collaborator" for purposes of Section 8 and 9
for such country.
14.4 Enforcement.
14.4.1 Solely Owned Technology. Subject to 14.4.2 below, in
the event that any Introgen Technology or RPRP Technology necessary for
manufacture, use and sale of a Collaboration Product is infringed or
misappropriated by a third-party in any country in which Introgen or RPRP has
rights to market such Collaboration Product, or is subject to a declaratory
judgment action arising from such infringement in such country, Introgen or RPRP
(respectively) shall promptly notify the other party hereto. The owner of such
Technology shall have the initial right (but not the obligation) to enforce the
Technology it owns, or defend any declaratory judgment action with respect
thereto, at its expense. In the event that the owner of such Technology fails to
initiate a suit to enforce such Technology against a commercially significant
infringement in the Field by a third party within one hundred eighty (180) days
of a request by the other party to do so if such infringement is occurring in a
territory in which the other party (the "Licensee") has the right to market the
subject Collaboration Product, such Licensee may initiate such suit in the name
of the owner of such Technology against such infringement, at the expense of
such Licensee. The party involved in any such claim, suit or proceeding, shall
keep the other party hereto reasonably informed of the progress of any such
claim, suit or proceeding. Any recovery by such party received as a result
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of any such claim, suit or proceeding shall be used first to reimburse such
party for all expenses (including attorneys and professional fees) incurred in
connection with such claim, suit or proceeding. If the Party initiating the suit
was the owner of the subject Technology, all of the remainder shall be retained
by such owner, and if applicable, included in Net Sales for purposes of Article
8 if the infringing activities were in a country in which royalties would be due
on sales of a Collaboration Product. If the party initiating the suit is the
Licensee, twenty percent (20%) of the remainder shall be paid to the owner of
the subject Technology and eighty percent (80%) to the Licensee.
14.4.2 Jointly Owned Technology. Notwithstanding 14.4.1 above,
in the event that any Technology that is jointly owned by RPRP and Introgen
under Section 14.1 of this Agreement is infringed or misappropriated by a third
party, Introgen and RPRP shall mutually agree upon whether, and, if so, how, to
enforce such Joint Technology or defend such Joint Technology in a declaratory
judgment or similar proceeding.
15. REPRESENTATIONS AND WARRANTIES
15.1 Warranties. Each party warrants and represents to the other that
(i) it has the full right and authority to enter into this Agreement and grant
the rights and licenses granted herein; (ii) it has not previously granted and
will not grant any rights in conflict with the rights and licenses granted
herein; (iii) and there are no existing or threatened actions, suits or claims
pending against it with respect to its Technology or its right to enter into and
perform its obligations under this Agreement and (iv) it has not previously
granted, and will not grant during the term of this Agreement, any right,
license or interest in or to its Technology, or any portion thereof, to
manufacture, sell or use a Collaboration Product that is in conflict with the
rights or licenses granted under this Agreement. RPRP further represents and
warrants that, as of the Effective Date, it is a wholly owned subsidiary of RPR
Inc., and that no other "person" (as defined in the Securities Exchange Act of
1934) owns beneficially more than eighty percent (80%) of the outstanding
capital stock of RPR Inc. Introgen further represents and warrants that a true
and correct copy of the UT Agreement and the Restated UT Agreement (as defined
in Section 9.1 above) were provided to RPRP by facsimile from Wilson, Sonsini,
Goodrich & Rosati on September 28, 1994.
15.2 Disclaimer of Warranties. Introgen and RPRP specifically disclaim
any guarantee that the Early Stage or Later Stage Development Program will be
successful, in whole or in part. To the extent that Introgen and RPRP have
complied with Articles 2, 3, 4 and 14.2 hereof, the failure of the parties to
successfully develop Collaboration Products will not constitute a breach of any
representation or warranty or other obligation under this Agreement. Neither
Introgen nor RPRP makes any representation or warranty or guaranty that the
Program Plan and Budget will be sufficient for the successful completion of the
Early Stage Development Program. INTROGEN AND RPRP EXPRESSLY DISCLAIM ANY
WARRANTIES OR CONDITIONS, EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, WITH RESPECT
TO THE EARLY STAGE OR LATER STAGE DEVELOPMENT PROGRAM AND THE INTROGEN AND RPRP
INTELLECTUAL PROPERTY, INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF
MERCHANTABILITY, NONINFRINGEMENT, OR FITNESS FOR A PARTICULAR PURPOSE,
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VALIDITY OF INTROGEN OR RPRP TECHNOLOGY, PATENTED OR UNPATENTED, AND
NON-INFRINGEMENT OF THE INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES.
15.3 Effect of Representations and Warranties. It is understood that if
the representations and warranties under this Article are not true and accurate
and Introgen or RPRP incurs liabilities, costs or other expenses as a result of
such falsity, Introgen or RPRP, as the case may be, shall indemnify, defend and
hold the other party harmless from and against any such liabilities, costs or
expenses incurred, provided that the indemnifying party receives prompt notice
of any claim against Introgen or RPRP, as the case maybe, resulting from or
related to such falsity, the cooperation of the indemnified party, as requested
in connection with any such claim, and the sole right to control the defense or
settlement thereof.
16. CONFIDENTIALITY
16.1 Confidential Information. Except as expressly provided herein, the
parties agree that, for the term of this Agreement and for five (5) years
thereafter, the receiving party shall keep completely confidential and shall not
publish or otherwise disclose and shall not use for any purpose any information
furnished to it by the other party hereto pursuant to this Agreement except to
the extent that it can be established by the receiving party by competent proof
that such information:
(a) was already known to the receiving party, other
than under an obligation of confidentiality, at the time of disclosure;
(b) was generally available to the public or
otherwise part of the public domain at the time of its disclosure to the
receiving party;
(c) became generally available to the public or
otherwise part of the public domain after its disclosure and other than through
any act or omission of the receiving party in breach of this Agreement; or
(d) was subsequently lawfully disclosed to the
receiving party by a person other than a party or developed by the receiving
party without reference to any information or materials disclosed by the
disclosing party.
16.2 Permitted Disclosures. Each party hereto may disclose another's
information to the extent such disclosure is reasonably necessary in filing or
prosecuting patent applications, prosecuting or defending litigation, complying
with applicable governmental regulations or otherwise submitting information to
tax or other governmental authorities, making a permitted sublicense or other
exercise of its rights hereunder or conducting clinical trials, provided that if
a party is required to make any such disclosure of another party's confidential
information, other than pursuant to a confidentiality agreement, it will give
reasonable advance notice to the latter party of such disclosure and, save to
the extent inappropriate in the case of patent applications, will use its best
efforts to secure confidential treatment of such information prior to its
disclosure (whether through protective orders or
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otherwise). Notwithstanding the foregoing, neither party shall disclose to third
parties, clinical data or regulatory filings received from Introgen or RPRP,
except as permitted under section 5.4 above.
17. INDEMNIFICATION
17.1 Indemnification of Introgen. RPRP shall indemnify each of Introgen
and its Affiliates and the directors, officers, employees, and counsel of
Introgen and such Affiliates and the successors and assigns of any of the
foregoing (the "Introgen Indemnitees"), pay on demand and protect, defend, save
and hold each Introgen Indemnitee harmless from and against, any and all
liabilities, damages, losses, settlements, claims, actions, suits, penalties,
fines, costs or expenses (including, without limitation, reasonable attorneys'
fees and other expenses of litigation) (any of the foregoing, a "Claim")
incurred by any Introgen Indemnitee, arising from or occurring as a result of
(a) activities performed by or on behalf of RPRP in connection with the Later
Stage Clinical Development, (b) activities performed by RPRP in connection with
the development of any Collaboration Product for commercialization outside North
America, (c) third party claims, including without limitation, product liability
claims relating to any Collaboration Products used, sold or otherwise
distributed by RPRP, its Affiliates or Sublicensees, (d) third party claims
relating to any Collaboration Products supplied by Introgen to the Joint
Venture; except in each case to the extent such claim is caused by the
negligence or intentional misconduct of an Introgen Indemnitee. For purposes of
this Section 17.1, it is understood that product liability claims that arise out
of the marketing or use of a Collaboration Product in a country after obtaining
governmental approval to market such Collaboration Product shall not be deemed
to "arise from or occur as a result of" the activities of RPRP described in (a)
above.
17.2 Indemnification of RPRP. Introgen shall indemnify each of RPRP and
its Affiliates and the directors, officers, employees, and counsel of RPRP and
such Affiliates and the successors and assigns of any of the foregoing (the
"RPRP Indemnitees"), pay on demand and protect, defend, save and hold each RPRP
Indemnitee harmless from and against any and all liabilities, damages, losses,
settlements, claims, actions, suits, penalties, fines, costs or expenses
(including, without limitation, reasonable attorneys' fees and other expenses of
litigation) (any of the foregoing, a "Claim") incurred by any RPRP Indemnitee,
arising from or occurring as a result of (a) activities performed by or on
behalf of Introgen in connection with Early Stage Development, (b) activities
performed by Introgen in connection with the development of any Collaboration
Product for commercialization outside North America, and (c) third party claims,
including without limitation, product liability claims, relating to any
Collaboration Products used, sold or otherwise distributed by Introgen, its
Affiliates or Sublicensees (other than RPRP), or (d) third party claims relating
to any Collaboration Products supplied by RPRP to Introgen for sale or use by
Introgen, its Affiliates or Sublicensees outside North America, except in each
case to the extent such claim is caused by the negligence or intentional
misconduct by an RPRP Indemnitee. For purposes of this Section 17.2, it is
understood that product liability claims that arise out of the marketing or use
of a Collaboration Product in a country after obtaining governmental approval to
market such Collaboration Product shall not be deemed to "arise from or occur as
a result of" the activities of Introgen described in (a) above.
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17.3 Procedure. A party (the "Indemnitee") that intends to claim
indemnification under this Article shall promptly notify the other party (the
"Indemnitor") in writing of any loss, claim, damage, liability or action in
respect of which the Indemnitee or any of its Affiliates, Sublicensees or their
directors, officers, employees or agents intend to claim such indemnification,
and the Indemnitor shall have the right to participate in, and, to the extent
the Indemnitor so desires, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that Indemnitee shall have the
right to retain its own counsel, with the fees and expenses to be paid by the
Indemnitor, if representation of such Indemnitee by the counsel retained by the
Indemnitor would be inappropriate due to actual or potential differing interests
between such Indemnitee and any other party represented by such counsel in such
proceeding. The indemnity agreement in this Article shall not apply to amounts
paid in settlement of any loss, claim, damage, liability or action if such
settlement is effected without the consent of the Indemnitor, which consent
shall not be withheld unreasonably. The failure to deliver written notice to the
Indemnitor within a reasonable time after the commencement of any such action,
if prejudicial to its ability to defend such action, shall relieve such
Indemnitor of any liability to the Indemnitee under this Article but the
omission so to deliver written notice to the Indemnitor shall not relieve it of
any liability that it may have to any Indemnitee otherwise than under this
Article. The Indemnitee under this Article, its employees and agents, shall
cooperate fully with the Indemnitor and its legal representatives in the
investigation of any action, claim or liability covered by this indemnification.
18. TERM AND TERMINATION
18.1 Term. This Agreement shall become effective as of the Effective
Date and, unless earlier terminated pursuant to the other provisions of this
Article, shall continue in full force and effect on a product-by-product and
country-by-country basis, until [*] after the first commercial sale of each
Collaboration Product in such country.
18.2 Termination for Cause. Either party to this Agreement may
terminate this Agreement in the event the other party shall have materially
breached or defaulted in the performance of any of its material obligations
hereunder, and such default shall have continued for sixty (60) days after
written notice thereof was provided to the breaching party by the non-breaching
party. Any termination shall become effective at the end of such sixty (60) day
period unless the breaching party (or any other party on its behalf) has cured
any such breach or default prior to the expiration of the sixty (60) day period.
18.3 Termination for Convenience by RPRP.
18.3.1 Entire Agreement. RPRP shall have the right to
terminate this Agreement on one hundred eighty (180) days prior written notice
to Introgen, provided such notice of termination may not be given prior to
December 15, 1995.
18.3.2 Individual Products. Upon one hundred eighty (180) days
prior notice to Introgen, RPRP may terminate the development of any particular
Collaboration Product, and RPRP shall have no further payment obligations with
respect to the development of such Collaboration
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Product following the effective date of such termination, except as set forth in
18.4.2(b) below. In such event, such product will cease to be a Collaboration
Product for all purposes of this Agreement, and RPRP shall have no further
rights with respect thereto; provided, however, that unless there is at least
one Collaboration Product remaining, such termination shall also be deemed a
termination of this Agreement under 18.3.1 above.
18.4 Effect of Breach or Termination.
18.4.1 Accrued Obligations. Termination of this Agreement for
any reason shall not release any party hereto from any liability which, at the
time of such termination, has already accrued to the other party or which is
attributable to a period prior to such termination nor preclude either party
from pursuing all rights and remedies it may have hereunder or at law or in
equity with respect to any breach of this Agreement.
18.4.2 Wind-Down Expenses.
(a) Following any termination pursuant to Section
18.3.1, RPRP shall reimburse Introgen for all non-cancelable obligations or
commitments incurred by Introgen prior to RPRP's notice of such termination in
the course of performing the Early Stage Development Program, and expenses of
Introgen employees who had been engaged in the performance of the Early Stage
Development Program, which employee expenses are incurred by Introgen during the
six (6) months following the effective date of such termination (including
benefits, a reasonable allocation of overhead, and/or if the employees are
terminated by Introgen, reasonable severance pay); provided that RPRP shall be
responsible only for that portion of such employee expenses equal to the
percentage of such employees' time that was dedicated towards work under the
Early Stage Development Program during the six (6) months prior to RPRP's notice
of termination ("Employee Expenses").
(b) Following any termination of development of any
particular Collaboration Product pursuant to Section 18.3.2, RPRP shall
reimburse Introgen for all non-cancelable obligations and commitments incurred
by Introgen with respect to such Collaboration Product prior to RPRP's notice of
such termination, and Employee Expenses (as described in 18.3.2(a) above)
incurred by Introgen during the six (6) months following the effective date of
such termination, to the extent that such employees are not reassigned to other
work to be performed under the Early Stage Development Program and funded by
RPRP. Introgen shall use reasonable efforts to mitigate these "wind-down"
expenses by redirecting such obligations and commitments, and employees, to the
furtherance of the continuing Early Stage Development Program and the
development of other Collaboration Products.
18.4.3 Return of Materials. Upon any termination of this
Agreement, Introgen and RPRP shall promptly return to the other all Confidential
Information received from the other (except one copy of which may be retained
for archival purposes).
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18.4.4 Stock on Hand. In the event this Agreement is
terminated with respect to Introgen or RPRP for any reason, subject to Articles
8, 9 and Article 10, the terminated party and their respective Affiliates and
Sublicensees, shall have the right to sell or otherwise dispose of the stock of
any Collaboration Product subject to this Agreement then on hand.
18.5 Survival. Section 14.1 and Articles 10, 15, 16, 17, 18 and 19 of
this Agreement shall survive expiration or termination of this Agreement for any
reason. In addition, for a period of three (3) years following any termination
of this Agreement prior to the end of the term specified in 18.1 above (other
than pursuant to Section 18.2 for material breach by Introgen), RPRP shall not
develop or commercialize directly or through third parties a product within the
Field. In addition:
(a) In the event of a termination under 18.2 above by
reason of a material breach by Introgen, RPRP shall have an exclusive, worldwide
license, with the right to grant sublicenses, under the Introgen Technology to
make, have made, use and sell the Collaboration Products within the Field, and
in addition to the other Articles surviving as set for the above, Article 9 and
Sections 14.3 and 14.4 shall also survive.
(b) In the event of a termination under 18.2 above by
reason of a material breach by RPRP, or by reason of a termination of this
Agreement by RPRP under Section 18.3.1 hereof, Introgen shall have an exclusive,
worldwide license, with the right to grant sublicenses, under the RPRP
Technology to make, have made, use and sell the Collaboration Products, and in
addition to the other Articles surviving as set forth above, Article 9 and
Sections 14.3 and 14.4 shall also survive.
(c) In the event of a termination contemplated under
18.5(a) or (b), the term "Collaboration Products" shall be deemed to also
include any product within the Field for which an IND was filed under the Early
Stage Development Program but for which Phase I was continuing and not completed
prior to the date of such termination.
19. MISCELLANEOUS
19.1 Governing Law. This Agreement and any dispute arising from the
performance or breach hereof shall be governed by and construed and enforced in
accordance with, the laws of the State of New York, without reference to
conflicts of laws principles.
19.2 Force Majeure. Nonperformance of any party (except for payment
obligations) shall be excused to the extent that performance is rendered
impossible by strike, fire, earthquake, flood, governmental acts or orders or
restrictions, failure of suppliers, or any other reason where failure to perform
is beyond the reasonable control and not caused by the negligence or intentional
conduct or misconduct of the nonperforming party.
19.3 No Implied Waivers; Rights Cumulative. No failure on the part of
Introgen or RPRP to exercise and no delay in exercising any right under this
Agreement, or provided by statute or at law or in equity or otherwise, shall
impair, prejudice or constitute a waiver of any such right, nor
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shall any partial exercise of any such right preclude any other or further
exercise thereof or the exercise of any other right.
19.4 Independent Research. Each party acknowledges and agrees that
Introgen and RPRP shall have the right to engage in their own research and
development activities outside the Field. Neither party shall, by virtue of this
Agreement, have any right, title or interest in or to such independent
activities or to the income or profits derived therefrom.
19.5 Independent Contractors. Nothing contained in this Agreement is
intended implicitly, or is to be construed, to constitute Introgen or RPRP as
partners in the legal sense. No party hereto shall have any express or implied
right or authority to assume or create any obligations on behalf of or in the
name of any other party or to bind any other party to any contract, agreement or
undertaking with any third party.
19.6 Notices. All notices, requests and other communications hereunder
shall be in writing and shall be personally delivered or sent by registered or
certified mail, return receipt requested, postage prepaid, in each case to the
respective address specified below, or such other address as may be specified in
writing to the other parties hereto:
RPRP: Rhone-Poulenc Rorer Pharmaceuticals, Inc.
500 Arcola Road
P.O. Box 1200
Collegeville, Pennsylvania 19426-0107
Attn: President, Cell and Gene Therapy
Division
with a copy to: Rhone-Poulenc Rorer, Inc.
500 Arcola Road
P.O. Box 2200
Collegeville, Pennsylvania 19426-0107
Attn: General Counsel
Introgen: Introgen Therapeutics, Inc.
301 Congress Ave.
Suite 2025
Austin, Texas 78701
Attn: President
with a copy to: Rodney Varner, Esq.
Wilson & Varner, L.L.P.
301 Congress Avenue
Austin, Texas 78701
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Wilson Sonsini Goodrich & Rosati
Professional Corporation
650 Page Mill Road
Palo Alto, California 94304-1050
Attention: Kenneth A. Clark, Esq.
19.7 Assignment. This Agreement shall not be assignable by either party
to any third party hereto without the written consent of the other party hereto;
except Introgen may assign this Agreement without RPRP's consent to an entity
that acquires substantially all of the business or assets of Introgen, and RPRP
may assign this Agreement without Introgen's consent to an entity that acquires
substantially all of the business or assets of RPR Inc., in each case whether by
merger, acquisition or sale. The terms and conditions of this Agreement shall be
binding on and inure to the benefit of the permitted successors and assigns of
the parties.
19.8 Modification. No amendment or modification of any provision of
this Agreement shall be effective unless in writing signed by all parties
hereto. No provision of this Agreement shall be varied, contradicted or
explained by any oral agreement, course of dealing or performance or any other
matter not set forth in an agreement in writing and signed by all parties.
19.9 Severability. If any provision hereof should be held invalid,
illegal or unenforceable in any jurisdiction, all other provisions hereof shall
remain in full force and effect in such jurisdiction and shall be liberally
construed in order to carry out the intentions of the parties hereto as nearly
as may be possible. Such invalidity, illegality or unenforceability shall not
affect the validity, legality or enforceability of such provision in any other
jurisdiction.
19.10 Non-Disclosure. Each of the parties hereto agrees: (i) not to
disclose to any third party the financial terms of this Agreement without the
prior written consent of each other party hereto, except to advisors, investors
and others on a need to know basis under circumstances that reasonably ensure
the confidentiality thereof, or to the extent required by law. Without
limitation upon any provision of this Agreement, each of the parties hereto
shall be responsible for the observance by its employees of the foregoing
confidentiality obligations. Notwithstanding the foregoing, the parties shall
agree upon a press release to announce the execution of this Agreement, together
with a corresponding Q&A outline for use in responding to inquiries about the
Agreement; thereafter, RPRP and Introgen may each disclose to third parties the
information contained in such press release and Q&A without the need for further
approval by the other.
19.11 Entire Agreement. This Agreement together with the Stock Purchase
Agreement entered by the parties of even date herewith, constitute the entire
agreement, both written or oral, with respect to the subject matter hereof, and
supersede all prior or contemporaneous understandings or agreements, whether
written or oral, between Introgen and RPRP with respect to such subject matter.
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19.12 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and all of which
together, shall constitute one and the same instrument.
19.13 Headings. Headings used herein are for convenience only and shall
not in any way affect the construction of or be taken into consideration in
interpreting this Agreement.
19.14 Patent Marking. Introgen and RPRP agree to mark and have their
Affiliates and Sublicensees mark all Collaboration Products they sell or
distribute pursuant to this Agreement in accordance with the applicable statute
or regulations in the country or countries of manufacture and sale thereof.
19.15 Export Laws. Notwithstanding anything to the contrary contained
herein, all obligations of Introgen and RPRP are subject to prior compliance
with United States export regulations and such other United States laws and
regulations as may be applicable, and to obtaining all necessary approvals
required by the applicable agencies of the government of the United States.
Introgen and RPRP shall cooperate with each other and shall provide assistance
to the other as reasonably necessary to obtain any required approvals.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered in duplicate originals as of the date first above
written.
INTROGEN THERAPEUTICS, INC. RHONE-POULENC RORER
PHARMACEUTICALS INC.
By: /s/ DAVID G. NANCE By: /s/ MICHEL DE ROSEN
------------------------------------ --------------------------------
Name: David G. Nance Name: Michel de Rosen
---------------------------------- ------------------------------
Title: President Title: President
--------------------------------- -----------------------------
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EXHIBIT A
Existing Introgen Licensed Patents
[*]
<PAGE> 41
EXHIBIT B
European Countries
Albania Macedonia
Andorra Malta
Austria Moldavia
Belgium Monaco
Bosnia Montenegro
Bulgaria Netherlands
Croatia Norway
Czech Republic Poland
Denmark Portugal
Finland Rumania
France San Marino
Germany Slovakia
Greece Slovenia
Hungary Spain
Iceland Sweden
Ireland Switzerland
Italy Turkey
Liechtenstein United Kingdom
Luxembourg Vatican City
<PAGE> 42
EXHIBIT C
Initial Program Plan and Budget
[*]
<PAGE> 1
EXHIBIT 10.24
DEPARTMENT OF HEALTH & HUMAN SERVICES Public Health Service
- --------------------------------------------------------------------------------
National Institutes of Health
National Cancer Institute
Office of Technology Development
Executive Plaza South, Suite 450
6120 Executive BLVD, MSC 7182
Bethesda, MD 20892-7182 (301)
496-0477 phone
(301) 402-2117 fax
March 26, 1996
Mr. Martin Savitsky
General Counsel
RPR Gencell
500 Arcola Road
P.O. Box 1200
Collegeville, PA 19426
Re: Proposed Cooperative Research and Development Agreement (CRADA)
NCI Principal Investigator Dr. Dale Shoemaker
Collaborator Investigator Dr. Martine George
Title: Clinical Development of Adenovirus - P53
RPR FILE NO. A2172, NCI CRADA 352
Dear Mr. Savitsky,
It is my understanding that a cooperative research and development project
between the parties referenced below is being considered. Accordingly, until a
formal Collaborative Research and Development Agreement (CRADA) is reviewed by
the CRADA Subcommittee and approved by the Director, National Cancer Institute
(NCI), this Letter is offered to permit joint research to commence.
o The Parties agree that all such trials which may begin prior to the
execution of the formal CRADA Agreement shall be preceded by the
appropriate US Food and Drug Association IND approval (or international
equivalents thereof).
o The Parties acknowledge that cooperative research pursuant to the
Research Plan, attached as Appendix A, will be conducted informally by
the NCI Principal Investigator and Collaborator pending formal approval
of this CRADA. It is further acknowledged that patentable inventions
may be made by NCI employees and employees of the Collaborator.
Pursuant to its authority under Federal Technology Transfer Act of
1986, NCI agrees that should this CRADA be approved, it will have
retroactive effect to the date that the last party has executed the
Letter for any inventions that may be made under this Research Plan.
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<PAGE> 2
o NCI further agrees that this CRADA will have retroactive effect to the
date that the last party has executed this Letter for confidentiality
obligations specified in the NH Model CRADA.
o The NIH Model CRADA provisions for the protection of proprietary
information are incorporated by reference and in the event that any
conflict arises between the provisions set forth in the NIH Model CRADA
and the negotiated CRADA, the terms of the negotiated CRADA will
control. These provisions include, but are not limited to, Article 2.5
and Articles 8.1 to 8.7. The NIH Model CRADA is attached as Appendix B.
This letter is not a commitment on the part of either party to enter into a
CRADA. Further, this Letter is effective for a term of (1) year. The one year
term may be extended, provided the CRADA is under active negotiation and the
collaborative research is continuing.
Assuming the necessary approvals are forthcoming, we look forward to a
successful collaboration.
Sincerely,
/s/THOMAS D. MAYS
- ---------------------------------------
Thomas D. Mays, Ph.D., J.D.
Director, NCI Office of Technology Development
ACCEPTED AND AGREED TO:
NATIONAL CANCER INSTITUTE RHONE POULENC RORER PHARMACEUTICALS INC.
/s/ALAN RABSON KENNETH R. PINA
- ---------------------------------- ----------------------------------------
Alan Rabson, M.D. Kenneth R. Pina, Esq.
Deputy Director, NCI Vice President, General Counsel &
Secretary
3/29/96 4/8/96
- ---------------------------------- ----------------------------------------
Date Date
INTROGEN THERAPEUTICS, INC.
DAVID NANCE
- ----------------------------------
David Nance
President
4/9/96
- ----------------------------------
Date
Attachments:
Appendix A: Proposed Research Plan
Appendix B: NCI Model CRADA
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<PAGE> 3
Letter of Intent
Appendix A
Research Plan
1. Background
1.1 Goal of this CRADA
Adp53 is a recombinant adenovirus containing an expression cassette of the
tumor-suppressor gene, p53, that consists of a [*].
The goal of this CRADA is to explore whether or not Adp53 is an effective
antitumor agent against the Designated Cancers, and whether or not it will be
superior to other treatment, available or under development, for these cancers.
The Designated Cancers include: breast cancer, ovarian cancer, bladder cancer,
hepatocellular carcinoma and glioma. If the data are positive, this CRADA will
provide a mechanism for NCI and RPR/INT to collaborate in the commercial
development of Adp53 as an anticancer agent and to generate the data necessary
to obtain Food and Drug Administration (FDA) approval for RPR/INT to market
Adp53. The collaboration of NCI and RPR/INT under this CRADA is expected to
expedite the development of Adp53 and to provide best treatment options to
patients with specific cancer indications.
1.2 RPR/INT
RPR/INT is uniquely qualified to collaborate with NCI under this CRADA to
develop Adp53 as an anti-cancer agent. In addition to RPR/INTs exclusive rights
under patents and licenses to develop commercially Adp53 in the United States
and Europe, RPR/INT has begun the Phase I development of a gene transfer study
using retroviral p53 (Rvp53) in patients with non-small cell lung cancer
(NSCLC). RPR/INT has also begun phase I studies with Adp53 in NSCLC and squamous
cell carcinoma of head and neck (SCCHN). In addition, RPR/INT plans to evaluate
Adp53 in combination with chemotherapy in both cancers. RPR/INT has made
significant investment in manufacturing facilities, toxicology, on-going phase I
trials, and on-going research programs to improve delivery methods. RPR/INT will
contribute its clinical research and commercial development expertise to carry
this project through the PLA/ELA process and to its eventual commercialization
as expeditiously as possible. Under this CRADA, RPR/INT will provide clinical
grade Adp53, [*] in quantities sufficient to conduct all clinical studies
planned under this CRADA.
1.3 NCI Program
NCI will contribute to this CRADA with its broad experience of clinical
development of anti-cancer drugs. NCI has expertise in the design,
implementation and evaluation of anti-cancer drug studies
LOI - A1
<PAGE> 4
that are necessary to bring Adp53 to the clinics rapidly and effectively. Under
this CRADA, NCI will perform some preclinical modeling and toxicology studies in
some of the Designated Cancers. NCI will further contribute to this CRADA with
its knowledge of existing and investigational anti- cancer agents and adjuvants
that could potentially be studied in combination with Adp53. Through its
extensive intramural and extramural clinical trial network, NCI will contribute
to the timely evaluation and development of Adp53 as a potential anti-cancer
agent.
2. Research Strategy
2.1 Background
Recent advances in the molecular biology of HUMAN cancer have provided
opportunities to develop novel therapeutic modality in cancer management. Over
the past several years, the loss of normal p53 functions has been detected in a
wide spectrum of cancer types. The frequency of p53 mutations varies from an
average of 70% in small cell lung cancer, 60% in colorectal cancer, 50% in
nonsmall cell lung cancer and head and neck cancer, to less than 20% in prostate
cancer. Although the exact mechanisms of action of p53 to affect tumonigenesis
are yet to be firmly established, sufficient evidence suggests that p53 plays a
significant role in controlling cell death through apoptosis. In cancer cells
that contain mutations in p53, this normal regulatory function is lost and
tumorigenesis ensues. It is thus theorized that by supplementing the abnormal
p53 functions in cancer cells with exogenously introduced wild-type p53, the
cancer cells will undergo apoptosis leading to tumor regression.
To test this hypothesis, Dr. J. Roth has constructed recombinant viruses
containing the expression cassette of wild-type p53 using a retroviral vector
and an adenoviral vector for HUMAN gene transfer studies. An [*] adenovirus
vector was selected to carry the wild-type p53 cDNA along with a [*] into the
tumor cells for expression. The successful expression of wild-type p53 has been
confirmed in various cancer cell cultures infected with Adp53. The ability of
Adp53 to suppress tumorigenesis of cancer cell lines in nude mouse models has
also been observed. The Phase I protocol to study the biological effects of
retroviral p53 (Rvp53) in patients with NSCLC and the protocols to study Adp53
in patients with NSCLC and SCCHN, respectively, have been approved by the FDA
and the Recombinant DNA Committee (RAC) of NIH.
In the Rvp53 study, nine NSCLC patients have received intratumoral injections of
Rvp53 to their endobronchial lesions or locoregional disease. Preliminary
results indicate the regression of endobrochial lesions in 3 of 4 patients.
There has been minimal systemic toxicity due to Rvp53. Biochemical analyses have
shown that the presence of wild-type p53 introduced by Rvp53, and apoptosis in
posttreatment tumor biopsies.
The studies of Adp53 in NSCLC and SCCHN have been open for patient entry since
Oct. 1995. Both are dose escalating studies. Four patients have entered the lung
cancer study and twelve have entered the head and neck cancer study. No
significant toxicity has been observed to date.
In summary, the loss of normal p53 functions due to mutations is frequent in
human cancers. Preliminary data from a Phase I study have provided early
evidence of anti-cancer activity of wild
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type p53 when introduced into tumors by intratumoral injections. There has not
been any systemic toxicity related to Rvp53. The toxicity evaluation of Adp53 is
in progress. Thus wild-type p53 appears to be a promising anti-cancer agent and
warrants further investigation in Designated Cancers outlined in this CRADA.
2.2 Specific Objectives
2.2.1 RPR/INT and NCI will collaborate on the design and implementation of
the clinical trial program for the Designated Cancers.
2.2.2 RPR/INT and NCI will evaluate the clinical utility of Adp53 for the
Designated Cancers in the clinical trial program. The initial clinical
program is planned to conduct studies in the following Designated
Cancers: breast cancer (skin and chest wall disease), ovarian cancer
(intraperitoneal administration), hepatocellular carcinoma, bladder
cancer and glioma. However, additional cancer types or route of
administration may be added in the future by mutual, written agreement
under an Amendment to this CRADA if circumstances warrant.
2.2.3 RPR/INT will provide information related to the dose and schedule of
Adp53 administration to be used in the Phase 11 study of Adp53 in
breast cancer patients with skin and chest wall lesions. NCI will
conduct some preclinical studies in animal models that are relevant to
conducting trials in cancer types included in this CRADA. NCI will also
perform limited toxicology studies of Adp53 to obtain information
necessary for the design and implementation of studies in cancer types
included in this CRADA.
2.2.4 RPR/INT will develop Adp53 under the IND filed by lntrogen
Therapeutics, Inc. NCI will conduct the clinical trials outlined in the
clinical trial program under an NCI-sponsored IND for Adp53. The NCI
sponsored IND may cross-reference the IND held by Introgen
Therapeutics, Inc.
2.2.5 RPR/INT will provide clinical grade Adp53 to be used in the clinical
studies in Designated Cancers under this CRADA.
2.2.6 RPR/INT expects to file the PLA/ELA within [*] years from the date of
execution of this CRADA to obtain regulatory approval for the
commercial marketing of Adp53.
2.3 Responsibilities of RPR/INT
2.3.1 RPR/INT is primarily responsible for the conduct of the
preclinical studies. Preclinical studies will be adequate to
meet the FDA requirements for conducting clinical studies and
provide sufficient rationale for the clinical development
plan.
2.3.2 RPR/INT will provide Adp53 agent [*] for the studies under
this CRADA.
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2.3.3 RPR/INT jointly with NCI shall design the studies and review
the protocols.
2.3.4 RPR/INT will provide partial funding to the NCI (which is
detailed in earlier correspondence and which will be clarified
in further discussions) for the studies under this CRADA.
2.3.5 RPR/INT agrees to prepare and file a dossier with the FDA
when appropriate.
2.4 NCI Responsibilities
The specific contributions of the Division of Cancer Treatment,
Diagnosis and Centers (DCTDC), NCI include the following:
2.4.1 The DCTDC, through the Cancer Treatment Evaluation Program
(CTEP), will sponsor an Investigational New Drug Application
to be filed with the Food and Drug Administration (FDA) for
Adp53.
2.4.2 CTEP will cross-file to the IND currently held by RPR/INT.
2.4.3 Through the Cancer Cooperative Groups, CTEP will sponsor
clinical trials in the following disease sites: breast cancer,
ovarian cancer, bladder cancer, hepatocellular carcinoma and
glioma.
Initiation of trials in a given disease is contingent upon
completion of RPR/INT phase I trials and/or completion or
availability of required preclinical efficacy and toxicology
studies.
2.4.4 CTEP may sponsor studies in other disease sites with the
agreement of RPR/INT.
2.4.5 CTEP agrees to work closely with RPR/INT for the
commercialization of the Adp53 agent and with the Cooperative
Groups to provide RPR/INT with prompt and complete access to
all necessary data.
2.4.6 CTEP will have primary responsibility for protocol review for
trials run through the Cooperative Groups. RPR/INT will
receive copies of the protocols prior to Protocol Review
Committee meetings and have a reasonable opportunity of at
least a week to submit relevant comments to be discussed.
RPR/INT will receive the final consensus reviews provided to
the Investigators.
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Abstract of the Research Plan for Public Release
The National Cancer Institute and RPR Gencell/Introgen Therapeutics, Inc.
("RPR/INT") will collaborate in the conduct of clinical trials of Adp53, a novel
adenoviral construct containing the tumor suppressor gene p53. The trials will
be focused on clinical situations where benefit to patients might be obtained
from the locoregional control of disease with the administration of Adp53. The
designated disease sites under this agreement include: chest wall or skin
metastasis of breast cancer, ovarian cancer, bladder cancer, hepatocellular
carcinoma and glioma. The National Cancer Institute and RPR/INT will collaborate
to obtain approval of Adp53 as a commercial anti- cancer agent.
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NCI CRADA #352
LETTER OF INTENT APPENDIX B
PUBLIC HEALTH SERVICE
COOPERATIVE RESEARCH AND DEVELOPMENT AGREEMENT
This Cooperative and Development Agreement, hereinafter referred to as the
"CRADA," consists of this Cover Page, an attached Agreement, a Signature Page
and various Appendices referenced in the Agreement. This Cover Page serves to
identify the Parties to this CRADA:
(1) the following Bureau(s), Institute(s), Center(s) or
Division(s) of the National Institutes of Health ("NTH"), the Food and Drug
Administration ("FDA"), and the Centers for Disease Control and Prevention
("CDC"): , hereinafter singly or collectively referred to as the Public Health
Service ("PHS"); and
(2) , which has offices at
, hereinafter referred to
as the "Collaborator."
Although drafted for two Parties, the attached CRADA also may be used for any
number. This Cover Page, however, should be modified by repeating block (2) to
identify other Parties to the CRADA. All non-PHS Parties are hereinafter
collectively referred to as the "Collaborator." Use of the terms "Collaborator,"
and "Party," should be construed as appropriate for the actual number of CRADA
participants.
<PAGE> 9
COOPERATIVE RESEARCH AND DEVELOPMENT AGREEMENT
ARTICLE 1. INTRODUCTION
This Cooperative Research and Development Agreement (CRADA) between PHS and the
Collaborator will be effective when signed by all Parties. The research and
development activities which will be undertaken by each of the Parties in the
course of this CRADA are detailed in the Research Plan (RP) which is attached as
Appendix A. The funding and staffing commitments of the Parties are set forth in
Appendix B. Any exceptions or changes to the CRADA are set forth in Appendix C.
ARTICLE 2. DEFINITIONS
As used in this CRADA, the following terms shall have the indicated meanings:
2.1 "COOPERATIVE RESEARCH AND DEVELOPMENT AGREEMENT" or "CRADA" means this
Agreement entered into by PHS pursuant to the Federal Technology
Transfer Act of 1986, as amended 15 U.S.C. 3710a et seq. and Executive
Order 12591 of October 10, 1987.
2.2 "GOVERNMENT" means the Government of the United States as represented
through the PHS agency that is a Party to this agreement.
2.3 "INVENTION" means any Invention or discovery which is or may be
patentable or otherwise protected under title 35, United States Code,
or any novel variety or plant which is or may be protectable under the
Plant Variety Protection Act (7 U.S.C. 2321 et seq.).
2.4 "PRINCIPAL INVESTIGATOR(S)" or "PIS" means the persons designated
respectively by the Parties to this CRADA who will be responsible for
the scientific and technical conduct of the RP.
2.5 "PROPRIETARY/CONFIDENTIAL INFORMATION" means confidential scientific,
business, or financial information provided that such information does
not include:
2.5.1 information that is publicly known or available from other
sources who are not under a confidentiality obligation to the
source of the information;
2.5.2 information which has been made available by its owners to
others without a confidentiality obligation;
2.5.3 information which is already known by or available to the
receiving Party without a confidentiality obligation; or
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2.5.4 information which relates to potential hazards or cautionary
warnings associated with the production, handling or use of
the subject matter of the Research Plan of this CRADA.
2.6 "RESEARCH LICENSE" shall mean a nontransferable, nonexclusive license
under any IP license to make and use a licensed invention for purposes
of research and not for purposes of commercial manufacture or
distribution or in lieu of purchase.
2.7 "RESEARCH MATERIALS" means all tangible materials other than Subject
Data first produced in the performance of this CRADA.
2.8 "RESEARCH PLAN" or "RP" means the statement in Appendix A of the
respective research and development commitments of the Parties to this
CRADA.
2.9 "SUBJECT INVENTION" means any Invention of the Parties, conceived or
first actually reduced to practice in the performance of the Research
Plan of this CRADA.
2.10 "SUBJECT DATA" means all recorded information first produced in the
performance of this CRADA by the Parties.
ARTICLE 3. COOPERATIVE RESEARCH
3.1 PRINCIPAL INVESTIGATORS. PHS research work under this CRADA will be
performed by the PHS laboratory identified in the RP, and the PHS
Principal Investigator (PI) designated in the RP will be responsible
for the scientific and technical conduct of this project on behalf of
PHS. Also designated in the RP is the Collaborator PI who will be
responsible for the scientific and technical conduct of this project on
behalf of the Collaborator.
3.2 RESEARCH PLAN CHANGE. The RP may be modified by mutual written consent
of the Principal Investigators. Substantial changes in the scope of the
RP will be treated as amendments under Article 13.6.
ARTICLE 4. REPORTS
4.1 INTERIM REPORTS. The Parties shall exchange formal written interim
progress reports on a agreed to by the PIs, but at least within twelve
(12) months after this CRADA becomes effective and at least within
every twelve (12) months thereafter. Such reports shall set forth the
technical progress made, identifying such problems as may have been
encountered and establishing goals and objectives requiring further
effort, any modifications to the Research Plan pursuant to Article 3.2,
and all CRADA-related patent applications filed.
4.2 FINAL REPORTS. The Parties shall exchange final reports of their
results within four (4) months after completing the projects described
in the RP or after the expiration or termination of this CRADA.
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ARTICLE 5. FINANCIAL AND STAFFING OBLIGATIONS
5.1 PHS AND COLLABORATOR CONTRIBUTIONS. The contributions of the Parties,
including payment schedules, if applicable, are set forth in Appendix
B. PHS shall not be obligated to perform any of the research specified
herein or to take any other action required by this CRADA if the
funding is not provided as set forth in Appendix B. PHS shall return
excess funds to the Collaborator when it sends its final fiscal report
pursuant to Article 5.2, except for staffing support pursuant to
Article 10.3. Collaborator acknowledges that the U.S. Government will
have the authority to retain and expend any excess funds for up to one
(1) year subsequent to the expiration or termination of the CRADA to
cover any costs incurred during the term of the CRADA in undertaking
the work set forth in the RP.
5.2 ACCOUNTING RECORDS. PHS shall maintain separate and distinct current
accounts, records, and other evidence supporting all its obligations
under this CRADA, and shall provide the Collaborator a final fiscal
report pursuant to Article 4.2.
5.3 CAPITAL EQUIPMENT. Equipment purchased by PHS with funds provided by
the Collaborator shall be the property of PHS. All capital equipment
provided under this CRADA by one party for the use of another Party
remains the property of the providing Party unless other disposition is
mutually agreed upon by in writing by the Parties. If title to this
equipment remains with the providing Party, that Party is responsible
for maintenance of the equipment and the costs of its transportation to
and from the site where it will be used.
ARTICLE 6. INTELLECTUAL PROPERTY RIGHTS AND PATENT APPLICATIONS
6.1 REPORTING. The Parties shall promptly report to each other in writing
each Subject Invention resulting from the research conducted under this
CRADA that is reported to them by their respective employees. Each
Party shall report all Subject Inventions to the other Party in
sufficient detail to determine inventorship. Such reports shall be
treated as Proprietary/Confidential Information in accordance with
Article 8.4.
6.2 COLLABORATOR EMPLOYEE INVENTIONS. If the Collaborator does not elect to
retain its IP rights, the Collaborator shall offer to assign these IP
rights to the Subject Invention to PHS pursuant to Article 6.5. If PHS
declines such assignment, the Collaborator may release its IP rights as
it may determine.
6.3 PHS EMPLOYEE INVENTIONS. PHS on behalf of the U.S. Government may elect
to retain IP rights to each Subject Invention made solely by PHS
employees. If PHS does not elect to retain its rights, PHS shall offer
to assign these IP rights to such Subject Invention to the Collaborator
pursuant to Article 6.5. If the Collaborator declines such assignment,
PHS may release IP rights in such Subject Invention to its employee
inventors pursuant to Article 6.6.
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6.4 JOINT INVENTIONS. Each Subject Invention made jointly by PHS and
Collaborator employees shall be jointly owned by PHS and the
Collaborator. The Collaborator may elect to file the joint patent or
other IP application(s) thereon and shall notify PHS promptly upon
making this election. If the Collaborator decides to file such
applications, it shall do so in a timely manner and at its own expense.
If the Collaborator does not elect to file such application(s), PHS on
behalf of the U.S. Government shall have the right to file the joint
application(s) in a timely manner and at its own expense. If either
Party decides not to retain its IP rights to a jointly owned Subject
Invention, it shall offer to assign such rights to the other Party
pursuant to Article 6.5. If the other Party declines such assignment,
the offering Party may release its IP rights as provided in Articles
6.2, 6.3, and 6.6.
6.5 FILING OF PATENT APPLICATIONS. With respect to Subject Inventions made
by the Collaborator as described in Article 6.2, or by PHS as described
in Article 6.3, a Party exercising its right to elect to retain IP
rights to a Subject Invention agrees to file patent or other IP
applications in a timely manner and at its own expense and after
consultation with the other Party. The Party shall notify the other
Party of its decision regarding filing in countries other than the
United States in a timely manner. The Party may elect not to file a
patent or other IP application thereon in any particular country or
countries provided it so advises the other Party ninety (90) days prior
to the expiration of any applicable filing deadline, priority period
or, statutory bar date, and hereby agrees to assign its IP right, title
and interest in such country or countries to the Subject Invention to
the other Party and to cooperate in the preparation and filing of a
patent or other IP applications. In any countries in which title to
patent or other IP rights is transferred to the Collaborator, the
Collaborator agrees that PHS inventors will share in any royalty
distribution that the Collaborator pays to its own inventors.
6.6 RELEASE TO INVENTORS. In the event neither of the Parties to this CRADA
elects to file a patent or other IP application on a Subject Invention,
either or both (if a joint invention) may retain or release their IP
rights in accordance with their respective policies and procedures.
However, the Government shall retain a nonexclusive, non-transferrable,
irrevocable, royalty-free license to practice any such Subject
Invention or have it practiced throughout the world.
6.7 PATENT EXPENSES. The expenses attendant to the filing of patent or
other IP applications generally shall be paid by the Party filing such
application. If an exclusive license to any Subject Invention is
granted to the Collaborator, the Collaborator shall be responsible for
an past and future out-of-pocket expenses in connection with the
preparation, filing, prosecution and maintenance of any applications
claiming such exclusively-licensed inventions and any patents or other
IP grants that may issue on such applications. The Collaborator may
waive its exclusive license rights on any application, patent or other
IP grant at any time, and incur no subsequent compensation obligation
for that application, patent or IP grant.
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6.8 PROSECUTION OF INTELLECTUAL PROPERTY APPLICATIONS. Within one month of
receipt or filing, each Party shall provide the other Party with copies
of the applications and all documents received from or filed with the
relevant patent or other IP office in connection with the prosecution
of such applications. Each Party shall also provide the other Party
with the power to inspect and make copies of all documents retained in
the patent or other IP application files by the applicable patent or
other IP office. Where licensing is contemplated by Collaborator, the
Parties agree to consult with each other with respect to the
prosecution of applications for PHS Subject Inventions described in
Article 6.3 and joint Subject Inventions described in Article 6.4. If
the Collaborator elects to file and prosecute IP applications on joint
Subject Inventions pursuant to Article 6.4, PHS will be granted an
associate power of attorney (or its equivalent) on such IP
applications.
ARTICLE 7. LICENSING
7.1 OPTION FOR COMMERCIALIZATION LICENSE. With respect to Government IP
rights to any Subject Invention not made solely by the Collaborator's
employees for which a patent or other IP application is filed, PHS
hereby grants to the Collaborator an option to elect an exclusive or
nonexclusive commercialization license, which is substantially in the
form of the appropriate model PHS license agreement. This option does
not apply to Subject Inventions conceived prior to the effective date
of this CRADA if PHS has filed a patent application on the invention
and has licensed it or offered to license it to a third party. The
terms of the license will fairly reflect the nature of the invention,
the relative contributions of the Parties to the invention and the
CRADA, the risks incurred by the Collaborator and the costs of
subsequent research and development needed to bring the invention to
the marketplace.
7.2 EXERCISE OF LICENSE OPTION. The option of Article 7.1 must be exercised
by written notice mailed within three (3) months after collaborator
receives written notice that the patent or other IP application is
filed. Exercise of this option by the Collaborator initiates a
negotiation period that expires nine (9) months after the patent or
other IP application filing date. If the last proposal by the
Collaborator has not been responded to in writing by PHS within this
nine (9) month period, the negotiation period shall be extended to
expire one (1) month after PHS so responds, during which month the
Collaborator may accept in writing the final license proposal of PHS.
In the absence of such acceptance, PHS will be free to license such IP,
rights to others. In the event that the Collaborator elects the option
for an exclusive license, but no such license is executed during the
negotiation period, PHS agrees not to make an offer for an exclusive
license on more favorable terms to a third party for a period of six
(6) months without first offering Collaborator those more favorable
terms.
7.3 GOVERNMENT INTELLECTUAL PROPERTY RIGHTS. For inventions developed
wholly by PHS investigators or jointly with a Collaborator, under this
CRADA, pursuant to Articles 6.3 and 6.4, PHS retains, pursuant to the
Federal Technology Transfer Act of 1986, as amended, 15 U.S.C. Section
3710a(b)(2), a nonexclusive, irrevocable, paid-up license to practice
the invention or to have the invention practiced throughout the world
by or on behalf of the
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U.S. Government. The PHS also reserves the right under any exclusive IP
license to require Collaborator to grant on reasonable terms a Research
License to third parties.
7.4 RESEARCH LICENSES. For inventions developed wholly by Collaborator
under this CRADA, pursuant to Article 6.2, the Collaborator agrees to
grant the Government a Research License, as defined in Article 2.6,
which shall be royalty-free nonexclusive and nontransferable.
7.5 JOINT INVENTIONS NOT EXCLUSIVELY LICENSED. In the event that the
Collaborator does not acquire an exclusive commercialization license to
IP rights in all fields in joint Subject Inventions described in
Article 6.4, then each Party shall have the right to use the joint
Subject Invention and to license its use to others in all fields not
exclusively licensed to Collaborator. The Parties may agree to a joint
licensing approach for such IP rights.
ARTICLE 8. PROPRIETARY RIGHTS AND PUBLICATION
8.1 RIGHT OF ACCESS. PHS and the Collaborator agree to exchange all Subject
Data produced in the course of research under this CRADA, whether
developed solely by PHS or jointly with the Collaborator. Research
Materials will be shared equally by the Parties to the CRADA unless
other disposition is agreed to by the Parties. All Parties to this
CRADA will be free to utilize Subject Data and Research Materials for
their own purposes, consistent with their obligations under this CRADA.
8.2 OWNERSHIP OF SUBJECT DATA AND RESEARCH MATERIALS. Subject to the
sharing requirements of Paragraph 8.1 and the regulatory filing
requirement of Paragraph 8.3, the producing Party will retain ownership
of and title to all Subject Inventions, all Subject Data and all
Research Materials produced solely by their investigators. Jointly
developed Subject Inventions, Subject Data and Research Materials will
be jointly owned.
8.3 DISSEMINATION OF SUBJECT DATA AND RESEARCH MATERIALS. To the extent
allowed under law, the Collaborator and PHS agree to use reasonable
efforts to keep Subject Data and Research Materials confidential until
published or until corresponding patent applications are filed. Any
information that would identify human subjects of research or patients
will always be maintained confidentially. Collaborator shall have the
exclusive right to use any and all CRADA Subject Data in and for any
regulatory filing by or on behalf of Collaborator, except that PHS
shall have the exclusive right to use Subject Data for that purpose,
and authorize others to do so, if the CRADA is terminated or if
Collaborator abandons its commercialization efforts.
8.4 PROPRIETARY/CONFIDENTIAL INFORMATION. Each Party agrees to limit its
disclosure of Proprietary/Confidential Information to the amount
necessary to carry out the Research Plan of this CRADA and shall place
a confidentiality notice on all such information. Confidential oral
communications shall be reduced to writing within 30 days by the
disclosing Party. Each Party receiving Proprietary/Confidential
Information agrees that any
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information so designated shall be used by it only for the purposes
described in the attached Research Plan. Any Party may object to the
designation of information as Proprietary/Confidential Information by
another Party and may decline to accept such information. Subject Data
and Research Materials developed solely by the Collaborator may be
designated as Proprietary/Confidential Information when they are wholly
separable from the Subject Data and Research Materials developed
jointly with PHS investigators, and advance designation of such data
and material categories is set forth in the RP. The exchange of other
confidential information, e.g., patient-identifying data, should be
similarly limited and treated. Jointly developed Subject Data and
Research Material derived from the Research Plan may be disclosed by
Collaborator to a third party under a confidentiality agreement for the
purpose of possible sublicensing pursuant to the Licensing Agreement
and subject to Article 8.7.
8.5 PROTECTION OF PROPRIETARY/CONFIDENTIAL INFORMATION.
Proprietary/Confidential Information shall not be disclosed, copied,
reproduced or otherwise made available to any other person or entity
without the consent of the owning Party except as required under court
order or the Freedom of Information Act (5 U.S.C. Section 552). Each
Party agrees to use its best efforts to maintain the confidentiality of
Proprietary/Confidential Information. Each Party agrees that the other
Party is not liable for the disclosure of Proprietary/Confidential
Information which, after notice to and consultation with the concerned
Party, the other Party in possession of the Proprietary/Confidential
Information determines may not be lawfully withheld, provided the
concerned Party has been given an opportunity to obtain a court order
to enjoin disclosure.
8.6 DURATION OF CONFIDENTIALITY OBLIGATION. The obligation to maintain the
confidentiality of Proprietary/Confidential Information shall expire at
the earlier of the date when the information is no longer Proprietary
Information as defined in Article 2.5 or three (3) years after the
expiration or Termination date of this CRADA. The Collaborator may
request an extension to this term when necessary to protect
Proprietary/Confidential Information relating to products not yet
commercialized.
8.7 PUBLICATION. The Parties are encouraged to make publicly available the
results of their research. Before either Party submits a paper or
abstract for publication or otherwise to publicly disclose information
about a Subject Invention, Subject Data or Research Materials, the
other Party shall be provided thirty (30) days to review the proposed
publication or disclosure to assure that Proprietary/Confidential
Information is protected. The publication or other disclosure shall be
delayed for up to thirty (30) additional days upon written request by
any Party as to preserve U.S. or foreign patent or other IP rights.
ARTICLE 9. REPRESENTATIONS AND WARRANTIES
9.1 REPRESENTATIONS AND WARRANTIES OF PHS. PHS hereby represents and
warrants to the Collaborator that the official signing this CRADA has
authority to do so.
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9.2 REPRESENTATIONS AND WARRANTIES OF THE COLLABORATOR.
(a) The Collaborator hereby represents and warrants to PHS that the
Collaborator has the requisite power and authority to enter into this
CRADA and to perform according to its terms, and that the
Collaborator's official signing this CRADA has authority to do so. The
Collaborator further represents that it is financially able to satisfy
any funding commitments made in Appendix B.
(b) The Collaborator certifies that the statements herein are true,
complete, and accurate to the best of its knowledge. The Collaborator
is aware that any false, fictitious, or fraudulent statements or claims
may subject it to criminal, civil, or administrative penalties.
ARTICLE 10. TERMINATION
10.1 TERMINATION BY MUTUAL CONSENT. PHS and the Collaborator may terminate
this CRADA, or portions thereof, at any time by mutual written consent.
In such event the Parties shall specify the disposition of all
property, inventions, patent or other IP applications and other results
of work accomplished or in progress, arising from or performed under
this CRADA, all in accordance with the rights granted to the Parties
under the terms of this Agreement.
10.2 UNILATERAL TERMINATION. Either PHS or the Collaborator may unilaterally
terminate this entire CRADA at any time by giving written notice at
least thirty (30) days prior to the desired termination date, and any
rights accrued in property, patents or other IP rights shall be
disposed of as provided in paragraph 10.1.
10.3 STAFFING. If this CRADA is mutually or unilaterally terminated prior to
its expiration, funds will nevertheless remain available to PHS for
continuing any staffing commitment made by the Collaborator pursuant to
Article 5.1 above and Appendix B, if applicable, for a period of six
(6) months after such termination. If there are insufficient funds to
cover this expense, the Collaborator agrees to pay the difference.
10.4 NEW COMMITMENTS. No Party shall make new commitments related to this
CRADA after a mutual termination or notice of a unilateral termination
and shall, to the extent feasible, cancel all outstanding commitments
and contracts by the termination date.
10.5 TERMINATION COSTS. Concurrently with the exchange of final reports
pursuant to Articles 4.2 and 5.2, PHS shall submit to the Collaborator
for payment a statement of all costs incurred prior to the date of
termination and for all reasonable termination costs including the cost
of returning Collaborator property or removal of abandoned property,
for which Collaborator shall be responsible.
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ARTICLE 11. DISPUTES
11.1 SETTLEMENT. Any dispute arising under this CRADA which is not disposed
of by agreement of the Principal Investigators shall be submitted
jointly to the signatories of this CRADA. If the signatories are unable
to jointly resolve the dispute within thirty (30) days after
notification thereof, the Assistant Secretary for Health (or his/her
designee or successor) shall propose a resolution. Nothing in this
Article shall prevent any Party from pursuing any additional
administrative remedies that may be available and, after exhaustion of
such administrative remedies, pursuing all available judicial remedies.
11.2 CONTINUATION OF WORK. Pending the resolution of any dispute or claim
pursuant to this Article, the Parties agree that performance of all
obligations shall be pursued diligently in accordance with the
direction of the PHS signatory.
ARTICLE 12. LIABILITY
12.1 PROPERTY. The U.S. Government shall not be responsible for damages to
any Collaborator property provided to PHS, where Collaborator retains
title to the property, or any property acquired by Collaborator for its
own use pursuant to this CRADA.
12.2 NO WARRANTIES. EXCEPT AS SPECIFICALLY STATED IN ARTICLE 10, THE PARTIES
MAKE NO EXPRESS OR IMPLIED WARRANTY AS TO ANY MATTER WHATSOEVER,
INCLUDING THE CONDITIONS OF THE RESEARCH OR ANY INVENTION OR PRODUCT,
WHETHER TANGIBLE OR INTANGIBLE, MADE, OR DEVELOPED UNDER THIS CRADA, OR
THE OWNERSHIP, MERCHANTABILITY, OR FITNESS FOR A PARTICULAR PURPOSE OF
THE RESEARCH OR ANY INVENTION OR PRODUCT.
12.3 INDEMNIFICATION. The Collaborator agrees to hold the U.S. Government
harmless and to indemnify the Government for all liabilities, demands,
damages, expenses and losses arising out of the use by the Collaborator
for any purpose of the Subject Data. Research Materials and/or Subject
Inventions produced in whole or part by PHS employees under this CRADA,
unless due to the negligence or willful misconduct of PHS, its
employees, or agents. The Collaborator shall be liable for any claims
or damages it incurs in connection with this CRADA. PHS has no
authority to indemnify the Collaborator.
12.4 FORCE MAJEURE. Neither Party shall be liable for any unforeseeable
event beyond its reasonable control not caused by the fault or
negligence of such Party, which causes such Party to be unable to
perform its obligations under this CRADA, and which it has been unable
to overcome by the exercise of due diligence. In the event of the
occurrence of such a force majeure event, the Party unable to perform
shall promptly notify the other Party. It shall further use its best
efforts to resume performance as quickly as possible and shall suspend
performance only for such period of time as is necessary as a result of
the force majeure event.
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<PAGE> 18
ARTICLE 13. MISCELLANEOUS
13.1 GOVERNING LAW. The construction, validity, performance and effect of
this CRADA shall be governed by Federal law, as applied by the Federal
Courts in the District of Columbia. Federal law and regulations will
preempt any conflicting or inconsistent provisions in this CRADA.
13.2 ENTIRE AGREEMENT. This CRADA constitutes the entire agreement between
the Parties concerning the subject matter of this CRADA and supersedes
any prior understanding or written or oral agreement.
13.3 HEADINGS. Titles and headings of the articles and subarticles of this
CRADA are for convenient reference only, do not form a part of this
CRADA, and shall in no way affect its interpretation.
13.4 WAIVERS. None of the provisions of the CRADA shall be considered waived
by any Party unless such waiver is given in writing to the other Party.
The failure of a party to insist upon strict performance of any of the
terms and conditions hereof, or failure or delay to exercise any rights
provided herein or by law, shall not be deemed a waiver of any rights
of any Party.
13.5 SEVERABILITY. The illegality or invalidity of any provisions of this
CRADA shall not impair, affect, or invalidate the other provisions of
this CRADA.
13.6 AMENDMENTS. If either Party desires a modification to this CRADA, the
Parties shall, upon reasonable notice of the proposed modification or
extension by the Party desiring the change, confer in good faith to
determine the desirability of such modification or extension. Such
modification shall not be effective until a written amendment is signed
by the signatories to this CRADA or by their representatives duly
authorized to execute such amendment.
13.7 ASSIGNMENT. Neither this CRADA nor any rights or obligations of any
Party hereunder shall be assigned or otherwise transferred by either
Party without the prior written consent of the other Party.
13.8 NOTICES. All notices pertaining to or required by this CRADA shall be
in writing and shall be signed by an authorized representative and
shall be delivered by hand or sent by certified mail, return receipt
requested, with postage prepaid, to the addresses indicated on the
signature page for each Party. Notices regarding the exercise of
license options shall be made pursuant to Article 7.2. Any Party may
change such address by notice given to the other Party in the manner
set forth above.
13.9 INDEPENDENT CONTRACTORS. The relationship of the Parties to this CRADA
is that of independent contractors and not as agents of each other or
as joint venturers or partners.
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<PAGE> 19
Each Party shall maintain sole and exclusive control over its personnel
and operations. Collaborator employees who will be working at PHS
facilities may be asked to sign a Guest Researcher or Special Volunteer
Agreement appropriately modified in view of the terms of this CRADA.
13.10 USE OF NAME OR ENDORSEMENTS. By entering into this CRADA, PHS does not
directly or indirectly endorse any product or service provided, or to
be provided, whether directly or indirectly related to either this
CRADA or to any patent or other IP license or agreement which
implements this CRADA by its successors, assignees, or licensees. The
Collaborator shall not in any way state or imply that this CRADA is an
endorsement of any such product or service by the U.S. Government or
any of its organizational units or employees. Collaborator issued press
releases that reference or rely upon the work of PHS under this CRADA
shall be made available to PHS at least 7 days prior to publication for
review and comment.
13.11 EXCEPTIONS TO THIS CRADA. Any exceptions or modifications to this CRADA
that are agreed to by the Parties prior to their execution of this
CRADA are set forth in Appendix C.
13.12 REASONABLE CONSENT. Whenever a Party's consent or permission is
required under this CRADA, such consent or permission shall not be
unreasonably withheld.
ARTICLE 14. DURATION OF AGREEMENT
14.1 DURATION. It is mutually recognized that the duration of this project
cannot be rigidly defined in advance, and that the contemplated time
periods for various phases of the RP are only good faith guidelines
subject to adjustment by mutual agreement to fit circumstances as the
RP proceeds. In no case will the term of this CRADA extend beyond the
term indicated in the RP unless it is in accordance with Article 13.6.
14.2 SURVIVABILITY. The provisions of Articles 4.2, 5-8, 10.3-10.5, 11.1,
12.2-12.4, 13.1, 13. 10 and 14.2 shall survive the termination of this
CRADA.
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<PAGE> 20
CRADA SIGNATURE PAGE
FOR PHS:
__________________________________ ___________________________________
Date
__________________________________
Mailing Address for Notices:
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
FOR THE COLLABORATOR:
__________________________________ ___________________________________
Date
__________________________________
Mailing Address for Notices:
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
[Include additional signature and address blocks as necessary for all
Parties to this CRADA.]
<PAGE> 1
EXHIBIT 11.1
INTROGEN THERAPEUTICS, INC.
STATEMENT REGARDING COMPUTATION OF PRO FORMA
NET LOSS PER SHARE
<TABLE>
<CAPTION>
YEAR ENDED
JUNE 30, 1996
-------------
<S> <C>
Weighted average shares outstanding............................................. 7,015,961
Effect of preferred stock, common stock, options and warrants issued in twelve
months preceding the Company's initial public offering........................ 461,595
------------
Shares used in computing pro forma net loss per share........................... 7,477,556
============
Net loss........................................................................ $ (1,332,195)
============
Pro forma net loss per share.................................................... $ (0.18)
============
</TABLE>
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our
report (and all references to our Firm) included in or made a part of this
Registration Statement.
ARTHUR ANDERSEN LLP
Houston, Texas
August 28, 1996
<PAGE> 1
CONSENT OF COUNSEL
We consent to the use of our name in the second paragraph under the caption
"Experts" in the prospectus, which constitutes a part of the Registration
Statement for the Common Stock of Introgen Therapeutics, Inc. on Form S-1.
By: /s/ DAVID PARKER
------------------------------------
David Parker
Arnold, White & Durkee
Austin, Texas
August 30, 1996
