<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 17, 2000
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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)
<TABLE>
<S> <C> <C>
DELAWARE 2834 74-2704230
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer Identification
incorporation or organization) Classification Code Number) Number)
</TABLE>
301 CONGRESS AVENUE, SUITE 1850
AUSTIN, TEXAS 78701
(512) 708-9310
(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) 708-9310
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
---------------------
Copies to:
<TABLE>
<S> <C>
CHRISTOPHER J. OZBURN, ESQ. DANIELLE CARBONE, ESQ.
WILLIAM B. OWENS, JR., ESQ. SHEARMAN & STERLING
STACY A. FELD, ESQ. 599 LEXINGTON AVENUE
BRANDON W. FREEMAN, ESQ. NEW YORK, NEW YORK 10022
WILSON SONSINI GOODRICH & ROSATI, (212) 848-4000
PROFESSIONAL CORPORATION
8911 CAPITAL OF TEXAS HIGHWAY, SUITE 3350
AUSTIN, TEXAS 78759
(512) 338-5400
</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,
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, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
---------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
TITLE OF EACH CLASS OF PROPOSED MAXIMUM AMOUNT OF
SECURITIES TO BE REGISTERED AGGREGATE OFFERING PRICE(1) REGISTRATION FEE
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Common stock, $0.001 par value.......................... $92,000,000 $24,300
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for the purpose of computing the amount of the registration
fee pursuant to Rule 457(o) 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, AS AMENDED OR UNTIL THE REGISTRATION STATEMENT SHALL
BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE
MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS
NOT AN OFFER TO SELL SECURITIES, AND WE ARE NOT SOLICITING OFFERS TO BUY
THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED FEBRUARY 17, 2000
PROSPECTUS
SHARES
[INTROGEN LOGO]
COMMON STOCK
This is an initial public offering of shares of common stock of Introgen
Therapeutics, Inc. We expect that the initial public offering price will be
between $ and $ per share.
We have applied for approval for trading and quotation of our common stock
on the Nasdaq National Market under the symbol "INGN."
OUR BUSINESS INVOLVES SIGNIFICANT RISKS. THESE RISKS ARE DESCRIBED UNDER
THE CAPTION "RISK FACTORS" BEGINNING ON PAGE 8.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
---------------------------
<TABLE>
<CAPTION>
PER SHARE TOTAL
<S> <C> <C>
Public offering price....................................... $ $
Underwriting discounts and commissions...................... $ $
Proceeds, before expenses, to Introgen...................... $ $
</TABLE>
The underwriters may also purchase up to an additional shares of
common stock at the public offering price, less the underwriting discounts and
commissions, to cover over-allotments.
The underwriters expect to deliver the shares against payment in New York,
New York on , 2000.
---------------------------
SG COWEN
PRUDENTIAL VECTOR HEALTHCARE
A UNIT OF PRUDENTIAL SECURITIES
, 2000
<PAGE> 3
The inside cover contains a depiction of loco-regional administration of
INGN 201, Adenoviral p53. The image depicts a viral vector encoding the normal
p53 therapeutic gene. The p53 gene is being injected into a tumor, causing
transformation of the cancer cells, cell death and tumor shrinkage. The various
steps are explained with captions:
Caption 1 -- INGN 201, a modified adenovirus carrying a normal p53 gene.
Caption 2 -- Easy administration to tumors.
Caption 3 -- P53 gene transfer into tumor cells.
Caption 4 -- Tumor responding to treatment.
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<S> <C>
Prospectus Summary.................... 4
Risk Factors.......................... 8
Our Company........................... 19
Special Note Regarding Forward-Looking
Statements.......................... 19
Use of Proceeds....................... 20
Dividend Policy....................... 20
Capitalization........................ 21
Dilution.............................. 22
Selected Financial Data............... 23
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 24
Business.............................. 31
Management............................ 51
Certain Transactions.................. 59
Principal Stockholders................ 61
Description of Capital Stock.......... 63
Shares Eligible for Future Sale....... 66
Underwriting.......................... 68
Legal Matters......................... 70
Experts............................... 70
Where You Can Find Additional
Information......................... 70
Financial Statements.................. F-1
</TABLE>
------------------------------
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS. WE
HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT. WE
ARE OFFERING TO SELL AND SEEKING OFFERS TO BUY SHARES OF OUR COMMON STOCK ONLY
IN JURISDICTIONS WHERE OFFERS AND SALES ARE PERMITTED. THE INFORMATION CONTAINED
IN THIS PROSPECTUS IS ACCURATE ONLY AS OF THE DATE OF THIS PROSPECTUS,
REGARDLESS OF THE TIME OF DELIVERY OF THIS PROSPECTUS OR OF ANY SALE OF OUR
COMMON STOCK. IN THIS PROSPECTUS, REFERENCES TO "INTROGEN THERAPEUTICS,"
"INTROGEN," "WE," "US" AND "OUR" REFER TO INTROGEN THERAPEUTICS, INC., A
DELAWARE CORPORATION.
------------------------------
UNTIL , 2000, ALL DEALERS THAT EFFECT TRANSACTIONS IN THESE
SECURITIES, WHETHER OR NOT PARTICIPATING IN THIS OFFERING, MAY BE REQUIRED TO
DELIVER A PROSPECTUS. THIS REQUIREMENT IS IN ADDITION TO THE DEALERS' OBLIGATION
TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR
UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
3
<PAGE> 5
PROSPECTUS SUMMARY
The following summary highlights information we present more fully
elsewhere in this prospectus. This prospectus contains forward-looking
statements that involve risks and uncertainties. Our actual results could differ
materially from those anticipated in the forward-looking statements as a result
of factors described under the heading "Risk Factors" and elsewhere in this
prospectus. Except as otherwise indicated, all of the information in this
prospectus (1) reflects a -for- forward stock split of our outstanding
common stock that will be effected at the effective time of this offering, (2)
reflects the automatic conversion of all outstanding shares of preferred stock
into 7,703,866 shares of common stock immediately prior to the closing of this
offering and (3) assumes no exercise of the underwriters' over-allotment option.
INTROGEN THERAPEUTICS, INC.
We are a leading developer of gene therapy products for the treatment of
cancer. We are capitalizing on the significant advances in the understanding of
the human genome and the role that genetic function plays in the development of
cancer. Our drug discovery and development programs have resulted in innovative
approaches in which therapeutic genes are used to treat cancer by directly
addressing the genetic abnormalities associated with the disease.
Our lead product candidate, INGN 201, combines the naturally occurring p53
tumor suppressor gene with our clinically proven adenoviral delivery system. The
critical importance of the p53 gene in controlling tumor growth indicates that
INGN 201 is applicable to multiple cancers. We are beginning pivotal Phase III
clinical studies of INGN 201 in head and neck cancer and conducting a Phase II
clinical trial in non-small cell lung cancer. We are also conducting several
Phase I clinical trials in additional cancer indications. To date, we have
treated over 400 patients with a total of over 3,000 doses of INGN 201,
establishing a broad safety profile. We are developing INGN 201 and other p53
products as part of our collaboration agreement with Aventis Pharma AG.
Cancer is now understood to be primarily a genetic disease, caused by cell
dysfunction or mutation resulting in uncontrolled cell growth. A class of genes
called tumor suppressor genes has been shown to regulate cancer cell growth and
to be mutated or defective in cancer cells. In gene therapy for cancer, the
tumor suppressor genes are used to produce proteins that cause cancer cell death
without affecting normal cells. Conventional cancer treatments with radiation
and chemotherapy cannot discriminate well between normal cells and cancer cells
and therefore are often toxic at effective doses.
Cancer is the second leading cause of death in the United States, with
approximately 1.2 million people newly diagnosed and over 550,000 deaths each
year. According to the American Cancer Society, the direct cost of treating
cancer exceeded $37 billion in 1999, yet conventional approaches are often
limited. We are developing cancer therapies based on restoring normal cellular
function through gene therapy, which may offer safer and more effective
treatments than are currently available.
We have completed a Phase II study with INGN 201 in 112 patients with
recurrent head and neck cancer in the United States and Europe. In this study,
we demonstrated that INGN 201 shrank tumors or stopped their growth in 60% of
the tumors treated. Also, INGN 201 was effective in treating tumors with normal
and mutant p53 genes. The treatment was well tolerated without the significant
side effects associated with conventional cancer treatments. Based on these
results, we have designed our randomized, controlled pivotal Phase III studies
to demonstrate the efficacy of INGN 201 for treatment of patients with head and
neck cancer who have failed conventional treatments. We believe the results of
these trials will establish the effectiveness of INGN 201 both as a monotherapy
and in combination with chemotherapy.
In addition to our INGN 201 development program, we have identified and are
developing additional gene therapeutics, including the genes mda-7, PTEN and
CCAM and associated delivery systems, or vectors, which we believe will be
effective in treating certain cancers. Through our development experience with
INGN 201, we have created a structured process to rapidly evaluate pipeline
candidates and advance
4
<PAGE> 6
them from preclinical studies to human trials. We also have a variety of
enabling technologies and a manufacturing infrastructure to support our
continued product development and commercialization efforts.
Our objective is to be the leader in the development of gene therapy
products for the treatment of cancer. To accomplish this objective, our strategy
is to:
- develop and commercialize INGN 201 for multiple cancer indications;
- develop our portfolio of gene therapeutics;
- expand delivery system technologies;
- leverage manufacturing capabilities to produce additional gene therapy
products;
- establish targeted sales and marketing capabilities; and
- expand market focus to non-cancer indications.
Our principal executive offices are located at 301 Congress Avenue, Suite
1850, Austin, Texas 78701, and our telephone number is (512) 708-9310. Our
corporate web site is located at www.introgen.com. Statements and information
contained on our web site are not part of this prospectus. We were incorporated
in Delaware on June 17, 1993.
5
<PAGE> 7
THE OFFERING
Common stock we are offering............ shares
Common stock to be outstanding after
this offering........................... shares
Underwriters' over-allotment option..... shares
Use of proceeds......................... We expect to use the net proceeds
from this offering to conduct
research and development, including
clinical trials, advance our
process development and
manufacturing capabilities and
initiate product marketing and
commercialization programs, and for
general corporate purposes,
including working capital. See "Use
of Proceeds".
Proposed Nasdaq National Market
symbol.................................. INGN
The number of shares of common stock to be outstanding after the offering
is based on 10,271,909 shares of common stock outstanding as of December 31,
1999. It does not include:
- 1,507,352 shares of common stock subject to stock options outstanding as
of December 31, 1999, with a weighted average exercise price of $0.75 per
share;
- 114,250 shares of common stock subject to warrants outstanding as of
December 31, 1999, with a weighted average exercise price of $7.17 per
share;
6
<PAGE> 8
SUMMARY FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
The following table contains a summary of our statement of operations data.
The pro forma net loss per share data below gives effect to the pro forma basis
of presentation described in Note 2 to our consolidated financial statements,
including the conversion of each outstanding share of preferred stock into 1.2
shares of common stock upon the closing of this offering.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED JUNE 30, DECEMBER 31,
--------------------------------------------------------- ----------------------
1995 1996 1997 1998 1999 1998 1999
--------- --------- --------- --------- --------- --------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenue from collaborations............... $ 2,664 $ 10,449 $ 12,052 $ 8,606 $ 6,714 $ 3,974 $ 3,916
--------- --------- --------- --------- --------- --------- ----------
Revenue from product sales to affiliate... -- -- -- 2,505 1,475 699 1,786
Cost of product sales..................... -- -- -- 1,729 994 466 1,153
--------- --------- --------- --------- --------- --------- ----------
Gross margin on product sales........... -- -- -- 776 481 233 633
Operating costs and expenses.............. 3,996 11,992 15,589 12,186 10,516 5,635 8,504
--------- --------- --------- --------- --------- --------- ----------
Loss from operations...................... (1,332) (1,543) (3,537) (2,804) (3,321) (1,428) (3,955)
Interest income, net...................... 107 211 421 789 675 409 208
--------- --------- --------- --------- --------- --------- ----------
Net loss.................................. $ (1,225) $ (1,332) $ (3,116) $ (2,015) $ (2,646) $ (1,019) $ (3,747)
========= ========= ========= ========= ========= ========= ==========
Basic and diluted net loss per share...... $ (0.50) $ (0.55) $ (1.28) $ (0.82) $ (1.06) $ (0.41) $ (1.48)
========= ========= ========= ========= ========= ========= ==========
Shares used in computing basic and diluted
net loss per share...................... 2,438,360 2,443,360 2,443,360 2,451,730 2,503,683 2,475,622 2,536,043
========= ========= ========= ========= ========= ========= ==========
Pro forma basic and diluted net loss per
share................................... $ (0.27) $ (0.37)
========= ==========
Shares used in computing pro forma basic
and diluted net loss per share.......... 9,681,493 10,239,909
========= ==========
</TABLE>
The following table contains a summary of our consolidated balance sheet at
December 31, 1999:
- on an actual basis; and
- on a pro forma as adjusted basis to reflect the conversion of all
outstanding shares of preferred stock into 7,703,866 shares of common
stock effective upon the closing of this offering and the receipt of the
estimated net proceeds for the sale of the shares of common stock that we
are offering, at an assumed initial public offering price per share of $
, after deducting the estimated underwriting discount and the
estimated offering expenses.
<TABLE>
<CAPTION>
DECEMBER 31, 1999
----------------------
PRO FORMA
ACTUAL AS ADJUSTED
------- -----------
(UNAUDITED)
<S> <C> <C>
BALANCE SHEET DATA:
Cash and investments........................................ $13,582 $
Working capital............................................. 12,984
Total assets................................................ 26,320
Long-term obligations, net of current portion............... 8,089
Accumulated deficit......................................... (14,767)
Total stockholders' equity.................................. 16,425
</TABLE>
7
<PAGE> 9
RISK FACTORS
You should carefully consider the risks described below before making an
investment decision. You should also refer to the other information in this
prospectus, including our financial statements and the related notes. The risks
and uncertainties described below are those that we currently believe may
materially affect our company. Additional risks and uncertainties that we are
unaware of or that we currently deem immaterial also may become important
factors that affect our company.
RISKS RELATED TO OUR COMPANY AND BUSINESS
WE MAY ENCOUNTER DELAYS OR DIFFICULTIES IN OUR INGN 201 CLINICAL TRIALS, WHICH
MAY DELAY OR PRECLUDE THE COMMERCIAL USE OF INGN 201.
To date, no gene therapy product has been approved for sale in the United
States or internationally. We are beginning a Phase III clinical trial of INGN
201 for the treatment of head and neck cancer, conducting a Phase II clinical
trial of INGN 201 for the treatment of non-small cell lung cancer and conducting
six Phase I clinical trials of INGN 201 for other cancer indications. INGN 201
is our only product candidate in clinical trials. In order to commercialize INGN
201 for any cancer or other indication, we must obtain regulatory approvals for
that indication. To obtain regulatory approvals, we must, among other
requirements, complete clinical trials demonstrating that INGN 201 is safe and
effective for a particular cancer indication. Current or future clinical trials
may demonstrate that INGN 201 is not safe or effective. Any delays or
difficulties we encounter in our INGN 201 clinical trials, in particular the
Phase III clinical trial of INGN 201 for the treatment of head and neck cancer,
may delay or preclude the commercialization of INGN 201. Any delay or preclusion
may negatively affect our operations and cause our stock price to decline,
perhaps significantly. In addition, we or the United States Food and Drug
Administration might delay or halt any of our clinical trials of INGN 201 at any
time for various reasons, including:
- INGN 201's failure to be more effective than current therapies;
- presence of unforeseen adverse side effects of INGN 201, including its
delivery system;
- longer than expected time required to determine whether INGN 201 is
effective;
- death of patients during a clinical trial, even though those deaths may
not have been caused by INGN 201;
- failure to enroll a sufficient numbers of patients in our clinical
trials; or
- our potential failure to produce sufficient quantities of INGN 201 to
complete the trials.
WE HAVE NOT INITIATED CLINICAL TRIALS FOR ANY OF OUR NON-INGN 201 PRODUCT
CANDIDATES, THEREFORE, THERE IS A HIGH RISK OF FAILURE.
We have not initiated clinical trials for any of our non-INGN 201 product
candidates because they are at an earlier stage of development. We face the
risks of failure inherent in developing drugs based on new technologies. We will
need to conduct significant additional research and animal testing, referred to
as preclinical testing, before any of these product candidates can advance to
clinical trials. It will take us many years to complete preclinical testing and
clinical trials, and failure could occur at any stage of testing. Acceptable
results in early testing or trials may not be repeated later. Moreover, not all
products in preclinical testing or early stage clinical trials will become
approved products. Before we can file applications with the FDA for product
approval, our clinical trials must demonstrate that a particular product
candidate is safe and effective. Our failure to adequately demonstrate the
safety and efficacy of our product candidates could prevent FDA approval and
commercialization of our products. Our product development costs will increase
if we experience delays in testing or regulatory approvals or if we need to
perform more or larger clinical trials than planned. If the delays are
significant, they could affect negatively our financial results and the
commercial prospects for our products.
8
<PAGE> 10
WE HAVE A HISTORY OF OPERATING LOSSES AND EXPECT TO INCUR SIGNIFICANT ADDITIONAL
OPERATING LOSSES.
We have generated operating losses since we began operations in June 1993.
As of December 31, 1999, we had an accumulated deficit of approximately $14.8
million. We expect to incur substantial additional operating expenses over the
next several years as our research, development, preclinical testing and
clinical trial activities increase. We have no products that have generated any
commercial revenue and our only revenues to date have been payments from our
collaborator Aventis Pharma AG under collaborative agreements for research and
development and sales to Aventis of INGN 201 product for use in clinical trials.
We do not expect to generate revenues from the commercial sale of products in
the foreseeable future, and we may never generate revenues from the sale of
products.
Our profitability will depend on the market's acceptance of INGN 201. The
commercial success of INGN 201 will depend on whether:
- INGN 201 is more effective than alternative treatments;
- side effects of INGN 201 are acceptable to patients and doctors;
- we produce and sell INGN 201 at a profit;
- sufficient reimbursement for INGN 201 is available; and
- we market INGN 201 effectively, if we choose to form a joint marketing
operation with Aventis.
IF WE CONTINUE TO INCUR OPERATING LOSSES FOR A PERIOD LONGER THAN ANTICIPATED
AND FAIL TO OBTAIN THE CAPITAL NECESSARY TO FUND OUR OPERATIONS, WE WILL BE
UNABLE TO ADVANCE OUR DEVELOPMENT PROGRAM AND COMPLETE OUR CLINICAL TRIALS.
Developing a new drug and conducting clinical trials for multiple disease
indications are expensive. We expect that we will fund our capital expenditures
and operations over at least the next two years with our current working
capital, the net proceeds of this offering and future payments under our
collaborative agreements with Aventis. We may need to raise additional capital
sooner, however, due to a number of factors, including:
- an acceleration of the number, size or complexity of our clinical trials;
- slower than expected progress in developing INGN 201;
- higher than expected costs to obtain regulatory approvals;
- higher than expected costs to pursue our intellectual property strategy;
- higher than expected costs to further develop our manufacturing
capability; and
- higher than expected costs to develop our sales and marketing capability,
if we choose to form a joint marketing operation with Aventis.
We do not know whether additional financing will be available when needed,
or on terms favorable to us or our stockholders. We may raise any necessary
funds through public or private equity offerings, debt financings or additional
corporate collaboration and licensing arrangements. To the extent we raise
additional capital by issuing equity securities, our stockholders will
experience dilution. If we raise funds through debt financings, we may become
subject to restrictive covenants. To the extent that we raise additional funds
through collaboration and licensing arrangements, we may be required to
relinquish some rights to our technologies or product candidates, or grant
licenses on terms that are not favorable to us.
IF WE CANNOT MAINTAIN OUR CURRENT COLLABORATIVE RELATIONSHIP WITH AVENTIS, OUR
PRODUCT DEVELOPMENT WOULD BE DELAYED.
Under our collaboration agreements with Aventis, we are primarily
responsible for conducting early stage product development in North America,
which includes preclinical research and development and
9
<PAGE> 11
Phase I clinical trials. However, we rely to a significant extent on Aventis to
fund and support the development of products which are part of our collaboration
with Aventis. Through October 1997, Aventis was required to fund our early stage
development programs for North America pursuant to mutually approved budgets.
Since October 1997, Aventis has agreed on an annual basis to continue to fund
our early stage development program. Since Aventis is not obligated to provide
funding for more than a year at a time, we cannot be certain that Aventis will
continue to fund early stage development in North America. If Aventis does not
agree to continue to fund our early stage development, and we decide to continue
this development, we would have to fund this development ourselves or obtain
funding from other sources.
Once we have completed Phase I clinical trials of a potential gene therapy
product, Aventis may elect to pursue later stage clinical development of that
product, which includes conducting Phase II and III clinical trials,
commercializing the product, making all further submissions to existing
Investigational New Drug, or IND, applications and preparing all product license
applications. If Aventis does not make this election, neither we nor Aventis may
develop or commercialize the product before October 2004 without the other's
approval. Consequently, our development or commercialization efforts for the
product could be delayed with respect to the product if Aventis fails to consent
to our further development and commercialization. Aventis may terminate its
collaboration agreements with us, in whole or in part with respect to individual
products, at any time upon six months' notice. If Aventis were to breach or
terminate its collaboration agreements with us or otherwise fail to conduct the
collaborative activities successfully and in a timely manner, the research,
development or commercialization of the affected product candidates or research
programs could be delayed or terminated.
WE ARE RELYING ON OUR COLLABORATIVE RELATIONSHIP WITH AVENTIS TO HELP US MARKET
INGN 201.
Under our collaboration agreements with Aventis, we can elect to form a
joint commercial operation with Aventis to market the products developed under
our collaboration with Aventis in North America. If we elect to form such a
joint commercial operation, we may have to enter into marketing, distribution or
other similar arrangements with third parties in order to successfully sell,
market and distribute our products. To the extent that we enter into any such
arrangements with third parties, our product revenues are likely to be lower
than if we directly marketed and sold our products, and any revenues we receive
will depend upon the efforts of such third parties.
If we elect to form a joint commercial operation with Aventis, then we may
be required to develop sales, marketing and distribution capabilities. We have
no experience in marketing or selling pharmaceutical products and we currently
have no sales, marketing or distribution capability. We may be unable to develop
sufficient sales, marketing and distribution capabilities to successfully
commercialize our products. At this time, we believe that electing to form a
joint commercial operation will maximize the value of INGN 201 to us. However,
this assessment may change depending on the circumstances at the time we are
required to make our election. If we do not elect to form a joint commercial
operation, Aventis would retain exclusive marketing rights in North America and
would pay us royalties on product sales. In Eastern and Western Europe, Aventis
has exclusive marketing rights to INGN 201 but must pay us royalties on product
sales. Any revenues we receive from products sales in Eastern and Western Europe
will depend entirely on the efforts of Aventis. In Japan, North and South Korea,
Taiwan, China and India, both companies have the right, at their own expense, to
market and manufacture the products that are part of the collaboration. To the
extent that we have co-marketing rights with Aventis, there is the potential
that we will compete with Aventis in those markets. Aventis is a large, global
pharmaceutical company with far greater financial and other resources than we
have, and therefore, our ability to compete with Aventis will be limited.
IF WE FAIL TO ADEQUATELY PROTECT OUR INTELLECTUAL PROPERTY RIGHTS, OUR
COMPETITORS MAY BE ABLE TO TAKE ADVANTAGE OF OUR RESEARCH AND DEVELOPMENT
EFFORTS TO DEVELOP COMPETING DRUGS.
Our commercial success will depend in part on obtaining patent protection
for our products and other technologies and successfully defending these patents
against third party challenges. Our patent position, like that of other
biotechnology and pharmaceutical companies, is highly uncertain. The United
States
10
<PAGE> 12
Patent and Trademark Office, the PTO, may deny or significantly narrow claims
made under patent applications. We cannot assure you that any patents that may
be issued or licensed to us will provide any competitive advantage to us or that
they will not be successfully challenged, invalidated or circumvented in the
future. In addition, we cannot assure you 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 our ability to make, use and sell our potential products
either in the United States or in international markets.
Our ability to develop and protect a proprietary position based on
biotechnological innovations, technologies involving genes, gene therapy, viral
constructs, formulations, delivery systems and the like, is particularly
uncertain. The PTO, as well as patent offices in other jurisdictions, have often
required that patent applications concerning biotechnology-related inventions be
limited or narrowed substantially. In addition, courts have invalidated many key
patents in the biotechnology industry. Thus, even if we are able to develop
commercially significant patent positions, our patents may not be upheld or our
patents may be substantively narrowed.
Patent applications in the United States, as well as their processing
through the PTO, are, in most cases, maintained in secrecy until patents issue.
Furthermore, publication of discoveries in the scientific or patent literature
frequently occurs significantly later than the date on which the underlying
discoveries were made. Many companies choose not to publish their scientific
discoveries at all. Consequently, we cannot be certain that our patent
applications lay claim to the first made inventions or that they were the first
filed patent applications for such inventions. Similarly, we are unable to
predict or assess the United States patent application portfolio of competitors
and third parties with any degree of certainty.
The processing of patent applications directed to technologies such as
genes and gene therapies in the PTO and patent offices in other jurisdictions
will typically require a much longer period of time than patent applications
involving other technologies, leading to additional uncertainty. We have been
notified by the PTO that two of our patent applications directed to our
adenoviral p53 technology and two other patent applications directed to
supporting technologies have been allowed, but that their issuance is being
suspended for the possible institution of interference proceedings. Another
patent application directed to supporting technologies is currently involved in
an interference proceeding. An interference proceeding is instituted by the PTO
to determine, as between two or more parties claiming the same patentable
invention, which party has the right to the patent. If any of our key patent
applications become involved in an interference proceeding, there is a
likelihood that it will take many years to resolve. There is also the
possibility that our competitors could ultimately prevail in any such
interference, which would result in their being awarded the patent at issue,
which could have a significant detrimental effect on our ability to
commercialize our potential products.
We rely on trade secrets to protect technology where we believe patent
protection is not appropriate or obtainable. However, trade secrets are
difficult to protect. In addition, we generally require employees, academic
collaborators and consultants to enter into confidentiality agreements. Despite
these measures, we may not be able to adequately protect our trade secrets or
other proprietary information. We are a party to various license agreements that
give us rights to use specified technologies in our research and development
processes. If we are not able to continue to license this technology on
commercially reasonable terms, our product development and research may be
delayed. In addition, we do not ultimately control the prosecution of
in-licensed technology, and accordingly are unable to exercise the same degree
of control over this intellectual property as we exercise over our internally
developed technology. Our research collaborators and scientific advisors have
rights to publish data and information in which we have rights. If we cannot
maintain the confidentiality of our technology and other confidential
information in connection with our collaborations, then our ability to receive
patent protection or protect our proprietary information will be diminished.
11
<PAGE> 13
THIRD PARTY CLAIMS OF INFRINGEMENT OF INTELLECTUAL PROPERTY COULD REQUIRE US TO
SPEND TIME AND MONEY TO ADDRESS THE CLAIMS AND COULD LIMIT OUR INTELLECTUAL
PROPERTY RIGHTS.
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. We are aware of a number of issued patents and patent
applications that relate to gene therapy, the treatment of cancer and the use of
the p53 and other tumor suppressor genes. Schering-Plough Corporation, or its
subsidiary Canji, Inc., controls various United States patent applications and a
European patent directed to methods of supplying normal p53 function to a cell
which has lost such function and to adenoviral p53 compositions and methods. In
addition, Canji controls an issued United States patent and its international
counterparts, including a European patent, involving a method of treating
mammalian cancer cells lacking normal p53 protein by introducing a p53 gene into
the cancer cell.
While we believe that our potential products do not infringe any valid
claim of the Canji p53 patents, Canji or Schering Plough could assert a claim
against us. We may also become subject to infringement claims or litigation
arising out of other patents and pending applications of our competitors, if
they issue, or additional interference proceedings declared by the PTO to
determine the priority of inventions. The defense and prosecution of
intellectual property suits, PTO interference proceedings and related legal and
administrative proceedings are costly and time-consuming to pursue, and their
outcome is uncertain. Litigation may be necessary to enforce our issued patents,
to protect our trade secrets and know-how or to determine the enforceability,
scope and validity of the proprietary rights of others. An adverse determination
in litigation or interference proceedings to which we may become a party could
subject us to significant liabilities, require us to obtain licenses from third
parties, or restrict or prevent us from selling our 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, the necessary
licenses may not be available to us on satisfactory terms, if at all. In
particular, if we were found to infringe a valid claim of the Canji p53 issued
United States patent, our business could be materially harmed.
We and Aventis are currently involved in three opposition proceedings
before the European Patent Office, or EPO, in which we are seeking to have the
EPO revoke three different European patents owned or controlled by Canji. These
European patents relate to the use of a p53 gene, or the use of tumor suppressor
genes, in the preparation of therapeutic products. In one opposition involving
the use of a p53 gene, the European patent at issue was upheld following an
initial hearing. A second hearing to determine whether this patent should be
revoked will be upcoming. The other two oppositions are in earlier stages and a
hearing date has not been set. The final outcome of these oppositions is
uncertain. If we do not ultimately prevail in one or more of these oppositions,
our competitors could seek to assert by means of litigation any patent surviving
opposition against European commercial activities involving our potential
products. If our competitors are successful in any such litigation, it could
have a significant detrimental effect on our, or our collaborator's, ability to
commercialize our potential commercial products in Europe.
BECAUSE WE MUST OBTAIN REGULATORY APPROVAL TO MARKET OUR PRODUCTS IN THE UNITED
STATES AND FOREIGN JURISDICTIONS, WE CANNOT PREDICT WHETHER OR WHEN WE WILL BE
PERMITTED TO COMMERCIALIZE OUR PRODUCTS.
The pharmaceutical industry is subject to stringent regulation by a wide
range of authorities. We cannot predict whether we will obtain regulatory
approval for any product we develop. A pharmaceutical product cannot be marketed
in the United States until it has completed rigorous preclinical testing and
clinical trials and an extensive regulatory approval process implemented by the
FDA. Satisfaction of regulatory requirements typically takes many years, is
dependent upon the type, complexity and novelty of the product and requires the
expenditure of substantial resources. Of particular significance are the
requirements covering research and development, testing, manufacturing, quality
control, labeling and promotion of drugs for human use. Before commencing
clinical trials, we must submit and receive
12
<PAGE> 14
approval from the FDA of an Investigational New Drug application. Clinical
trials are subject to oversight by institutional review boards and the FDA and:
- must meet requirements for institutional review board oversight;
- must meet requirements for informed consent;
- must meet requirements for good clinical practices;
- are subject to continuing FDA oversight;
- may require large numbers of test subjects; and
- may be suspended by us or the FDA at any time if it is believed that the
subjects participating in these trials are being exposed to unacceptable
health risks or if the FDA finds deficiencies in the Investigational New
Drug application or the conduct of these trials.
We may encounter delays or rejections in the regulatory approval process
because of additional government regulation from future legislation or
administrative action or changes in FDA policy during the period of product
development, clinical trials and FDA regulatory review. Failure to comply with
applicable FDA or other applicable regulatory requirements may result in
criminal prosecution, civil penalties, recall or seizure of products, total or
partial suspension of production or injunction, as well as other regulatory
action against our product candidates or us. If regulatory approval of a product
is granted, this approval will be limited to those disease indications for which
the product is demonstrated through clinical trials to be safe and effective.
The FDA also strictly regulates promotion and labeling after approval. Outside
the United States, our ability to market a product is contingent upon receiving
clearances from the appropriate regulatory authorities. This foreign regulatory
approval process includes all of the risks associated with FDA clearance
described above.
ADVERSE EVENTS IN THE FIELD OF GENE THERAPY MAY NEGATIVELY AFFECT REGULATORY
APPROVAL OR PUBLIC PERCEPTION OF OUR PRODUCTS.
The recent death of a patient undergoing gene therapy using an adenoviral
vector to deliver the therapeutic gene has been widely publicized. This death
and any other adverse events in the field of gene therapy that may occur in the
future may result in greater governmental regulation of our product candidates
and potential regulatory delays relating to the testing or approval of our
product candidates. As a result of this death, the United States Senate has
commenced hearings to determine whether additional legislation is required to
protect volunteers and patients who participate in gene therapy clinical trials.
Additionally, the Recombinant DNA Advisory Committee, which acts as an advisory
body to the NIH, has extensively discussed the use of adenoviral vectors in gene
therapy clinical trials and intends to issue a report in March 2000 on the
adverse events reported by investigators using adenoviral vectors. Any increased
scrutiny could delay or increase the costs of our product development efforts or
clinical trials.
We have reported to the FDA and the NIH that, in one of our Phase I studies
conducted from 1995 to 1997, two deaths occurred for which the gene therapy
treatment could not be unequivocally ruled out as a contributing cause of death.
There was no evidence that our gene therapy was responsible for the deaths, but
the clinical investigator could not rule out the possibility that our gene
therapy could have been related. Often, cancer patients are enrolled in gene
therapy clinical trials because they have failed all conventional treatments
available to them, so they often have short life expectancies and they sometimes
die before completion of their clinical trials.
The commercial success of our product candidates will depend in part on
public acceptance of the use of gene therapies for the prevention or treatment
of human diseases. Public attitudes may be influenced by claims that gene
therapy is unsafe, and gene therapy may not gain the acceptance of the public or
the medical community. Negative public reaction to gene therapy could result in
greater government regulation and stricter clinical trial oversight and
commercial product labeling requirements of gene therapies and could cause a
decrease in the demand for any products we may develop.
13
<PAGE> 15
IF WE CANNOT MAINTAIN OUR OTHER CORPORATE AND ACADEMIC ARRANGEMENTS AND ENTER
INTO NEW ARRANGEMENTS, PRODUCT DEVELOPMENT COULD BE DELAYED.
Our strategy for the research, development and commercialization of some of
our product candidates requires us to enter into contractual arrangements with
corporate collaborators in addition to Aventis, academic institutions and
others. We have entered into sponsored research and/or collaborative
arrangements with several entities including M.D. Anderson Cancer Center,
National Cancer Institute and Corixa Corporation. Our success depends upon the
performance by these collaborative partners of their responsibilities under
these arrangements. We cannot control the amount and timing of resources our
collaborative partners devote to our research and testing programs or product
candidates, which can vary because of factors unrelated to such programs or
product candidates. These relationships may in some cases be terminated at the
discretion of our collaborative partners with only limited notice to us. We may
not be able to maintain our existing arrangements or enter into new arrangements
or negotiate current or new arrangements on acceptable terms, if at all. Some of
our collaborative partners may also be researching competing technologies
independently from us to treat the diseases targeted by our collaborative
programs.
COMPETITION AND TECHNOLOGICAL CHANGE MAY MAKE OUR PRODUCT CANDIDATES AND
TECHNOLOGIES LESS ATTRACTIVE OR OBSOLETE.
We compete with pharmaceutical and biotechnology companies, including Canji
and Onyx Pharmaceuticals, Inc., which are pursuing other forms of treatment for
the diseases INGN 201 and our other product candidates target. We also may face
competition from companies that may develop internally or acquire competing
technology from universities and other research institutions. As these companies
develop their technologies, they may develop proprietary positions which may
prevent or limit our product commercialization efforts.
Some of our competitors are established companies with greater financial
and other resources than we have. Other companies may succeed in developing
products earlier than we do, obtaining FDA approval for products more rapidly
than we do or developing products that are more effective than our product
candidates. While we will seek to expand our technological capabilities to
remain competitive, research and development by others may render our technology
or products obsolete or noncompetitive or result in treatments or cures superior
to any therapy developed by us.
IF WE ARE UNABLE TO MANUFACTURE OUR PRODUCTS IN SUFFICIENT QUANTITIES OR ARE
UNABLE TO OBTAIN REGULATORY APPROVALS FOR OUR MANUFACTURING FACILITY, WE MAY BE
UNABLE TO MEET DEMAND FOR OUR PRODUCTS AND LOSE POTENTIAL REVENUES.
Completion of our clinical trials and commercialization of our product
candidates require access to, or development of, facilities to manufacture a
sufficient supply of our product candidates. We recently constructed a new
manufacturing facility in Houston, Texas. We plan to use the facility to
manufacture INGN 201 for our currently planned clinical trials and eventually
for the initial commercial launch of INGN 201. We have no experience
manufacturing INGN 201 in the volumes that will be necessary to support large
clinical trials or commercial sales. If we are unable to manufacture our product
candidates in clinical or, when necessary, commercial quantities, then we will
need to rely on third party manufacturers to manufacture compounds for
preclinical, clinical and commercial purposes. These third party manufacturers
must receive FDA approval before they can produce clinical material or
commercial product. Our products may be in competition with other products for
access to these facilities and may be subject to delays in manufacture if third
parties give other products greater priority than ours. In addition, we may not
be able to enter into any necessary third-party manufacturing arrangements on
acceptable terms. There are very few contract manufacturers who currently have
the capability to produce INGN 201, and the inability of any of these contract
manufacturers to deliver our required quantities of product candidates timely
and at commercially reasonable prices would negatively affect our operations.
14
<PAGE> 16
Before we can begin commercially manufacturing INGN 201 or any other
product candidate, we must obtain regulatory approval of our manufacturing
facility and process. Manufacturing of our INGN 201 must comply with the FDA's
Current Good Manufacturing Practices requirements, commonly known as CGMP, and
foreign regulatory requirements. The CGMP requirements govern quality control
and documentation policies and procedures. In complying with CGMP and foreign
regulatory requirements, we will be obligated to expend time, money and effort
in production, recordkeeping and quality control to assure that the product
meets applicable specifications and other requirements. We must also pass a
pre-approval inspection prior to FDA approval. If we fail to comply with these
requirements, we would be subject to possible regulatory action and may be
limited in the jurisdictions in which we are permitted to sell our products.
Further, the FDA and foreign regulatory authorities have the authority to
perform unannounced periodic inspections of our manufacturing facility to ensure
compliance with CGMP and foreign regulatory requirements. Our facility in
Houston, Texas, is our only manufacturing facility. If this facility were to
incur significant damage or destruction, then our ability to manufacture INGN
201 or any other compound would be significantly hampered. This, in turn, could
result in delays in our preclinical testing, clinical trials or
commercialization efforts.
WE RELY ON ONLY ONE SUPPLIER FOR SOME OF OUR MANUFACTURING MATERIALS. ANY
PROBLEMS EXPERIENCED BY ANY SUCH SUPPLIER COULD NEGATIVELY AFFECT OUR
OPERATIONS.
We rely on third party suppliers and vendors for some of the materials used
in the manufacture of INGN 201. Some of these materials are available from only
one supplier or vendor. Any significant problem experienced by one of our sole
source suppliers could result in a delay or interruption in the supply of
materials to us until such supplier cures the problem or an alternative source
of supply is located. Any delay or interruption would likely lead to a delay or
interruption in our manufacturing operations, which could negatively affect our
operations.
HEALTH CARE REFORM AND RESTRICTIONS ON REIMBURSEMENT MAY LIMIT OUR
PROFITABILITY.
Our ability to earn sufficient returns on our products will depend in part
on the extent to which reimbursement for our products and related treatments
will be available from:
- government health administration authorities;
- private health coverage insurers;
- managed care organizations; and
- other organizations.
If appropriate reimbursement arrangements are not available for our
products, it could prevent us from successfully commercializing our potential
products. Additionally, third party payors are increasingly challenging the
price of medical products and services. If purchasers or users of our products
are not able to obtain adequate reimbursement for the cost of using our
products, they may forego or reduce their use. Significant uncertainty exists as
to the reimbursement status of newly approved health care products and whether
adequate third party coverage will be available. There are efforts by
governmental and third party payors to contain or reduce the costs of health
care through various means. We expect that there will continue to be a number of
legislative proposals to implement government controls.
IF WE LOSE OUR KEY PERSONNEL OR ARE UNABLE TO ATTRACT AND RETAIN ADDITIONAL
PERSONNEL, WE MAY NOT BE ABLE TO DEVELOP OUR PRODUCTS.
We are highly dependent on the principal members of our scientific,
manufacturing and management personnel, the loss of whose services might
significantly delay or prevent the achievement of our objectives. We face
competition from other companies, academic institutions, government entities and
other organizations in attracting and retaining personnel.
15
<PAGE> 17
IF PRODUCT LIABILITY LAWSUITS ARE SUCCESSFULLY BROUGHT AGAINST US, WE MAY INCUR
SUBSTANTIAL DAMAGES AND DEMAND FOR OUR PRODUCTS MAY BE REDUCED.
The testing and marketing of medical products is subject to an inherent
risk of product liability claims. Regardless of their merit or eventual outcome,
product liability claims may result in:
- decreased demand for INGN 201;
- injury to our reputation;
- withdrawal of clinical trial volunteers;
- costs of litigation; and
- substantial monetary awards to plaintiffs.
Although we currently carry product liability insurance, we may not have
sufficient coverage to protect us fully against product liability claims. We
intend to expand our product liability insurance coverage to include the sale of
commercial products if we obtain marketing approval for any of our product
candidates. Our inability to obtain sufficient product liability insurance at an
acceptable cost to protect against product liability claims could prevent or
limit the commercialization of our products.
WE USE HAZARDOUS MATERIALS IN OUR BUSINESS, AND ANY CLAIMS RELATING TO IMPROPER
HANDLING, STORAGE OR DISPOSAL OF THESE MATERIALS COULD HARM OUR BUSINESS.
Our business involves the use of a broad range of hazardous chemicals and
materials. Environmental laws impose stringent civil and criminal penalties for
improper handling, disposal and storage of these materials. In addition, in the
event of an improper or unauthorized release of, or exposure of individuals to,
hazardous materials, we could be subject to civil damages due to personal injury
or property damage caused by the release or exposure. A failure to comply with
environmental laws could result in fines and the revocation of environmental
permits, which could prevent us from conducting our business.
IF OUR OFFICERS, DIRECTORS AND LARGEST STOCKHOLDERS CHOOSE TO ACT TOGETHER, THEY
MAY BE ABLE TO CONTROL OUR MANAGEMENT AND OPERATIONS IN A MANNER NOT IN OUR BEST
INTERESTS.
Our officers, directors and our stockholders owning greater than 5% of our
outstanding common stock immediately prior to this offering will together
control approximately % of our outstanding common stock immediately after
this offering. As a result, these stockholders, if they act together, will be
able to exert a significant degree of influence over our management and affairs
and over matters requiring stockholder approval, including the election of
directors and approval of significant corporate transactions. This concentration
of ownership may have the effect of delaying or preventing a change in control
of Introgen and might affect the market price of our common stock, even when
such a change may be in the best interests of all stockholders.
RISKS RELATED TO THIS OFFERING
PROVISIONS OF OUR CHARTER DOCUMENTS MAY HAVE ANTI-TAKEOVER EFFECTS THAT COULD
PREVENT A CHANGE IN OUR CONTROL, EVEN IF THIS WOULD BE BENEFICIAL TO
STOCKHOLDERS.
Provisions of our amended and restated certificate of incorporation, bylaws
and Delaware law could make it more difficult for a third party to acquire us,
even if doing so would be beneficial to our stockholders. These provisions
include:
- a classified board of directors, in which our board is divided into three
classes with three year terms with only one class elected at each annual
meeting of stockholders, which means that holders of a majority of our
common stock will need two annual meetings of stockholders to gain
control of our board;
- a provision which prohibits our stockholders from acting by written
consent without a meeting;
16
<PAGE> 18
- a provision which permits only the board of directors, the president or
the chairman to call special meetings of stockholders; and
- a provision which requires advance notice of items of business to be
brought before stockholders meetings.
These provisions can be amended only with the vote of the holders of at
least two-thirds of our outstanding capital stock.
OUR STOCK PRICE MAY FLUCTUATE SUBSTANTIALLY, AND YOUR INVESTMENT IN OUR STOCK
COULD DECLINE IN VALUE.
Prior to this offering, there has been no public market for shares of our
common stock. An active public trading market may not develop following
completion of this offering or, if developed, may not be sustained. The initial
public offering price of the shares of common stock will be determined by
negotiation between us and representatives of the underwriters. This price will
not necessarily reflect the market price of the common stock following this
offering. See "Underwriting" for a discussion of the factors to be considered in
determining the initial public offering price.
The market price for the common stock following this offering will be
affected by a number of factors, including:
- the announcement of new products or services by us or our competitors;
- quarterly variations in our or our competitors' results of operations;
- failure to achieve operating results projected by securities analysts;
- changes in earnings estimates or recommendations by securities analysts;
- developments in our industry; and
- general market conditions and other factors, including factors unrelated
to our operating performance or the operating performance of our
competitors.
In addition, stock prices for many companies in the technology and emerging
growth sectors have experienced wide fluctuations that have often been unrelated
to the operating performance of such companies. Many factors may have a
significant adverse effect on the market price of our common stock, including:
- results of our preclinical and clinical trials;
- announcement of technological innovations or new commercial products by
us or our competitors;
- developments concerning proprietary rights, including patent and
litigation matters;
- publicity regarding actual or potential results with respect to products
under development by us or by our competitors;
- regulatory developments; and
- quarterly fluctuations in our revenues and other financial results.
POTENTIAL SALES OF SHARES ELIGIBLE FOR FUTURE SALE AFTER THIS OFFERING COULD
CAUSE OUR STOCK PRICE TO DECLINE.
If our stockholders sell substantial amounts of our common stock (including
shares issued upon the exercise of outstanding options and warrants) in the
public market following this offering, the market price of our common stock
could fall. These sales also might make it more difficult for us to sell equity
or equity-related securities in the future at a time and price that we deem
appropriate. The shares sold in this offering will be freely tradable
immediately upon completion of this offering. In addition, on the 181st day
after completion of this offering, 10,128,709 shares of our common stock held by
existing stockholders will be freely tradable. We intend to file a registration
statement covering an aggregate of 5,300,000 shares issuable upon exercise of
options to purchase common stock and common stock reserved for issuance
17
<PAGE> 19
under our stock plans within ninety days after the effective date of the
registration statement of which this prospectus is a part. For an additional
description of the eligibility of shares for sale into the public market
following the offerings, see "Shares Eligible for Future Sale."
WE HAVE BROAD DISCRETION IN THE USE OF PROCEEDS FROM THIS OFFERING
Our management will have considerable discretion in the application of the
net proceeds, and you will not have the opportunity, as part of your investment
decision, to assess whether the proceeds are being used appropriately. The net
proceeds may be used for corporate purposes that do not increase our
profitability or our stock price. Pending use of the net proceeds of this
offering, we intend to invest the net proceeds in short term, interest bearing,
investment grade securities or guaranteed obligations of the United States
Government.
ANY ACQUISITION WE MIGHT MAKE MAY BE COSTLY AND DIFFICULT TO INTEGRATE, MAY
DIVERT MANAGEMENT RESOURCES OR DILUTE STOCKHOLDER VALUE.
As part of our business strategy, we may acquire assets and businesses
principally relating to or complementary to our current operations. Any
acquisitions that we undertake will be accompanied by the risks commonly
encountered in business acquisitions. These risks include, among other things:
- potential exposure to unknown liabilities of acquired companies;
- the difficulty and expense of assimilating the operations and personnel
of acquired businesses;
- diversion of management time and attention and other resources;
- loss of key employees and customers as a result of changes in management;
- the incurrence of amortization expenses; and
- possible dilution to our stockholders.
In addition, geographic distances may make the integration of businesses
more difficult. We may not be successful in overcoming these risks or any other
problems encountered in connection with any acquisitions. As of the date of this
prospectus, we have no present understandings, commitments or agreements for any
material investment or acquisition.
AS A NEW INVESTOR, YOU WILL EXPERIENCE IMMEDIATE AND SUBSTANTIAL DILUTION.
If you purchase shares of our common stock in this offering, you will incur
immediate and substantial dilution in pro forma net tangible book value. If the
holders of outstanding options or warrants exercise those options or warrants,
you will incur further dilution. See "Dilution."
WE DO NOT INTEND TO PAY CASH DIVIDENDS.
We have not paid cash dividends since our inception and do not intend to
pay cash dividends in the foreseeable future.
18
<PAGE> 20
OUR COMPANY
Introgen was incorporated as a Delaware corporation on June 17, 1993. We
lease our facilities in Houston from our wholly-owned subsidiary TMX Realty
Corporation, which was formed to own our real estate assets. In September 1998,
we formed our wholly-owned subsidiaries Gendux, Inc., and Gendux AB, which is
based in Stockholm, Sweden, in order to create a European presence with which to
extend our technology and product development opportunities and enhance our
interactions with European academic and commercial institutions. We have
licensed certain rights to some of the technologies in our gene therapy
portfolio to Gendux AB, contingent upon Gendux AB's achievement of certain
capitalization milestones.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Statements contained in this prospectus discuss our future expectations,
contain projections of our results of operations or financial condition, and
include other "forward-looking" information within the meaning of Section 27A of
the Securities Act of 1933, as amended. Forward-looking statements that express
our beliefs, plans, objectives, assumptions or future events or performance may
involve estimates, assumptions, as well as risks and uncertainties.
Forward-looking statements often, although not always, include words or phrases
such as "will likely result," "are expected to," "will continue," "is
anticipated," "estimate," "intends," "plans," "projection," and "outlook."
Actual results or outcomes may differ materially from those predicted in
our forward-looking statements due to the risks and uncertainties inherent in
our business, including risks and uncertainties relating to:
- our clinical trial results;
- our ability to obtain and maintain regulatory approvals;
- market acceptance of and continuing demand for our products;
- our ability to obtain patent protection for our products;
- the effect of competitive products, pricing and reimbursement policies;
- our ability to obtain additional financing to support our operations;
- the continuation of our corporate collaborations; and
- changing market conditions and other risks described above under the
caption "Risk Factors".
Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, levels of
activity, performance or achievements. Any forward-looking statement speaks only
as of the date on which that statement is made. Other than as required by law,
we will not update any forward-looking statement to reflect events or
circumstances that occur after the date on which such statement is made.
19
<PAGE> 21
USE OF PROCEEDS
We estimate that the net proceeds from the sale of the shares of
common stock in this offering will be approximately $ million (approximately
$ million if the underwriters exercise their over-allotment option in full),
at an assumed initial public offering price of $ per share, after
deducting the underwriting discount and estimated offering expenses. We expect
to use the net proceeds from this offering to conduct research and development,
including clinical trials, advance our process development and manufacturing
capabilities and initiate product marketing and commercialization programs, and
for general corporate purposes, including working capital. We will have a broad
discretion to use the proceeds as we see fit. We may use a portion of the net
proceeds to acquire or invest in complementary businesses or products or to
obtain the right to use complementary technologies. From time to time, in the
ordinary course of business, we may evaluate potential acquisitions of these
businesses, products or technologies. Other than acquiring or maintaining rights
to technologies in the ordinary course of our business, we have no current
plans, agreements or commitments, and are not currently engaged in any
negotiations regarding any such transaction. Pending use of the net proceeds of
this offering, we intend to invest the net proceeds in short term, interest
bearing, investment grade securities or guaranteed obligations of the United
States Government.
DIVIDEND POLICY
We have never declared or paid any dividends on our capital stock. We
currently expect to retain all of our future earnings, if any, to support the
development of our business and do not anticipate paying any cash dividends in
the foreseeable future.
20
<PAGE> 22
CAPITALIZATION
The following table sets forth our capitalization as of December 31, 1999:
- on an actual basis; and
- on a pro forma basis to reflect the conversion of all outstanding shares
of our preferred stock into 7,703,866 shares of common stock; and
- on an as adjusted basis to reflect the pro forma conversion and the
authorization of 5,000,000 shares of undesignated preferred stock upon
the closing of this offering and our receipt of the net proceeds from the
sale of shares of common stock in this offering at an assumed
initial public offering price of $ per share, after deducting
underwriting discounts and commissions and estimated offering expenses.
You should read this table in conjunction with our financial statements and
related notes included in this prospectus.
<TABLE>
<CAPTION>
DECEMBER 31, 1999
(UNAUDITED)
----------------------------------
PRO PRO FORMA
ACTUAL FORMA AS ADJUSTED
-------- -------- ------------
(IN THOUSANDS)
<S> <C> <C> <C>
Long-term obligations, net of current portion.............. $ 8,089 $ 8,089 $
Stockholders' equity:
Convertible preferred stock, $0.001 par value; 8,308,523
shares authorized, actual, and 5,000,000 shares
authorized, pro forma and pro forma as adjusted;
6,419,896 shares issued and outstanding, actual; none
issued and outstanding, pro forma and pro forma as
adjusted.............................................. 6 --
Common stock, $0.001 par value; 50,000,000 shares
authorized, actual, pro forma and pro forma as
adjusted; 2,568,043 shares issued and outstanding,
actual; 10,271,909 shares issued and outstanding, pro
forma and pro forma as adjusted....................... 3 10
Additional paid-in capital............................... 33,144 33,143
Deferred compensation.................................... (1,961) (1,961)
Accumulated deficit...................................... (14,767) (14,767)
-------- -------- --------
Total stockholders' equity............................ 16,425 16,425
-------- -------- --------
Total capitalization............................. $ 24,514 $ 24,514 $
======== ======== ========
</TABLE>
The information in the table above does not include:
- 1,507,352 shares of common stock subject to stock options outstanding as
of December 31, 1999, with a weighted average exercise price of $0.75 per
share;
- 114,250 shares of common stock subject to warrants outstanding as of
December 31, 1999, with a weighted average exercise price of $7.17 per
share;
21
<PAGE> 23
DILUTION
Our pro forma net tangible book value at December 31, 1999, was $16.4
million, or $1.60 per share of common stock. Our pro forma net tangible book
value per share represents total tangible assets less total liabilities, divided
by the number of shares of our common stock outstanding at December 31, 1999,
assuming the conversion of all outstanding shares of our preferred stock.
After giving effect to the sale of the shares of common stock we are
offering at an assumed initial public offering price of $ per share and
after deducting underwriting discount and offering expenses, our pro forma as
adjusted net tangible book value at December 31, 1999, would have been $ ,
or $ per share. This represents an immediate increase in the pro forma as
adjusted net tangible book value of $ per share to existing stockholders and
an immediate and substantial dilution of $
per share to new investors, or approximately % of the assumed offering
price of $ per share. The following table illustrates this per share
dilution:
<TABLE>
<S> <C> <C> <C>
Assumed initial public offering price per share............. $
Pro forma net tangible book value per share at December
31, 1999............................................... $1.60
Increase per share attributable to this offering..........
-----
Pro forma as adjusted net tangible book value per share
after offering............................................
-------
Dilution per share to new investors......................... $
=======
</TABLE>
The following table sets forth, as of December 31, 1999, on the pro forma
as adjusted basis described above, the number of shares of common stock
purchased from us, the total consideration paid and the average price per share
paid both by existing stockholders and by the new investors purchasing shares of
common stock in this offering:
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
----------------------- ------------------------ PRICE
NUMBER PERCENTAGE AMOUNT PERCENTAGE PER SHARE
---------- ---------- ----------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Existing Stockholders.......... 10,271,909 % $30,896,160 % $3.01
New Investors..................
---------- --- ----------- ---
Total..................... 100% 100%
========== === =========== ===
</TABLE>
The discussion and the tables above assume no exercise of stock options and
warrants outstanding at December 31, 1999. At December 31, 1999, there were
1,507,352 shares of common stock issuable upon exercise of outstanding stock
options at a weighted average exercise price of $0.75 per share and 114,250
shares of common stock issuable upon exercise of outstanding warrants at a
weighted average exercise price of $7.17 per share. To the extent that any of
these options or warrants are exercised, there will be further dilution to new
investors.
22
<PAGE> 24
SELECTED FINANCIAL DATA
You should read the selected financial data set forth below in conjunction
with our consolidated financial statements and related notes and the
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" included in this prospectus. We derived the statement of operations
data for the fiscal years ended June 30, 1997, 1998 and 1999, and the balance
sheet data as of June 30, 1998 and 1999, from the audited consolidated financial
statements included in this prospectus. The consolidated statement of operations
data for the years ended June 30, 1995 and 1996, and the balance sheet data as
of June 30, 1995, 1996 and 1997, are derived from our audited consolidated
financial statements that are not included in this prospectus. The statement of
operations data for the six months ended December 31, 1998 and 1999, and the
balance sheet data as of December 31, 1999, are derived from our unaudited
financial statements but have been prepared on a basis consistent with our
audited financial statements and the notes thereto and include all adjustments
(consisting only of normal recurring adjustments) that we consider necessary for
a fair presentation of the information. Historical results are not necessarily
indicative of future results.
Pro forma basic and diluted net loss per share have been calculated
assuming the conversion of all outstanding preferred stock into common stock as
if the conversion had occurred upon its issuance.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED JUNE 30, DECEMBER 31,
-------------------------------------------------------------- ------------------------
1995 1996 1997 1998 1999 1998 1999
---------- ---------- ---------- ---------- ---------- ---------- -----------
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenue from collaborations.......... $ 2,664 $ 10,449 $ 12,052 $ 8,606 $ 6,714 $ 3,974 $ 3,916
---------- ---------- ---------- ---------- ---------- ---------- -----------
Revenue from product sales to
affiliate.......................... -- -- -- 2,505 1,475 699 1,786
Cost of product sales................ -- -- -- 1,729 994 466 1,153
---------- ---------- ---------- ---------- ---------- ---------- -----------
Gross margin on product sales...... -- -- -- 776 481 233 633
Operating costs and expenses:
Research and development........... 3,372 11,020 12,954 10,361 7,539 4,094 6,104
General and administrative......... 624 866 2,400 1,561 2,590 1,346 1,462
Amortization of deferred
compensation..................... -- 106 235 264 387 195 938
---------- ---------- ---------- ---------- ---------- ---------- -----------
Total operating costs and
expenses....................... 3,996 11,992 15,589 12,186 10,516 5,635 8,504
---------- ---------- ---------- ---------- ---------- ---------- -----------
Loss from operations................. (1,332) (1,543) (3,537) (2,804) (3,321) (1,428) (3,955)
Interest income, net................. 107 211 421 789 675 409 208
---------- ---------- ---------- ---------- ---------- ---------- -----------
Net loss............................. $ (1,225) $ (1,332) $ (3,116) $ (2,015) $ (2,646) $ (1,019) $ (3,747)
========== ========== ========== ========== ========== ========== ===========
Basic and diluted net loss per
share.............................. $ (0.50) $ (0.55) $ (1.28) $ (0.82) $ (1.06) $ (0.41) $ (1.48)
========== ========== ========== ========== ========== ========== ===========
Shares used in computing basic and
diluted net loss per share......... 2,438,360 2,443,360 2,443,360 2,451,730 2,503,683 2,475,622 2,536,043
========== ========== ========== ========== ========== ========== ===========
Pro forma basic and diluted net loss
per share.......................... $ (0.27) $ (0.37)
========== ===========
Shares used in computing pro forma
basic and diluted net loss per
share.............................. 9,681,493 10,239,909
========== ===========
</TABLE>
The following table contains a summary of our balance sheet on an actual
basis at June 30, 1995, 1996, 1997, 1998 and 1999 and at December 31, 1999.
<TABLE>
<CAPTION>
JUNE 30,
------------------------------------------------ DECEMBER 31,
1995 1996 1997 1998 1999 1999
------- ------- ------- ------- -------- ------------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and investments................................ $ 2,799 $ 7,024 $ 9,411 $16,848 $ 15,761 $ 13,582
Working capital..................................... 2,060 5,613 7,780 15,944 14,226 12,984
Total assets........................................ 3,478 8,965 9,990 17,766 25,741 26,320
Long-term obligations, net of current portion....... -- 130 -- -- 3,388 8,089
Accumulated deficit................................. (1,911) (3,244) (6,359) (8,375) (11,021) (14,767)
Total stockholders' equity.......................... 2,575 6,920 8,359 16,322 19,187 16,425
</TABLE>
23
<PAGE> 25
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with our financial
statements and related notes included in this prospectus. The following
discussion contains forward-looking statements that involve risks and
uncertainties. Our actual results could differ materially from those anticipated
in these forward-looking statements as a result of certain factors, including
those discussed below and elsewhere in this prospectus, particularly under the
heading "Risk Factors."
OVERVIEW
We are a leading developer of gene therapy products for the treatment of
cancer. Our lead product candidate, INGN 201, combines the naturally occurring
p53 tumor suppressor gene with our clinically proven adenoviral delivery system.
We are beginning pivotal Phase III clinical studies of INGN 201 in head and neck
cancer and conducting a Phase II clinical trial in non-small cell lung cancer.
We are also conducting several Phase I clinical trials in additional cancer
indications. In addition to our INGN 201 development program, we have identified
and are developing additional gene therapeutics, including the genes mda-7, PTEN
and CCAM and associated delivery systems, or vectors. We are developing cancer
therapies based on restoring normal cellular function through gene therapy,
which may offer safer and more effective treatments than are currently
available.
Since our inception in 1993, we have used our resources primarily to
conduct research and development activities, primarily for INGN 201 and, to a
lesser extent, for other products. At December 31, 1999, we had an accumulated
deficit of approximately $14.8 million. We anticipate that we will incur losses
in the future, which are likely to be greater than losses incurred in prior
years. We expect that cash needed for operating activities will increase as we
continue to expand our research and development of various gene therapy
technologies. Since inception, our only significant revenues have been payments
from Aventis under collaborative research and development agreements for our
early stage development work for INGN 201 and their purchases of INGN 201
product we manufacture for their use in later stage clinical development of that
product. We have also earned interest income on cash placed in short-term
investments.
We have entered into two collaboration agreements with Rhone-Poulenc Rorer
Pharmaceuticals, Inc. to develop therapeutics based on p53 and on K-ras pathway
inhibition. In December 1999, Rhone-Poulenc Rorer combined with Hoechst AG, and
the parties have combined Hoechst Marion Roussel, the pharmaceutical business of
Hoechst AG, with that of Rhone-Poulenc Rorer to form Aventis Pharma AG. Since
1994, we have earned a total of $44.4 million in collaborative research and
development revenues from Aventis pursuant to the agreement relating to p53. We
generally receive payments from Aventis for early stage development activities
quarterly in advance. We record these payments as revenue as we perform the
collaboration work and incur the related expenses. We record as deferred revenue
collaborative research and development payments which we receive but for which
the related expenses have not yet been incurred. Continued funding of early
stage development programs under the collaboration agreements is subject to a
mutually agreed budget on an annual basis. The 2000 budget has been agreed upon
by us and Aventis.
We also manufacture and sell INGN 201 to Aventis for their use in later
stage clinical development of that product. We record revenue from these product
sales upon completion of production and acceptance of the product by Aventis. To
date, we have recorded $5.9 million in revenues from these product sales.
24
<PAGE> 26
RESULTS OF OPERATIONS
COMPARISON OF SIX MONTHS ENDED DECEMBER 31, 1999 AND 1998
Revenues
Revenue from Collaborations. Collaborative research and development
revenues from Aventis were $3.9 million for the six months ended December 31,
1999, compared to $4.0 million for the six months ended December 31, 1998. These
revenues were relatively unchanged because the nature and scope of the research
and development activities in each period were similar.
Revenue from Product Sales to Affiliate. Revenues from product sales to
Aventis were $1.8 million for the six months ended December 31, 1999, compared
to $699,000 for the six months ended December 31, 1998. This 156% increase was
primarily due to increased sales of INGN 201 product to Aventis under our
collaboration agreement with them to further later stage clinical development of
that product.
Expenses
Cost of Product Sales. Cost of product sales was $1.2 million for the six
months ended December 31, 1999, compared to $466,000 for the six months ended
December 31, 1998. This 147% increase reflects costs associated with our
increased sales of INGN 201 product to Aventis.
Research and Development. Research and development expenses were $6.1
million for the six months ended December 31, 1999, compared to $4.1 million for
the six months ended December 31, 1998. This 49% increase was due to the
increase in research and development activities for our pipeline of gene therapy
product candidates. We believe that continued investment in research and
development is critical to attaining our strategic objectives, and we expect
these expenses to continue to increase in the future.
General and Administrative. General and administrative expenses, excluding
amortization of deferred stock compensation, were $1.5 million for the six
months ended December 31, 1999, compared to $1.3 million for the six months
ended December 31, 1998. These expenses were unchanged because our general and
administrative activities and resources in place in 1998 were adequate to meet
the general and administrative needs of our operations in 1999. We expect
general and administrative expenses to increase in the future as we add
personnel, incur additional costs to support continued growth and implement
additional internal systems necessary to support a public company. In addition,
we expect to incur sales and marketing expenses not previously experienced in
order to begin to establish our sales and marketing efforts, particularly if we
elect to form a joint commercial operation with Aventis with respect to the
commercialization of INGN 201.
Amortization of Deferred Compensation. Amortization of deferred stock
compensation was $938,000 for the six months ended December 31, 1999, compared
with $195,000 for the six months ended December 31, 1998. The 381% increase was
due primarily to a compensation charge related to the accelerated vesting of
options held by a board member concurrent with the individual's ceasing to be a
member of the board. The increase was also due to the granting in 1999 of
additional options to purchase our common stock at exercise prices below the
deemed fair value of the common stock. We anticipate that additional deferred
compensation totaling approximately $3.8 million will be recorded for options
granted in February 2000. These amounts are being amortized over the respective
vesting periods of the individual stock options. We expect to record
amortization expense for deferred compensation of $1.7 million during fiscal
2000, $1.6 million during fiscal 2001, $1.5 million during fiscal 2002, $1.3
million during fiscal 2003 and $711,000 during fiscal 2004. The amount of
deferred compensation expense to be recorded in future periods may decrease if
unvested options for which deferred compensation has been recorded are
subsequently forfeited.
Interest Income, Net.
Net interest income was $208,000 for the six months ended December 31,
1999, compared with $409,000 for the six months ended December 31, 1998. This
49% decrease resulted primarily from a
25
<PAGE> 27
decrease in interest income in 1999, which resulted from lower average cash and
short-term investments balances and increased interest expense as a result of
our borrowings to finance new facilities and equipment acquired during 1999.
COMPARISON OF FISCAL YEARS ENDED JUNE 30, 1999 AND 1998
Revenues
Revenue from Collaborations. Collaborative research and development
revenues from Aventis were $6.7 million for the fiscal year ended June 30, 1999,
compared to $8.6 million for the fiscal year ended June 30, 1998. This 22%
decrease was due primarily to a decrease in early stage development program
funding, as INGN 201 continued to progress from early stage development
activities performed by us to increased later stage clinical development
activities performed by Aventis.
Revenue from Product Sales to Affiliate. Revenues from product sales to
Aventis were $1.5 million for fiscal 1999 compared with $2.5 million for fiscal
1998. This 41% decrease was primarily due to a decrease in sales of INGN 201
product for Aventis' later stage clinical development use as Aventis relied upon
previously purchased inventories to meet their needs in fiscal 1999.
Expenses
Cost of Product Sales. Cost of product sales was $1.0 million for fiscal
1999, compared with $1.7 million for fiscal 1998. This 43% decrease resulted
from a decrease in sales of INGN 201 product to Aventis in fiscal 1999.
Research and Development. Research and development expenses were $7.5
million for fiscal 1999, compared with $10.4 million for fiscal 1998. This 27%
decrease was primarily due to a decrease in early stage development program
funding received from Aventis as a result of INGN 201 progressing from early
stage development activities performed by us to increased later stage clinical
development activities performed by Aventis.
General and Administrative. General and administrative expenses, excluding
amortization of deferred stock compensation, were $2.6 million for fiscal 1999,
compared with $1.6 million for fiscal 1998. This 66% increase was primarily
related to initial organization, administration and capitalization activities
associated with the formation of our wholly-owned subsidiaries, Gendux, Inc. and
Gendux AB, in fiscal 1999.
Amortization of Deferred Stock Compensation. Amortization of deferred stock
compensation was $387,000 for fiscal 1999, compared with $264,000 for fiscal
1998. This 47% increase was due primarily to the granting to directors, officers
and employees in each of those fiscal years of additional options to purchase
common stock at exercise prices below the deemed fair value of the common stock.
Interest Income, Net
Net interest income was $675,000 for fiscal 1999, compared with $789,000
for fiscal 1998. This 14% decrease resulted primarily from lower cash and
short-term investments balances due to a decrease in early stage development
funding from Aventis.
COMPARISON OF FISCAL YEARS ENDED JUNE 30, 1998 AND 1997
Revenues
Revenue from Collaborations. Collaborative research and development
revenues from Aventis were $8.6 million for the fiscal year ended June 30, 1998,
compared to $12.1 million for the fiscal year ended June 30, 1997. This 29%
decrease was due primarily to a decrease in early stage development program
funding as INGN 201 continued to progress from early stage development
activities performed by us to increased later stage clinical development
activities performed by Aventis.
Revenues from Product Sales to Affiliate. Revenues from product sales to
Aventis were $2.5 million for fiscal 1998 compared with none for fiscal 1997.
The increase is due to the initiation of Phase II clinical
26
<PAGE> 28
trials under later stage clinical development activities performed by Aventis
and the resulting need for INGN 201 product for those trials.
Expenses
Cost of Product Sales. Cost of product sales was $1.7 million for fiscal
1998, compared with none for fiscal 1997. The initiation of cost associated with
INGN 201 product sales in fiscal 1998 coincided with the initiation of product
sales.
Research and Development. Research and development expenses were $10.4
million for fiscal 1998, compared with $13.0 million for fiscal 1997. This 20%
decrease was primarily due to a decrease in early stage development program
funding received from Aventis as a result of INGN 201 progressing from early
stage development activities performed by us to increased later stage clinical
development activities performed by Aventis.
General and Administrative. General and administrative expenses, excluding
amortization of deferred stock compensation, were $1.6 million for fiscal 1998,
compared with $2.4 million for fiscal 1997. This 35% decrease was primarily due
to the legal, accounting and administrative costs we incurred in fiscal 1997
related to financing efforts.
Amortization of Deferred Stock Compensation. Amortization of deferred stock
compensation was $264,000 for fiscal 1998, compared with $235,000 for fiscal
1997. This 12% increase was due primarily to the granting in each of those
fiscal years of additional options to purchase common stock at exercise prices
below the deemed fair value of the common stock.
Interest Income, Net
Net interest income was $789,000 for fiscal 1998, compared with $421,000
for fiscal 1997. This 87% increase was due primarily to higher cash and
short-term investment balances as a result of our October 1997 private placement
of Series D Preferred Stock.
INCOME TAXES
We have incurred net operating losses since inception and consequently we
have not paid any federal, state or foreign income taxes. As of June 30, 1999,
we had federal net operating loss carryforwards of approximately $5.8 million.
We also had federal research and development credit carryforwards of
approximately $49,000. These net operating loss and credit carryforwards will
expire at various dates from 2008 through 2019 if we do not utilize them before
expiration. Our ability to utilize net operating losses and credits may be
subject to significant annual limitations due to the change in the ownership
provisions of federal and state tax laws. These annual limitations may result in
the expiration of net operating losses and credits before we are able to use
them.
LIQUIDITY AND CAPITAL RESOURCES
We have incurred annual operating losses since our inception, and at
December 31, 1999, we had an accumulated deficit of $14.8 million. Since
inception through December 31, 1999, we have financed our operations using $44.4
million of collaborative research and development payments from Aventis, $14.4
million of private equity sales to Aventis, $14.6 million of private equity
sales to others, $5.9 million of sales of INGN 201 product to Aventis for use in
later stage clinical development, $6.0 million in mortgage financing from a bank
for our facilities, $3.9 million in leases from commercial leasing companies to
acquire equipment pledged as collateral for those leases and $2.7 million from
interest income earned on cash and short term investments.
From our inception through December 31, 1999, we have acquired buildings in
the aggregate amount of $8.3 million and capital equipment in the aggregate
amount of $5.4 million through a combination of cash purchases and financings
under capital lease arrangements. We have debt obligations under notes payable
and capital leases totaling approximately $8.6 million at December 31, 1999.
These notes payable
27
<PAGE> 29
and capital leases finance the facilities we occupy and a significant portion of
the equipment we use, which are pledged as collateral for this debt. We make
monthly principal and interest payments on this debt. Our buildings and related
debt are owned and held by TMX Realty Corporation, our wholly owned subsidiary.
We expect that we will fund our capital expenditures and operations over at
least the next two years with our current working capital, the net proceeds of
this offering and future payments under our collaborative agreements with
Aventis. However, changes in our research and development plans and other
changes affecting our company may result in the expenditure of these funds in
less than two years. In addition, these resources may not be sufficient to fund
our operations to the point of commercial introduction of any of our potential
products. We may require substantial funds in the future to conduct additional
research and development programs, preclinical studies and clinical trials for
potential products, and to commercialize and market any products that are
successfully developed. To meet our future capital requirements, we expect to
seek additional funding through additional collaborative agreements, and we may
seek additional funding through public or private sales of our securities,
including equity securities, or through debt financing.
At December 31, 1999, we had cash and short term investments of
approximately $13.6 million, compared with $15.8 million at June 30, 1999. Net
cash used by operating activities for the six months ended December 31, 1999 was
$3.7 million, compared with $2.4 million for the six months ended December 31,
1998. This increase was primarily due to higher net losses from operations, and
a decrease in accounts payable, offset by a net decrease in accounts receivable
and inventory related to sales of INGN 201 product to Aventis for later stage
clinical development. Net cash used by operating activities was $2.0 million,
$1.9 million and $1.0 million for the years ended June 30, 1999, 1998 and 1997.
These increases resulted primarily from increased net losses from operations and
increases in INGN 201 product inventory for sale to Aventis for later stage
clinical development offset by increases in accounts payable.
Net cash provided by investing activities for the six months ended December
31, 1999, was $1.2 million, compared with $3.2 million for the six months ended
December 31, 1998. The decrease was due to the use of cash to fund operating
activities and for the construction of our facilities resulting in less cash
being available for short-term investments. Net cash used by investing
activities was $5.4 million, $8.3 million and $7.6 million for the years ended
June 30, 1999, 1998 and 1997. The decrease in 1999 compared to 1998 is primarily
due to higher net purchases of short term investments in 1998 as a result of the
initial availability of proceeds from the sale of our Series D preferred stock
offset by the increase in 1999 of purchases of property and equipment related to
our new facility. The increase in 1998 compared to 1997 is primarily due to
higher net purchases of short term investments in 1998 as a result of the
initial availability of proceeds from the sale of our Series D preferred stock.
Net cash provided by financing activities for the six months ended December
31, 1999, was $2.8 million, compared with $21,000 for the six months ended
December 31, 1998. The increase was due to proceeds from the mortgage note
payable for our new facilities. Net cash provided by financing activities was
$8.3 million, $9.6 million and $3.4 million for the years ended June 30, 1999,
1998 and 1997. The decrease in 1999 compared to 1998 was due to higher sales of
preferred stock in 1998, particularly the sale of our Series D preferred stock,
offset by proceeds received in 1999 from the mortgage note payable for our new
facilities. The increase in 1998 compared to 1997 was due to higher sales of
preferred stock in 1998, particularly the sale of our Series D preferred stock.
At December 31, 1999, we had outstanding $6.0 million under a note payable for
our facilities and $2.6 million under capital leases to finance the purchase of
equipment.
QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
Our exposure to market risk for changes in interest rates relates primarily
to our short-term investments in United States Government obligations and our
fixed rate long-term debt. Short-term investments are classified as
held-to-maturity and are carried at amortized costs. We do not hedge interest
rate exposure or invest in derivative securities.
28
<PAGE> 30
Based on our June 30, 1999 and December 31, 1999 investment balances, the
detrimental effect of a hypothetical 100 basis point increase in interest rates
would be to increase our net loss by approximately $136,000 and $60,000, for the
year ended June 30, 1999, and the six months ended December 31, 1999,
respectively.
At June 30, 1999, the fair value of our fixed rate debt approximated its
carrying value based upon discounted future cash flows using current market
prices.
IMPACT OF YEAR 2000
Many currently installed computer systems and software products were unable
to distinguish between twentieth century dates and twenty-first century dates.
As a result, many companies' software and computer systems needed to be upgraded
or replaced to comply with Year 2000 requirements or to avoid the risk of system
failure or miscalculations causing disruptions of normal business activities.
State of Readiness
The majority of the computer programs and hardware we currently use in our
own internal operations did not require replacement or modification as a result
of the Year 2000 issue. We believe that our significant vendors and service
providers are Year 2000 compliant and have not, to date, been made aware that
any of our significant vendors or service providers have suffered Year 2000
disruptions in their systems.
Costs
To date, we have not incurred any material costs in identifying or
evaluating Year 2000 compliance issues, although consideration of the Year 2000
question is an integral part of our ongoing developmental and operational
reviews. We have incurred some expenses related to the operating costs
associated with time spent by employees in the evaluation process and general
Year 2000 compliance testing. We presently do not anticipate that future
expenditures will be material.
Risks
We completed internal assessments of our Year 2000 readiness prior to
December 31, 1999, with emphasis on our operating and administrative systems and
are not aware of any Year 2000 problems that could reasonably be expected to
have a material adverse effect on our business. Our assessment plans consisted
of internal testing of our systems, contacting third party vendors of hardware,
software and services, assessing and implementing repairs or replacements as
required and developing contingency plans if Year 2000 problems still arise. We
contacted our major vendors for software, hardware and related services. These
vendors indicated that they are Year 2000 compliant. However, we can not
guarantee that we have identified or will identify all Year 2000 compliance
problems in our infrastructure that may require substantial revisions and
repairs. Also, despite our testing and reviews, we may experience Year 2000
problems related to the third party software, hardware or other systems on which
we are reliant, and any of these problems may be time consuming or expensive to
fix.
Contingency Plan
We have been engaged in an ongoing assessment of our readiness and have
developed contingency plans to address Year 2000 problems that may arise. The
results of our analyses and the responses received from third party vendors and
service providers were taken into account in developing these plans.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for
Derivative Financial Instruments and for Hedging Activities," which will be
effective for our fiscal year 2001. This Statement establishes accounting
29
<PAGE> 31
and reporting standards requiring that every derivative instrument, including
certain derivative instruments embedded in other contracts, be recorded in the
balance sheet as either an asset or liability measured at its fair value. The
statement also requires that changes in the derivative's fair value be
recognized in earnings unless specific hedge accounting criteria are met. SFAS
133 is not anticipated to have a significant impact on our operating results or
financial condition when adopted, since we currently do not engage in hedging
activities.
30
<PAGE> 32
BUSINESS
OVERVIEW
We are a leading developer of gene therapy products for the treatment of
cancer. We are capitalizing on the significant advances in the understanding of
the human genome and the role that gene function plays in the development of
cancer. Our drug discovery and development programs have resulted in innovative
approaches in which therapeutic genes are used to treat cancer by directly
addressing the genetic abnormalities associated with the disease.
Our lead product candidate, INGN 201, combines the naturally occurring p53
tumor suppressor gene with our clinically proven adenoviral delivery system. We
are beginning pivotal Phase III clinical studies of INGN 201 in head and neck
cancer and conducting a Phase II clinical trial in non-small cell lung cancer.
We are also conducting several Phase I clinical trials in additional cancer
indications. To date, we have treated over 400 patients with a total of over
3,000 doses of INGN 201, establishing a broad safety profile.
In addition to our INGN 201 development program, we have identified and are
developing additional gene therapeutics, including the genes mda-7, PTEN and
CCAM and associated delivery systems, or vectors, which we believe will be
effective in treating certain cancers. We also have a variety of enabling
technologies and a manufacturing infrastructure to support our continued product
development and commercialization efforts.
BACKGROUND
Gene Function and Genomics
A typical living cell in the body contains thousands of different proteins
essential to cellular structure, growth and function. Proteins are produced by
the cell according to a set of genetic instructions encoded by DNA, which
contains all the information necessary to control the cell's biological
processes. DNA is organized into segments called genes, with each gene
containing the information required to produce one or more specific proteins.
Production of a protein encoded by a particular gene requires gene expression or
activity. Many of the proteins inside a cell interact to form pathways that
enable a cell to perform its various functions. The improper expression of one
or more genes can alter these pathways and affect a cell's normal function,
frequently resulting in disease.
In recent years, scientists have made significant progress toward
understanding the nature of the human genome and evaluating the role that genes
play in both normal and disease states. The Human Genome Project and other
commercial, academic and governmental initiatives are rapidly achieving the goal
of sequencing all of the approximately 100,000 genes that comprise the human
genome. As new genes are discovered and decoded, their functions are being
identified and understood, providing opportunities to develop therapeutic
applications for the gene, including treatment and prevention of disease.
Gene Therapy
Gene therapy uses genes to regulate cellular function or to correct
cellular dysfunction. These processes involve the introduction of genes into
cells to restore missing gene functions, correct aberrant gene functions,
augment normal gene activity, neutralize the activity of defective genes or
induce cell death. In order to do this, a therapeutic gene is often combined
with a delivery system, called a "vector", which enables the therapeutic gene to
enter the target cells and express its gene product. For in vivo gene therapy,
the vector containing the therapeutic genetic material is typically injected
directly into a patient's tissue, body cavity or bloodstream.
The therapeutic gene is typically the normal counterpart of a gene that is
defective or inadequately expressed in the diseased cell. In some cases the
therapeutic gene will simply act to replace a missing protein or to augment the
level of a protein that is otherwise inadequate to prevent disease. In other
cases, the therapeutic gene will act to initiate cell death pathways to
eliminate the diseased cells.
31
<PAGE> 33
The delivery system used must be compatible with both the therapeutic gene
and the route through which the gene is administered so that it can reach the
target disease site. The vector must also be able to deliver sufficient genes to
cause a therapeutic effect. The most common delivery systems currently in use
are modified viruses such as adenoviruses and retroviruses and synthetic
non-viral substances such as liposomes. Viruses are often used as delivery
systems because they have the ability to efficiently infect cells and carry
their genetic material, or genome, into the cell where it will initiate a
program to produce more virus. Scientists can modify these viruses by deleting
pieces of the viral genome that are necessary for viral reproduction, or
replication, and replacing them with a therapeutic gene or genes. The resulting
"viral vector" retains the ability of the virus to efficiently deliver its
genes, which now include a therapeutic gene or genes, into cells, but has lost
the ability to replicate itself. Non-viral systems can also deliver genetic
material to host cells. These systems are synthetically developed in order to
mimic the characteristics of viral systems and may expand the disease targets
that can be treated with gene therapy.
Many of the clinical trials currently ongoing which involve gene therapy
use adenoviral vectors. Adenoviral vectors are created using adenoviruses, which
are among several common cold viruses. These vectors have been modified so that
their ability to replicate will be inhibited in a human host. The DNA of
adenoviral vectors rarely becomes incorporated or integrated into the cell
genome. Instead, it 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. For cancer treatment, where the goal is to rapidly
kill or repair the cancer cells, the relatively short life of the adenovirus and
its ability to carry sufficient therapeutic genes makes its use particularly
appropriate.
Cancer, a Genetic Disease
Cancer is the second leading cause of death in the United States, surpassed
only by heart disease. In the United States, approximately 1.2 million people
are newly diagnosed with cancer each year and over 550,000 people die from the
disease. Although the prevalence of specific cancers varies among different
populations, we believe that the overall incidence of cancer worldwide is
similar to that experienced in the United States. According to the American
Cancer Society, the direct costs of treating cancer patients were estimated at
$37 billion in the United States in 1999.
Cancer is a group of diseases in which certain cells grow uncontrolled by
the body's normal self-regulatory mechanisms. 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 inactivation, or to function
abnormally. Cells have a number of protective pathways, controlled by genes,
that prevent them from becoming cancerous. For example, pathways that transmit
signals for a cell to divide have on/off switches that allow cell division to be
regulated. Cells also have mechanisms that allow them to determine if their DNA
has been damaged, and they have pathways to repair that damage. Alternatively,
cells may initiate a suicide pathway called apoptosis, or programmed cell death,
in order to completely eliminate the DNA damage.
The failure of any of these protective pathways can lead to the development
of cancer. Cancer is one of the more attractive initial applications for gene
therapy, because in contrast to more complex genetic disorders, which may
require DNA repair sufficient to restore proper long-term cell function, cancer
can be treated effectively by restoring just those functions that will lead to
the destruction of the cancer cell. The introduction of normal tumor suppressor
genes, such as p53, into cancer cells is among the most promising of these
approaches.
The p53 tumor suppressor gene
Tumor suppressor genes are one class of genes that has been found to play a
crucial role in preventing cancer and its spread. The best known and most
studied of the tumor suppressor genes is the p53 gene. Initially mislabeled an
oncogene, or cancer-causing gene, p53 is now known to be a powerful tumor
suppressor gene that acts to block cancer development by preventing the
accumulation of DNA damage. p53 is involved in multiple cellular processes,
including control of the cell cycle, DNA repair and
32
<PAGE> 34
replication, cell differentiation, genome integrity, apoptosis, and inhibition
of blood vessel growth, or anti-angiogenesis. p53 is capable of such
wide-ranging effects because it orchestrates the activity of a host of other
genes and proteins. If the DNA of a cell is damaged, p53 responds to the damage
by initiating a cascade of protective processes to either repair the DNA damage
or to destroy the damaged cell through apoptosis. These p53-mediated processes
prevent damaged cells from multiplying and progressing towards cancer.
Therefore, the presence of a normally functioning p53 pathway allows the body to
naturally suppress tumor growth.
Current Treatment of Cancer
Despite advancements in cancer research in recent years, better treatments
for cancer are urgently needed. The conventional therapeutic approaches,
including surgery, chemotherapy and radiation therapy are ineffective or only
partially effective in many cancer types. Surgery is inadequate for many
patients because the cancer is inaccessible or impossible to remove completely.
Surgery, although used in over half of all cancer cases, is also inadequate
where the cancer has spread, or metastasized. 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 and disability to the patient. Radiation
therapy and chemotherapy are, by their nature, toxic procedures that damage
normal as well as cancerous tissue. These treatments must be carefully
controlled to avoid being life-threatening themselves, and many patients are
unable to withstand the most effective doses due to toxicity. These conventional
therapies are also marked by debilitating side effects such as bone marrow
suppression, nausea, vomiting and hair loss, often requiring additional and
costly medications to ameliorate such side effects. Further, certain
chemotherapies may be of limited use in tumors that have developed mechanisms to
evade the action of the drugs, a phenomenon known as multidrug resistance.
Because of the limitations of current cancer therapies, the treatment of
cancer is complex. The first treatment regimen for a newly diagnosed cancer,
usually surgery if it is possible, or radiation therapy, is referred to as
primary treatment. If the primary treatment is not successful, the cancer can
regrow or continue to grow, which is referred to as recurrent disease. In most
cases, recurrent cancer is not curable, with secondary treatment regimens,
usually chemotherapy, only providing marginal benefits for a limited period of
time. When recurrent cancer has proven resistant to a secondary treatment, it is
considered refractory. Most new cancer treatments are tested initially in
patients with either recurrent or refractory disease because the effects of the
new therapy are more quickly apparent.
Given that established cancer therapies often prove to be incomplete,
ineffective or toxic to the patient, there is a need for new treatment
modalities that will either complement established therapies or replace them by
offering better therapeutic outcomes. For example, for a limited number of
cancers, immunotherapy, which seeks to stimulate a patient's own immune system
to kill cancer cells, has rapidly become widely accepted by improving on the
shortcomings of existing therapy. However, for a broad range of cancers
additional approaches are needed to improve the toxicity and marginal benefits
associated with current cancer treatments. Gene therapy directly addresses the
cellular dysfunction that causes cancer, compared with small molecule drugs or
immunotherapeutic agents, which are intended to act indirectly.
THE INTROGEN APPROACH
We believe that the emerging field of gene therapy presents a new approach
for treating many cancers without the toxic side effects associated with
traditional therapies. We have developed significant expertise in identifying
therapeutic genes and in using safe and effective delivery systems to transport
these genes to the cancer cells. We are able to treat a number of cancers in a
way that kills cancer cells while not harming normal cells.
Because most cancers are amenable to local treatment, we administer gene
therapy directly into a patient's cancerous tumor using adenoviral vectors. We
have focused on cancers that lack effective treatment and that present
discernable patient populations that are suitable for our approach. Our clinical
studies have shown that our gene therapy can be used alone and in combination
with conventional
33
<PAGE> 35
treatments such as surgery, radiation therapy and chemotherapy. To date, we have
treated over 400 patients with a total of over 3,000 doses of INGN 201,
establishing a broad safety profile.
Our initial product candidate is INGN 201. We have packaged the p53 gene
into our clinically proven, adenoviral delivery system to produce the gene
therapeutic INGN 201. Evidence from laboratory, preclinical and clinical studies
suggests that restoring the function of the p53 tumor suppressor gene may be
sufficient to slow, stop or kill cancer cells. We believe that INGN 201 holds
promise as an effective anti-cancer therapeutic that would restore or augment
normal tumor suppressor functions, both in combination with conventional cancer
treatment and as a stand-alone treatment for patients who are resistant to or
unable to receive conventional therapies.
THE INTROGEN STRATEGY
Our objective is to be the leader in the development of gene therapy
products for the treatment of cancer. To accomplish this objective, we are
pursuing the following strategies:
- Develop and Commercialize INGN 201 for Multiple Cancer Indications. We
plan to continue development of our lead product candidate, INGN 201, in
multiple cancer indications. We are beginning a pivotal Phase III
clinical trial in head and neck cancer, conducting a Phase II clinical
trial in non-small cell lung cancer and conducting six Phase I studies in
other indications. These trials are being conducted with Aventis.
- Develop Our Portfolio of Gene Therapeutics. Utilizing our significant
research, clinical, and regulatory expertise, we are pursuing additional
gene therapeutics for various cancers. We have established a structured
process for evaluating gene therapy candidates and rapidly progressing
them from preclinical to clinical development. We have identified and
licensed multiple genes, including mda-7, PTEN and CCAM, which we have
combined with our adenoviral vector system and believe are attractive
development targets for the treatment of various cancers.
- Expand Delivery System Technologies. We believe that no single gene
delivery system will be applicable to all clinical needs. At present, we
have a broad portfolio of delivery technologies under development. We are
leveraging our experience gained with our existing adenoviral vector
systems to develop next generation vectors for both viral and non-viral
delivery systems. To augment our portfolio, we will continue to examine
new licensing opportunities and develop collaborations in the area of
novel delivery and targeting technologies.
- Leverage Manufacturing Capabilities to Produce Additional Gene Therapy
Products. We have developed significant expertise and capabilities in
manufacturing and process development of therapeutic genes and delivery
systems. We have built a CGMP manufacturing facility, which we have fully
validated. This facility is capable of supporting market launch of INGN
201. We have also established formulation and process methodologies and
quality release assays to produce clinical grade materials at commercial
scale. We intend to utilize these processing and production capabilities
to advance clinical development of our pipeline of gene therapeutics and
commercialize gene therapy product candidates.
- Establish Targeted Sales and Marketing Capabilities. As part of our
collaboration with Aventis, we have the right to elect to form a joint
commercial operation to market INGN 201 in North America upon application
for product approval. At this time, we believe that exercising this right
will maximize the value of INGN 201 to us. Because the oncology market is
characterized by a concentration of specialists in relatively few major
cancer centers, it can be effectively addressed by a small, focused sales
force. The marketing and sales infrastructure we develop to support our
commercialization efforts with Aventis will give us the ability to more
effectively pursue commercialization of additional oncology products.
- Expand Market Focus to Non-Cancer Indications. Our long term strategy is
to leverage our scientific, research and process competencies in gene
function and vector development to pursue gene-based therapies for a
variety of other diseases and conditions. We believe that gene therapy
34
<PAGE> 36
holds promise for diseases such as cardiovascular disease and rheumatoid
arthritis, which, like cancer, result from cellular dysfunction or
uncontrolled cell growth.
PRODUCT DEVELOPMENT PROGRAMS
The following table summarizes the status of our gene therapy product
development programs.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CANCER DEVELOPMENT COMMERCIAL
PRODUCT (GENE) INDICATION STATUS RIGHTS
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------
INGN 201 (P53) Head & Neck Beginning Phase III Introgen/Aventis
Non-Small Cell Lung Phase II
Prostate Phase I
Bladder Phase I
Ovarian Phase I
Brain (glioblastoma) Phase I
Bronchoalveolar Phase I
Breast Phase I
- ----------------------------------------------------------------------------------------------------------
INGN 241 (MDA-7) Breast Preclinical Introgen
Lung Preclinical
- ----------------------------------------------------------------------------------------------------------
INGN 251 (PTEN)* Colorectal Preclinical Introgen
Brain (glioblastoma) Preclinical
- ----------------------------------------------------------------------------------------------------------
INGN 231 (CCAM)* Prostate Preclinical Introgen
- ----------------------------------------------------------------------------------------------------------
BAK PROGRAM Various Research Introgen
- ----------------------------------------------------------------------------------------------------------
P16 PROGRAM Pancreatic Research Introgen
- ----------------------------------------------------------------------------------------------------------
DBCCR1* PROGRAM Bladder Research Introgen
- ----------------------------------------------------------------------------------------------------------
RSK3* PROGRAM Ovarian Research Introgen
- ----------------------------------------------------------------------------------------------------------
</TABLE>
- ------------------------------
* Exclusively licensed to Gendux AB, our wholly owned subsidiary.
Indications for INGN 201 (p53)
INGN 201, our lead product candidate, combines the p53 tumor suppressor
gene with our adenoviral vector system and is typically administered via
injection. The importance of the p53 gene in controlling tumor growth suggests
that INGN 201 is applicable to multiple cancers.
Our development strategy for INGN 201 is initially to obtain approval for
cancer indications that have few or no treatment options available and have near
term clinical endpoints. We plan to expand the number of approved indications by
pursuing cancers that have accessible tumors that can be treated locally, like
head and neck and lung cancer.
We have conducted a number of Phase I and II studies to determine the
safety and efficacy of INGN 201 both alone and in combination with radiation
therapy, chemotherapy and/or surgery. Efficacy was evaluated by tumor
measurements taken during each study to indicate whether tumors had regressed,
remained stable or progressed during treatment. These measurements were
supplemented, where possible, by microscopic tissue analysis, or biopsy, to
determine the presence of residual cancer cells within the treated area. In
addition, we evaluated efficacy by measuring the survival time of the patients
treated in all of these studies.
35
<PAGE> 37
Head and Neck Cancer
Head and neck cancer has a worldwide incidence of approximately 400,000 new
cases per year and is the sixth leading cause of cancer-related deaths in the
United States, encompassing cancers of the tongue, mouth, vocal cords and
tissues surrounding them. In the United States, the annual incidence of squamous
cell cancer of the oral cavity, pharynx, and larynx is approximately 42,000.
This cancer is frequently fatal with most patients dying from local and regional
disease, rather than from metastasis to other organs. Primary treatments for
this cancer are surgery and radiation therapy. However, these treatments are
debilitating and have permanent side effects, including loss of teeth, loss of
voice or disfigurement. Moreover, a large number of patients with head and neck
cancer experience recurrence. Once the disease recurs, few patients survive
despite secondary treatment with conventional therapies, with median patient
survival of less than 12 months. Although often used as a secondary treatment,
there are no chemotherapy drugs available today which have been approved by the
FDA for treatment of patients with recurrent head and neck cancer.
Because INGN 201 can treat head and neck cancer locally, we believe it is
an excellent candidate for treatment in this indication. Based on clinical
results from our Phase I and II trials, we and Aventis are beginning a
registration program comprising two randomized, controlled Phase III studies
that have been reviewed and accepted by the FDA. The program is intended to
demonstrate the efficacy of INGN 201 for treatment of patients with squamous
cell carcinoma of the head and neck in whom standard treatment of surgery and
radiation therapy have not been effective and who have recurrent or refractory
disease.
The first Phase III study will be conducted at 60 centers in the United
States, Canada and Europe in 240 patients with refractory disease. Patients in
the control group will receive weekly methotrexate, a standard chemotherapy
treatment for this condition, while patients in the treatment group will receive
twice weekly injections of INGN 201. The primary endpoint of this study is
survival as measured by how long the p53 treatment group patients live relative
to how long the control group patients live. The second study, to be conducted
at 60 centers in the United States, Canada and Europe, will enroll 288 patients
with newly diagnosed recurrent head and neck cancer. These patients will not yet
have been treated with chemotherapy. The control group will be treated with
common chemotherapy agents and the treatment group will receive a regimen
containing both chemotherapy and INGN 201; either regimen is repeated every
three weeks, which is a standard interval for chemotherapy. The primary endpoint
will be the duration of tumor growth control, as measured by a patient's tumor
growth beyond the patient's baseline, or tumor size at the beginning of the
study. The goal of these studies is to establish INGN 201 both as a monotherapy
for refractory disease, and in combination with chemotherapy for recurrent
disease. These studies are complementary, with the primary endpoint in each
serving as a secondary endpoint in the other. An independent Data Safety
Monitoring Board will oversee safety for the studies and conduct a specified
interim data analysis for each study, as accepted by the FDA.
We have completed a Phase II study in 112 patients with recurrent head and
neck cancer at 18 clinical centers in the United States and Europe, using the
highest dose of INGN 201 tested in the Phase I study. The objective of this
study was to determine the safety, side effects and efficacy of INGN 201 as a
monotherapy. Secondary objectives were to examine whether certain tumor
characteristics such as size or p53 mutation status influenced the success rate
of treatment, as well as to estimate the survival time of patients receiving
INGN 201. We demonstrated that INGN 201 injections either shrank tumors or
stopped their growth in 60% of the tumors that were injected. The study showed
that the treatment was as effective in tumors with p53 mutations as in those
with a normal p53 gene. Median survival was 7 1/2 months, an increase of two
months over the expected survival time had these patients been treated with
conventional therapies. Further, INGN 201 was well tolerated in this Phase II
study, with minimal side effects consistent with those experienced in Phase I.
Previously, INGN 201 was tested in a Phase I safety study with patients
with recurrent head and neck cancer. In this study, 33 patients received a total
of 429 doses. This study demonstrated that INGN 201 could be safely injected
into head and neck tumors repetitively over many months. Side effects were
minimal, consisting of pain at the site of the injection and flu-like symptoms
that could be readily treated
36
<PAGE> 38
without disrupting the administration of the drug. No patient had treatment
stopped or reduced because of toxicity, even at the maximum dose. In fifteen of
these patients, we showed that surgery could be safely combined with INGN 201
without increasing the risk of wound infections or healing. Shown below is an
example of INGN 201 reducing tumor mass in a head and neck cancer patient.
This illustration depicts a radiographic response to therapy in a head and
neck cancer patient, illustrated by two CT scanned images. One CT image shows a
tumor before treatment with INGN 201, showing a tumor on affected head and neck
area. The second CT image shows the effect of the treatment on the tumor. The
two images are explained with captions. Caption 1, appearing above the
illustration: Clinical Response in Head and Neck Cancer Patient Treated with
INGN 201. Caption 2, appearing below the first image: Pre-treatment. Caption 3,
appearing below the second image: Post-treatment.
Non-Small Cell Lung Cancer
Non-small cell, or NSC, lung cancer is the most common cause of
cancer-related death in the United States, with an estimated 164,000 new cases
diagnosed annually. An estimated 157,000 people will die from the disease in
2000. The five year survival rate for patients diagnosed with NSC lung cancer is
13%. Surgery can be an effective treatment, but only a minority of patients are
eligible because early stage diagnosis is uncommon. Only half of these patients
realize a complete surgical resection of their disease. The remaining patients
typically undergo a combination of surgery, radiation and chemotherapy. This
combination treatment is only effective in a small percentage of cases. Of
patients who have unresectable disease, 80% will again have active cancer cells
three months after completing a full course of radiation. Due to the ineffective
treatment of NSC lung cancer in many patients, a significant unmet need for
better treatments exists. The opportunity for a new treatment to show benefit is
great, particularly if it can be combined with existing treatments without
increasing the toxicity of those treatments.
We are conducting a Phase II study of INGN 201 in combination with
radiotherapy as the primary treatment for patients who have newly diagnosed
unresectable NSC lung cancer and who cannot tolerate chemotherapy. Radiotherapy
is the standard treatment for patients in this condition. All patients in this
study receive three INGN 201 injections into the tumor during a five week course
of radiotherapy. These patients are being evaluated for the efficacy, safety and
side effects of the treatment to ascertain whether the combination of INGN 201
with radiation is well tolerated. Additionally, a three month followup
evaluation is being performed to see if there are residual tumor cells in the
tumor mass.
We have achieved promising preliminary results in the first 17 patients of
this study. We expect to present these results of this study at the American
Society of Clinical Oncology, or ASCO, Conference, to be held May 2000. We are
working with Aventis to finalize the design of pivotal trials in this
indication.
We conducted a Phase I safety study in 53 patients with end stage NSC lung
cancer who had failed surgery, radiation and chemotherapy. In one arm of the
study, 29 patients received INGN 201 into a single tumor site. In the other arm,
24 patients received INGN 201 administered sequentially with cisplatin, a
commonly used chemotherapeutic agent. Overall the INGN 201 treatments were very
well tolerated in this population. The most severe side effects noted in this
study were consistent with those experienced with the use of cisplatin alone.
Shown below is an example of INGN 201 reducing tumor mass in a non-small cell
lung cancer patient.
This illustration depicts a radiographic response to therapy in a non-small
cell lung cancer patient, illustrated by two CT scanned images. One CT image
shows a tumor before treatment with INGN 201, showing a tumor and collapsed lung
segment. The second CT image shows the effect of the treatment on the tumor,
showing normalization of the affected lung segment. The two images are explained
with captions. Caption 1, appearing above the illustration: Clinical Response in
Non-Small Cell Lung Cancer Patient Treated with INGN 201. Caption 2, appearing
below the first image: Pre-treatment. Caption 3, appearing below the second
image: Post-treatment.
Prostate Cancer
Prostate cancer is one of the most common forms of cancer. Approximately
265,000 new cases were diagnosed in the United States in 1996, and it is
estimated that the number of new cases will grow to
37
<PAGE> 39
390,000 in 2001. This increase in reported incidence is primarily due to more
effective methods of diagnosis. Most of these patients with prostate cancer are
treated with either surgery or radiation therapy. Because newer and simpler
methods of diagnosis that detect the disease at an earlier stage exist today,
there are significantly more patients diagnosed with prostate cancer before it
has metastasized who may benefit from local treatment therapies such as INGN
201.
We have designed a randomized, controlled Phase II study for patients who
have failed radiation therapy for prostate cancer. The study will enroll only
patients who have local recurrence in the pelvic regions, thus excluding those
with metastases beyond the pelvic region. Patients in the study arm will be
treated with a combination of INGN 201 injections and additional radiation
therapy, while patients in the control arm will receive only radiation
treatment. The goal of this study is to demonstrate the safety and efficacy of
INGN 201 and radiation in reducing or eliminating further tumor growth in
patients with localized disease who are not candidates for surgery.
We have completed enrollment and treatment in a Phase I study of 30
patients with INGN 201 injected into the prostate gland followed by surgical
resection of the prostate gland. The INGN 201 injections were well tolerated. In
a preliminary analysis, 27% of the patients showed measurable evidence of tumor
regression from the INGN 201 injections.
Other Cancers
There are several other potential cancer indications for which INGN 201 is
in earlier stages of clinical development. To evaluate these possible
indications, we and Aventis have entered into a Cooperative Research and
Development Agreement, or CRADA, with the National Cancer Institute, the NCI.
Under this program the NCI is conducting clinical studies with INGN 201 at
leading cancer centers using clinical protocols that we have developed with the
NCI. These protocols are designed to demonstrate the safety of INGN 201 in these
indications and by various routes of administration.
Ovarian Cancer. There will be an estimated 23,000 new cases of ovarian
cancer and 14,000 deaths in the United States in 2000. In approximately 80% of
patients with advanced disease, the cancer remains localized within the
peritoneal, or abdominal cavity. This allows ready access to cancer cells for
simple intraperitoneal administration of gene therapeutic agents. The NCI is
conducting Phase I clinical trials of INGN 201 in this population. We anticipate
that these trials will be expanded to evaluate the use of INGN 201 in
combination with surgery and/or chemotherapy.
Bladder Cancer. There will be an estimated 53,000 new cases of bladder
cancer in 2000 in the United States. The annual number of deaths from this
indication in the United States is estimated to be 12,000. The anatomy of the
bladder allows uniform delivery of high concentrations of gene therapeutic
agents via catheter. The NCI is conducting a Phase I trial using INGN 201 in
this indication.
Brain Cancer (Glioblastoma). An estimated 13,000 people die from cancers of
the brain and central nervous system in the United States each year.
Glioblastoma multiforme, or GBM, is a particularly deadly form of primary brain
cancer that afflicts children as well as adults. This condition occurs in
approximately 22% of all brain cancer patients in the United States. GBM is not
effectively treated with conventional therapies because the lesions are deep
within the brain and are large and grow rapidly. The NCI has initiated a Phase I
clinical trial using INGN 201 for recurrent GBM.
Breast Cancer. An estimated 183,000 new cases of breast cancer will be
diagnosed in the United States in 2000, and more than 41,000 are expected to die
of the disease. The NCI has initiated a Phase I clinical trial using INGN 201 in
patients with locally recurrent breast cancer involving the chest wall.
Separately, we are designing Phase I and II studies using INGN 201 as a
monotherapy and in combination with chemotherapy in women who have locally
advanced breast cancers.
Bronchoalveolar cancer. An estimated 9,800 new cases of bronchoalveolar
cancer will be diagnosed in the United States in 2000. Bronchoalveolar cancer is
a form of non-small cell lung cancer which spreads throughout the lungs, but
does not spread elsewhere in the body. Current treatments are not effective for
this condition. The NCI is conducting a Phase I study in bronchoalveolar cancer
with INGN 201 administered by directly bathing the airway leading to the
diseased lung segments.
38
<PAGE> 40
Other p53 Product Development
We are also exploring additional therapeutic approaches of combining p53
with other vectors as part of our collaboration with Aventis. We have studied
p53 in combination with retroviral vectors in a Phase I clinical trial and
observed no significant side effects. In addition, we are studying the use of
p53 in combination with non-viral delivery systems to evaluate the benefits of
systemic and other administration of p53 to treat cancer.
RESEARCH AND DEVELOPMENT PROGRAMS
Therapeutic Genes
In addition to our clinical programs underway with INGN 201, we are
conducting a number of preclinical and research programs involving a variety of
therapeutic genes for the treatment of cancer. These programs involve tumor
suppressor and pro-apoptotic genes that act through diverse mechanisms to
inhibit the growth of or kill cancer cells. Our programs involving these genes
are discussed below.
mda-7
mda-7 is a promising tumor suppressor gene which we believe, like p53, has
broad potential to induce apoptosis in many types of cancer. We have combined
mda-7 with our adenoviral system to form INGN 241. Our preclinical studies have
determined that INGN 241 suppresses growth of many cancer cells, including those
of the breast, lung, colon, prostate and central nervous system, while not
affecting growth of normal cells. Because INGN 241 kills cancer cells, even if
other tumor suppressor genes, including p53 or p16, are not functioning
properly, it appears that mda-7 functions via a novel mechanism of tumor
suppression. Our preclinical program with INGN 241 includes studies at M.D.
Anderson Cancer Center, Columbia University and the University of California at
Los Angeles. We are preparing to file an IND with the FDA to commence human
clinical trials in breast cancer. We have an exclusive license to the mda-7 gene
for gene therapy applications from Corixa Corporation.
PTEN
Mutations in the PTEN tumor suppressor gene have been linked to a variety
of common human cancers, including brain (GBM), prostate and breast cancers. We
have combined PTEN with our adenoviral system to form INGN 251. Preliminary gene
transfer studies have demonstrated that INGN 251 can inhibit the growth of
colorectal, prostate and brain cancer cells and promote apoptosis in many of
these cells. Our preclinical program with INGN 251 includes studies with
Imperial Cancer Research Technology Limited in London, or ICRT. We are preparing
an IND application with the FDA to commence human clinical trials. We obtained
an exclusive option to license the PTEN gene from ICRT, which we have
transferred to Gendux AB.
CCAM
CCAM is involved in a complex network of molecular interactions that
regulate organ development and cell differentiation. CCAM is abnormally
expressed in prostate, colon and breast cancers. We have combined the CCAM gene
with our adenoviral system to form INGN 231. Preclinical results in animal
models of prostate cancer show that INGN 231 inhibits tumor growth, suggesting
that it may be a promising therapy for the treatment of patients with locally
advanced prostate cancer. Our preclinical program with INGN 231 includes studies
with investigators at the Karolinska Institute in Sweden and at M.D. Anderson
Cancer Center. We are preparing an IND application with the FDA to commence
human clinical trials. We have exclusively licensed the INGN 231 technology from
M.D. Anderson Cancer Center and have sublicensed it to Gendux AB.
In addition to our preclinical programs, we are conducting research on
additional genes, including BAK, p16, DBCCR1 and rsk3, which hold promise as
therapeutic candidates. BAK is a pro-apoptotic gene which kills cancer cells. We
are working with our collaborators at M.D. Anderson Cancer Center to
39
<PAGE> 41
identify and develop both viral and non-viral vectors containing this gene. We
have exclusive rights to the BAK gene under a license with LXR Biotechnology,
Inc. p16 is a widely known tumor suppressor gene. We have licensed the
adenoviral vector containing the p16 gene from M.D. Anderson Cancer Center and
have demonstrated that it inhibits tumor growth in animal models. We are also in
early stages of research with two other genes, DBCCR1 and rsk3. We obtained
exclusive options to license the DBCCR1 and rsk3 genes from ICRT, which we have
transferred to Gendux AB.
INTROGEN ENABLING TECHNOLOGIES
We have a portfolio of enabling technologies which we plan to exploit to
develop additional gene therapy products to treat cancer and other diseases.
Viral Delivery Systems
Adenoviral Systems. We have demonstrated that our first product candidate,
INGN 201, enters tumor cells and expresses its protein despite the body's
natural immune response to the adenoviral vector. While the adenoviral vector
system used is appropriate for the treatment of cancer by local administration,
we have developed a number of additional systems that utilize modified
adenoviral vectors for gene delivery. These systems also may be applicable to
indications where expression of the therapeutic gene is required for longer
periods of time or where systemic administration may be necessary.
- Viral Gene Expression Modulation System. We are developing this
technology to block expression of viral proteins in the patient to reduce
immune response to the vector, thus prolonging the expression of the
therapeutic gene.
- Expanded Payload Systems. We are developing these technologies to allow
the removal of very large pieces of the genome in order to increase the
amount of genetic material that can be carried to the cell, allowing
multiple genes to be incorporated into a single vector. Also, since many
viral genes are deleted, we expect that the immune response against these
vectors will be reduced.
Retroviral Systems. Retroviral vectors may be advantageous for particular
clinical applications where the therapeutic gene needs to be expressed for an
extended period of time. We have clinical experience combining retroviral
vectors with p53 and have established manufacturing capability for these
delivery systems.
Non-Viral Delivery Systems
We have in-licensed and are developing a non-viral delivery platform as a
potential alternative to viral delivery for certain clinical indications,
particularly those that require systemic administration. Although we are not
currently using non-viral vector technology in our clinical programs, we have
completed proof-of-concept studies in animal models which suggest that this
system may be a useful way to deliver tumor suppressor genes for systemic cancer
treatment.
Additional Enabling Technologies
We are also developing a number of additional technologies that expand our
capabilities.
- Multi-Gene Vector System. This technology is designed to combine multiple
genes with a vector. This has the potential to be used with both viral
and non-viral delivery systems to allow the expression of more than one
therapeutic gene at a time.
- Pro-apoptotic Gene Delivery System. This technology is designed to allow
the expression of pro-apoptotic genes during treatment only, while
temporarily suppressing the ability of the therapeutic gene to kill cells
during production. This will facilitate production of the gene
therapeutic at higher volumes.
- Tissue-Specific Targeting Systems. This technology is designed to limit
therapeutic gene expression to particular cell types. It is intended to
be applied to both viral and non-viral vectors.
40
<PAGE> 42
- Selective Inhibition of Gene Expression. This technology is designed to
block the dysfunctional expression of certain genes, like
cancer-promoting oncogenes.
- Gene Screen Vector System. This technology is designed to aid in the
rapid screening of genes for therapeutic potential. This system should
allow us to quickly evaluate genes of unknown function for their
potential as cancer treatments.
MANUFACTURING AND PROCESS DEVELOPMENT
Commercialization of a gene therapeutic requires process methodologies,
formulations, and quality release assays in order to produce high quality
materials at a large scale. We believe that the expertise we have developed in
the areas of manufacturing and process development represents a competitive
advantage. We have developed scale-up methodologies for both upstream and
downstream production processes, formulations that are safe and stable and
quality release assays that ensure product quality.
We own and operate a state of the art, CGMP manufacturing facility, which
replaces an earlier pilot production facility, which we have fully validated and
which is producing INGN 201 for use in our Phase III studies. The design and
processes of this facility have been reviewed with the FDA. We plan to use this
facility for our market launch of INGN 201. Our production and quality personnel
team has been in place for over three years. To date, we have produced
approximately 20 batches of INGN 201 clinical material. The majority of our
existing INGN 201 inventory was produced at our pilot facility.
Under our collaboration agreement with Aventis, we have the right to supply
all INGN 201 product used or sold in North America. We supply product used in
early stage development, which is paid for by Aventis at our cost. We sell
product used in later stage clinical development to Aventis for our cost plus a
stated markup, and we have the right to sell to Aventis or to an
Introgen/Aventis joint commercial operation all INGN 201 for commercial sales in
North America for our cost plus a stated markup. To date, material manufactured
by us has been used for all of the patients treated in the worldwide Phase II
studies with INGN 201.
We manufacture non-INGN 201 early stage products at a separate facility. To
date, we have produced over 30 batches of clinical-grade material for use in
preclinical studies.
COLLABORATIVE ARRANGEMENTS AND LICENSING AGREEMENTS
Aventis Pharma AG
In October 1994, we entered into two collaboration agreements with
Rhone-Poulenc Rorer Pharmaceuticals, Inc. to develop therapeutics based on p53
and on K-ras pathway inhibition. In December 1999, Rhone-Poulenc Rorer combined
with Hoechst AG, and the parties have combined Hoechst Marion Roussel, the
pharmaceutical business of Hoechst AG, with that of Rhone-Poulenc Rorer to form
Aventis Pharma AG. Aventis Pharma is a multibillion dollar, global
pharmaceutical company.
Through December 31, 1999, Aventis has provided us with over $50 million in
the form of funding for early stage development programs and purchases of INGN
201 product for later stage clinical development and has purchased over $14
million of preferred stock from us. These purchases of preferred stock were made
upon the achievement of the milestones contemplated in our stock purchase
agreement with Aventis. While our collaboration agreements encompass development
of therapeutics based on p53 and on K-ras pathway inhibition, we and Aventis
have focused our efforts on the INGN 201 program and have relied on academic
collaborations to develop the K-ras technology.
Under our p53 collaboration, we are primarily responsible for conducting
early stage development programs, which include preclinical research and
development and Phase I clinical trials, for North America for potential gene
therapy products. Through October 1997, Aventis was required to fund our early
stage development programs pursuant to mutually approved budgets. Since October
1997, Aventis has agreed on an annual basis to continue to fund our early stage
development program. If Aventis were to stop funding early stage development, it
would only have rights limited to products for which Aventis has
41
<PAGE> 43
elected to proceed with later stage development at the time it discontinues
early stage development funding.
Once Phase I clinical trials of a potential gene therapy product are
completed, Aventis may elect to pursue later stage clinical development of the
product. If Aventis so elects, it becomes responsible for funding and conducting
later stage clinical development. This includes conducting Phase II and III
clinical trials, making all further submissions to existing Investigational New
Drug applications and preparing all license applications with the FDA and other
regulatory authorities. If Aventis elects not to pursue later stage clinical
development, neither we nor Aventis may develop or commercialize the product
before October 2004 without the other's approval.
In 1997, after we had completed early stage development of INGN 201 for
head and neck and non-small cell lung cancers, Aventis elected to proceed with
later stage clinical development of INGN 201. As a result, Aventis is obligated
to use its best efforts to commercialize INGN 201 for these indications and is
currently funding later stage clinical development of INGN 201.
In North America, we have the right to elect to form a joint commercial
operation with Aventis to market the products developed under each of the
collaboration agreements. Such a joint commercial operation could take the form
of a joint venture company or any other arrangement agreed to by us and Aventis.
We must make the election within a stated period after a license application is
filed with the FDA. If we do not elect to form a joint commercial operation,
Aventis would retain exclusive marketing rights in North America and would pay
us royalties on product sales. In either case, we will retain exclusive
manufacturing rights in North America.
In Eastern and Western Europe, Aventis has exclusive marketing and
manufacturing rights but must pay us royalties on product sales. In Japan, North
and South Korea, Taiwan, China and India, both companies have the right, at
their own expense, to seek regulatory approvals for and to market and
manufacture the products that are developed under the collaboration.
Unless a collaboration agreement is terminated, both we and Aventis are
precluded from marketing or licensing, and Aventis is precluded from developing,
any gene therapy products in the applicable field prior to October 2004, except
according to the terms of the applicable collaboration agreement.
The term of the collaboration agreements is, on a product-by-product and
country-by-country basis, 12 1/2 years after first commercial sale of that
product in that country. Aventis may terminate the collaboration agreements, in
whole or in part with respect to individual collaboration products, at any time
upon 180 days' notice. During the 180 day period following the notice of
termination, Aventis will reimburse us for certain ongoing expenses and
noncancellable commitments incurred prior to such notice of termination in
accordance with the collaboration agreements. If Aventis terminates one of the
collaboration agreements, then under certain circumstances we will have an
exclusive, worldwide license to certain Aventis technology with the right to
grant sublicenses and to commercialize products developed under the
collaboration agreement. Further, if Aventis terminates a collaboration
agreement for a particular field of use, then Aventis may not develop or
commercialize any products in such field for three years, and we may pursue the
development and commercialization of such later stage products and other
products in such field.
Academic and Other Collaborations
Academic collaboration agreements have been a cost-effective way of
expanding our intellectual property portfolio, generating data necessary for
regulatory submissions, accessing industry expertise and finding new technology
in-license candidates, all without building a large internal infrastructure.
The University of Texas M.D. Anderson Cancer Center
Many of our core technologies were developed by scientists at M.D. Anderson
Cancer Center in Houston, Texas, one of the largest academic cancer centers in
the world. We sponsor research conducted at M.D. Anderson Cancer Center to
further the development of technologies that have potential
42
<PAGE> 44
commercial viability. Through these sponsored research agreements, we have
access to M.D. Anderson Cancer Center's resources and expertise for the
development of our technology. In addition, we have the right to include certain
patentable inventions arising from these sponsored research agreements under our
exclusive license with M.D. Anderson Cancer Center. The technologies we have
licensed from M.D. Anderson Cancer Center under the exclusive license agreement
relate to p53 and CCAM, among others. Under the agreement, we have agreed to pay
M.D. Anderson Cancer Center royalties on sales of products utilizing these
technologies and we are obligated to reimburse any of M.D. Anderson's costs that
may be incurred in connection with obtaining patents related to the licensed
technologies. Our strategy for product development is designed to take advantage
of the significant multidisciplinary resources available at M.D. Anderson Cancer
Center. These efforts have resulted in our becoming one of the largest corporate
sponsors of activities at M.D. Anderson Cancer Center in recent years and have
yielded to us exclusive patent and licensing rights to numerous technologies.
National Cancer Institute
In October 1998, we and Aventis entered into a Cooperative Research and
Development Agreement, a CRADA, with the National Cancer Institute, the NCI. NCI
will sponsor and conduct preclinical and human clinical trials to evaluate the
effectiveness and potential superiority to other treatments of INGN 201 against
a range of designated cancers including breast cancer, ovarian cancer, bladder
cancer, and brain (GBM) cancer. Under the CRADA, NCI will conduct five or more
Phase I clinical trials and will provide most of the funding for these
activities. We will supply NCI with INGN 201 product to be administered in these
trials and will be reimbursed for such supply by Aventis. We and Aventis each
have co-exclusive rights to all preclinical and clinical data accumulated under
the CRADA. The CRADA provides that NCI has certain rights to continue
development of INGN 201 on its own if we elect to terminate the CRADA.
Corixa Corporation
In August 1999, we entered into a research and license agreement with
Corixa Corporation pursuant to which we acquired an exclusive worldwide license
to mda-7 for gene therapy applications. Under the agreement, we paid Corixa an
initial license fee and have agreed to make additional payments upon the
achievement of development milestones, as well as royalty payments on product
sales. We have also agreed to make research payments to Corixa, which will
perform research involving mda-7.
Imperial Cancer Research Technology Limited
In June 1998 and November 1998, we entered into two option agreements with
Imperial Cancer Research Technology Limited, the ICRT. ICRT is the technology
and licensing unit of the Imperial Cancer Research Fund, which conducts over
one-third of all cancer research in the United Kingdom. Under the agreements, we
have an option to obtain exclusive worldwide licenses to PTEN, rsk3 and DBCCR1
genes. We have paid ICRT an option fee and, to the extent we exercise our option
and enter into a license agreement, we will pay a license issue fee and will
make additional payments upon the achievement of certain development milestones,
as well as royalty payments on product sales. During the option period, we will
collaborate with ICRT to establish, among other objectives, the potential tumor
suppressor activity of the genes. In addition, we have an option to obtain an
exclusive license to other patented subject matter and technology arising out of
the research, subject to certain rights retained by ICRT and a non-exclusive
license back to ICRT with certain improvements we make to the technology.
The Karolinska Institute
In June 1999, our subsidiary Gendux AB entered into a sponsored research
agreement involving CCAM with The Karolinska Institute. Karolinska, the only
medical university in Sweden, is responsible for over 40% of the state-funded
medical research in that country. In return for funding the research, Gendux
will receive an exclusive option to negotiate to obtain an exclusive license,
with the right to sublicense, to any subject matter arising out of the research.
43
<PAGE> 45
MARKETING AND SALES
We are focusing our current product development and commercialization
efforts on the oncology market. This market is characterized by its
concentration of specialists in relatively few major cancer centers, which we
believe can be effectively addressed by a small, focused sales force. We intend
to build our initial marketing capability as part of the INGN 201
commercialization process. Under our collaboration with Aventis, we have the
right to elect to form a joint commercial operation to market INGN 201 in North
America within a defined time after the filing of an application for product
approval. At this time, we believe that exercising this right will maximize INGN
201's value to us. Pursuant to the collaboration agreement with Aventis, we
would share the costs and profits of the joint commercial operation.
In conjunction with Aventis, we intend to focus our marketing and
distribution efforts for INGN 201 on the North American market. We believe that
our participation with Aventis to market and commercialize INGN 201 will allow
us to further develop our marketing capabilities for additional products in
North America. Outside of North America, we intend to seek corporate partners to
market and distribute additional gene therapy products who will be responsible
for developing, registering, and marketing those products in specific countries.
We would retain rights to supply product and would also receive royalty payments
on non-North American revenues.
PATENTS AND INTELLECTUAL PROPERTY
Our Portfolio
Our success will depend in part on our ability to develop and maintain
proprietary aspects of our technology. To this end, we have an intellectual
property program directed at developing proprietary rights in technology that we
believe may be important to our success. We also rely on a licensing program to
ensure a continued strong technology development and technology transfer from
companies and research institutions with whom we work. In addition to our
collaboration with Aventis, we have entered into a number of exclusive license
agreements or options with such companies and institutions, including M.D.
Anderson Cancer Center, Sidney Kimmel, Corixa, the Imperial Cancer Research
Fund, and LXR Biotechnology, Inc. In addition to patents, we rely on trade
secrets and proprietary know-how, which we seek to protect, in part, through
confidentiality and proprietary information agreements.
We currently own or have an exclusive license to six issued United States
patents, nine United States patent applications for which we have received a
notice of allowance from the PTO and 40 pending United States patent
applications. In addition, we own or license 11 issued and 127 pending foreign
patent applications which generally parallel the United States portfolio.
Adenoviral p53 Compositions and Therapies
In developing our patent portfolio, we have focused our efforts in part on
protecting our potential products and how they will be used in the clinic.
Arising out of our work with M.D. Anderson Cancer Center, we currently have an
exclusive license to six United States and corresponding international patent
applications directed to adenoviral p53, adenoviral p53 pharmaceutical
compositions and the use of adenoviral p53 compositions in various cancer
therapies and protocols. Our collaborator, Aventis, owns a United States patent
application, and corresponding international applications, directed to
adenoviral p53 and its clinical applications. We also have an exclusive license
to a United States patent application and corresponding international
applications directed to the use of the p53 gene in the treatment of cancer
patients whose tumors appear to express a normal p53 protein.
Combination Therapy with the p53 Gene
We have also focused our portfolio development on protecting clinical
therapeutic strategies that combine the use of the p53 gene with traditional
cancer therapies. In this regard, also arising out of our work with M.D.
Anderson Cancer Center, we have an exclusive license to one issued United States
patent,
44
<PAGE> 46
one allowed patent and two pending applications and corresponding international
applications, directed to cancer therapy using the p53 gene in combination with
DNA damaging agents such as conventional chemotherapy or radiotherapy. This
patent and applications concern the therapeutic application of the p53 gene
either before, during or after chemotherapy or radiotherapy. Our collaborator,
Aventis, has a United States application and corresponding international
applications directed to therapy using the p53 gene together with taxanes such
as taxol or taxotere. Furthermore, we have exclusively licensed a United States
patent application, and corresponding international applications, directed to
the use of the p53 gene in combination with surgical intervention in cancer
therapy.
Adenovirus Production, Purification and Formulation
Another focus of our research has involved the development of procedures
for the commercial scale production of our potential adenoviral-based gene
therapy products, including that of our potential adenoviral p53 product. In
this regard, we own a number of pending United States applications, and
corresponding international applications, directed to commercial scale processes
for producing adenoviral gene therapy compositions having a high level of
purity, as well as to storage-stable formulations. These applications include
procedures for preparing commercial quantities of recombinant adenoviruses for
gene therapy and include procedures applicable to the p53 gene, as well as any
of the other of our potential gene therapy products. With respect to one of
these applications, we have received a formal notice of allowability from the
PTO. Aventis also controls a United States application and corresponding
international applications directed to processes for the production of purified
adenoviruses, useful for gene therapy applications.
Other Tumor Suppressor Genes
We either own or have exclusively licensed rights in a number of other
patents and applications directed to the clinical application of various tumor
suppressor genes other than the p53 gene, including the p16, PTEN, mda-7, C-CAM,
BAK, FHIT and K-ras antisense genes. We have exclusively licensed or optioned
rights in two issued United States patents covering the use of the BAK and mda-7
gene, and have received formal notices of allowances from the PTO in patent
applications relating to the p16 and mda-7 genes.
Other Therapeutic, Composition and Process Technologies
We also own or have exclusively licensed a number of United States and
international patent applications on a range of additional technologies. These
include various applications relating to the p53 gene, combination therapy with
2-methoxyestradiol, antiproliferative factor technologies, retroviral delivery
systems, stimulation of anti-p53, screening and product assurance technologies,
as well as second generation p53 gene molecules. We have exclusively licensed a
number of United States and international applications directed to various
improved gene therapy vectors for use in gene therapy protocols, gene therapy
employing more than one therapeutic gene, as well as applications directed to
the delivery of therapeutic genes without the use of a vector, or "non-viral"
therapy. We also have exclusive rights in an issued United States patent and
corresponding international applications directed to a low toxicity analogue of
IL-2, so-called F42K.
Competitive Environment
We are aware of a number of issued patents and patent applications that
relate to gene therapy, the treatment of cancer and the use of the p53 and other
tumor suppressor genes. Schering-Plough, or its subsidiary Canji, controls
various United States patent applications and a European patent directed to
methods of supplying normal p53 function to a cell which has lost such function
and to adenoviral p53 compositions and methods. In addition, Canji controls an
issued United States patent and its international counterparts, including a
European patent, involving a method of treating mammalian cancer cells lacking
normal p53 protein by introducing a p53 gene into the cancer cell. Canji also
controls a European patent that is directed to the use of tumor suppressor genes
in cancer therapy, but which does not mention p53.
45
<PAGE> 47
While we believe that our potential products do not infringe any valid
claim of the Canji p53 patents, Canji or Schering Plough could assert a claim
against us. Furthermore, we may become subject to other patent infringement
claims or litigation arising out of pending applications, should they issue, or
become involved in potentially protracted interference proceedings declared by
the PTO, or become involved in similar proceedings in foreign patent offices, to
determine the priority of inventions or validity of an issued patent.
We have been notified by the PTO that two of our patent applications
directed to our adenoviral p53 technology and two other patent applications
directed to supporting technologies have been allowed, but that their issuance
is being suspended for the possible institution of an interference proceeding.
The PTO has not officially informed us who the other parties to these
interferences will be.
We are currently involved in an interference proceeding in order to
determine the first inventor, and thus the party that is entitled to a patent on
an invention relating to an adenovirus vector lacking adenoviral coding regions.
The other parties involved in the interference include University of Michigan,
New York University, and University of Pennsylvania. This technology is not used
in any of our products currently involved in clinical trials.
In another area, Canji controls a United States patent and corresponding
international applications, including a European counterpart, relating to the
purification of viral or adenoviral compositions. We believe that our
manufacturing process does not infringe any valid claims of this patent. Genzyme
controls a United States application and corresponding international
applications, including a European counterpart application, directed to the
purification of adenoviral compositions. The relevance of this application to
our activities is unclear due to the fact that prosecution of the United States
application remains secret.
GOVERNMENT REGULATION
The production and marketing of our proposed products and our 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 (the FDC Act), as amended, the
regulations promulgated under the FDC Act, 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
our products. Product development and approval within this regulatory framework
take a number of years and involve the expenditure of substantial resources.
The drug approval process. The steps required before our proposed products
may be marketed in the United States include preclinical testing, the submission
to the FDA of an IND application for clinical trials, clinical trials to
establish the safety and effectiveness of the drug, the submission to the FDA of
a BLA (for a biologic) or an NDA (for a drug) and the FDA approval of the BLA or
NDA prior to any commercial sale of the drug. Our products will be regulated as
biologics. In addition to obtaining FDA approval for each product, 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 current Good Manufacturing Practice regulations, CGMP.
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.
Preclinical testing. Preclinical testing includes 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 in compliance with
FDA Good Laboratory Practices, or GLP regulations. The results of the
preclinical tests are submitted to the FDA as part of an IND to be reviewed by
the FDA prior to the commencement of human clinical trials. Submission of an IND
may not result in FDA authorization to commence clinical trials, but the IND
becomes effective if not rejected by the FDA within 30 days. The IND must
indicate the results of previous testing, how, where and by whom the clinical
studies will be conducted, the
46
<PAGE> 48
chemical structure of the compound, the method by which it is believed to work
in the human body, any toxic effects of the compound found in the animal studies
and how the compound is manufactured.
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. All clinical trials must be
conducted in accordance with Good Clinical Practices, or GCP, regulations, 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 an independent
Institutional Review Board, or 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. Progress reports detailing the results of the clinical trials must
be submitted at least annually to the FDA.
Clinical trials are typically conducted in three sequential phases, but the
phases often overlap. In Phase I, the initial introduction of the drug into
subjects, the drug is tested for safety or adverse effects, dosage tolerance,
absorption, distribution, metabolism, excretion and clinical pharmacology. Phase
II involves studies in a limited patient population to determine the
effectiveness of the drug for specific, targeted indications, determine dosage
tolerance and optional dosage and 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.
Marketing applications. After the completion of all three clinical trial
phases, if the data indicate that the drug is safe and effective, a BLA or an
NDA is filed with the FDA for approval of the marketing and commercial shipment
of the drug. This marketing application must contain all of the information on
the drug gathered to that date, including data from the clinical trials. It is
often over 100,000 pages in length.
The FDA reviews all marketing applications submitted to it before it
accepts them for filing and may request additional information rather than
accepting one for filing. In such event, the application must be resubmitted
with the additional information and is again subject to review before filing.
Once the submission is accepted for filing, the FDA begins an in-depth review of
the BLA or NDA. Under the FDC Act, the FDA has 180 days in which to review it
and respond to the applicant. The review process is often significantly extended
by FDA requests for additional information or clarification of information
already provided in the submission. The FDA may refer the application to an
appropriate advisory committee, typically a panel of clinicians, for review,
evaluation and a recommendation as to whether the application should be
approved. However, the FDA is not bound by the recommendation of an advisory
committee. If FDA evaluations of the marketing application and the manufacturing
facilities are favorable, the FDA may issue either an approval letter or an
approvable letter. An approvable letter usually contains a number of conditions
that must be met in order to secure final approval of the application. When and
if those conditions have been met to the FDA's satisfaction, the FDA will issue
an approval letter, authorizing commercial marketing of the drug for certain
indications. Approvals may be withdrawn if compliance with regulatory standards
is not maintained or if problems occur following initial marketing. If the FDA's
evaluation of the submission or manufacturing facilities is not favorable, the
FDA may refuse to approve the BLA or NDA or issue a not approvable letter.
If the FDA approves the BLA or NDA, the drug becomes available for
physicians to prescribe. Periodic reports must be submitted to the FDA,
including descriptions of any adverse reactions reported. The FDA may request
additional studies, referred to as Phase IV studies, to evaluate long-term
effects. Phase IV clinical trials and post marketing studies may also be
conducted to explore new indications and to broaden the application and use of
the drug and its acceptance in the medical community.
"Off-label" use. Physicians may prescribe drugs for uses that are not
described in the product's labeling for uses that differ from those tested by us
and approved by the FDA. Such "off-label" uses are common across medical
specialties and may constitute the best treatment for many patients in various
circumstances. The FDA does not regulate the behavior of physicians in their
choice of treatments. The
47
<PAGE> 49
FDA does, however, restrict manufacturer's communications on the subject of
off-label use. Companies cannot actively promote FDA-approved drugs for
off-label uses, but a recent court decision now allows them to disseminate to
physicians articles published in peer-reviewed journals, like The New England
Journal of Medicine, that discuss off-label uses of approved products. We cannot
disseminate articles concerning drugs that have not been approved for any
indication.
Orphan Drug Act. The Orphan Drug Act provides incentives to manufacturers
to develop and market drugs for rare diseases and conditions affecting fewer
than 200,000 people in the United States. The first developer to receive FDA
Marketing Approval for an orphan drug is entitled to a seven-year exclusive
marketing period in the United States following approval for that product.
However, the FDA will allow the sale of a drug clinically superior to or
different from another approved orphan drug, although for the same indication,
during the seven-year exclusive marketing period.
We believe that certain of our potential products may qualify for orphan
drug designation. We cannot be sure that any of our potential products will
ultimately receive orphan drug designation, or that the benefits currently
provided by such a designation will not subsequently be amended or eliminated.
The Orphan Drug Act has been controversial, and 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. New legislation may be
introduced in the future that could adversely affect the availability or
attractiveness of orphan drug status for our potential products. Orphan drug
designation does not convey any advantage in, or shorten the duration of, the
regulatory review and approval process.
FDAMA. The Food and Drug Administration Modernization Act of 1997, the
FDAMA, was enacted, in part, to ensure the timely availability of safe and
effective drugs, biologics, and medical devices by expediting the FDA review
process for new products. FDAMA established a statutory program for the approval
of "fast track products." The fast track provisions essentially codify FDA's
Accelerated Approval regulations for drugs and biologics. A "fast track product"
is defined as a new drug or biologic intended for the treatment of a serious of
life-threatening condition that demonstrates the potential to address unmet
medical needs for such a condition. Under the new fast track program, the
sponsor of a new drug or biologic may request the FDA to designate the drug or
biologic as a "fast track product" at any time during the clinical development
of the product. FDAMA specifies that the FDA must determine if the product
qualifies for fast track designation within 60 days of receipt of the sponsor's
request. Approval of an NDA for a fast track product can be based on a clinical
endpoint or on a surrogate endpoint that is reasonably likely to predict
clinical benefit. Approval of a fast track product may be subject to (1) post-
approval studies to validate the surrogate endpoint or confirm the effect on the
clinical endpoint and (2) prior review of copies of all promotional material. If
a preliminary review of the clinical data suggests efficacy, the FDA may
initiate review of sections of an application for a "fast track product" before
the application is complete. This "rolling review" is available if the applicant
provides a schedule for submission of remaining information and pays applicable
user fees.
We may seek fast track designation to secure expedited review of
appropriate products. It is uncertain whether we will obtain fast track
designation. We cannot predict the ultimate effect, if any, of the new fast
track process on the timing or likelihood of FDA approval of any of our
potential products.
International. Steps similar to those in the United States must be
undertaken in virtually every other country comprising the market for our
products before any such product can be commercialized in those countries. The
approval procedure and the time required for approval vary from country to
country and may involve additional testing. We cannot be sure that approvals
will be granted on a timely basis, or at all. In addition, regulatory approval
of prices is required in most countries other than the United States. There can
be no assurance that the resulting prices would be sufficient to generate an
acceptable return to us.
COMPETITION
The biotechnology and pharmaceutical industries are subject to rapid and
intense technological change. We face, and will continue to face, competition in
the development and marketing of our product
48
<PAGE> 50
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. Developments by others may render our
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.
We are aware that Canji, Inc., a subsidiary of Schering-Plough Corporation, 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. We are also aware
that Onyx Pharmaceuticals, Inc. has initiated clinical studies of an
adenovirus-based therapy which targets cells that are mutant for p53. We also
compete with universities and other research institutions in the development of
products, technologies and processes. In many instances, we compete with other
commercial entities in acquiring products or technologies from universities and
other research institutions.
We expect 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. Our
competitive position also depends upon our 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 December 31, 1999, we employed approximately 56 persons engaged in
research and development, regulatory affairs, clinical affairs, manufacturing
and quality, finance, and corporate development activities. Our employees
include 12 holders of the Ph.D. or M.D. degree. Many of our employees have
extensive experience in the pharmaceutical and biotechnology industries.
In addition to our full-time staff, we provide financial support through
sponsored research agreements for approximately 25 research scientists and
technicians at M.D. Anderson Cancer Center who serve as investigators for
Introgen on clinical and preclinical research projects. We have also entered
into part-time consulting arrangements with several M.D. Anderson Cancer Center
scientists and clinicians.
Our sponsored research projects with M.D. Anderson Cancer Center 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 our technology and
products is further augmented by our collaborators at the numerous other
institutions where sponsored research work is performed.
FACILITIES
We lease from TMX Realty Corporation, our wholly owned subsidiary,
facilities in Houston, Texas, totaling approximately 42,000 square feet, in two
buildings: a 12,000 square foot, CGMP production facility designed to support
INGN 201 product launch, as well as support multiple vector manufacturing, and a
30,000 square foot building which contains our research and development
laboratories and administrative offices. We also have a stand-alone pilot
production facility where early stage clinical materials are produced. Our
corporate offices are located in Austin, Texas. We expect our current facilities
to satisfy our requirements for at least the next four years.
LEGAL PROCEEDINGS
We are involved from time to time in legal proceedings relating to claims
arising out of our operations in the ordinary course of business, including
actions relating to intellectual property rights. We do not
49
<PAGE> 51
believe that the outcome of any present litigation, other than our opposition of
three European patents owned by Canji discussed under "Risk Factors," will have
a significant effect on our business. You can read the discussion of our
opposition of these European patents under "Risk Factors."
SCIENTIFIC ADVISORY BOARD
We receive guidance on a broad range of scientific, clinical and technical
issues from our Scientific Advisory Board. Members of our 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 M.D. Anderson Cancer
Center. Dr. Roth was one of our founders and is our Chief Medical Advisor. Dr.
Roth is 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. He received his M.D. from The Johns
Hopkins University School of Medicine.
Carol L. Prives, Ph.D., is a professor of biology at Columbia University.
She is the Chair of the NIH Experimental Virology Study Section, a member of the
NCI Intramural Scientific Advisory Board, and a member of the Advisory Board of
the Dana-Farber Cancer Center in Boston. 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 D. Von Hoff, M.D., is the Director of the Arizona Cancer Center in
Tuscon, Arizona, and a professor of medicine in the Department of Medicine of
the University of Arizona. Dr. Von Hoff is the President of the American
Association for Cancer Research. Dr. Von Hoff is certified in medical oncology
by the American Board of Internal Medicine.
Elizabeth Grimm, Ph.D., is a professor of tumor biology at M.D. Anderson
Cancer Center. Dr. Grimm has served as Cancer Expert, Surgical Branch of the
NCI. She received her Ph.D. degree in microbiology from the University of
California, Los Angeles School of Medicine.
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.
50
<PAGE> 52
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The following table sets forth certain information regarding our executive
officers and directors as of February 1, 2000:
<TABLE>
<S> <C> <C>
NAME AGE POSITION
- ------------------------------------------------ -- ----------------------------------------------
<S> <C> <C>
President, Chief Executive Officer and
David G. Nance(3)............................... 48 Director
James W. Albrecht, Jr........................... 45 Chief Financial Officer
J. David Enloe, Jr.............................. 36 Vice President, Operations
Shawn L. Gallagher.............................. 38 Vice President, Product Development
James A. Merritt, M.D. ......................... 48 Vice President, Clinical Affairs
David L. Parker, Ph.D........................... 45 Vice President, Intellectual Property
John N. Kapoor, Ph.D.(3)........................ 56 Chairman of the Board
Mark B. Chandler, Ph.D.(1)(2)................... 46 Director
Francois Meyer, Ph.D.(1)(2)..................... 54 Director
Mahendra G. Shah, Ph.D.......................... 55 Director
</TABLE>
- ---------------
(1) Member of Audit Committee
(2) Member of Compensation Committee
(3) Member of Executive Committee
DAVID G. NANCE has served as a member of our Board of Directors and as our
President and Chief Executive Officer since Introgen's inception in June 1993.
From 1992 to 1996, Mr. Nance served as the Managing Partner of Texas Biomedical
Development Partners, the investment group that founded Introgen.
JAMES W. ALBRECHT, JR. joined Introgen in November 1994 as our Vice
President, Operations and Administration, and has served as our Chief Financial
Officer since September 1995. From 1993 to 1996, he operated a consulting
business providing chief financial officer services to the technology and real
estate industries. Mr. Albrecht was previously with Arthur Andersen LLP as an
accountant and is a Certified Public Accountant.
J. DAVID ENLOE, JR. joined Introgen in March 1995. He has served as General
Business Manager and Vice President, Administration, and is currently Vice
President, Operations. From 1989 to 1995, he held various positions at
Centrilift, a division of Baker Hughes, Inc., an energy services company,
including Region General Manager, Southeast Asia, and was with Arthur Andersen
LLP as an accountant prior to that time. Mr. Enloe is a Certified Public
Accountant.
SHAWN L. GALLAGHER joined Introgen in August 1996 as our Vice President,
Manufacturing, and is currently Vice President, Product Development. From 1995
to 1996, he served as Director of Operations at Magenta Corporation, a
biotechnology services company, now BioReliance Corp. From 1991 to 1995, he held
various manufacturing management positions at ImmunoGen, Inc., a biotechnology
company. Mr. Gallagher received a M.S. in chemical engineering from the
University of California at San Diego.
JAMES A. MERRITT, M.D. joined Introgen in February 1996 as our Vice
President, Clinical Affairs. From 1994 to 1995, he served as Vice President of
Medical Affairs at Viagene, Inc., a biotechnology company. From 1990 to 1994,
Dr. Merritt held various positions with IDEC Pharmaceuticals Corp., most
recently as Senior Director, Clinical Sciences. Dr. Merritt has served on the
editorial board of the journal, Anti-Cancer Drugs, since 1990. He received his
M.D. from the University of Vermont and is board certified in internal medicine
and medical oncology.
DAVID L. PARKER, PH.D. joined Introgen in March 1999 as our Vice President,
Intellectual Property. Since January 2000, Dr. Parker has been a partner with
the law firm Fulbright & Jaworski LLP. From 1992 to January 2000, he was a
shareholder of the patent law firm Arnold White & Durkee Professional
51
<PAGE> 53
Corporation and was previously an associate with that firm. Since 1997, Dr.
Parker has served as an adjunct professor at The University of Texas School of
Law. Dr. Parker received his Ph.D. in molecular pharmacology and molecular
biology from Baylor College of Medicine and his J.D. from The University of
Texas School of Law.
JOHN N. KAPOOR, PH.D. has served as our Chairman of the Board since
Introgen's inception in June 1993. In 1990, Dr. Kapoor founded EJ Financial
Enterprises, Inc., a healthcare investment company and is presently its Chairman
of the Board. He is also presently Chairman of the Board of Akorn, Inc.,
NeoPharm, Inc. and OptionCare, Inc. and is a director of Integrated Surgical
Systems, Inc. Dr. Kapoor received his Ph.D. in medicinal chemistry from the
State University of New York at Buffalo.
MARK B. CHANDLER, PH.D. has served as a member of our Board of Directors
since October 1994. In 1983, Dr. Chandler co-founded Inland Laboratories, Inc.,
a biotechnology company, and currently serves as its Chief Executive Officer. He
also serves as Chairman of the Board and Chief Executive Officer of Luminex
Corporation, a biomedical research and development company. Dr. Chandler holds a
Ph.D. in immunology from The University of Texas Southwestern Medical Center at
Dallas.
FRANCOIS MEYER, PH.D. has served as a member of our Board of Directors
since 1998. Since 1998, Dr. Meyer has served as Vice President, Research of
Aventis, a pharmaceutical company. From 1996 to 1997, he served as Vice
President, Discovery for Gencell, Aventis' gene and cell therapy division. From
1993 to 1996, Dr. Meyer was Vice President of the Gene/Cell Therapy Business of
Sandoz Ltd., now Novartis AG. Dr. Meyer received a Ph.D. in molecular biology
from the University of Zurich.
MAHENDRA G. SHAH, PH.D. has served as a member of our Board of Directors
since Introgen's inception in June 1993. From 1993 to 1999, Dr. Shah also served
as our Vice President, Corporate and Business Development. He currently provides
consulting services to Introgen pursuant to a consulting agreement with EJ
Financial Enterprises, Inc. See "Certain Transactions." From 1991 to the
present, he has served as Vice President, Corporate Development of EJ Financial
Enterprises, Inc., a healthcare investment company. Dr. Shah also presently
serves as the Chief Executive Officer and Chairman of the Board of Directors of
First Horizon Pharmaceutical Corporation. Dr. Shah received a Ph.D. in
industrial pharmacy from St. John's University.
John N. Kapoor, one of our directors and a principal stockholder, was
previously the chairman and president of Lyphomed Inc. Fujisawa Pharmaceutical
Co. Ltd. was a major stockholder of Lyphomed from the mid-1980s until 1990, at
which time Fujisawa completed a tender offer for the remaining shares of
Lyphomed, including the shares held by Dr. Kapoor. In 1992, Fujisawa filed suit
in federal district court in Illinois against Dr. Kapoor alleging that between
1980 and 1986, Lyphomed filed a large number of allegedly fraudulent new drug
applications with the FDA, and that Dr. Kapoor's failure to make certain
disclosures to Fujisawa constituted a violation of federal securities laws and
the Racketeer Influenced and Corrupt Organizations Act. Fujisawa also alleged
state law claims. Dr. Kapoor countersued, and in 1999, the litigation was
settled on terms mutually acceptable to the parties. The terms of the settlement
are subject to a confidentiality agreement.
Officers serve at the discretion of the Board of Directors. There are no
family relationships between any of our directors or executive officers of the
Company.
BOARD COMPOSITION
We currently have five directors. Upon completion of this offering, our
Board of Directors will be divided into three classes, each with staggered
three-year terms. As a result, only one class of directors will be elected at
each annual meeting of our stockholders, with the other classes continuing for
the remainder of their respective three-year terms.
Our class I directors, whose terms will expire at the 2000 annual meeting
of stockholders, are Mark B. Chandler, Ph.D. and Francois Meyer, Ph.D. Our class
II director, whose term will expire at the 2001 annual meeting of stockholders,
is Mahendra G. Shah, Ph.D. Our class III directors, whose terms will expire at
the 2002 annual meeting of stockholders, are John N. Kapoor, Ph.D. and David G.
Nance.
52
<PAGE> 54
We are parties to a stock purchase agreement with Aventis, pursuant to
which Aventis has purchased shares of our preferred stock. Under this agreement,
so long as Aventis continues to hold 15% of our outstanding common stock, we
must nominate a person designated by Aventis and reasonably acceptable to us for
election to our Board of Directors.
BOARD COMMITTEES
Our Board of Directors has established an audit committee, a compensation
committee and an Executive Committee.
Audit Committee
The audit committee makes recommendations to our Board of Directors
regarding the selection of independent auditors, reviews the scope of audit and
other services by our independent auditors, reviews the accounting principles
and auditing practices and procedures to be used for our financial statements
and reviews the results of those audits. The members of our audit committee are
Mark B. Chandler, Ph.D., John N. Kapoor, Ph.D., and Francois Meyer, Ph.D.
Compensation Committee
The compensation committee makes recommendations to our Board of Directors
regarding our stock plans and the compensation of officers. The members of the
compensation committee are Mark B. Chandler, Ph.D. and Francois Meyer, Ph.D.
Executive Committee
The executive committee acts on behalf of our Board of Directors to the
extent permitted under Delaware law. The members of our executive committee are
David G. Nance and John N. Kapoor, Ph.D.
DIRECTOR COMPENSATION
Our non-employee directors are reimbursed for expenses incurred in
connection with attending board and committee meetings but do not receive cash
compensation for their services as board or committee members. We have in the
past granted and will continue to grant non-employee directors options to
purchase our common stock pursuant to the terms of our stock plans.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN COMPENSATION
DECISIONS
None of the members of the compensation committee is currently, or has ever
been at any time since our formation, one of our officers or employees. No
member of the compensation committee serves as a member of the board of
directors or compensation committee of any entity that has one or more officers
serving as a member of our Board of Directors or compensation committee.
LIMITATION OF LIABILITY AND INDEMNIFICATION
Our certificate of incorporation limits the liability of our 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 for the following:
- any breach of their duty of loyalty to the corporation or its
stockholders;
- acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;
- unlawful payments of dividends or unlawful stock repurchases or
redemptions; or
- any transaction from which the director derived an improper personal
benefit.
53
<PAGE> 55
This limitation of liability does not apply to liabilities arising under
the federal securities laws and does not affect the availability of equitable
remedies such as injunctive relief or rescission. Our certificate of
incorporation and bylaws provide that we shall indemnify our directors and
executive officers and may indemnify our other officers and employees and other
agents to the fullest extent permitted by law. We believe that indemnification
under our bylaws covers at least negligence and gross negligence on the part of
indemnified parties. Our bylaws also permit us 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 would
permit indemnification.
We have entered into agreements to indemnify our directors, executive
officers and controller, in addition to the indemnification provided for in our
bylaws. These agreements, among other things, provide for indemnification of our
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 arising out of such person's
services as a director or executive officer of us, any of our subsidiaries or
any other company or enterprise to which the person provides services at our
request. We believe that these provisions and agreements are necessary to
attract and retain qualified persons as directors and executive officers.
EXECUTIVE COMPENSATION
The following table sets forth the compensation paid by us during the
fiscal year ended June 30, 1999, to our Chief Executive Officer and our four
other most highly compensated executive officers. The executive officers listed
in the table below are referred to as the Named Executive Officers.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
------------
ANNUAL COMPENSATION SECURITIES
------------------- UNDERLYING
NAME AND PRINCIPAL POSITION SALARY BONUS OPTIONS(#)
--------------------------- --------- ------ ------------
<S> <C> <C> <C>
David G. Nance.............................................. $265,494 $500 109,000
President and Chief Executive Officer
James A. Merritt, M.D....................................... 191,743 500 54,000
Vice President, Clinical Affairs
James W. Albrecht, Jr....................................... 175,869 500 66,000
Chief Financial Officer
Shawn L. Gallagher.......................................... 156,660 500 66,000
Vice President, Product Development
J. David Enloe, Jr.......................................... 138,960 500 12,000
Vice President, Operations
</TABLE>
54
<PAGE> 56
OPTION GRANTS IN YEAR ENDED JUNE 30, 1999
The following table sets forth information relating to stock options
granted during the fiscal year ended June 30, 1999 to the Named Executive
Officers. Also shown below is the potential realizable value over the terms of
the options (the period from the grant date to the expiration date) based on
assumed rates of stock appreciation of 5% and 10%, compounded annually from the
date the options were granted to their expiration dates based on the fair market
value of the common stock on the date of grant. These calculations are required
by the Securities and Exchange Commission and do not represent our estimate of
future stock price. Actual gains, if any, on stock option exercises will depend
on the future performance of our common stock. All options were granted under
our 1995 Stock Plan. We granted options to purchase a total of 844,650 shares of
common stock during fiscal 1999.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-------------------------
PERCENT OF POTENTIAL REALIZABLE
TOTAL VALUE AT ASSUMED
NUMBER OF OPTIONS ANNUAL RATES OF STOCK
SECURITIES GRANTED TO APPRECIATION FOR
UNDERLYING EMPLOYEES EXERCISE OPTION TERM
OPTIONS IN FISCAL PRICE PER EXPIRATION ----------------------
NAME GRANTED YEAR SHARE DATE 5% 10%
---- ------------ ---------- ------------ ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
David G. Nance............. 109,000 12.9% $ .83 9/2/08 $56,896 $144,186
James A. Merritt, M.D...... 54,000 6.4 .83 9/2/08 28,187 71,432
James W. Albrecht, Jr. .... 66,000 7.8 .83 9/2/08 34,451 87,305
Shawn L. Gallagher......... 66,000 7.8 .83 9/2/08 34,451 87,305
J. David Enloe, Jr. ....... 12,000 1.4 .83 9/2/08 6,264 15,874
</TABLE>
AGGREGATE OPTION EXERCISES DURING FISCAL YEAR ENDED JUNE 30, 1999
AND 1999 YEAR-END OPTION VALUES
The following table sets forth information for our Chief Executive Officer
and our Named Executive Officers during the fiscal year ended June 30, 1999,
relating to option exercises in that period and the number and value of
securities underlying exercisable and unexercisable options held at June 30,
1999. None of the Named Executive Officers exercised stock options in the year
ended June 30, 1999.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
OPTIONS AT JUNE 30, 1999 JUNE 30, 1999(1)
--------------------------- ---------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
David G. Nance............................... 96,000 97,000
James A. Merritt, M.D........................ 45,000 69,000
James W. Albrecht, Jr. ...................... 39,000 75,000
Shawn L. Gallagher........................... 24,000 90,000
J. David Enloe, Jr. ......................... 48,000 12,000
</TABLE>
- ---------------
(1) Value of unexercised in-the-money options are based on an assumed initial
public offering price of $ , without taking into account any taxes
that may be payable in connection with the transaction, multiplied by the
number of shares underlying the option, less the aggregate exercise price
payable for these shares.
EMPLOYEE BENEFIT PLANS
1995 Stock Plan and 2000 Stock Option Plan
Our 1995 Stock Plan was adopted by our Board of Directors in January 1995
and by our stockholders in April 1995. This plan provides for the grant of
incentive stock options to our employees and nonstatutory stock options and
stock purchase rights to our employees, directors and consultants. We have
reserved an aggregate of 2,000,000 shares of common stock for issuance under
this plan. As of
55
<PAGE> 57
December 31, 1999, options to purchase 1,507,352 shares of common stock were
outstanding, 124,683 shares had been issued pursuant to the exercise of options
and stock purchase rights, and 367,965 shares were available for future grant.
Our Board of Directors has determined that no further options will be granted
under the 1995 Stock Plan, although options granted under the 1995 Stock Plan
will remain outstanding in accordance with their terms.
Our 2000 Stock Option Plan was adopted by our Board of Directors in
February 2000, subject to stockholder approval. This plan provides for the grant
of incentive stock options to our employees and nonstatutory stock options and
stock purchase rights to our employees, directors and consultants. We have
initially reserved an aggregate of 3,000,000 shares of common stock for issuance
under this plan. All of these shares are available for future grant. The share
reserve will automatically be increased on the first day of each fiscal year
beginning on or after July 1, 2001 by an amount equal to the lesser of 1,000,000
shares, 5% of the outstanding shares on the date of the annual increase, or a
lesser amount determined by our Board of Directors.
The compensation committee of our Board of Directors administers our stock
plans and determines the terms of options granted, including the exercise price,
the number of shares subject to individual option awards and the vesting period
of options. The exercise price of nonstatutory options is determined by the
compensation committee. The exercise price of incentive stock options cannot be
lower than 100% of the fair market value of our common stock on the date of
grant and, in the case of incentive stock options granted to holders of shares
representing more than 10% of our voting power, not less than 110% of the fair
market value. The term of an incentive stock option cannot exceed 10 years, and
the term of an incentive stock option granted to a holder of more than 10% of
our voting power cannot exceed five years.
Options granted under our 1995 Stock Plan will accelerate and become fully
vested in the event we are acquired. Options granted under our 2000 Stock Option
Plan stock plans will accelerate and become fully vested in the event we are
acquired, unless the successor corporation assumes or substitutes other options
in their place. Our Board of Directors may not, without the adversely affected
optionee's prior written consent, amend, modify or terminate our stock plans if
the amendment, modification or termination would impair the rights of optionees.
Our 1995 Stock Plan and our 2000 Stock Option Plan will terminate in 2005 and
2010, respectively, unless terminated earlier by our Board of Directors.
2000 Employee Stock Purchase Plan
Our Board of Directors adopted our 2000 Employee Stock Purchase Plan in
February 2000, subject to stockholder approval. This plan provides our employees
with an opportunity to purchase our common stock through accumulated payroll
deductions.
A total of 300,000 shares of common stock has been initially reserved for
issuance under this plan. The share reserve will automatically be increased on
the first day of each fiscal year beginning on or after July 1, 2001, by an
amount equal to the lesser of 300,000 shares, 1.5% of the outstanding shares of
common stock on the date of the annual increase, or a lesser amount determined
by our Board of Directors.
The Board of Directors or a committee appointed by the board administers
the purchase plan. The board or its appointed committee has full and exclusive
authority to interpret the terms of the purchase plan and determine eligibility
for the purchase plan.
Employees are eligible to participate in the purchase plan if they are
customarily employed by us or any participating subsidiary for at least 20 hours
per week and more than five months in any calendar year. However, an employee
may not be granted an option to purchase stock under the purchase plan if such
employee:
- immediately after such grant, would own stock possessing five percent or
more of the total combined voting power or value of all classes of our
capital stock, or
- immediately after such grant, would have the right to purchase stock
under all of our employee stock purchase plans at a rate which exceeds
$25,000 worth of stock for each calendar year.
56
<PAGE> 58
The purchase plan, which is intended to qualify under Section 423 of the
United States Internal Revenue Code, contains consecutive sixth-month offering
periods. The offering periods generally start on the first trading day on or
after May 1 and November 1 of each year, except for the first such offering
period which will commence on the first trading day on or after the effective
date of this offering and will end on the last trading day on or before October
31, 2001.
The purchase plan permits participants to purchase common stock through
payroll deductions of up to 10% of the participant's "compensation."
Compensation is defined as the participant's base straight time gross earnings
and commissions and excludes payments for overtime, shift premium payments,
incentive compensation, incentive payments, bonuses and other compensation. The
maximum number of shares a participant may purchase during a single offering
period is 10,000 shares.
Amounts deducted and accumulated by the participant are used to purchase
shares of common stock at the end of each offering period. The price of stock
purchased under the purchase plan is 85% of the lower of the fair market value
of the common stock at the beginning or end of the offering period. If the fair
market value at the end of a purchase period is less than the fair market value
at the beginning of the offering period, participants will withdraw from the
current offering period following the exercise and will automatically re-enroll
in a new offering period. Participants may end their participation at any time
during an offering period, and they will be paid their payroll deductions to
date. Participation ends automatically upon termination of employment with us.
A participant may not transfer rights granted under the purchase plan other
than by will, the laws of descent and distribution or as otherwise provided
under the purchase plan.
The purchase plan provides that, if we merge with or into another
corporation or sell substantially all of our assets, a successor corporation may
assume or substitute for each outstanding purchase right. If the successor
corporation refuses to assume or substitute for the outstanding purchase rights,
the offering period then in progress will be shortened, and a new exercise date,
occurring before the proposed date of our merger or sale, will be set.
The purchase plan will terminate in 2010. However, the Board of Directors
has the authority to amend or terminate the purchase plan, except that, subject
to specified exceptions, no such action may adversely affect any outstanding
rights to purchase stock under the purchase plan.
401(k) Plan
In July 1997, our Board of Directors adopted a Retirement Savings and
Investment Plan covering our full-time employees located in the United States.
This plan is intended to qualify under Section 401(k) of the United States
Internal Revenue Code, so that contributions to this plan by employees, and the
investment earnings thereon, are not taxable to employees until they are
withdrawn. Under this plan, employees may elect to reduce their current
compensation by up to the lesser of 20% of their annual compensation or the
statutorily prescribed annual limit ($10,500 in 2000) and to have the amount of
such reduction contributed to this plan. We do not currently make additional
matching contributions on behalf of plan participants.
CHANGE OF CONTROL AGREEMENTS
In August 1996, our Board of Directors approved a resolution that provided
that all of the options granted under our 1995 Stock Plan shall immediately vest
and become exercisable upon the merger or reorganization of our Company with or
into another corporation, entity or person, or the sale of all or substantially
all our assets to another corporation, entity or person, unless after such
merger, reorganization or sale of assets, at least 51% of the capital stock or
equity interest in such other corporation, entity or person are owned by persons
who owned in the aggregate 51% of our capital stock immediately prior to such
merger, reorganization or sale of assets.
57
<PAGE> 59
EMPLOYMENT AGREEMENTS
We have an employment agreement with David G. Nance, under which he serves
as our President and Chief Executive Officer. Under this agreement, upon the
closing of this offering, Mr. Nance will receive an aggregate base salary at the
rate of $275,000 per annum until July 31, 2000. His base salary will be raised
10% effective August 1, 2000, by an additional 10% effective August 1, 2001, and
by an additional 10% effective August 1, 2002. Under this agreement, Mr. Nance
will be granted options to purchase 50,000 shares of our common stock pursuant
to our 2000 Stock Plan on August 1, 2000, August 1, 2001, and August 1, 2002.
Such options will be exercisable at a price determined by our plan
administrator, and will be fully vested when granted. This agreement continues
through July 31, 2003 and renews automatically for one year terms until either
party gives timely written notice of non-renewal.
58
<PAGE> 60
CERTAIN TRANSACTIONS
PREFERRED STOCK FINANCINGS
We have issued shares of our preferred stock in private placement
transactions as follows: In August 1994, we issued a total of 3,011,423 shares
of Series A preferred stock at a purchase price of $0.175 per share; from
October 1994 to June 1999, we issued a total of 1,757,063 shares of Series B
preferred stock at purchases prices ranging from $5.72 to $10.67 per share; from
March 1996 to June 1996, we issued a total of 551,410 shares of Series C
preferred stock at a purchase price of $8.65 per share, and in October 1997, we
issued a total of 1,100,000 shares of Series D preferred stock at a purchase
price of $10.00 per share. These shares convert into 7,703,866 shares of our
common stock.
In August 1994, David G. Nance, our President and Chief Executive Officer
and one of our directors and a beneficial stockholder, and John N. Kapoor,
Ph.D., one of our directors and a beneficial stockholder, purchased shares of
our Series A preferred stock at a price of $0.175 per share. From October 1994
to June 1999, Rhone-Poulenc Rorer International (Holdings) Inc. purchased a
total of 1,757,063 shares of our Series B preferred stock at purchase prices
ranging from $5.72 to $10.67 per share. Mr. Nance beneficially owns 887,312
shares of Series A preferred stock, which convert into 1,064,773 shares of our
common stock, and Dr. Kapoor beneficially owns 1,814,040 shares of Series A
preferred stock, which convert into 2,176,846 shares of our common stock. See
"Principal Stockholders" for more detail on the shares beneficially owned by
these stockholders. Rhone-Poulenc Rorer International (Holdings) Inc. owns
1,757,063 shares of Series B preferred stock, which convert into 2,108,474
shares of our common stock, as well as 310,071 shares of Series A preferred
stock which it purchased from Mr. Nance and Dr. Kapoor and which convert into
372,084 share of our common stock.
Holders of our preferred stock are entitled to registration rights with
respect to the shares of common stock that they will hold following this
offering. See "Description of Capital Stock--Registration Rights."
CONSULTING AGREEMENTS
Dr. Jack A. Roth beneficially owns 603,957 shares of our common stock. Dr.
Roth is also Chairman of the Department of Thoracic and Cardiovascular Surgery
at M.D. Anderson Cancer Center, with which we have a licensing agreement and
several research agreements. We have a consulting agreement with Dr. Roth under
which he provides his technical knowledge, expertise and assistance in the
development and commercialization of our products and abides by confidentiality
and noncompetition provisions. For these services, we pay Dr. Roth $150,000 per
year with such compensation increasing annually starting October 1, 2001 in
varying increments until it reaches $200,000 per year, subject to adjustment for
inflation. This agreement continues to September 2009, but we may terminate this
agreement upon one year's advance notice.
Mahendra G. Shah, Ph.D., one of our directors, is an employee of EJ
Financial Enterprises, Inc., one of our stockholders. John N. Kapoor, Ph.D.,
another of our directors, is the sole shareholder of EJ Financial Enterprises.
We have a consulting agreement with EJ Financial Enterprises pursuant to which
EJ Financial Enterprises provides the services of Dr. Shah to us for $175,000
per year. The agreement provides that Dr. Shah will assist with business
development, license negotiation, market analysis and general corporate
development. This agreement is automatically renewable each July 1 for one-year
terms, unless either party gives 30 days' advance notice of termination.
OTHER ARRANGEMENTS
The Board of Regents of The University of Texas System is one of our
stockholders. The Board of Regents of The University of Texas System, M.D.
Anderson Cancer Center and Introgen are parties to the Patent and Technology
License Agreement and several sponsored research agreements. For information on
this relationship, see "Business of Introgen -- Collaborative Agreements and
Licensing Agreements -- The University of Texas M.D. Anderson Cancer Center."
59
<PAGE> 61
We paid Arnold White & Durkee legal fees in the amounts of $463,189,
$774,135 and $613,886 in the fiscal years ended June 30, 1997, 1998 and 1999.
David L. Parker, our Vice President, Intellectual Property, was a shareholder of
Arnold White & Durkee during that period of time. Since January 2000, Dr. Parker
has been a partner with the law firm Fulbright & Jaworski LLP, which provides
legal services to us.
Francois Meyer, Ph.D, one of our directors, is an employee of Aventis,
which is a holder of more than 5% of our outstanding stock. We have several
agreements with Aventis, including a stock purchase agreement pursuant to which
Aventis has purchased over $14 million of our Series B preferred stock. Under
this agreement, so long as Aventis continues to hold 15% of our outstanding
common stock, we must nominate a person designated by Aventis and reasonably
acceptable to us for election to our Board of Directors and include a person
designated by Aventis and reasonably acceptable to us on our Scientific Advisory
Board.
POLICY REGARDING TRANSACTIONS WITH AFFILIATES
We believe the foregoing transactions were in our best interests. It is our
policy that future transactions with affiliates, including any loans we make to
our officers, directors, principal stockholders or other affiliates will be on
terms no less favorable to us than we could have obtained from unaffiliated
third parties. These transactions will be approved by a majority of our Board of
Directors, including a majority of the independent and disinterested members,
or, if required by law, a majority of our disinterested stockholders.
60
<PAGE> 62
PRINCIPAL STOCKHOLDERS
The following table sets forth information regarding the beneficial
ownership of our common stock, as of December 31, 1999, by the following
individuals or groups:
- each person, or group of affiliated persons, known to us to own
beneficially more than 5% of our outstanding common stock;
- our Chief Executive Officer and each of our Named Executive Officers;
- each of our directors; and
- all of our directors and executive officers as a group.
Except as otherwise noted, and subject to applicable community property
laws, to our knowledge, the persons named in this table have sole voting and
investing power for all of the shares of common stock held by them.
This table lists applicable percentage ownership based on 10,271,909 shares
of common stock outstanding as of December 31, 1999, as adjusted to reflect the
conversion of all outstanding shares of preferred stock into 7,703,866 shares of
common stock upon the closing of this offering, and also lists the applicable
percentage ownership based on shares of common stock outstanding after the
completion of this offering. Options to purchase shares of our common stock that
are exercisable within 60 days of December 31, 1999 are deemed to be
beneficially owned by the persons holding these options for the purpose of
computing percentage ownership of that person, but are not treated as
outstanding for the purpose of computing any other person's ownership
percentage.
Unless otherwise indicated, the address for each stockholder on this table
is c/o Introgen Therapeutics, Inc., 301 Congress Avenue, Suite 1850, Austin,
Texas 78701.
<TABLE>
<CAPTION>
PERCENT BENEFICIALLY OWNED
SHARES ---------------------------
BENEFICIALLY BEFORE AFTER
BENEFICIAL OWNER OWNED THE OFFERING THE OFFERING
---------------- ------------ ------------ ------------
<S> <C> <C> <C>
Rhone-Poulenc Rorer International (Holdings) Inc. ......... 2,480,558 24.1% %
Delaware Corporate Center I
Suite 114
1 Righter Parkway
Wilmington, DE 19803
John N. Kapoor, Ph.D.(1)................................... 2,212,846 21.5
225 Deerpath, #250
Lake Forest, IL 60045
David G. Nance(2).......................................... 2,023,885 19.5
The Board of Regents of The University of Texas
System(3)................................................ 748,749 7.3
201 West 7th Street
Austin, TX 78701.........................................
Jack A. Roth, M.D.(4)...................................... 724,749 7.1
2324 Bolsover
Houston, TX 77005
Nomura International PLC................................... 595,176 5.8
Nomura House
1 St. Martin's-le-Grand
London ED1A 4NP
England
Mahendra G. Shah, Ph.D.(5)................................. 200,881 1.9
James A. Merritt, M.D.(6).................................. 73,500 *
James W. Albrecht, Jr.(7).................................. 65,500 *
Shawn L. Gallagher(8)...................................... 52,500 *
</TABLE>
61
<PAGE> 63
<TABLE>
<CAPTION>
PERCENT BENEFICIALLY OWNED
SHARES ---------------------------
BENEFICIALLY BEFORE AFTER
BENEFICIAL OWNER OWNED THE OFFERING THE OFFERING
---------------- ------------ ------------ ------------
<S> <C> <C> <C>
J. David Enloe, Jr.(9)..................................... 51,000 *
Mark B. Chandler(10)....................................... 30,000 *
Francois Meyer(11)......................................... 6,000 *
All directors and executive officers as a group (10
people)(12).............................................. 4,627,731 42.8
</TABLE>
- ---------------
* Less than 1% of the outstanding shares of common stock.
(1) Consists of 224,528 shares held by EJ Financial Enterprises, Inc.,
1,120,066 shares held by EJ Financial Investments IV, L.P., 832,252 shares
held by EJ Financial Investments VI, L.P., and 36,000 shares held by Dr.
Kapoor subject to stock options that are exercisable within 60 days of
December 31, 1999. EJ Financial Investments IV, L.P. and EJ Financial
Investments, VI, L.P. are partnerships controlled by their general partner,
EJ Financial Enterprises. Dr. Kapoor is President of EJ Financial
Enterprises. Dr. Kapoor disclaims beneficial ownership of the shares held
by EJ Financial Enterprises, EJ Financial Investments IV, L.P. and EJ
Financial Investment VI, L.P.
(2) Consists of 521,882 shares held by David G. Nance, trustee, 841,862 shares
held by Developtech Resources Corporation, 11,331 shares held by Domecq
Technologies, Inc., 531,560 shares held by Debouchement, Ltd., and 117,250
shares held by Mr. Nance subject to stock options that are exercisable
within 60 days of December 31, 1999. Mr. Nance is President and Chief
Executive Officer of Developtech Resources Corporation, Domecq
Technologies, Inc., and Debouchement, Ltd. Mr. Nance holds the right to
vote for each entity and has dispositive control over the shares.
(3) Includes 24,000 shares subject to stock options that are exercisable within
60 days of December 31, 1999.
(4) Includes 362,374 shares held by Roth 1994 Investment Trusts. Dr. Roth holds
the right to vote for each entity and has dispositive control over the
shares.
(5) Consists of 100,500 shares subject to stock options that are exercisable
within 60 days of December 31, 1999 and an option to purchase from EJ
Financial Enterprises, Inc. a total of 100,381 shares of our common stock
owned by EJ Financial Enterprises.
(6) Consists of 73,500 shares subject to stock options that are exercisable
within 60 days of December 31, 1999.
(7) Includes 64,500 shares subject to stock options that are exercisable within
60 days of December 31, 1999.
(8) Consists of 52,500 shares subject to stock options that are exercisable
within 60 days of December 31, 1999.
(9) Consists of 51,000 shares subject to stock options that are exercisable
within 60 days of December 31, 1999.
(10) Consists of 30,000 shares subject to stock options that are exercisable
within 60 days of December 31, 1999.
(11) Consists of 6,000 shares subject to stock options that are exercisable
within 60 days of December 31, 1999.
(12) Consists of shares described in the notes above, as applicable to our
directors and current executive officers.
62
<PAGE> 64
DESCRIPTION OF CAPITAL STOCK
GENERAL
Our Restated Certificate of Incorporation, which will become effective upon
the closing of this offering, authorizes the issuance of 50,000,000 shares of
common stock, $0.001 par value, and authorizes the issuance of 5,000,000 shares
of undesignated preferred stock, $0.001 par value. From time to time, our Board
of Directors may establish the rights and preferences of the undesignated
preferred stock.
As of December 31, 1999, 10,271,909 shares of common stock were issued and
outstanding, assuming the conversion of all outstanding shares of preferred
stock, and held by approximately 125 stockholders.
Immediately after the closing of this offering, we will have shares of
common stock outstanding, assuming no exercise of the options to acquire
1,507,352 additional shares of common stock or the warrants to purchase 114,250
shares of common stock that were outstanding as of December 31, 1999.
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 the
dividends, if any, that are declared from time to time by the Board of Directors
out of funds legally available for that purpose. See "Dividend Policy." In the
event of a liquidation, dissolution or winding up of Introgen, the holders of
common stock are entitled to share in our assets remaining after the payment of
liabilities and the satisfaction of any liquidation preference granted to the
holders of any outstanding shares of preferred stock. Holders of our common
stock have no preemptive or conversion rights or other subscription rights.
There are no redemption or sinking fund provisions applicable to our common
stock. All outstanding shares of our common stock are fully paid and
nonassessable. The rights, preferences and privileges of the holders of our
common stock are subject to, and may be adversely affected by, the rights of the
holders of shares of any series of our preferred stock that we may designate in
the future.
PREFERRED STOCK
The Board of Directors has the authority, without action by the
stockholders, to designate and issue preferred stock in one or more series and
to designate the rights, preferences and privileges of each series, which may be
greater than the rights of our common stock. It is not possible to state the
actual effect of the issuance of any shares of preferred stock upon the rights
of holders of our common stock until the Board of Directors determines the
specific rights of the holders of this preferred stock. However, the effects
might include, among other things:
- restricting dividends on our common stock;
- diluting the voting power of our common stock;
- impairing the liquidation rights of our common stock; or
- delaying or preventing a change in control of Introgen without further
action by the stockholders.
Upon the closing of this offering, no shares of preferred stock will be
outstanding, and we have no present plans to issue any shares of preferred
stock.
WARRANTS
As of December 31, 1999, the Company has two outstanding warrants to
purchase an aggregate of 102,250 shares of common stock at a weighted average
exercise price of $7.93 per share. These warrants are currently exercisable and
will expire on March 31, 2001. The Company also has one outstanding warrant to
purchase an aggregate of 12,000 shares of common stock at an exercise price of
$0.725 per share. This warrant is currently exercisable and will expire on
August 31, 2001.
63
<PAGE> 65
REGISTRATION RIGHTS
Demand Registration
According to the terms of agreements between us and holders of our Series
A, Series B, Series C and Series D Preferred Stock, beginning 180 days after the
closing of this offering, the holders of 7,703,866 shares of common stock will
have the right to require us to register their shares with the Securities and
Exchange Commission so that those shares may be resold to the public. To demand
such registration, holders who together hold an aggregate of at least 50% of the
shares having such registration rights must request that the registration
statement register shares for an aggregate offering price of at least
$10,000,000, net of underwriting discounts and commissions. We are not required
to effect more than two demand registrations. We may defer the filing of a
demand registration once in any twelve-month period, for a period up to 90 days
with respect to a request for registration by holders of our common stock issued
upon conversion of Series A, Series B, and Series C Preferred Stock and up to
120 days with respect to a request for registration by holders of our common
stock issued upon conversion of our Series D Preferred Stock.
Piggyback Registration
In addition, if we register in an underwritten offering any securities for
public sale, other than a registration relating solely to employee benefit
plans, a registration relating solely to a Rule 145 transaction, or any
registration on any registration form that does not permit secondary sales,
holders of demand registration rights will have the right to include their
shares in the registration statement.
Form S-3 Registration
At any time after we become eligible to file a registration statement on
Form S-3 or any comparable or successor form, holders of shares of common stock
having demand and piggyback registration rights may require us to file Form S-3
registrations, if the aggregate offering proceeds, net of underwriting discounts
and commissions, are at least $1,000,000. We may defer one request in any
twelve-month period for a period of up to 120 days.
The registration rights are subject to conditions and limitations,
including the right of the underwriters of an offering to limit the number of
shares of common stock to be included in the registration. We are generally
required to bear the expenses of all registrations, except underwriting
discounts and commissions. However, we will not pay for any expenses of any
demand registration if the request is subsequently withdrawn by the holders
requesting such registration, unless a majority of the holders of registration
rights agree to forfeit the right to one demand registration. The stockholders
rights agreement also contains our commitment to indemnify the holders of
registration rights for losses attributable to statements or omissions by us
incurred in connection with the registrations under the agreement. The
registration rights terminate 6 years from the closing of this offering.
EFFECT OF CERTAIN PROVISIONS OF OUR CERTIFICATE OF INCORPORATION AND BYLAWS, AND
THE DELAWARE ANTI-TAKEOVER LAW
Provisions of Delaware law and our certificate of incorporation and bylaws
could make the acquisition of Introgen and the removal of incumbent officers and
directors more difficult. These provisions, summarized below, are expected to
discourage certain types of coercive takeover practices and inadequate takeover
bids. These provisions are also designed to encourage persons seeking to acquire
control of Introgen to negotiate first with our board. We believe that the
benefits of increased protection of our ability to negotiate with the proponent
of an unfriendly or unsolicited proposal to acquire or restructure Introgen
outweigh the disadvantages of discouraging these proposals because negotiation
of any proposals of this type could result in an improvement of their terms.
Election and Removal of Directors
Our Board of Directors is divided into three classes. The directors in each
class will serve for a three-year term, with our stockholders electing one class
each year. For a more detailed description of this system,
64
<PAGE> 66
see "Management--Board Composition." This system of electing and removing
directors may tend to discourage a third party from making a tender offer or
otherwise attempting to obtain control of Introgen, because it generally makes
it more difficult for stockholders to replace a majority of the directors.
Stockholder Meetings
Under our bylaws, only the Board of Directors, the chairman of the board,
the chief executive officer or the president may call special meetings of
stockholders.
Requirements for Advance Notification of Stockholder Nominations and Proposals
Our bylaws establish advance notice procedures for stockholder proposals
and for the nomination of candidates for election as directors, other than
nominations made by or at the direction of the Board of Directors or a committee
of the board.
Delaware Anti-takeover Law
Introgen is subject to Section 203 of the Delaware General Corporation Law,
an anti-takeover law. In general, Section 203 prohibits a publicly held Delaware
corporation from engaging in a business combination with an interested
stockholder for a period of three years following the date the person became an
interested stockholder, unless the business combination or the transaction in
which the person became an interested stockholder is approved in the manner
specified in Section 203. Generally, a business combination includes a merger,
asset or stock sale, or other transaction resulting in a financial benefit to
the interested stockholder. Generally, an "interested stockholder" is a person
who, together with affiliates and associates, owns or within three years prior
to the determination of interested stockholder status did own 15% or more of a
corporation's voting stock. The existence of this provision may have an
antitakeover effect by discouraging takeover attempts not approved in advance by
our Board of Directors but which could result in a premium over the market price
for the shares of common stock held by stockholders.
Elimination of Stockholder Action by Written Consent
Our certificate of incorporation eliminates the right of stockholders to
act by written consent without a meeting.
No Cumulative Voting
Our certificate of incorporation and bylaws do not provide for cumulative
voting in the election of directors.
Undesignated Preferred Stock
The authorization of undesignated preferred stock makes it possible for our
Board of Directors to issue preferred stock with voting or other rights or
preferences that could impede the success of any attempt to change control of
Introgen. These and other provisions may have the effect of deterring hostile
takeovers or delaying changes in control or management of Introgen.
Amendment of Charter Provisions
The amendment of any of the above provisions of our certificate of
incorporation and bylaws would require approval by holders of at least 66 2/3%
of our outstanding common stock.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for our common stock is Norwest Bank
Minnesota, N.A.
LISTING
We have applied to list our common stock on The Nasdaq Stock Market's
National Market under the symbol "INGN."
65
<PAGE> 67
SHARES ELIGIBLE FOR FUTURE SALE
Prior to this offering, there has been no market for our common stock, and
we cannot assure you that a significant public market for the common stock will
develop or be sustained after this offering. Future sales of substantial amounts
of common stock, including shares issued upon exercise of outstanding options
and warrants, in the public market following this offering could adversely
affect market prices prevailing from time to time and could impair our ability
to raise capital through the sale of our equity securities. As described below,
shares currently outstanding will be available for sale immediately after this
offering.
SALES OF RESTRICTED SECURITIES
Upon completion of this offering, we will have outstanding shares of
common stock, based upon shares outstanding as of December 31, 1999, assuming no
exercise of the underwriters' over-allotment option and no exercise of
outstanding options or warrants. Of these shares, the shares sold in this
offering will be freely tradable without restriction under the Securities Act,
except for any shares purchased by our "affiliates" as defined in Rule 144 under
the Securities Act. The 10,271,909 remaining shares of common stock held by
existing stockholders are "restricted shares" as defined in Rule 144. Over %
of these restricted shares are subject to lock-up agreements providing that the
stockholder will not offer to sell, contract to sell or otherwise sell, dispose
of, loan, pledge or grant any rights with respect to any shares of common stock
owned as of the date of this prospectus or acquired directly from us by the
stockholder or with respect to which they have or may acquire the power of
disposition for a period of 180 days after the date of this prospectus without
the prior written consent of SG Cowen Securities Corporation. As a result of
these lock-up agreements, notwithstanding possible earlier eligibility for sale
under the provisions of Rules 144, 144(k)and 701, none of the shares subject to
lock-up agreements will be resellable until 181 days after the date of this
prospectus. SG Cowen Securities Corporation may, in its sole discretion, and at
any time without notice, release all or any portion of the restricted shares
subject to lock-up agreements.
Beginning 181 days after the date of this prospectus, approximately
10,128,709 restricted shares will be eligible for sale in the public market. All
of these shares are subject to volume limitations under Rule 144, except
3,042,081 shares eligible for sale under Rule 144(k) and 905,351 shares eligible
for sale under Rule 701.
In addition, as of December 31, 1999, there were outstanding warrants to
purchase 114,250 shares of common stock.
Rule 144
In general, under Rule 144, as currently in effect, beginning 90 days after
the date of this prospectus, a person who has beneficially owned restricted
shares for at least one year, including the holding period of any prior owner
except an affiliate, would be entitled to sell within any three-month period a
number of shares that does not exceed the greater of:
- 1.0% of the number of shares of common stock then outstanding, which will
equal approximately shares immediately after this offering; or
- the average weekly trading volume of the common stock 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 manner of sale provisions
and notice requirements and to the availability of current public information
about us. Under Rule 144(k), a person who is not deemed to have been an
affiliate of us at any time during the three months preceding a sale, and who
has beneficially owned the shares proposed to be sold for at least two years,
including the holding period of any prior owner except an affiliate, is entitled
to sell those shares without complying with the manner of sale, public
information, volume limitation or notice provisions of Rule 144.
66
<PAGE> 68
Rule 701
Rule 701, as currently in effect, permits resales of shares in reliance
upon Rule 144 but without compliance with certain restrictions of Rule 144. Any
employee, officer or director of or consultant to us who purchased shares
pursuant to a written compensatory plan or contract may be entitled to rely on
the resale provisions of Rule 701. Rule 701 permits affiliates to sell their
Rule 701 shares under Rule 144 without complying with the holding period
requirements of Rule 144. Rule 701 further provides that non-affiliates may sell
their Rule 701 shares in reliance on Rule 144 without having to comply with the
holding period, public information, volume limitation or notice provisions of
Rule 144. All holders of Rule 701 shares are required to wait until 90 days
after the date of this prospectus before selling their Rule 701 shares. However,
certain Rule 701 shares are subject to lock-up agreements and will only become
eligible for sale at the earlier of the expiration of the 180-day lock-up
agreements or the receipt of the written consent of SG Cowen Securities
Corporation more than 90 days after the date of this prospectus.
After this offering, we intend to file a registration statement on Form S-8
registering shares of common stock subject to outstanding options or reserved
for future issuance under our employee stock plans. Any shares of common stock
issued upon exercise of outstanding vested options or issued pursuant to our
employee stock purchase plan, other than common stock issued to our affiliates
or subject to lock-up agreements, will be available for immediate resale in the
open market following the effectiveness of such registration statement.
LOCK-UP AGREEMENTS
Our directors, executive officers, stockholders holding an aggregate of
shares, holders of options to purchase shares of common stock and
holders of warrants to purchase shares of common stock, have agreed that for
a period of 180 days following the date of this prospectus, without the prior
written consent of SG Cowen Securities Corporation, to not:
- directly or indirectly, offer, sell, assign, transfer, encumber, pledge,
contract to sell, sell any option or contract to purchase, purchase any
option or contract to sell, grant any option, right or warrant to
purchase, lend or otherwise dispose of, other than by operation of law,
any shares of common stock or any securities convertible into or
exercisable or exchangeable for common stock (including, without
limitation, common stock which may be deemed to be beneficially owned in
accordance with the rules and regulations promulgated under the
Securities Act), whether any such transaction described above is to be
settled by delivery of common stock or such other securities, in cash or
otherwise; or
- enter into any swap or other arrangement that transfers to another, in
whole or in part, any of the economic consequences of ownership of common
stock, whether any such transaction described above is to be settled by
delivery of common stock or such other securities, in cash or otherwise.
67
<PAGE> 69
UNDERWRITING
Subject to the terms and conditions of the underwriting agreement dated
, 2000, the underwriters named below, through their representatives
SG Cowen Securities Corporation and Prudential Securities Incorporated, have
severally agreed to purchase from us the number of shares of common stock set
forth opposite their names at the public offering price less the underwriting
discounts and commissions set forth on the cover page of this prospectus.
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITERS SHARES
------------ ---------
<S> <C>
SG Cowen Securities Corporation.............................
Prudential Securities Incorporated..........................
---------
Total.............................................
=========
</TABLE>
The underwriting agreement provides that the obligations of the
underwriters are conditional and may be terminated at their discretion based on
their assessment of the state of the financial markets. The obligations of the
underwriters may also be terminated upon the occurrence of other events
specified in the underwriting agreement. The underwriters are severally
committed to purchase all of the common stock offered by us if any shares are
purchased, other than those covered by the over-allotment option described
below.
At our request, the underwriters have reserved up to 5% of the shares of
common stock for sale at the initial public offering price to our employees,
friends and family members of our employees and employees of companies with
which we do business. The number of shares available for sale to the general
public will be reduced to the extent that any reserved shares are purchased. Any
reserved shares which are not so purchased will be offered by the underwriters
to the general public on the same basis as the shares sold hereby.
The underwriters propose to offer the common stock directly to the public
at the public offering price set forth on the cover page of this prospectus. The
underwriters may offer the common stock to securities dealers at that price less
a concession not in excess of $ per share. Securities dealers may reallow a
concession not in excess of $ per share to other dealers. After the shares
of the common stock are released for sale to the public, the underwriters may
vary the offering price and other selling terms from time to time.
We have granted to the underwriters an option to purchase up to an
aggregate of additional shares of common stock at the public offering
price set forth on the cover of this prospectus to cover over-allotments, if
any. The option is exercisable for a period of 30 days. If the underwriters
exercise the over-allotment option, the underwriters have severally agreed to
purchase shares in approximately the same proportion as shown in the tables
above.
The following table shows the per share and total public offering price,
the underwriting discount to be paid by us to the underwriters and the proceeds
from the sale of shares to the underwriters before our expenses. This
information is presented assuming either no exercise or full exercise by the
underwriters of their over-allotment option.
<TABLE>
<CAPTION>
WITHOUT WITH
PER SHARE OPTION OPTION
--------- ------- ------
<S> <C> <C> <C>
Public offering price.....................................
Underwriting discount.....................................
Proceeds, before expenses, to Introgen....................
</TABLE>
We have agreed to indemnify the underwriters against certain liabilities,
including liabilities under the Securities Act, and to contribute to payments
that the underwriters may be required to make in respect of those liabilities.
68
<PAGE> 70
Our directors, executive officers, stockholders holding an aggregate of
shares, holders of options to purchase shares of common
stock and holders of warrants to purchase shares of common stock have
agreed that for a period of 180 days following the date of this prospectus,
without the prior written consent of SG Cowen Securities Corporation, not to
directly or indirectly, offer, sell, assign, transfer, pledge, contract to sell,
or otherwise dispose of, other than by operation of law, any shares of common
stock or any securities convertible into or exercisable or exchangeable for
common stock, including, without limitation, common stock which may be deemed to
be beneficially owned in accordance with rules and regulations promulgated under
the Securities Act.
The representatives may engage in over-allotment, stabilizing transactions,
syndicate covering transactions and penalty bids in accordance with Regulation M
under the Securities Exchange Act of 1934. Over-allotment involves syndicate
sales in excess of the offering size, which creates a syndicate short position.
Stabilizing transactions permit bids to purchase the underlying security so long
as the stabilizing bids do not exceed a specified maximum. Syndicate covering
transactions involve purchases of the common stock in the open market after the
distribution has been completed in order to cover syndicate short positions.
Penalty bids permit the representatives to reclaim a selling concession from a
syndicate member when the common stock originally sold by such syndicate member
is purchased in a syndicate covering transaction to cover syndicate short
positions. These stabilizing transactions, syndicate covering transactions and
penalty bids may cause the price of the common stock to be higher than it would
otherwise be in the absence of these transactions. These transactions may be
effected on the Nasdaq National Market or otherwise and, if commenced, may be
discontinued at any time.
The underwriters have advised us that they do not intend to confirm sales
in excess of 5% of the common stock offered hereby to any account over which
they exercise discretionary authority.
Prior to this offering, there has been no public market for the common
stock. Consequently, the initial public offering price range will be determined
by negotiations between us and the underwriters. Among the factors considered in
these negotiations will be prevailing market conditions, the market
capitalizations and the stages of development of other companies that we and the
underwriters believe to be comparable to us, estimates of our business
potential, our results of operation in recent periods, the present state of our
development and other factors deemed relevant.
One of the representatives, Prudential Securities Incorporated, also
markets securities online through its PrudentialSecurities.com division. Clients
of Prudential Advisor(SM), a full service brokerage firm program, may view
offering terms and a prospectus online and place orders through their financial
advisors. Other than the prospectus in electronic format, the information on
this Web site is not part of this prospectus or the registration statement of
which this prospectus forms a part and has not been approved and/or endorsed by
us or any underwriter in such capacity and should not be relied on by
prospective investors.
We estimate that our out-of-pocket expenses for this offering, not
including the underwriting discount, will be approximately $ .
69
<PAGE> 71
LEGAL MATTERS
The validity of the common stock offered hereby will be passed upon for
Introgen by Wilson Sonsini Goodrich & Rosati, Professional Corporation, Austin,
Texas. Shearman & Sterling, New York, New York is acting as counsel for the
underwriters in connection with various legal matters relating to the shares of
common stock offered by this prospectus. As of December 31, 1999, investment
partnerships and certain members of Wilson Sonsini Goodrich & Rosati
beneficially owned an aggregate of 30,000 shares of our common stock.
EXPERTS
The consolidated financial statements as of June 30, 1997, 1998 and 1999,
and for each of the three years in the period ended June 30, 1999, 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.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
We have filed with the Securities and Exchange Commission a Registration
Statement on Form S-1. This prospectus, which forms a part of the Registration
Statement, does not contain all the information included in the Registration
Statement. Certain information is omitted and you should refer to the
Registration Statement and its exhibits. With respect to references made in this
prospectus to any contract or other document of Introgen, such references are
not necessarily complete and you should refer to the exhibits attached to the
Registration Statement for copies of the actual contract or document. You may
review a copy of the Registration Statement, including exhibits and schedule
filed therewith, at the Securities and Exchange Commission's public reference
facilities in Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the regional offices of the Securities and Exchange
Commission located at 7 World Trade Center, Suite 1300, New York, New York
10048, and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. You may also obtain copies of such materials from the Public
References Section of the Securities and Exchange Commission, Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. The Securities and Exchange Commission maintains a Web site
(http://www.sec.gov) that contains reports, proxy and information statements and
other information regarding registrants, such as Introgen, that file
electronically with the Securities and Exchange Commission.
70
<PAGE> 72
INTROGEN THERAPEUTICS, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Public Accountants.................... F-2
Consolidated Balance Sheets................................. F-3
Consolidated Statements of Operations....................... F-4
Consolidated Statements of Stockholders' Equity............. F-5
Consolidated Statements of Cash Flows....................... F-6
Notes to Consolidated Financial Statements.................. F-7
</TABLE>
F-1
<PAGE> 73
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of
Introgen Therapeutics, Inc.:
We have audited the accompanying consolidated balance sheets of Introgen
Therapeutics, Inc. (a Delaware corporation), and subsidiaries as of June 30,
1998 and 1999, and the related consolidated statements of operations,
stockholders' equity and cash flows for each of the three years in the period
ended June 30, 1999. These financial statements are the responsibility of
Introgen's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. 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.,
and subsidiaries as of June 30, 1998 and 1999, and the results of their
operations and their cash flows for each of the three years in the period ended
June 30, 1999, in conformity with accounting principles generally accepted in
the United States.
ARTHUR ANDERSEN LLP
Houston, Texas
July 16, 1999
F-2
<PAGE> 74
INTROGEN THERAPEUTICS, INC., AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30,
------------------------- DECEMBER 31,
1998 1999 1999
----------- ----------- ------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current Assets:
Cash........................................................ $ 1,185,490 $ 2,145,676 $ 2,399,211
Short-term investments...................................... 15,662,302 13,615,328 11,183,258
Collaborative research payments receivable from affiliate... 66,468 -- 787,416
Inventory................................................... 465,969 1,624,611 413,560
Other current assets........................................ 7,775 6,589 6,523
----------- ----------- -----------
Total current assets............................... 17,388,004 17,392,204 14,789,968
Property and equipment, net of accumulated depreciation of
$1,747,339, $1,761,506 and $1,825,111, respectively....... 337,488 8,060,745 11,112,182
Other assets................................................ 40,455 287,952 417,368
----------- ----------- -----------
Total assets....................................... $17,765,947 $25,740,901 $26,319,518
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable.......................................... $ 257,112 $ 2,014,813 $ 428,883
Accrued liabilities....................................... 212,751 263,788 650,180
Deferred revenue from affiliate........................... 974,368 798,187 225,001
Current portion of capital lease obligations and note
payable................................................. -- 89,330 502,068
----------- ----------- -----------
Total current liabilities.......................... 1,444,231 3,166,118 1,806,132
Capital lease obligations, net of current portion........... -- 231,617 2,173,456
Note payable, net of current portion........................ -- 3,156,295 5,915,044
Commitments and contingencies
Stockholders' equity:
Convertible preferred stock, $.001 par value; aggregate
liquidation preference of $28,884,232 at June 30, 1999,
and December 31, 1999; 8,308,523 shares authorized,
5,941,662, 6,419,896 and 6,419,896 shares issued and
outstanding, respectively............................... 5,941 6,419 6,419
Common stock, $.001 par value; 50,000,000 shares
authorized; 2,471,816, 2,503,897 and 2,568,043 shares
issued and outstanding, respectively.................... 2,472 2,504 2,568
Additional paid-in capital................................ 25,085,296 31,976,661 33,144,112
Deferred compensation..................................... (397,338) (1,778,161) (1,961,118)
Accumulated deficit....................................... (8,374,655) (11,020,552) (14,767,095)
----------- ----------- -----------
Total stockholders' equity......................... 16,321,716 19,186,871 16,424,886
----------- ----------- -----------
Total liabilities and stockholders' equity......... $17,765,947 $25,740,901 $26,319,518
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-3
<PAGE> 75
INTROGEN THERAPEUTICS, INC., AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEARS ENDED JUNE 30, SIX MONTHS ENDED DECEMBER 31,
----------------------------------------- -----------------------------
1997 1998 1999 1998 1999
------------ ------------ ----------- ------------- -------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Collaborative research and
development
revenues from affiliate........... $ 12,051,514 $ 8,606,240 $ 6,713,653 $ 3,974,368 $ 3,915,715
------------ ------------ ----------- ----------- -----------
Product sales to affiliate.......... -- 2,504,847 1,475,282 698,954 1,786,151
Cost of product sales............... -- 1,729,130 993,748 465,969 1,153,056
------------ ------------ ----------- ----------- -----------
Gross margin on product sales... -- 775,717 481,534 232,985 633,095
------------ ------------ ----------- ----------- -----------
Costs and expenses:
Research and development.......... 12,954,193 10,360,699 7,539,514 4,094,375 6,103,957
General and administrative........ 2,634,534 1,825,481 2,976,955 1,540,934 2,399,501
------------ ------------ ----------- ----------- -----------
Loss from operations............ (3,537,213) (2,804,223) (3,321,282) (1,427,956) (3,954,648)
Interest income..................... 476,088 791,247 680,748 408,835 359,929
Interest expense.................... (54,564) (2,417) (5,363) -- (151,824)
------------ ------------ ----------- ----------- -----------
Net loss............................ $ (3,115,689) $ (2,015,393) $(2,645,897) $(1,019,121) $(3,746,543)
============ ============ =========== =========== ===========
Net loss per share, basic and
diluted........................... $ (1.28) $ (0.82) $ (1.06) $ (0.41) $ (1.48)
============ ============ =========== =========== ===========
Shares used in computing basic and
diluted net loss per share........ 2,433,360 2,451,730 2,503,683 2,475,622 2,536,043
============ ============ =========== =========== ===========
Pro forma net loss per share, basic
and diluted $ (0.27) $ (0.37)
=========== ===========
Shares used in computing pro forma
basic and diluted net loss per
share 9,681,493 10,239,909
=========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-4
<PAGE> 76
INTROGEN THERAPEUTICS, INC., AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
SERIES A SERIES B SERIES C SERIES D
CONVERTIBLE CONVERTIBLE CONVERTIBLE CONVERTIBLE
PREFERRED STOCK PREFERRED STOCK PREFERRED STOCK PREFERRED STOCK
------------------ ------------------ ---------------- -----------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
--------- ------ --------- ------ ------- ------ -------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, June 30, 1996.................... 3,011,423 $3,011 787,500 $ 788 551,410 $551 -- $ --
Issuance of warrants to purchase common
stock.................................... -- -- -- -- -- -- -- --
Issuance of Series B preferred stock in
January 1997 in accordance with stock
purchase agreement with affiliate........ -- -- 491,329 491 -- -- -- --
Deferred compensation relating to issuance
of certain stock options................. -- -- -- -- -- -- -- --
Amortization of deferred compensation..... -- -- -- -- -- -- -- --
Net loss.................................. -- -- -- -- -- -- -- --
--------- ------ --------- ------ ------- ---- -------- ------
Balance, June 30, 1997.................... 3,011,423 3,011 1,278,829 1,279 551,410 551 -- --
Issuance of common stock in connection
with exercise of outstanding stock
options.................................. -- -- -- -- -- -- -- --
Issuance of Series D preferred stock in
October 1997 in connection with private
placement, net of offering costs of
$1,304,293............................... -- -- -- -- -- -- 1,100,000 1,100
Deferred compensation relating to issuance
of certain stock options................. -- -- -- -- -- -- -- --
Amortization of deferred compensation..... -- -- -- -- -- -- -- --
Net loss.................................. -- -- -- -- -- -- -- --
--------- ------ --------- ------ ------- ---- -------- ------
Balance, June 30, 1998.................... 3,011,423 3,011 1,278,829 1,279 551,410 551 1,100,000 1,100
Issuance of Series B preferred stock in
June 1999 in accordance with stock
purchase agreement with affiliate........ -- -- 478,234 478 -- -- -- --
Issuance of common stock in connection
with exercise of outstanding stock
options.................................. -- -- -- -- -- -- -- --
Deferred compensation relating to issuance
of certain stock options................. -- -- -- -- -- -- -- --
Amortization of deferred compensation..... -- -- -- -- -- -- -- --
Net loss.................................. -- -- -- -- -- -- -- --
--------- ------ --------- ------ ------- ---- -------- ------
Balance, June 30, 1999.................... 3,011,423 3,011 1,757,063 1,757 551,410 551 1,100,000 1,100
Issuance of common stock in connection
with exercise of outstanding stock
options (Unaudited)...................... -- -- -- -- -- -- -- --
Deferred compensation relating to issuance
of certain stock options (Unaudited)..... -- -- -- -- -- -- -- --
Amortization of deferred compensation and
stock-based compensation (Unaudited)..... -- -- -- -- -- -- --
Net loss (Unaudited)...................... -- -- -- -- -- -- -- --
--------- ------ --------- ------ ------- ---- -------- ------
Balance, December 31, 1999 (Unaudited).... 3,011,423 $3,011 1,757,063 $1,757 551,410 $551 1,100,000 $1,100
========= ====== ========= ====== ======= ==== ======== ======
<CAPTION>
COMMON STOCK ADDITIONAL
------------------ PAID-IN DEFERRED ACCUMULATED
SHARES AMOUNT CAPITAL COMPENSATION DEFICIT TOTAL
--------- ------ ----------- ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Balance, June 30, 1996.................... 2,443,360 $2,443 $10,743,332 $ (586,883) $(3,243,573) $ 6,919,669
Issuance of warrants to purchase common
stock.................................... -- -- 70,225 -- -- 70,225
Issuance of Series B preferred stock in
January 1997 in accordance with stock
purchase agreement with affiliate........ -- -- 4,249,504 -- -- 4,249,995
Deferred compensation relating to issuance
of certain stock options................. -- -- 287,935 (287,935) -- --
Amortization of deferred compensation..... -- -- -- 235,192 -- 235,192
Net loss.................................. -- -- -- -- (3,115,689) (3,115,689)
--------- ------ ----------- ----------- ------------ -----------
Balance, June 30, 1997.................... 2,443,360 2,443 15,350,996 (639,626) (6,359,262) 8,359,392
Issuance of common stock in connection
with exercise of outstanding stock
options.................................. 28,456 29 18,203 -- -- 18,232
Issuance of Series D preferred stock in
October 1997 in connection with private
placement, net of offering costs of
$1,304,293............................... -- -- 9,694,607 -- -- 9,695,707
Deferred compensation relating to issuance
of certain stock options................. -- -- 191,215 (191,215) -- --
Amortization of deferred compensation..... -- -- (169,725) 433,503 -- 263,778
Net loss.................................. -- -- -- -- (2,015,393) (2,015,393)
--------- ------ ----------- ----------- ------------ -----------
Balance, June 30, 1998.................... 2,471,816 2,472 25,085,296 (397,338) (8,374,655) 16,321,716
Issuance of Series B preferred stock in
June 1999 in accordance with stock
purchase agreement with affiliate........ -- -- 5,102,279 -- -- 5,102,757
Issuance of common stock in connection
with exercise of outstanding stock
options.................................. 32,081 32 21,222 -- -- 21,254
Deferred compensation relating to issuance
of certain stock options................. -- -- 1,919,358 (1,919,358) -- --
Amortization of deferred compensation..... -- -- (151,494) 538,535 -- 387,041
Net loss.................................. -- -- -- -- (2,645,897) (2,645,897)
--------- ------ ----------- ----------- ------------ -----------
Balance, June 30, 1999.................... 2,503,897 2,504 31,976,661 (1,778,161) (11,020,552) 19,186,871
Issuance of common stock in connection
with exercise of outstanding stock
options (Unaudited)...................... 64,146 64 46,804 -- -- 46,868
Deferred compensation relating to issuance
of certain stock options (Unaudited)..... -- -- 608,765 (608,765) -- --
Amortization of deferred compensation and
stock-based compensation (Unaudited)..... -- -- 511,882 425,808 -- 937,690
Net loss (Unaudited)...................... -- -- -- -- (3,746,543) (3,746,543)
--------- ------ ----------- ----------- ------------ -----------
Balance, December 31, 1999 (Unaudited).... 2,568,043 $2,568 $33,144,112 $(1,961,118) $(14,767,095) $16,424,886
========= ====== =========== =========== ============ ===========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-5
<PAGE> 77
INTROGEN THERAPEUTICS, INC., AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
SIX MONTHS
YEARS ENDED JUNE 30, ENDED DECEMBER 31,
------------------------------------------ ---------------------------
1997 1998 1999 1998 1999
------------ ------------ ------------ ------------ ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net loss........................... $ (3,115,689) $ (2,015,393) $ (2,645,897) $ (1,019,121) $ (3,746,543)
Adjustments to reconcile net loss
to net cash used in operating
activities-
Depreciation..................... 1,214,591 447,471 14,167 7,086 547,283
Compensation related to issuance
of certain stock options and
warrants....................... 250,492 263,778 387,041 195,101 937,690
Changes in assets and
liabilities-
Decrease (increase) in
receivable from affiliate.... 138,547 (66,468) 66,468 66,468 (787,416)
Decrease (increase) in
inventory.................... -- (465,969) (1,158,642) (686,019) 1,211,051
Decrease (increase) in other
assets....................... 361,578 3,814 (246,311) (76,912) (129,350)
Increase (decrease) in accounts
payable...................... 42,150 (703,530) 1,757,701 30,393 (1,585,930)
Increase (decrease) in accrued
liabilities.................. (3,487) 115,416 51,037 27,702 386,392
Increase (decrease) in deferred
revenue from affiliate....... 119,728 532,972 (176,181) (974,368) (573,186)
------------ ------------ ------------ ------------ ------------
Net cash used in operating
activities......................... (992,090) (1,887,909) (1,950,617) (2,429,670) (3,740,009)
------------ ------------ ------------ ------------ ------------
Cash flows from investing activities:
Purchases of property and
equipment........................ -- (258,012) (7,441,013) (1,211,509) (1,247,916)
Purchases of short-term
investments...................... (10,082,809) (15,461,069) (24,644,122) (11,096,738) (11,135,761)
Maturities of short-term
investments...................... 2,499,580 7,381,996 26,691,096 15,461,069 13,567,831
------------ ------------ ------------ ------------ ------------
Net cash provided by (used in)
investing activities............... (7,583,229) (8,337,085) (5,394,039) 3,152,822 1,184,154
------------ ------------ ------------ ------------ ------------
Cash flows from financing activities:
Proceeds from sale of preferred
stock............................ 4,249,995 9,695,707 5,102,757 -- --
Proceeds from issuances of common
stock and common stock
warrants......................... 54,925 18,232 21,254 20,990 46,868
Proceeds from issuance of note
payable.......................... -- -- 3,185,993 -- 2,814,007
Payments under capital lease
obligations...................... (926,439) (130,964) (5,162) -- (51,485)
------------ ------------ ------------ ------------ ------------
Net cash provided by financing
activities......................... 3,378,481 9,582,975 8,304,842 20,990 2,809,390
------------ ------------ ------------ ------------ ------------
Net increase (decrease) in cash........ (5,196,838) (642,019) 960,186 744,142 253,535
Cash, beginning of period.............. 7,024,347 1,827,509 1,185,490 1,185,490 2,145,676
------------ ------------ ------------ ------------ ------------
Cash, end of period.................... $ 1,827,509 $ 1,185,490 $ 2,145,676 $ 1,929,632 $ 2,399,211
============ ============ ============ ============ ============
Supplemental disclosure of cash flow
information:
Cash paid for interest............. $ 54,564 $ 2,417 $ 45,555 $ -- $ 247,188
============ ============ ============ ============ ============
Supplemental disclosure of noncash
investing and financing activity:
Purchases of equipment under
capital lease obligations........ $ 353,062 $ -- $ 296,411 $ -- $ 2,350,804
============ ============ ============ ============ ============
Retirement of fully depreciated
assets........................... $ 247,880 $ -- $ -- $ -- $ 483,678
============ ============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-6
<PAGE> 78
INTROGEN THERAPEUTICS, INC., AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1999
(INCLUDING AMOUNTS RELATED TO UNAUDITED INTERIM PERIODS)
1. FORMATION AND BUSINESS OF THE COMPANY:
Introgen Therapeutics, Inc., a Delaware corporation, and its subsidiaries
(Introgen) develops gene therapy products for the treatment of cancer.
Introgen's lead product candidate, INGN 201, combines the naturally occurring
p53 tumor suppressor gene with its clinically proven adenoviral delivery system.
Introgen is beginning pivotal Phase III clinical studies of INGN 201 in head and
neck cancer, conducting a Phase II clinical trial in non-small cell lung cancer
and conducting several Phase I clinical trials in additional cancer indications.
In addition to Introgen's INGN 201 development program, Introgen has identified
and is developing additional gene therapeutics, including the genes MDA-7, PTEN
and CCAM and associated delivery systems, or vectors. Introgen is developing
cancer therapies based on restoring normal cellular function through gene
therapy, which may offer safer and more effective treatments than are currently
available.
Introgen is manufacturing and selling to an affiliate a gene therapy-based
product for use in clinical trials. Introgen has not yet generated any
significant revenues from unaffiliated third parties, nor is there any assurance
of future product revenues. Introgen's research and development activities
involve a high degree of risk and uncertainty, and its ability to successfully
develop, manufacture and market its proprietary products is dependent upon many
factors. These factors include, but are not limited to, the need for additional
financing, 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, competitive
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 Introgen's future success.
Introgen has research collaboration agreements and a stock purchase
agreement with Aventis Pharma AG, formerly Rhone-Poulenc Rorer Pharmaceuticals,
Inc. (Aventis or affiliate). Pursuant to the terms of the stock purchase
agreement under which the final scheduled stock purchase was completed in June
1999, Aventis has purchased approximately $14 million of Introgen's preferred
stock from Introgen.
Development and commercialization of certain products are being pursued in
conjunction with Aventis pursuant to a collaboration arrangement, the funding of
which is subject to extension from time to time upon mutual agreement by
Introgen and Aventis. Under this arrangement, Introgen is primarily responsible
for completing the early stage development programs related to these products,
and Aventis is primarily responsible, if it so elects, for the later stage
clinical development of these products. In accordance with the terms of this
arrangement, prior to fiscal 1999, Introgen paid $2 million of the costs for
early-stage research and development activities using its own funds. In North
America, Introgen retains exclusive manufacturing rights and may elect to form a
joint commercial operation with Aventis to market collaboration products.
Introgen is entitled to royalties on product sales arising from Aventis'
exclusive marketing and manufacturing rights in Europe. Both parties have the
right, at their own expense, seek regulatory approvals for and market and
manufacture products that are part of the collaboration in Japan, Korea, Taiwan,
China and India. Introgen and Aventis have agreed that they will not market or
license, and Aventis will not develop, any gene therapy products in the field
covered by their collaboration arrangement prior to October 2004, except
according to the terms of the applicable collaboration arrangement. Aventis can
terminate this agreement upon six months' notice, subject to certain wind-down
provisions.
F-7
<PAGE> 79
INTROGEN THERAPEUTICS, INC., AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of
Introgen Therapeutics, Inc. and all of its subsidiaries. Intercompany
transactions and balances are eliminated in consolidation.
Unaudited Interim Financial Statements
The accompanying consolidated balance sheet as of December 31, 1999, the
consolidated statements of operations and cash flows for the six months ended
December 31, 1998 and 1999, and the consolidated statement of stockholders'
equity for the six months ended December 31, 1999, are unaudited but, in the
opinion of management, include all adjustments, consisting only of normal
recurring adjustments, necessary for a fair presentation of results for the
interim periods. Results for the six months ended December 31, 1999, are not
necessarily indicative of the results that may be expected for the fiscal year
ending June 30, 2000.
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 and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Short-Term Investments
At June 30, 1998 and 1999, and December 31, 1999, short-term investments
consist of U.S. Government obligations with various maturity dates not exceeding
one year. All short-term investments have been classified as held-to-maturity
and are carried at amortized cost, which approximates fair value.
Inventory
Inventory consists of vials of gene therapy-based product and is
accumulated in batches for inventory costing. The inventory is held for sale to
Aventis for use in clinical trials and is stated at the lower of cost or market.
Cost is determined for each inventory batch based upon direct materials used and
an allocation of direct and indirect labor and overhead.
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 for equipment
is computed using accelerated methods over the estimated useful economic lives
of the equipment (five to seven years). Leasehold improvements are depreciated
over the remaining term of the lease. Construction in process at June 30, 1999,
relates to Introgen's new research, manufacturing and administrative facility
which was completed in December 1999 and is being depreciated over 15 years
using an accelerated method. As of June 30, 1999, and December 31, 1999,
Introgen has capitalized $40,192 and $143,311, respectively, of interest related
to the construction of its facility.
F-8
<PAGE> 80
INTROGEN THERAPEUTICS, INC., AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Property and equipment consisted of the following as of June 30, 1998 and
1999, and December 31, 1999:
<TABLE>
<CAPTION>
JUNE 30
------------------------- DECEMBER 31,
1998 1999 1999
----------- ----------- ------------
(UNAUDITED)
<S> <C> <C> <C>
Facility.............................................. $ -- $ -- $ 8,285,429
Laboratory equipment.................................. 1,292,002 1,307,196 4,651,864
Leasehold improvements................................ 483,678 483,678 --
Construction in process............................... 309,147 8,031,377 --
----------- ----------- -----------
Total property and equipment................ 2,084,827 9,822,251 12,937,293
Less- Accumulated depreciation........................ (1,747,339) (1,761,506) (1,825,111)
----------- ----------- -----------
Net property and equipment.................. $ 337,488 $ 8,060,745 $11,112,182
=========== =========== ===========
</TABLE>
As of June 30, 1999, and December 31, 1999, $296,400 and $1,263,654,
respectively, of equipment is held under capital lease obligations and is being
depreciated over the applicable lease term (see Note 7).
Revenue Recognition
Cash received in connection with collaborative research is recognized as
revenue as Introgen performs its obligations related to such research
agreements. Deferred revenue is recorded for cash received for which the related
expenses have not been incurred or for which the related product being purchased
by its affiliate has not been shipped. Revenue from Introgen's production of its
gene therapy-based product for sale to its affiliate is recognized upon
completion of production and acceptance by the affiliate.
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.
Net Loss Per Share
Net loss per share is computed using the weighted average number of shares
of common stock outstanding. Due to losses incurred in all periods presented,
the shares associated with stock options, warrants and the convertible preferred
stock are not included because they are antidilutive.
Pro forma net loss per share is computed using the weighted average number
of common shares outstanding for the applicable period, including the pro forma
effects of the automatic conversion of each outstanding share of preferred stock
into 1.2 shares of Introgen's common stock effective upon the closing of
Introgen's proposed initial public offering (see Note 9) as if such conversion
occurred on the dates of original issuance.
F-9
<PAGE> 81
INTROGEN THERAPEUTICS, INC., AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The following table sets forth the computation of basic and dilutive, and
pro forma basic and dilutive, net loss per share for the year ended June 30,
1999, and the six months ended December 31, 1999:
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1999 1999
----------- ------------
(UNAUDITED)
<S> <C> <C>
Numerator --
Net loss................................................. $(2,645,897) $(3,746,543)
=========== ===========
Denominator --
Weighted average common shares........................... 2,503,683 2,536,043
=========== ===========
Denominator for basic and diluted calculation............ 2,503,683 2,536,043
Weighted average effect of pro forma securities --
Series A preferred stock.............................. 3,613,703 3,613,703
Series B preferred stock.............................. 1,582,418 2,108,474
Series C preferred stock.............................. 661,689 661,689
Series D preferred stock.............................. 1,320,000 1,320,000
----------- -----------
Denominator for pro forma basic and diluted
calculation........................................... 9,681,493 10,239,909
=========== ===========
Net loss per share --
Basic and diluted........................................ $ (1.06) $ (1.48)
Pro forma basic and diluted.............................. (0.27) (0.37)
</TABLE>
3. STOCKHOLDERS' EQUITY
Stock Split
In August 1996, the board of directors approved a 1.2-for-1 split of common
stock. 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 as of the earliest date presented in the
accompanying consolidated financial statements.
Preferred Stock
Preferred stock outstanding at June 30, 1998 and 1999, and December 31,
1999, is as follows:
<TABLE>
<CAPTION>
JUNE 30
--------------- DECEMBER 31,
1998 1999 1999
------ ------ ------------
(UNAUDITED)
<S> <C> <C> <C>
Series A convertible preferred stock; liquidation
preference of $1.00 per share; 3,011,423 shares
authorized.......................................... $3,011 $3,011 $3,011
Series B convertible preferred stock; liquidation
preference of $5.75 per share; 2,114,100 shares
authorized.......................................... 1,279 1,757 1,757
Series C convertible preferred stock; liquidation
preference of $8.65 per share; 1,183,000 shares
authorized.......................................... 551 551 551
Series D convertible preferred stock; liquidation
preference of $10.00 per share; 2,000,000 shares
authorized.......................................... 1,100 1,100 1,100
</TABLE>
Each share of preferred stock is convertible at the option of the holder
into 1.2 shares of common stock. All shares of preferred stock automatically
convert into common stock on the same basis upon the closing of a public
offering with total proceeds of at least $10 million.
Series A Convertible Preferred Stock
Holders of Series A preferred stock (Series A Preferred) may receive
dividends of $0.10 per share per annum, noncumulative, at the discretion of
Introgen's board of directors. The holders of Series A
F-10
<PAGE> 82
INTROGEN THERAPEUTICS, INC., AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Preferred have preference in declaration and payment of any dividend over the
holders of Series B preferred stock, Series C preferred stock, Series D
preferred stock and common stock. To date, no dividends have been declared.
In the event of any liquidation, dissolution or winding up of Introgen, the
holders of Series A Preferred are entitled to receive preference over any
distribution to the holders of Series B preferred stock, Series C preferred
stock, Series D preferred stock and common stock in the amount of $1.00 per
share. The holders of Series A Preferred have registration rights as defined in
the stock purchase agreement and have the right to vote on all stockholder
matters on an as-if-converted basis. In addition, the holders of Series A
Preferred shares, voting as a separate class, are entitled to elect one director
of Introgen.
Series B Convertible Preferred Stock
In accordance with the stock purchase agreement with Introgen, Aventis has
purchased 1,757,063 shares of Series B preferred stock (Series B Preferred) from
Introgen for approximately $14.5 million and 310,071 shares of Series A
Preferred from Texas Biomedical Development Partners (TBDP) for approximately
$2.6 million during the period from inception of this agreement through June 30,
1999. These purchases were made at prices ranging from $5.72 to $10.67 per
share. There are no additional stock purchases by Aventis scheduled under this
stock purchase agreement. The prices of these transactions were determined on
the date of the common stock purchase agreement, which was October 1994.
Holders of Series B Preferred may receive dividends of $0.575 per share per
annum, noncumulative, at the discretion of Introgen's board of directors. The
holders of Series B Preferred have preference in declaration and payment of any
dividend over the holders of Series C preferred stock, Series D preferred stock
and common stock. To date, no dividends have been declared.
In the event of any liquidation, dissolution or winding up of Introgen, the
holders of Series B Preferred are entitled to receive preference over any
distribution to the holders of Series C preferred stock, Series D preferred
stock and common stock in the amount of $5.75 per share. The holders of Series B
Preferred have registration rights as defined in the stock purchase agreement
and have the right to vote on all stockholder matters on an as-if-converted
basis. In addition, the holders of Series B Preferred shares, voting as a
separate class, are entitled to elect one director of Introgen.
Series C Convertible Preferred Stock
Series C preferred stock (Series C Preferred) was issued to third parties
in connection with Introgen's private placement of securities during the year
ended June 30, 1996. Series C Preferred carries the same rights as the Series B
Preferred 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 Introgen is $8.65 per share, both of which are
preferential to the holders of Series D preferred stock and common stock, and
(b) the holders of Series C Preferred are not entitled to elect any directors
voting as a separate class. To date, no dividends have been declared.
Series D Convertible Preferred Stock
Holders of Series D Preferred (Series D Preferred) may receive dividends of
$1.00 per share per annum, noncumulative, at the discretion of Introgen's board
of directors. The holders of Series D Preferred have preference in declaration
and payment of any dividend over the holders of common stock. To date, no
dividends have been declared.
F-11
<PAGE> 83
INTROGEN THERAPEUTICS, INC., AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
In the event of any liquidation, dissolution or winding up of Introgen, the
holders of Series D Preferred are entitled to receive preference over any
distribution to the holders of common stock in the amount of $10.00 per share.
The holders of Series D Preferred have registration rights and have the right to
vote on all stockholder matters on an as-if-converted basis.
Incentive Stock Option Plan
The 1995 Stock Plan (the Plan), as amended, provides for the granting of
options, either incentive or nonstatutory, or stock purchase rights to
employees, directors and consultants of Introgen to purchase up to 2,000,000
shares of Introgen's common stock. The exercise price shall be no less than the
fair value at the date of the grant for incentive stock options and shall be
determined by the Plan Administrator for nonstatutory options. Options granted
generally vest annually over four years from the date of a recipient's
commencement of services to Introgen. In the event of a merger, reorganization
or change in controlling ownership of Introgen, all options outstanding under
the Plan shall be fully vested.
Statement of Financial Accounting Standards (SFAS) No. 123, "Accounting for
Stock-Based Compensation," allows companies to adopt one of two methods for
accounting for stock options. Introgen has elected the method that requires
disclosure only of stock-based compensation. Because of this election, Introgen
continues to account for its employee stock-based compensation plans under
Accounting Principles Board (APB) Opinion No. 25 and the related
interpretations. Accordingly, deferred compensation is recorded for stock-based
compensation grants based on the excess of the market value of the common stock
on the measurement date over the exercise price. The deferred compensation is
amortized over the vesting period of each unit of stock-based compensation
grant, generally four years. If the exercise price of the stock-based
compensation grants is equal to the estimated fair value of Introgen's stock on
the date of grant, no compensation expense is recorded.
During the years ended June 30, 1997, 1998 and 1999, Introgen recorded
aggregate deferred compensation of $287,935, $191,215 and $1,919,358,
respectively. Introgen recognized $235,192, $263,778 and $387,041 of these
amounts as compensation expense during the years ended June 30, 1997, 1998 and
1999, respectively. Additionally, during the years ended June 30, 1998 and 1999,
Introgen reversed $169,725 and $151,494, respectively, of deferred compensation
and additional paid in capital related to the forfeiture of nonvested options by
terminated employees.
The fair value of options granted during fiscal years 1997, 1998 and 1999
was estimated on the applicable grant dates using the Black-Scholes option
pricing model. Significant weighted average assumptions used to estimate fair
value for all years include risk-free interest rates ranging from 5.1 percent to
6.7 percent; expected lives of seven years; no expected dividends; and
volatility factors ranging from 58.0 percent to 62.7 percent. Had compensation
expense been determined consistent with the provisions of SFAS No. 123,
Introgen's net loss would have been increased to the following pro forma
amounts:
<TABLE>
<CAPTION>
YEARS ENDED JUNE 30,
------------------------------------
1997 1998 1999
---------- ---------- ----------
<S> <C> <C> <C>
Net loss --
As reported.................................. $3,115,689 $2,015,393 $2,645,897
========== ========== ==========
Pro forma.................................... $3,128,940 $2,024,817 $2,714,932
========== ========== ==========
Basic and diluted EPS --
As reported.................................. $ (1.28) $ (0.82) $ (1.06)
========== ========== ==========
Pro forma.................................... $ (1.29) $ (0.83) $ (1.08)
========== ========== ==========
</TABLE>
F-12
<PAGE> 84
INTROGEN THERAPEUTICS, INC., AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Because SFAS No. 123 does not apply to options granted prior to July 1,
1995, the resulting pro forma compensation costs may not be representative of
the costs to be expected in future years.
The following is a summary of option activity under this plan:
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
OPTIONS EXERCISE
OUTSTANDING PRICE
----------- --------
<S> <C> <C>
Balance, June 30, 1996...................................... 576,000 $.625
Granted................................................... 236,683 .725
Canceled.................................................. (10,860) .725
---------
Balance, June 30, 1997...................................... 801,823 .653
Granted................................................... 153,091 .751
Exercised................................................. (28,456) .641
Canceled.................................................. (74,071) .693
---------
Balance, June 30, 1998...................................... 852,387 .668
Granted................................................... 844,650 .830
Exercised................................................. (32,081) .652
Canceled.................................................. (145,511) .818
---------
Balance, June 30, 1999...................................... 1,519,445 .744
Granted................................................... 82,318 .830
Exercised................................................. (64,146) .725
Canceled.................................................. (30,265) .820
---------
Balance, December 31, 1999 (unaudited)...................... 1,507,352 .748
=========
Exercisable at June 30, 1999................................ 638,576 .658
=========
Exercisable at December 31, 1999 (unaudited)................ 758,387 .688
=========
</TABLE>
The weighted average fair values of options granted during the years ended
June 30, 1997, 1998 and 1999 were $0.48, $0.49 and $0.55, respectively. As of
June 30, 1999 and December 31, 1999, there were 420,018 options and 367,965
options, respectively, available for grant under the Plan.
Warrants
In connection with the issuance of the Series C Preferred, Introgen issued
warrants to purchase 102,250 shares of common stock at a weighted average
exercise price of $7.93 per share to third parties who assisted in the sale of
the Series C Preferred. In addition, in August 1996, Introgen issued a warrant
to purchase 12,000 shares of common stock at an exercise price of $0.725 per
share. In conjunction with this warrant issuance, Introgen recognized
approximately $15,000 in expenses for the services rendered during the year
ended June 30, 1997. The warrants expire in March and August 2001.
In connection with the issuance of the Series D Preferred, Introgen issued
warrants to purchase 82,500 shares of common stock at exercise prices ranging
from $10.00 per share to $12.50 per share to third parties who assisted in the
sale of the Series D Preferred. The warrants expired in October 1999.
4. FEDERAL INCOME TAXES:
Introgen recognizes deferred tax liabilities and assets for the expected
future tax consequences of events that have been recognized differently between
the financial statements and 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
F-13
<PAGE> 85
INTROGEN THERAPEUTICS, INC., AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
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.
The reconciliation of the statutory federal income tax rate to Introgen's
effective income tax rate for the years ended June 30, 1997, 1998 and 1999, is
as follows:
<TABLE>
<CAPTION>
YEARS ENDED JUNE 30,
---------------------
1997 1998 1999
----- ----- -----
<S> <C> <C> <C>
Statutory rate.............................................. (34.0)% (34.0)% (34.0)%
Increase in deferred tax valuation allowance................ 29.0 29.1 29.8
Stock option compensation not deductible.................... 2.6 4.4 5.0
Research and development tax credits........................ -- -- (1.4)
Other....................................................... 2.4 0.5 0.6
----- ----- -----
--% --% --%
===== ===== =====
</TABLE>
The components of Introgen's deferred tax assets are as follows:
<TABLE>
<CAPTION>
JUNE 30,
-------------------------
1998 1999
----------- -----------
<S> <C> <C>
Net operating loss carryforwards........................... $ 1,353,800 $ 2,187,300
Capitalized start-up costs................................. 13,900 --
Research and development tax credits....................... 12,500 49,200
Technology license......................................... 68,500 63,300
Tax basis of property and equipment in excess of book
basis.................................................... 951,300 823,900
Accrued liabilities........................................ 25,700 26,000
Capital leases............................................. 90,500 137,700
Other...................................................... 30,800 47,900
----------- -----------
Total deferred tax assets........................ 2,547,000 3,335,300
Less -- Valuation allowance................................ (2,547,000) (3,335,300)
----------- -----------
Net deferred tax assets.......................... $ -- $ --
=========== ===========
</TABLE>
As of June 30, 1999, Introgen has generated net operating loss (NOL)
carryforwards of approximately $6.4 million and research and development credits
of approximately $49,200 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 Introgen's ability to
utilize its carryforwards. Introgen's ability to utilize its current and future
NOLs to reduce future taxable income and tax liabilities may be limited.
Additionally, because United States tax laws limit the time during which these
carryforwards may be applied against future taxes, Introgen may not be able to
take full advantage of these attributes for federal income tax purposes. As
Introgen 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, 1998 and 1999. The valuation allowance increased $586,200
and $788,300 for the years ended June 30, 1998 and 1999, respectively, primarily
due to Introgen's losses.
5. NOTE PAYABLE:
In November 1998, Introgen entered into a $6 million note payable agreement
with a bank which is secured by Introgen's buildings under construction.
Interest is capitalized as incurred while the building is under construction.
Interest only at an annual rate of 8.5 percent is payable through November 1999,
after which time interest at an annual rate of 7.5 percent plus principal based
on a 25-year amortization period are payable monthly until November 2009, at
which time the remaining outstanding principal is due and
F-14
<PAGE> 86
INTROGEN THERAPEUTICS, INC., AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
payable. The 7.5 percent interest rate is fixed until November 2004, at which
time it is subject to a one-time adjustment to a rate equal to the then-current
rate of the five-year United States Treasury bond note plus 2 percent, with such
adjusted interest rate not to exceed 8.5 percent. As of June 30, 1999, Introgen
had borrowings on the note totaling $3,185,993. Aggregate annual maturities of
the note payable as of June 30, 1999 are as follows:
<TABLE>
<S> <C>
Year ending June 30 --
2000.................................................. $ 29,696
2001.................................................. 47,414
2002.................................................. 51,094
2003.................................................. 55,061
2004.................................................. 59,336
Thereafter............................................ 2,943,392
----------
$3,185,993
==========
</TABLE>
6. LICENSE AND RESEARCH AGREEMENTS:
Patent and Technology License Agreement
With The University of Texas System
Introgen has a license agreement with the board of regents of The
University of Texas System (the System) and The University of Texas M.D.
Anderson Cancer Center (UTMDACC), a component institution of the System, whereby
Introgen has an exclusive, worldwide license to use certain technology.
Beginning with the first commercial sale of a product incorporating the licensed
technologies, Introgen will pay UTMDACC, for the longer of 15 years or the life
of the patent, a royalty based on net sales by Introgen or its affiliates or by
sublicense agreement of products incorporating any of such technologies.
Introgen 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.
Other Technology Option and License Agreements
Introgen has technology option and license agreements with various other
third parties. If Introgen chooses to maintain its rights to develop and use all
the technologies covered by these agreements (recognizing it is not obligated to
do so), Introgen will be obligated to pay up to approximately $738,000 and
$75,000 to these third parties during the years ended June 30, 2000 and 2001,
respectively. Introgen has technology option and license agreements with two
additional third parties, both of which require annual payments of $20,000 until
cancelled at Introgen's option. If Introgen licenses these technologies and if
certain product development or clinical study milestones are met, or if
commercial product sales occur using these technologies, additional fees and/or
royalties may be payable to these third parties.
Sponsored Research
Introgen funds certain research performed by UTMDACC to further the
development of technologies 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 the years ended June 30, 1997, 1998 and 1999,
Introgen paid approximately $2,234,000, $2,239,000 and $820,000, respectively,
for this research. During the year ended June 30, 2000, Introgen will be
required to pay approximately $180,000 for this research.
F-15
<PAGE> 87
INTROGEN THERAPEUTICS, INC., AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
7. COMMITMENTS AND CONTINGENCIES:
Lease Commitments
Introgen is obligated under various capital and operating leases for land,
office and laboratory space and equipment which expire at various dates through
September 2026. The amounts payable under capital leases are drawn under a
$3,000,000 lease line of credit with a commercial leasing company which is being
used to finance equipment acquisitions. Introgen may make draws on this lease
line of credit through December 31, 1999. Amounts drawn are payable monthly over
48 months from the time of the draw at a fixed interest rate applicable to each
draw determined based on the average interest rate of four-year United States
Treasury securities plus 6.22 percent (11.30 percent to 11.69 percent at June
30, 1999). This lease line of credit is secured by the equipment being financed.
As of June 30, 1999, amounts due under the capital lease totaled $291,249.
Operating leases consist primarily of a ground lease for the land on which
Introgen's new facilities are under construction. Commencing upon the completion
and occupancy of these facilities, annual rent under this lease will be
$136,188. The primary term of this lease continues through September, 2026.
During the years ended June 30, 1997, 1998 and 1999, Introgen incurred
lease expenses of approximately $710,500, $740,100 and $688,282, respectively.
Future minimum lease payments under noncancelable operating leases and the
present value of future minimum capital lease payments as of June 30, 1999, are
as follows:
<TABLE>
<CAPTION>
OPERATING CAPITAL
LEASES LEASES
---------- --------
<S> <C> <C>
Year ending June 30 --
2000........................................ $ 341,841 $ 92,772
2001........................................ 245,237 92,772
2002........................................ 205,373 92,772
2003........................................ 136,188 88,744
2004........................................ 136,188 --
Thereafter.................................. 2,349,243 --
---------- --------
Total minimum lease payments.................. $3,414,070 367,060
==========
Less -- Amount representing interest.......... (75,811)
--------
Capital lease obligations..................... $291,249
========
</TABLE>
Insurance
Introgen is subject to numerous risks and uncertainties because of the
nature and status of its operations. Introgen 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 Introgen's
financial position or results of operations.
Employment Agreement
Introgen has an employment agreement with its president and chief executive
officer which provides for a base salary and bonuses through July 31, 2003. The
agreement also provides for the grant of an aggregate 150,000 options to be made
in increments of 50,000 on August 1, 2000, 2001 and 2002.
F-16
<PAGE> 88
INTROGEN THERAPEUTICS, INC., AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
8. RELATED PARTIES:
Introgen's chairman, its president and chief executive officer and another
officer are owners in or otherwise associated with other companies that are or
were previously stockholders of Introgen. Introgen paid the companies, with
which these officers are associated, consulting fees of approximately $179,000,
$150,000 and $175,000 during the years ended June 30, 1997, 1998 and 1999,
respectively, and is obligated to pay one of the companies $175,000 per year
until such time as Introgen, at its option, terminates the services of that
company. As of June 30, 1999, these officers hold options to purchase up to
210,000 shares of Introgen's common stock.
Introgen has a consulting agreement with an individual primarily
responsible for the creation of one of its technologies, who is also a
stockholder of Introgen. Under this consulting agreement, Introgen paid this
person fees of $95,800, $120,800 and $145,800 during the years ended June 30,
1997, 1998 and 1999, respectively, and is obligated to pay the individual fees
of $150,000 per year, with such compensation increasing annually starting
October 1, 2001 in varying increments until it reaches $200,000 per year,
subject to adjustment for inflation. The agreement continues to September 2009,
but Introgen may terminate the agreement upon one year's advance notice.
9. SUBSEQUENT EVENTS (UNAUDITED):
Employee Stock Purchase Plan
In February 2000, Introgen's board of directors adopted the 2000 Employee
Stock Purchase Plan (the Stock Purchase Plan), subject to stockholder approval.
Under the Stock Purchase Plan, 300,000 shares of common stock are reserved for
purchase by eligible employees, at 85 percent of the appropriate market price.
The Stock Purchase Plan provides for annual increases in the number of shares
available for issuance on the first day of each fiscal year, beginning with
fiscal year 2001, equal to the lesser of 300,000 shares, 1.5 percent of the
outstanding shares of common stock on the date of the annual increase or such
lesser amount as may be determined by the board of directors. The Stock Purchase
Plan provides that eligible employees may authorize payroll deductions of up to
10 percent of their qualified compensation. The maximum number of shares that an
employee may purchase in a single offering period is 10,000 shares. The Stock
Purchase Plan will terminate in 2010 and may be amended or terminated by the
board of directors.
2000 Stock Option Plan
In February 2000, Introgen's board of directors adopted the 2000 Stock
Option Plan (the Stock Option Plan), subject to stockholder approval. The Stock
Option Plan provides for the granting of options, either incentive or
nonstatutory, or stock purchase rights to employees, directors and consultants
of Introgen to purchase up to 3,000,000 shares of Introgen's common stock. The
Stock Option Plan provides for annual increases in the number of shares
available for issuance beginning in fiscal 2001, equal to the lesser of
1,000,000 shares, 5 percent of the outstanding shares on the date of the annual
increase, or a lesser amount determined by the board of directors. The exercise
price for all option grants shall be no less than the fair value at the date of
grant, with the exception of incentive stock options granted to holders of
shares representing more than 10 percent of Introgen's voting power, in which
case the exercise price shall be no less than 110 percent of the fair value. In
the event of a merger, reorganization or change in controlling ownership of
Introgen, all options outstanding under the Stock Option Plan shall be fully
vested, unless the successor corporation assumes or substitutes other options in
their place. The Stock Option Plan will terminate in 2010 and may be amended or
terminated by the board of directors.
F-17
<PAGE> 89
INTROGEN THERAPEUTICS, INC., AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Stock Option Compensation
In December 2000, Introgen accelerated the vesting of options held by a
board member concurrent with the individual ceasing to be a member of the board.
Introgen accelerated these options in recognition of the individual's
contributions to the board and recognized approximately $574,000 of non-cash
compensation expense for the fair value of the previously unvested options as of
the remeasurement date. Introgen also recognized aggregate deferred compensation
of approximately $609,000 for option grants at exercise prices below the deemed
fair value during the six months ended December 31, 1999. Amortization of
deferred compensation during the six months ended December 31, 1999 was
approximately $364,000.
Introgen anticipates that additional deferred compensation totaling
approximately $3.8 million will be recorded for options totaling 169,048, which
were granted in February 2000. These amounts are being amortized over the
respective vesting periods of the individual stock options. Introgen expects to
record amortization expense for deferred compensation and the accelerated vested
options as follows: $1.7 million during fiscal 2000, $1.6 million during fiscal
2001, $1.5 million during fiscal 2002, $1.3 million during fiscal year 2003, and
$711,000 during fiscal 2004. The amount of deferred compensation expense to be
recorded in future periods may decrease if unvested options for which deferred
compensation has been recorded are subsequently canceled.
Registration with Securities and Exchange Commission
In February 2000, Introgen filed a registration statement which, upon its
effectiveness, the outstanding preferred stock will convert into 7,703,866
shares of common stock. Accordingly, the following components of stockholders'
equity as of December 31, 1999, are adjusted here to reflect on a pro forma
basis the conversion of all outstanding preferred stock into common stock.
<TABLE>
<CAPTION>
DECEMBER 31, 1999
---------------------------
ACTUAL PRO FORMA
------------ ------------
<S> <C> <C>
Stockholders' equity --
Convertible preferred stock............................ $ 6,419 $ --
Common stock........................................... 2,568 10,272
Additional paid-in capital............................. 33,144,112 33,142,827
Deferred compensation.................................. (1,961,118) (1,961,118)
Accumulated deficit.................................... (14,767,095) (14,767,095)
------------ ------------
$ 16,424,886 $ 16,424,886
============ ============
</TABLE>
F-18
<PAGE> 90
The upper left portion of the inside back cover contains a depiction of a
syringe and vial containing INGN 201. The standard size syringe shows
measurements by milliliters. The labeled vial is a sample of one used by the
Company to treat patients. The image includes the following caption: INGN 201 is
an investigational biologic and has not been approved for sale in any country.
The lower portion of the inside back cover contains two separate parts. The
first part shows a picture of a standard biopsy procedure, showing a biopsy
needle injected into a lung cancer patient. The patient is shown lying face up.
The second picture is a syringe containing INGN 201 being injected into a lung
cancer patient. The images are explained with the following caption: Simple
Administration of INGN 201 Utilizes Routine Biopsy Procedure and Local
Injection.
The upper right portion of the inside back cover contains a photographic
illustration of p53 gene expression in the cells of a cancer patient. The left
side of the photo shows cancer cells before treatment with INGN 201. The right
side of the photo shows cells that have been treated with INGN 201. New p53
protein has been produced in the treated cells as evidenced by brown pigment in
the treated cells.
<PAGE> 91
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SHARES
[INTROGEN LOGO]
COMMON STOCK
-----------------------------
PROSPECTUS
-----------------------------
SG COWEN
PRUDENTIAL VECTOR HEALTHCARE
A UNIT OF PRUDENTIAL SECURITIES
, 2000
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 92
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth all fees and expenses payable by Introgen in
connection with the registration of the common stock hereunder. All of the
amounts shown are estimates except for the SEC registration fee, the NASD filing
fee and the Nasdaq National Market listing fee.
<TABLE>
<S> <C>
SEC Registration Fee........................................ $ 24,300
National Association of Securities Dealers, Inc. Filing
Fee....................................................... 9,700
Nasdaq National Market listing fee.......................... 95,000
Printing and Engraving Expenses............................. 200,000
Legal Fees and Expenses..................................... 300,000
Accounting Fees and Expenses................................ 250,000
Transfer Agent and Registrar Fees and Expenses.............. 25,000
Blue Sky fees and expenses.................................. 10,000
Miscellaneous Expenses...................................... 186,000
----------
Total............................................. $1,100,000
==========
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law allows for the
indemnification of officers, directors and any corporate agents in terms
sufficiently broad to indemnify such persons under certain circumstances for
liabilities (including reimbursement for expenses incurred) arising under the
Securities Act. Our certificate of incorporation and our bylaws provide for
indemnification of our directors, officers, employees and other agents to the
extent and under the circumstances permitted by the Delaware General Corporation
Law. We have also entered into agreements with our directors and executive
officers that require Introgen, among other things, to indemnify them against
certain liabilities that may arise by reason of their status or service as
directors and executive officers to the fullest extent permitted by Delaware
law. We have also purchased directors and officers liability insurance, which
provides coverage against certain liabilities including liabilities under the
Securities Act.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
Within the last three fiscal years, and through December 31, 1999, we have
issued and sold the following unregistered securities:
1. Since our inception, we have granted options to purchase 1,916,742
shares of common stock to employees, directors and consultants under our
1995 stock plan at exercise prices ranging from $0.625 to $0.830 per share.
Of the 1,916,742 shares granted, 1,507,352 shares remain outstanding,
124,683 shares of common stock have been purchased pursuant to exercises of
stock options and 284,707 shares have been canceled and returned to our
1995 stock plan.
2. In October 1997, we sold an aggregate of 1,100,000 shares of Series
D preferred stock at a price of $10.00 per share to one investor.
3. In June 1999, we sold an aggregate of 478,234 shares of Series B
preferred stock at a price of $10.67 per share to one investor.
4. In January 1997, we sold an aggregate of 491,329 shares of our
Series B preferred stock at a price of $8.65 to one investor.
The sales and issuances of securities in the transactions described above
were deemed to be exempt from registration under the Securities Act in reliance
upon Section 4(2) of the Securities Act, Regulation D promulgated thereunder,
Regulation S promulgated thereunder or Rule 701 promulgated under Section 3(b)
of the Securities Act, as transactions by an issuer not involving any public
offering or transactions pursuant to compensatory benefit plans and contracts
relating to compensation as provided
II-1
<PAGE> 93
under Rule 701. The recipients of securities in each 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 securities issued in such transactions. All
recipients had adequate access, through their relationship with Introgen, to
information about us.
(b) There were no underwritten offerings employed in connection with any of
the transactions set forth in Item 15(a).
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(A) EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------- -----------------------
<C> <S>
1.1* Form of Underwriting Agreement
3.1(a) Certificate of Incorporation, as amended and as currently in
effect
3.1(b) Form of Certificate of Incorporation to be filed upon
completion of the offering
3.2(a) Bylaws of Introgen as currently in effect
3.2(b) Bylaws of Introgen as in effect upon completion of the
offering
4.1* Specimen Common Stock Certificate
5.1 Opinion of Wilson Sonsini Goodrich & Rosati, Professional
Corporation
10.1 Form of Indemnification Agreement between Introgen and each
of its directors and officers
10.2 1995 Stock Plan and form of stock option agreement
thereunder
10.3 2000 Stock Option Plan and forms of agreements thereunder
10.4 2000 Employee Stock Purchase Plan and forms of agreements
thereunder
10.5 Form of Series C Preferred Stock Purchase Agreement among
Introgen and certain investors.
10.6 Registration Rights Agreement, dated October 31, 1997
10.7(a) Assignment of Leases, dated November 23, 1998, by TMX Realty
Corporation and Riverway Bank, and other related agreements.
10.7(b) Lease Agreement, dated June 7, 1996, by and between Introgen
and Plaza del Oro Business Center.
10.8(a)+ Patent and Technology License Agreement, effective as of
July 20, 1994, by and between the Board of Regents of The
University of Texas System, M.D. Anderson and Introgen.
10.8(b)+ Amendment No. 1 to Patent License Agreement, effective as of
September 1, 1996.
10.8(c)+ Amendment No. 2 to Patent License Agreement, effective as of
August 8, 1997.
10.9+ Sponsored Research Agreement for Clinical Study, No. CS
93-27, dated February 11, 1993, between Introgen and M.D.
Anderson, as amended.
10.10+ Sponsored Research Agreement No. SR95-012, dated September
21, 1995 between Introgen and M.D. Anderson, as amended.
10.11+ Sponsored Research Agreement No. SR 93-04, dated February
11, 1993 between M.D. Anderson and Introgen, as amended.
10.12+ Sponsored Laboratory Study Agreement No. LS95-035 between
M.D. Anderson and Introgen, dated September 21, 1995.
10.13+ Sponsored Research Agreement No. SR 96-004 between Introgen
and M.D. Anderson, dated January 17, 1996.
10.14+ Sponsored Research Agreement, dated March 29, 1996, between
Introgen and SKCC
10.15+ License Agreement, dated March 29, 1996 between Introgen and
SKCC.
10.16 Consulting Agreement between Introgen and Jack A. Roth,
M.D., effective as of October 1, 1994.
10.17 Consulting Agreement between EJ Financial Enterprises, Inc.
and Introgen, effective as of July 1, 1994.
</TABLE>
II-2
<PAGE> 94
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------- -----------------------
<C> <S>
10.18(a) Employment Agreement dated as of August 1, 1996 between
Introgen and David G. Nance.
10.18(b) Amendment No. 1 to Employment Agreement, effective as of
August 1, 1998.
10.18(c) Amendment No. 2 to Employment Agreement, dated as of
February 15, 2000.
10.19 Service Agreement, effective as of July 1, 1994, between
Introgen and Domecq Technologies, Inc.
10.20(a)+ Collaboration Agreement (p53 Products), effective as of
October 7, 1994, between Introgen and RPR, as amended.
10.20(b)+ Addendum No. 1 to Collaboration Agreement (p53 Products),
dated January 23, 1996, between Introgen and RPR.
10.20(c)+ 1997 Agreement Memorandum, effective as of July 22, 1997,
between Introgen and RPR.
10.20(d)+ Letter Agreement, dated April 19, 1999, from Introgen to RPR
regarding manufacturing process for INGN 201.
10.21(a)+ Collaboration Agreement (K-ras Products), effective as of
October 7, 1994, between Introgen and RPR, as amended.
10.21(b) Amendment No. 1 to Collaboration Agreement (K-ras Products),
effective as of September 27, 1995, between Introgen and
RPR.
10.22+ Collaborative Research and Development Agreement dated
October 30, 1998 between Introgen, RPR and NCI.
10.23+ Non-exclusive license agreement dated April 16, 1997, by
Introgen and Iowa Research Foundation.
10.24+ Option Agreement, effective as of June 1, 1998, by Introgen
and Imperial Cancer Research Technology Limited ("ICRT").
10.25+ Option Agreement, effective as of January 1, 1999, by
Introgen and ICRT.
10.26+ Exclusive License Agreement, effective as of July 19, 1999,
by Introgen and Corixa Corporation.
10.27(a)+ Evaluation and Exclusive Option Agreement dated September
1998, by Introgen and LXR Biotechnology ("LXR").
10.27(b) Letter dated January 28, 2000, from Introgen to LXR,
notifying LXR of its exercise of its option.
10.28+ Administrative Services and Management Agreement, effective
as of January 1, 1999, by and between Introgen and Gendux,
Inc.
10.29+ Research and Development Agreement, effective as of January
1, 1999, by and between Introgen and Gendux, Inc.
10.30+ Delivery Technology License Agreement, effective as of
January 1, 1999, by and between Introgen and Gendux, Inc.
10.31+ Target Gene License Agreement, effective as of January 1,
1999, by and between Introgen and Gendux, Inc.
10.32+ Nonexclusive License Agreement, dated as of August 17, 1998,
by and between Introgen and National Institute of Health.
21.1 List of subsidiaries of Introgen
23.1 Consent of Arthur Andersen LLP, independent public
accountants
23.2 Consent of Counsel (included in Exhibit 5.1)
24.1 Power of Attorney (See page II-5)
27.1 Financial Data Schedule for year ended June 30, 1999, and
six months ended December 31, 1999
</TABLE>
- ---------------
* To be filed by amendment
+ Confidential treatment has been requested for portions of this exhibit
II-3
<PAGE> 95
(b) FINANCIAL STATEMENT SCHEDULES
All schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission are not required under the
related instructions or are inapplicable, and therefore have been omitted.
ITEM 17. UNDERTAKINGS
Insofar as indemnification by Introgen for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of Introgen, we have 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
Introgen of expenses incurred or paid by a director, officer or controlling
person of Introgen in the successful defense of any action, suit or proceeding)
is asserted by a director, officer or controlling person in connection with the
securities being registered, we will, unless in the opinion of our counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by Introgen
is against public policy as expressed in the Securities Act and will be governed
by the final adjudication of such issue.
We hereby undertake that:
(a) We will provide to the underwriters at the closing as specified in
the underwriting agreement certificates in such denominations and
registered in such names as required by the underwriters to permit prompt
delivery to each purchaser.
(b) For purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of a
registration statement in reliance upon Rule 430A and contained in the form
of prospectus filed by Introgen pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of the registration
statement as of the time it was declared effective.
(c) For the purpose of determining any liability under the Securities
Act, 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> 96
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
Introgen Therapeutics, Inc. has duly caused this Registration Statement on Form
S-1 to be signed on its behalf by the undersigned, thereunto duly authorized, in
the City of Austin, State of Texas, on the 17th day of February, 2000.
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 constitutes and appoints David G. Nance and James W. Albrecht, Jr.
and each of them, his attorneys-in-fact, each with the power of substitution,
for him and in his name, place and stead, in any and all capacities, to sign any
and all amendments (including post-effective amendments) to this Registration
Statement, and to sign any registration statement for the same offering covered
by this Registration Statement that is to be effective upon filing pursuant to
Rule 462(b) promulgated under the Securities Act of 1933, and all post-effective
amendments thereto, and to file the same, with all exhibits thereto in all
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said 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 and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that such attorneys-in-fact and agents or any of them, or his or their
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS REGISTRATION STATEMENT ON FORM S-1 HAS BEEN SIGNED BY THE FOLLOWING PERSONS
IN THE CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
SIGNATURE TITLE DATE
- --------------------------------------------------- ---------------------------------- -----------------
<S> <C> <C>
/s/ DAVID G. NANCE President and Chief Executive February 17th,
- --------------------------------------------------- Officer and Director (Principal 2000
David G. Nance Executive Officer)
/s/ JAMES W. ALBRECHT, JR. Chief Financial Officer (Principal February 17th,
- --------------------------------------------------- Financial and Accounting Officer) 2000
James W. Albrecht, Jr.
/s/ MARK B. CHANDLER, PH.D. Director February 17th,
- --------------------------------------------------- 2000
Mark B. Chandler, Ph.D.
/s/ JOHN N. KAPOOR, PH.D. Chairman of the Board February 17th,
- --------------------------------------------------- 2000
John N. Kapoor, Ph.D.
/s/ FRANCOIS MEYER, PH.D. Director February 17th,
- --------------------------------------------------- 2000
Francois Meyer, Ph.D.
/s/ MAHENDRA G. SHAH, PH.D. Director February 17th,
- --------------------------------------------------- 2000
Mahendra G. Shah, Ph.D.
</TABLE>
<PAGE> 97
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------- -----------------------
<C> <S>
1.1* Form of Underwriting Agreement
3.1(a) Certificate of Incorporation, as amended and as currently in
effect
3.1(b) Form of Certificate of Incorporation to be filed upon
completion of the offering
3.2(a) Bylaws of Introgen as currently in effect
3.2(b) Bylaws of Introgen as in effect upon completion of the
offering
4.1* Specimen Common Stock Certificate
5.1 Opinion of Wilson Sonsini Goodrich & Rosati, Professional
Corporation
10.1 Form of Indemnification Agreement between Introgen and each
of its directors and officers
10.2 1995 Stock Plan and form of stock option agreement
thereunder
10.3 2000 Stock Option Plan and forms of agreements thereunder
10.4 2000 Employee Stock Purchase Plan and forms of agreements
thereunder
10.5 Form of Series C Preferred Stock Purchase Agreement among
Introgen and certain investors.
10.6 Registration Rights Agreement, dated October 31, 1997
10.7(a) Assignment of Leases, dated November 23, 1998, by TMX Realty
Corporation and Riverway Bank, and other related agreements.
10.7(b) Lease Agreement, dated June 7, 1996, by and between Introgen
and Plaza del Oro Business Center.
10.8(a)+ Patent and Technology License Agreement, effective as of
July 20, 1994, by and between the Board of Regents of The
University of Texas System, M.D. Anderson and Introgen.
10.8(b)+ Amendment No. 1 to Patent License Agreement, effective as of
September 1, 1996.
10.8(c)+ Amendment No. 2 to Patent License Agreement, effective as of
August 8, 1997.
10.9+ Sponsored Research Agreement for Clinical Study, No. CS
93-27, dated February 11, 1993, between Introgen and M.D.
Anderson, as amended.
10.10+ Sponsored Research Agreement No. SR95-012, dated September
21, 1995 between Introgen and M.D. Anderson, as amended.
10.11+ Sponsored Research Agreement No. SR 93-04, dated February
11, 1993 between M.D. Anderson and Introgen, as amended.
10.12+ Sponsored Laboratory Study Agreement No. LS95-035 between
M.D. Anderson and Introgen, dated September 21, 1995.
10.13+ Sponsored Research Agreement No. SR 96-004 between Introgen
and M.D. Anderson, dated January 17, 1996.
10.14+ Sponsored Research Agreement, dated March 29, 1996, between
Introgen and SKCC
10.15+ License Agreement, dated March 29, 1996 between Introgen and
SKCC.
10.16 Consulting Agreement between Introgen and Jack A. Roth,
M.D., effective as of October 1, 1994.
10.17 Consulting Agreement between EJ Financial Enterprises, Inc.
and Introgen, effective as of July 1, 1994.
</TABLE>
<PAGE> 98
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------- -----------------------
<C> <S>
10.18(a) Employment Agreement dated as of August 1, 1996 between
Introgen and David G. Nance.
10.18(b) Amendment No. 1 to Employment Agreement, effective as of
August 1, 1998.
10.18(c) Amendment No. 2 to Employment Agreement, dated as of
February 15, 2000.
10.19 Service Agreement, effective as of July 1, 1994, between
Introgen and Domecq Technologies, Inc.
10.20(a)+ Collaboration Agreement (p53 Products), effective as of
October 7, 1994, between Introgen and RPR, as amended.
10.20(b)+ Addendum No. 1 to Collaboration Agreement (p53 Products),
dated January 23, 1996, between Introgen and RPR.
10.20(c)+ 1997 Agreement Memorandum, effective as of July 22, 1997,
between Introgen and RPR.
10.20(d)+ Letter Agreement, dated April 19, 1999, from Introgen to RPR
regarding manufacturing process for INGN 201.
10.21(a)+ Collaboration Agreement (K-ras Products), effective as of
October 7, 1994, between Introgen and RPR, as amended.
10.21(b) Amendment No. 1 to Collaboration Agreement (K-ras Products),
effective as of September 27, 1995, between Introgen and
RPR.
10.22+ Collaborative Research and Development Agreement dated
October 30, 1998 between Introgen, RPR and NCI.
10.23+ Non-exclusive license agreement dated April 16, 1997, by
Introgen and Iowa Research Foundation.
10.24+ Option Agreement, effective as of June 1, 1998, by Introgen
and Imperial Cancer Research Technology Limited ("ICRT").
10.25+ Option Agreement, effective as of January 1, 1999, by
Introgen and ICRT.
10.26+ Exclusive License Agreement, effective as of July 19, 1999,
by Introgen and Corixa Corporation.
10.27(a)+ Evaluation and Exclusive Option Agreement dated September
1998, by Introgen and LXR Biotechnology ("LXR").
10.27(b) Letter dated January 28, 2000, from Introgen to LXR,
notifying LXR of its exercise of its option.
10.28+ Administrative Services and Management Agreement, effective
as of January 1, 1999, by and between Introgen and Gendux,
Inc.
10.29+ Research and Development Agreement, effective as of January
1, 1999, by and between Introgen and Gendux, Inc.
10.30+ Delivery Technology License Agreement, effective as of
January 1, 1999, by and between Introgen and Gendux, Inc.
10.31+ Target Gene License Agreement, effective as of January 1,
1999, by and between Introgen and Gendux, Inc.
10.32+ Nonexclusive License Agreement, dated as of August 17, 1998,
by and between Introgen and National Institute of Health.
21.1 List of subsidiaries of Introgen
23.1 Consent of Arthur Andersen LLP, independent public
accountants
23.2 Consent of Counsel (included in Exhibit 5.1)
24.1 Power of Attorney (See page II-5)
27.1 Financial Data Schedule for year ended June 30, 1999, and
six months ended December 31, 1999
</TABLE>
- ---------------
* To be filed by amendment
+ Confidential treatment has been requested for portions of this exhibit
<PAGE> 1
EXHIBIT 3.1(a)
AMENDED AND 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 242 and 245 of the Delaware General Corporation
Law, this Amended and Restated Certificate of Incorporation restates, 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
50,000,000. The total number of shares of Preferred Stock, $0.001 par value,
which this corporation has authority to issue is 8,308,523. 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"), 1,183,000 shares of Preferred Stock are designated
Series C Preferred Stock ("Series C Preferred") and 2,000,000 shares of
Preferred Stock are designated Series D Preferred Stock ("Series D Preferred").
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:
<PAGE> 2
1. Dividends. The holders of the Series A Preferred, the Series B
Preferred, Series C Preferred and Series D 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, $0.865 and $1.00 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, Series D 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,
Series D Preferred and Common Stock. Such dividends on the Series C Preferred
and Series D Preferred shall be paid, on a pari passu basis, 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, Series D 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, Series D 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 and Series D Preference. After payment of the
Series A Preference and the Series B Preference, the holders of the Series C
Preferred and Series D Preferred shall be entitled to receive, on a pari passu
basis, in preference and prior 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 and $10.00 per share, respectively, plus a further amount
equal to any dividends declared but
- 2 -
<PAGE> 3
unpaid on such shares (respectively, the "Series C Preference" and the "Series D
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 or Series D Preference, such assets
as are available shall be distributed ratably among the holders of the Series C
Preferred and Series D 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, the Series C Preference and the Series D
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 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
- 3 -
<PAGE> 4
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 initially be $0.833, (ii) Series B Preferred shall initially
be $4.79, (iii) Series C Preferred shall initially be $7.20 and (iv) Series D
Preferred shall initially be $8.33. The Conversion Value per share of (i) Series
A Preferred shall be $1.00, (ii) Series B Preferred shall be $5.75, (iii) Series
C Preferred shall be $8.65 and (iv) Series D Preferred shall be $10.00. The
Conversion Price of each series of Preferred Stock stated above has been
adjusted for the corporation's 1.2 for 1 forward split of its Common Stock
effected on August 26, 1996 and shall be subject to further 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(e) 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 or combination
of shares), the shares of Preferred Stock shall, after such capital
reorganization or
- 5 -
<PAGE> 6
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 Common Stock and the amount, if any, of
- 6 -
<PAGE> 7
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. Market Standoff. In connection with the initial public offering of the
corporation's securities, each holder of Common Stock and each holder of
Preferred Stock may not sell, make any short sale of, loan, grant any option for
the purchase of, or otherwise dispose of or hedge its ownership risks of, any
securities of the corporation (other than those included in the registration)
without the prior written consent of the corporation and the managing
underwriters for up to one hundred eighty (180) days from the effective date of
such registration. The corporation may impose stop transfer instructions in
order to enforce the foregoing covenant. Each holder of Common Stock or
Preferred Stock agrees to execute an agreement reflecting the foregoing as may
be requested by the managing underwriters at the time of the corporation's
initial underwritten public offering.
6. 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
- 7 -
<PAGE> 8
(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.
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 occurring, 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.
- 8 -
<PAGE> 9
IN WITNESS WHEREOF, the corporation has caused this Certificate to be
signed by James W. Albrecht, Jr., its Chief Financial Officer, and attested by
J. Rodney Varner, its Secretary, this ____ day of October, 1997.
INTROGEN THERAPEUTICS, INC.
By: /s/ James W. Albrecht, Jr.
------------------------------------
James W. Albrecht, Jr.
Chief Financial Officer
ATTEST:
/s/ J. Rodney Varner
- ---------------------------
J. Rodney Varner, Secretary
<PAGE> 1
EXHIBIT 3.1(b)
RESTATED CERTIFICATE OF INCORPORATION OF
INTROGEN THERAPEUTICS, INC.
---------------------------
Introgen Therapeutics, Inc., a corporation organized and existing under the
laws of the State of Delaware (the "Corporation"), hereby certifies as follows:
A. The Corporation filed its original Certificate of Incorporation with the
Delaware Secretary of State under the name "Intron Therapeutics, Inc. on June
17, 1993. The Corporation changed its name to "Introgen Therapeutics, Inc." on
March 29, 1996.
B. This Restated Certificate of Incorporation was duly adopted by the
Corporation's directors and stockholders in accordance with the applicable
provisions of Sections 228, 242 and 245 of the Delaware General Corporation Law
(the "DGCL").
C. This Restated Certificate of Incorporation restates, integrates and
amends the provisions of the Certificate of Incorporation of this Corporation,
as heretofore amended.
D. The text of the Certificate of Incorporation, as heretofore amended, is
hereby amended and restated in its entirety to read as follows:
ARTICLE I
The name of this Corporation is Introgen Therapeutics, Inc.
ARTICLE II
The address of the Corporation's registered office in the State of Delaware
is 1209 Orange Street, City of Wilmington, County of New Castle, 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 a corporation may be organized under the DGCL.
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
<PAGE> 2
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 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 with this
-2-
<PAGE> 3
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 DGCL 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. To the fullest extent permitted by applicable law, this
Corporation is authorized to provide indemnification of (and advancement of
expenses to) directors, officers, employees and other agents of this Corporation
(and any other persons to which Delaware law permits this Corporation to provide
indemnification), through Bylaw provisions, agreements with any such director,
officer, employee or other agent or other person, vote of stockholders or
disinterested directors, or otherwise, in excess of the indemnification and
advancement otherwise permitted by Section 145 of the DGCL.
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.
ARTICLE IX
Holders of stock of any class or series of the 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.
1. Number of Directors. The number of directors which constitutes the whole
Board of Directors of the Corporation shall be designated in the Corporation's
Bylaws. The directors shall be divided into three classes with the term of
office of the first class (Class I) to expire at the annual
-3-
<PAGE> 4
meeting of stockholders held in 2000; the term of office of the second class
(Class II) to expire at the annual meeting of stockholders held in 2001; the
term of office of the third class (Class III) to expire at the annual meeting of
stockholders held in 2002; and thereafter for each such term to expire at each
third succeeding annual meeting of stockholders after such election.
2. Election of Directors. Elections of directors need not be by written
ballot unless the Corporation's Bylaws shall so provide.
ARTICLE X
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 Corporation's Bylaws.
ARTICLE XI
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
Corporation's Bylaws and no action shall be taken by the stockholders by written
consent. The affirmative vote of at least two-thirds of the then outstanding
voting securities of the Corporation, voting together as a single class, shall
be required for the amendment, repeal or modification of the provisions of
Article IX, Article X or Article XII of this Amended and Restated Certificate of
Incorporation or Sections 2.3 (Special Meeting), 2.4 (Notice of Stockholders'
Meeting), 2.5 (Advanced Notice of Stockholder Nominees and Stockholder
Business), 2.10 (Voting), or 2.12 (Stockholder Action by Written Consent Without
a Meeting), or 3.2 (Number of Directors) of the Corporation's Bylaws.
ARTICLE XII
Meetings of stockholders may be held within or without the State of
Delaware, as the Corporation's 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 Corporation's Bylaws.
------------------------------
-4-
<PAGE> 5
IN WITNESS WHEREOF, the Corporation has caused this Restated Certificate of
Incorporation to be signed by its Chief Executive Officer and President on ,
2000.
Introgen Therapeutics, Inc.
-------------------------------------
David G. Nance
Chief Executive Officer and President
-5-
<PAGE> 1
EXHIBIT 3.2(a)
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>
-i-
<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>
-ii-
<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>
-iii-
<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. No other person or persons are permitted to call a special
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-
-2-
<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
-3-
<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
-4-
<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.
-5-
<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
-6-
<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:
-7-
<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
-8-
<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.
-9-
<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-
-10-
<PAGE> 15
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
-11-
<PAGE> 16
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.
-12-
<PAGE> 17
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-
-13-
<PAGE> 18
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.
-14-
<PAGE> 19
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
-15-
<PAGE> 20
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
-16-
<PAGE> 21
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-
-17-
<PAGE> 22
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.
-18-
<PAGE> 23
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
-19-
<PAGE> 24
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
-20-
<PAGE> 25
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.
-21-
<PAGE> 26
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
-22-
<PAGE> 27
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
-23-
<PAGE> 28
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
-24-
<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.
-25-
<PAGE> 1
EXHIBIT 3.2(b)
AMENDED AND RESTATED 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 ADVANCE NOTICE OF STOCKHOLDER NOMINEES AND STOCKHOLDER
BUSINESS........................................................2
2.6 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE....................3
2.7 QUORUM..........................................................3
2.8 ADJOURNED MEETING; NOTICE.......................................4
2.9 CONDUCT OF BUSINESS.............................................4
2.10 VOTING..........................................................4
2.11 WAIVER OF NOTICE................................................4
2.12 STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING.........4
2.13 RECORD DATE FOR STOCKHOLDER NOTICE; VOTING; GIVING CONSENTS.....5
2.14 PROXIES.........................................................5
2.15 LIST OF STOCKHOLDERS ENTITLED TO VOTE...........................5
ARTICLE III DIRECTORS........................................................6
3.1 POWERS..........................................................6
3.2 NUMBER OF DIRECTORS.............................................6
3.3 ELECTION, QUALIFICATION AND TERM OF OFFICE OF DIRECTORS.........6
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..........................................................8
3.9 WAIVER OF NOTICE................................................9
3.10 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING...............9
3.11 FEES AND COMPENSATION OF DIRECTORS..............................9
3.12 APPROVAL OF LOANS TO OFFICERS...................................9
3.13 REMOVAL OF DIRECTORS............................................9
ARTICLE IV COMMITTEES.......................................................10
4.1 COMMITTEES OF DIRECTORS........................................10
4.2 COMMITTEE MINUTES..............................................10
</TABLE>
- i -
<PAGE> 3
<TABLE>
<S> <C>
4.3 MEETINGS AND ACTION OF COMMITTEES..............................10
ARTICLE V OFFICERS..........................................................11
5.1 OFFICERS.......................................................11
5.2 APPOINTMENT OF OFFICERS........................................11
5.3 SUBORDINATE OFFICERS...........................................11
5.4 REMOVAL AND RESIGNATION OF OFFICERS; FILLING VACANCIES.........11
5.5 CHAIRMAN OF THE BOARD..........................................12
5.6 CHIEF EXECUTIVE OFFICER........................................12
5.7 PRESIDENT......................................................12
5.8 VICE PRESIDENTS................................................12
5.9 SECRETARY......................................................13
5.10 CHIEF FINANCIAL OFFICER........................................13
5.11 ASSISTANT SECRETARY............................................13
5.12 ASSISTANT TREASURER............................................14
5.13 REPRESENTATION OF SHARES OF OTHER CORPORATIONS.................14
5.14 AUTHORITY AND DUTIES OF OFFICERS...............................14
ARTICLE VI INDEMNITY........................................................14
6.1 THIRD PARTY ACTIONS............................................14
6.2 ACTIONS BY OR IN THE RIGHT OF THE CORPORATION..................15
6.3 SUCCESSFUL DEFENSE.............................................15
6.4 DETERMINATION OF CONDUCT.......................................15
6.5 PAYMENT OF EXPENSES IN ADVANCE.................................16
6.6 INDEMNITY NOT EXCLUSIVE........................................16
6.7 INSURANCE INDEMNIFICATION......................................16
6.8 THE CORPORATION................................................16
6.9 EMPLOYEE BENEFIT PLANS.........................................17
6.10 CONTINUATION OF INDEMNIFICATION AND ADVANCEMENT OF EXPENSES....17
ARTICLE VII RECORDS AND REPORTS.............................................17
7.1 MAINTENANCE AND INSPECTION OF RECORDS..........................17
7.2 INSPECTION BY DIRECTORS........................................18
7.3 ANNUAL STATEMENT TO STOCKHOLDERS...............................18
ARTICLE VIII GENERAL MATTERS................................................18
8.1 CHECKS.........................................................18
8.2 EXECUTION OF CORPORATE CONTRACTS AND INSTRUMENTS...............18
8.3 STOCK CERTIFICATES; PARTLY PAID SHARES.........................18
8.4 SPECIAL DESIGNATION ON CERTIFICATES............................19
8.5 LOST CERTIFICATES..............................................19
8.6 CONSTRUCTION; DEFINITIONS......................................20
8.7 DIVIDENDS......................................................20
8.8 FISCAL YEAR....................................................20
</TABLE>
- ii -
<PAGE> 4
<TABLE>
<S> <C>
8.9 SEAL...........................................................20
8.10 TRANSFER OF STOCK..............................................20
8.11 STOCK TRANSFER AGREEMENTS......................................21
8.12 REGISTERED STOCKHOLDERS........................................21
ARTICLE IX AMENDMENTS.......................................................21
</TABLE>
- iii -
<PAGE> 5
AMENDED AND RESTATED 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, either within or
without the State of Delaware, as may be designated by the board of directors or
in the manner provided in these bylaws. In the absence of any such designation,
stockholders' meetings shall be held at the registered office of the corporation
in the State of Delaware.
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 stockholders shall be held on the second
Tuesday of November of each year at 10:00 a.m. However, if such day falls on a
egal 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 by the chief executive
officer, or by the president.
<PAGE> 6
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 2.6 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 ADVANCE NOTICE OF STOCKHOLDER NOMINEES AND STOCKHOLDER BUSINESS
Subject to the rights of holders of any class or series of stock having
a preference over the Common Stock as to dividends or upon liquidation,
(i) nominations for the election of directors, and
(ii) business proposed to be brought before any stockholder
meeting
may be made by the board of directors or proxy committee appointed by the board
of directors or by any stockholder entitled to vote in the election of directors
generally if such nomination or business proposed is otherwise proper business
before such meeting. However, any such stockholder may nominate one or more
persons for election as directors at a meeting or propose business to be brought
before a meeting, or both, only if such stockholder has given timely notice in
proper written form of their intent to make such nomination or nominations or to
propose such business. To be timely, such stockholder's notice must be delivered
to or mailed and received at the principal executive offices of the corporation
not less than one hundred twenty (120) calendar days in advance of the first
anniversary date of mailing of the corporation's proxy statement released to
stockholders in connection with the previous year's annual meeting of
stockholders; provided, however, that in the event that no annual meeting was
held in the previous year or the date of the annual meeting has been changed by
more than thirty (30) days from the date contemplated at the time of the
previous year's proxy statement, notice by the stockholder to be timely must be
so received a reasonable time before the solicitation is made. To be in proper
form, a stockholder's notice to the secretary shall set forth:
- 2 -
<PAGE> 7
(a) the name and address of the stockholder who intends to
make the nominations or propose the business and, as the case may be,
of the person or persons to be nominated or of the business to be
proposed;
(b) a representation that the stockholder is a holder of
record of stock of the corporation entitled to vote at such meeting
and, if applicable, intends to appear in person or by proxy at the
meeting to nominate the person or persons specified in the notice;
(c) if applicable, a description of all arrangements or
understandings between the stockholder and each nominee and any other
person or persons (naming such person or persons) pursuant to which the
nomination or nominations are to be made by the stockholder;
(d) such other information regarding each nominee or each
matter of business to be proposed by such stockholder as would be
required to be included in a proxy statement filed pursuant to the
proxy rules of the Securities and Exchange Commission had the nominee
been nominated, or intended to be nominated, or the matter been
proposed, or intended to be proposed by the board of directors; and
(e) if applicable, the consent of each nominee to serve as
director of the corporation if so elected.
The chairman of the meeting shall refuse to acknowledge the nomination
of any person or the proposal of any business not made in compliance with the
foregoing procedure.
2.6 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.
2.7 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 stockholders for the transaction of
business except as otherwise provided 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.
- 3 -
<PAGE> 8
2.8 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.
2.9 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.
2.10 VOTING
The stockholders entitled to vote at any meeting of stockholders shall
be determined in accordance with the provisions of Section 2.13 of these bylaws,
subject to the provisions of Sections 217 and 218 of the Delaware General
Corporation Law (relating to voting rights of fiduciaries, pledgors and joint
owners of stock and to voting trusts and other voting agreements).
Except 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.
2.11 WAIVER OF NOTICE
Whenever notice is required to be given under any provision of the
Delaware General Corporation Law or of the certificate of incorporation or these
bylaws, a written waiver, 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, 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.
2.12 STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING
Unless otherwise provided in the certificate of incorporation, the
stockholders of the corporation may not act by written consent without a meeting
but instead must act at a duly called annual or special meeting.
- 4 -
<PAGE> 9
2.13 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 first date on which
a signed written consent is delivered to the corporation.
(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.
2.14 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 such stockholder by a written
proxy, signed by such 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 such stockholder's name is placed on the proxy by any
reasonable means including, but not limited to, by facsimile signature, manual
signature, typewriting, telegraphic transmission or otherwise, by such
stockholder or such 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(e) of the Delaware General Corporation Law.
2.15 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
- 5 -
<PAGE> 10
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 Delaware General Corporation Law 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 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 board of directors shall consist of five (5) members. The number of
directors may be changed by an amendment to this bylaw, duly adopted by the
board of directors or by the stockholders, or by a duly adopted amendment to the
certificate of incorporation. Upon the closing of the first sale of the
corporation's common stock pursuant to a firmly underwritten registered public
offering (the "IPO"), the directors shall be divided into three classes, with
the term of office of the first class, which class shall initially consist of
three directors, to expire at the first annual meeting of stockholders held
after the IPO; the term of office of the second class, which shall initially
consist of three directors, to expire at the second annual meeting of
stockholders held after the IPO; the term of office of the third class, which
class shall initially consist of four directors, to expire at the third annual
meeting of stockholders held after the IPO; and thereafter for each such term to
expire at each third succeeding annual meeting of stockholders held after such
election.
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 stockholders 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.
- 6 -
<PAGE> 11
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 shall
resign from the board of directors, 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:
(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 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 provisions 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 Delaware General Corporation Law.
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
Delaware General Corporation Law as far as applicable.
- 7 -
<PAGE> 12
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 such board of directors,
or committee by 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 pursuant to this section 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, the certificate of incorporation, or
these bylaws. 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.
- 8 -
<PAGE> 13
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
Delaware General Corporation Law, 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 such 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
directors shall approve, including, without limitation, a pledge of shares of
stock of the corporation. Nothing contained in this section 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 stockholders of the corporation are entitled to cumulative
voting, if less than the entire
- 9 -
<PAGE> 14
board is to be removed, no director may be removed without cause if the votes
cast against his removal would be sufficient to elect such director if then
cumulatively voted at an election of the entire board of directors or, if there
be classes of directors, at an election of the class of directors of which such
director is a part.
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 such
member or members 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 (i) approving or adopting or
recommending to the stockholders, any action or matter expressly required by the
Delaware General Corporation Law to be submitted to stockholders for approval or
(ii) adopting, amending, or repealing any 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 Delaware
General Corporation Law.
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
- 10 -
<PAGE> 15
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.
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 provided in these bylaws or as the board of
directors may from time to time determine.
5.4 REMOVAL AND RESIGNATION OF OFFICERS; FILLING VACANCIES
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
- 11 -
<PAGE> 16
be necessary to make it effective. Any resignation is without prejudice to the
rights, if any, of the corporation under any contract to which the officer is a
party.
Any vacancy occurring in any office of the corporation shall be filled
by the board of directors.
5.5 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 the
chairman of the board by the board of directors or as may be prescribed by these
bylaws. If there is no president and no one has been appointed chief executive
officer, 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 5.6 of these bylaws.
5.6 CHIEF EXECUTIVE OFFICER
The board of directors shall select a chief executive officer of the
corporation who shall be subject to the control of the board of directors and
have general supervision, direction and control of the business and the officers
of the corporation. The chief executive officer shall preside at all meetings of
the stockholders and, in the absence or nonexistence of a chairman of the board,
at all meetings of the board of directors.
5.7 PRESIDENT
The president 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. In addition and subject to such supervisory powers, if any, as may be
given by the board of directors to the chairman of the board, if no one has been
appointed chief executive officer, the president shall be the chief executive
officer of the corporation and shall, subject to the control of the board of
directors, have the powers and duties described in Section 5.6.
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.
- 12 -
<PAGE> 17
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. The secretary 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. The chief financial
officer shall disburse the funds of the corporation as may be ordered by the
board of directors, shall render to the president and directors, 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 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
- 13 -
<PAGE> 18
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 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 such person is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture trust or other enterprise, against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement (if such settlement is approved
in advance by the corporation, which approval shall not be unreasonably
withheld) actually and reasonably incurred by such person in connection with
such action, suit or proceeding if such person acted in good faith and in a
manner such person 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 such person's conduct was
unlawful. The termination of any action, suit
- 14 -
<PAGE> 19
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 the person 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 the person's 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 such person 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, partnership,
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 approval shall not be unreasonably withheld) actually
and reasonably incurred by such person in connection with the defense or
settlement of such action or suit if such person acted in good faith and in
manner such person 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, such person shall be indemnified against
expenses (including attorneys' fees) actually and reasonably incurred by such
person 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 such person 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
- 15 -
<PAGE> 20
foregoing, 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.
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 such person 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 such person's
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 such
person and incurred by such person in any such capacity or arising out of such
person's status as such, whether or not the corporation would have the power to
indemnify such person 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 Article VI (including,
without limitation the provisions of Section 6.4) with respect to the resulting
or surviving corporation as such person would have with respect to such
constituent corporation if its separate existence had continued.
- 16 -
<PAGE> 21
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 such person
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 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
- 17 -
<PAGE> 22
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.
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
- 18 -
<PAGE> 23
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 if such person 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 corporation 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, however, 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 canceled 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 alleged loss, theft or destruction of any such certificate or the
issuance of such new certificate or uncertificated shares.
- 19 -
<PAGE> 24
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 Delaware General Corporation Law 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 certificate to the person entitled
thereto, cancel the old certificate, and record the transaction in its books.
- 20 -
<PAGE> 25
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 Delaware General Corporation Law.
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.
- 21 -
<PAGE> 26
INTROGEN THERAPEUTICS, INC.
CERTIFICATE OF ADOPTION OF BYLAWS
=============================
The undersigned hereby certifies that he is the duly elected,
qualified, and acting Secretary of Introgen Therapeutics, Inc. and that the
foregoing Amended and Restated Bylaws, comprising twenty-one (21) pages, were
adopted as the Amended and Restated Bylaws of the corporation on February ___,
2000 by the board of directors of the corporation.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
this ___ day of _____________________, 2000.
--------------------------------------
Secretary
<PAGE> 1
EXHIBIT 5.1
[WILSON SONSINI GOODRICH & ROSATI LETTERHEAD]
February 17, 2000
VIA OVERNIGHT MAIL
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 February 17, 2000
(as such may be amended or supplemented, the "Registration Statement"), in
connection with the registration under the Securities Act of 1933, as amended
(the "Act"), of shares of your common stock (the "Shares"). The Shares, which
include shares of common stock issuable pursuant to an over-allotment option
granted to the underwriters, are to be sold to the underwriters as described in
such Registration Statement for the sale to the public. 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.
Should you have any questions or comments, please contact me at the
above-referenced number.
Sincerely,
WILSON SONSINI GOODRICH & ROSATI
Professional Corporation
/s/ Wilson Sonsini Goodrich & Rosati
<PAGE> 1
EXHIBIT 10.1
INTROGEN THERAPEUTICS, INC.
INDEMNIFICATION AGREEMENT
This Indemnification Agreement ("Agreement") is effective as of
____________________, 2000 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 significant 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, 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), 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 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
<PAGE> 2
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 subsidiaries) 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
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.
-2-
<PAGE> 3
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 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 Independent 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,
-3-
<PAGE> 4
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 proceeding. 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 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.
-4-
<PAGE> 5
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.
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
-5-
<PAGE> 6
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
determination 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 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.
-6-
<PAGE> 7
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. 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
-7-
<PAGE> 8
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 Actions 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.
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
-8-
<PAGE> 9
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 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
-9-
<PAGE> 10
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 the 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, 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.
-10-
<PAGE> 11
IN WITNESS WHEREOF, the parties hereto have executed this
Indemnification Agreement as of the date first above written.
Introgen Therapeutics, Inc.
By:
-------------------------------------------
Name: David G. Nance
Title: Chief Executive Officer and President
Address: 301 Congress Avenue, Suite 1850
Austin, TX 78701
AGREED TO AND ACCEPTED
INDEMNITEE:
--------------------------------
(Signature)
--------------------------------
Name
Address:
------------------------
------------------------
<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.
-2-
<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.
-3-
<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;
-4-
<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
-5-
<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
-6-
<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.
-7-
<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, 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; provided, however, that, with the written
approval of the Administrator, which may be granted or withheld in its absolute
discretion, Non-Statutory Stock Options may be sold, transferred, pledged or
assigned, and may be exercised by any such approved transferee.
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
-8-
<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
-9-
<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
--------------------- --
-2-
<PAGE> 1
EXHIBIT 10.3
INTROGEN THERAPEUTICS INC.
2000 STOCK OPTION PLAN
1. Purposes of the Plan. The purposes of this 2000 Stock Option Plan are:
o to attract and retain the best available personnel for positions of
substantial responsibility,
o to provide additional incentive to Employees, Directors and
Consultants, and
o to promote the success of the Company's business.
Options granted under the Plan may be Incentive Stock Options or
Nonstatutory Stock Options, as determined by the Administrator at the time of
grant. 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 as shall be
administering the Plan, in accordance with Section 4 of the Plan.
(b) "Applicable Laws" means the requirements relating to the
administration of stock option plans under U. S. state corporate laws, U.S.
federal and state securities laws, the Code, any stock exchange or quotation
system on which the Common Stock is listed or quoted and the applicable laws of
any foreign country or jurisdiction where Options or Stock Purchase Rights are,
or will be, granted under the Plan.
(c) "Board" means the Board of Directors of the Company.
(d) "Code" means the Internal Revenue Code of 1986, as amended.
(e) "Committee" means a committee of Directors appointed by the Board in
accordance with Section 4 of the Plan.
(f) "Common Stock" means the common stock of the Company.
(g) "Company" means Introgen Therapeutics Inc., a Delaware corporation.
(h) "Consultant" means any person, including an advisor, engaged by the
Company or a Parent or Subsidiary to render services to such entity.
(i) "Director" means a member of the Board.
<PAGE> 2
(j) "Disability" means total and permanent disability as defined in
Section 22(e)(3) of the Code.
(k) "Employee" means any person, including Officers and Directors,
employed by the Company or any Parent or Subsidiary of the Company. A Service
Provider shall not cease to be an Employee in the case of (i) any leave of
absence approved by the Company or (ii) transfers between locations of the
Company or between the Company, its Parent, any Subsidiary, or any successor.
For purposes of Incentive Stock Options, no such leave may exceed ninety days,
unless reemployment upon expiration of such leave is guaranteed by statute or
contract. If reemployment upon expiration of a leave of absence approved by the
Company is not so guaranteed, on the 181st day of such leave any Incentive Stock
Option held by the Optionee shall cease to be treated as an Incentive Stock
Option and shall be treated for tax purposes as a Nonstatutory Stock Option.
Neither service as a Director nor payment of a director's fee by the Company
shall be sufficient to constitute "employment" by the Company.
(l) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(m) "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; or
(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.
(n) "Incentive Stock Option" means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.
(o) "Nonstatutory Stock Option" means an Option not intended to qualify
as an Incentive Stock Option.
(p) "Notice of Grant" means a written or electronic notice evidencing
certain terms and conditions of an individual Option or Stock Purchase Right
grant. The Notice of Grant is part of the Option Agreement.
- 2 -
<PAGE> 3
(q) "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.
(r) "Option" means a stock option granted pursuant to the Plan.
(s) "Option Agreement" means an agreement between the Company and an
Optionee evidencing the terms and conditions of an individual Option grant. The
Option Agreement is subject to the terms and conditions of the Plan.
(t) "Option Exchange Program" means a program whereby outstanding
Options are surrendered in exchange for Options with a lower exercise price.
(u) "Optioned Stock" means the Common Stock subject to an Option or
Stock Purchase Right.
(v) "Optionee" means the holder of an outstanding Option or Stock
Purchase Right granted under the Plan.
(w) "Parent" means a "parent corporation," whether now or hereafter
existing, as defined in Section 424(e) of the Code.
(x) "Plan" means this 2000 Stock Option Plan.
(y) "Restricted Stock" means shares of Common Stock acquired pursuant to
a grant of Stock Purchase Rights under Section 11 of the Plan.
(z) "Restricted Stock Purchase Agreement" means a written agreement
between the Company and the Optionee evidencing the terms and restrictions
applying to stock purchased under a Stock Purchase Right. The Restricted Stock
Purchase Agreement is subject to the terms and conditions of the Plan and the
Notice of Grant.
(aa) "Rule 16b-3" means Rule 16b-3 of the Exchange Act or any successor
to Rule 16b-3, as in effect when discretion is being exercised with respect to
the Plan.
(bb) "Section 16(b) " means Section 16(b) of the Exchange Act.
(cc) "Service Provider" means an Employee, Director or Consultant.
(dd) "Share" means a share of the Common Stock, as adjusted in
accordance with Section 13 of the Plan.
(ee) "Stock Purchase Right" means the right to purchase Common Stock
pursuant to Section 11 of the Plan, as evidenced by a Notice of Grant.
(ff) "Subsidiary" means a "subsidiary corporation", whether now or
hereafter existing, as defined in Section 424(f) of the Code.
- 3 -
<PAGE> 4
3. Stock Subject to the Plan. Subject to the provisions of Section 13 of
the Plan, the maximum aggregate number of Shares that may be optioned and sold
under the Plan is 3,000,000 Shares, plus an annual increased to be added on the
first day of the Company's fiscal year beginning in 2001 equal to the lesser of
(i) 1,000,000 shares, (ii) 5% of the outstanding shares on such date, or (iii) a
lesser amount determined by the Board. 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 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) Procedure.
(i) Multiple Administrative Bodies. Different Committees with
respect to different groups of Service Providers may administer the Plan.
(ii) Section 162(m). To the extent that the Administrator determines
it to be desirable to qualify Options granted hereunder as "performance-based
compensation" within the meaning of Section 162(m) of the Code, the Plan shall
be administered by a Committee of two or more "outside directors" within the
meaning of Section 162(m) of the Code.
(iii) Rule 16b-3. To the extent desirable to qualify transactions
hereunder as exempt under Rule 16b-3, the transactions contemplated hereunder
shall be structured to satisfy the requirements for exemption under Rule 16b-3.
(iv) Other Administration. Other than as provided above, the Plan
shall be administered by (A) the Board or (B) a Committee, which committee shall
be constituted to satisfy Applicable Laws.
(b) Powers of the Administrator. Subject to the provisions of the Plan,
and in the case of a Committee, subject to the specific duties delegated by the
Board to such Committee, the Administrator shall have the authority, in its
discretion:
(i) to determine the Fair Market Value;
(ii) to select the Service Providers to whom Options and Stock
Purchase Rights may be granted hereunder;
(iii) to determine the number of shares of Common Stock to be
covered by each Option and Stock Purchase Right granted hereunder;
- 4 -
<PAGE> 5
(iv) to approve forms of agreement for use under the Plan;
(v) to determine the terms and conditions, not inconsistent with the
terms of the Plan, of any Option or Stock Purchase Right granted hereunder. Such
terms and conditions include, but are not limited to, the exercise price, the
time or times when Options or Stock Purchase Rights may be exercised (which may
be based on performance criteria), any vesting acceleration or waiver of
forfeiture restrictions, and any restriction or limitation regarding any Option
or Stock Purchase Right or the shares of Common Stock relating thereto, based in
each case on such factors as the Administrator, in its sole discretion, shall
determine;
(vi) to reduce the exercise price of any Option or Stock Purchase
Right to the then current Fair Market Value if the Fair Market Value of the
Common Stock covered by such Option or Stock Purchase Right shall have declined
since the date the Option or Stock Purchase Right was granted;
(vii) to institute an Option Exchange Program;
(viii) to construe and interpret the terms of the Plan and awards
granted pursuant to the Plan;
(ix) to prescribe, amend and rescind rules and regulations relating
to the Plan, including rules and regulations relating to sub-plans established
for the purpose of qualifying for preferred tax treatment under foreign tax
laws;
(x) to modify or amend each Option or Stock Purchase Right (subject
to Section 15(c) of the Plan), including the discretionary authority to extend
the post-termination exercisability period of Options longer than is otherwise
provided for in the Plan;
(xi) to allow Optionees to satisfy withholding tax obligations by
electing to have the Company withhold from the Shares to be issued upon exercise
of an Option or Stock Purchase Right that number of Shares having a Fair Market
Value equal to the amount required to be withheld. The Fair Market Value of the
Shares to be withheld shall be determined on the date that the amount of tax to
be withheld is to be determined. All elections by an Optionee to have Shares
withheld for this purpose shall be made in such form and under such conditions
as the Administrator may deem necessary or advisable;
(xii) to authorize any person to execute on behalf of the Company
any instrument required to effect the grant of an Option or Stock Purchase Right
previously granted by the Administrator;
(xiii) to make all other determinations deemed necessary or
advisable for administering the Plan.
(c) Effect of Administrator's Decision. The Administrator's decisions,
determinations and interpretations shall be final and binding on all Optionees
and any other holders of Options or Stock Purchase Rights.
- 5 -
<PAGE> 6
5. Eligibility. Nonstatutory Stock Options and Stock Purchase Rights may be
granted to Service Providers. Incentive Stock Options may be granted only to
Employees.
6. Limitations.
(a) Each Option shall be designated in the Option Agreement as either an
Incentive Stock Option or a Nonstatutory Stock Option. However, notwithstanding
such designation, to the extent that the aggregate Fair Market Value of the
Shares with respect to which Incentive Stock Options are exercisable for the
first time by the Optionee during any calendar year (under all plans of the
Company and any Parent or Subsidiary) exceeds $100,000, such Options shall be
treated as Nonstatutory Stock Options. For purposes of this Section 6(a),
Incentive Stock Options shall be taken into account in the order in which they
were granted. The Fair Market Value of the Shares shall be determined as of the
time the Option with respect to such Shares is granted.
(b) Neither the Plan nor any Option or Stock Purchase Right shall confer
upon an Optionee any right with respect to continuing the Optionee's
relationship as a Service Provider with the Company, nor shall they interfere in
any way with the Optionee's right or the Company's right to terminate such
relationship at any time, with or without cause.
(c) The following limitations shall apply to grants of Options:
(i) No Service Provider shall be granted, in any fiscal year of the
Company, Options to purchase more than 1,000,000 Shares.
(ii) In connection with his or her initial service, a Service
Provider may be granted Options to purchase up to an additional 1,000,000
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 13.
(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 13), the cancelled Option will be counted against the
limits set forth in subsections (i) and (ii) above. For this purpose, if the
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.
7. Term of Plan. Subject to Section 19 of the Plan, the Plan shall become
effective upon its adoption by the Board. It shall continue in effect for a term
of ten (10) years unless terminated earlier under Section 15 of the Plan.
8. Term of Option. The term of each Option shall be stated in the Option
Agreement. In the case of an Incentive Stock Option, the term shall be ten (10)
years from the date of grant or such shorter term as may be provided in the
Option Agreement. Moreover, in the case of an Incentive Stock Option granted to
an Optionee who, at the time the Incentive Stock Option is granted, owns stock
representing more than ten percent (10%) of the total combined voting power of
all classes of stock of the Company or any Parent or Subsidiary, the term of the
Incentive Stock
- 6 -
<PAGE> 7
Option shall be five (5) years from the date of grant or such shorter term as
may be provided in the Option Agreement.
9. Option Exercise Price and Consideration.
(a) Exercise Price. The per share exercise price for the Shares to be
issued pursuant to exercise of an Option shall be determined by the
Administrator, subject to the following:
(i) In the case of an Incentive Stock Option
(A) granted to an Employee who, at the time the Incentive Stock
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 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 other than an Employee described in
paragraph (A) immediately above, 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. In the case of a
Nonstatutory Stock Option intended to qualify as "performance-based
compensation" within the meaning of Section 162(m) of the Code, the per Share
exercise price shall be no less than 100% of the Fair Market Value per Share on
the date of grant.
(iii) Notwithstanding the foregoing, Options may be granted with a
per Share exercise price of less than 100% of the Fair Market Value per Share on
the date of grant pursuant to a merger or other corporate transaction.
(b) Waiting Period and Exercise Dates. At the time an Option is granted,
the Administrator shall fix the period within which the Option may be exercised
and shall determine any conditions that must be satisfied before the Option may
be exercised.
(c) Form of Consideration. The Administrator shall determine the
acceptable form of consideration for exercising an Option, including the method
of payment. In the case of an Incentive Stock Option, the Administrator shall
determine the acceptable form of consideration at the time of grant. Such
consideration may consist entirely of:
(i) cash;
(ii) check;
(iii) promissory note;
(iv) other Shares which (A) 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
- 7 -
<PAGE> 8
(B) 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;
(v) consideration received by the Company under a cashless exercise
program implemented by the Company in connection with the Plan;
(vi) a reduction in the amount of any Company liability to the
Optionee, including any liability attributable to the Optionee's participation
in any Company-sponsored deferred compensation program or arrangement;
(vii) any combination of the foregoing methods of payment; or
(viii) such other consideration and method of payment for the
issuance of Shares to the extent permitted by Applicable Laws.
10. Exercise of Option.
(a) Procedure for Exercise; Rights as a Shareholder. Any Option granted
hereunder shall be exercisable according to the terms of the Plan and at such
times and under such conditions as determined by the Administrator and set forth
in the Option Agreement. Unless the Administrator provides otherwise, vesting of
Options granted hereunder shall be tolled during any unpaid leave of absence. An
Option may not be exercised for a fraction of a Share.
An Option shall be deemed exercised when the Company receives: (i)
written or electronic notice of exercise (in accordance with the Option
Agreement) from the person entitled to exercise the Option, and (ii) full
payment for the Shares with respect to which the Option is exercised. Full
payment may consist of any consideration and method of payment authorized by the
Administrator and permitted by the Option Agreement and the Plan. Shares issued
upon exercise of an Option shall be issued in the name of the Optionee or, if
requested by the Optionee, in the name of the Optionee and his or her spouse.
Until the Shares are 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 Shares 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 Shares are issued, except as
provided in Section 13 of the Plan.
Exercising an Option in any manner shall decrease the number of
Shares thereafter 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 Relationship as a Service Provider. If an Optionee
ceases to be a Service Provider, other than upon the Optionee's death or
Disability, the Optionee may exercise his or her Option within such period of
time as is specified in the Option Agreement to the extent that the Option is
vested on the date of termination (but in no event later than the expiration of
the term of such Option as set forth in the Option Agreement). In the absence of
a specified time in the Option Agreement, the Option shall remain exercisable
for three (3) months following the
- 8 -
<PAGE> 9
Optionee's termination. If, on the date of termination, the Optionee is not
vested as to his or her entire Option, the Shares covered by the unvested
portion of the Option shall revert to the Plan. If, after termination, the
Optionee does not exercise his or her Option within the time specified by the
Administrator, the Option shall terminate, and the Shares covered by such Option
shall revert to the Plan.
(c) Disability of Optionee. If an Optionee ceases to be a Service
Provider as a result of the Optionee's Disability, the Optionee may exercise his
or her Option within such period of time as is specified in the Option Agreement
to the extent the Option is vested on the date of termination (but in no event
later than the expiration of the term of such Option as set forth in the Option
Agreement). In the absence of a specified time in the Option Agreement, the
Option shall remain exercisable for twelve (12) months following the Optionee's
termination. If, on the date of termination, the Optionee is not vested as to
his or her entire Option, the Shares covered by the unvested portion of the
Option shall revert to the Plan. If, after termination, the Optionee does not
exercise his or her Option 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. If an Optionee dies while a Service Provider, the
Option may be exercised within such period of time as is specified in the Option
Agreement (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 acquires the right to exercise the Option by bequest or inheritance, but
only to the extent that the Option is vested on the date of death. In the
absence of a specified time in the Option Agreement, the Option shall remain
exercisable for twelve (12) months following the Optionee's termination. If, at
the time of death, the Optionee is not vested as to his or her entire Option,
the Shares covered by the unvested portion of the Option shall immediately
revert to the Plan. The Option may be exercised by the executor or administrator
of the Optionee's estate or, if none, by the person(s) entitled to exercise the
Option under the Optionee's will or the laws of descent or distribution. If the
Option is not so exercised within the time specified herein, the Option shall
terminate, and the Shares covered by such Option shall revert to the Plan.
(e) 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.
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 or electronically, by means of a Notice of Grant, of the
terms, conditions and restrictions related to the offer, including the number of
Shares that the offeree shall be entitled to purchase, the price to be paid, and
the time within which the offeree must accept such offer. The offer shall be
accepted by execution of a Restricted Stock Purchase Agreement in the form
determined by the Administrator.
- 9 -
<PAGE> 10
(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 service 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 a rate determined by the
Administrator.
(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.
(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 13 of the Plan.
12. Non-Transferability of Options and Stock Purchase Rights. Unless
determined otherwise by the Administrator, an Option or Stock Purchase Right 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. If the
Administrator makes an Option or Stock Purchase Right transferable, such Option
or Stock Purchase Right shall contain such additional terms and conditions as
the Administrator deems appropriate.
13. Adjustments Upon Changes in Capitalization, Dissolution, Merger or
Asset Sale.
(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 and 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 reclassification 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 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 or Stock
Purchase Right.
- 10 -
<PAGE> 11
(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 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.
14. Date of Grant. The date of grant of an Option or Stock Purchase Right
shall be, for all purposes, the date on which the Administrator makes the
determination granting such Option or Stock Purchase Right, or such other later
date as is determined by the Administrator. Notice of the determination shall be
provided to each Optionee within a reasonable time after the date of such grant.
- 11 -
<PAGE> 12
15. Amendment and Termination of the Plan.
(a) Amendment and Termination. The Board may at any time amend, alter,
suspend or terminate the Plan.
(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.
Termination of the Plan shall not affect the Administrator's ability to exercise
the powers granted to it hereunder with respect to Options granted under the
Plan prior to the date of such termination.
16. Conditions Upon Issuance of Shares.
(a) Legal Compliance. 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 shall
comply with Applicable Laws and shall be further subject to the approval of
counsel for the Company with respect to such compliance.
(b) Investment Representations. 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.
17. Inability to Obtain Authority. 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.
18. 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.
19. Shareholder Approval. The Plan shall be subject to approval by the
shareholders of the Company within twelve (12) months after the date the Plan is
adopted. Such shareholder approval shall be obtained in the manner and to the
degree required under Applicable Laws.
- 12 -
<PAGE> 13
INTROGEN THERAPEUTICS INC.
2000 STOCK OPTION PLAN
STOCK OPTION AGREEMENT
Unless otherwise defined herein, the terms defined in the Plan shall
have the same defined meanings in this Option Agreement.
I. NOTICE OF STOCK OPTION 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 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/Expiration Date:
-----------------------------------
Vesting Schedule:
Subject to accelerated vesting as set forth below, this Option may be
exercised, in whole or in part, in accordance with the following schedule:
[25% OF THE SHARES SUBJECT TO THE OPTION SHALL VEST TWELVE MONTHS AFTER
THE VESTING COMMENCEMENT DATE, AND 1/48 OF THE SHARES SUBJECT TO THE OPTION
SHALL VEST EACH MONTH THEREAFTER, SUBJECT TO THE OPTIONEE CONTINUING TO BE A
SERVICE PROVIDER ON SUCH DATES].
<PAGE> 14
Termination Period:
This Option may be exercised for three months after Optionee ceases to
be a Service Provider. Upon the death or Disability of the Optionee, this Option
may be exercised for twelve months after Optionee ceases to be a Service
Provider. In no event shall this Option be exercised later than the
Term/Expiration Date as provided above.
II. AGREEMENT
A. Grant of Option.
The Plan Administrator of the Company hereby grants to the Optionee
named in the Notice of Grant attached as Part I of this Agreement (the
"Optionee") an option (the "Option") to purchase the number of Shares, as 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 and conditions of
the Plan, which is incorporated herein by reference. Subject to Section 15(c) of
the Plan, in the event of a conflict between the terms and conditions of the
Plan and the terms and conditions of this Option Agreement, the terms and
conditions of the Plan shall prevail.
If designated in the Notice of Grant as an Incentive Stock Option
("ISO"), this Option is intended to qualify as an Incentive Stock Option under
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").
B. Exercise of Option.
(a) Right to Exercise. This Option is exercisable during its term in
accordance with the Vesting Schedule set out in the Notice of Grant and the
applicable provisions of the Plan and this Option Agreement.
(b) Method of Exercise. This Option is exercisable by delivery of an
exercise notice, in the form attached as Exhibit A (the "Exercise Notice"),
which shall state the election to exercise the Option, the number of Shares in
respect of which the Option is being exercised (the "Exercised Shares"), and
such other representations and agreements as may be required by the Company
pursuant to the provisions of the Plan. The Exercise Notice shall be completed
by the Optionee and delivered to [TITLE] of the Company. The Exercise Notice
shall be accompanied by payment of the aggregate Exercise Price as to all
Exercised Shares. This Option shall be deemed to be exercised upon receipt by
the Company of such fully executed Exercise Notice accompanied by such aggregate
Exercise Price.
No Shares shall be issued pursuant to the exercise of this Option
unless such issuance and exercise complies with Applicable Laws. Assuming such
compliance, for income tax purposes the Exercised Shares shall be considered
transferred to the Optionee on the date the Option is exercised with respect to
such Exercised Shares.
-2-
<PAGE> 15
C. Method of Payment.
Payment of the aggregate Exercise Price shall be by any of the
following, or a combination thereof, at the election of the Optionee:
1. cash; or
2. check[; OR
3. CONSIDERATION RECEIVED BY THE COMPANY UNDER A CASHLESS EXERCISE
PROGRAM IMPLEMENTED BY THE COMPANY IN CONNECTION WITH THE PLAN][; OR
4. SURRENDER OF OTHER SHARES WHICH (i) 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 (ii) HAVE A FAIR MARKET VALUE ON THE
DATE OF SURRENDER EQUAL TO THE AGGREGATE EXERCISE PRICE OF THE EXERCISED
SHARES[; OR
5. WITH THE ADMINISTRATOR'S CONSENT, DELIVERY OF OPTIONEE'S
PROMISSORY NOTE (THE "NOTE") IN THE FORM ATTACHED HERETO AS EXHIBIT C, IN THE
AMOUNT OF THE AGGREGATE EXERCISE PRICE OF THE EXERCISED SHARES TOGETHER WITH THE
EXECUTION AND DELIVERY BY THE OPTIONEE OF THE SECURITY AGREEMENT ATTACHED HERETO
AS EXHIBIT B. THE NOTE SHALL BEAR INTEREST AT THE "APPLICABLE FEDERAL RATE"
PRESCRIBED UNDER THE CODE AND ITS REGULATIONS AT TIME OF PURCHASE, AND SHALL BE
SECURED BY A PLEDGE OF THE SHARES PURCHASED BY THE NOTE PURSUANT TO THE SECURITY
AGREEMENT][; OR
6. TO THE EXTENT PERMITTED BY THE ADMINISTRATOR, 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 PROCEEDS REQUIRED TO PAY
THE EXERCISE PRICE.]
D. 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 the Plan and this Option
Agreement shall be binding upon the executors, administrators, heirs, successors
and assigns of the Optionee.
E. 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 Agreement.
F. Tax Consequences.
Some of the federal tax consequences relating to this Option, as of
the date of this Option, are set forth below. THIS SUMMARY IS NECESSARILY
INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. THE OPTIONEE
SHOULD
-3-
<PAGE> 16
CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE
SHARES.
G. Exercising the Option.
1. Nonstatutory Stock Option. The Optionee may incur regular federal
income tax liability upon exercise of a 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 Exercised Shares on the
date of exercise over their aggregate Exercise Price. If the Optionee is an
Employee or a former Employee, the Company will be required to withhold from his
or her compensation or collect from Optionee and pay to the applicable taxing
authorities an amount in cash equal to a percentage of this compensation income
at the time of exercise, and may refuse to honor the exercise and refuse to
deliver Shares if such withholding amounts are not delivered at the time of
exercise.
2. Incentive Stock Option. If this Option qualifies as an ISO, the
Optionee will have no regular federal income tax liability upon its exercise,
although the excess, if any, of the Fair Market Value of the Exercised Shares on
the date of exercise over their aggregate Exercise Price will be treated as an
adjustment to alternative minimum taxable income for federal tax purposes and
may subject the Optionee to alternative minimum tax in the year of exercise. In
the event that the Optionee ceases to be an Employee but remains a Service
Provider, any Incentive Stock Option of the Optionee that remains unexercised
shall cease to qualify as an Incentive Stock Option and will be treated for tax
purposes as a Nonstatutory Stock Option on the date three (3) months and one (1)
day following such change of status.
3. Disposition of Shares.
(a) NSO. If the Optionee holds NSO Shares 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.
(b) ISO. If the Optionee holds ISO Shares for at least one year
after exercise and two years after the grant date, any gain realized on
disposition of the Shares will be treated as long-term capital gain for federal
income tax purposes. If the Optionee disposes of ISO Shares within one year
after exercise or two years after the grant date, any gain realized on such
disposition will be treated as compensation income (taxable at ordinary income
rates) to the extent of the excess, if any, of the lesser of (A) the difference
between the Fair Market Value of the Shares acquired on the date of exercise and
the aggregate Exercise Price, or (B) the difference between the sale price of
such Shares and the aggregate Exercise Price. Any additional gain will be taxed
as capital gain, short-term or long-term depending on the period that the ISO
Shares were held.
(c) Notice of Disqualifying Disposition of ISO Shares. If the
Optionee sells or otherwise disposes of any of the Shares acquired pursuant to
an ISO on or before the later of (i) two years after the grant date, or (ii) one
year after the exercise date, the Optionee shall immediately notify the Company
in writing of such disposition. The Optionee agrees that he or she may be
subject to income tax withholding by the Company on the compensation income
recognized from such early disposition of ISO Shares by payment in cash or out
of the current earnings paid to the Optionee.
-4-
<PAGE> 17
H. Entire Agreement; Governing Law.
The Plan is incorporated herein by reference. The Plan and this
Option Agreement constitute the entire agreement of the parties with respect to
the subject matter hereof and supersede in their entirety all prior undertakings
and agreements of the Company and Optionee with respect to the subject matter
hereof, and may not be modified adversely to the Optionee's interest except by
means of a writing signed by the Company and Optionee. This agreement is
governed by the internal substantive laws, but not the choice of law rules, of
Texas.
I. NO GUARANTEE OF CONTINUED SERVICE.
OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT
TO THE VESTING SCHEDULE HEREOF IS EARNED ONLY BY CONTINUING AS A SERVICE
PROVIDER AT THE WILL OF THE COMPANY (AND NOT THROUGH THE ACT OF BEING HIRED,
BEING GRANTED AN OPTION OR PURCHASING SHARES HEREUNDER). OPTIONEE FURTHER
ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED
HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS
OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS A SERVICE PROVIDER FOR THE VESTING
PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL NOT INTERFERE WITH OPTIONEE'S RIGHT
OR THE COMPANY'S RIGHT TO TERMINATE OPTIONEE'S RELATIONSHIP AS A SERVICE
PROVIDER AT ANY TIME, WITH OR WITHOUT CAUSE.
By your signature and the signature of the Company's representative
below, you and the Company agree that this Option is granted under and governed
by the terms and conditions of the Plan and this Option Agreement. Optionee has
reviewed the Plan and this Option Agreement in their entirety, has had an
opportunity to obtain the advice of counsel prior to executing this Option
Agreement and fully understands all provisions of the Plan and Option Agreement.
Optionee hereby agrees to accept as binding, conclusive and final all decisions
or interpretations of the Administrator upon any questions relating to the Plan
and Option Agreement. Optionee further agrees to notify the Company upon any
change in the residence address indicated below.
OPTIONEE: INTROGEN THERAPEUTICS INC.
- --------------------------- ---------------------------
Signature By
- --------------------------- ---------------------------
Print Name Title
- ---------------------------
Residence Address
- ---------------------------
-5-
<PAGE> 18
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
<PAGE> 19
EXHIBIT A
---------
INTROGEN THERAPEUTICS INC.
2000 STOCK OPTION PLAN
EXERCISE NOTICE
Introgen Therapeutics Inc.
301 Congress Avenue, Suite 1850
Austin, Texas 78701
Attention: [Title]
1. Exercise of Option. Effective as of today, ________________,
_____, the undersigned ("Purchaser") hereby elects to purchase ______________
shares (the "Shares") of the Common Stock of Introgen Therapeutics Inc. (the
"Company") under and pursuant to the 2000 Stock Option Plan (the "Plan") and the
Stock Option Agreement dated, _____ (the "Option Agreement"). The purchase price
for the Shares shall be $_____, as required by the Option Agreement.
2. Delivery of Payment. Purchaser herewith delivers to the Company
the full purchase price for the Shares.
3. Representations of Purchaser. Purchaser acknowledges that
Purchaser has received, read and understood the Plan and the Option Agreement
and agrees to abide by and be bound by their terms and conditions.
4. Rights as Shareholder. 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 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 Shares so acquired shall
be 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 of issuance, except as provided in Section 13 of the
Plan.
5. Tax Consultation. Purchaser understands that Purchaser may suffer
adverse tax consequences as a result of Purchaser's purchase or disposition of
the Shares. Purchaser represents that Purchaser has consulted with any tax
consultants Purchaser deems advisable in connection with the purchase or
disposition of the Shares and that Purchaser is not relying on the Company for
any tax advice.
<PAGE> 20
6. Entire Agreement; Governing Law. The Plan and Option Agreement are
incorporated herein by reference. This Agreement, the Plan and the Option
Agreement constitute the entire agreement of the parties with respect to the
subject matter hereof and supersede in their entirety all prior undertakings and
agreements of the Company and Purchaser with respect to the subject matter
hereof, and may not be modified adversely to the Purchaser's interest except by
means of a writing signed by the Company and Purchaser. This agreement is
governed by the internal substantive laws, but not the choice of law rules, of
Texas.
Submitted by: Accepted by:
PURCHASER: INTROGEN THERAPEUTICS INC.
- --------------------------- -------------------------------
Signature By
- --------------------------- -------------------------------
Print Name Its
Address: Address:
- ------- -------
INTROGEN THERAPEUTICS INC.
- ---------------------------
301 Congress Avenue, Suite 1850
- ---------------------------
Austin, Texas 78701
- ---------------------------
-------------------------------
Date Received
-2-
<PAGE> 21
EXHIBIT B
SECURITY AGREEMENT
This Security Agreement is made as of __________, _____ between
Introgen Therapeutics Inc., a Delaware corporation ("Pledgee"), and
_________________________ ("Pledgor").
Recitals
Pursuant to Pledgor's election to purchase Shares under the Option
Agreement dated ________ (the "Option"), between Pledgor and Pledgee under
Pledgee's 2000 Stock Option Plan, and Pledgor's election under the terms of the
Option to pay for such shares with his promissory note (the "Note"), Pledgor has
purchased _________ shares of Pledgee's Common Stock (the "Shares") at a price
of $________ per share, for a total purchase price of $__________. The Note and
the obligations thereunder are as set forth in Exhibit C to the Option.
NOW, THEREFORE, it is agreed as follows:
1. Creation and Description of Security Interest. In consideration of
the transfer of the Shares to Pledgor under the Option Agreement, Pledgor,
pursuant to the Texas Commercial Code, hereby pledges all of such Shares (herein
sometimes referred to as the "Collateral") represented by certificate number
______, duly endorsed in blank or with executed stock powers, and herewith
delivers said certificate to the Secretary of Pledgee ("Pledgeholder"), who
shall hold said certificate subject to the terms and conditions of this Security
Agreement.
The pledged stock (together with an executed blank stock assignment for
use in transferring all or a portion of the Shares to Pledgee if, as and when
required pursuant to this Security Agreement) shall be held by the Pledgeholder
as security for the repayment of the Note, and any extensions or renewals
thereof, to be executed by Pledgor pursuant to the terms of the Option, and the
Pledgeholder shall not encumber or dispose of such Shares except in accordance
with the provisions of this Security Agreement.
2. Pledgor's Representations and Covenants. To induce Pledgee to enter
into this Security Agreement, Pledgor represents and covenants to Pledgee, its
successors Iand assigns, as follows:
(a) Payment of Indebtedness. Pledgor will pay the principal sum
of the Note secured hereby, together with interest thereon, at the time and in
the manner provided in the Note.
(b) Encumbrances. The Shares are free of all other encumbrances,
defenses and liens, and Pledgor will not further encumber the Shares without the
prior written consent of Pledgee.
<PAGE> 22
(c) Margin Regulations. In the event that Pledgee's Common Stock
is now or later becomes margin-listed by the Federal Reserve Board and Pledgee
is classified as a "lender" within the meaning of the regulations under Part 207
of Title 12 of the Code of Federal Regulations ("Regulation G"), Pledgor agrees
to cooperate with Pledgee in making any amendments to the Note or providing any
additional collateral as may be necessary to comply with such regulations.
3. Voting Rights. During the term of this pledge and so long as all
payments of principal and interest are made as they become due under the terms
of the Note, Pledgor shall have the right to vote all of the Shares pledged
hereunder.
4. Stock Adjustments. In the event that during the term of the pledge
any stock dividend, reclassification, readjustment or other changes are declared
or made in the capital structure of Pledgee, all new, substituted and additional
shares or other securities issued by reason of any such change shall be
delivered to and held by the Pledgee under the terms of this Security Agreement
in the same manner as the Shares originally pledged hereunder. In the event of
substitution of such securities, Pledgor, Pledgee and Pledgeholder shall
cooperate and execute such documents as are reasonable so as to provide for the
substitution of such Collateral and, upon such substitution, references to
"Shares" in this Security Agreement shall include the substituted shares of
capital stock of Pledgor as a result thereof.
5. Options and Rights. In the event that, during the term of this
pledge, subscription Options or other rights or options shall be issued in
connection with the pledged Shares, such rights, Options and options shall be
the property of Pledgor and, if exercised by Pledgor, all new stock or other
securities so acquired by Pledgor as it relates to the pledged Shares then held
by Pledgeholder shall be immediately delivered to Pledgeholder, to be held under
the terms of this Security Agreement in the same manner as the Shares pledged.
6. Default. Pledgor shall be deemed to be in default of the Note and of
this Security Agreement in the event:
(a) Payment of principal or interest on the Note shall be
delinquent for a period of 10 days or more; or
(b) Pledgor fails to perform any of the covenants set forth in
the Option or contained in this Security Agreement for a period of 10 days after
written notice thereof from Pledgee.
In the case of an event of Default, as set forth above, Pledgee
shall have the right to accelerate payment of the Note upon notice to Pledgor,
and Pledgee shall thereafter be entitled to pursue its remedies under the Texas
Commercial Code.
7. Release of Collateral. Subject to any applicable contrary rules
under Regulation G, there shall be released from this pledge a portion of the
pledged Shares held by Pledgeholder hereunder upon payments of the principal of
the Note. The number of the pledged Shares which shall be released shall be that
number of full Shares which bears the same proportion to the initial number of
-2-
<PAGE> 23
Shares pledged hereunder as the payment of principal bears to the initial full
principal amount of the Note.
8. Withdrawal or Substitution of Collateral. Pledgor shall not sell,
withdraw, pledge, substitute or otherwise dispose of all or any part of the
Collateral without the prior written consent of Pledgee.
9. Term. The within pledge of Shares shall continue until the payment
of all indebtedness secured hereby, at which time the remaining pledged stock
shall be promptly delivered to Pledgor, subject to the provisions for prior
release of a portion of the Collateral as provided in paragraph 7 above.
10. Insolvency. Pledgor agrees that if a bankruptcy or insolvency
proceeding is instituted by or against it, or if a receiver is appointed for the
property of Pledgor, or if Pledgor makes an assignment for the benefit of
creditors, the entire amount unpaid on the Note shall become immediately due and
payable, and Pledgee may proceed as provided in the case of default.
11. Pledgeholder Liability. In the absence of willful or gross
negligence, Pledgeholder shall not be liable to any party for any of his acts,
or omissions to act, as Pledgeholder.
12. Invalidity of Particular Provisions. Pledgor and Pledgee agree that
the enforceability or invalidity of any provision or provisions of this Security
Agreement shall not render any other provision or provisions herein contained
unenforceable or invalid.
13. Successors or Assigns. Pledgor and Pledgee agree that all of the
terms of this Security Agreement shall be binding on their respective successors
and assigns, and that the term "Pledgor" and the term "Pledgee" as used herein
shall be deemed to include, for all purposes, the respective designees,
successors, assigns, heirs, executors and administrators.
14. Governing Law. This Security Agreement shall be interpreted and
governed under the internal substantive laws, but not the choice of law rules,
of Texas.
-3-
<PAGE> 24
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
"PLEDGOR" ---------------------------------------
Signature
---------------------------------------
Print Name
Address:
-------------------------------
---------------------------------------
"PLEDGEE" INTROGEN THERAPEUTICS INC.
a Delaware corporation
---------------------------------------
Signature
---------------------------------------
Print Name
---------------------------------------
Title
"PLEDGEHOLDER"
---------------------------------------
Secretary of Introgen Therapeutics Inc.
-4-
<PAGE> 25
EXHIBIT C
NOTE
$ [City,State]
- -------------------------
------------------,-----
FOR VALUE RECEIVED, _____________________ promises to pay to Introgen
Therapeutics Inc., a Delaware corporation (the "Company"), or order, the
principal sum of _______________________ ($_____________), together with
interest on the unpaid principal hereof from the date hereof at the rate of
_______________ percent (____%) per annum, compounded semiannually.
Principal and interest shall be due and payable on _______________,
_____. Payment of principal and interest shall be made in lawful money of the
United States of America.
The undersigned may at any time prepay all or any portion of the
principal or interest owing hereunder.
This Note is subject to the terms of the Option, dated as of
________________. This Note is secured in part by a pledge of the Company's
Common Stock under the terms of a Security Agreement of even date herewith and
is subject to all the provisions thereof.
The holder of this Note shall have full recourse against the
undersigned, and shall not be required to proceed against the collateral
securing this Note in the event of default.
In the event the undersigned shall cease to be an employee, director or
consultant of the Company for any reason, this Note shall, at the option of the
Company, be accelerated, and the whole unpaid balance on this Note of principal
and accrued interest shall be immediately due and payable.
Should any action be instituted for the collection of this Note, the
reasonable costs and attorneys' fees therein of the holder shall be paid by the
undersigned.
------------------------------------
------------------------------------
<PAGE> 26
INTROGEN THERAPEUTICS INC.
2000 STOCK OPTION PLAN
STOCK OPTION AGREEMENT
Unless otherwise defined herein, the terms defined in the Plan shall
have the same defined meanings in this Option Agreement.
I. NOTICE OF STOCK OPTION 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 Option
Agreement, as follows:
<TABLE>
<S> <C>
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/Expiration Date: _____________________________________
</TABLE>
Vesting Schedule:
Subject to accelerated vesting as set forth below, this Option may be
exercised, in whole or in part, in accordance with the following schedule:
[25% OF THE SHARES SUBJECT TO THE OPTION SHALL VEST TWELVE MONTHS AFTER
THE VESTING COMMENCEMENT DATE, AND 1/48 OF THE SHARES SUBJECT TO THE OPTION
SHALL VEST EACH MONTH THEREAFTER, SUBJECT TO THE OPTIONEE CONTINUING TO BE A
SERVICE PROVIDER ON SUCH DATES]. [NOTWITHSTANDING THE FOREGOING OR ANYTHING TO
THE CONTRARY IN THE PLAN, 100% OF THE SHARES SUBJECT TO THE OPTION SHALL
IMMEDIATELY VEST AND BECOME EXERCISABLE IN THE EVENT OF (i) THE MERGER OR
REORGANIZATION OF THE COMPANY WITH OR INTO ANOTHER CORPORATION, ENTITY, OR
PERSON, (ii) THE SALE OF ALL OR SUBSTANTIALLY ALL OF THE COMPANY'S ASSETS TO
ANOTHER CORPORATION, ENTITY, OR
<PAGE> 27
PERSON, OR (iii) ANY CHANGE IN OWNERSHIP OF THE COMPANY'S VOTING STOCK RESULTING
IN OWNERSHIP OF MORE THAN 50% OF THE COMPANY'S VOTING STOCK BY ONE OR MORE
PERSONS ACTING IN CONCERT WHO DID NOT PRIOR TO THE DATE OF GRANT OWN MORE THAN
50% OF THE COMPANY'S VOTING STOCK.]
Termination Period:
This Option may be exercised for three months after Optionee ceases to
be a Service Provider. Upon the death or Disability of the Optionee, this Option
may be exercised for twelve months after Optionee ceases to be a Service
Provider. In no event shall this Option be exercised later than the
Term/Expiration Date as provided above.
II. AGREEMENT
A. Grant of Option.
The Plan Administrator of the Company hereby grants to the
Optionee named in the Notice of Grant attached as Part I of this Agreement (the
"Optionee") an option (the "Option") to purchase the number of Shares, as 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 and conditions of
the Plan, which is incorporated herein by reference. Subject to Section 15(c) of
the Plan, in the event of a conflict between the terms and conditions of the
Plan and the terms and conditions of this Option Agreement, the terms and
conditions of the Plan shall prevail.
If designated in the Notice of Grant as an Incentive Stock
Option ("ISO"), this Option is intended to qualify as an Incentive Stock Option
under 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").
B. Exercise of Option.
(a) Right to Exercise. This Option is exercisable during
its term in accordance with the Vesting Schedule set out in the Notice of Grant
and the applicable provisions of the Plan and this Option Agreement.
(b) Method of Exercise. This Option is exercisable by
delivery of an exercise notice, in the form attached as Exhibit A (the "Exercise
Notice"), which shall state the election to exercise the Option, the number of
Shares in respect of which the Option is being exercised (the "Exercised
Shares"), and such other representations and agreements as may be required by
the Company pursuant to the provisions of the Plan. The Exercise Notice shall be
completed by the Optionee and delivered to [TITLE] of the Company. The Exercise
Notice shall be accompanied by payment of the aggregate Exercise Price as to all
Exercised Shares. This Option shall be deemed to be exercised upon receipt by
the Company of such fully executed Exercise Notice accompanied by such aggregate
Exercise Price.
No Shares shall be issued pursuant to the exercise of
this Option unless such issuance and exercise complies with Applicable Laws.
Assuming such compliance, for income tax purposes the Exercised Shares shall be
considered transferred to the Optionee on the date the Option is exercised with
respect to such Exercised Shares.
-2-
<PAGE> 28
C. Method of Payment.
Payment of the aggregate Exercise Price shall be by any of the
following, or a combination thereof, at the election of the Optionee:
1. cash; or
2. check[; OR
3. CONSIDERATION RECEIVED BY THE COMPANY UNDER A
CASHLESS EXERCISE PROGRAM IMPLEMENTED BY THE COMPANY IN CONNECTION WITH THE
PLAN][; OR
4. SURRENDER OF OTHER SHARES WHICH (i) 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 (ii) HAVE A FAIR MARKET
VALUE ON THE DATE OF SURRENDER EQUAL TO THE AGGREGATE EXERCISE PRICE OF THE
EXERCISED SHARES[; OR
5. WITH THE ADMINISTRATOR'S CONSENT, DELIVERY OF
OPTIONEE'S PROMISSORY NOTE (THE "NOTE") IN THE FORM ATTACHED HERETO AS EXHIBIT
C, IN THE AMOUNT OF THE AGGREGATE EXERCISE PRICE OF THE EXERCISED SHARES
TOGETHER WITH THE EXECUTION AND DELIVERY BY THE OPTIONEE OF THE SECURITY
AGREEMENT ATTACHED HERETO AS EXHIBIT B. THE NOTE SHALL BEAR INTEREST AT THE
"APPLICABLE FEDERAL RATE" PRESCRIBED UNDER THE CODE AND ITS REGULATIONS AT TIME
OF PURCHASE, AND SHALL BE SECURED BY A PLEDGE OF THE SHARES PURCHASED BY THE
NOTE PURSUANT TO THE SECURITY AGREEMENT][; OR
6. TO THE EXTENT PERMITTED BY THE ADMINISTRATOR,
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
PROCEEDS REQUIRED TO PAY THE EXERCISE PRICE.]
D. 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 the Plan and
this Option Agreement shall be binding upon the executors, administrators,
heirs, successors and assigns of the Optionee.
E. 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 Agreement.
F. Tax Consequences.
Some of the federal tax consequences relating to this Option,
as of the date of this Option, are set forth below. THIS SUMMARY IS NECESSARILY
INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. THE OPTIONEE
SHOULD
-3-
<PAGE> 29
CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.
G. Exercising the Option.
1. Nonstatutory Stock Option. The Optionee may incur
regular federal income tax liability upon exercise of a 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
Exercised Shares on the date of exercise over their aggregate Exercise Price. If
the Optionee is an Employee or a former Employee, the Company will be required
to withhold from his or her compensation or collect from Optionee and pay to the
applicable taxing authorities an amount in cash equal to a percentage of this
compensation income at the time of exercise, and may refuse to honor the
exercise and refuse to deliver Shares if such withholding amounts are not
delivered at the time of exercise.
2. Incentive Stock Option. If this Option qualifies as
an ISO, the Optionee will have no regular federal income tax liability upon its
exercise, although the excess, if any, of the Fair Market Value of the Exercised
Shares on the date of exercise over their aggregate Exercise Price will be
treated as an adjustment to alternative minimum taxable income for federal tax
purposes and may subject the Optionee to alternative minimum tax in the year of
exercise. In the event that the Optionee ceases to be an Employee but remains a
Service Provider, any Incentive Stock Option of the Optionee that remains
unexercised shall cease to qualify as an Incentive Stock Option and will be
treated for tax purposes as a Nonstatutory Stock Option on the date three (3)
months and one (1) day following such change of status.
3. Disposition of Shares.
(a) NSO. If the Optionee holds NSO Shares 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.
(b) ISO. If the Optionee holds ISO Shares for at
least one year after exercise and two years after the grant date, any gain
realized on disposition of the Shares will be treated as long-term capital gain
for federal income tax purposes. If the Optionee disposes of ISO Shares within
one year after exercise or two years after the grant date, any gain realized on
such disposition will be treated as compensation income (taxable at ordinary
income rates) to the extent of the excess, if any, of the lesser of (A) the
difference between the Fair Market Value of the Shares acquired on the date of
exercise and the aggregate Exercise Price, or (B) the difference between the
sale price of such Shares and the aggregate Exercise Price. Any additional gain
will be taxed as capital gain, short-term or long-term depending on the period
that the ISO Shares were held.
(c) Notice of Disqualifying Disposition of ISO
Shares. If the Optionee sells or otherwise disposes of any of the Shares
acquired pursuant to an ISO on or before the later of (i) two years after the
grant date, or (ii) one year after the exercise date, the Optionee shall
immediately notify the Company in writing of such disposition. The Optionee
agrees that he or she may be subject to income tax withholding by the Company on
the compensation income recognized from such early disposition of ISO Shares by
payment in cash or out of the current earnings paid to the Optionee.
-4-
<PAGE> 30
H. Entire Agreement; Governing Law.
The Plan is incorporated herein by reference. The Plan and
this Option Agreement constitute the entire agreement of the parties with
respect to the subject matter hereof and supersede in their entirety all prior
undertakings and agreements of the Company and Optionee with respect to the
subject matter hereof, and may not be modified adversely to the Optionee's
interest except by means of a writing signed by the Company and Optionee. This
agreement is governed by the internal substantive laws, but not the choice of
law rules, of Texas.
I. NO GUARANTEE OF CONTINUED SERVICE.
OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES
PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED ONLY BY CONTINUING AS A
SERVICE PROVIDER AT THE WILL OF THE COMPANY (AND NOT THROUGH THE ACT OF BEING
HIRED, BEING GRANTED AN OPTION OR PURCHASING SHARES HEREUNDER). OPTIONEE FURTHER
ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED
HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS
OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS A SERVICE PROVIDER FOR THE VESTING
PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL NOT INTERFERE WITH OPTIONEE'S RIGHT
OR THE COMPANY'S RIGHT TO TERMINATE OPTIONEE'S RELATIONSHIP AS A SERVICE
PROVIDER AT ANY TIME, WITH OR WITHOUT CAUSE.
By your signature and the signature of the Company's representative
below, you and the Company agree that this Option is granted under and governed
by the terms and conditions of the Plan and this Option Agreement. Optionee has
reviewed the Plan and this Option Agreement in their entirety, has had an
opportunity to obtain the advice of counsel prior to executing this Option
Agreement and fully understands all provisions of the Plan and Option Agreement.
Optionee hereby agrees to accept as binding, conclusive and final all decisions
or interpretations of the Administrator upon any questions relating to the Plan
and Option Agreement. Optionee further agrees to notify the Company upon any
change in the residence address indicated below.
OPTIONEE: INTROGEN THERAPEUTICS INC.
- ------------------------------------- --------------------------------------
Signature By
- ------------------------------------- --------------------------------------
Print Name Title
- -------------------------------------
Residence Address
- -------------------------------------
-5-
<PAGE> 31
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
<PAGE> 32
EXHIBIT A
INTROGEN THERAPEUTICS INC.
2000 STOCK OPTION PLAN
EXERCISE NOTICE
Introgen Therapeutics Inc.
301 Congress Avenue, Suite 1850
Austin, Texas 78701
Attention: [Title]
1. Exercise of Option. Effective as of today, ________________,
_____, the undersigned ("Purchaser") hereby elects to purchase ______________
shares (the "Shares") of the Common Stock of Introgen Therapeutics Inc. (the
"Company") under and pursuant to the 2000 Stock Option Plan (the "Plan") and the
Stock Option Agreement dated, _____ (the "Option Agreement"). The purchase price
for the Shares shall be $_____, as required by the Option Agreement.
2. Delivery of Payment. Purchaser herewith delivers to the
Company the full purchase price for the Shares.
3. Representations of Purchaser. Purchaser acknowledges that
Purchaser has received, read and understood the Plan and the Option Agreement
and agrees to abide by and be bound by their terms and conditions.
4. Rights as Shareholder. 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 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 Shares so acquired shall
be 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 of issuance, except as provided in Section 13 of the
Plan.
5. Tax Consultation. Purchaser understands that Purchaser may
suffer adverse tax consequences as a result of Purchaser's purchase or
disposition of the Shares. Purchaser represents that Purchaser has consulted
with any tax consultants Purchaser deems advisable in connection with the
purchase or disposition of the Shares and that Purchaser is not relying on the
Company for any tax advice.
<PAGE> 33
6. Entire Agreement; Governing Law. The Plan and Option Agreement
are incorporated herein by reference. This Agreement, the Plan and the Option
Agreement constitute the entire agreement of the parties with respect to the
subject matter hereof and supersede in their entirety all prior undertakings and
agreements of the Company and Purchaser with respect to the subject matter
hereof, and may not be modified adversely to the Purchaser's interest except by
means of a writing signed by the Company and Purchaser. This agreement is
governed by the internal substantive laws, but not the choice of law rules, of
Texas.
Submitted by: Accepted by:
PURCHASER: INTROGEN THERAPEUTICS INC.
- ---------------------------------- ----------------------------------------
Signature By
- ---------------------------------- ----------------------------------------
Print Name Its
Address: Address:
- ---------------------------------- INTROGEN THERAPEUTICS INC.
- ---------------------------------- 301 Congress Avenue, Suite 1850
- ---------------------------------- Austin, Texas 78701
----------------------------------------
Date Received
-2-
<PAGE> 34
EXHIBIT B
SECURITY AGREEMENT
This Security Agreement is made as of __________, _____ between
Introgen Therapeutics Inc., a Delaware corporation ("Pledgee"), and
_________________________ ("Pledgor").
Recitals
Pursuant to Pledgor's election to purchase Shares under the Option
Agreement dated ________ (the "Option"), between Pledgor and Pledgee under
Pledgee's 2000 Stock Option Plan, and Pledgor's election under the terms of the
Option to pay for such shares with his promissory note (the "Note"), Pledgor has
purchased _________ shares of Pledgee's Common Stock (the "Shares") at a price
of $________ per share, for a total purchase price of $__________. The Note and
the obligations thereunder are as set forth in Exhibit C to the Option.
NOW, THEREFORE, it is agreed as follows:
1. Creation and Description of Security Interest. In
consideration of the transfer of the Shares to Pledgor under the Option
Agreement, Pledgor, pursuant to the Texas Commercial Code, hereby pledges all of
such Shares (herein sometimes referred to as the "Collateral") represented by
certificate number ______, duly endorsed in blank or with executed stock powers,
and herewith delivers said certificate to the Secretary of Pledgee
("Pledgeholder"), who shall hold said certificate subject to the terms and
conditions of this Security Agreement.
The pledged stock (together with an executed blank stock assignment for
use in transferring all or a portion of the Shares to Pledgee if, as and when
required pursuant to this Security Agreement) shall be held by the Pledgeholder
as security for the repayment of the Note, and any extensions or renewals
thereof, to be executed by Pledgor pursuant to the terms of the Option, and the
Pledgeholder shall not encumber or dispose of such Shares except in accordance
with the provisions of this Security Agreement.
2. Pledgor's Representations and Covenants. To induce Pledgee to
enter into this Security Agreement, Pledgor represents and covenants to Pledgee,
its successors and assigns, as follows:
(a) Payment of Indebtedness. Pledgor will pay the
principal sum of the Note secured hereby, together with interest thereon, at the
time and in the manner provided in the Note.
(b) Encumbrances. The Shares are free of all other
encumbrances, defenses and liens, and Pledgor will not further encumber the
Shares without the prior written consent of Pledgee.
<PAGE> 35
(c) Margin Regulations. In the event that Pledgee's
Common Stock is now or later becomes margin-listed by the Federal Reserve Board
and Pledgee is classified as a "lender" within the meaning of the regulations
under Part 207 of Title 12 of the Code of Federal Regulations ("Regulation G"),
Pledgor agrees to cooperate with Pledgee in making any amendments to the Note or
providing any additional collateral as may be necessary to comply with such
regulations.
3. Voting Rights. During the term of this pledge and so long as
all payments of principal and interest are made as they become due under the
terms of the Note, Pledgor shall have the right to vote all of the Shares
pledged hereunder.
4. Stock Adjustments. In the event that during the term of the
pledge any stock dividend, reclassification, readjustment or other changes are
declared or made in the capital structure of Pledgee, all new, substituted and
additional shares or other securities issued by reason of any such change shall
be delivered to and held by the Pledgee under the terms of this Security
Agreement in the same manner as the Shares originally pledged hereunder. In the
event of substitution of such securities, Pledgor, Pledgee and Pledgeholder
shall cooperate and execute such documents as are reasonable so as to provide
for the substitution of such Collateral and, upon such substitution, references
to "Shares" in this Security Agreement shall include the substituted shares of
capital stock of Pledgor as a result thereof.
5. Options and Rights. In the event that, during the term of this
pledge, subscription Options or other rights or options shall be issued in
connection with the pledged Shares, such rights, Options and options shall be
the property of Pledgor and, if exercised by Pledgor, all new stock or other
securities so acquired by Pledgor as it relates to the pledged Shares then held
by Pledgeholder shall be immediately delivered to Pledgeholder, to be held under
the terms of this Security Agreement in the same manner as the Shares pledged.
6. Default. Pledgor shall be deemed to be in default of the Note
and of this Security Agreement in the event:
(a) Payment of principal or interest on the Note shall be
delinquent for a period of 10 days or more; or
(b) Pledgor fails to perform any of the covenants set
forth in the Option or contained in this Security Agreement for a period of 10
days after written notice thereof from Pledgee.
In the case of an event of Default, as set forth above, Pledgee shall
have the right to accelerate payment of the Note upon notice to Pledgor, and
Pledgee shall thereafter be entitled to pursue its remedies under the Texas
Commercial Code.
7. Release of Collateral. Subject to any applicable contrary
rules under Regulation G, there shall be released from this pledge a portion of
the pledged Shares held by Pledgeholder hereunder upon payments of the principal
of the Note. The number of the pledged Shares which shall be released shall be
that number of full Shares which bears the same proportion to the initial number
of
-2-
<PAGE> 36
Shares pledged hereunder as the payment of principal bears to the initial full
principal amount of the Note.
8. Withdrawal or Substitution of Collateral. Pledgor shall not
sell, withdraw, pledge, substitute or otherwise dispose of all or any part of
the Collateral without the prior written consent of Pledgee.
9. Term. The within pledge of Shares shall continue until the
payment of all indebtedness secured hereby, at which time the remaining pledged
stock shall be promptly delivered to Pledgor, subject to the provisions for
prior release of a portion of the Collateral as provided in paragraph 7 above.
10. Insolvency. Pledgor agrees that if a bankruptcy or insolvency
proceeding is instituted by or against it, or if a receiver is appointed for the
property of Pledgor, or if Pledgor makes an assignment for the benefit of
creditors, the entire amount unpaid on the Note shall become immediately due and
payable, and Pledgee may proceed as provided in the case of default.
11. Pledgeholder Liability. In the absence of willful or gross
negligence, Pledgeholder shall not be liable to any party for any of his acts,
or omissions to act, as Pledgeholder.
12. Invalidity of Particular Provisions. Pledgor and Pledgee agree
that the enforceability or invalidity of any provision or provisions of this
Security Agreement shall not render any other provision or provisions herein
contained unenforceable or invalid.
13. Successors or Assigns. Pledgor and Pledgee agree that all of
the terms of this Security Agreement shall be binding on their respective
successors and assigns, and that the term "Pledgor" and the term "Pledgee" as
used herein shall be deemed to include, for all purposes, the respective
designees, successors, assigns, heirs, executors and administrators.
14. Governing Law. This Security Agreement shall be interpreted
and governed under the internal substantive laws, but not the choice of law
rules, of Texas.
-3-
<PAGE> 37
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
"PLEDGOR"
---------------------------------------------
Signature
---------------------------------------------
Print Name
Address:
------------------------------------
------------------------------------
"PLEDGEE" INTROGEN THERAPEUTICS INC.
a Delaware corporation
---------------------------------------------
Signature
---------------------------------------------
Print Name
---------------------------------------------
Title
"PLEDGEHOLDER"
---------------------------------------------
Secretary of Introgen Therapeutics Inc.
-4-
<PAGE> 38
EXHIBIT C
NOTE
$__________________________ [City, State]
__________________, _____
FOR VALUE RECEIVED, _____________________ promises to pay to Introgen
Therapeutics Inc., a Delaware corporation (the "Company"), or order, the
principal sum of _______________________ ($_____________), together with
interest on the unpaid principal hereof from the date hereof at the rate of
_______________ percent (____%) per annum, compounded semiannually.
Principal and interest shall be due and payable on _______________,
_____. Payment of principal and interest shall be made in lawful money of the
United States of America.
The undersigned may at any time prepay all or any portion of the
principal or interest owing hereunder.
This Note is subject to the terms of the Option, dated as of
________________. This Note is secured in part by a pledge of the Company's
Common Stock under the terms of a Security Agreement of even date herewith and
is subject to all the provisions thereof.
The holder of this Note shall have full recourse against the
undersigned, and shall not be required to proceed against the collateral
securing this Note in the event of default.
In the event the undersigned shall cease to be an employee, director or
consultant of the Company for any reason, this Note shall, at the option of the
Company, be accelerated, and the whole unpaid balance on this Note of principal
and accrued interest shall be immediately due and payable.
Should any action be instituted for the collection of this Note, the
reasonable costs and attorneys' fees therein of the holder shall be paid by the
undersigned.
------------------------------------
------------------------------------
<PAGE> 39
INTROGEN THERAPEUTICS INC.
2000 STOCK OPTION PLAN
NOTICE OF GRANT OF STOCK PURCHASE RIGHT
Unless otherwise defined herein, the terms defined in the Plan shall
have the same defined meanings in this Notice of Grant.
[Grantee's Name and Address]
You have been granted the right to purchase Common Stock of the
Company, subject to the Company's Repurchase Option and your ongoing status as a
Service Provider (as described in the Plan and the attached Restricted Stock
Purchase Agreement), as follows:
<TABLE>
<S> <C>
Grant Number
---------------------------
Date of Grant
---------------------------
Price Per Share $
---------------------------
Total Number of Shares Subject
to This Stock Purchase Right
---------------------------
Expiration Date:
---------------------------
</TABLE>
YOU MUST EXERCISE THIS STOCK PURCHASE RIGHT BEFORE THE EXPIRATION DATE
OR IT WILL TERMINATE AND YOU WILL HAVE NO FURTHER RIGHT TO PURCHASE THE SHARES.
By your signature and the signature of the Company's representative below, you
and the Company agree that this Stock Purchase Right is granted under and
governed by the terms and conditions of the 2000 Stock Option Plan and the
Restricted Stock Purchase Agreement, attached hereto as Exhibit A-1, both of
which are made a part of this document. You further agree to execute the
attached Restricted Stock Purchase Agreement as a condition to purchasing any
shares under this Stock Purchase Right.
GRANTEE: INTROGEN THERAPEUTICS INC.
- -------------------------------- -------------------------------------
Signature By
- -------------------------------- -------------------------------------
Print Name Title
<PAGE> 40
EXHIBIT A-1
INTROGEN THERAPEUTICS INC.
2000 STOCK OPTION PLAN
RESTRICTED STOCK PURCHASE AGREEMENT
Unless otherwise defined herein, the terms defined in the Plan shall
have the same defined meanings in this Restricted Stock Purchase Agreement.
WHEREAS the Purchaser named in the Notice of Grant, (the "Purchaser")
is a Service Provider, and the Purchaser's continued participation is considered
by the Company to be important for the Company's continued growth; and
WHEREAS in order to give the Purchaser an opportunity to acquire an
equity interest in the Company as an incentive for the Purchaser to participate
in the affairs of the Company, the Administrator has granted to the Purchaser a
Stock Purchase Right subject to the terms and conditions of the Plan and the
Notice of Grant, which are incorporated herein by reference, and pursuant to
this Restricted Stock Purchase Agreement (the "Agreement").
NOW THEREFORE, the parties agree as follows:
1. Sale of Stock. The Company hereby agrees to sell to the Purchaser
and the Purchaser hereby agrees to purchase shares of the Company's Common Stock
(the "Shares"), at the per Share purchase price and as otherwise described in
the Notice of Grant.
2. Payment of Purchase Price. The purchase price for the Shares may be
paid by delivery to the Company at the time of execution of this Agreement of
cash, a check, or some combination thereof.
3. Repurchase Option.
(a) In the event the Purchaser ceases to be a Service Provider for
any or no reason (including death or disability) before all of the Shares are
released from the Company's Repurchase Option (see Section 4), the Company
shall, upon the date of such termination (as reasonably fixed and determined by
the Company) have an irrevocable, exclusive option (the "Repurchase Option") for
a period of sixty (60) days from such date to repurchase up to that number of
shares which constitute the Unreleased Shares (as defined in Section 4) at the
original purchase price per share (the "Repurchase Price"). The Repurchase
Option shall be exercised by the Company by delivering written notice to the
Purchaser or the Purchaser's executor (with a copy to the Escrow Holder) AND, at
the Company's option, (i) by delivering to the Purchaser or the Purchaser's
executor a check in the amount of the aggregate Repurchase Price, or (ii) by
canceling an amount of the Purchaser's
<PAGE> 41
indebtedness to the Company equal to the aggregate Repurchase Price, or (iii) by
a combination of (i) and (ii) so that the combined payment and cancellation of
indebtedness equals the aggregate Repurchase Price. Upon delivery of such notice
and the payment of the aggregate Repurchase Price, the Company shall become the
legal and beneficial owner of the Shares being repurchased and all rights and
interests therein or relating thereto, and the Company shall have the right to
retain and transfer to its own name the number of Shares being repurchased by
the Company.
(b) Whenever the Company shall have the right to repurchase Shares
hereunder, the Company may designate and assign one or more employees, officers,
directors or shareholders of the Company or other persons or organizations to
exercise all or a part of the Company's purchase rights under this Agreement and
purchase all or a part of such Shares. If the Fair Market Value of the Shares to
be repurchased on the date of such designation or assignment (the "Repurchase
FMV") exceeds the aggregate Repurchase Price of such Shares, then each such
designee or assignee shall pay the Company cash equal to the difference between
the Repurchase FMV and the aggregate Repurchase Price of such Shares.
4. Release of Shares From Repurchase Option.
(a) _______________________ percent (______%) of the Shares shall be
released from the Company's Repurchase Option [one year] after the Date of Grant
and __________________ percent (______%) of the Shares [at the end of each month
thereafter], provided that the Purchaser does not cease to be a Service Provider
prior to the date of any such release.
(b) Any of the Shares that have not yet been released from the
Repurchase Option are referred to herein as "Unreleased Shares."
(c) The Shares that have been released from the Repurchase Option
shall be delivered to the Purchaser at the Purchaser's request (see Section 6).
5. Restriction on Transfer. Except for the escrow described in Section
6 or the transfer of the Shares to the Company or its assignees contemplated by
this Agreement, none of the Shares or any beneficial interest therein shall be
transferred, encumbered or otherwise disposed of in any way until such Shares
are released from the Company's Repurchase Option in accordance with the
provisions of this Agreement, other than by will or the laws of descent and
distribution.
6. Escrow of Shares.
(a) To ensure the availability for delivery of the Purchaser's
Unreleased Shares upon repurchase by the Company pursuant to the Repurchase
Option, the Purchaser shall, upon execution of this Agreement, deliver and
deposit with an escrow holder designated by the Company (the "Escrow Holder")
the share certificates representing the Unreleased Shares, together with the
stock assignment duly endorsed in blank, attached hereto as Exhibit A-2. The
Unreleased Shares and stock assignment shall be held by the Escrow Holder,
pursuant to the Joint Escrow Instructions of the Company and Purchaser attached
hereto as Exhibit A-3, until such time as the Company's
-2-
<PAGE> 42
Repurchase Option expires. As a further condition to the Company's obligations
under this Agreement, the Company may require the spouse of Purchaser, if any,
to execute and deliver to the Company the Consent of Spouse attached hereto as
Exhibit A-4.
(b) The Escrow Holder shall not be liable for any act it may do or
omit to do with respect to holding the Unreleased Shares in escrow while acting
in good faith and in the exercise of its judgment.
(c) If the Company or any assignee exercises the Repurchase Option
hereunder, the Escrow Holder, upon receipt of written notice of such exercise
from the proposed transferee, shall take all steps necessary to accomplish such
transfer.
(d) When the Repurchase Option has been exercised or expires
unexercised or a portion of the Shares has been released from the Repurchase
Option, upon request the Escrow Holder shall promptly cause a new certificate to
be issued for the released Shares and shall deliver the certificate to the
Company or the Purchaser, as the case may be.
(e) Subject to the terms hereof, the Purchaser shall have all the
rights of a shareholder with respect to the Shares while they are held in
escrow, including without limitation, the right to vote the Shares and to
receive any cash dividends declared thereon. If, from time to time during the
term of the Repurchase Option, there is (i) any stock dividend, stock split or
other change in the Shares, or (ii) any merger or sale of all or substantially
all of the assets or other acquisition of the Company, any and all new,
substituted or additional securities to which the Purchaser is entitled by
reason of the Purchaser's ownership of the Shares shall be immediately subject
to this escrow, deposited with the Escrow Holder and included thereafter as
"Shares" for purposes of this Agreement and the Repurchase Option.
7. Legends. The share certificate evidencing the Shares, if any, issued
hereunder shall be endorsed with the following legend (in addition to any legend
required under applicable state securities laws):
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS UPON TRANSFER AND RIGHTS OF REPURCHASE AS SET FORTH IN AN AGREEMENT
BETWEEN THE COMPANY AND THE SHAREHOLDER, A COPY OF WHICH IS ON FILE WITH THE
SECRETARY OF THE COMPANY.
8. 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 that may be made by the Company after the date of this Agreement.
9. Tax Consequences. The Purchaser has reviewed with the Purchaser's
own tax advisors the federal, state, local and foreign tax consequences of this
investment and the transactions contemplated by this Agreement. The Purchaser is
relying solely on such advisors and not on any statements or representations of
the Company or any of its agents. The Purchaser understands that
-3-
<PAGE> 43
the Purchaser (and not the Company) shall be responsible for the Purchaser's own
tax liability that may arise as a result of the transactions contemplated by
this Agreement. The Purchaser understands that Section 83 of the Internal
Revenue Code of 1986, as amended (the "Code"), taxes as ordinary income the
difference between the purchase price for the Shares and the Fair Market Value
of the Shares as of the date any restrictions on the Shares lapse. In this
context, "restriction" includes the right of the Company to buy back the Shares
pursuant to the Repurchase Option. The Purchaser understands that the Purchaser
may elect to be taxed at the time the Shares are purchased rather than when and
as the Repurchase Option expires by filing an election under Section 83(b) of
the Code with the IRS within 30 days from the date of purchase. The form for
making this election is attached as Exhibit A-5 hereto.
THE PURCHASER ACKNOWLEDGES THAT IT IS THE PURCHASER'S SOLE
RESPONSIBILITY AND NOT THE COMPANY'S TO FILE TIMELY THE ELECTION UNDER SECTION
83(b), EVEN IF THE PURCHASER REQUESTS THE COMPANY OR ITS REPRESENTATIVES TO MAKE
THIS FILING ON THE PURCHASER'S BEHALF.
10. General Provisions.
(a) This Agreement shall be governed by the internal substantive
laws, but not the choice of law rules of Texas. This Agreement, subject to the
terms and conditions of the Plan and the Notice of Grant, represents the entire
agreement between the parties with respect to the purchase of the Shares by the
Purchaser. Subject to Section 15(c) of the Plan, in the event of a conflict
between the terms and conditions of the Plan and the terms and conditions of
this Agreement, the terms and conditions of the Plan shall prevail. Unless
otherwise defined herein, the terms defined in the Plan shall have the same
defined meanings in this Agreement.
(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.
Any notice to the Escrow Holder shall be sent to the Company's
address with a copy to the other party hereto.
(c) The rights 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 of this
Agreement shall not in any way be construed as a waiver of any such provision,
nor prevent that party from thereafter enforcing any other provision of this
Agreement. The rights granted both parties hereunder are
-4-
<PAGE> 44
cumulative and shall not constitute a waiver of either party's right to assert
any other legal remedy available to it.
(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.
(f) PURCHASER ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES
PURSUANT TO SECTION 4 HEREOF IS EARNED ONLY BY CONTINUING SERVICE AS A SERVICE
PROVIDER AT THE WILL OF THE COMPANY (AND NOT THROUGH THE ACT OF BEING HIRED OR
PURCHASING SHARES HEREUNDER). PURCHASER FURTHER ACKNOWLEDGES AND AGREES THAT
THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE
SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED
ENGAGEMENT AS A SERVICE PROVIDER FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT
ALL, AND SHALL NOT INTERFERE WITH PURCHASER'S RIGHT OR THE COMPANY'S RIGHT TO
TERMINATE PURCHASER'S RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME, WITH OR
WITHOUT CAUSE.
By Purchaser's signature below, Purchaser represents that he or she is
familiar with the terms and provisions of the Plan, and hereby accepts this
Agreement subject to all of the terms and provisions thereof. Purchaser has
reviewed the Plan and this Agreement in their entirety, has had an opportunity
to obtain the advice of counsel prior to executing this Agreement and fully
understands all provisions of this Agreement. Purchaser agrees to accept as
binding, conclusive and final all decisions or interpretations of the
Administrator upon any questions arising under the Plan or this Agreement.
Purchaser further agrees to notify the Company upon any change in the residence
indicated in the Notice of Grant.
DATED:
-------------------------
PURCHASER: INTROGEN THERAPEUTICS INC.
- ----------------------------------- ----------------------------------
Signature By
- ----------------------------------- ----------------------------------
Print Name Title
-5-
<PAGE> 45
EXHIBIT A-2
ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED I, _______________________________, hereby sell,
assign and transfer unto ____________ (__________) shares of the Common Stock of
Introgen Therapeutics Inc., standing in my name of the books of said corporation
represented by Certificate No. _____ herewith and do hereby irrevocably
constitute and appoint ____________ to transfer the said stock on the books of
the within named corporation with full power of substitution in the premises.
This Stock Assignment may be used only in accordance with the
Restricted Stock Purchase Agreement (the "Agreement")
between________________________ and the undersigned dated ________________,
_______.
Dated: _______________, _____
Signature:____________________________
INSTRUCTIONS: Please do not fill in any blanks other than the signature
line. The purpose of this assignment is to enable the Company to exercise the
Repurchase Option, as set forth in the Agreement, without requiring additional
signatures on the part of the Purchaser.
<PAGE> 46
EXHIBIT A-3
JOINT ESCROW INSTRUCTIONS
,
------------------ ----
Corporate Secretary
Introgen Therapeutics Inc.
301 Congress Avenue, Suite 1850
Austin, Texas 78701
Dear :
----------
As Escrow Agent for both Introgen Therapeutics Inc., a Delaware
corporation (the "Company"), and the undersigned purchaser of stock of the
Company (the "Purchaser"), you are hereby authorized and directed to hold the
documents delivered to you pursuant to the terms of that certain Restricted
Stock Purchase Agreement ("Agreement") between the Company and the undersigned,
in accordance with the following instructions:
1. In the event the Company and/or any assignee of the Company
(referred to collectively as the "Company") exercises the Company's Repurchase
Option set forth in the Agreement, the Company shall give to Purchaser and you a
written notice specifying the number of shares of stock to be purchased, the
purchase price, and the time for a closing hereunder at the principal office of
the Company. Purchaser and the Company hereby irrevocably authorize and direct
you to close the transaction contemplated by such notice in accordance with the
terms of said notice.
2. At the closing, you are directed (a) to date the stock assignments
necessary for the transfer in question, (b) to fill in the number of shares
being transferred, and (c) to deliver same, together with the certificate
evidencing the shares of stock to be transferred, to the Company or its
assignee, against the simultaneous delivery to you of the purchase price (by
cash, a check, or some combination thereof) for the number of shares of stock
being purchased pursuant to the exercise of the Company's Repurchase Option.
3. Purchaser irrevocably authorizes the Company to deposit with you any
certificates evidencing shares of stock to be held by you hereunder and any
additions and substitutions to said shares as defined in the Agreement.
Purchaser does hereby irrevocably constitute and appoint you as Purchaser's
attorney-in-fact and agent for the term of this escrow to execute with respect
to such securities all documents necessary or appropriate to make such
securities negotiable and to complete any transaction herein contemplated,
including but not limited to the filing with any applicable state blue sky
authority of any required applications for consent to, or notice of transfer of,
the securities.
<PAGE> 47
Subject to the provisions of this paragraph 3, Purchaser shall exercise all
rights and privileges of a shareholder of the Company while the stock is held by
you.
4. Upon written request of the Purchaser, but no more than once per
calendar year, unless the Company's Repurchase Option has been exercised, you
shall deliver to Purchaser a certificate or certificates representing so many
shares of stock as are not then subject to the Company's Repurchase Option.
Within 90 days after Purchaser ceases to be a Service Provider, you shall
deliver to Purchaser a certificate or certificates representing the aggregate
number of shares held or issued pursuant to the Agreement and not purchased by
the Company or its assignees pursuant to exercise of the Company's Repurchase
Option.
5. If at the time of termination of this escrow you should have in your
possession any documents, securities, or other property belonging to Purchaser,
you shall deliver all of the same to Purchaser and shall be discharged of all
further obligations hereunder.
6. Your duties hereunder may be altered, amended, modified or revoked
only by a writing signed by all of the parties hereto.
7. You shall be obligated only for the performance of such duties as
are specifically set forth herein and may rely and shall be protected in relying
or refraining from acting on any instrument reasonably believed by you to be
genuine and to have been signed or presented by the proper party or parties. You
shall not be personally liable for any act you may do or omit to do hereunder as
Escrow Agent or as attorney-in-fact for Purchaser while acting in good faith,
and any act done or omitted by you pursuant to the advice of your own attorneys
shall be conclusive evidence of such good faith.
8. You are hereby expressly authorized to disregard any and all
warnings given by any of the parties hereto or by any other person or
corporation, excepting only orders or process of courts of law, and are hereby
expressly authorized to comply with and obey orders, judgments or decrees of any
court. In case you obey or comply with any such order, judgment or decree, you
shall not be liable to any of the parties hereto or to any other person, firm or
corporation by reason of such compliance, notwithstanding any such order,
judgment or decree being subsequently reversed, modified, annulled, set aside,
vacated or found to have been entered without jurisdiction.
9. You shall not be liable in any respect on account of the identity,
authorities or rights of the parties executing or delivering or purporting to
execute or deliver the Agreement or any documents or papers deposited or called
for hereunder.
10. You shall not be liable for the outlawing of any rights under the
statute of limitations with respect to these Joint Escrow Instructions or any
documents deposited with you.
11. You shall be entitled to employ such legal counsel and other
experts as you may deem necessary properly to advise you in connection with your
obligations hereunder, may rely upon the advice of such counsel, and may pay
such counsel reasonable compensation therefor.
-2-
<PAGE> 48
12. Your responsibilities as Escrow Agent hereunder shall terminate if
you shall cease to be an officer or agent of the Company or if you shall resign
by written notice to each party. In the event of any such termination, the
Company shall appoint a successor Escrow Agent.
13. If you reasonably require other or further instruments in
connection with these Joint Escrow Instructions or obligations in respect
hereto, the necessary parties hereto shall join in furnishing such instruments.
14. It is understood and agreed that should any dispute arise with
respect to the delivery and/or ownership or right of possession of the
securities held by you hereunder, you are authorized and directed to retain in
your possession without liability to anyone all or any part of said securities
until such disputes shall have been settled either by mutual written agreement
of the parties concerned or by a final order, decree or judgment of a court of
competent jurisdiction after the time for appeal has expired and no appeal has
been perfected, but you shall be under no duty whatsoever to institute or defend
any such proceedings.
15. 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 Post Office, by registered or certified mail with
postage and fees prepaid, addressed to each of the other parties thereunto
entitled at the following addresses or at such other addresses as a party may
designate by ten days' advance written notice to each of the other parties
hereto.
COMPANY: Introgen Therapeutics Inc.
301 Congress Avenue, Suite 1850
Austin, Texas 78701
PURCHASER:
-----------------------------------------
-----------------------------------------
-----------------------------------------
ESCROW AGENT: Corporate Secretary
Introgen Therapeutics Inc.
301 Congress Avenue, Suite 1850
Austin, Texas 78701
16. By signing these Joint Escrow Instructions, you become a party
hereto only for the purpose of said Joint Escrow Instructions; you do not become
a party to the Agreement.
17. This instrument shall be binding upon and inure to the benefit of
the parties hereto, and their respective successors and permitted assigns.
-3-
<PAGE> 49
18. These Joint Escrow Instructions shall be governed by, and construed
and enforced in accordance with, the internal substantive laws, but not the
choice of law rules, of Texas.
Very truly yours,
INTROGEN THERAPEUTICS INC.
-------------------------------------
By
-------------------------------------
Title
PURCHASER:
-------------------------------------
Signature
-------------------------------------
Print Name
ESCROW AGENT:
- -------------------------------------
Corporate Secretary
-4-
<PAGE> 50
EXHIBIT A-4
CONSENT OF SPOUSE
I, _________________________, spouse of ________________________, have
read and approve the foregoing Restricted Stock Purchase Agreement (the
"Agreement"). In consideration of the Company's grant to my spouse of the right
to purchase shares of Introgen Therapeutics Inc., as set forth in the Agreement,
I hereby appoint my spouse as my attorney-in-fact in respect to the exercise of
any rights under the Agreement and agree to be bound by the provisions of the
Agreement insofar as I may have any rights in said Agreement or any shares
issued pursuant thereto under the community property laws or similar laws
relating to marital property in effect in the state of our residence as of the
date of the signing of the foregoing Agreement.
Dated: ____________________, _____
_________________________________________
Signature of Spouse
<PAGE> 51
EXHIBIT A-5
ELECTION UNDER SECTION 83(b)
OF THE INTERNAL REVENUE CODE OF 1986
The undersigned taxpayer hereby elects, pursuant to Section 83(b) of the
Internal Revenue Code of 1986, as amended, to include in taxpayer's gross income
for the current taxable year the amount of any compensation taxable to taxpayer
in connection with his or her receipt of the property described below:
1. The name, address, taxpayer identification number and taxable year of
the undersigned are as follows:
<TABLE>
<S> <C> <C>
NAME: TAXPAYER: SPOUSE:
ADDRESS:
IDENTIFICATION NO.: TAXPAYER: SPOUSE:
TAXABLE YEAR:
</TABLE>
2. The property with respect to which the election is made is described as
follows: ___ shares (the "Shares") of the Common Stock of Introgen
Therapeutics Inc. (the "Company").
3. The date on which the property was transferred is: ___________________,
______.
4. The property is subject to the following restrictions:
The Shares may be repurchased by the Company, or its assignee, upon
certain events. This right lapses with regard to a portion of the
Shares based on the continued performance of services by the taxpayer
over time.
5. The fair market value at the time of transfer, determined without regard
to any restriction other than a restriction which by its terms will
never lapse, of such property is: $__________.
6. The amount (if any) paid for such property is: $___________.
The undersigned has submitted a copy of this statement to the person for whom
the services were performed in connection with the undersigned's receipt of the
above-described property. The transferee of such property is the person
performing the services in connection with the transfer of said property.
The undersigned understands that the foregoing election may not be revoked
except with the consent of the Commissioner.
Dated: ,
------------------ ------- -------------------------------------
Taxpayer
The undersigned spouse of taxpayer joins in this election.
Dated: ,
------------------ ------- -------------------------------------
Spouse of Taxpayer
<PAGE> 1
Exhibit 10.4
INTROGEN THERAPEUTICS INC.
2000 EMPLOYEE STOCK PURCHASE PLAN
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., a Delaware
corporation, and any Designated Subsidiary of the Company.
(e) "Compensation" shall mean all base straight time gross earnings
and commissions, exclusive of payments for overtime, shift premium, incentive
compensation, incentive payments, bonuses and other compensation.
(f) "Designated Subsidiary" shall mean any Subsidiary that has 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
and who has been employed by the Company for at least sixty (60) consecutive
calendar days prior to the first day of an Offering Period. 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 shall 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 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 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 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; or
(4) For purposes of the Enrollment Date of 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 (the "Registration
Statement").
(k) "Offering Period" shall mean a period of approximately six (6)
months during which an option granted pursuant to the Plan may be exercised,
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; provided, however, that the
first Offering Period under the Plan shall commence with the first Trading Day
on or after the date on which the Securities and Exchange Commission declares
the Company's Registration Statement effective and ending on the last Trading
Day on or before October 31, 2000. The duration of Offering Periods may be
changed pursuant to Section 4 of this Plan.
(l) "Plan" shall mean this 2000 Employee Stock Purchase Plan.
(m) "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; provided, however, that the Purchase Price
may be adjusted by the Board pursuant to Section 20.
(n) "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.
(o) "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.
- 2 -
<PAGE> 3
(p) "Trading Day" shall mean a day on which national stock exchanges
and the Nasdaq System are open for trading.
3. Eligibility.
(a) Any Employee 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 that,
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 that his or her rights to purchase stock
under all employee stock purchase plans of the Company and its subsidiaries
accrues 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
20 hereof; provided, however, that the first Offering Period under the Plan
shall commence with the first Trading Day on or after the date on which the
Securities and Exchange Commission declares the Company's Registration Statement
effective and ending on the last Trading Day on or before October 31, 2000. The
Board shall have the power to change the duration of Offering Periods (including
the commencement dates thereof) with respect to future offerings without
stockholder approval if such change is announced 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.
(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.
- 3 -
<PAGE> 4
(b) All payroll deductions made for a participant shall be credited to
his or her account under the Plan and shall be withheld in whole percentages
only. A participant may not make any additional payments into such account.
(c) A participant 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 zero percent (0%) at any time during an
Offering Period. 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 shall not be obligated to, withhold from the participant's
compensation the amount 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
10,000 shares (subject to any adjustment pursuant to Section 19), 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. The Option 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
shall 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
- 4 -
<PAGE> 5
account. No fractional shares shall 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, as appropriate, the shares purchased upon exercise of his or her
option.
10. Withdrawal.
(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 B to this Plan. All of the participant's payroll deductions
credited to his or her account shall be paid to such participant promptly after
receipt of notice of withdrawal and such participant's option for the Offering
Period shall be automatically terminated, and no further payroll deductions for
the purchase of shares shall be made for such Offering Period. If a participant
withdraws from an Offering Period, payroll deductions shall not resume at the
beginning of the succeeding Offering Period unless the participant delivers to
the Company a new subscription agreement.
(b) A participant's withdrawal from an Offering Period shall 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. Termination of Employment. Upon a participant's ceasing to be an
Employee for any reason, he or she shall 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 shall be
returned to such participant or, in the case of his or her death, to the person
or persons entitled thereto under Section 15 hereof, and such participant's
option shall 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.
12. Interest. No interest shall accrue on the payroll deductions of a
participant in the Plan.
13. Stock.
(a) Subject to adjustment upon changes in capitalization of the
Company as provided in Section 19 hereof, the maximum number of shares of the
Company's Common Stock which shall be made available for sale under the Plan
shall be three hundred thousand (300,000) shares, plus an annual increase to be
added on the first day of the Company's fiscal year beginning in 2001 equal to
the lesser of (i) 300,000 shares, (ii) 1.5% of the outstanding shares on such
date, or (iii) a lesser
- 5 -
<PAGE> 6
amount determined by the Board. 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 shall 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 shall be
registered in the name of the participant or in the name of the participant and
his or her spouse.
14. Administration. 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.
15. 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.
16. 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 15 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.
- 6 -
<PAGE> 7
17. 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.
18. Reports. Individual accounts shall be maintained for each participant
in the Plan. Statements of account shall be given to participating Employees at
least annually, which statements shall set forth the amounts of payroll
deductions, the Purchase Price, the number of shares purchased and the remaining
cash balance, if any.
19. Adjustments Upon Changes in Capitalization, Dissolution, Liquidation,
Merger or Asset Sale.
(a) Changes in Capitalization. Subject to any required action by the
stockholders of the Company, the Reserves, the maximum number of shares each
participant may purchase per Offering Period (pursuant to Section 7), as well as
the price per share and the number of shares 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 then in progress
shall be shortened by setting a new Exercise Date (the "New Exercise Date"), and
shall terminate immediately prior to the consummation of such proposed
dissolution or liquidation, unless provided otherwise by the Board. The New
Exercise Date shall be before the date of the Company's proposed dissolution or
liquidation. 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
the participant's option has been changed to the New Exercise Date and that the
participant's option shall be exercised automatically on the New Exercise Date,
unless prior to such date the participant has withdrawn from the Offering Period
as provided in Section 10 hereof.
(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 outstanding option shall be assumed or an
equivalent option 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, the Offering Period
then in progress shall be shortened by setting a new Exercise Date (the "New
Exercise Date"). The New Exercise Date shall be before the date of the Company's
proposed sale or merger. 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 the participant's option has been changed to the New Exercise Date and
that the participant's option shall
- 7 -
<PAGE> 8
be exercised automatically on the New Exercise Date, unless prior to such date
the participant has withdrawn from the Offering Period as provided in Section 10
hereof.
20. 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 19 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 Offering Period or the Plan
is in the best interests of the Company and its stockholders. Except as provided
in Section 19 and Section 20 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 Section 423 of the Code (or
any other applicable law, regulation or stock exchange rule), the Company shall
obtain shareholder approval in such a manner and to such a degree as required.
(b) Without stockholder 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.
(c) In the event the Board determines that the ongoing operation of
the Plan may result in unfavorable financial accounting consequences, the Board
may, in its discretion and, to the extent necessary or desirable, modify or
amend the Plan to reduce or eliminate such accounting consequence including, but
not limited to:
(1) altering the Purchase Price for any Offering Period including
an Offering Period underway at the time of the change in Purchase Price;
(2) shortening any Offering Period so that Offering Period ends
on a new Exercise Date, including an Offering Period underway at the time of the
Board action; and
(3) allocating shares.
Such modifications or amendments shall not require stockholder approval or
the consent of any Plan participants.
21. 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.
- 8 -
<PAGE> 9
22. 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 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.
23. 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 stockholders of
the Company. It shall continue in effect for a term of ten (10) years unless
sooner terminated under Section 20 hereof.
- 9 -
<PAGE> 10
EXHIBIT A
INTROGEN THERAPEUTICS INC.
2000 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. 2000 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 (from 0 to 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 my ability
to exercise the option under this Subscription Agreement is subject to
stockholder 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 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
<PAGE> 11
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's Social
Security Number: ----------------------------------------
Employee's Address: ----------------------------------------
----------------------------------------
- 2 -
<PAGE> 12
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)
- 3 -
<PAGE> 13
EXHIBIT B
INTROGEN THERAPEUTICS INC.
2000 EMPLOYEE STOCK PURCHASE PLAN
NOTICE OF WITHDRAWAL
The undersigned participant in the Offering Period of the Introgen
Therapeutics Inc. 2000 Employee Stock Purchase Plan which began on ___________,
______ (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
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
INTROGEN THERAPEUTICS, INC.
SERIES C PREFERRED STOCK
PURCHASE AGREEMENT
301 Congress Avenue
Suite 2025
Austin, Texas 78701
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
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
</TABLE>
-i-
<PAGE> 3
<TABLE>
<S> <C>
4.7 Restricted Securities...........................................7
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............................................9
5.5 Minimum Purchase Amount.........................................9
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......................................14
7.9 Delay of Registration..........................................14
7.10 Indemnification................................................14
7.11 Reports Under Securities Exchange Act of 1934..................16
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 and Information Rights........18
7.17 Termination of Registration Rights.............................19
7.18 Prior Registration Rights......................................19
8. Miscellaneous..............................................................19
8.1 Survival of Warranties.........................................19
8.2 Successors and Assigns.........................................19
8.3 Governing Law..................................................19
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<S> <C>
8.4 Counterparts...................................................19
8.5 Titles and Subtitles...........................................19
8.6 Notices........................................................19
8.7 Expenses.......................................................20
8.8 Amendments and Waivers.........................................20
8.9 Severability...................................................20
8.10 Aggregation of Stock...........................................20
</TABLE>
EXHIBITS
A. [omitted]
-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
-2-
<PAGE> 7
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,
-3-
<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
communi cations 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 pro vision 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,
-4-
<PAGE> 9
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.
-5-
<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
-6-
<PAGE> 11
execution of this Agreement hereby confirms, that the Series C Preferred to be
received by the 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:
-7-
<PAGE> 12
(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 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.
-8-
<PAGE> 13
5.4 Restated Certificate. The Restated Certificate shall have
been filed with the Delaware Secretary of State.
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
-9-
<PAGE> 14
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 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),
-10-
<PAGE> 15
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 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
-11-
<PAGE> 16
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 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.
-12-
<PAGE> 17
(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 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.
-13-
<PAGE> 18
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 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
-14-
<PAGE> 19
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.
(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.
-15-
<PAGE> 20
(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:
(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
-16-
<PAGE> 21
(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 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)
-17-
<PAGE> 22
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.
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.
-18-
<PAGE> 23
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.
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.
-19-
<PAGE> 24
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 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> 26
EXHIBIT A
[omitted]
<PAGE> 1
EXHIBIT 10.6
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the"Agreement") is made as of
October 31, 1997 by and between Introgen Therapeutics, Inc., a Delaware
corporation (the "Company") and Nomura International plc ("Nomura").
RECITALS
1. The Company entered into a Series B Preferred Stock Purchase
Agreement wherein registration rights were granted to the holders of the Series
B Preferred Stock and certain holders of the Company's Series A Preferred Stock
and Common Stock.
2. The Company entered into a Series C Preferred Stock Purchase
Agreement (the "Series C Agreement") wherein registration rights were granted to
the holders of the Series C Preferred Stock. In addition, the registration
rights of the Series C Agreement were substituted for those of the Series B
Preferred Stock Purchase Agreement.
3. Section 7.14 of the Series C Agreement sets forth the limitations on
subsequent registration rights.
4. Simultaneously herewith, the Company is issuing shares of Series D
Preferred Stock pursuant to a Placement Agreement among the Company, Nomura and
Nomura Securities International, Inc.
5. The Company has agreed to provide Nomura and other Holders of the
Company's Series D Preferred Stock and their direct and indirect transferees the
registration rights as set forth in this Agreement subject to Section 13 hereof.
NOW, THEREFORE, the Company covenants and agrees as follows:
1. Definitions. For purposes of this Agreement:
(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 D Preferred Stock and
(2) 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 D Preferred Stock, excluding in all cases, however,
(i) any Registrable Securities sold by a person in a transaction in which his
rights under this Agreement are not permitted to be assigned hereunder, or (ii)
any Registrable Securities sold to or through a broker or dealer or underwriter
in a public distribution or a public securities transaction.
<PAGE> 2
(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 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.
2. Request for Registration.
(a) If the Company shall receive at any time after January 1, 1999, a
written request from the Holders of at least fifty percent (50%) of the
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), 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 2(b) and (c), cause to become effective 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) The Company shall not be obligated to take any action to cause to
become effective any such registration, qualification or compliance pursuant to
subsection 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 caused two registrations to become
effective pursuant to subsection 2(a);
(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 2(a) shall
-2-
<PAGE> 3
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 2 and the Company shall
include such information in the written notice referred to in subsection 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 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 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.
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 shall, subject to the provisions of Section 8, cause to be
registered under the Act all of the Registrable Securities that each such Holder
has requested to be registered.
4. Obligations of the Company. Whenever required under this Agreement 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.
-3-
<PAGE> 4
(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 Agreement, on the date that such
Registrable Securities are delivered to the underwriters for sale in connection
with a registration pursuant to this Agreement, 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.
5. Furnish Information. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Agreement 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
-4-
<PAGE> 5
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.
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 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 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 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 2. The Company's obligations under this 6 shall apply to
each registration pursuant to Section 2.
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
3 for each Holder (which right may be assigned as provided in Section 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 Holder.
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 3 to include any of the Holders' securities in such
underwriting: (i) 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 or (ii) if inclusion would reduce the
amount of securities to be included in such registration pursuant to a request
under Section 7.2 of the Series C Agreement. 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 Holders according to the total amount of
securities entitled to be included therein owned by each selling Holder or in
such other proportions as shall mutually be agreed to by such selling Holders)
but in no event shall any shares being sold by a stockholder exercising a demand
registration right similar to that granted in Section 2 be excluded from such
offering. For purposes of apportionment, any selling Holder 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 Holder",
and any pro rata reduction with respect to such "selling Holder" shall be based
upon the aggregate amount of
-5-
<PAGE> 6
shares carrying registration rights owned by all entities and individuals
included in such "selling Holder", as defined in this sentence.
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 Agreement.
10. Indemnification. In the event any Registrable Securities are included
in a registration statement under this Agreement:
(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 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.
(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
-6-
<PAGE> 7
subsection 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 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 10(b) exceed the gross proceeds from the offering received
by such Holder.
(c) Promptly after receipt by an indemnified party under this Section
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 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 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 10.
(d) The obligations of the Company and Holders under this Section 10
shall survive the completion of any offering of Registrable Securities in a
registration statement under this Agreement, and otherwise.
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
-7-
<PAGE> 8
(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.
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, if applicable, 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 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 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
-8-
<PAGE> 9
registrations requested pursuant to Section 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.
13. Assignment of Registration Rights. The rights to cause the Company to
register Registrable Securities pursuant to this Agreement may be assigned by a
Holder to a transferee or assignee of such securities who acquires (i) at least
25,000 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.
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 15 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 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 date set
forth in subsection 2(a) or within six months of the effective date of any
registration effected pursuant to Section 2.
15. Amendment of Registration Rights. Any provision of this Agreement 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 and (ii) the holders of more than fifty
percent (50%) of the Registrable Securities 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 Agreement. Any amendment, waiver or supplemental agreement
effected in accordance with this Section 15 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.
16. Termination of Registration Rights. No Holder shall be entitled to
exercise any right provided for in this Agreement 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.
-9-
<PAGE> 10
17. Miscellaneous.
(a) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
UNDER THE LAWS OF THE STATE OF NEW YORK.
(b) 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.
(c) 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.
(d) 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.
(e) 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.
-10-
<PAGE> 11
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first set forth above.
INTROGEN THERAPEUTICS, INC.
By:
-------------------------------------
Title:
-------------------------------------
INVESTOR
---------------------------------------------
(print name)
---------------------------------------------
(signature)
---------------------------------------------
(title, if applicable)
Address:
-------------------------------------
-------------------------------------
-------------------------------------
-11-
<PAGE> 1
EXHIBIT 10.7(a)
ASSIGNMENT OF LEASES
(Space Lease)
THE STATE OF TEXAS )
) KNOW ALL MEN BY THESE PRESENTS:
COUNTY OF HARRIS )
THIS ASSIGNMENT, made the 23rd day of November, 1998, by TMX REALTY
CORPORATION, a Delaware corporation, hereinafter referred to as the "Assignor",
to RIVERWAY BANK, with its banking house located in Houston, Harris County,
Texas, hereinafter referred to as "Assignee";
W I T N E S S E T H:
That the Assignor, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, hereby grants, transfers and
assigns to the Assignee all of Assignor's interest in and to any and all
sublease and/or sub-sublease agreements or any other agreements wherein
Assignor is Lessor (collectively called the "Leases") now or hereafter made and
entered into covering (1) any or all of the space located in the improvements
now or hereafter constructed on the property (the "Property") described in
Exhibit "A", (2) any or all of the property described in Exhibit "A", and (3)
any of Assignor's rights with respect to the Property or improvements located
thereon.
Assignee acknowledges the existence of (1) that certain Ground Sublease
(herein so called) covering the Property as evidenced by the Amended and
Restated Ground Sublease Agreement dated November 23rd, 1998 by and between
Assignor as subtenant and Amelang Partners, Inc., as sublandlord and (2) this
certain Enhanced-Use Lease (the "Ground Lease") by and between Amelang
Partners, Inc., as Ground Lessee and the United States Department of Veteran
Affairs is Ground Lessor. The term Lease as used herein shall mean any and all
leases affecting the Property including, without limitation, any existing
leases and any subleases or sub-subleases hereinafter entered into by Assignor
and any tenants for office space or otherwise. The term Lease, for the purposes
hereof shall exclude the Ground lease.
TOGETHER with all rents, income and profits arising from the Leases and
renewals thereof and together with all rents, income and profits for the use
and occupation of the premises described in the Leases.
I.
The Assignor covenants with the Assignee to observe and perform all of the
obligations imposed upon the lessor under the Leases and not to do or permit to
be done anything to impair the security thereof; not to collect any of the rent,
income and profits arising or accruing under the Leases or from the Property in
advance of the time when the same shall become due (except for the last month's
rent); not to execute any assignment, collateral assignment or security
agreement covering any of lessor's interest in the Leases or the Property; not
to alter, modify or change the terms of the Leases or give any consent or
exercise any option required or permitted by such terms without the prior
written consent of Assignee, or cancel or terminate any of the Leases or accept
a surrender thereof or convey or transfer or suffer or permit a conveyance or
transfer of the Property or of any interest therein so as to effect directly or
indirectly, proximately or remotely, a merger of the estates and rights of, or a
termination or diminution of the obligations of, lessee thereunder; nor to
consent to any assignment of or subletting under the Leases, whether or not in
accordance with their terms, without the prior written consent of the Assignee;
to assign and transfer to the Assignee any and all subsequent leases upon all or
any part of the Property or improvements located thereon and to execute and
deliver at the request of the Assignee all such further equal assurances and
assignments with respect to the Property, the improvements located or to be
located thereon, or any part thereof, as the Assignee shall from time to time
require.
<PAGE> 2
II.
Assignor shall have the right to collect at the time of, but not
prior to, the date provided for the payment thereof, all rents, income and
profits arising under the Leases or from the Property and to retain, use and
enjoy the same, so long as there shall exist no default (after notice and
opportunity to cure as provided in the Construction Loan Agreement) by the
Assignor in:
(a) The payment of the principal sum, interest and indebtedness
evidenced by that certain promissory note (the "Note") and any
amendments, extensions, consolidations, increases or renewals thereof,
whether represented by modification agreement, renewal note, letter
agreement or otherwise, in the original principal amount of
$6,000,000.00, executed by Assignor, payable to Assignee, dated of
even date herewith and secured by, among other collateral, a
Leasehold Deed of Trust (the "Deed of Trust") covering the Property.
(b) The payment of all other sums with interest thereon becoming due
and payable by Assignor to Assignee.
(c) The performance and discharge of each and every obligation,
covenant and agreement of the Assignor contained (i) herein, (ii) in
the Leases, (iii) in the Note, (iv) in the Deed of Trust, (v) the
Construction Loan Agreement or (vi) in any documents executed by
Assignor in connection with the Note.
III.
Upon or at any time after default in the performance of any obligation,
covenant or agreement herein or in the Note, Deed of Trust or Leases on the part
of the Assignor to be performed (after notice and opportunity to cure as
provided in the Construction Loan Agreement), the Assignee without in any way
waiving such default may, at its option without further notice and without
regard to the adequacy of the security for the payment of the Note, either in
person or by agent, with or without bringing any action or proceeding or by a
receiver appointed by a court, take possession of the Property and improvements
thereon located and have, hold, manage, lease and operate the same on such terms
and for such period of time as the Assignee may deem proper and either with or
without taking possession of the Property in its own name, demand, sue for or
otherwise collect and receive all rents, income and profits of the Property,
including those past due and unpaid with full power to make from time to time
all alterations, renovations, repairs or replacements thereto or thereof as may
seem proper to the Assignee and to apply such rents, income and profits to the
payment of: (a) all expenses of managing the Property, together with the
improvements located thereon, including without being limited thereto, the
salaries, fees and wages of a managing agent and such other employees as the
Assignee may deem necessary or desirable and all expenses of operating and
maintaining the Property and improvements, including without being limited
thereto, all taxes, charges, claims, assessments, water rents, sewer rents, and
any other liens and premiums for all insurance which the Assignee may deem
necessary or desirable, and the cost of all alterations, renovations, repairs or
replacements, and all expenses incident to taking and retaining possession of
the Property and improvements; and (b) the principal, interest due and payable
pursuant to the Note, together with all costs and attorneys' fees provided for
therein, in such order of priority as to any of the items mentioned herein as
the Assignee in its sole discretion may determine. The exercise by the Assignee
of the option granted it in this Section III and the collection of the rents,
income and profits and the application thereof as herein provided shall not be
considered a waiver of any default by the Assignor under the Note, Deed of
Trust, Leases or this Assignment. Assignor agrees that the possession by
Assignee subsequent to default shall be conclusively deemed to be a "lawful
possession" of the Property and the improvements thereon located.
2
<PAGE> 3
IV.
The Assignee shall not be liable for any loss sustained by the Assignor
resulting from the Assignee's failure to let the Property or improvements after
default or from any other act or omission of the Assignee in managing the
Property or improvements after default unless such loss is caused by the
willful misconduct and bad faith of the Assignee. Nor shall the Assignee be
obligated to perform or discharge nor does the Assignee hereby undertake to
perform or discharge any obligation, duty or liability under the Leases or
under or by reason of this Assignment and the Assignor shall and does hereby
agree to indemnify the Assignee for, and to hold the Assignee harmless from,
any and all liability, loss or damage which may or might be incurred under the
Leases or under or by reason of this Assignment and from any and all claims and
demands whatsoever which may be asserted against the Assignee by reason of any
alleged obligations or undertakings on its part to perform or discharge any of
the terms, covenants or agreements contained in the Leases. Should the Assignee
incur any such liability under the Leases or under or by reason of this
Assignment or in defense of any such claims or demands, the amount thereof,
including costs, expenses and reasonable attorneys' fees, shall be secured
hereby and the Assignor shall reimburse the Assignee therefor immediately upon
demand and upon the failure of the Assignor so to do, the Assignee may, at its
option, declare the Note immediately due and payable, if the same have not
theretofore been accelerated. And it is further understood that this Assignment
shall not operate to place responsibility for the control, care, management or
repair of the Property or improvements upon the Assignee nor shall Assignee be
responsible or liable for any waste committed on the Property or improvements
by the tenants or any other parties, or for any dangerous or defective
condition of the Property or improvements, or for any negligence in the
management, upkeep, repair or control of the Property or improvements resulting
in loss or injury or death to any tenant, licensee, employee or stranger.
Assignor acknowledges that Assignee retains the rights set forth in this
Section only for the protection of its collateral, and this Section is in no
manner to be construed as interference with or control of Assignor's business
or tenants.
V.
Upon payment in full of the Note and performance in full of the provisions
of the Deed of Trust, this Assignment shall become and be void and of no
effect. The Assignor hereby authorizes and directs the lessees named in the
Leases or any other or future lessees or occupant of the Property, or any part
thereof, upon receipt from the Assignee of written notice to the effect that a
default exists under the Note, Deed of Trust or this Assignment, to pay over to
the Assignee all rents, income and profits arising or accruing under the Leases
and to continue to do so until otherwise notified by the Assignee.
VI.
The Assignee may take or release any security for the payment of the Note,
may release any party primarily or secondarily liable thereon and may apply any
security held by it to the satisfaction of such principal, interest or
indebtedness without prejudice to any of its rights under this Assignment.
VII.
Nothing contained in this Assignment and no act done or omitted by the
Assignee pursuant to the powers and rights granted it hereunder shall be deemed
to be a waiver by the Assignee of its rights and remedies under the Note or
Deed of Trust, and this Assignment is accepted without prejudice to any of the
rights and remedies possessed by the Assignee under the terms of the Note and
Deed of Trust, and it is agreed that this is an absolute assignment and not a
security agreement, pledge or collateral assignment. The right of the Assignee
to collect the principal and interest and to enforce any security therefor held
by it may be exercised by the Assignee either prior to, simultaneously with, or
subsequent to any action taken by it hereunder.
3
<PAGE> 4
VIII.
When this Assignment is executed by more than one person, it shall be
construed as though Assignor were written Assignors and words in their number
were changed to correspond; and pronouns of masculine gender, wherever used
herein, shall include persons of the female sex and corporations and
associations of every kind and character; and the words "heirs, executors and
administrators", when this instrument is executed by a corporation, shall be
construed to mean "successors and assigns". If Assignee is more than one person,
it shall be construed as though Assignee were written Assignees and words in
their number were changed to correspond; and pronouns of the masculine gender,
where used herein as to Assignee, shall be construed to include persons of the
female sex, corporations and associations of every kind and character and, as to
a corporation, the words "heirs" shall be construed as "successors".
IX.
This Assignment, together with the covenants and warranties herein
contained, shall inure to the benefit of the Assignee and any subsequent holder
of the Note and Deed of Trust and shall be binding upon the Assignor, his heirs,
executors, administrators, successors and assigns, and any subsequent owner of
the Property, or any part thereof.
X.
ASSIGNOR HEREBY EXPRESSLY RECOGNIZES THAT CONTAINED IN SECTION IV. OF THIS
ASSIGNMENT OF LEASES ARE PROVISIONS WHICH REQUIRE ASSIGNOR TO INDEMNIFY ASSIGNEE
UNDER CERTAIN CIRCUMSTANCES AND ASSIGNOR HEREBY ACKNOWLEDGES THAT BY EXECUTING
THIS ASSIGNMENT OF LEASES, ASSIGNOR ACCEPTS THESE PROVISIONS AND THE OBLIGATIONS
TO INDEMNIFY ASSIGNEE UNDER SUCH CIRCUMSTANCES.
4
<PAGE> 5
EXECUTED on this the 23rd day of November, 1998.
TMX REALTY CORPORATION, a Delaware
corporation
By: /s/ JAMES W. ALBRECHT, JR.
---------------------------
Name: JAMES W. ALBRECHT, JR.
-------------------------
Title: CHIEF FINANCIAL OFFICER
-------------------------
THE STATE OF TEXAS )
)
COUNTY OF HARRIS )
This instrument was acknowledged before me on this 23 day of November,
1998, by James W. Albrecht, Jr., CEO of TMX REALTY CORPORATION, a Delaware
corporation, for and on behalf of said corporation.
/s/ LAWANA HARDIN
----------------------
[SEAL] [SEAL] Notary Public in and
for the STATE OF TEXAS
Printed Name of Notary: My Commission Expires:
- ---------------------------- ----------------------
5
<PAGE> 6
EXHIBIT "A"
Being a tract or parcel containing 2.619 acres (114,086 square feet) of land
situated in the DWC Harris Survey, Abstract Number 325, Harris County, Texas,
and being part of and out of that certain called 118.831 acres, described in
deed to the United States of America, as recorded in Volume 1297, Page 87, Deed
Records of Harris County, Texas, said 2.619 acre tract being more particularly
described as follows (all bearings and coordinates are based on the Texas State
Plane Coordinate System; South Central Zone; all distances and coordinates are
surface and may be converted to grid by multiplying by a combined scale factor
of 0.9998632):
COMMENCING at a 5/8-inch iron rod with plastic cap set marking the intersection
of the south right-of-way (ROW) line of Holcombe Boulevard with the west ROW
line of Almeda Road, and having surface coordinates of X=3,147,967.40,
Y=698,487.10, thence:
South 14 degrees 53'21" West, with said west ROW line, a distance of 206.00
feet to a set 5/8-inch iron rod with plastic cap;
North 75 degrees 06'39" West, a distance of 329.30 feet to a 5/8-inch iron
rod with plastic cap set marking the POINT OF BEGINNING and northeast
corner of the herein described tract;
THENCE, SOUTH 14 degrees 53'21" West, a distance of 330.70 feet to a 5/8-inch
iron rod with plastic cap set marking the southeast corner of the herein
described tract;
THENCE, NORTH 75 degrees 06'39" West, a distance of 432.78 feet to a 5/8-inch
iron rod with plastic cap set marking the southwest corner of the herein
described tract;
THENCE, North 41 degrees 44'27" East, a distance of 334.23 feet to a 5/8-inch
iron rod with plastic cap set marking the beginning of a tangent curve;
THENCE, NORTHEASTERLY, with a curve to the left having a radius of 760.00 feet,
a central angle of 03 degrees 35'59", an arc length of 47.75 feet, and a chord
which bears North 39 degrees 56'28" East, 47.74 feet to an "X" in concrete set
marking the most northwesterly corner of the herein described tract;
THENCE, SOUTHEASTERLY, with a non-tangent curve to the left having a radius of
87.50 feet, an arc length of 93.13 feet, a central angle of 60 degrees 59'01",
and a chord which bears South 58 degrees 25'28" East, 88.80 feet to a 5/8-inch
iron rod with plastic cap set marking a point of tangency;
THENCE, SOUTH 88 degrees 54'58" East, a distance of 27.76 feet to a 5/8-inch
iron rod with plastic cap set marking the beginning of a tangent curve;
THENCE, EASTERLY, with a curve to the right having a radius of 281.50 feet, an
arc length of 67.83 feet, a central angle of 13 degrees 48'19", and a chord
which bears South 82 degrees 00'48" East, 67.66 feet to a 5/8-inch
iron rod with plastic cap set marking a point of tangency;
THENCE, SOUTH 75 degrees 06'39" East, a distance of 82.41 feet to the POINT OF
BEGINNING and containing 2.619 acres (114,086 square feet) of land (this
description is based on a Land Title Survey and plat prepared by Terra
Surveying Company, Inc. Project Number 0163-9801-S).
[STAMP]
[STAMP]
<PAGE> 7
ANY PROVISION HEREIN WHICH RESTRICTS THE SALE, RENTAL OR USE OF THE DESCRIBED
REAL PROPERTY BECAUSE OF COLOR OR RACE IS INVALID AND UNENFORCEABLE UNDER
FEDERAL LAW
THE STATE OF TEXAS )
COUNTY OF HARRIS )
I hereby certify that this instrument was FILED in File Number Sequence on
the date and at the time stamped hereon by me, and was duly RECORDED, in the
Official Public Records of Real Property of Harris County, Texas on
DEC 3 1998
[SEAL]
/s/ BEVERLY B. KAUFMAN
COUNTY CLERK
HARRIS COUNTY TEXAS
<PAGE> 8
CONSENT TO ASSIGNMENT OF CONSTRUCTION CONTRACT
The undersigned Contractor hereby acknowledges receipt of a copy of the
Assignment of Construction Contract set out in Section 4.18 of that certain
Construction Loan Agreement of even date herewith by and between TMX Realty
Corporation, a Delaware corporation and RIVERWAY BANK and consents to be bound
by the provisions thereof.
J.T. Vaughn Construction Company, Inc.
By: /s/ J. THOMAS VAUGHN
-----------------------------------
Name: J. Thomas Vaughn
---------------------------------
Title: Exec. V.P.
--------------------------------
<PAGE> 9
CONSTRUCTION LOAN AGREEMENT
THIS LOAN AGREEMENT dated November 23, 1998, is made by and between
RIVERWAY BANK ("Lender"), whose address is Five Riverway, Houston, Texas 77056
and TMX REALTY CORPORATION, a Delaware corporation ("Borrower"), whose address
is 301 Congress Avenue, Suite 1850, Austin, Texas 78701, in respect of a loan in
the principal sum of SIX MILLION AND NO/100 DOLLARS ($6,000,000).
ARTICLE 1 - DEFINITIONS
For purposes of this Loan Agreement, the following terms shall have the
respective meanings assigned to them.
1.1 Advance.
The term "Advance" shall mean a disbursement by Lender of any of the
proceeds of the Loan and/or the Borrower's Deposit.
1.2 Affidavit of Borrower.
The term "Affidavit of Borrower" shall mean a sworn affidavit of
Borrower (and such other parties as Lender may require) to the effect that all
statements, invoices, bills, and other expenses incident to the acquisition of
the Property and the construction of the Improvements incurred to a specified
date, whether or not specified in the Approved Budget, have been paid in full,
except for (a) amounts retained pursuant to the Construction Contract, and (b)
items to be paid from the proceeds of an Advance then being requested or in
another manner satisfactory to Lender.
1.3 Application for Advance.
The term "Application for Advance" shall mean a written application (on
a form approved by Lender) by Borrower (and such other parties as Lender may
require) to Lender specifying by name, current address, and amount all parties
to whom Borrower is obligated for labor, materials, or services supplied for the
construction of the improvements and all other expenses incident to the Loan,
the Property, and the construction of the Improvements, whether or not specified
in the Approved Budget requesting an Advance for the payment of such items,
containing, if requested by Lender, an Affidavit of Borrower, accompanied by
such schedules, affidavits, releases, waivers, statements, invoices, bills, and
other documents as Lender may reasonably request.
1.4 Approved Budget
The term "Approved Budget" shall mean a budget or cost itemization
prepared by Borrower specifying the cost by item of (a) all labor, materials,
and services necessary for the construction of the Improvements in accordance
with the Plans and all Governmental Requirements, and (b) all other expenses
anticipated by Borrower incident to the Loan, the Property, and the construction
of Improvements. The Approved Budget is attached hereto as Exhibit "C" and
incorporated herein by reference.
1.5 Appraisal.
The term "Appraisal" shall mean a Fair Value appraisal from a MAI
appraiser approved by Lender and reflecting a completed value of not less than
$7,860,000. The term Fair Value shall mean the cash price that might reasonably
be anticipated in a current sale under all conditions requisite to a fair sale.
A fair sale means that buyer and seller are each acting prudently, knowledgeably
and under no necessity to buy or sell - i.e., other than in a forced or
liquidation sale. The appraiser should estimate the cash price that might
received upon exposure to the open market
1
<PAGE> 10
for a reasonable time, considering the property type and local market
conditions. When a current sale is unlikely - i.e., when it is unlikely that the
sale can be completed within 12 months - the appraiser must discount all cash
flows generated by the Property to obtain the estimate of Fair Value. These cash
flows include, but are not limited to, those arising from ownership,
development, operation, and sale of the Property. The discount applied shall
reflect the appraiser's judgement of what a prudent, knowledgeable purchaser
under no necessity to buy would be willing to pay to purchase property in a
current sale.
1.6 Architect.
The term "Architect" shall mean Browne Penland McGregor Architects,
Inc.
1.7 Architectural Contract.
The term "Architectural Contract" shall mean a written agreement
between Borrower and Architect for architectural services pertaining to
construction of the Improvements.
1.8 Assignment of Landlord's Interest in Leases.
The term "Assignment of Landlord's Interest in Leases" shall mean a
document so entitled, effectuating an assignment by Borrower to Lender of the
landlord's (in this case sub-sublandlord) interest in the leases (in this case
sub-sublessor), lease proceeds, and/or rents from the Property.
1.9 Borrower.
The term "Borrower" shall mean TMX REALTY CORPORATION, a Delaware
corporation.
1.10 Borrower's Deposit.
The term "Borrower's Deposit" shall mean such cash sums as Lender may
deem necessary, from time to time until the Loan is paid in full, in addition to
the Loan, for the payment of the costs of labor, materials, and services
required for the construction of the Improvements, other costs and expenses
specified in the Approved Budget, and other costs and expenses required to be
paid in connection with the construction of the Improvements in accordance with
the Plans, any Governmental Requirements and the requirements of any lessee, if
applicable.
1.11 Code.
The term "Code" shall mean the Uniform Commercial Code as in force in
the state in which the Property is located and, if different, the state of the
Borrower's residence.
1.12 Completion Date.
The term "Completion Date" shall mean one year from the date of this
Construction Loan Agreement.
1.13 Construction Contract.
The term "Construction Contract" shall mean all construction contracts
executed by Borrower for the construction of the Improvements, including,
without limitation, contracts between Borrower and Contractor.
1.14 Contractor.
The term "Contractor" shall mean J.T. Vaughn Construction Company, Inc.
2
<PAGE> 11
1.15 Debtor Relief Laws.
The term "Debtor Relief Laws" shall mean any applicable liquidation,
conservatorship, bankruptcy, moratorium, rearrangement, insolvency,
reorganization, or similar laws affecting the rights or remedies of creditors
generally, as in effect from time to time.
1.16 Event of Default.
The term "Event of Default" shall mean the occurrence of any one of the
following (subject to the requirement of notice by Lender and opportunity to
cure as provided below):
(a) Any indebtedness evidenced, governed or secured by any of the
Loan Instruments is not paid when due, whether by acceleration or
otherwise.
(b) Any covenant in this Agreement or any of the other Loan
Instruments is not fully and timely performed, or the occurrence
of any default or event of default thereunder.
(c) Any statement, representation or warranty in the Loan
Instruments, any Financial Statements or any other writing
delivered to Lender in connection with the Loan is false,
misleading or erroneous in any material respect.
(d) The cessation of the construction of the Improvements for more
than fifteen (15) days without the written consent of Lender,
unless such cessation is due to weather, shortages or
unavailability of labor or materials, nonperformance by the
Contractor or Architect, or other causes beyond Borrower's
control.
(e) Failure of the construction of the Improvements or any materials
for which an Advance has been requested to comply with the Plans,
any Governmental Requirements or the requirements of any lessee,
if applicable.
(f) Failure of Borrower to satisfy any condition specified herein as
precedent to the obligation of Lender to make an Advance after an
Application for Advance has been submitted by Borrower to Lender.
(g) A reasonable determination by Lender that construction of the
Improvements will not be completed on or before the Completion
Date, or within ninety days thereafter, unless such cessation is
due to weather, shortages or unavailability of labor or
materials, non-performance by the Contractor or Architect
(caused through no fault of Borrower) or other causes beyond
Borrower's control.
(h) Any person obligated to pay any part of the indebtedness
evidenced, governed or secured by the Loan Instruments
(1) makes a general assignment for the benefit of creditors; or
(2) commences any case, proceeding or other action seeking
reorganization, arrangement, adjustment, liquidation,
dissolution or composition of it or its debts under any
Debtor Relief Laws; or
(3) in any involuntary case, proceeding or other action
commenced against it which seeks to have an order for relief
entered against it, as debtor, or seeks reorganization,
arrangement, adjustment, liquidation, dissolution or
composition
3
<PAGE> 12
of it or its debts under any law relating to bankruptcy,
insolvency, reorganization or relief of debtors, (i) fails
to obtain a dismissal of such case, proceeding or other
action within sixty (60) days of its commencement, or (ii)
converts the case from one chapter of the Federal Bankruptcy
Code to another chapter, or (iii) is the subject of an order
for relief; or
(4) conceals, removes, or permits to be concealed or removed,
any part of its property, with intent to hinder, delay or
defraud its creditors or any of them, or makes or suffers a
transfer of any of its property which is fraudulent under
any bankruptcy, fraudulent conveyance or similar law; or
makes any transfer of its property to or for the benefit of
a creditor at a time when other creditors similarly situated
have not been paid; or suffers or permits, while insolvent,
any creditor to obtain a lien upon any of its property
through legal proceedings which is not vacated within sixty
(60) days from the date thereof; or
(5) has a trustee, receiver, custodian or other similar official
appointed for or take possession of all or any part of the
Property or any other of its property or has any court take
jurisdiction of any other of its property which continues
for a period of sixty (60) days (except where a shorter
period is specified in the immediately following
subparagraph (6)); or
(6) fails to have discharged within a period of thirty (30) days
any attachment, sequestration, or similar writ levied upon
any property of such person; or
(7) fails to pay immediately any final, nonappealable money
judgment against such person.
(i) Title to all or any part of the Property (other than obsolete or
worn personal property replaced by adequate substitutes of equal
or greater value than the replaced items when new) shall become
vested in any party other than the granting party named in the
Mortgage, whether by operation of law or otherwise. Lender may,
in its sole discretion, waive this Event of Default, but it shall
have no obligation to do so, and any waiver may be conditioned
upon such one or more of the following as Lender may require; the
grantee's integrity, reputation, character, creditworthiness and
management ability being satisfactory to Lender in its sole
judgment, the grantee executing, prior to such sale or transfer,
a written assumption agreement containing such terms as Lender
may require, a principal paydown on the Note, an increase in the
rate of interest payable under the Note, a transfer fee, and any
other modification of the Loan Instruments which Lender may
require.
(j) Without the prior written consent of Lender, the owner of the
Property grants any easement or dedication, files any plat,
condominium declaration, or restriction, or otherwise encumbers
the Property, unless such action is expressly permitted by the
Loan Instruments or does not affect the Property.
(k) Without the prior written consent of Lender, Borrower enters into
any lease of part or all of the Property.
(1) Borrower abandons any of the Property.
(m) Lender reasonably determines that the condition of the Property
has materially deteriorated in value.
4
<PAGE> 13
(n) The holder of any lien, security interest or assignment on the
Property institutes foreclosure or other proceedings or takes
other action for the enforcement of its remedies thereunder.
(o) The liquidation, termination, dissolution, death, or legal
incapacity of Borrower.
(p) If Borrower is a partnership or joint venture, a default by any
general partner or joint venturer under Borrower's partnership
agreement or joint venture agreement.
(q) If Borrower is a corporation, the sale, pledge, encumbrance or
assignment of any shares of its stock without the prior written
consent of Lender. If Borrower or the owner of the Property (if
other than Borrower) is a partnership or joint venture, the sale,
pledge, encumbrance or assignment of any of its partnership or
joint venture interests or the withdrawal from or admission into
it of any general partner or joint venturer without the prior
written consent of Lender.
(r) There is an event of default pursuant to the Ground Lease or the
Ground Sublease after notice and expiration of opportunity to
cure as provided therein and under circumstances in which the
Government is not obligated to honor the Ground Sublease or to
enter into a Replacement Lease with Borrower or Introgen
Therapeutics, Inc.
Any other provision of this Construction Loan Agreement or any of the Loan
Instruments (which term is defined in Section 1.35 below) notwithstanding,
Borrower shall not be deemed to be in default in connection with the Loan or any
of the Loan Instruments nor shall any Event of Default be deemed to have
occurred or to exist, until Lender has first delivered to Borrower notice of
default ("Notice of Default") and an opportunity to cure, as follows: (i) with
respect to any failure by Borrower to timely pay any monthly payment or the
balloon payment described in the Note, Lender shall provide to Borrower Notice
of Default and a period of ten (10) days following delivery of such notice
within to cure such default, and (ii) with respect to any other event or
occurrence which would otherwise constitute an Event of Default, Lender shall
deliver to Borrower notice of such default and Borrower shall have a period of
thirty (30) days within which to cure such default, provided that if such
default is of a nature that it cannot reasonably be cured within such thirty day
period, then Borrower shall have a further reasonable period of time to cure
such default so long as Borrower is working diligently to effect such cure.
However, Lender shall have no obligation to send more than three Notices of
Default pursuant to (i) above within any calendar year.
1.17 Financial Statements.
The term "Financial Statements" shall mean such balance sheets, profit
and loss statements, reconciliations of capital and surplus, changes in
financial condition, schedules of sources and uses of funds, operating
statements with respect to the Property, pro forma schedules of sources and uses
of funds for ensuing twelve-month periods, and other financial information of
Borrower as shall be required by Lender, from time to time, which statements
shall be certified as true and correct by the party submitting such statements
or, if required by Lender, shall be certified by an independent certified public
accountant.
1.18 Financing Statements.
The term "Financing Statements" shall mean the Form UCC-1 financing
statements perfecting the security interests securing the Loan, to be filed with
the appropriate offices for the perfection of a security interest in any of the
Property.
5
<PAGE> 14
1.19 Governmental Authority.
The term "Governmental Authority" shall mean the United States, the
state, the county, the city, or any other political subdivision in which the
Property is located, and any other political subdivision, agency, or
instrumentality exercising jurisdiction over Borrower or the Property.
1.20 Governmental Requirements.
The term "Governmental Requirements" shall mean all laws, ordinances,
rules, and regulations of any Governmental Authority applicable to Borrower or
the Property.
1.21 Ground Lease.
The term "Ground Lease" shall mean that certain Enhanced-Use Agreement
dated August 25, 1993, by and between the Secretary of Veterans Affairs, an
officer of the United States on behalf of the United States Department of
Veterans Affairs, as Ground Lessor, and Amelang Partners, Inc., as Ground
Lessee, as amended.
1.22 Ground Lessee.
The term "Ground Lessee" shall mean Amelang Partners, Inc., a Texas
corporation.
1.23 Ground Lessor.
The term "Ground Lessor" shall mean the Secretary of Veterans Affairs,
an officer of the United States on behalf of the United States Department of
Veterans Affairs.
1.24 Ground Sublease.
The term "Ground Sublease" or "Ground Sublease Agreement" shall mean
that certain Amended and Restated Ground Sublease Agreement dated the 23 day of
November, 1998, by and between Amelang Partners, Inc., as Ground Sublessor and
Introgen Therapeutics, Inc., as Ground Sublessee, as the same was assigned by
Ground Sublessee by Assignment dated November 23, 1998 to Borrower.
1.25 Ground Sublessee.
The term "Ground Sublessee" shall mean Introgen Therapeutics, Inc. or
Borrower, as assignee of the Ground Sublease, as the case may be.
1.26 Ground Sublessor.
The term "Ground Sublessor" shall mean Amelang Partners, Inc.
1.27 Hazardous Materials.
The term "Hazardous Materials" shall mean (a) any "hazardous waste" as
defined by the Resource Conservation and Recovery Act of 1976 (42 U.S.C. Section
6901 et seq.), as amended from time to time, and regulations promulgated
thereunder; (b) any "hazardous substance" as defined by the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 (42 U.S.C.
Section 9601 et seq.), as amended from time to time, and regulations promulgated
thereunder; (c) asbestos; (d) polychlorinated biphenyls; (e) underground storage
tanks, whether empty, filled or partially filled with any substances (f) any
substance the presence of which on the Property is prohibited by any
Governmental Requirements; and (g) any other substance which by any
Governmental Requirements requires special handling or notification of any
federal, state or local governmental entity in its collection, storage,
treatment or disposal.
6
<PAGE> 15
1.28 Hazardous Materials Contamination.
The term "Hazardous Materials Contamination" shall mean the
contamination (whether presently existing or hereafter occurring) of the
Improvements, facilities, soil, groundwater, air or other elements on or of the
Property by Hazardous Materials, or the contamination of the buildings,
facilities, soil, groundwater, air or other elements on or of any other property
as a result of Hazardous Materials at any time (whether before or after the date
of this Loan Agreement) emanating from the Property. In no event will Borrower's
use and storage of Hazardous Materials in connection with its research and
business activities constitute "Hazardous Materials Contamination", provided
that such storage and use is in compliance with all applicable laws and
governmental regulations governing the use and storage of such materials.
1.29 Improvements.
The term "Improvements" shall mean two buildings with exterior
elevations and appearances substantially in accordance with Exhibits "C" and "D"
of the Ground Sublease Agreement.
1.30 Inspecting Architects/Engineers.
The term "Inspecting Architects/Engineers" shall mean such employees,
representatives and agents of Lender or third parties, who may, from time to
time, conduct inspections of the Property or offer other services related
thereto.
1.31 Insurance Policies.
The term "Insurance Policies" shall mean:
(a) All-risk builder's risk insurance during the construction of the
Improvements, in an amount equal to 100% of the replacement cost
of the Improvements, providing all risk coverage on the
Improvements and materials stored on the Property and elsewhere,
and including the perils of collapse, damage resulting from error
in design or faulty workmanship or materials, water damage and,
if requested by Lender, flood, earthquake, business interruption
and other risks;
(b) All-risk insurance after the completion of the construction of
the Improvements, as determined by Lender, in the amount of at
least 100% of the replacement cost of such Improvements or in
such additional amounts as Lender may require, providing all-risk
coverage on the Improvements, and, if requested by Lender, to
include the perils of flood, earthquake, business interruption
and other risks;
(c) Comprehensive General Liability Insurance for owners and
contractors, including blanket contractual liability, products
and completed operations, personal injury (including employees),
independent contractors, explosion, collapse and underground
hazards for not less than $5,000,000 arising out of any one
occurrence or in any increased amount required by Lender;
(d) Comprehensive Automobile Liability Insurance for contractors for
not less than $500,000 for bodily injury and $100,000 for
property damage arising out of any one occurrence or in any
increased amount required by Lender;
(e) Worker's Compensation Insurance for contractors for statutory
limits; and
(f) Such other insurance as Lender may reasonably require.
7
<PAGE> 16
All insurance Policies shall be issued on forms and by companies
reasonably satisfactory to Lender and shall be delivered to Lender. All-risk
Insurance Policies shall have loss made payable to Lender as mortgagee together
with the standard mortgagee rider set forth on Exhibit "D" attached hereto.
Comprehensive General Liability, Comprehensive Automobile Liability and Worker's
Compensation coverages shall have a provision giving Lender thirty (30) days
prior notice of cancellation or material change of the coverage. However, should
any provision of the Ground Lease or the Ground Sublease require insurance in
addition to or in excess of what is required pursuant to this section, Borrower
shall maintain such additional insurance as may be required by the Ground Lease
or the Ground Sublease.
1.32 Lender.
The term "Lender" shall mean Riverway Bank.
1.33 Loan.
The term "Loan" shall mean the Loan by Lender to Borrower, in an amount
set forth in the first paragraph of this Loan Agreement, not to exceed, in the
aggregate, the payment of the costs of labor, materials, and services supplied
for the construction of the Improvements and all other expenses incident to the
acquisition and the construction of the Property, all as specified in the
Approved Budget.
1.34 Loan Finance Charge.
The term "Loan Finance Charge" shall mean the sum of money set forth on
Exhibit "B" attached hereto and incorporated herein by reference, to be paid to
Lender on the date hereof.
1.35 Loan Instruments.
The term "Loan Instruments" shall mean this Loan Agreement the
Mortgage, the Note, the Assignment of Landlord's Interest in Leases, the
Financing Statements and such other instruments evidencing, securing, or
pertaining to the Loan as shall, from time to time, be executed and delivered by
Borrower or any other party to Lender pursuant to this Loan Agreement,
including, without limitation, each Affidavit of Borrower, each Application for
Advance, and the Approved Budget.
1.36 Mortgage
The term "Mortgage" shall mean the Mortgage, Deed of Trust, Trust Deed,
or Deed to Secure Debt securing the payment of the Note and the payment and
performance of all obligations specified in the Mortgage and this Loan
Agreement, and evidencing a valid and enforceable lien and direct assignment of
Borrower's subleasehold estate in the Property.
1.37 Note.
The term "Note" shall mean the Note from Borrower to Lender dated of
even date herewith in the amount of and evidencing the Loan.
1.38 Plans.
The term "Plans" shall mean the final working drawings and
specifications for the construction of the Improvements.
8
<PAGE> 17
1.39 Property.
The term "Property" shall mean Borrower's subleasehold interest in the
real property described in Exhibit "A" attached hereto and incorporated herein
by reference, together with the Improvements and all other property constituting
the "Mortgaged Property," as described in the Mortgage.
1.40 Survey.
The term "Survey" shall mean a current certified survey of the
Property satisfying the requirements set forth on Exhibit "D" attached hereto
and/or a recorded plat or map of the Property, as required by Lender, which such
plat or map shall be approved and accepted by all Governmental Authorities
having jurisdiction of the Property.
1.41 Subordination, Attornment and Non-Disturbance Agreement.
The term "Subordination, Attornment and Non-Disturbance Agreement"
shall mean that certain agreement by and between Aid Association for Lutherans,
a Wisconsin corporation ("Lutherans"), Ground Sublessee and Ground Sublessor,
in form and substance acceptable to Lender.
1.42 Title Company.
The term "Title Company" shall mean Partners Title Company.
1.43 Title Insurance.
The term "Title Insurance" shall mean a title insurance policy, in the
amount of the Loan, insuring that the Mortgage constitutes a valid lien covering
the Property having the priority required by Lender and subject only to those
exceptions and encumbrances which Lender may approve, issued by the Title
Company.
ARTICLE 2 - ADVANCES OF THE LOAN
2.1 Commitment of Lender.
Subject to the conditions hereof, and provided that an Event of Default
has not occurred (after notice and expiration of Borrower's opportunity to
cure), Lender will make Advances to Borrower in accordance with this Loan
Agreement.
2.2 Interest on the Loan.
Interest on the Loan, at the rate or rates specified in the Note, shall
be computed on the unpaid principal balance which exists from time to time and
shall be computed with respect to each Advance only from the date of such
Advance (as to the portion of each Advance not constituting a portion of
Borrower's Deposit).
2.3 Advances.
Advances for the payment of costs of labor, materials, and services
supplied for the construction of the Improvements and the other items shown in
the Approved Budget shall be made by Lender, not more frequently than monthly,
upon compliance by Borrower with this Loan Agreement, after actual commencement
of construction of the Improvements, for work actually done during the preceding
period. From time to time, Borrower shall submit an Application for Advance to
Lender requesting an Advance for the payment of costs of labor, materials, and
services supplied for the construction of the Improvements or for the payment of
other costs and expenses incident to the Loan, the acquisition of the Property,
or the construction of the Improvements, and specified in the Approved Budget.
Lender may require an inspection of and favorable report on the Improvements by
the Inspecting Architects/Engineers prior
9
<PAGE> 18
to making any Advance. Each Advance for Payment of costs of construction of the
Improvements and the other items shown in the Approved Budget shall be limited
to the amounts shown in the Approved Budget and not exceed the aggregate of (a)
the costs of labor, materials, and services incorporated into the Improvements
in a manner reasonably acceptable to Lender, plus (b) if approved by Lender, the
purchase price of all uninstalled materials to be utilized in the construction
of the Improvements, title to which has passed to Borrower, stored on the
Property or elsewhere with the written consent of, and in a manner acceptable
to, Lender, less (c) twenty percent (20%) of the sum of the aforesaid items (a)
and (b), less (d) retainage, if any, and less (e) all prior Advances for payment
of costs of labor, materials, and services for the construction of the
Improvements. Prior to each Advance, Borrower must contribute 20% of the amount
of such request with the results being that 80% of all items in the Approved
Budget are advanced by Lender and 20% contributed simultaneously by Borrower.
Each Application for Advance shall be submitted by Borrower to Lender a
reasonable time (but not less than 5 days) prior to the date on which an Advance
is desired by Borrower. The final Advance, including all retainage, will not be
made until the Lender has received the following: (1) a completion certificate
from the Inspecting Architects/Engineers, if any, (2) evidence that all
Governmental Requirements have been satisfied, including, but not limited to,
delivery to Lender of Certificates of Occupancy permitting the Improvements to
be legally occupied, (3) evidence that no mechanic's or materialmen's liens or
other encumbrances have been filed and remain in effect against the Property,
and (4) final lien releases or waivers by Architect, Contractor, and all
subcontractors, materialmen, and other parties who have supplied labor,
materials, or services for the construction of the Improvements, or who
otherwise might be entitled to claim a contractual, statutory, or constitutional
lien against the Property, and (5) if available under local rules, the Title
Insurance shall be endorsed and extended to acknowledge completion of
construction of the Improvements without any encroachment and in compliance with
all applicable matters of public record and Governmental Requirements, with no
additional exception objectionable to Lender. In addition, the Final Advance
hereunder shall, at Lender's option, be withheld until thirty (30) days after
(i) the "completion" (as that term is defined in Section 53.106 of the Texas
Property Code) of the Improvements and (ii) an affidavit of completion has been
filed with the county clerk of the county in which the Property is located in
compliance with Section 53.106 of the Texas Property Code.
2.4 Conditions to the First Advance.
As a condition precedent to the first Advance hereunder, Borrower must
(i) satisfy the conditions required hereby, (ii) execute and deliver to, procure
for and deposit with, and pay to Lender and, if appropriate, record in the
proper records with all filing and recording fees paid the documents,
certificates, and other items that are described in Exhibit "B" attached hereto
and incorporated herein by reference, together with such other documents,
instruments, and certificates as Lender may reasonably require, and (iii)
deliver to Lender an irrevocable unconditional straight letter of credit in the
face amount of $1,734,582 in favor of Lender, issued by a bank acceptable to
Lender in its sole discretion, with an expiration date of not earlier than 390
days from date hereof. Such credit and any replacements thereof is herein called
the "Letter of Credit". If not therefore drawn, the Letter of Credit shall be
returned to Borrower at the time the Note is fully advanced provided there is
then no Event of Default. Lender may draw on the Letter of Credit at any time an
Event of Default exists. The Letter of Credit may be replaced by Borrower from
time to time with a new irrevocable unconditional straight letter of credit in
favor of Lender issued by a bank acceptable to Lender in its sole discretion in
the face amount of $1,734,582, less equity contributions made by Borrower as
contemplated by Section 2.3. As a condition precedent to the first Advance for
labor, materials, or construction services (whether or not it is the first
Advance), Borrower and each original contractor shall have jointly executed and
recorded with the county clerk Of the county in which the Property is situated
an affidavit of commencement of work, in form and substance approved by Lender,
which contains the information required by Section 53.124(c) of the Texas
Property Code, provided further that the date of commencement of work specified
in such affidavit shall be subsequent to the date of recordation of the
Mortgage. Such affidavit shall be executed and recorded after the date the work
actually commenced, but not later than the 10th day thereafter.
10
<PAGE> 19
2.5 Conditions to Subsequent Advances.
As a condition precedent to each Advance other than the first Advance,
in addition to all other requirements herein, Borrower must satisfy the
following requirements and, if required by Lender, deliver to Lender evidence of
such satisfaction:
(a) All conditions precedent to the first Advance shall have been
satisfied;
(b) There shall then exist no Event of Default (after giving notice
by Lender and expiration of Borrower's opportunity to cure);
(c) A foundation survey, if required by Lender, shall have been
furnished to Lender within ten (10) days after laying of the
foundation of the Improvements, showing no encroachment of the
Improvements on any boundary line, easement, building setback
line, or other restricted area;
(d) The representations and warranties made in this Loan Agreement
shall be true and correct on and as of the date of each Advance
with the same effect as if made on that date;
(e) Borrower will procure and deliver to Lender, if required by
Lender, releases or waivers of mechanic's liens and receipted
bills showing payment of all parties who have furnished materials
or services or performed labor of any kind in connection with the
construction of any of the Improvements; and
(f) The Title Insurance shall be endorsed and extended, if available
under the local rules, to cover each Advance with no additional
title exceptions objectionable to Lender.
2.6 Reallocation of Approved Budget.
Lender reserves the right to make Advances which are allocated to any
of the designated items in the Approved Budget for such other purposes or in
such different proportions as Lender may, in its sole discretion, deem necessary
or advisable. Borrower may not reallocate items of cost or change the Approved
Budget without the prior written consent of Lender.
2.7 No Waiver.
No Advance shall constitute a waiver of any condition precedent to the
obligation of Lender to make any further Advance or preclude Lender from
thereafter declaring the failure of Borrower to satisfy such condition precedent
to be an Event of Default.
2.8 Conditions Precedent for the Benefit of Lender.
All conditions precedent to the obligation of Lender to make any
Advance are imposed hereby solely for the benefit of Lender, and no other party
may require satisfaction of any such condition precedent or be entitled to
assume that Lender will refuse to make any Advance in the absence of strict
compliance with such conditions precedent. All requirements of this Loan
Agreement may be waived by Lender, in whole or in part, at any time.
2.9 Subordination.
Lender shall not be obligated to make, nor shall Borrower be entitled
to, any Advance until such time as Lender shall have received, to the extent
requested by Lender, subordination agreements from Architect, Contractor, and
all
11
<PAGE> 20
other persons furnishing labor, materials, or services for the design or
construction of the Improvements, subordinating to the lien of the Mortgage any
lien, claim, or charge they may have against Borrower or the Property.
ARTICLE 3 - REPRESENTATIONS AND WARRANTIES OF BORROWER
3.1 Financial Statements.
The Financial Statements are true, correct, and complete as of the
dates specified therein and fully and accurately present the financial condition
of Borrower as of the dates specified. No material adverse change has occurred
in the financial condition of Borrower since the dates of the Financial
Statements.
3.2 Suits, Actions, Etc.
There are no material actions, suits, or proceedings pending or, to the
knowledge of Borrower, threatened, in any court or before or by any Governmental
Authority against or affecting Borrower or the Property, or involving the
validity, enforceability, or priority of any of the other Loan Instruments, at
law or in equity. The consummation of the transactions contemplated hereby, and
the performance of any of the terms and conditions hereof and of the other Loan
Instruments, will not result in a breach of, or constitute a default in, any
mortgage, deed of trust, lease, promissory note, loan agreement, credit
agreement, partnership agreement, or other agreement to which Borrower is a
party or by which Borrower may be bound or affected. Borrower is not in default
of any order of any court or any requirement of any Governmental Authority.
3.3 Valid and Binding Obligation.
All of the Loan Instruments, and all other documents referred to herein
to which Borrower is a party, upon execution and delivery will constitute valid
and binding obligations of Borrower, enforceable in accordance with their terms
except as limited by Debtor Relief Laws.
3.4 Title to the Property.
Borrower holds full leasehold title to the Property, subject only to
title exceptions set forth in the Title Insurance.
3.5 Commencement of Construction.
Prior to the recordation of the Mortgage, no work of any kind
(including the destruction or removal of any existing improvements, site work,
clearing, grading, grubbing, draining, or fencing of the Property) shall have
commenced or shall have been performed on the Property, no equipment or material
shall have been delivered to or upon the Property for any purpose whatsoever.
Further, no affidavit of commencement showing a commencement date prior to the
recordation of the Mortgage shall be filed in the records of the County in which
the Property is located.
3.6 Disclosure.
To the best of Borrower's knowledge, there is no fact that Borrower has
not disclosed to Lender in writing that could materially adversely affect the
property, business or financial condition of Borrower or the Property.
3.7 Compliance with Environmental Requirements; No Hazardous Materials.
(a) To the best of Borrower's knowledge, except as otherwise provided
herein, no Hazardous Materials are located on the Property or
have been released into the environment, or
12
<PAGE> 21
deposited, discharged, placed or disposed of at, on, under or
near the Property. To the best of Borrower's knowledge, except as
otherwise provided herein, no portion of the Property is being
used or, to the knowledge of Borrower, has been used at any
previous time for the disposal, storage, treatment, processing or
other handling of Hazardous Materials nor is the Property
affected by any Hazardous Materials Contamination.
(b) To the best of Borrower's knowledge, no polychlorinated biphenyls
are located on or in the Property, in the form of electrical
transformers, fluorescent light fixtures with ballasts, cooling
oils, or any other device or form.
(c) To the best of Borrower's knowledge, no investigation,
administrative order, consent order and agreement, litigation or
settlement with respect to Hazardous Materials or Hazardous
Materials Contamination is proposed, threatened, anticipated or
in existence with respect to the Property. To the best of
Borrower's knowledge, the Property and its existing and prior
uses comply and at all times have complied with any applicable
Governmental Requirements relating to environmental matters or
Hazardous Materials. To the best of Borrower's knowledge, there
is no condition on the Property which is in violation of any
applicable Governmental Requirements relating to Hazardous
Materials, and Borrower has received no communication from or on
behalf of any Governmental Authority that any such condition
exists. The Property is not currently on and, to Borrower's
knowledge after diligent investigation and inquiry, has never
been on any federal or state "Superfund" or "Superlien" list.
(d) All representations and warranties contained in this Section
shall survive the consummation of the transactions contemplated
in this Loan Agreement.
Any other provision of this Loan Agreement or the Loan Instruments
notwithstanding, Borrower's lawful use and storage of Hazardous Materials in
connection with its research and business activities at the Property shall not
constitute a default under any of the Loan Instruments.
3.8 System Compliance.
The storm and sanitary sewer system, water system, all mechanical
systems of the Property and other parts of the Improvements do (or when
constructed will) comply with all applicable environmental, pollution control
and ecological laws, ordinances, rules and regulations, and all Governmental
Authorities having jurisdiction of the Property have or will have issued all
necessary permits, licenses or other authorizations for the construction,
occupancy, operation, and use of the Improvements (specifically including the
named systems).
3.9 Submittals.
The Loan Instruments and all Financial Statements, Plans, budgets,
schedules, opinions, certificates, confirmations, Contractor's statements,
applications, rent rolls, affidavits, agreements, Construction Contract,
Architectural Contract and other materials submitted to the Lender in connection
with or in furtherance of the Loan Instruments by or on behalf of the Borrower
fully and fairly state the matters with which they purport to deal, and do not
misstate any material fact.
3.10 Utility Availability.
Subject only to payment of fees to be paid from the Approved Budget,
all utility and municipal services required for the construction, occupancy and
operation of the Improvements, including, but not limited to, water supply,
storm and sanitary sewer systems, gas, electric and telephone facilities, are or
will be available for use and tap-on at the boundaries of the Property and will
be available in sufficient amounts for the normal and intended use of the
13
<PAGE> 22
Improvements, and written permission has been or will be obtained from
the applicable utility companies or municipalities to connect the Improvements
into each of said services.
3.11 Inducement to Lender.
The representations and warranties contained in the Loan Instruments
are made by Borrower as an inducement to Lender to make the Loan and Borrower
understands that Lender is relying on such representations and warranties and
that such representations and warranties shall survive any (a) bankruptcy
proceedings involving Borrower or the Property, or (b) foreclosure of the
Mortgage or (c) conveyance of title to the Property in lieu of foreclosure of
the Mortgage. Acceptance of each Advance constitutes reaffirmation, as of the
date of such acceptance, of the representations and warranties of Borrower in
the Loan Instruments, on which Lender shall rely in making such Advance.
3.12 Year 2000.
Borrower represents and warrants to Lender the following:
a. all software, hardware and critical systems used by Borrower and
its subsidiaries, if any, in the conduct of Borrower's and such
subsidiaries' business ("Borrower's Computer Items") will record,
store, process and present calendar dates falling on or after
January 1, 2000, and all information pertaining to such dates
correctly;
b. Borrower's Computer Items will have all appropriate capability
and compatibility for handling century-aware or year 2000
compliant data; and
c. the data related user interface functions, data fields and data
related program instructions and functions of Borrower's Computer
Items will include the indication of the century.
ARTICLE 4 - COVENANTS AND AGREEMENTS OF BORROWER
Borrower hereby covenants and agrees as follows:
4.1 Compliance With Governmental Requirements.
Borrower shall timely comply with all Governmental Requirements and
deliver to Lender evidence thereof. Borrower assumes full responsibility for the
compliance of the Plans and the Property with all Governmental Requirements and
with sound building and engineering practices, and, notwithstanding any
approvals by Lender, Lender shall have no obligation or responsibility
whatsoever for the Plans or any other matter incident to the Property or the
construction of the Improvements. Immediately upon Borrower's receipt of any
notice from a Governmental Authority of noncompliance with any Governmental
Requirements, Borrower shall provide Lender with written notice thereof.
4.2 Construction Contract.
Borrower shall become party to no contract, including the Construction
Contract, for the performance of any work on the Property or for the supplying
of any labor, materials, or services for the construction of the Improvements
except upon such terms and with such parties as shall be approved in writing by
Lender. The Construction Contract shall provide that all liens of the Contractor
are subordinate to the Mortgage and that the Contractor waives any right to
remove removable improvements and shall require all subcontracts and purchase
orders to contain a provision subordinating the subcontractors' and
materialmen's liens to the Mortgage and waiving any right to remove removable
improvements. The Construction Contract shall also provide that no change order
of a material amount shall be effective
14
<PAGE> 23
without the prior written approval of Lender. No approval by Lender of any
Construction Contract or change order shall make Lender responsible for the
adequacy, form, or content of such Construction Contract or change order.
4.3 Construction of the Improvements.
Borrower shall commence construction of the Improvements within thirty
(30) days from the date hereof, and the construction of the Improvements shall
be prosecuted with diligence and continuity, in a good and workmanlike manner,
and in accordance with sound building and engineering practices, all applicable
Governmental Requirements, the Plans and the requirements of any lessee, if
applicable. Borrower shall not permit cessation of work for a period in excess
of 15 days without the prior written consent of Lender and shall complete
construction of the Improvements on or before the Completion Date (unless such
cessation or failure to timely complete the Improvements is due to weather,
shortages or unavailability of labor or materials, non-performance by the
Contractor, or Architect, or other causes beyond Borrower's control), free and
clear of all liens (except those as to which Borrower has furnished a bond or
other security acceptable to Lender and otherwise complied with the requirements
of Section 4.22).
4.4 Correction of Defects.
Borrower shall correct or cause to be corrected (a) any material defect
in the Improvements, (b) any material departure in the construction of the
Improvements from the Plans, Governmental Requirements, or the requirements of
any lessee, if applicable, or (c) any encroachment by any part of the
Improvements, or any structure located on the Property, on any easement,
property line, or restricted area, or any encroachment by any such structure on
any building line.
4.5 Storage of Materials.
Borrower shall cause all materials supplied for, or intended to be
utilized in, the construction of the Improvements, but not affixed to or
incorporated into the Improvements or the Property, to be stored on the Property
or at such other location as may be approved by Lender in writing, with adequate
safeguards, as required by Lender, to prevent loss, theft, damage, or
commingling with other materials or projects.
4.6 Inspection of the Property.
Borrower shall permit Lender, any Governmental Authority, and their
agents and representatives, to enter upon the Property and any location where
materials intended to be utilized in the construction of the Improvements are
stored, for the purpose of inspection of the Property and such materials at all
reasonable times.
4.7 Notices by Governmental Authority, Casualty, Condemnation.
Borrower shall timely comply with and promptly furnish to Lender true
and complete copies of any notice or claim by any Governmental Authority
pertaining to the Property. Borrower shall promptly notify Lender of any fire or
other casualty or any notice of taking or eminent domain action or proceeding
affecting the Property, or the threat of any such action or proceeding of which
Borrower becomes aware.
4.8 Special Account.
Borrower shall maintain a special account with Lender, into which all
Advances (but no other funds), and excluding direct disbursements made by Lender
pursuant to Section 4.11 hereof, shall be deposited by Borrower, and against
which checks shall be drawn only for the payment of (a) costs of labor,
materials, and services supplied for the construction of the Improvements
specified in the Approved Budget, and (b) other costs and expenses incident to
the Loan, the Property, and the construction of the Improvements specified in
the Approved Budget. Such account will be a custodial account segregated from
all other funds of Lender. Lender will hold such funds as a fiduciary for the
benefit of Borrower. Borrower shall have the right to direct investments of such
funds.
15
<PAGE> 24
4.9 Application of Advances.
Borrower shall disburse all Advances for payment of costs and expenses
specified in the Approved Budget, and for no other purpose.
4.10 Borrower's Deposit.
If Lender reasonably determines at any time that the sum of the
unadvanced portion of the Loan, and the amount of the Borrower's equity
contribution specified in Section 2.4 (or letter of credit), will be
insufficient for payment in full of (a) costs of labor, materials, and services
required for the construction of the Improvements, (b) other costs and expenses
specified in the Approved Budget, and (c) other costs and expenses required to
be paid in connection with the construction of the Improvements in accordance
with the Plans, any Governmental Requirements or the requirements of any lessee,
if applicable, then Borrower shall, on request of Lender, make the Borrower's
Deposit with Lender. Lender shall hold the Borrower's Deposit in a custodial
account segregated from all other funds of Lender. Lender shall hold such funds
as a fiduciary for the benefit of Borrower. Borrower shall have the right to
direct investments of such account. Lender may advance all or a portion of the
Borrower's Deposit prior to any portion of the Loan proceeds. Borrower shall
promptly notify Lender in writing if and when the cost of the construction of
the Improvements exceeds, or appears likely to exceed, the amount of the
unadvanced portion of the Loan and the unadvanced portion of the Borrower's
Deposit. The above notwithstanding, no Borrower's deposit will be required
before Lender has made the first Advanced Funds under the Loan.
4.11 Direct Disbursement and Application by Lender.
Lender shall have the right, but not the obligation, to disburse and
directly apply the proceeds of any Advance to the satisfaction of any of
Borrower's obligations hereunder or under any of the other Loan Instruments,
including, without limitation, payments to the Ground Sublessee to cure default
or potential default under the Ground Sublease. Any Advance by Lender for such
purpose, except Borrower's Deposit, shall be part of the Loan and shall be
secured by the Loan Instruments. Borrower hereby authorizes Lender to hold, use,
disburse, and apply the Loan and the Borrower's Deposit for payment of costs of
construction of the Improvements, expenses incident to the Loan and the
Property, and the payment or performance of any obligation of Borrower hereunder
or under any of the other Loan Instruments. Borrower hereby assigns and pledges
the proceeds of the Loan and the Borrower's Deposit to Lender for such purposes.
Lender may advance and incur such expenses as Lender deems necessary for the
completion of construction of the Improvements and to preserve the Property and
any other security for the Loan, and such expenses, even though in excess of the
amount of the Loan, shall be secured by the Loan Instruments and payable to
Lender. Lender may disburse any portion of any Advance at any time, and from
time to time, to persons other than Borrower for the purposes specified in this
Section 4.11 irrespective of the provisions of Section 2.3 hereof, and the
amount of Advances to which Borrower shall thereafter be entitled shall be
correspondingly reduced.
4.12 Costs and Expenses.
Borrower shall pay when due all costs and expenses required by this
Loan Agreement, including, without limitation, (a) all taxes and assessments
applicable to the Property, (b) all fees for filing or recording the Loan
Instruments, (c) all fees and commissions lawfully due to brokers, salesmen, and
agents in connection with the Loan or the Property, (d) all fees and expenses of
counsel to Lender, (e) all title insurance and title examination charges,
including premiums for the Title Insurance, (f) all survey costs and expenses,
including the cost of the Survey, (g) all premiums for the Insurance Policies,
and (h) all other costs and expenses payable to third parties incurred by Lender
in connection with the consummation of the transactions contemplated by this
Loan Agreement. Lender has not engaged and is not obligated to pay any brokerage
commissions or finder's fee in connection with the Loan.
16
<PAGE> 25
4.13 Additional Documents.
Borrower shall execute and deliver to Lender, from time to time as
requested by Lender, such other documents as shall reasonably be necessary to
provide the rights and remedies to Lender granted or provided for by the Loan
Instruments.
4.14 Inspection of Books and Records.
Borrower shall permit Lender, at all reasonable times, to examine and
copy the books and records of Borrower pertaining to the Loan and the Property,
and all contracts, statements, invoices, bills, and claims for labor, materials,
and services supplied for the construction of the Improvements.
4.15 No Liability of Lender.
Lender shall have no liability, obligation, or responsibility
whatsoever with respect to the construction of the Improvements except to
advance the Loan and the Borrower's Deposit pursuant to this Loan Agreement.
Lender shall not be obligated to inspect the Property or the construction of the
Improvements, nor be liable or responsible for any defect in the Property or the
Improvements by reason of inspecting same, nor be liable for the performance or
default of Borrower, Architect, the Inspecting Architects/Engineers, Contractor,
or any other party, or for any failure to construct, complete, protect, or
insure the Improvements, or for the payment of costs of labor, materials, or
services supplied for the construction of the Improvements, or for the
performance of any obligation of Borrower whatsoever. Nothing, including without
limitation any Advance or acceptance of any document or instrument, shall be
construed as a representation or warranty, express or implied, to any party by
Lender.
4.16 No Conditional Sale Contracts, Etc.
No materials, equipment, or fixtures shall be supplied, purchased, or
installed for the construction or operation of the Improvements or the Mortgaged
Property (as defined in the Mortgage) pursuant to security agreements,
conditional sale contracts, lease agreements, or other arrangements or
understandings whereby a security interest or title is retained by any party or
the right is reserved or accrues to any party to remove or repossess any of the
Improvements or the Mortgaged Property (as defined in the Mortgage).
4.17 Defense of Actions.
Lender may (but shall not be obligated to) commence, appear in, or
defend any action or proceeding purporting to affect the Loan, the Property, or
the respective rights and obligations of Lender and Borrower pursuant to this
loan Agreement. Lender may (but shall not be obligated to) pay all necessary
expenses, including attorneys' fees and expenses incurred in connection with
such proceedings or actions, which Borrower agrees to repay to Lender on demand.
4.18 Assignment of Construction Contract.
As additional security for the payment of the Loan, Borrower hereby
transfers and assigns to Lender all of Borrower's rights and interest, but not
its obligations, in, under, and to the Construction Contract, upon the following
terms and conditions:
(a) Borrower represents and warrants that the copy of any
Construction Contract it has furnished to Lender is a true and
complete copy thereof and that Borrower's interest therein is not
subject to any claim, set off, or encumbrance.
(b) Neither this assignment nor any action by Lender shall constitute
an assumption by Lender of any obligation under the Construction
Contract, and Borrower shall continue to be liable
17
<PAGE> 26
for all obligations of Borrower thereunder, Borrower hereby
agreeing to perform all of its obligations under the Construction
Contract. Borrower indemnifies and holds Lender harmless against
and from any loss, cost, liability, or expense (including, but
not limited to, attorneys' fees and expenses) resulting from any
failure of Borrower to so perform.
(c) Lender shall have the right at any time, after giving notice of
default and expiration of Borrower's right to cure the default
(but shall have no obligation), to take in its name or in the
name of Borrower such action as Lender may at any time determine
to be necessary or advisable to cure any default under the
Construction Contract or to protect the rights of Borrower or
Lender thereunder. Lender shall incur no liability if any action
so taken by it or in its behalf shall prove to be inadequate or
invalid, and Borrower agrees to hold Lender free and harmless
against and from any loss, cost, liability or expense (including,
but not limited to, attorneys' fees and expenses) incurred in
connection with any such action.
(d) Borrower hereby irrevocably constitutes and appoints Lender as
Borrower's attorney-in-fact, in Borrower's name or in Lender's
name, to enforce all rights of Borrower under the Construction
Contract.
(e) Prior to an Event of Default, Borrower shall have the right to
exercise its rights as Owner under the Construction Contract,
provided that Borrower shall not cancel or amend the Construction
Contract or do or suffer to be done any act which would impair
the security constituted by this assignment without the prior
written consent of Lender.
(f) This assignment shall inure to the benefit of Lender, its
successors and assigns, including any purchaser upon foreclosure
of the Mortgage, any receiver in possession of the Property, and
any corporation formed by or on behalf of Lender which assumes
Lender's rights and obligations under this Loan Agreement.
4.19 Assignment of Plans.
As additional security for the payment of the Loan, Borrower hereby
transfers and assigns to Lender all of Borrower's right, title, and interest in
and to the Architectural Contract and Plans and hereby represents and warrants
to and agrees with Lender as follows:
(a) The schedule of the Plans delivered to Lender is a complete and
accurate description of the Plans.
(b) The Plans are complete and adequate for the construction of the
Improvements and there have been no modifications thereof except
as described in such schedule. The Plans shall not be modified
without the prior written consent of Lender.
(c) Lender may use the Plans for any purpose relating to the
Improvements, including but not limited to inspections of
construction and the completion of the Improvements.
(d) Lender's acceptance of this assignment shall not constitute
approval of the Plans by Lender. Lender has no liability or
obligation whatsoever in connection with the Plans and no
responsibility for the adequacy thereof or for the construction
of the Improvements contemplated by the Plans. Lender has no duty
to inspect the Improvements, and, if Lender should inspect the
Improvements, Lender shall have no liability or obligation to
Borrower arising out of such inspection. No such inspection nor
any failure by Lender to make objections after any such
inspection shall constitute a representation by Lender that the
18
<PAGE> 27
Improvements are in accordance with the Plans or constitute a
waiver of Lender's right thereafter to insist that the
Improvements be constructed in accordance with the Plans.
(e) This assignment shall inure to the benefit of Lender, its
successors and assigns, including any purchaser upon foreclosure
of the Mortgage, any receiver in possession of the Property, and
any corporation formed by or on behalf of Lender which assumes
Lender's rights and obligations under this Loan Agreement.
4.20 Prohibition on Assignment of Borrower's Interest.
Borrower shall not assign or encumber any interest of Borrower
hereunder without the prior written consent of Lender.
4.21 Payment of Claims.
Borrower shall promptly pay or cause to be paid when due all costs and
expenses incurred in connection with the Property and the construction of the
Improvements, and Borrower shall keep the Property free and clear of any lien,
charge, or claim other than the encumbrances of the Mortgage and other liens
approved in writing by Lender. Notwithstanding anything to the contrary
contained in this Loan Agreement, Borrower (a) may contest the validity or
amount of any claim of any contractor, consultant, architect, or other person
providing labor, materials, or services with respect to the Property, (b) may
contest any tax or special assessments levied by any Governmental Authority, and
(c) may contest the enforcement of or compliance with any Governmental
Requirements, and such contest on the part of Borrower shall not be a default
hereunder and shall not release Lender from its obligations to make Advances
hereunder; provided, however, that during the pendency of any such contest
Borrower shall furnish to Lender and Title Company an indemnity bond with
corporate surety satisfactory to Lender and Title Company or other security
reasonably acceptable to them in an amount equal to the amount being contested
plus a reasonable additional sum to cover possible costs, interest, and
penalties, and provided further that Borrower shall pay any amount adjudged by a
court of competent jurisdiction to be due, with all costs, interest, and
penalties thereon, before such judgment becomes a lien on the Property.
4.22 Restrictions and Annexation.
Borrower shall not impose any restrictive covenants, easements or other
encumbrances upon the Property, execute or file any subdivision plat affecting
the Property, or consent to the annexation of the Property to any city without
the prior written consent of Lender.
4.23 Advertising by Lender.
Borrower agrees that, during the term of the Loan, Lender may erect and
maintain on the Property one or more reasonable and typical advertising signs
indicating that the construction financing for the Property has been provided by
Lender; provided that such signs are not objectionable to the Ground Lessor or
the Ground Sublessor.
4.24 Current Financial Statements.
Borrower shall, (1) on or before the forty-fifth (45th) day after the
end of each calendar quarter after completion of the Improvements, deliver to
Lender current financial statements itemizing the income and expenses of the
Property for the immediately preceding quarter, (2) on or before the ninetieth
(90th) day after the end of each fiscal year, deliver or cause to be delivered
to Lender then current Financial Statements of Borrower, and (3) from time to
time, as Lender may reasonably request, deliver to Lender additional Financial
Statements of Borrower.
19
<PAGE> 28
4.25 Tax Receipts.
Subject to the provisions of Section 4.22 hereof, Borrower shall
furnish Lender with receipts or tax statements marked "Paid" to evidence the
payment of all taxes levied on the Property on or before 30 days prior to the
date such taxes become delinquent.
4.26 Loan Participations.
Borrower acknowledges and agrees that Lender may, from time to time,
sell or offer for sale participation interests in the Loan and the Loan
Instruments to one or more participants. Borrower authorizes Lender to
disseminate any information it has pertaining to the Loan, including, without
limitation, complete and current credit information of Borrower or any of its
principals to any participant or prospective participant in the Loan.
4.27 Notice of Litigation, Claims, and Financial Change.
Borrower shall promptly inform Lender of (a) any litigation against
Borrower or affecting the Property, which, if determined adversely, might have a
material adverse effect upon the financial condition of Borrower or upon the
Property, or might cause an Event of Default, (b) any claim or controversy which
might become the subject of such litigation, and (c) any material adverse change
in the financial condition of Borrower. For purposes hereof, a material adverse
change shall be deemed to have occurred when (1) there has been a decline of
fifteen percent (15%) or more in the tangible net worth of Borrower as shown
on the Financial Statements delivered to Lender in connection with the Loan or
(2) actual sources and uses of funds for any twelve-month period adversely vary
by fifteen percent (15%) or more with the pro forma sources and uses of funds
statement submitted for such period.
4.28 No Occupancy Contrary to Builder's Risk Policy.
The Improvements shall not be occupied until Borrower has obtained and
furnished to Lender a "permission to occupy" endorsement to the builder's risk
insurance policy, which endorsement is satisfactory to Lender, or Borrower has
obtained replacement coverage in the form of an all-risk insurance policy upon
the completed Improvements, which policy will not be impaired by the occupancy
of the Improvements and is satisfactory to Lender.
4.29 Hold Harmless.
Borrower shall defend, at its own cost and expense, and hold Lender
harmless from, any proceeding or claim in any way relating to the Property or
the Loan Instruments. All costs and expenses incurred by Lender in protecting
its interests hereunder, including all court costs and attorneys' fees and
expenses, shall be borne by Borrower. The provisions of this Section shall
survive the payment in full of the Loan and all other indebtedness secured by
the Mortgage and the release of the Mortgage as to events occurring and causes
of action arising before such payment and release.
4.30 Hazardous Materials; Indemnification.
(a) Borrower agrees to (i) give notice to Lender immediately upon
Borrower's acquiring knowledge of any Hazardous Materials
Contamination with a full description thereof; (ii) promptly, at
Borrower's sole cost and expense, comply with any Governmental
Requirements requiring the use, storage, removal, treatment or
disposal of such Hazardous Materials or Hazardous Materials
Contamination and provide Lender with satisfactory evidence of
such compliance; and (iii) provide the Lender, within thirty (30)
days after demand by Lender, with a bond, letter of credit or
similar financial assurance evidencing to Lender's satisfaction
that the necessary funds are available to pay the cost of
removing, treating and disposing of any Hazardous Materials
Contamination and discharging any assessments which may be
established on the Property as a result thereof.
20
<PAGE> 29
(b) Borrower shall not cause or suffer any liens to be recorded
against the Property as a consequence of, or in any way related
to, the presence, remediation or disposal of Hazardous Material
in or about the Property, including any state, federal or local
so-called "Superfund" lien relating to such matters.
(c) Borrower shall at all times retain any and all liabilities
arising from the presence, handling, treatment, storage,
transportation, removal or disposal of Hazardous Materials on the
Property. Regardless of whether any Event of Default shall have
occurred and be continuing or any remedies in respect of the
Property are exercised by Lender, Borrower shall defend,
indemnify and hold harmless Lender from and against any and all
liabilities (including strict liability), suits, actions, claims,
demands, penalties, damages (including, without limitation, lost
profits, consequential damages, interest, penalties, fines and
monetary sanctions), losses, costs or expenses (including,
without limitation, attorneys' fees and expenses, and remedial
costs) (the foregoing are hereinafter collectively referred to as
"Liabilities") which may now or in the future (whether before or
after the culmination of the transactions contemplated by this
Loan Agreement) incurred or suffered by Lender by reason of,
resulting from, in connection with, or arising in any manner
whatsoever out of the breach of any warranty or covenant or the
inaccuracy of any representation of Borrower contained or
referred to in this Section or Section 3.7 of this Loan Agreement
or which may be asserted as a direct or indirect result of the
presence on or under, or escape, seepage, leakage, spillage,
discharge, emission, or release from the Property of any
Hazardous Materials or any Hazardous Materials Contamination or
arise out of or result from the environmental condition of the
Property or the applicability of any Governmental Requirements
relating to Hazardous Materials, whether or not occasioned wholly
or in part by any condition, accident or event caused by any act
or omission of Lender.
Such Liabilities shall include, without limitation; (i) injury or
death to any person; (ii) damage to or loss of the use of any
property; (iii) the cost of any demolition and rebuilding of the
Improvements, repair or remediation and the preparation of any
activity required by any Governmental Authority; (iv) any lawsuit
brought or threatened, good faith settlement reached, or
governmental order relating to the presence, disposal, release or
threatened release of any Hazardous Material on, from or under
the Property; and (v) the imposition of any lien on the Property
arising from the activity of Borrower or Borrower's predecessors
in interest on the Property or from the existence of Hazardous
Materials or Hazardous Materials Contamination upon the Property.
The covenants and agreements contained in this Section shall
survive the consummation of the transactions contemplated by this
Loan Agreement.
Notwithstanding anything contained in this Loan Agreement, the Note,
the Mortgage or in any of the Loan Instruments, the Borrower shall not be
released of corporate liability and shall have corporate liability for any and
all of Lender's costs, expenses, damages or liabilities (including, without
limitation, all reasonable attorneys' fees, whether incurred by Lender prior to
or following foreclosure of the Mortgage and whether Lender shall be in the
status of a lienholder or an owner of the Property following foreclosure)
directly or indirectly arising out of or attributable to the use, generation,
manufacture, storage, release, threatened release, discharge, disposal, or
presence on, under, to, from or about the Property of any Hazardous Materials.
4.31 Disclaimer of Loan Extension.
Borrower acknowledges and agrees that Lender has not made any
commitments, either express or implied, to extend the term of the Loan past its
stated maturity date.
21
<PAGE> 30
4.32 Evidence of Year 2000 Compliance.
Within thirty (30) days of any request therefor by Lender, Borrower
will deliver to Lender a statement from a person reasonably acceptable to Lender
to the effect that Borrower's Computer Items comply with the representations
contained in Section 3.12 hereof.
ARTICLE 5 - RIGHTS AND REMEDIES OF LENDER
5.1 Rights of Lender.
Upon the occurrence of an Event of Default, after Lender has given the
requisite notice and opportunity to cure as provided herein and if Borrower has
failed to cure the default, Lender shall have the right, in addition to any
other right or remedy of Lender, but not the obligation, in its own name or in
the name of Borrower, to enter into possession of the Property; to perform all
work necessary to complete the construction of the Improvements substantially in
accordance with the Plans, Governmental Requirements and the requirements of any
lessee, if applicable; and to employ watchmen and other safeguards to protect
the Property. Borrower hereby appoints Lender as the attorney-in-fact of
Borrower, with full power of substitution, and in the name of Borrower, if
Lender elects to do so, upon the occurrence of an Event of Default, to (a) use
such sums as necessary, including any proceeds of the Loan and the Borrower's
Deposit, make such changes or corrections in the Plans, and employ such
architects, engineers, and contractors as may be required for the purpose of
completing the construction of the Improvements substantially in accordance with
the Plans and Governmental Requirements, (b) execute all applications and
certificate in the name of Borrower which may be required for completion of
construction of the Improvements, (c) endorse the name of Borrower on any checks
or drafts representing proceeds of the Insurance Policies, or other checks or
instruments payable to Borrower with respect to the Property, (d) do every act
with respect to the construction of the Improvements which Borrower may do, and
(e) prosecute or defend any action or proceeding incident to the Property. The
power of attorney granted hereby is a power coupled with an interest and
irrevocable. Lender shall have no obligation to undertake any of the foregoing
actions, and, if Lender should do so, it shall have no liability to Borrower for
the sufficiency or adequacy of any such actions taken by Lender.
5.2 Acceleration.
Upon the occurrence of an Event of Default, after Lender has given the
requisite notice and opportunity to cure as provided herein and if Borrower has
failed to cure the default, Lender may, at its option, declare the Loan
immediately due and payable (unless further notice is required by applicable
law).
5.3 Cessation of Advances.
Upon the occurrence of an Event of Default, after Lender has given the
requisite notice and opportunity to cure as provided herein and if Borrower has
failed to cure the default, the obligation of Lender to disburse the Loan and
the Borrower's Deposit and all other obligations of Lender hereunder shall, at
Lender's option, immediately terminate.
5.4 Funds of Lender.
Any funds of Lender used for any purpose referred to in this Article 5
shall constitute Advances secured by the Loan Instruments and shall bear
interest at the rate specified in the Note to be applicable after default
thereunder.
5.5 No Waiver or Exhaustion.
No waiver by Lender of any of its rights or remedies hereunder,
in the other Loan Instruments, or otherwise, shall be considered a waiver of any
other or subsequent right or remedy of Lender; no delay or omission in the
exercise or enforcement by Lender of any rights or remedies shall ever be
construed as a waiver of any right or remedy of
22
<PAGE> 31
Lender; and no exercise or enforcement of any such rights or remedies shall
ever be held to exhaust any right or remedy of Lender.
ARTICLE 6 - GENERAL TERMS AND CONDITIONS
6.1 Notices.
All notices, demands, requests, approvals and other communications
required or permitted hereunder shall be in writing and shall be deemed to have
been given when presented personally or deposited in a regularly maintained mail
receptacle of the United States Postal Service, postage prepaid, registered, or
certified, return receipt requested, addressed to Borrower or Lender, as the
case may be, at the respective addresses set forth on the first page of this
Loan Agreement, or such other address as Borrower or Lender may from time to
time designate by written notice to the other as herein required.
6.2 Entire Agreement and Modifications.
The Loan Instruments constitute the entire understanding and agreement
between the undersigned with respect to the transactions arising in connection
with the Loan and supersede all prior written or oral understandings and
agreements between the undersigned in connection therewith. No provision of this
Loan Agreement or the other Security Instruments may be modified, waived, or
terminated except by instrument in writing executed by the party against whom a
modification, waiver, or termination is sought to be enforced.
6.3 Severability.
In case any of the provisions of this Loan Agreement shall for any
reason be held to be invalid, illegal, or unenforceable, such invalidity,
illegality, or unenforceability shall not affect any other provision hereof, and
this Loan Agreement shall be construed as if such invalid, illegal, or
unenforceable provision had never been contained herein.
6.4 Election of Remedies.
Lender shall have all of the rights and remedies granted in the
Security Instruments and available at law or in equity, and these same rights
and remedies shall be cumulative and may be pursued separately, successively, or
concurrently against Borrower or any property covered under the Security
Instruments, at the sole discretion of Lender. The exercise or failure to
exercise any of the same shall not constitute a waiver or release thereof or of
any other right or remedy, and the same shall be nonexclusive.
6.5 Form and Substance.
All documents, certificates, insurance policies, evidence, and other
items required under this Loan Agreement to be executed and/or delivered to
Lender shall be in form and substance satisfactory to Lender.
6.6 Limitation on Interest.
All agreements between Borrower and Lender, whether now existing or
hereafter arising and whether written or oral, are hereby limited so that in no
contingency, whether by reason of acceleration of the maturity of any
indebtedness governed hereby or otherwise, shall the interest contracted for,
charged or received by Lender exceed the maximum amount permissible under
applicable law. If, from any circumstance whatsoever, interest would otherwise
be payable to Lender in excess of the maximum lawful amount, the interest
payable to Lender shall be reduced to the maximum amount permitted under
applicable law; and, if from any circumstance the Lender shall ever receive
anything of value deemed interest by applicable law in excess of the maximum
lawful amount, an amount equal to any excessive interest shall be applied to the
reduction of the principal of the Loan and not to the payment of interest, or
if such
23
<PAGE> 32
excessive interest exceeds the unpaid balance of principal of the Loan such
excess shall be refunded to Borrower. All interest paid or agreed to be paid to
Lender shall, to the extent permitted by applicable law, be amortized, prorated,
allocated, and spread throughout the full period until payment in full of the
principal of the Loan (including the period of any renewal or extension thereof)
so that interest thereon for such full period shall not exceed the maximum
amount permitted by applicable law. This paragraph shall control all agreements
between the Borrower and Lender.
6.7 No Third Party Beneficiary.
This Loan Agreement is for the sole benefit of Lender and Borrower and
is not the benefit of any third party.
6.9 Borrower In Control.
In no event shall Lender's rights and interests under the Loan
Instruments be construed to give Lender the right to, or be deemed to indicate
that Lender is in control of the business, management or properties of Borrower
or has power over the daily management functions and operating decisions made by
Borrower.
6.9 Number and Gender.
Whenever used herein, the singular number shall include the plural and
the plural the singular, and the use of any gender shall be applicable to all
genders. The duties, covenants, obligations, and warranties of Borrower in this
Loan Agreement shall be joint and several obligations of Borrower and of each
Borrower if more than one.
6.10 Captions.
The captions, headings, and arrangements used in this Loan Agreement
are for convenience only and do not in any way affect, limit, amplify, or modify
the terms and provisions hereof.
6.11 Applicable Law.
This Loan Agreement and the Loan Instruments shall be governed by and
construed in accordance with the laws of the State of Texas and the laws of the
United States applicable to transactions within such State.
6.12 Statutory Notice.
IN ACCORDANCE WITH SECTION 26.02 OF THE TEXAS BUSINESS AND COMMERCE
CODE, LENDER HEREBY NOTIFIES BORROWER THAT:
(a) A LOAN AGREEMENT IN WHICH THE AMOUNT INVOLVED IN THE LOAN
AGREEMENT EXCEEDS $50,000 IN VALUE IS NOT ENFORCEABLE UNLESS THE
AGREEMENT IS IN WRITING AND SIGNED BY THE PARTY TO BE BOUND OR BY
THAT PARTY'S AUTHORIZED REPRESENTATIVE.
(b) THE RIGHTS AND OBLIGATIONS OF THE PARTIES TO AN AGREEMENT SUBJECT
TO SUBSECTION (a) OF THIS SECTION SHALL BE DETERMINED SOLELY FROM
THE WRITTEN LOAN AGREEMENT, AND ANY PRIOR ORAL AGREEMENTS BETWEEN
THE PARTIES ARE SUPERSEDED BY AND MERGED INTO THE LOAN AGREEMENT.
(c) THE LOAN INSTRUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
24
<PAGE> 33
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
EXECUTED AND DELIVERED on the date first recited.
"LENDER"
RIVERWAY BANK
By: /s/ GLEN R. BELL
-------------------------------
Name: Glen R. Bell
------------------------------
Title: Vice-President
-----------------------------
"BORROWER"
TMX REALTY CORPORATION,
a Delaware corporation
By: /s/ JAMES W. ALBRECHT, JR.
-------------------------------
Name: James W. Albrecht, Jr.
------------------------------
Title: Chief Financial Officer
-----------------------------
25
<PAGE> 34
EXHIBIT A
Being a tract or parcel containing 2.619 acres (114,086 square feet) of land
situated in the D W C Harris Survey, Abstract Number 325, Harris County, Texas,
and being part of and out of that certain called 118.831 acres, described in
deed to the United States of America, as recorded in Volume 1297, Page 87, Deed
Records of Harris County, Texas, said 2.619 acre tract being more particularly
described as follows (all bearings and coordinates are based on the Texas State
Plane Coordinate System; South Central Zone; all distances and coordinates are
surface and may be converted to grid by multiplying by a combined scale factor
of 0.9998632):
COMMENCING at a 5/8-inch iron rod with plastic cap set marking the intersection
of the south right-of-way (ROW) line of Holcombe Boulevard with the west ROW
line of Almeda Road, and having surface coordinates of X=3,147,967.40,
Y=698,487.10, thence:
South 14 degrees 53'21" West, with said west ROW line, a distance of 206.00
feet to a set 5/8-inch iron rod with plastic cap;
North 75 degrees 06'39" West, a distance of 329.30 feet to a 5/8-inch iron
rod with plastic cap set marking the POINT OF BEGINNING and northeast
corner of the herein described tract;
THENCE, SOUTH 14 degrees 53'21" West, a distance of 330.70 feet to a 5/8-inch
iron rod with plastic cap set marking the southeast corner of the herein
described tract;
THENCE, NORTH 75 degrees 06'39" West, a distance of 432.78 feet to a 5/8-inch
iron rod with plastic cap set marking the southwest corner of the herein
described tract;
THENCE, NORTH 41 degrees 44'27" East, a distance of 334.23 feet to a 5/8-inch
iron rod with plastic cap set marking the beginning of a tangent curve;
THENCE, NORTHEASTERLY, with a curve to the left having a radius of 760.00 feet,
a central angle of 03 degrees 35'59", an arc length of 47.75 feet, and a chord
which bears North 39 degrees 56'28" East, 47.74 feet to an "X" in concrete set
marking the most northwesterly corner of the herein described tract;
THENCE, SOUTHEASTERLY, with a non-tangent curve to the left having a radius of
87.50 feet, an arc length of 93.13 feet, a central angle of 60 degrees 59'01",
and a chord which bears South 58 degrees 25'28" East, 88.80 feet to a 5/8-inch
iron rod with plastic cap set marking a point of tangency;
THENCE, SOUTH 88 degrees 54'58" East, a distance of 27.76 feet to a 5/8-inch
iron rod with plastic cap set marking the beginning of a tangent curve;
THENCE, EASTERLY, with a curve to the right having a radius of 281.50 feet, an
arc length of 67.83 feet, a central angle of 13 degrees 48'19", and a chord
which bears South 82 degrees 00'48" East, 67.66 feet to a 5/8-inch iron rod with
plastic cap set marking a point of tangency;
THENCE, SOUTH 75 degrees 06'39" East, a distance of 82.41 feet to the POINT OF
BEGINNING and containing 2.619 acres (114,086 square feet) of land (this
description is based on a Land Title Survey and plat prepared by Terra Surveying
Company, Inc. Project Number 0163-9801-S).
<PAGE> 35
EXHIBIT "B"
ATTACHED TO AND INCORPORATED BY REFERENCE
IN LOAN AGREEMENT DATED NOVEMBER 23, 1998,
BETWEEN RIVERWAY BANK, AS LENDER
AND TMX REALTY CORPORATION, AS BORROWER
1. The Loan Finance Charge in the amount of $120,000 in cash;
2. The Note;
3. The Mortgage;
4. The Assignment of Landlord's Interest in Leases;
5. Subordination of all leases affecting the Property;
6. The Title Insurance;
7. The Construction Contract;
8. The consent of Contractor to the assignment of the Construction
Contracts;
9. Subordination of mechanics' and materialmen's liens from all
subcontractors and suppliers;
10. The Architectural Contract, if in writing;
11. The Plans;
12. Consent of Architect to the assignment of the Plans and Architectural
Contract;
13. The Survey;
14. Financing Statements (Form UCC-1) with respect to the security interest
granted in the Loan Instruments, together with evidence of the priority
of the respective security interests perfected hereby;
15. Executed ground sublease between Borrower and Amelang Partners in form
and content acceptable to Lender, with a minimum term of 28 years;
16. Financial Statements;
17. Evidence of approval of the Plans by any lessee of the Property, if
applicable, and any necessary Governmental Authority;
18. Building permit and all other permits required by the Governmental
Requirements with respect to the then current phase of construction and
development of the Property;
19. Evidence of Borrower's compliance with or satisfaction of all conditions
applicable to any leases affecting the Property;
<PAGE> 36
20. Evidence that all applicable zoning ordinances or restrictive covenants
affecting the Property permit the use for which the Property is intended
and have been or will be complied with;
21. Evidence of the Property's compliance with the requirements of all
applicable "environmental protection" laws, rules, and regulations,
whether federal, state, or municipal including an environmental audit
satisfactory to Lender;
22. Evidence that all of the streets providing access to the Property either
have been dedicated to public use or established by private easement,
duly recorded in the records of the County in which the Property is
located, and have been fully installed and accepted by Governmental
Authority (if applicable), that all costs and expenses of the
installation and acceptance thereof have been paid in full, and that
there are no restrictions on the use and enjoyment of such streets that
adversely affect, limit, or impair Borrower's ability to develop and
construct the Property or operate the Property for the purposes and in
the manner represented to Lender;
23. Evidence of the availability of all utilities to the Property, including
specifically, but without limitation, gas, electricity, sewer, and water
services;
24. Evidence that all necessary action on the part of Borrower has been
taken with respect to the execution and delivery of this Loan Agreement
and the consummation of the transactions contemplated hereby, so that
this Loan Agreement and all Security Instruments to be executed and
delivered by or on behalf of Borrower will be valid and binding upon
Borrower or the person or entity executing and delivering such document.
Such evidence shall include, at the option of the Lender, a legal
opinion of Borrower's legal counsel confirming such authority, validity,
and binding effect, confirming that neither the Loan nor any of the
financing arrangements contemplated by this Loan Agreement violates the
usury laws of the State of, or any other applicable jurisdiction, and
covering such other matters as Lender may require;
25. A flood insurance policy, or binder therefor, in an amount equal to the
outstanding principal amount of the Loan or the maximum amount available
under the Flood Disaster Protection Act of 1973 and regulations issued
pursuant thereto (the "Act"), whichever is less, in form complying with
the "insurance purchase requirement" of the Act, or evidence that no
portion of the Property lies within a designated flood plain or flood
hazard area;
26. The Insurance Policies or Certificates of such Insurance Policies;
27. Breakdown of all costs and expenses required to complete development and
construction of the Property, in detail and in amount reasonably
acceptable to Lender;
28. Application for Advance;
29. Certified Articles of Incorporation and Bylaws of Borrower, and all
amendments thereto;
30. Certificate of existence and certificate of good standing of Borrower
from the appropriate officer of the State of Texas;
31. Certified resolutions of the board of directors of Borrower authorizing
such corporation to execute the Loan Instruments and perform its
obligations thereunder;
32. Tax or assessment certificates or other similar evidences of payment
from all appropriate bodies or entities which have taxing or assessing
authority over any of the Property, stating that all taxes and
assessments are current;
33. Either a statement by a qualified third party unrelated to Borrower or
an Environmental Site Assessment by an engineer acceptable to Lender
providing that there is no evidence that any Hazardous Materials have
been
<PAGE> 37
or are being generated, treated, stored or disposed of on any of the
Property and none exists on, under or at the Property; and
34. Soils Report.
35. Estoppel letters from Ground Lessor, Ground Sublessor, Lutheran and any
other parties as Lender may require.
36. The Subordination, Non-Disturbance and Attornment Agreement.
37. Executed copy, with all amendments to the Ground Lease.
38. Such amendments as Lender may reasonably require with respect to the
Ground Lease.
39. The Letter of Credit.
<PAGE> 38
EXHIBIT "C"
1998_1030 RAB-PLF Construction Cost Report
11/11/98
INTROGEN THERAPEUTICS, INC.
RAB/PLF CONSTRUCTION PROJECT
CONSTRUCTION COST REPORT
MASTER BUDGET
10/30/98
<TABLE>
<CAPTION>
HARD COSTS
----------------------------------------------------------------------------
<S> <C> <C>
Construction Vaughn Construction 6,987,073
Telephone/Security 150,000
Graphics/Signage 13,000
---------
TOTAL HARD COSTS 7,150,073
---------
SOFT COSTS
----------------------------------------------------------------------------
Architect Browne Penland McGregor 613,750
Project management ccrd partners 120,600
Planning & Schematic Design BioMetics 106,107
Construction Materials Testing Kenneth Tand & Assoc. 15,000
Tap fees 18,100
Testing/balancing 9,000
Roof consultant Advanced Technology 6,000
Surveys G P Surveyors 8,000
Geotechnical Kenneth Tand & Assoc. 6,680
Acoustical consultant 3,000
Environmental Environ. Resource Csltnts 4,100
Property taxes 2,500
Validation consultant 9,000
Comm/tech consultant 1,000
Insurance (builder risk) 30,000
Legal 100,000
Title/closing/appraisal 50,000
---------
TOTAL SOFT COSTS 1,102,837
---------
CONTINGENCY AND TOTAL PROJECT COST
----------------------------------------------------------------------------
Contingency 5% 420,000
---------
TOTAL PROJECT COST 8,672,910
---------
</TABLE>
THIS INFORMATION IS CONFIDENTIAL AND FOR INTERNAL USE SOLELY BY INTROGEN
THERAPEUTICS, INC. AND/OR PARTIES COVERED BY AN INTROGEN THERAPEUTICS, INC.
CONFIDENTIALITY AND NON-DISCLOSURE AGREEMENT.
<PAGE> 39
EXHIBIT "D"
ATTACHED TO AND INCORPORATED BY REFERENCE
IN LOAN AGREEMENT DATED NOVEMBER 21, 1998,
BETWEEN RIVERWAY BANK, AS LENDER
AND TMX REALTY CORPORATION, AS BORROWER
1. The Survey Requirements:
(a) Field Note Description. The Survey should contain a certified metes and
bounds description and should comply with the following requirements:
(i) The beginning point should be established by a monument located
at the beginning point, or by reference to a nearby monument;
(ii) The sides of the Property should be described by giving the
distances and bearings of each;
(iii) The distances, bearings, and angles should be taken from a recent
instrument survey, or recently recertified instrument survey, by
a licensed Professional Engineer or Registered Surveyor;
(iv) Curved sides should be described by data including; length of
arc, central angle, radius of circle for the arc and chord
distance, and bearing;
(v) The legal description should be a single perimeter description of
the entire Property;
(vi) The description should include a reference to all streets,
alleys, and other rights-of-way that abut the Property surveyed,
and the width of all rights-of-way mentioned should be given the
first time these rights-of-way are referred to; and
(vii) If the Property surveyed has been recorded on a map or plat as
part of an abstract or subdivision, reference to such recording
data should be made.
(b) Lot and Block Description. If the Property is included within a properly
established, recorded subdivision or addition, then a lot and block
description will be an acceptable substitute for a metes and bounds
description, provided that the lot and block description must completely
and properly identify the name or designation of the recorded
subdivision or addition and give the recording information therefor.
(c) Map or Plat. The Survey should also contain a certified map or plat
showing the following:
(i) the plot to be covered by the Mortgage;
(ii) the relation of the point of beginning of said plot to the
monument from which it is fixed;
(iii) monuments for corners and points of curves;
<PAGE> 40
(iv) all easements, showing recording information therefor by volume
and page;
(v) the established building line, if any;
(vi) all easements appurtenant to said plot;
(vii) the boundary line of the street or streets abutting the plot and
the width of said streets; and
(viii) encroachments and the extent thereof in terms of distance upon
said plot or any easement appurtenant thereto.
The Survey should also contain all structures and improvements on said
plot with horizontal lengths of all sides and the relation thereof by
distances to (a) all boundary lines of the plot, (b) easements, (c)
established building lines, and (d) street lines.
(d) Certification. The certification for the Property description and the
map or plat should be addressed to Lender (and to the interested title
company, if required by the title company), signed by the surveyor,
bearing current date, registration number, and seal, and should be in
the following form or its substantial equivalent:
The undersigned hereby certifies to Lender that (i) this survey
was made on the ground as per the field notes shown hereon and
correctly shows the boundary lines and dimensions and area of
the land indicated hereon and each individual parcel thereof
indicated hereon; (ii) all monuments shown hereon actually
exist, and the location, size and type of Such monuments are
correctly shown; (iii) this survey correctly shows the location
of all buildings, structures, other improvements and visible
items on the subject Property; (iv) this survey correctly shows
the location and dimensions of all alleys, streets, roads,
rights-of-way, easements, and other matters of record of which
the undersigned has been advised affecting the subject Property
according to the legal description in such easements and other
matters (with instrument, book, and page number indicated); (v)
except as shown, there are no visible easements, rights-of-way,
party walls, drainage ditches, streams, or conflicts, visible
encroachments onto adjoining premises, streets, or alleys by any
of said buildings, structures, or other improvements, or visible
encroachments onto the subject Property by buildings,
structures, or other improvements on adjoining premises; (vi)
the distance from the nearest intersecting street and road is as
shown hereon; and (vii) the subject property has direct access
to dedicated public roads accepted for maintenance by the entity
to which such roads were dedicated.
(e) The Survey shall also contain a flood plain designation evidencing the
Property is located in Zone "X".
2. Standard Mortgage Clause For All-Risk Insurance Policy:
The mortgage clause to be contained in the All-Risk Insurance Policy
covering the Improvements should be in the following form:
This policy, as to the interest of mortgagee only therein, shall not be
invalidated by any act or neglect of mortgagor or owner of the within
described property, nor by any foreclosure or other proceedings or
notice of sale relating to the property, nor by any change in the title
or ownership of the property, nor by the occupation of the premises for
purposes more hazardous than are permitted by this policy, provided that
the mortgagee shall notify this Company of any change of ownership or
increase of hazard which shall come to the knowledge of said mortgagee,
and, unless permitted by this policy,
<PAGE> 41
it shall be noted hereon; and provided, further, that upon failure of
the insured to render proof of loss, such mortgagee upon notice shall
render proof of loss in the form herein specified within ninety-one (91)
days thereafter and shall be subject to the provisions hereof relating
to appraisal and time of payment and of bringing suit.
Failure upon the part of mortgagee to comply with any of the foregoing
obligations shall render the insurance under this policy null and void
as to the interest of mortgagee.
This policy may be canceled as to the interest of any mortgagee named
hereon by giving such mortgagee thirty (30) days' written notice.
If this Company shall claim that no liability existed as to mortgagor or
owner, it shall, to the extent of payment of loss to mortgagee, be
subrogated to all mortgagee's rights of recovery, but without impairing
mortgagee's right to sue or it may pay off the mortgage debt and require
an assignment thereof and of the mortgage without recourse.
The word "mortgagee" shall be construed to mean "mortgagee or trustee."
<PAGE> 42
[SEAL] [DEPARTMENT OF VETERANS AFFAIRS LETTERHEAD]
In Reply Refer To: 580/138
November 24, 1998
Amelang Partners, Inc.
952 Echo Lane, Suite 100
Houston, Texas 77024
SUBJ: Enhanced-Use Lease between the United States Department of Veterans
Affairs (the "Government") and Amelang Partners, Inc. ("API")
Dear Sirs:
Reference is hereby made to those certain Utility Letters (herein so called)
issued by the City of Houston dated October 23, 1998, which evidence that
certain water, storm sewer and wastewater capacities (collectively the
"Utilities") are available to the 2.619 acres of land fronting on Ringness
Road in the Houston VA Medical Center, which property is subject to the Amended
and Restated Ground Sublease Agreement between API and Introgen Therapeutics,
Inc. (the "Amended Sublease Premises"). The Utility Letters have been issued to
the Government. The Government hereby agrees that API, as ground lease tenant
pursuant to the Enhanced-Use Lease, may make such Utilities available to the
owner and tenants, including any future owners and tenants, of the buildings to
be constructed upon the Amended Sublease Premises, and the Government further
agrees that it will take no action to utilize, divert, sell, or in any way
decrease the availability or the capacity of Utilities to the Amended Sublease
Premises.
Further, the Government has reviewed the plans for rerouting of the storm sewer
line which lies partially under the Amended Sublease Premises, as illustrated
on the drawing attached as Exhibit "A" to this letter and the Government hereby
approves the routing of said storm sewer line as illustrated in said drawing.
Sincerely yours,
/s/ W. HOWARD GIBSON
W. Howard Gibson
<PAGE> 43
ESCROW AGREEMENT
This Escrow Agreement ("Escrow Agreement") is by and among Riverway Bank,
Five Riverway, Houston, Texas 77056 ("Bank"), TMX Realty Corporation, a Delaware
corporation ("TMX") and Introgen Therapeutics, Inc. a Delaware corporation
("Introgen"), the foregoing parties being hereinafter collectively referred to
as the "Parties", who agree as follows:
RECITALS
Reference is hereby made to that certain Amended and Restated Ground
Sublease Agreement (the "Ground Sublease") dated effective September 24, 1998,
by and between Introgen, as ground sublessee and Amelang Partners, Inc., as
ground sublessor. The interest of Introgen in and to the Ground Lease was
assigned to TMX, pursuant to Assignment of Lease dated November 23, 1998.
Pursuant to the Assignment of Lease, Introgen remains liable for all obligations
and liabilities of the ground sublessee pursuant to the Ground Sublease. For the
purposes of this Agreement, Introgen and TMX are hereby sometimes collectively
referred to herein as "Ground Sublessee". Reference is also made to that certain
Loan (herein so called) dated on or about even date herewith from the Bank to
TMX, as evidenced, in part, by that certain promissory note dated on or about
even date herewith from TMX as maker to the Bank as payee. As a condition
precedent to the Bank making the Loan, and as further security therefore, Ground
Lessee has agreed to deposit, in advance with the Bank, the annual rent to be
paid by Introgen to Ground Lessor pursuant to the Ground Lease.
AGREEMENT
1. APPOINTMENT AND ACCEPTANCE, COMPENSATION.
1.1 Appointment and Acceptance. Ground Sublessee hereby appoints the Bank
as escrow agent under this Escrow Agreement and the Bank accepts the
appointment.
1.2 Compensation. The Bank shall not be compensated for its services under
this Agreement, except as otherwise provided herein.
1.3 Deposit. Contemporaneously with the execution hereof, Ground Lessee
shall deposit with the Bank the amount of $136,191, the same being the maximum
amount of annual rent due through and including the year 2000.
1.4 Payment of Escrowed Funds. Bank is hereby authorized and directed, on
or before the date such amounts are due, to pay rent accruing pursuant to the
Ground Sublease for the year 1999, if any and the year 2000 from the funds
deposited pursuant to Section 1.3 hereof. On or before January 1, 2000, Ground
Sublessee shall deliver to Bank all sums due and payable pursuant to the Ground
Sublease for the first calendar quarter of the year 2000. Ground Sublessee
agrees to deposit,
<PAGE> 44
on or before the first day of each succeeding calendar quarter thereafter during
the term that the Loan is outstanding, an amount sufficient to cover all
payments due pursuant to the Ground Sublessee for the next calendar quarter
year. The net effect of Section 1.3 and 1.4 being that there is always held in
escrow sufficient funds to pay at least one year's rent due under the Ground
Sublease.
1.5 Payment by Bank. All sums delivered to Bank pursuant to this Agreement
shall be held by Bank and paid as rent, and other obligations as the same are
payable pursuant to the Ground Sublease provided sufficient funds have been
deposited hereunder.
1.6 Other Payments by Bank. The foregoing to contrary notwithstanding,
should a Event of Default occur, (as such term is defined in the loan agreement
executed in connection with the Loan), the Bank may use any funds deposited
pursuant to this Agreement to prepay rent pursuant to the Ground Sublease, or,
at the Bank's option, to cure any Event(s) of Default, pursuant to the Loan.
1.7 Fiduciary Account, Investment of Funds. The funds placed in escrow will
be held in a separate segregated account in accordance with this Agreement and
shall be invested from time to time by the Bank as set forth in written
instructions of TMX which must be acceptable to Bank. If no such instructions
are given, the funds shall be invested in certificates of deposit of the Bank
with maturities of thirty (30) days.
2. SUCCESSOR ESCROW AGENTS.
2.1 The Bank or any successor escrow agent may, at any time, resign by
giving notice in writing to TMX and shall be discharged from its duties under
this Escrow Agreement on the first to occur of (a) the appoint of a successor
escrow agent, as provided in this Paragraph 3, or (b) the expiration of thirty
(30) calendar days after the notice is given. In the event of any resignation, a
successor escrow agent shall be appointed by the Bank. If the Bank fails or
refuses to appoint a successor escrow agent, the successor escrow agent shall be
appointed by TMX. Any successor escrow agent shall deliver to the TMX, a written
instrument accepting appointment under this Escrow Agreement and hereupon it
shall succeed to all the rights and duties of the Bank hereunder and shall be
entitled to receive any funds held by the Bank in its capacity as predecessor
escrow agent.
3. RIGHTS, PRIVILEGES, IMMUNITIES AND LIABILITIES OF THE BANK.
The following shall govern the rights, privileges, immunities and
liabilities of the Bank in its capacity as escrow agent.
3.1 Indemnity. In the event the Bank becomes involved in litigation in
connection with this Escrow Agreement or any transaction related in any way
hereto, TMX agrees to indemnify and save the Bank harmless from all loss, cost,
damage, expense and reasonable attorney's fees suffered
2
<PAGE> 45
or incurred by the Bank as a result thereof, except for any loss, cost, damage
or expense resulting from the gross negligence, willful misconduct, or bad faith
breach of this agreement by the Bank.
3.2 Good Faith Actions. The Bank shall not be liable for anything which it
may do or refrain from doing in connection herewith, provided that it acts in
good faith.
3.3 Legal Counsel. The Bank may advise with legal counsel in the event of
any dispute or question as to the construction of any of the provisions of this
Escrow Agreement or its duties hereunder and TMX shall pay any and all
reasonable legal fees so incurred.
3.4 Event of Dispute. In the event of any disagreement involving the
Parties resulting in adverse claims or demands being made in connection with the
matters covered by this Escrow Agreement or in the event that the Bank, in good
faith, shall be in doubt as to what action it should take hereunder, the Bank
may, at its option, refuse to comply with any claims or demands on it or refuse
to take any other action hereunder, so long as such disagreement continues or
such doubt exists and, in such event, the Bank shall not be or become liable in
any way or to any person for its failure or refusal to act and the Bank shall be
entitled to continue so to refrain from acting until (a) the rights of all
interested parties shall have been fully and finally adjudicated by a court of
competent jurisdiction, or (b) all differences shall have been adjusted and all
doubt resolved by agreement among all of the interest parties and the Bank shall
have been notified thereof in writing signed by all parties. The rights of the
Bank under this subparagraph are cumulative of all other rights which it may
have by law or otherwise and shall in no manner impair the Bank's ability to
apply the Escrow Funds to payment on the Loan in the Event of Default
thereunder.
3.5 Discharge. When the Loan has been paid in full and the Bank has
delivered all of the proceeds pursuant to the terms of this Escrow Agreement,
the Bank and Introgen shall be discharged from any further obligation hereunder.
3.6 Statements of Accounts. Bank will deliver to Introgen monthly
statements of account, on or before the fifteenth (15) day of each month,
reflecting all activity in the account and interest earned thereon.
4. MISCELLANEOUS.
4.1 Notices. Any and all notices permitted or required to be given under
the terms of this Escrow Agreement shall be in writing and may be served by
mail, postage prepaid and addressed to the person or entity to be notified at
the appropriate address specified on the signature page hereof or by delivering
the same to such person or entity or by overnight delivery and addressed to the
person or entity to be notified at said address. Actual notice, however
received, shall be valid. Addresses may be changed by notice given in the manner
provided in this subparagraph.
3
<PAGE> 46
4.2 Effect of Escrow Agreement. This Escrow Agreement shall be binding on,
inure to the benefit of and be enforceable by and against the Parties, their
successors and assigns.
4.3 Choice of Law. This Escrow Agreement is performable in whole or in part
in the State of Texas and shall be interpreted and construed in accordance with
and shall be governed by the laws of the State of Texas.
4.4 Counterparts. This Escrow Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
4.5 Effective Date of Escrow Agreement. This Escrow Agreement shall be
deemed effective for all purposes as of the date hereof.
This Escrow Agreement is executed and delivered by the Parties and the Bank
on the date specified below.
TMX REALTY CORPORATION
By: /s/ JAMES W. ALBRECHT, JR.
----------------------------------
Name: James W. Albrecht, Jr.
----------------------------------
Title: Chief Financial Officer
----------------------------------
Address: 301 Congress Avenue, Suite 1850,
Austin, Texas 78701
Date: November 23, 1998
INTROGEN THERAPEUTICS, INC.
By: /s/ JAMES W. ALBRECHT, JR.
----------------------------------
Name: James W. Albrecht, Jr.
----------------------------------
Title: Chief Financial Officer
----------------------------------
Address: 301 Congress Avenue, Suite 1850,
Austin, Texas 78701
Date: November 23, 1998
4
<PAGE> 47
RIVERWAY BANK
By: /s/ GLEN R. BELL
---------------------------------
Name: Glen R. Bell
---------------------------------
Title: Vice President
---------------------------------
Address: Five Riverway
Houston, Texas 77056
Date: November 23, 1998
5
<PAGE> 48
EXHIBIT C
11-23-98
[SITE PLAN]
<PAGE> 49
EXHIBIT D
11-23-98
INTROGEN THERAPEUTICS, INC.
NEW PRODUCT LAUNCH FACILITY
HOUSTON, TX
PROJECT MANUAL
BPM Project No. 98027
October 15, 1998
VOLUME TWO
Including:
Mechanical and Electrical
ARCHITECT:
BROWNE PENLAND MCGREGOR ARCHITECTS, INC.
520 Post Oak Blvd. Suite 880, Houston, TX 77027
Contact: Ken Shanks, AIA
Phone: 713-850-1733 ext. 18
Fax: 713-850-0833
STRUCTURAL ENGINEERS:
ASA CONSULTING ENGINEERS
1155 Dairy Ashford, Suite 111, Houston, TX 77079
Contact: Saad Ahmed, PE
MECHANICAL/ELECTRICAL ENGINEERS:
HMG
3508 Far West Blvd. Suite 350, Austin, TX 78731
Contact: Brian Moore, PE
CIVIL ENGINEERS:
PATE ENGINEERS
13405 Northwest Freeway, Suite 300, Houston, TX 77040
Contact: Jeff Ross, PE
LANDSCAPE ARCHITECT:
THE OFFICE OF JAMES BURNETT
1973 West Gray, Suite 5, Houston, TX 77019
Contact: Chip Trageser, ASLA
CLEAN ROOM CONSULTANTS:
MSS CLEAN ROOM TECHNOLOGY LTD.
Fredrick House, Fulton Road, York Y01 4EG UK
Contact: Paul Stubley
<PAGE> 50
EXHIBIT D(1)
11-23-98
[SITE PLAN]
<PAGE> 51
THIS SPACE FOR USE OF FILING OFFICER
ACKNOWLEDGMENT COPY
98-241163
12/4/98 10:14 AM
TEXAS SECRETARY OF STATE
FILED
<PAGE> 52
UNIFORM COMMERCIAL CODE -- FINANCING STATEMENT -- UCC1
This instrument is prepared as, and is intended to be, a Financing
Statement, complying with the formal requisites therefor, as set forth in the
Texas Business and Commerce Code, Article 9 (also known as the Texas Uniform
Commercial Code -- Secured Transactions), and, in particular, Section 9.402
thereof.
FINANCING STATEMENT
1. Debtor -- Name and Mailing Address:
TMX Realty Corporation
301 Congress Avenue, Suite 1850
Austin, Texas 78701
2. The name and address of the secured party ("Secured Party") is:
RIVERWAY BANK
Five Riverway
Houston, Texas 77056
3. This Financing Statement covers the following types (or items) of
property (the "Collateral"):
Construction Contracts: Any and all contracts, subcontracts, and
agreements, written or oral, between Debtor and any other party, and
between parties other than Debtor, in any way relating to the
construction of the Improvements (as hereinafter defined) on the Land
(as hereinafter defined) or the supplying of material (specially
fabricated or otherwise), labor, supplies, or other services
therefor.
Contracts: All of the right, title and interest of Debtor in, to, and
under any and all (i) Contracts (herein so called) for the purchase
or sale of all or any portion of that certain real property described
in Exhibit "A" attached hereto and made a part hereof for all
purposes (the "Land"), together with all Improvements (herein so
called) thereon and appurtenances thereto (the Improvements, together
with the Land are collectively called the "Mortgaged Property"),
whether such Contracts are now or at any time hereafter existing,
including all amendments and supplements to and renewals and
extensions of the Contracts at any time made, and together with all
payments, earnings, income, and profits arising from the sale of all
or any portion of the Mortgaged Property or from the Contracts and
all other sums due or to become due under and pursuant thereto and
together with any and all earnest money, security, letters of credit
or other deposits under any of the Contracts; (ii) contracts,
licenses,
1
<PAGE> 53
permits and living unit equivalents of water, wastewater, and other utility
services whether executed, granted, or issued by a private person or entity or
a governmental or quasi-governmental agency, which are directly or indirectly
related to, or connected with, the development of the Mortgaged Property,
whether such contracts, licenses, and permits are now or at any time hereafter
existing, including without limitation, any and all living unit equivalents of
water, wastewater, and other utility services, certificates, licenses, zoning
variances, permits, and no-action letters from each governmental authority
required: (a) to evidence full compliance by Debtor and all improvements
constructed or to be constructed on the Mortgaged Property with all legal
requirements applicable to the Mortgaged Property, and (b) to complete
construction of any improvements on the Mortgaged Property; (iii) any and all
right, title, and interest Debtor may have in any financing arrangements
relating to the financing of the purchase of all or any portion of the
Mortgaged Property by future purchasers; (iv) all plans, specifications, and
drawings prepared for the Mortgaged Property, including all amendments and
supplements to and renewals and extensions of such contracts any time made, and
together with all rebates, refunds or deposits, and all other sums due or to
become due under and pursuant thereto and together with all powers, privileges,
options, and other benefits of Debtor under such contracts; and (v) all other
contracts which in any way relate to the use, enjoyment, occupancy, operation,
maintenance, or ownership of the Mortgaged Property (save and except any and
all leases, subleases, or other agreements pursuant to which Debtor is granted
a possessory interest in the Land), including but not limited to engineer's
contracts, architect's contracts, maintenance agreements and service contracts.
Fixtures: All materials, supplies, equipment, systems, apparatus, and other
items now owned or hereafter acquired by Debtor and now or hereafter attached
to, installed in, or used in connection with (temporarily or permanently) the
Mortgaged Property, which are now owned or hereafter acquired by Debtor and are
now or hereafter attached to the Mortgaged Property and needed in the operation
thereof, and including, but not limited to, any and all motors, engines,
boilers, furnaces, pipes, sprinkler systems, fire extinguishing apparatus and
equipment, water tanks, heating, ventilating, refrigeration, plumbing,
lighting, transportation (of people or things, including, but not limited to,
stairways, elevators, escalators, and conveyors), incinerating, air
conditioning and air cooling equipment and systems, gas and electric machinery,
and water, gas, electrical, storm and sanitary sewer facilities, and all other
utilities whether or not situated in easements, together with all accessions,
appurtenances, replacements, betterments, and substitutions for any of the
foregoing and the proceeds thereof.
Leases: Any and all leases, subleases, sub-subleases licenses, concessions, or
other agreements (written or oral, now or hereafter in effect) which grant to
third parties a possessory interest in and to, or the right to use, all or any
part of the Mortgaged Property, together with all security and other deposits
made in connection therewith.
2
<PAGE> 54
Personalty: All of the right, title and interest of Debtor in and to the
Plans, all building and construction materials and equipment, insurance
proceeds, accounts, contract and subcontract rights pertaining to the
buildings, all refundable, returnable, or reimbursable fees, deposits or
other funds or evidences of credit or indebtedness deposited by or on
behalf of Debtor in connection with the Mortgaged Property with any
governmental agencies, boards, corporations, providers of utility services,
public or private, including specifically, but without limitation, all
refundable, returnable, or reimbursable tap fees, utility deposits,
commitment fees and development costs, any awards, remunerations,
reimbursements, settlements, or compensation heretofore made or hereafter
to be made by any Governmental Authority pertaining to the Land,
Improvements, Fixtures, Construction Contracts, including but not limited
to those for any vacation of, or change of grade in, any streets affecting
the Land or the Improvements and those for municipal utility district or
other utility costs incurred or deposits made in connection with the Land;
which are now owned or hereinafter acquired by Debtor, which are now or
hereafter situated in, on, or about the Land or the Improvements, or used
in or necessary to the complete and proper planning, development,
construction, financing, use, occupancy, or operation thereof, or acquired
(whether delivered to the Land or stored elsewhere) for use in or on the
Land or the Improvements, together with all accessions, replacements, and
substitutions thereto or therefor and the proceeds thereof.
Rents: All of the rents, revenues, income, proceeds, profits, security
and other types of deposits, and other benefit paid or payable by parties
to the Leases other than Debtor for using, leasing, licensing, possessing,
operating from, residing in, selling, or otherwise enjoying the Mortgaged
Property.
Excluded Property: Any other provision hereof notwithstanding, there is
hereby excepted from the definition of the "Mortgaged Property" and the
"Collateral" and from all liens and security interests held by Secured
Party all property of Debtor described on Exhibit "B" attached hereto,
which Exhibit "B" is incorporated herein for all purposes.
4. Proceeds of the Collateral are also covered.
5. Number of additional sheets presented: Two (2)
DATED as of the 23 day of November, 1998.
"DEBTOR"
TMX REALTY CORPORATION,
a Delaware corporation
By: /s/ JAMES W. ALBRECHT, JR.
-------------------------------
Name: James W. Albrecht, Jr.
Title: Chief Financial Officer
3
<PAGE> 55
EXHIBIT "A"
Being a tract or parcel containing 2.619 acres (114,086 square feet) of land
situated in the D W C Harris Survey, Abstract Number 325, Harris County, Texas,
and being part of and out of that certain called 118.831 acres, described in
deed to the United States of America, as recorded in Volume 1297, Page 87, Deed
Records of Harris County, Texas, said 2.619 acre tract being more particularly
described as follows (all bearings and coordinates are based on the Texas State
Plane Coordinate System; South Central Zone; all distances and coordinates are
surface and may be converted to grid by multiplying by a combined scale factor
of 9.9998632):
COMMENCING at a 5/8-inch iron rod with plastic cap set marking the intersection
of the south right-of-way (ROW) line of Holcombe Boulevard with the west ROW
line of Almeda Road, and having surface coordinates of X=3,147,967.40,
Y=698,487.10, thence:
South 14 degrees 53'21" West, with said west ROW line, a distance of
206.00 feet to a set 5/8-inch iron rod with plastic cap;
North 75 degrees 06'39" West, a distance of 329.30 feet to a 5/8-inch
iron rod with plastic cap set marking the POINT OF BEGINNING and
northeast corner of the herein described tract;
THENCE, SOUTH 14 degrees 53'21" West, a distance of 330.70 feet to a 5/8-inch
iron rod with plastic cap set marking the southeast corner of the herein
described tract;
THENCE, NORTH 75 degrees 06'39" West, a distance of 432.78 feet to a 5/8-inch
iron rod with plastic cap set marking the southwest corner of the herein
described tract;
THENCE, NORTH 41 degrees 44'27" East, a distance of 334.23 feet to a 5/8-inch
iron rod with plastic cap set marking the beginning of a tangent curve;
THENCE, NORTHEASTERLY, with a curve to the left having a radius of 760.00 feet,
a central angle of 03 degrees 35'59", an arc length of 47.75 feet, and a chord
which bears North 39 degrees 56'28" East, 47.74 feet to an "X" in concrete set
marking the most northwesterly corner of the herein described tract;
THENCE, SOUTHEASTERLY, with a non-tangent curve to the left having a radius of
87.50 feet, an arc length of 93.13 feet, a central angle of 60 degrees 59'01",
and a chord which bears South 58 degrees 25'28" East, 88.80 feet to a 5/8-inch
iron rod with plastic cap set marking a point of tangency;
THENCE, SOUTH 88 degrees 54'58" East, a distance of 27.76 feet to a 5/8-inch
iron rod with plastic cap set marking the beginning of a tangent curve;
THENCE, EASTERLY, with a curve to the right having a radius of 281.50 feet, an
arc length of 67.83 feet, a central angle of 13 degrees 48'19", and a chord
which bears South 82 degrees 00'48" East, 67.66 feet to a 5/8-inch iron rod
with plastic cap set marking a point of tangency;
THENCE, SOUTH 75 degrees 06'39" East, a distance of 82.41 feet to the POINT OF
BEGINNING and containing 2.619 acres (114,086 square feet) of land (this
description is based on a Land Title Survey and plat prepared by Terra
Surveying Company, Inc. Project Number 0163-9801-S).
<PAGE> 56
EXHIBIT "B"
There is hereby excepted from the definition of the "Mortgaged Property"
and the "Collateral", and from all liens and security interests held by Secured
Party, all property of Debtor which is not a part of the plumbing, electrical,
heating, cooling, ventilation, standard lighting, ceiling tile, sprinkler
equipment and related equipment together with other fixtures and equipment
necessary for the use and operation of the buildings for general purposes and
all property (save and except the foregoing) which is not permanently attached
or affixed to the building and is not an integral part of the building and
needed for the same to be functional as an office building. Without limiting the
foregoing sentence, the property described below is excepted from said
definitions of "Mortgaged Property" and "Collateral" and shall not be in any way
secured or encumbered by any lien or security interest held by Secured Party.
Excluded Property
Furniture
Computers and related equipment, computer network equipment and software
Laboratory equipment
Production Equipment
Modular clean room units
Telephone equipment
Office equipment
Artwork
Decorative items
Plants
Inventory, including raw materials, work in progress and finished goods
Office supplies
Lab notebooks
Electronic media
Backup power generator
Cold storage equipment
Waste treatment equipment
Whether now owned or hereafter acquired
5
<PAGE> 57
ENVIRONMENTAL MONITORING REPORT LOG IN
ROOM 3
<TABLE>
<CAPTION>
DATE OPERATION L/N OR C/N
<S> <C> <C>
11 Feb 98 DHGF(10) Prep N/A
19 Feb 98 Expand to 1 CF 10 B0419901
23 Feb 98 Thaw C/N 05498001
26 Feb 98 Expansion C/N 05498001
02 Mar 98 Expansion C/N 05498001
06 Mar 98 Split to 10 - trays C/N 05498001
13 Mar 98 10 - tray harvest C/N 05498001
13 Mar 98 Seeding 6 CF 10's C/N 05498001
17 Mar 98 Harvest 10 - trays C/N 05498001
20 Mar 98 Thaw of 08198001 C/N 08198001
23 Mar 98 Harvest 4 - T 150 C/N 08198001
25 Mar 98 Splitting T - 150's C/N 08198001
26 Mar 98 Splitting tray T - 10=50's to CF 10 C/N 08198001
27 Mar 98 Media Prep C/N 08198001
30 Mar 98 Split CF 10 to 4 -CR 10's C/N 08198001
01 Apr 98 CellCube Assembly C/N 08198001
03 Apr 98 Split to 10 - trays C/N 08198001
07 Apr 98 Harvest CR 10's to Seed Side I C/N 08198001
07 Apr 98 Harvest CF 10 to Seed Side 2 C/N 08198001
13 Apr 98 Cell Thaw B1039801
16 Apr 98 Expand to 8 T 150 B1039801
19 Apr 98 Split to 1 CF10 B1039801
24 Apr 98 Media Prep/Split to 4 10 - trays B1039801
24 Apr 98 Cube Assembly B1039801
28 Apr 98 Harvest to Seed Cube Side I B1039801
28 Apr 98 Thaw 11898001/Harvest 1039801 C/N 11898001 &
to Seed Cube * B1039801
01 May 98 Split to 8 T 150 C/N 11898001
04 May 98 Split to 1, CF 10 B11898001
08 May 98 Split to 4 10 - trays B1189801
08 May 98 Cube Setup B1189801
11 May 98 Thaw C/N 13198001
13 May 98 Harvest For Cube Side I B1189801
13 May 98 Harvest 2 CF 10's for Side II B1189801
14 May 98 Split to 8 T - 150's B1319801
18 May 98 Split to 1 CF 10 C/N 13198001
</TABLE>
<PAGE> 58
THIS STATEMENT IS PRESENTED TO A FILING
OFFICER FOR FILING PURSUANT TO THE
UNIFORM COMMERCIAL CODE.
<TABLE>
11. [ ] CHECK TO REQUEST SAME DEBTOR
SEARCH CERTIFICATE (INSTRUCTION B.11)
<S> <C> <C> <C> <C> <C>
1. DEBTOR (IF PERSONAL) LAST NAME FIRST NAME MI 1A. PREFIX 1B. SUFFIX
AMELANG PARTNERS INCORPORATED
1C. MAILING ADDRESS 1D. CITY, STATE 1E ZIP CODE
952 Echo Lane, Suite 100 Houston, Texas 77024
2. ADDITIONAL DEBTOR (IF PERSONAL) LAST NAME FIRST NAME MI 2A. PREFIX 2B. SUFFIX
2C. MAILING ADDRESS 2D. CITY, STATE 2E. ZIP CODE
3. SECURED PARTY (IF PERSONAL) LAST NAME FIRST NAME MI
Aid Association for Lutherans
3A. MAILING ADDRESS 3B. CITY, STATE 3C. ZIP CODE
4321 North Ballard Road Appleton, Wisconsin 54919
4. ADDITIONAL SECURED PARTY (IF ANY)
4A. MAILING ADDRESS 4B. CITY, STATE 4C. ZIP CODE
5 ORIGINAL FINANCING STATEMENT NUMBER 5A. ORIGINAL DATE FILED 6. CHECK THIS FINANCING STATEMENT CHANGE IS
S-319698 2/12/97 IF TO BE FILED IN THE REAL ESTATE RECORDS.
APPLICABLE [X] NO. OF ADDITIONAL SHEETS PRESENTED 1.
---
7. A. [ ] AMENDMENT - THE FINANCING STATEMENT IS AMENDED AS SET FORTH IN ITEM 8 BELOW. (INSTRUCTION B.7(A))
B. [ ] TOTAL ASSIGNMENT - ALL OF SECURED PARTY'S RIGHTS UNDER THE FINANCING STATEMENT HAVE BEEN ASSIGNED TO THE ASSIGNEE
WHOSE NAME AND ADDRESS ARE SET FORTH IN ITEM 8 BELOW. (INSTRUCTION B.7(B))
C. [ ] PARTIAL ASSIGNMENT - SOME OF SECURED PARTY'S RIGHTS HAVE BEEN ASSIGNED TO THE ASSIGNEE SHOWN IN ITEM 8 BELOW.
(INSTRUCTION B.7(C))
D. [ ] CONTINUATION - THE ORIGINAL STATEMENT IS STILL EFFECTIVE. (INSTRUCTION B.7(D))
E. [ ] TOTAL RELEASE - THE SECURED PARTY RELEASES ALL OF THEIR INTEREST IN THE COLLATERAL. (INSTRUCTION B.7(E))
F. [X] PARTIAL RELEASE - THE SECURED PARTY RELEASES THE FOLLOWING COLLATERAL DESCRIBED IN ITEM 8 BELOW. (INSTRUCTION B.7(F))
G. [ ] TERMINATION - THE SECURED PARTY(IES) OF RECORD NO LONGER CLAIMS A SECURITY INTEREST AND THE FINANCING STATEMENT IS
TERMINATED. (INSTRUCTION B.7(G))
8. The 5.119 acre tract being more particularly described on Exhibit "A" attached hereto.
9. SIGNATURE(S) THIS SPACE FOR USE OF FILING OFFICER
OF (DATE, TIME, NUMBER, FILING OFFICER)
DEBTOR(S)
SIGNATURE(S)
OF
SECURED PARTY(IES) /s/ [illegible]
10. Return copy to:
NAME Barry E. Putterman
ADDRESS 9 Greenway Plaza, Suite 2300
CITY Houston, Texas 77046
STATE
ZIP
STANDARD FORM - FORM UCC-3 (REV. 9/1/92) [C] 1992 OFFICE OF THE SECRETARY OF STATE OF TEXAS
(1) FILING OFFICER COPY - NUMERICAL
</TABLE>
<PAGE> 59
EXHIBIT "A"
Being a tract or parcel containing 5.119 acres (222,986 square feet) of land
situated in the D W C Harris Survey, Abstract Number 325, Harris County, Texas,
and being part of and out of that certain called 118,831 acres, described in
deed to the United States of America, as recorded in Volume 1297, Page 87, Deed
Records of Harris County, Texas, said 5.119 acre tract being more particularly
described as follows (all bearings and coordinates are based on the Texas State
Plane Coordinate System; South Central Zone; all distances and coordinates are
surface and may be converted to grid by multiplying by a combined scale factor
of 0.9998632):
COMMENCING at a 5/8-inch iron rod with plastic cap set marking the intersection
of the south right-of-way (ROW) line of Holcombe Boulevard with the west ROW
line of Almeda Road, and having surface coordinates of X=3,147,967.40,
Y=698,487.10, thence:
South 14 degrees 53'21" West, with said west ROW line, a distance of
206.00 feet to a 5/8-inch iron rod with plastic cap set marking the POINT
OF BEGINNING and northeast corner of the herein described tract;
THENCE, SOUTH 14 degrees 53'21" West, continuing with said west ROW line, a
distance of 330.70 feet to a 5/8-inch iron rod with plastic cap set marking the
southeast corner of the herein described tract;
THENCE, NORTH 75 degrees 06'39" West, a distance of 762.08 feet to a 5/8-inch
iron rod with plastic cap set marking the southwest corner of the herein
described tract;
THENCE, NORTH 41 degrees 44'27" East, a distance of 334.23 feet to a 5/8-inch
iron rod with plastic cap set marking the beginning of a tangent curve;
THENCE, NORTHEASTERLY, with a curve to the left having a radius of 760.00 feet,
a central angle of 03 degrees 35'59" an arc length of 47.75 feet, and a chord
which bears North 39 degrees 56'28" East, 47.74 feet to an "X" in concrete set
marking the most northwesterly corner of the herein described tract;
THENCE, SOUTHEASTERLY, with a non-tangent curve to the left having a radius of
87.50 feet, an arc length of 93.13 feet, a central angle of 60 degrees 59'01"
and a chord which bears South 58 degrees 25'28" East, 88.80 feet to a
5/8-inch iron rod with plastic cap set marking a point of tangency;
THENCE, SOUTH 88 degrees 54'58" East, a distance of 27.76 feet to a 5/8-inch
iron rod with plastic cap set marking the beginning of a tangent curve;
THENCE, EASTERLY, with a curve to the right having a radius of 281.50 feet, an
arc length of 67.83 feet, a central angle of 13 degrees 48'19" and a chord
which bears South 82 degrees 00'48" East, 67.66 feet to a 5/8-inch iron rod
with plastic cap set marking a point of tangency;
THENCE, SOUTH 75 degrees 06'39" East, a distance of 411.72 feet to the POINT OF
BEGINNING and containing 5.119 acres (222,986 square feet) of land (this
description is based on an ALTA/ACSM Land Title Survey and plat prepared by
Terra Surveying Company, Inc. Project Number 0043-9603-S).
<PAGE> 60
GROUND SUB-SUBLEASE AGREEMENT
1. PARTIES. This Ground Sub-Sublease Agreement (this "Lease") is entered into
effective the 23rd day of November, 1998, and is by and between TMX REALTY
CORPORATION, A DELAWARE CORPORATION (the "Lessor"), and INTROGEN THERAPEUTICS,
INC., A DELAWARE CORPORATION (the "Lessee").
2. PREMISES.
2.1 Lessor leases to Lessee, and Lessee leases from Lessor, to have and to
hold same for the term, at the rental and upon all of the conditions set forth
herein, real property generally described as approximately 2,619 acres near the
corner of Almeda Road and Holcombe Boulevard, in Houston, Harris County, Texas,
as more particularly described on Exhibit "A" attached hereto and incorporated
by reference, including all improvements to be constructed thereon and all
easements, rights-of-way and appurtenances thereto (the "Premises"). This Lease
is made and Lessee accepts leasehold title to the Premises subject to the
matters affecting title which are described on Exhibit "B" to the Ground
Sublease (the "Permitted Title Exceptions") and the following conditions and
limitations: the "Premises" is a portion of a larger tract of real property
which is subject to the terms and provisions of an Enhanced-Use Lease dated
August 25, 1993, as amended, (the "Enhanced-Use Lease") between Amelang
Partners, Inc. and the United States Department of Veterans Affairs (the
"Department"), and is also subject to the Amended and Restated Ground Sublease
Agreement between Amelang Partners, Inc., and Introgen Therapeutics, Inc., dated
September 24, 1998, (the "Ground Sublease"), which Ground Sublease was assigned
to Lessor by an Assignment and Assumption Agreement between Introgen
Therapeutics, Inc. and Lessor dated November 23, 1998, and the parties hereto
agree that nothing herein shall constitute a modification of, waiver of or
amendment to such terms, conditions, rights and responsibilities of the parties
to the Enhanced-Use Lease or the Ground Sublease. The Permitted Title Exceptions
expressly include an easement granted by Lessor to Aid Association for Lutherans
described in Section 7.3 hereof.
2.2 Lessor will construct two buildings on the Premises (collectively
referred to as the "Buildings"), as required by the Ground Sublease.
2.3 As between Lessor and Lessee, Lessor is solely responsible for the
diligent construction of any and all leasehold improvements to be made to the
Premises, including the Buildings. All exterior elevations, architectural
structures, colors and appearances of the Buildings will be completed
substantially in accordance with those shown in the plans and specifications
attached as Exhibits "C" and "D" to the Ground Sublease. Lessor will be solely
responsible for securing the consent of any and all governmental,
quasi-governmental, regulatory and other authorities, and such other permits,
consents and permissions as are required to complete the Buildings and any other
improvements to be constructed by Lessor on the Premises.
<PAGE> 61
3. TERM
3.1 Term. The term of this Lease (the "Term") will commence on the date
first written above (the "Commencement Date") and end September 30, 2026.
4. RENT
4.1 Lessee agrees to pay the Lessor monthly rental payments equal in
amount to the sum of (a) the amount due and owing by Lessor to Amelang Partners,
Inc. as monthly rent under the Ground Sublease, plus (b) the amount of each
monthly payment, including principal and interest, which becomes due and owing
each month by Lessor to Riverway Bank pursuant to that certain Promissory Note
in the original amount of $6,000,000 executed by Lessor herein and payable to
the order of Riverway Bank, which Promissory Note is secured by a Leasehold Deed
of Trust upon Lessor's interest in the Premises, plus (c) five (5%) percent of
the amounts stipulated in subparagraphs 4.1(a) and 4.1(b). The amount of rent
owing by Lessee to Lessor calculated in accordance with the foregoing sentence
for each month during the term of this Lease shall be due and owing on the first
day of said month.
4.2 Lease Year. The term "Lease Year" means, for the first Lease Year,
the period that commences on the Commencement Date and terminates on the last
day of the twelfth (12th) full calendar month after the Commencement Date. Each
subsequent Lease Year means a period of twelve (12) full calendar months
commencing on the anniversary of the day following the end of the first Lease
Year. The last Lease Year of the Term may be less than twelve (12) full calendar
months, depending upon the date of termination of the Lease.
4.3 Late Charges. If Lessee fails to either pay any installment of
Annual Basic Rent when due or make any other payment for which Lessee is
obligated under this Lease when due, Lessor will incur costs and expenses not
contemplated by this Lease, the exact amount of which are difficult and
impractical to ascertain, including without limitation, processing and
accounting charges and financing costs and late changes that may be imposed by
the terms of any incumbrance on or note secured by the Premises. Therefor, in
the event of any such late payment, Lessee will pay to Lessor a late charge
equal to five percent (5%) of the amount due or One Hundred Dollars ($100.00),
whichever is greater, to compensate Lessor for the extra costs incurred as a
result of such late payment. All such delinquent rent and other sums will bear
interest from due date until paid at fifteen percent (15%) per annum or the
maximum lawful rate, whichever is less.
5. INTENTIONALLY OMITTED
6. CONSTRUCTION
6.1 Lessor will construct the improvements described in the plans and
specifications described in Exhibits "C" and "D" to the Ground Sublease. Lessor
will pay for the cost of construction of the Buildings and other improvements,
including expenses of construction, building permits, plans and specifications,
plat plans, removing existing improvements from the Premises,
<PAGE> 62
bringing utilities to the Premises, soil preparation, pavement, removal of
underground obstructions, soil fill, compacting soil, and other work required to
complete the construction.
6.2 Lessor must obtain Lessee's approval of any change orders under the
contract to be entered into by Lessee to construct the improvements described in
the plans and specifications referred to in Exhibits "C" and "D" attached
hereto, but only to the extent that such change orders will materially alter the
exterior elevations, architectural design, colors, or other external appearance
of the Buildings. Such approval will not be unreasonably withheld. Lessor will
provide in its construction contract that the general contractor will construct
the improvements in a good and workmanlike manner and in accordance with such
plans and specifications.
7. USE AND RESTRICTIONS THEREON.
7.1 Use. Lessee will use the Premises only for purposes and uses
permitted under the VA Lease Agreement and the Ground Sublease. Lessee will not
use or occupy the Premises in violation of law or of the certificate of
occupancy issued for the Premises, and will, upon written notice of Lessor,
discontinue any use of the Premises which is declared by any governmental
authority having jurisdiction to be a violation of law or said certificate of
occupancy. Lessee will not use or allow the Premises to be used for any immoral
or unlawful purpose, nor will Lessee cause, maintain or permit any loud noise,
vibration or other nuisance in, on or about the Premises or otherwise disturb
the peaceful possession of adjoining or nearby property. Lessee will not keep
any incinerators, storage tanks or like equipment in the open or exposed to
public view or view from adjacent buildings.
7.2 Use Restrictions. In addition, except with the prior written
consent of Lessor (which consent may be withheld in Lessor's sole and absolute
discretion, and shall always be withheld until Lessor has obtained the prior
written consent of Lessor's third party lender), Lessee shall not use the
Premises in a manner inconsistent with the following restrictions, which shall
be covenants running with the Premises and be binding upon Lessee and its
successors and assigns during the term of this Sublease or any renewal or
extension hereof: (a) the exterior design of and development shall be compatible
with the exterior architectural design of the adjacent VA Medical Center and the
improvements situated on the Initial Development (as defined in Section 7.3
hereof); (b) the Buildings shall be situated on the Premises at least
twenty-five (25) feet away from F.M. 521 (Almeda Road) and at least ten (10)
feet away from the common boundary line with the Initial Development; (c)
adequate on-site parking shall be established, including, without limitation,
meeting the minimum requirements of the City of Houston Parking Ordinance as
they apply generally to all properties; (d) the Premises shall contain adequate
surface drainage so that no excessive drainage flows onto the surface of any
other portion of the property covered by the Enhanced Use Lease, and (e) no curb
cuts for vehicular traffic shall be located on any portion of the Premises
within twenty (20) feet of the northern boundary of the Premises. Within twelve
(12) days of a request from time to time by Lessor, Lessee shall deliver or
cause to be delivered to Lessor evidence reasonably satisfactory to Lessor that
Lessee is bound by and is then in compliance with the foregoing restrictions.
3
<PAGE> 63
7.3 Utility Easement. Lessee hereby acknowledges and agrees that
Amelang Partners, Inc. has granted to Aid Association for Lutherans ("AAL"),
and any successor to the interest of AAL, a non-exclusive easement on and Under
the Premises to provide water to the Initial Development (as hereinafter
defined) and to treat wastewater from the Initial Development through the lines
presently existing under the Premises, together with reasonable rights of
access to repair such lines. Amelang Partners, Inc., at its sole cost and
expense may, and hereby reserves the right, at Lessee's sole cost and expense,
to relocate such lines to other locations on the Premises. The "Initial
Development" is the 3,135 acre tract described in Deed of Trust and Security
Agreement executed by Lessor to Barry E. Putterman, Trustee, filed under
Clerk's File No. S319696, and recorded under Film Code Reference No.
###-##-#### in the Official Public Records of Real Property of Harris County,
Texas, as amended to date.
8. QUIET ENJOYMENT. Lessee, upon payment the Annual Basic Rent and performing
its other covenants and agreements herein set forth, will peaceably and quietly
have, hold and enjoy the Premises for the Term without hindrance or molestation,
subject to the Permitted Title Exceptions. Lessor shall perform its obligations
under the Enhanced Use Lease and the Ground Sublease and shall not agree to any
termination thereof during the term of this Lease. In the event Lessor should
default in timely payment of the rentals due under the Ground Sublease, Lessee
may, at its option and in addition to any other remedies available to Lessee,
make such payments on behalf of Lessor and receive credit for amounts so paid
against rent due or to become due hereunder.
9. CONDITION OF PREMISES.
9.1 Acceptance. By taking possession of the Premises, Lessee will be
deemed to have accepted the Premises as being in good and acceptable order,
condition, and repair, and in accordance with the requirements of this Lease.
LESSOR MAKES NO REPRESENTATION OR WARRANTY AS TO THE CONDITION OF THE PREMISES
OR AS TO THE USE OR OCCUPANCY WHICH MAY BE MADE THEREOF, EITHER EXPRESS OR
IMPLIED. LESSEE WAIVES ANY AND ALL IMPLIED WARRANTIES OTHER THAN THE WARRANTY OF
QUIET ENJOYMENT SET FORTH IN SECTION 8, INCLUDING, WITHOUT LIMITATION, ANY
IMPLIED WARRANTY OF MERCHANTABILITY, HABITABILITY OR SUITABILITY FOR ANY
INTENDED COMMERCIAL PURPOSES. LESSOR MAKES NO REPRESENTATIONS OR WARRANTIES AND
SHALL NOT IN ANY WAY BE LIABLE FOR ANY REPRESENTATIONS OR WARRANTIES, INCLUDING,
WITHOUT LIMITATION, (A) THE DIMENSIONS, SIZE OR ACREAGE OF THE PREMISES; (B) THE
CONDITION OF THE PREMISES OR ANY BUILDINGS, STRUCTURES OR IMPROVEMENTS THEREON
OR THE SUITABILITY OF THE PREMISES FOR HABITATION OR FOR LESSEE'S INTENDED USE
OR FOR ANY USE WHATSOEVER; (C) ANY APPLICABLE ENVIRONMENTAL, BUILDING, ZONING OR
FIRE LAWS OR REGULATIONS OR WITH RESPECT TO COMPLIANCE THEREWITH OR WITH RESPECT
TO THE EXISTENCE OF OR COMPLIANCE WITH ANY REQUIRED PERMITS, IF ANY, OR ANY
GOVERNMENTAL AGENCY OR OTHER
4
<PAGE> 64
THIRD PARTY; AND/OR (D) THE ABSENCE OF ANY HAZARDOUS OR TOXIC MATERIALS OR
SUBSTANCES. LESSEE ACKNOWLEDGES TO LESSOR THAT LESSEE HAS HAD THE OPPORTUNITY TO
FULLY INSPECT THE PREMISES, AND LESSEE ASSUMES THE RESPONSIBILITY AND RISKS OF
ALL DEFECTS AND CONDITIONS, INCLUDING SUCH DEFECTS AND CONDITIONS, IF ANY, THAT
CANNOT BE OBSERVED BY CASUAL INSPECTION.
9.2 Regulation. Except as otherwise provided in this Lease, Lessee
accepts the Premises in their condition existing as of the Commencement Date,
subject to all applicable zoning, municipal, county and state laws, ordinances
and regulations governing and regulating the use of the Premises, and Permitted
Title Exceptions.
9.3 Lease Termination. On the last day of the Term or on the sooner
termination of this Lease, Lessee will surrender the Premises to Lessor in good
condition and repair, normal wear and tear excepted.
9.4 Ownership of Buildings, Improvements and Fixtures. Any buildings,
improvements, additions, alterations and fixtures (except furniture and trade
fixtures) constructed, placed or maintained on any part of the Premises during
the Term are considered part of the real property of the Premises and must
remain on the Premises and become Lessor's property when this Lease terminates.
Lessee shall have the right to, from time to time, remodel, renovate and
reconfigure, the Buildings provided that: (1) Lessee shall comply with all
applicable laws and regulations pertaining to such activities including, without
limitation, building and zoning ordinances, and (2) Lessee shall not materially
alter the external appearance of the Buildings without Lessor's written consent,
which consent will not be unreasonably withheld.
9.5 Right to Remove Personal Property. Lessee may, at any time while it
occupies the Premises, remove any furniture, machinery, equipment or other trade
fixtures owned or placed by Lessee, its subtenants or licensee, in, under or on
the Premises, or acquired by the Lessee, whether before or during the Term.
Before this Lease terminates, Lessee must repair any damage to any buildings or
improvements on the Premises resulting from use that causes damage beyond normal
wear and tear, or from the removal of any such items. Any such items not removed
at or before the date this Lease terminates will become Lessor's property on
that date, except for those items which Lessor requires Lessee to remove, which
shall remain the property of Lessee.
10. NOTICES. Any notice, demand or communication required or permitted to be
given hereunder must be in writing and may be given by personal delivery or by
mail, and if given by mail, will be deemed given when deposited in the United
States mail, registered or certified mail, postage prepaid, addressed to Lessee
at the Premises, or to Lessor at 301 Congress Avenue, Suite 2025, Austin, Texas
78701. Either party may specify a different or additional address for notice
purposes by written notice to the other, except that Lessor may in any event use
the Premises as Lessee's sole address for notice purposes.
5
<PAGE> 65
11. HOLDING OVER. If Lessee holds over after the expiration or earlier
termination of the Term without the express written consent of Lessor, Lessee
will become a lessee at sufferance only, at a rental rate equal to one hundred
fifty percent (150%) of the Annual Basic Rent in effect upon the date of such
expiration (prorated on a daily basis) and otherwise subject to the terms,
covenants and conditions herein specified, so far as applicable. Acceptance by
Lessor of rent after such expiration or earlier termination will not result in a
renewal of this Lease.
12. MAINTENANCE, REPAIRS AND ALTERATIONS.
12.1 Lessee's Obligations. Lessee will, at Lessee's sole cost and
expense, keep in good order, condition and repair the Premises and every part
thereof, structural and nonstructural (whether or not such portion of the
Premises requiring repair or the means of repairing the same are reasonably or
readily accessible to Lessee, and whether or not the need for such repairs
occurs as a result of Lessee's use, any prior use, the elements, the age or
quality of construction of such portion of the Premises) including, without
limiting the generality of the foregoing, all plumbing, heating, ventilation,
air conditioning (Lessee will procure and maintain, at Lessee's expense, a
heating, ventilation and air conditioning system maintenance contract acceptable
to Lessor), electrical, lighting facilities and equipment within the Premises,
fixtures, walls (interior and exterior), foundations, ceiling, roofs (interior
and exterior), floors, windows, doors, plate glass and skylights located within
the Premises, and all landscaping (Lessee will procure and maintain, at Lessee's
expense, a landscaping maintenance contract acceptable to Lessor), driveways,
parking lots, fences and signs located on the Premises and sidewalks and
parkways adjacent to the Premises. Lessor acknowledges that Lessor will charge
no fees or expenses to Lessee for Lessor's overhead, services, or any other
item, except to the extent that may be necessary to cure Lessee's defaults under
express provisions of this Lease.
12.2 Lessor's Rights. If Lessee fails to perform Lessee's obligations
under this Article 12 or under any other article of this Lease, Lessor may, at
its option (but is not required to), in addition to any other remedies available
to Lessor, enter upon the Premises after ten (10) days prior written notice to
Lessee (except in the case of an emergency, in which case no notice is
required), perform such obligations on Lessee's behalf and put the same in good
order, condition and repair, and the cost thereof together with interest at the
rate described in paragraph 4.5 will become due and payable as additional rental
to Lessor.
12.3 Lessor's Obligations. Lessor has no obligation to either repair
and maintain the Premises or the fixtures or improvements thereon or any
equipment or other personal property therein, whether structural or
nonstructural (all of which obligations are Lessee's), or to pay any other cost
or expense whatsoever directly or indirectly relating to the construction,
maintenance, repairs, renovation, reconstruction, management, leasing, operation
or use of the Premises. Lessee waives the benefit of any statute now or
hereinafter in effect which would otherwise afford Lessee the right to make
repairs at Lessor's expense or to terminate this Lease because of Lessor's
failure to keep the Premises in good order, condition and repair.
6
<PAGE> 66
13. LIENS. Lessee will not permit any mechanic's, materialmen's or other lien to
be filed against the interest of the United States Department of Veterans
Affairs or Amelang Partners, Inc., or of Lessor in the Premises. Lessor has the
right at all reasonable times to post and keep posted on the Premises any
notices which it deems necessary for protection from such liens. If any such
liens are filed, Lessor may, without waiving its rights and remedies based on
such breach of this Lease by Lessee and without releasing Lessee from any of its
obligations, cause such liens to be released by any means it deems proper,
including payment in satisfaction of the claim giving rise to such lien. Lessee
will pay to Lessor at once, upon notice by Lessor, any sum paid by Lessor to
remove such liens, together with interest at the rate per annum described in
paragraph 4.5 above. Lessor acknowledges that Lessee will create liens and
security interests in Lessee's leasehold estate, and Lessor expressly consents
to such liens and security interests.
14. BANKRUPTCY. If Lessee files a petition in bankruptcy under any provision of
the Bankruptcy Code, or if Lessee is adjudicated a bankrupt in involuntary
bankruptcy proceedings and such adjudication has not been vacated within ninety
(90) days from the date of filing, or if a receiver or trustee is appointed of
Lessee's property and the order appointing such receiver or trustee is not set
aside or vacated within ninety (90) days after the entry thereof, or if Lessee
makes a general assignment for the benefit of creditors, or if Lessee's interest
in this Lease or a substantial portion of Lessee's assets located at the
Premises are seized or attached and such seizure or attachment is not discharged
within ninety (90) days, or if this Lease, by operation of law or otherwise,
passes to any person or persons other than Lessee, then in any such event Lessor
may terminate this Lease, if Lessor so elects, with or without notice of such
election and with or without entry or action by Lessor. In addition to any and
all rights and remedies allowed by law or equity, Lessor is, upon such
termination, entitled to recover damages in the amount provided in paragraph
20.2.
15. INDEMNIFICATION. Lessee will indemnify, defend and hold Lessor and its
officers, directors, agents and employees and the Department and its officers,
employees and agents, harmless from all claims, demands, costs and expenses
(including reasonable attorneys' fees) directly or indirectly arising from or in
connection with the Premises, including the construction contemplated thereon.
Lessee's use of the Premises or the conduct or its business or from any
activity, work or thing done, permitted or suffered by Lessee in or about the
Premises. Lessor will indemnify, hold harmless and defend Lessee and its
officers, directors, agents, representatives and employees harmless from all
claims, demands, costs and expenses (including reasonable attorney's fees)
directly or indirectly arising from or in connection with the grossly negligent,
willful or intentional acts or omissions of Lessor.
16. INSURANCE.
16.1 Liability Insurance. Lessee will, at Lessee's expense, obtain and
keep in force during the Term of this Lease, and any other period of occupancy
hereof, insurance with companies acceptable to Lessor and in the minimum amounts
of coverage, all as set forth in the insurance
7
<PAGE> 67
schedule below. Lessee will cause its insurer to name Lessor, Amelang Partners,
Inc., and the Department as additional insureds on said insurance policies. Said
insurance schedule is as follows:
(a) Worker's Compensation (including occupational disease)
and Employer's Liability Insurance coverages which supply to all employees in
accordance with the benefits afforded by the statutory Worker's Compensation
Acts applicable to the State, Territory or District of hire, supervision or
place of accident. Employer's liability limits must be at least $500,000.00,
each accident; $500,000.00, disease, each employee; $500,000.00, disease, policy
limit;
(b) Comprehensive General Liability Insurance will cover: the
Premises, operations, products and completed operations, independent
contractors, blanket contractual liability, and a cross liability provision, and
contain an endorsement that "the insurance provided the Lessor will be primary
and noncontributing with any other insurance available to the Lessor". The
limits of said insurance will not, however, be less than One Million Dollars
($1,000,000.00) per occurrence and Two Million Dollars ($2,000,000.00)
aggregate;
(c) Excess/Umbrella Liability Insurance will be required with
a Two Million Dollar ($2,000,000.00) per occurrence limit; and
(d) A policy or policies of insurance covering loss or damage
to the Premises in the amount of the full replacement value thereof, as the same
may exist from time to time, but in no event less than the total amount required
by lenders having liens on the Premises, against all perils included within the
classification of fire, extended coverage, vandalism, malicious mischief, flood,
earthquake and special extended perils ("All Risk" as such term is used in the
insurance industry).
(e) Lessee shall require Lessee's Contractor to obtain
insurance coverage of such types and amounts that are standard for construction
projects of this type and reasonably acceptable to Lessor, and all such policies
shall name Lessor and the United States Department of Veterans' Affairs as
additional insureds. Prior to commencement of construction, Lessee shall deliver
to Lessor appropriate certificates evidencing such insurance coverage.
16.2 Insurers. All insurance policies will be in a form reasonably
satisfactory to Lessor and issued by insurance companies holding a "General
Policyholders Rating" of at least A+XII, or such other rating as may be required
by a lender having a lien on the Premises as set forth in the most current issue
of "Best's Insurance Guide".
16.3 Exemption of Lessor from Liability. None of the Lessor nor Amelang
Partners, Inc. nor the Department will be liable for injury to Lessee's business
or any loss of income therefrom or for damage to the goods, wares, merchandise
or other property of Lessee, Lessee's employees, invitees, customers or any
other person in or about the Premises, nor will such parties be liable for
injury to the person of Lessee, Lessee's employees, agents or contractors,
whether such damage or injury is caused by or results from any event, natural or
otherwise, including, without limiting the generality of the foregoing, fire,
steam, electricity, gas, water or rain, or from the breakage, leakage,
8
<PAGE> 68
obstruction or other defects of pipes, sprinklers, wires, appliances, plumbing,
air conditioning or lighting fixtures.
16.4 Insurance Policies. All insurance policies obtained by Lessee
will:
(a) Provide for waiver of subrogation releasing Lessor and
Amelang Partners, Inc. from any claims for damage to any persons or property in
or about the Premises or any other insured risk and contain all endorsements for
Lessor's or Lessee's insurance company which may be necessary or required to
effect this waiver of subrogation (except that this Section 16.4(a) will not
apply to workers' compensation insurance policies);
(b) Provide that such policy may not be canceled, reduced in
coverage or amount, or amended in any manner for any reason whatsoever except
after at least thirty (30) days prior written notice to Lessor and Lessor's
lender, if any;
(c) Within ten (10) days after execution of this Lease, and
thereafter, upon demand at any time during the Term, Lessee will deliver to
Lessor copies of policies or certificates of insurance evidencing existence of
the amounts and forms of coverage and proof of payment satisfactory to Lessor;
and
(d) Lessee will, at least ten (10) days prior to the
expiration of the policies required hereunder, furnish Lessor with renewal
policies or certificates or "binders" thereof. Failure to do so may result in
Lessor ordering such insurance and charging the cost to Lessee as additional
rent, or may, in Lessor's sole discretion, constitute a default under this
Lease. If Lessor does obtain any insurance that is the responsibility of Lessee
under this Lease, Lessor will deliver to Lessee a written statement setting
forth the cost of such insurance and showing in reasonable detail the manner in
which it has been computed.
17. DAMAGE OR DESTRUCTION.
17.1 Definitions.
(a) "PREMISES PARTIAL DAMAGE" means damage or destruction to
the Premises to the extent that the cost of repair is less than twenty-five
percent (25%) of the then replacement cost of the Premises;
(b) "PREMISES BUILDING PARTIAL DAMAGE" means damage or
destruction to the building, if any, constructed on the Premises to the extent
that the cost of repair is less than twenty-five percent (25%) of the then
replacement cost of such building as a whole;
(c) "PREMISES TOTAL DESTRUCTION" means damage or destruction
to the Premises to the extent that the cost of repair is twenty-five percent
(25%) or more of the then replacement cost of the Premises;
9
<PAGE> 69
(d) "PREMISES BUILDING TOTAL DESTRUCTION" means damage or
destruction to the building, if any, constructed on the Premises to the extent
that the cost of repair is twenty-five percent (25%) or more of the then
replacement cost of such building as a whole; and
(e) "INSURED LOSS" means damage or destruction which was
caused by an event required to be covered by any of the insurance described in
Article 16 and for which the insurance proceeds of such policies are sufficient
to pay the full cost to repair, excluding any deductible amounts.
17.2 Partial Damage. Subject to the provisions of paragraphs 17.3 and
17.4, if there is damage which is an Insured Loss and which is classified as
either Premises Partial Damage or Premises Building Partial Damage, then Lessee
will, utilizing only insurance proceeds, repair such damage, as soon as
reasonably possible, and this Lease will continue in full force and effect
without any abatement of rent.
17.3 Total Destruction. If there is damage, whether or not an Insured
Loss (including destruction required by any authorized public authority), which
is classified as either Premises Total Destruction or Premises Building Total
Destruction, Lessee shall have the option to either: (a) terminate this Lease as
of the date of such total destruction, in which event all insurance proceeds
will be payable solely to Lessee, and Lessor waives any and all claims to such
insurance proceeds, or (b) repair the Premises as soon as reasonably possible,
in which event this Lease will continue in full force and effect.
17.4 Damage Near End of Term. If at any time during the last twelve
(12) months of the Term (including any renewals or extensions) of this Lease
there is damage, whether or not an Insured Loss, which is classified as either
Premises Partial Damage or Premises Building Partial Damage, either party may,
at its option, cancel and terminate this Lease as of the date of occurrence of
such damage by giving written notice to the other party of its election to do so
within thirty (30) days after the date of occurrence of such damage in which
event all insurance proceeds will be payable solely to Lessee, and Lessor waives
any and all claims to such insurance proceeds.
17.5 Demolition and Removal. If pursuant to Section 17.3 or 17.4 either
party elects to terminate the Lease, then Lessee shall demolish and remove the
damaged Buildings and improvements and restore the Premises as nearly as
reasonably possible to their original condition.
18. REAL PROPERTY TAXES
18.1 Payment of Taxes. Lessee will pay the real property tax, as
defined in paragraph 18.2, applicable to the Premises and all personal property
taxes during the Term. All payments will be made at least ten (10) days prior to
the due date. Lessee will, within five (5) days after payment, furnish Lessor
with satisfactory evidence that such real property taxes have been paid. If any
real property taxes paid by Lessee covers any period of time prior to or after
the expiration of the Term,
10
<PAGE> 70
Lessee's share of such real property taxes will be equitably prorated to cover
only the period of time within the tax year during which this Lease was in
effect, and Lessor will reimburse Lessee to the extent required. If Lessee fails
to pay any such real property taxes, Lessor has the right to pay the same, in
which case, Lessee will repay such amounts to Lessor on the due date of Lessee's
next rent installment, together with interest at the rate described in paragraph
4.4.
18.2 Definition of "Real Property Tax". The term "real property tax"
means all ad valorem taxes and assessments upon the real property constituting
the Premises, including city, county, and state and all other ad valorem taxes,
existing now or in the future.
19. UTILITIES AND MAINTENANCE. Lessee will pay for all water, gas, heat, light,
power, telephone, waste removal, sewer and other utilities and services supplied
to the Premises including the cost of bringing utilities to the Premises and any
tap or connection fees, together with any taxes thereon. Lessee will also pay
for all maintenance and repair of the entire premises, both interior and
exterior.
20. DEFAULTS AND REMEDIES.
20.1 The occurrence of any one or more of the following events
constitutes a default by Lessee:
(a) the abandonment of the Premises by Lessee. Abandonment is
defined to mean failure of Lessee to keep the Premises (including grounds and
landscaping) clean for ten (10) consecutive business days or longer, or for
fifteen (15) or more days in any month, after notice and opportunity to cure as
provided in Section 20.1(c) below;
(b) the failure by Lessee to make any payment of rent or
additional rent, or any other payment required to be made by Lessee hereunder,
as and when due if such failure continues for a period of ten (10) days after
Lessor gives notice of such failure; and
(c) the failure by Lessee to observe or perform any of the
express or implied covenants or provisions of this Lease to be observed or
performed by Lessee other than specified in Paragraph 20.1(b) above, and such
failure continues for thirty (30) days after written notice thereof from Lessor
to Lessee. Any such notice will be in lieu of and not in addition to any notice
required under applicable state statutes regarding unlawful detainer actions. If
the nature of Lessee's default is such that more than thirty (30) days are
reasonably required for its cure, then Lessee will not be deemed to be in
default if Lessee commences such cure within said thirty (30) day period and
thereafter diligently prosecutes such cure to completion, which completion must
occur within a reasonable period of time, considering the nature of the
particular default in question.
20.2 Upon the occurrence of any event of default, Lessor has the option
to pursue any one or more of the following remedies without any notice or
demand:
11
<PAGE> 71
(a) Without declaring the Lease terminated, Lessor may
terminate Lessee's right to possession of the Premises and enter upon and take
possession of the Premises by picking and changing locks if necessary, and lock
out, expel or remove Lessee and any other person who may be occupying all or any
part of the Premises without being liable for any claim for damages, and relet
the Premises on behalf of Lessee and receive the rent directly by reason of the
reletting. Lessee agrees to pay Lessor on demand any deficiency that may arise
by reason of any reletting of the Premises; further Lessee agrees to reimburse
Lessor for any expenditures made by it in order to relet the Premises,
including, but not limited to, brokerage fees, remodeling and repair costs; or
(b) Without declaring the Lease terminated, Lessor may
terminate Lessee's right to possession of the Premises and enter upon the
Premises by picking and changing locks if necessary without being liable for any
claim for damages, and do whatever Lessee is obligated to do under the terms of
this Lease. Lessee agrees to reimburse Lessor on demand for any expenses which
Lessor may incur in effecting compliance with Lessee's obligations under this
Lease. LESSEE AGREES THAT LESSOR WILL NOT BE LIABLE FOR ANY DAMAGES RESULTING TO
LESSEE FROM EFFECTING COMPLIANCE WITH LESSEE'S OBLIGATIONS UNDER THIS LEASE
CAUSED BY THE NEGLIGENCE OF LESSOR, OR OTHERWISE; or
(c) Lessor may terminate this Lease, in which event Lessee
will immediately surrender the Premises to Lessor, and if Lessee fails to
surrender the Premises, Lessor may, without prejudice to any other remedy which
it may have for possession or arrearages in rent, enter upon and take possession
of the Premises by picking or changing locks if necessary, and lock out, expel
or remove Lessee and any other person who may be occupying all or any part of
the Premises without being liable for any claim for damages. Lessee agrees to
pay on demand the amount of all loss and damages which Lessor may suffer by
reason of the termination of this Lease under this section, including, without
limitation, loss and damage due to failure of Lessee to maintain and repair the
Premises as required hereunder and/or due to the inability to relet the Premises
on satisfactory terms or otherwise. This Lease may be terminated by Lessor only
by mailing or delivering written notice of such termination to Lessee, and no
other act or omission of Lessor will be construed as a termination of this
Lease.
(d) If Lessor exercises its remedy to lock out Lessee in
accordance with any provision of this Lease, Lessee agrees that no notice is
required to be posted by Lessor on any door to the Premises (or elsewhere)
disclosing the reason for such action or any other information, and that Lessor
is not obligated to provide a key to the changed lock to Lessee unless Lessee
has:
(i) brought current all payments due to Lessor under
this Lease (unless Lessor has permanently repossessed the
Premises or terminated this Lease, in which event payment of
all past due amounts will not obligate Lessor to provide a
key);
12
<PAGE> 72
(ii) fully cured and remedied to Lessor's
satisfaction all other defaults of Lessee under this Lease
(unless Lessee has abandoned or vacated the Premises, in which
event Lessor will not be obligated to provide the new key to
Lessee under any circumstances); and
(iii) provided Lessor with an additional security
deposit and assurances satisfactory to Lessor that Lessee
intends to and is able to meet and comply with its future
obligations under this Lease, both monetary and nonmonetary.
THE PROVISIONS OF THIS PARAGRAPH 20.2(d) ARE INTENDED TO OVERRIDE AND SUPERSEDE
ANY CONFLICTING PROVISIONS OF THE TEXAS PROPERTY CODE OR ANY SIMILAR LAW IN ANY
OTHER STATE, AND ANY AMENDMENTS OR SUCCESSOR STATUTES THERETO, AND OF ANY OTHER
LAW, TO THE MAXIMUM EXTENT PERMITTED BY THE LAW.
21. CONDEMNATION. If more than either thirty percent (30%) of the floor area of
either Building located on the Premises or fifty percent (50%) of the land
area of the Premises which is not occupied by any building is taken by power of
eminent domain (herein called "condemnation"), Lessee may, at Lessee's option,
to be exercised in writing only within thirty (30) days after Lessor has given
Lessee written notice of such taking (or in absence of such notice, within
thirty (30) days after the condemning authority has taken possession), terminate
this Lease as of the date the condemning authority takes such possession. If
Lessee does not terminate this Lease in accordance with the foregoing, this
Lease and the obligation to pay rent will remain in full force and effect,
except that rent will be reduced to the same proportion that the floor area of
the Buildings on the Premises bears to the original floor area of the Buildings
on the Premises. No reduction of rent will occur if the only area taken is that
which does not have a building located thereon. Any award for the taking of all
or any part of the Premises under the power of eminent domain or any payment
made under threat of the exercise of such power will be first allocated to
Lessee up to the replacement cost of the Buildings and other improvements on the
Premises, and then equitably allocated to Lessor and Lessee in proportion to the
value of their respective leasehold interests, whether such award is made as
compensation for diminution in value of the leasehold or for the taking of the
fee, or as severance damages, or for the bonus value or market value of this
Lease, or for the value of any option to extend the term of this Lease or to
purchase the Premises; provided, however, that Lessee is entitled to any award
for loss of or damage to Lessee's trade fixtures and removable personal
property, provided such award is separately made. If this Lease is not
terminated by reason of such condemnation, Lessee, to the extent of severance
damages received by Lessee in connection with such condemnation, will repair any
damage to the Premises caused by such condemnation, except to the extent that
Lessor has been reimbursed therefor by the condemning authority. Lessee will pay
any amount in excess of such severance damages required to complete such repair.
13
<PAGE> 73
22. ESTOPPEL CERTIFICATE. Within ten (10) days following any written request
which Lessor or Lessee may make to the other from time to time, the requested
party will execute and deliver to the requesting party a statement certifying
(i) the date of commencement of this Lease; (ii) the fact that this Lease is
unmodified and in full force and effect (or, if there have been modifications
hereto, that this Lease is in full force and effect, and stating the date and
nature of such modifications); (iii) the date to which the rental and other sums
payable under this Lease have been paid; (iv) that there are no current defaults
under this Lease by either Lessor or Lessee, except as specified in the
statement; and (v) such other matters reasonably requested. Lessor and Lessee
intend that any statement delivered pursuant to this Paragraph 22 may be relied
upon by any underwriter, mortgagee, beneficiary, purchaser or prospective
purchaser of the Premises or any interest herein or any other party with whom
the requesting party may contemplate conducting a business transaction.
23. GOVERNING LAW. This Lease will be governed by and construed pursuant to the
laws of the state in which the Premises are located.
24. SUCCESSORS AND ASSIGNS. All of the covenants, conditions and provisions of
this Lease are binding upon and will inure to the benefit of the parties hereto
and their respective heirs, personal representatives, successors and assigns.
25. ATTORNEYS' FEES. If a party defaults in the performance of any of the terms,
covenants, agreements or conditions contained in this Lease, the other party
places in the hands of an attorney the enforcement of all or any part of the
defaulting party's obligations under this Lease, including the recovery of
possession of the Premises, the defaulting party shall pay the non-defaulting
party's costs of collection, including reasonable attorneys' fees, whether suit
is actually filed or not.
26. PERFORMANCE BY LESSEE. All covenants and agreements to be performed by
Lessee under any of the terms of this Lease will be performed by Lessee at
Lessee's sole cost and expense, and without any abatement of rent.
27. MORTGAGE PROTECTION. In the event of any default on the part of Lessee,
Lessor will give notice by registered or certified mail to any beneficiary of a
deed of trust or mortgage covering Lessee's interest in the Premises whose
address has been furnished to Lessor, and offer such beneficiary or mortgagee a
reasonable opportunity to cure the default, including time to obtain possession
of the Premises by power of sale or a judicial foreclosure, if such should prove
necessary to effect a cure, but in no event shall beneficiary or mortgagee be
given more than ninety (90) days to effect such cure.
28. WAIVER. The waiver by Lessor of any breach of any term, covenant or
condition herein contained will not be deemed to be a waiver of any subsequent
breach of the same or any other term, covenant or condition herein contained,
nor will any custom or practice established between the parties in the
administration of the terms hereof be deemed a waiver of or in any way affect
the right of Lessor to insist upon the performance by Lessee in strict
accordance with the terms of this Lease.
14
<PAGE> 74
The subsequent acceptance of rent by Lessor will not be deemed to be a waiver of
any preceding breach by Lessee of any term, covenant or condition of this Lease,
other than the failure of Lessee to pay the particular rent so accepted,
regardless of Lessor's knowledge of such preceding breach at the time of
acceptance of such rent.
29. TERMS AND HEADINGS. The words "Lessor" and "Lessee" as used herein include
the plural as well as the singular. Words used in any gender include other
genders.
30. TIME. Time is of the essence with respect to the performance of every
provision of this Lease.
31. PRIOR AGREEMENT; AMENDMENTS. This Lease contains all of the agreements of
the parties with respect to any matter covered or mentioned in this Lease, and
no prior agreement or understanding pertaining to any such matter will be
effective for any purpose. No provisions of this Lease may be amended or added
to except by an agreement in writing signed by the parties hereto or their
respective successors in interest.
32. SEPARABILITY. Any provision of this Lease which proves to be invalid, void
or illegal in no way affects, impairs or invalidates any other provision hereof,
and such other provision will remain in full force and effect.
33. AUTHORITY. Each person executing this Lease on behalf of a party represents
and warrants that he has been duly authorized by appropriate action of such
party. Lessee agrees to provide to Lessor such information or documents as
Lessor may reasonably request in connection with the foregoing.
34. LESSOR'S ACCESS . Lessor and Lessor's agents have the right upon reasonable
advance notice (except in case of an emergency, when no notice shall be
required) to enter the Premises at reasonable times for the purpose of
inspecting the same.
35. SIGNS. All signs will comply with rules and regulations established by
Lessor, as they may be modified from time to time. Lessee will not place any
signs or other display materials in or about the Premises, if such sign is
visible from the exterior of the Premises, without Lessor's prior written
consent, which will not be unreasonably withheld. Any signs or display materials
violating this provision may be removed and destroyed by Lessor without
compensation to Lessee.
36. PARTY'S LIABILITY. If a party recovers a money judgment against the other
party for acts or failures to act which in any way relate to this Lease, such
judgment will be satisfied only out of the right, title and interest of such
party in the Premises as the same may then be encumbered, and neither party nor
any person or entity comprising a party will be liable for any deficiency.
Neither Lessor nor Lessee shall have the right to levy execution against any
property of the other nor any person or entity comprising the other party other
than to levy against the other party's interest in the Premises.
15
<PAGE> 75
37. SUBORDINATION AND ATTORNMENT. This Lease will be subordinate to the
Enhanced-Use Lease, now on the real property of which the Premises are a part.
Notwithstanding such subordination, Lessee's right to quiet possession of the
Premises will not be disturbed if Lessee is not in default and so long as Lessee
pays the rent and observes and performs all of the provisions of this Lease,
unless this Lease is otherwise terminated pursuant to its terms. In the event of
any sale or assignment of the Premises, Lessee will attorn to the purchaser and
recognize such purchaser as Lessor hereunder.
38. MODIFICATION FOR LENDER. If in connection with obtaining construction,
interim or permanent financing for the Buildings or other improvements on the
Premises, the lender requests reasonable modifications to this Lease as a
condition to such financing, Lessor will not unreasonably withhold, delay or
defer its consent thereto, provided such modifications do not materially
increase the obligations of Lessor or materially adversely affect the leasehold
interest created or Lessor's rights hereunder.
39. ASSIGNMENT AND SUBLETTING. Lessee will not either voluntarily or by
operation of law assign, sell, encumber, pledge or otherwise transfer all or any
part of Lessee's leasehold estate hereunder or permit the Premises to be
occupied by anyone other than Lessee, or sublet the Premises or any portion
thereof without Lessor's prior written consent in each instance, which consent
may not be unreasonably withheld, except that Lessor's consent shall not be
required if: the assignee or sublessee in any such instance shall undertake in
writing to (1) assume this Lease and all of Lessee's duties, liabilities and
obligations hereunder, including, without limitation, the obligation to maintain
the Premises, including exterior grounds and landscaping, in a clean and
attractive manner, (2) refrain from altering the exterior elevation, appearance
or color of the Buildings without Lessor's written consent, (3) operate the
Buildings only for a use or uses consistent and compatible with, and which will
not detract from, the then existing uses of the buildings located on the
surrounding real property which is also subject to the VA Lease Agreement, as
determined by Lessee in its reasonable discretion. In the event that any
proposed sublessee or assignee demonstrates the financial ability, as determined
by Lessor in its reasonable discretion, to operate the Premises and to perform
Lessee's obligations in accordance with the terms and provisions of this Lease
(including payment of rent hereunder), and if such proposed sublessee or
assignee undertakes in writing to perform all such obligations remaining to be
performed after the effective date of the proposed sublease or assignment, then
Lessee shall upon the effective date of such assignment be released from all of
its obligations remaining to be performed under this Lease to be performed
after the effective date of the proposed sublease or assignment, in which event
Lessee shall have no further liability or obligation under this Lease except for
those obligations to be performed up to and through the effective date of such
sublease or assignment; otherwise no subletting or assignment, even with the
consent of Lessor, will relieve Lessee of its obligation to pay the rent and
perform all the other obligations to be performed by Lessee hereunder. In no
event will payment of rent be delayed or abated in connection with any proposal
to sublet or assign this Lease. Consent by Lessor to one or more assignments of
this Lease or to one or more sublettings of the Premises will not operate to
exhaust Lessor's rights under this Article. Lessee agrees to reimburse Lessor
for Lessor's reasonable costs and attorneys' fees incurred
16
<PAGE> 76
in conjunction with the processing and documentation of any such assignment,
subletting, transfer, change of ownership or hypothecation of this Lease. The
acceptance of rent by Lessor from any other person will not be deemed to be a
waiver by Lessor of any provision of this Lease or to be a consent to any
assignment or subletting where consent is necessary. Any other provision hereof
notwithstanding neither sale or transfer of Lessee's corporate stock, nor
purchase by a mortgagee or purchaser at a foreclosure sale shall require
Lessor's consent.
40. HOLD HARMLESS. THE DEPARTMENT AND LESSOR WILL NOT BE LIABLE TO LESSEE'S
EMPLOYEES, AGENTS, INVITEES, LICENSEES OR VISITORS OR TO ANY OTHER PERSON FOR
THE DEATH OF ANY PERSON, AN INJURY TO PERSON OR DAMAGE TO PROPERTY ON OR ABOUT
THE PREMISES LESSEE HEREBY WAIVING AND RELEASING LESSOR FROM ANY AND ALL CLAIMS
FOR DAMAGE, INJURY OR DEATH. LESSEE AGREES TO INDEMNIFY AND HOLD HARMLESS
LESSOR AND THE DEPARTMENT OF AND FROM ANY LOSS, ATTORNEYS' FEES, EXPENSES OR
CLAIMS ARISING OUT OF ANY DEATH, DAMAGE OR INJURY OCCURRING IN OR ON THE
PREMISES.
41. LIMITATION OF WARRANTIES. LESSOR AND LESSEE EXPRESSLY AGREE THAT THERE ARE
AND WILL BE NO IMPLIED WARRANTIES OF MERCHANTABILITY, HABITABILITY, FITNESS FOR
A PARTICULAR PURPOSE OR OF ANY OTHER KIND ARISING OUT OF THIS LEASE (EXCEPT FOR
THE WARRANTY OF QUIET ENJOYMENT SET FORTH IN SECTION 8), AND THERE ARE NO
WARRANTIES WHICH EXTEND BEYOND THOSE EXPRESSLY SET FORTH IN THIS LEASE.
42. LESSOR'S LIEN. Lessor hereby expressly and unconditionally waives any and
all liens which Lessor may have, whether contractual, statutory, constitutional,
or at common law, against any goods, wares, equipment, furniture, inventory,
accounts, fixtures, contract rights, and other property of Lessee now or
hereafter situated on the Premises. Lessor will, upon request by Lessee,
certify its waiver of all such liens to Lessee's lenders, vendors and others
with whom Lessee proposes to conduct business.
43. HAZARDOUS WASTE.
43.1 The term "Substances" as used in this Lease means pollutants,
contaminants, toxic or hazardous wastes, or any other substances, the use,
storage, handling, disposal, transportation or removal of which is regulated,
restricted, prohibited or penalized by any "Environmental Law". "Environmental
Law" means any federal, state or local law, ordinance or other statute of a
governmental or quasi-governmental authority relating to pollution or protection
of the environment and shall specifically include, but not be limited to, any
"hazardous substance" as that term is defined under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 and any
amendments or successors in function thereto. Lessee agrees that (i) no activity
will be conducted on the Premises that will use or produce any Substance, except
for such activities that are part of the
17
<PAGE> 77
ordinary course of Lessee's business activities (the "Permitted Activities")
provided said Permitted Activities are conducted in accordance with all
Environmental Laws; Lessee is responsible for obtaining any required permits
and paying any fees and providing any testing required by any governmental
agency; (ii) the Premises will not be used in any manner for the storage of any
Substances, except for the storage of such materials that are used or produced
in the ordinary course of Lessee's business (the "Permitted Materials") provided
such Permitted Materials are properly stored in a manner and location meeting
all Environmental Laws; Lessee is responsible for obtaining any required permits
and paying any fees and providing any testing required by any governmental
agency; (iii) no portion of the Premises will be used as a landfill or a dump;
(iv) Lessee will not install any underground tanks of any type; (v) Lessee will
not allow any surface or subsurface conditions to exist or come into existence
that constitute, or with the passage of time may constitute a public or private
nuisance; and (vi) Lessee will not permit any Substances to be brought onto the
Premises, except for the Permitted Materials or upon any written permission from
Lessor, and if so brought or found located thereon, the same will be immediately
removed, with proper disposal, and all required cleanup procedures will be
diligently undertaken pursuant to all Environmental Laws.
43.2 Lessor or Lessor's representative has the right, but not the
obligation to enter the Premises for the purpose of inspecting the storage, use
and disposal of Permitted Materials to ensure compliance with all Environmental
Laws. Should it be determined, in Lessor's reasonable opinion, that said
Permitted Materials are being improperly stored, used or disposed of, then
Lessee will immediately take such corrective action as required by Lessor.
Should Lessee fail to take such corrective action within twenty-four (24) hours,
Lessor will have the right to perform such work, and Lessee will promptly
reimburse Lessor for any and all costs associated with said work and compensate
Lessor for any other damages which Lessor may sustain which result, in whole or
in part, from the failure of Lessee to take such corrective action. If at any
time during or after the Term of this Lease the Premises are found to be
contaminated or subject to said conditions, Lessee will diligently institute
proper and thorough cleanup procedures at Lessee's sole cost, and Lessee agrees
to indemnify and hold Lessor harmless from all claims, demands, actions,
liabilities, costs, expenses, damages, finds, reimbursement, restitution,
response costs, clean up costs and obligations (including investigative
responses and attorneys' fees) of any nature arising from or as a result of the
use of the Premises by Lessee. The foregoing indemnification and the
responsibilities of Lessee will survive the termination or expiration of this
Lease.
43.3 On a date not more than thirty (30) days nor less than five
(5) days prior to the termination of the Term of this Lease, Lessee will, at its
sole cost and expense, cause to be prepared and delivered to Lessor a Phase I
Environmental Risk Analysis and Asbestos Survey of the Premises, prepared by a
firm reasonably acceptable to the Lessor, which analysis will describe and
evaluate the environmental condition of the Premises as of a date not more than
sixty (60) days prior to the termination of the Term of this Lease.
44. BROKERS. Lessee and Lessor each warrants that it has had no dealings with
any real estate broker or agent in connection with the negotiation of this
Lease. Lessee and Lessor each knows of no other real estate broker or agent who
is or might be entitled to a commission in connection with this Lease. If Lessee
or Lessor has dealt with any other person, firm or real estate broker with
respect
18
<PAGE> 78
to leasing the Premises, such party will be solely responsible for the payment
of any fee due said person or firm, and will hold the other party free and
harmless from any liability in respect thereto, including attorneys' fees and
costs.
45. TITLE, GROUND LEASE. Lessor's interest in the Premises is a leasehold estate
and interest existing or created under the Enhanced Use Lease. This Lease is
subject to all terms and provisions of the Enhanced Use Lease. Lessor warrants
that: (a) the Enhanced Use Lease remains in full force and effect and is valid
and binding upon the Lessor and Lessee thereunder, (b) Lessor is not in default
under the Enhanced Use Lease, and no circumstances exist which, with the mere
passage of time, will constitute a default on the Enhanced Use Lease, and (c)
there are no liens, encumbrances, easements, restrictions, reservations or other
matters affecting title except as listed on Exhibit "B" attached hereto.
46. LESSEE'S RIGHT TO TERMINATE. Lessee may at any time upon sixty (60) days
written notice to Lessor terminate this Lease provided that upon termination
Lessee will pay to Lessor in cash the entire net present value of all unpaid
monthly installments of rent contracted to be paid through the Term of this
Lease (not including any extensions which Lessee has not yet exercised),
discounted at an interest rate equal to the "Prime Rate" as set forth in the
"Money Rates" section of the Wall Street Journal on the nearest date preceding
the date of Lessee's notice to terminate, plus three percentage points. For
example, if the Prime Rate as published in the "Money Rate" section of the Wall
Street Journal on the date immediately preceding the date of Lessee's notice to
terminate is seven (7%) percent, then the discount rate for purposes of
determining net present value will be ten (10%) percent per annum.
47. SURVIVAL. Sections 9.3, 9.4, 9.5, 11, 15, 16.3, 17.5, 18.1, 25, 40, 41,
and 43 (HAZARDOUS WASTE) shall survive expiration or other termination of the
Lease.
48. INTENTIONALLY OMITTED.
49. THIRD PARTY BENEFICIARY. Lessee acknowledges and agrees that Sections 2.1,
16.3, 40 and 45 are expressly for the benefit of Lessor and the Department, and
may be enforced by Lessor and the Department.
SIGNED AND AGREED TO this the 23rd day of November, 1998, but effective
for all purposes as of the date reflected in Article 1 above.
LESSOR
TMX REALTY CORPORATION
By: /s/ JAMES W. ALBRECHT, JR.
------------------------------------------
James W. Albrecht, Jr.
Its Chief Financial Officer
-------------------------------------
19
<PAGE> 79
SIGNED AND AGREED TO this the 23rd day of November, 1998.
LESSEE:
INTROGEN THERAPEUTICS, INC.
By: /s/ JAMES W. ALBRECHT, JR.
-----------------------------------
Its Chief Financial Officer
--------------------------
Exhibit A--Subleased Premises (2.619 Acres)
Exhibit B--Omitted
Exhibit C--Plans
Exhibit D--Specifications
THE STATE OF TEXAS )
)
COUNTY OF HARRIS )
BEFORE ME, the undersigned authority, on this day personally appeared James
W. Albrecht, Jr., the Chief Financial Officer of TMX REALTY CORPORATION, a
Texas corporation, known to me to be the person whose name is subscribed to the
foregoing instrument, and acknowledged to me that he executed the same for the
purposes and consideration therein expressed, in the capacity therein stated and
as the act and deed of said corporation.
GIVEN under my hand and seal of office on this the 23rd day of November,
1998.
[SEAL] /s/ TIA M. STOVALL-ARTISST
-----------------------------------
Notary Public, State of Texas
THE STATE OF TEXAS )
)
COUNTY OF HARRIS )
BEFORE ME, the undersigned authority, on this day personally appeared James
W. Albrecht, Jr., the Chief Financial Officer of INTROGEN THERAPEUTICS, INC., a
Delaware corporation, known to me to be the person whose name is subscribed to
the foregoing instrument, and acknowledged to me that he executed the same for
the purposes and consideration therein expressed, in the capacity therein stated
and as the act and deed of said corporation.
GIVEN under my hand and seal of office on this the 23rd day of November,
1998.
[SEAL] /s/ TIA M. STOVALL-ARTISST
-----------------------------------
Notary Public, State of Texas
20
<PAGE> 80
LEASEHOLD DEED OF TRUST
THE STATE OF TEXAS )
) KNOW ALL MEN BY THESE PRESENTS:
COUNTY OF HARRIS )
THAT THE UNDERSIGNED, TMX REALTY CORPORATION, a Delaware corporation
(hereinafter called "Grantors", whether one or more), whose mailing address is
301 Congress Avenue, Suite 1850, Austin, Texas 78701, for and in consideration
of the debt hereinafter described, have granted, bargained, sold and conveyed,
and by these presents do grant, bargain, sell and convey, in trust, unto JOHN
E. PHILLIPS of Harris County, Texas, as Trustee, and unto his successors in the
trust hereby created and unto his or their assigns and the heirs of such
assigns (all of whom are hereinafter called "Trustee"), forever, all Grantor's
subleasehold estate in that certain tract of land (the "Real Property")
described in Exhibit "A" attached hereto and made a part hereof for all
purposes. To have and to hold unto Trustee and his substitutes, successors and
assigns said subleasehold estate in the property described in Exhibit "A"
which subleasehold estate was created pursuant to and by virtue of that certain
Amended and Restated Ground Sublease Agreement (the "Ground Sublease") dated
effective September 24, 1998, executed by INTROGEN THERAPEUTICS, INC., a
Delaware corporation, as Ground Sublessee (herein so called) and AMELANG
PARTNERS, INC., as Ground Sublessor (herein so called), together with any and
all buildings and improvements of every kind and character now or hereafter
situated or placed thereon (including, but not limited to, any and all
plumbing, electrical, heating, cooling and other fixtures, equipment and
appliances necessary for the use and operation of the buildings), and all
replacements of and additions thereto, and all of Grantors' rights with respect
to utility capacity, utilities and utility taps, wastewater capacity, proceeds
arising from any claim pursuant to any policy of title insurance covering the
leasehold in the Real Property and all and singular the rights, privileges,
hereditaments, appurtenances, rents, revenues, profits and income thereunto now
or hereafter incident or belonging thereto but excluding all of the Property
described on Exhibit "B" (collectively referred to herein as the "Mortgaged
Property"), forever and Grantors do hereby bind themselves, their heirs,
successors, assigns and legal representatives to warrant and forever defend,
all and singular the Mortgaged Property unto the Trustee, his substitutes or
successors and assigns forever, against the claim or claims of all persons to
claim the same or any part thereof. It is hereby agreed that to the extent
permitted by law all of the Mortgaged Property is to be deemed and held to be a
part of and affixed to the realty. By assignment and assumption of lease dated
November 23, 1998, Ground Sublessee assigned all of its rights, title and
interest as Ground Sublessee in and to the Ground Sublease to Grantor. Such
assignment and assumption was consented to by Amelang Partners, Inc. ("Ground
Sublessor") and Ground Lessor (as hereinafter defined) by instrument dated
November 23, 1998. The Ground Sublessor is the lessee pursuant to that certain
Enhanced-Use Lease dated August 25, 1993, as amended, (the "Enhanced-Use
Lease") wherein the United States Department of Veteran Affairs is the Ground
Lessor (herein so called).
This conveyance is made in trust, however, to secure and enforce the
payment of a promissory note (hereinafter referred to as "Note", whether one or
more) of even date herewith, executed by Grantors, payable to the order of
RIVERWAY BANK (hereinafter called "Beneficiary"), whose mailing address is Five
Riverway, Houston, Texas 77056, in the principal amount of $6,000,000, bearing
interest and being payable as provided therein.
This Deed of Trust shall secure, in addition to the Note, all funds
hereafter advanced by Beneficiary to or for the benefit of Grantors, as
contemplated by any covenant or provision herein contained or for any other
purpose, and all other indebtedness, of whatever kind or character, owing or
which may hereafter become owing by Grantors to Beneficiary, whether such
indebtedness is evidenced by note, open account, overdraft, endorsement, surety
agreement, guaranty or otherwise, it being contemplated that Grantors may
hereafter become indebted to Beneficiary in further sum or sums. All
indebtedness secured hereby shall be payable in Harris County, Texas, until
Beneficiary gives written notice to Grantors designating another place of
payment; and unless otherwise provided in the instrument evidencing said
indebtedness, shall bear interest at the maximum non-usurious rate allowed by
applicable law. If the Note or any other indebtedness secured hereby shall be
collected by legal proceedings or through a probate or bankruptcy court or
<PAGE> 81
shall be placed in the hands of an attorney for collection after maturity,
whether matured by the expiration of time or by the option given to the
Beneficiary to mature same, Grantors agree that all attorney's or collection
fees as provided for in the Note shall be paid by Grantors and shall be a part
of the indebtedness secured hereby. This Deed of Trust shall also secure all
renewals, rearrangements and extensions of any of the indebtedness secured
hereby.
Better to secure payment of said indebtedness, Grantors do hereby jointly
and severally covenant and agree with the Beneficiary and with the Trustee as
follows:
(1) Grantors will pay all of the indebtedness secured hereby, together
with the interest and other appurtenant charges thereon, when the same shall
become due in accordance with the terms of the Note or other instruments
evidencing said indebtedness or evidencing any renewal or extension of the same
or any part thereof.
(2) Grantors have, in their own right, good and marketable leasehold title
to the Mortgaged Property, which is free from encumbrance superior to the liens
and security interests hereby created unless otherwise herein provided and have
full right and authority to make this conveyance. Grantors shall at all times
comply with and perform all obligations under any applicable laws, statutes,
regulations, covenants, restrictions or ordinances relating to the Mortgaged
Property.
(3) Grantors will keep all buildings and other property covered by this
Deed of Trust insured against fire, lightning, tornado, hail, explosion and
against such other risks as Beneficiary may require, all in amounts approved by
Beneficiary. In addition to the above required insurance, Grantors will keep all
buildings and other property covered by this Deed of Trust and all personal
property covered hereby or covered by any other instrument securing payment of
the Note insured for the term of the Note with flood insurance in an amount at
least equal to the outstanding principal of the Note or to the maximum limit of
coverage made available with respect to the particular type of property under
the National Flood Insurance Act of 1968, whichever is less. Such flood
insurance is required hereunder only when such property is located or to be
located in an area that has been identified by the Secretary of Housing and
Development as an area having special flood hazards and in which flood insurance
has been made available under the National Flood Insurance Act of 1968. Such
insurance is to be written in form and in companies acceptable to the
Beneficiary with mortgagee clauses of standard form in favor of Beneficiary and
will deliver the policies of insurance to the Beneficiary promptly as issued;
and, in case the Grantors fail so to do, Beneficiary, at its option, may procure
such insurance at Grantors' expense. All renewal and substitute policies of
insurance shall be delivered at the office of Beneficiary, premiums paid, at
least ten (10) days before termination of policies theretofore delivered to
Beneficiary. All policies shall provide, by way of riders, endorsements or
otherwise, that the insurance provided thereby shall not be terminated, reduced
or otherwise limited, regardless of any breach of the representations and
agreements set forth therein and that the interest of the Beneficiary will not
be invalidated by any act or omission of the Grantors and that no such policy
shall be canceled, endorsed or amended to any extent unless the issuer thereof
shall have first given Beneficiary at least fifteen (15) days prior written
notice. In case Grantors fail to furnish such policies, Beneficiary, at its
option, may procure such insurance at Grantors' expense. In case of loss,
Beneficiary, at its option, shall be entitled to receive and retain the proceeds
of the insurance policies, applying the same toward payment of said indebtedness
as Beneficiary shall see fit or, at Beneficiary's option, Beneficiary may pay
the same over wholly or in part to Grantors for the repair of said building or
buildings or for the erection of a new building or buildings in their place or
for any other purpose satisfactory to Beneficiary, but Beneficiary shall not be
obligated to see to the proper application of any amount paid over to Grantors.
If Beneficiary elects to allow payment of all or part of such proceeds to
Grantors, such payments shall be disbursed on such terms and subject to such
conditions as Beneficiary may specify. Should Beneficiary elect to allow
Grantors to repair such damage, Grantors agree that, regardless of whether any
insurance proceeds payable to them are sufficient to pay the costs of repair and
restoration of the Mortgaged Property, Grantors shall promptly commence and
carry out the repair, replacement, restoration and rebuilding of any and all of
the Mortgaged Property damaged or destroyed by fire or other casualty so as to
return same, to the extent practicable, to its condition immediately prior to
such damage to or destruction thereof. Grantors shall not permit or carry on any
activities within or relating to the Mortgaged Property that is prohibited by
the terms of any insurance policy covering any part of the Mortgaged Property or
which permits cancellation of or increase in the premium payable for any
insurance policy covering any part of the Mortgaged Property. In the event of a
foreclosure of this Deed of Trust, the purchaser of the Mortgaged Property shall
succeed to all the rights of Grantors, including any right to unearned premiums,
in and to all policies of insurance assigned and
-2-
<PAGE> 82
delivered to Beneficiary pursuant to the provisions of this Deed of Trust.
Regardless of the types or amounts of insurance required and approved by
Beneficiary, Grantors shall assign and deliver to Beneficiary all policies of
insurance that insure against any loss or damage to the Mortgaged Property as
collateral and further security for the payment of the Note and any other
indebtedness secured hereby. Grantors shall also obtain and maintain in force
and effect such liability and other insurance policies and protection as
Beneficiary may from time to time specify.
(4) Grantors will pay all taxes and assessments against the Mortgaged
Property including, without limitation, all taxes in lieu of ad valorem taxes as
the same become due and payable. In the event of the passage after date of this
Deed of Trust of any law by the State of Texas deducting from the Mortgaged
Property for the purposes of taxation any lien thereon or changing in any way
the laws now in force for the taxation of mortgages, deeds of trust or
indebtedness secured thereby for the State or local purposes or the manner of
the operation of any such taxes so as to affect the interest of Beneficiary,
then, and in such event, Grantors shall bear and pay the full amount of such
taxes. If Grantors fail to pay any such taxes and assessments including, without
limitation, taxes in lieu of ad valorem taxes and taxes against this Deed of
Trust or said indebtedness secured hereby, Beneficiary may pay the same,
together with all costs and penalties thereon, at Grantors' expense; provided,
however, that if, for any reason, payment by Grantors of any such new or
additional taxes would be unlawful or if the payment thereof would constitute
usury or render said indebtedness wholly or partially usurious under any of the
terms or provisions of the Note or this Deed of Trust or otherwise, Beneficiary
may, at its option, declare the indebtedness secured hereby, with all accrued
interest thereon, to be immediately due and payable or Beneficiary may, at its
option, pay the amount or portion of such taxes as renders the indebtedness
secured hereby unlawful or usurious, in which event Grantors shall concurrently
therewith pay the remaining lawful and non-usurious portion or balance of said
taxes.
(5) All judgments, decrees, awards or payment for injury or damage to the
Mortgaged Property and all awards pursuant to proceeding for condemnation
thereof, including interest thereon, are hereby assigned in their entirety to
the Beneficiary, who may apply the same first to reimbursement of all costs and
expenses incurred by Beneficiary in connection with such condemnation proceeding
and the balance to the indebtedness secured hereby in such manner as it may
elect; and Beneficiary is hereby authorized, in the name of Grantors, to execute
and deliver valid acquittances for and to appeal from any such award, judgment
or decree. Grantors shall promptly notify Beneficiary of the institution or
threatened institution of any proceeding for the condemnation of any of the
Mortgaged Property. Beneficiary shall have the right to participate in any such
condemnation proceeding.
(6) If, while this trust is in force, the title of the Trustee to the
Mortgaged Property or any part thereof shall be endangered or shall be attached
directly or indirectly, Grantors hereby authorize the Beneficiary, at Grantors'
expense, to take all necessary and proper steps for the defense of said title,
including the employment of counsel, the prosecution or defense of litigation
and the compromise or discharge of claims made against said title.
(7) If, in pursuance of any covenant herein contained, the Beneficiary
shall pay out any money chargeable to Grantors or subject to reimbursement by
Grantors under the terms of said covenant or agreement, Grantors will repay to
the same to Beneficiary immediately at the place where the Note or other
indebtedness hereby secured is payable, together with interest thereon at the
maximum non-usurious rate allowed by applicable law from and after the date of
Beneficiary's making such payment. The sum of each such payment shall be added
to the Note and thereafter shall form a part of the same; and it shall be
secured by this Deed of Trust and by subrogation to all the rights of the
person, corporation or body politic receiving such payment.
(8) Grantors will keep every part of the Mortgaged Property in first-class
condition and presenting a first-class appearance, making promptly all repairs,
renewals and replacements necessary to such end and doing promptly all else
necessary to such end; but Grantors will discharge all claims for labor
performed and material furnished therefor; and will not suffer any lien of
mechanics or materialmen therefor to attach to any part of the Mortgaged
Property; and Grantors will guard every part of the Mortgaged Property from
removal, destruction and damage, and will not do or suffer to be done any act
whereby the value of any part of the Mortgaged Property may be lessened. No
building or other property now or hereafter covered by the lien of this Deed of
Trust shall be removed, demolished or materially altered or enlarged, nor shall
any new building be constructed, without the prior written consent of
Beneficiary. Grantors shall not initiate, join in or consent to any change in
any private restrictive covenants, zoning ordinances
-3-
<PAGE> 83
or other public or private restrictions limiting or defining the uses that may
be made of the Mortgaged Property or any part thereof without the prior written
consent of Beneficiary. Beneficiary and its agents or representatives shall have
access to the Mortgaged Property upon reasonable advance notice at all
reasonable times in order to inspect same and verify Grantors' compliance with
their duties and obligations under this Deed of Trust. Grantors shall not,
without prior written approval of Beneficiary, grant, convey or otherwise
create or permit to be created, any type of mortgage, lien, security interest
or other encumbrance on any of the Mortgaged Property, regardless whether same
shall be inferior and subordinate to the liens and security interests of
Beneficiary in and to the Mortgaged Property.
(9) Grants shall not sell, transfer, assign or mortgage all or any
portion of the Mortgaged Property (including any utilities, utility capacity,
utility taps or any rights or interests thereto), nor shall Grantors grant any
easement or right-of-way, except for utility easements granted in connection
with the development of the Mortgaged Property, or file of record any
restrictive covenants or restrictions whatsoever with respect to the Mortgaged
Property, not shall Grantors rent or lease any or all of the Mortgaged Property
for a period in excess of one (1) year without the express written consent of
the Beneficiary. The sale of any partnership interests (limited or general)
shall constitute a sale of the Mortgaged Property for the purposes hereof, with
the exception of the addition of limited partners not to exceed a ten percent
(10%) interest in Borrower.
(10) In the event the ownership of the Mortgaged Property or any part
thereof becomes vested in a person other than Grantors, Beneficiary may,
subject to the requirements for notice and opportunity to cure defaults set
forth in the Loan Agreement, deal with such successor or successors in interest
with reference to this Deed of Trust and to said indebtedness in the same
manner as with Grantors, without in any way vitiating or discharging Grantors'
liability hereunder or upon said indebtedness. No sale of the Mortgaged
Property and no forbearance on the part of Beneficiary and no extension of the
time for the payment of said indebtedness given by Beneficiary shall operate to
release, discharge, modify, change or affect, either in whole or in part, any
original liability of Grantors or the liability of the guarantors or sureties
of Grantors or of any other party liable for payment of said indebtedness or any
part thereof.
(11) In the event Grantors shall default in the prompt payment when due of
the indebtedness secured hereby or any part thereof, or fail to keep and
perform any of the covenants or agreements herein contained; or in the event
any of the representations or warranties made to Beneficiary or set forth
herein prove to be false; or in the event Grantors or any person liable for the
indebtedness secured hereby or any part thereof file a voluntary petition in
bankruptcy, make an assignment for the benefit of any creditor or are
adjudicated a bankrupt or insolvent or if the Mortgaged Property is placed under
control or in the custody of any court or if the Grantors abandon any of the
Mortgaged Property; then, subject to the requirements for notice and
opportunity to cure defaults set forth in the Loan Agreement, the Beneficiary,
at its option, may declare the entire indebtedness secured hereby immediately
due and payable, whereupon it shall be so due and payable.
(12) All of the covenants and agreements of Grantors set forth herein
shall survive the execution and delivery of this Deed of Trust and shall
continue in force until the indebtedness secured hereby is paid in full.
Accordingly, if Grantors shall perform faithfully each and all of the covenants
and agreements herein contained, then, and then only, this conveyance shall
become null and void and shall be released in due form at Grantors' expense;
otherwise, it shall remain in full force and effect. No release of this
conveyance or the lien thereof shall be valid unless executed by the
Beneficiary.
(13) If Grantors shall fail to perform faithfully any covenant or
agreement herein contained, Grantors hereby authorize and empower the Trustee
and each and all of his successors in this trust, at the request of the
Beneficiary, at any time when Grantors shall be in default in the performance of
any such covenant or agreement, to sell the Mortgaged Property at public vendue
to the highest bidder for cash at the door of the County Courthouse of the
county in Texas in which the Mortgaged Property or any part thereof is
situated, as herein described, between the hours of 10:00 a.m. and 4:00 p.m. of
the first Tuesday of any month, after advertising the time, place and terms of
said sale and the Mortgaged Property to be sold, by positing (or by having some
person or persons acting for him post) for at least twenty-one (21) days
preceding the date of the sale, written or printed notice of the proposed sale
at the Courthouse door of said county in which the sale is to be made and, if
the Mortgaged Property is in more than one county, one such notice of sale
shall be posted at the Courthouse door of each county in which part of the
Mortgaged Property is situated and
-4-
<PAGE> 84
the Mortgaged Property may be sold at the Courthouse door of any one of such
counties and the notice so posted shall designate in which county the Mortgaged
Property shall be sold; in addition to such posting of notice, the holder of the
indebtedness hereby secured shall, at least twenty-one (21) days preceding the
date of sale: (a) serve written or printed notice of the proposed sale by
certified mail on Grantors and on each other debtor, if any, obligated to pay
the indebtedness hereby secured according to records of such holder, and (b)
file a copy of the notice of proposed sale with the County Clerk or County
Clerks of the county or counties where such notice was posted. Service of such
notice shall be completed upon deposit of the notice, enclosed in a postpaid
wrapper, properly addressed to Grantors and such other debtors at their most
recent address or addresses as shown by the records of the holder of the
indebtedness hereby secured, in a post office or official depository under the
care and custody of the United States Postal Service. The affidavit of any
person having knowledge of the facts to the effect that such service was
completed shall be prima facie evidence of the fact of service. The provisions
hereof with respect to posting and giving notices of sale are intended to
comply with the provisions of Section 51.002 of the Property Code of the State
of Texas, and, in the event the requirement for any notice under such Section
51.002 shall be eliminated or the prescribed manner of giving same modified by
future amendment to or adoption of any statute superseding such Section 51.002,
the requirement for such particular notice shall be deemed stricken from or
modified in this instrument in conformity with such amendment or superseding
statute, effective as of the effective date of same. The manner herein
prescribed for serving or giving any notice, other than that to be posted or
caused to be posted by the Trustee, shall not be deemed exclusive, but such
notice or notices may be given in any other manner which may be permitted by
applicable law. Grantors agree that no notice of any sale other than as set out
in this paragraph need be given by Trustee, Beneficiary or any other person.
Grantors hereby designate as their address for the purposes of such notice the
address set out in the first paragraph hereof and agree that such address shall
be changed only by deposing notice of such change, enclosed in a postpaid
wrapper, in a post office or official depository under the care and custody of
the United States Postal Service, certified mail, postage prepaid, return
receipt requested, addressed to Beneficiary at the address for Beneficiary set
out herein (or to such other address as Beneficiary may have designated by
notice given as above provided to Grantors and such other debtors), any such
notice of change of address of Grantors or other debtors shall be effective
upon receipt by Beneficiary. Any change of address of Beneficiary shall be
effective three (3) business days after deposit thereof in the above described
manner in a post office or official depository under the care and custody of
the United Sates Postal Service. Grantors do hereby authorize and empower
Trustee and each and all of his successors in this trust to sell the Mortgaged
Property or any interest or estate in the Mortgaged Property, together or in
lots or parcels, as such Trustee shall deem expedient and to execute and
deliver to the purchaser or purchasers of the Mortgaged Property good and
sufficient deed or deeds of conveyance thereof and bills of sale with covenants
of general warranty binding on Grantors and Grantors' respective heirs, legal
representatives, successors and assigns. Trustee making such sale shall receive
the proceeds thereof and shall apply the same as follows: (a) he shall pay the
reasonable expense of executing this trust, (b) after paying such expenses, he
shall pay, so far as may be possible, the indebtedness hereby secured,
discharging first that portion of said indebtedness arising under the covenants
or agreements herein contained and then to sums remaining unpaid pursuant to
the Note; (c) then, he shall pay, so far as may be possible, the indebtedness
secured by any liens equal or superior to the lien created hereby; (d) then he
shall pay, so far as may be possible, to indebtedness owed to the Permanent
Lender; and (e) he shall pay the residue, if any, to Grantors, their respective
heirs, legal representatives, successors or assigns. Payment of the purchase
price to the Trustee shall satisfy the obligation of the purchaser at such sale
therefor and he shall not be bound to look after the application thereof.
(14) If the herein-named Trustee shall die or become disqualified from
acting in the execution of this trust or shall fail or refuse to execute the
same when requested by Beneficiary so to do or if, for any reason, Beneficiary
shall prefer to appoint a substitute trustee to act instead of the herein-named
Trustee, Beneficiary shall have full power to appoint, by written instrument, a
substitute trustee and, if necessary, several substitute trustees in
succession, who shall succeed to all the estate, rights, powers and duties of
Trustee named herein and no notice of such appointment need be given to
Grantors or to any other person or filed for record in any public office. Such
appointment may be executed by any authorized agent of the Beneficiary; and
such appointment executed in its behalf by any officer of such entity shall be
conclusively presumed to be executed with authority and shall be valid and
sufficient without proof of any action by the board of directors or any
superior officer of such entity. Grantors severally hereby ratify and confirm
any and all acts that Trustee, or his successor or successors in this trust
shall do lawfully by virtue hereof. Grantors hereby agree, on behalf of
Grantors and of Grantors' heirs, legal representatives, successors and
assigns, that the recitals contained in any deed or deeds or other instrument
executed in due form by any Trustee or substitute trustee acting
-5-
<PAGE> 85
under the provisions of this Deed of Trust shall be prima facie
evidence of the facts recited and that it shall not be necessary to
prove in any court, otherwise than by such recitals, the existence of
the facts essential to authorize the execution and delivery of such
deed or deeds or other instrument and the passing of title thereby
and all prerequisites and requirements of any sale or sales shall be
conclusively presumed to have been performed and all persons
subsequently dealing with the Mortgaged Property purported to be
conveyed by such deed or deeds or other instrument including,
without limitation, the purchaser or purchasers thereof, shall be
fully protected in relying upon the truthfulness of such recitals.
(15) The purchaser at any trustee's or foreclosure sale
hereunder, may disaffirm any easement granted or rental or lease
contract made in violation of any provision of this Deed of Trust
and may take immediate possession of the Mortgaged Property free
from and despite the terms of such grant of easement and rental or
lease contract.
(16) The Beneficiary may bid and become the purchaser of the
Mortgaged Property at any trustee's or foreclosure sale hereunder.
(17) Subsequent to default hereunder or default pursuant to the
Note or any other instrument securing payment thereof, Grantors
hereby authorize the Beneficiary, if and whenever it shall desire, to
demand and receive, in Grantors' right, all sums that may become due
under any and each oil, gas, mineral or other lease, rental contract
and easement contract pertaining to any portion of the Mortgaged
Property and, when received, to apply the same on the indebtedness
secured hereby. No demand for and no receipt or application of any
such sum shall be deemed to minimize, subordinate or affect in any
way the liens and rights hereunder of the Beneficiary or any rights
of a purchaser of the Mortgaged Property as trustee's or foreclosure
sale hereunder as against the person from whom such sum was demanded
or received or his executors, administrators or assigns or anyone
claiming under such lease, rental or easement contract.
(18) Any part of the Mortgaged Property may be released by the
Beneficiary without affecting the lien hereof against the remainder.
The lien and rights hereby granted shall not affect or be affected
by any other security taken for the same indebtedness or any part
thereof. The taking of additional security or the extension, renewal
or rearrangement of the same indebtedness or any part thereof, shall
at no time release or impair the lien and rights granted hereby or
affect the liability of any endorser or surety or improve the right
of any junior lienholder; and this Deed of Trust, as well as any
instrument given to secure any renewal or extension of the
indebtedness secured hereby or any part thereof, shall be and remain
a first and prior lien on all of the Mortgaged Property not
expressly released until the said indebtedness is completely paid.
(19) The invalidity or unenforceability in particular
circumstances of any provision of this Deed of Trust shall not extend
beyond such provision or such circumstances and no other provision of
this Deed of Trust shall be affected thereby. It is the intention of
the parties hereto to comply with applicable usury laws; accordingly,
it is agreed that, notwithstanding any provisions to the contrary in
the Note, or any instrument evidencing any indebtedness secured
hereby, in this Deed of Trust or in any of the documents or
instruments securing payment of said indebtedness or otherwise
relating thereto, in no event shall the Note or such documents
require the payment or permit the collection of interest in excess of
the maximum amount permitted by such laws. If any such excess of
interest is contracted for, charged or received under the Note or any
instrument evidencing said indebtedness under this Deed of Trust or
under the terms of any of the other documents securing payment of
said indebtedness or otherwise relating thereto or in the event the
maturity of any of said indebtedness is accelerated in whole or in
part or in the event that all or part of the principal or interest of
said indebtedness shall be prepaid so that, under any of such
circumstances, the amount of interest contracted for, charged or
received under the Note or any instruments evidencing said
indebtedness under this Deed of Trust or under any of the instruments
securing payment of said indebtedness or otherwise relating thereto
on the amount of principal actually outstanding from time to time
under the Note and other instruments evidencing said indebtedness
shall exceed the maximum amount of interest permitted by applicable
usury laws, then, in any such event, (a) the provisions of this
paragraph shall govern and control, (b) neither Grantors nor any
other person or entity now or hereafter liable for the payment of the
Note or any instrument evidencing said indebtedness shall be
obligated to pay the amount of such interest to the extent that it is
in excess of the maximum amount of interest permitted by applicable
usury laws, (c) any such excess that may have been collected shall be
either applied as a credit against the then unpaid principal
-6-
<PAGE> 86
pal amount of the Note or refunded to Grantors, at the holder's option, and (d)
the effective rate of interest shall be automatically reduced to the maximum
non-usurious rate allowed under applicable usury laws as now or hereafter
construed by the courts having jurisdiction thereof. It is further agreed that,
without limitation of the foregoing, all calculations of the rate of interest
contracted for, charged or received under the Note or any instrument evidencing
said indebtedness under this Deed of Trust or under such other documents that
are made for the purpose of determining whether such rate exceeds the maximum
non-usurious applicable rate, shall be made, to the extent permitted, by
amortizing, prorating, allocating and spreading in equal parts during the
period of the full stated term of the loans evidenced by the Note or the
instruments evidencing said indebtedness, all interest at any time contracted
for, charged or received from Grantors or otherwise by the holder or holders
hereof in connection with such loans.
(20) None of the Grantors, their heirs, executors, administrators or
assigns, ever shall have or assert any right under any statute or rule of law
pertaining to the marshaling of assets, the exemption of homestead, the
administration of estates of decedents or other matter whatever to defeat,
reduce or affect the right of the Beneficiary under the terms of this Deed of
Trust to a sale of the Mortgaged Property for the collection of said
indebtedness (without any prior or different resort for collection) or the
right of Beneficiary under the terms of this Deed of Trust to the payment of
such indebtedness out of the proceeds of sale of the Mortgaged Property in
preference to every other person and claimant whatever (only reasonable
expenses as aforesaid being first deducted).
(21) It is agreed that if default be made in the payment of any
installment of the Note, after notice and opportunity to cure as provided in
the Loan Agreement, the holder of the indebtedness or any part thereof on which
the payment is delinquent shall have the option to proceed with foreclosure in
satisfaction of such item, either through the courts or by directing the
Trustee or his successors in trust to proceed as if under a full foreclosure,
conducting the sale as herein provided and without declaring the whole debt due
and provided that, if sale is made because of default of an installment or a
part of an installment, such sale may be made subject to the unmatured part of
the Note and debt secured by this Deed of Trust; and it is agreed that such
sale, if so made, shall not in any manner affect the unmatured part of the debt
secured by this Deed of Trust but, as to such unmatured part of this Deed of
Trust, shall remain in full force and effect just as though no sale had been
made under the provisions of this paragraph. And it is further agreed that
several sales may be made hereunder without exhausting the right of sale for
any unmatured part of the debt secured hereby, it being the purpose to provide
for a foreclosure and sale of the security for any matured portion of the debt
secured hereby without exhausting the power to foreclose and to sell the
security for any other part of the debt secured hereby, whether matured at the
time or subsequently maturing. It is agreed that an assignee holding any
installment or installments or part of any installment of the Note secured
hereby shall have the same powers as are hereby conferred on the holder of the
indebtedness to proceed with foreclosure on a matured installment or
installments and also to request the Trustee or successors in trust to sell the
Mortgaged Property; but if an assignee forecloses or causes a sale to be made
to satisfy any installment, part of an installment or installments, then such
foreclosure or sale shall be made subject to the unmatured part of the Note and
the debt secured hereby owned by the holder of the indebtedness at the time or
assigned subsequent to the assignment of the item to satisfy which the sale is
being made.
(22) It is expressly agreed that (a) no waiver of any default on the part
of Grantors or breach of any of the provisions of this Deed of Trust shall be
considered a waiver of any other or subsequent default or breach and no delay
or omission in exercising or enforcing the rights and powers herein granted
shall be construed as a waiver of such rights and powers and, likewise, no
exercise or enforcement of any right or powers hereunder shall be held to
exhaust such rights and powers and every such right and power may be exercised
from time to time; (b) any failure by Beneficiary to insist upon the strict
performance by Grantors of any of the terms and provisions hereof shall not be
deemed to be a waiver of any of the terms and provisions hereof and
Beneficiary, notwithstanding any such failure, shall have the right thereafter
to insist upon the strict performance by Grantors of any and all of the terms
and provisions of this Deed of Trust; (c) neither Grantors nor any other person
now or hereafter obligated for the payment of the whole or any part of said
indebtedness shall be relieved of such obligation by reason of the failure of
Beneficiary or Trustee to comply with any request of Grantors or of any other
person so obligated to take action to foreclose this Deed of Trust or otherwise
enforce any of the provisions of this Deed of Trust or of any obligations
secured by this Deed of Trust or by reason of the release, regardless of
consideration, of the whole or any part of the security held for said
indebtedness or by reason of the subordination in whole or in part by
Beneficiary of the lien, security interest or rights evidenced hereby or by
reason of any agreement or stipulation which any subsequent owner or owners
of the Mortgaged Property extending
-7-
<PAGE> 87
the time of payment or modifying the terms of said indebtedness or this Deed of
Trust without first having obtained the consent of Grantors or such other
person and, in the latter event, Grantors and all such other persons shall
continue liable to make such payments according to the terms of any such
agreement of extension or modification unless expressly released and discharged
in writing by Beneficiary; (d) regardless of consideration and without the
necessity for any notice to or consent by the holder of any subordinate lien
or security interest on the Mortgage Property, Beneficiary may release the
obligation of anyone at any time liable for any of said indebtedness or any
part of the security held for said indebtedness and may extend the time of
payment or otherwise modify the terms of said indebtedness and/or this Deed of
Trust without, as to the security or the remainder thereof, in anywise impairing
or affecting the lien or security interest of this Deed of Trust or the
priority of such lien or security interest as security for the payment of said
indebtedness as it may be so extended or modified over any subordinate lien or
security interest; (e) the holder of any subordinate lien or security interest
shall have no right to terminate any lease affecting the Mortgaged Property,
whether or not such lease be subordinate to this Deed of Trust; and (f)
Beneficiary may resort, for the payment of said indebtedness, to any security
therefor held by Beneficiary in such order and manner as Beneficiary may elect.
(23) In the event that there be a trustee's sale hereunder and if, at the
time of such sale, Grantors, their heirs, executors, administrators or assigns,
be occupying the premises so sold, each and all shall immediately become the
tenant of the purchaser at such sale, which tenancy shall be a tenancy from
day to day, terminable at the will of either tenant or landlord, at a
reasonable rental per day, based upon the value of the Mortgaged Property, such
rental to be due daily to the purchaser. An action of forcible detainer shall
lie if the tenant holds over after a demand in writing for possession of the
Mortgaged Property; and this Deed of Trust and the trustee's deed shall
constitute a lease and agreement under which the tenant's possession, each and
all, arose and continued.
(24) In the event any portion of said indebtedness contemplated by the
loan documents is not, for any reason whatsoever, secured by this Deed of Trust
on the Mortgaged Property, the full amount of all payments made on said
indebtedness shall first be applied to such unsecured portion of said
indebtedness until the same has been fully paid.
(25) It is agreed that the lien hereby created shall take precedence over
and be a prior lien to any other lien of any character, whether vendor's
materialmen's or mechanics' lien hereafter created on the Mortgaged Property
and, in the event the proceeds of the Note are used to pay off and satisfy any
liens heretofore existing on the Mortgaged Property, then Beneficiary is and
shall be subrogated to all of the rights, liens and remedies of the holders of
the indebtedness so paid.
(26) The covenants herein contained shall bind and the benefits and
advantages shall inure to the respective heirs, executors, administrators,
successors and assigns of the parties hereto and to any substitute trustee.
Whenever used, the singular number shall include the plural, the plural the
singular, and the use of any gender shall be applicable to all genders. The term
"Beneficiary" shall also include any lawful owner, holder or pledgee of any
indebtedness secured hereby.
(27) Without limiting any of the provisions of this Deed of Trust, the
Grantors, as Debtors and referred to in this Paragraph as "Debtors", expressly:
(a) Grant unto the holder of all indebtedness described herein, as
Secured Party and referred to in this Paragraph as "Secured Party", a
security interest in all of the Mortgaged Property hereinabove described
(including both now and hereafter existing) to the full extent that same
may be subject to Chapter 9 of the Texas Business and Commerce Code as now
adopted and existing and as it may hereinafter be amended or succeeded
(hereinafter called "Uniform Commercial Code").
(b) Agree that, in addition to any other remedies granted in this
instrument to the Secured Party or Trustee, the Secured Party may, in the
event of any default, proceed under the Uniform Commercial Code as to all
or any part of the personal property (tangible or intangible) and fixtures
included in the Mortgaged Property (such portion of the properties being
herein referred to as "Collateral") and shall have and may exercise, with
respect to the Collateral, all the rights,
-8-
<PAGE> 88
remedies, and powers of a Secured Party under the Uniform Commercial Code
including, without limitation, the right and power to sell at public or private
sale or sales or otherwise dispose of, lease or utilize the Collateral and any
part or parts thereof in any manner authorized or permitted under said Uniform
Commercial Code after default by a debtor and to apply the proceeds thereof
toward payment of any costs and expenses and attorney's fees and legal expenses
thereby incurred by Secured Party and toward payment of the Debtors' obligations
including the Note and all other indebtedness described in this instrument in
such order or manner as Secured Party may elect. Among the rights of Secured
Party in the event of default and, without limitation, Secured Party shall have
the right to take possession of the Collateral and to enter upon any premises
where same may be situated for such purpose without being deemed guilty of
trespass and without liability for damages thereby occasioned and to take any
action deemed necessary or appropriate or desirable by Secured Party, at its
option and in its discretion, to repair, refurbish or otherwise prepare the
Collateral for sale, lease or other use or disposition as herein authorized. To
the extent permitted by law, Debtors expressly waive any notice of sale or other
disposition of the Collateral and any other rights or remedies of a debtor or
formalities prescribed by law relative to sale or disposition of the Collateral
or exercise of any other right or remedy of Secured Party existing after default
hereunder; and to the extent any such notice is required and cannot be waived,
Debtors agree that if such notice is mailed, postage prepaid, to the Debtors at
the address shown herein at least ten (10) days before the time of the sale or
disposition, such notice shall be deemed reasonable and shall fully satisfy any
requirement for giving of said notice.
(c) Grant to the Secured Party, after default hereunder, the right, at its
option, to transfer at any time to itself or to its nominee the Collateral or
any part thereof and to receive the monies, income, proceeds or benefits
attributable or accruing thereto and to hold the same as security for the
Debtors' obligations or to apply it on the principal and interest or other
amounts owing on any of the Debtors' obligations, whether or not then due, in
such order or manner as the Secured Party may elect. All rights or marshaling
of assets of Debtors, including any such right with respect to the Collateral,
are hereby waived.
(d) Covenant, stipulate and agree that all recitals in any instrument of
assignment or any other instrument executed by Secured Party incident to sale,
transfer, assignment, lease or other disposition or utilization of the
Collateral or any part thereof hereunder shall be full proof of the matters
stated therein and no other proof shall be requisite to establish full legal
propriety of the sale or other action taken by Secured Party or of any fact,
condition or thing incident thereto and all pre-requisites of such sale or
other action or of any fact, condition or thing incident thereto shall be
presumed conclusively to have been performed or to have occurred.
(e) Covenant and agree that Secured Party may require Debtors, after
default hereunder, to assemble the Collateral and make it available to Secured
Party at a place to be designated by Secured Party that is reasonably
convenient to both parties. All expenses of retaking, holding, preparing for
sale, lease or other use or disposition, selling, leasing or otherwise using or
disposing of the Collateral and the like which are incurred or paid by Secured
Party as authorized or permitted hereunder, including also all attorney's fees,
legal expenses and costs, shall be added to the Debtors' obligations and the
Debtors shall be liable therefor.
(f) Covenant and agree that the Secured Party may, at its election, at any
time after delivery of this instrument, sign one or more copies of this
instrument in order that such copies may be used as a Financing Statement under
the Uniform Commercial Code. Such signature by the Secured Party may be placed
between the last sentence of the instrument and the Debtors' acknowledgment or
may follow the Debtors' acknowledgment. The Secured Party's signature need not
be acknowledged and is not necessary to the effectiveness of this instrument as
a deed of trust, mortgage, assignment, pledge or security agreement.
-9-
<PAGE> 89
Except for the security interest granted hereby in the Collateral, Debtors
are the owners and holders of the Collateral free of any adverse claim,
security interest or encumbrance and Debtors will defend the Collateral against
all claims and demands of any person at any time claiming the same or any
interest therein. Debtors have not heretofore signed any financing statement
covering the Collateral and no such financing statement signed by Debtors is
now on file in any public office except those statements true and correct
copies of which have been delivered to the Secured Party. So long as any amount
remains unpaid on any indebtednesses described in this Deed of Trust, Debtors
will not execute and there will not be filed in any public office such
financing statement or statements affecting the Collateral other than financing
statements in favor of Secured Party hereunder unless the prior written
specific consent and approval of Secured Party shall have first been obtained.
Debtors authorize Secured Party to file, in jurisdictions where this
authorization will be given effect, a financing statement signed only by
Secured Party covering the Collateral and, at the request of Secured Party,
Debtors will join Secured Party in executing one or more financing statements
pursuant to the Uniform Commercial Code, in form satisfactory to Secured Party,
and will pay the cost of filing the same or filing or recording this instrument
as a financing statement in all public offices at any time and from time to
time whenever filing or recording of any financing statement or of this
instrument is deemed by Secured Party to be necessary or desirable.
(28) Portions of the Mortgaged Property are goods which are or are to
become fixtures relating to the property described in Exhibit "A" and the
Grantors herein expressly covenant and agree that the filing of this Deed of
Trust in the real estate records of the county where the Mortgaged Properties
are located shall also operate from time of filing therein as a financing
statement filed as a fixture filing in accordance with Section 9.402(f) of the
Uniform Commercial Code - secured Transaction of the State of Texas.
(29) Grantors will pay all fees or costs for appraisals that the
Beneficiary may reasonably require from time to time, but in no event more than
one (1) appraisal annually. In addition, Grantors will pay all recording fees,
taxes, abstract fees, attorneys' fees and all other costs and expenses of every
character from time to time incurred in connection with the making, closing and
servicing of the loan evidenced by the Note, or any renewal, modification,
rearrangement or extension thereof and will pay all reasonable fees and charges
made by the Trustee for services performed hereunder and will reimburse
Beneficiary and the Trustee for all expenses incurred by them, respectively,
and will indemnify and hold harmless Beneficiary and the Trustee from and
against all claims, demands, liabilities and causes of action asserted against
either of them on account of any act performed or omitted to be performed
hereunder or on account of any transaction arising out of or in any way
connected with the Mortgaged Property or this Deed of Trust, save and
except for their willful misconduct. In the event that Beneficiary should pay
for expenses incurred in way of attorneys' fees in connection with title
examination and legal matters and/or appraisal fees or costs connected with the
making, closing or servicing the Note or any renewal, modification,
rearrangement or extension thereof, or pay any recording or filing fee or fees
incident to recording instruments, title insurance premiums and title insurance
endorsement fees, Grantors shall reimburse the Beneficiary for all such sums
upon demand. Any such sums shall become part of the indebtedness secured by
this Deed of Trust and shall bear interest from the date incurred by
Beneficiary at the rate provided in the Note.
(30) This is a "construction mortgage" within the meaning of Sections
9.105(a)(10) and 9.313(a)(3) of the Uniform Commercial Code - Secured
Transactions of the State of Texas. This Deed of Trust secures an obligation
for the construction of an improvement on land including the acquisition cost,
if any, of the land.
(31) This Deed of Trust and Security Agreement is executed and delivered
pursuant to and is entitled to the benefits of that Loan Agreement of even date
herewith between Grantors and Beneficiary.
(32) Grantors represent and warrant to Beneficiary that to the best of
Grantors' knowledge:
(a) Neither Grantors nor the Mortgaged Property is in violation or
subject to any existing, pending or threatened investigation by any entity,
governmental body, or individual under any Environmental Law (as hereinafter
defined);
-10-
<PAGE> 90
(b) Grantors have not received any notice from any entity,
government body, or individual claiming any violation of or requiring
compliance with any Environmental Law and the Grantors have not
received any request for information, notice of claim, demand or other
notification that the Grantors may be responsible for a threatened or
actual release of any Hazardous Substance (as hereinafter defined) or
for any damage or threat to the environment, public health and safety,
or to natural resources;
(c) Grantors' intended use of the Mortgaged Property will
not result in the unlawful discharge, dispersal, storage, treatment,
use, manufacture, installation, generation, production, disposal or
release of any Hazardous Substance on, under, about, to, from or
within the Mortgaged Property.
Grantors represent and warrant to Beneficiary that Grantors have no actual
knowledge and have no reason to know that:
(a) Any of the land, improvements or any part of the
Mortgaged Property is or has been in violation of or subject to any
existing, pending, or threatened investigation, inquiry, order or
directive order by any governmental authority under any Environmental Law;
(b) Any Hazardous Substance is being or has been
discharged, dispersed, disposed of or released on, under, to, from, about
or within the Mortgaged Property; and
(c) Any underground storage tanks located on or about the
Mortgaged Property or which have been located on or about the Mortgaged
Property have been subsequently removed or filled.
Grantors further represent and warrant that:
(a) Grantors will not use, generate, manufacture, treat,
install, produce, store, release, discharge, or dispose of, on, under, to,
from or about the Mortgaged Property or transport to or from the Mortgaged
Property any Hazardous Substance or allow any other person or entity to do
so except under conditions permitted by applicable laws;
(b) Grantors will not locate, or permit to be located, any
underground storage tanks on the Mortgaged Property; and
(c) Grantors shall keep and maintain the Mortgaged Property
in strict compliance with, and shall not cause or permit the Mortgaged
Property to be in violation of, any Environmental Law.
Grantors shall give prompt written notice to Beneficiary of:
(i) any proceeding or inquiry by any governmental
authority with respect to (a) the presence of any
Hazardous Substance on the Mortgaged Property or the
migration thereof from or to other property or (b)
any other breach or violation of any Environmental
Law;
(ii) all claims made or threatened by any third party
against Grantors or the Mortgaged Property relating
to any loss or injury resulting from any Hazardous
Substance or the breach of any Environmental Law; and
(iii) Grantors' discovery of any occurrence or condition on
the Mortgaged Property that could cause the Mortgaged
Property or any part thereof to be subject to any
restrictions on the ownership, occupancy,
transferability or use of the Mortgaged
-11-
<PAGE> 91
Property under any Environmental Law, or to be otherwise subject to
any restrictions on the ownership, occupancy, transferability or use
of the Mortgaged Property under any Environmental Law.
Beneficiary shall have the right to join and participate in, as a party if
it so elects, any legal proceedings or actions initiated with respect to the
Mortgaged Property in connection with any Environmental Law and have its
attorneys' fees in connection therewith paid by Grantors.
Grantors shall protect, indemnify and hold harmless Beneficiary, its
directors, officers, employees, agents, attorneys, successors and assigns from
and against any and all loss, damage, cost, expense, penalty, fine, action,
cause of action or liability (including attorneys' fees and costs) directly or
indirectly arising out of or attributable to the use, generation, manufacture,
production, treatment, installation, storage, release, threatened release,
discharge, disposal, or presence of a Hazardous Substance on, under or from the
Mortgaged Property including without limitation (i) all foreseeable
consequential damage; and (ii) the costs of any required or necessary repair,
cleanup or detoxification of the Mortgaged Property and the preparation and
implementation of any closure, remedial or other required plan. This indemnity
shall survive the release of the lien of this Deed of Trust, or the
extinguishment of the lien by foreclosure or action, deed or conveyance in lieu
thereof, and this covenant of indemnity shall survive such release or
extinguishment; however, this indemnity shall exclude any acts by the
Beneficiary.
In the event that any investigation, site monitoring, containment, cleanup,
removal, restoration or other remedial work of any kind or nature (the "Remedial
Work") is reasonably necessary or desirable under any applicable local, state or
federal law or regulation, any judicial order, or by any governmental or
nongovernmental entity or person because of, or in connection with, the current
or future presence, suspected presence, release or suspected release of a
Hazardous Substance in or into the air, soil, groundwater, surface water or soil
vapor at, on, about, under or within the Mortgaged Property (or any portion
thereof), Grantors shall within thirty (30) days after written demand for
performance thereof by Beneficiary (or such shorter period of time as may be
required under any applicable law, regulation, order or agreement), commence and
thereafter diligently prosecute to completion, all such Remedial Work. All
Remedial Work shall be performed by contractors approved in advance by
Beneficiary, and under the supervision of a consulting engineer approved by
Beneficiary. All costs and expenses of such Remedial Work shall be paid by
Grantors including, without limitation, Beneficiary's reasonable attorneys' fees
and costs incurred in connection with monitoring or review of such Remedial
Work. In the event Grantors shall fail to timely commence, or cause to be
commenced, or fail to diligently prosecute to completion, such Remedial Work,
Beneficiary may, but shall not be required to, cause such Remedial Work to be
performed and all costs and expenses thereof, or incurred in connection
therewith, including without limitation, attorney fees, shall become part of the
indebtedness secured hereby.
Notwithstanding anything contained in the Note, this Deed of Trust or in
any of the loan documents, the Grantors shall not be released of corporate
liability and shall have corporate liability for any and all of Beneficiary's
costs, expenses, damages or liabilities (including, without limitation, all
reasonable attorneys' fees, whether incurred by Beneficiary prior to or
following foreclosure of the Deed of Trust and whether Beneficiary shall be in
the status of a lienholder or an owner of the Mortgaged Property following
foreclosure) directly or indirectly arising out of or attributable to the use,
generation, manufacture, storage, release, threatened release, discharge,
disposal, or presence on under, to or from the Mortgaged property of any
Hazardous Substance.
For the purposes of this Deed of Trust, the following terms shall have the
following meanings:
(1) "Environmental Laws" means any federal, state or local law, statute,
ordinance, or regulation pertaining to health, industrial hygiene, or
the environmental conditions on, under or about the Mortgaged
Property, including without limitation the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980 ("CERCLA") as
amended 42 U.S.C. Sections 9601 et seq., and the Resource Conservation
and Recovery Act of 1976 ("RCRA"), 42 U.S.D. Sections 6901 et seq.
(2) "Hazardous Substance" includes, without limitation:
-12-
<PAGE> 92
(i) Those substances included within the definitions of "hazardous
substances", "hazardous materials", "toxic substances", or
"solid waste" in CERCLA, RCRA, and the Hazardous Materials
Transportation Act, 49 U.S.C. Section 801 et seq., and in the
regulations promulgated pursuant to said laws;
(ii) Those substances listed in the United States Department of
Transportation Table (49 CFR 172.101 and any amendments thereto)
or by the Environmental Protection Agency (or any successor
agency) as hazardous substances (40 DFR Part 302 and any
amendments thereto);
(iii) Such other substances, materials and wastes which are or become
regulated under applicable local, state or federal law, or the
United States government, or which are classified as hazardous
or toxic under federal, state or local laws or regulations; and
(iv) Any material, waste or substance which is (A) asbestos; (B)
polychlorinated biphenyls; (C) designated as a "hazardous
substance" pursuant to Section 311 of the Clean Water Act, 33
U.S.C. Sections 1251 et. seq. (33 U.S.C. Section 1321) or listed
pursuant to Section 307 of the Clean Water Act (33 U.S.C.
Section 1373); (D) explosives; (E) radioactive materials; or (F)
gasoline, diesel fuel, kerosene or other petroleum products not
contained in an underground storage tank upon the Mortgaged
Property.
(33) Grantor represents and warrants to Beneficiary that as of the date
hereof:
(a) The Ground Sublease is a valid and subsisting lease of the
property therein described and purported to be demised and is in full force and
effect in accordance with its terms and has not been amended or modified in any
respect.
(b) No default has occurred and is continuing under the Ground
Sublease and no event has occurred or is occurring which, with the passage of
time or service of notice or both would constitute an event of default under the
Ground Sublease.
(c) The Ground Sublease is subject to no liens or encumbrances other
than the as set forth in the Mortgagee's Title Insurance issued in connection
with this Deed of Trust.
(d) Grantor is the owner of the subleasehold estate created by the
Ground Sublease and has the right and authority under the Ground Sublease to
execute this Deed of Trust and to encumber the subleasehold estate as provided
herein.
(34) Grantor will promptly perform and observe all the terms, covenants
and conditions required to be performed and observed by Grantor, as Sublessee
under the Ground Sublease, within the periods provided in the Ground Sublease,
and will do all things necessary to preserve and keep unimpaired its rights
under the Ground Sublease. Grantor will furnish Beneficiary, upon demand, proof
of payment of all items which are required to be paid by Grantor under the
Ground Sublease, with the exception of rent payments which shall be escrowed
with Beneficiary pursuant to separate agreement covering both Ground Lease rent
and Ground Sublease rent, such agreement to be executed by Grantor, Ground
Sublessor and Beneficiary. Upon request of Beneficiary, within five (5) days
after the date of each such payment, Grantor shall deliver to Beneficiary the
original or photostatic copy of the official receipt evidencing such payment or
other proof of payment of any such item required to be paid by Grantor under the
Ground Sublease. Grantor shall not waive any of its rights under the Ground
Sublease (or Ground Lease, if applicable), or refrain from exercising any right
or remedy accorded to it under the Ground Sublease (or Ground Lease, if
applicable) on account of any default thereunder, or release any party from any
liability or condone or excuse any improper actions of any party thereunder
without first obtaining the written consent of Beneficiary.
-13-
<PAGE> 93
(35) In the event that (i) all the terms, provisions and conditions of the
Ground Sublease or any instrument executed in connection with the Ground
Sublease are not complied with so as to result in a default thereunder and/or
(ii) any statement, representation or warranty made by Grantor hereunder shall
be false, misleading or erroneous in any respect, such failure shall constitute
an event of default under this Deed of Trust, and shall entitle Beneficiary,
after notice and opportunity to cure as provided in the Loan Agreement, at its
option, to exercise any and all rights and remedies given Beneficiary in the
event of a default hereunder, and Grantor agrees to hold harmless and indemnify
Beneficiary therefrom to the full extent permitted by law.
(36) For the purpose of preventing or curing any default by Grantor under
the Ground Lease or the Ground Sublease Beneficiary, may (but shall be under no
obligation to) do any act or execute any document in the name of Grantor or as
its attorney-in-fact, as well as in the name of Beneficiary. Grantor hereby
irrevocably appoints Beneficiary its true and lawful attorney-in-fact in its
name or otherwise to do any and all acts and to execute any and all documents
which in the opinion of Beneficiary may be necessary or desirable to prevent
or cure any default under the Ground Sublease, the Ground Lease or to preserve
any rights of Grantor in, to or under the Ground Sublease or the Ground Lease,
including the right to effectuate a renewal of the Ground Sublease or to
preserve any rights of Grantor whatsoever in respect of any part of the
Mortgaged Property.
(37) The curing by Beneficiary of any default by Beneficiary under the
Ground Lease or Ground Sublease shall not remove or waive, as between Grantor
and Beneficiary, the default which occurred hereunder by virtue of the default
by Grantor under the Ground Lease or Ground Sublease, and all sums expended by
Beneficiary in order to cure any such default and costs and expenses incurred
by Beneficiary in connection with the curing of such default shall be paid by
Grantor to Beneficiary upon demand with interest thereon at the default rate of
interest set forth in the Note (but in no event at a rate in excess of the
maximum lawful rate which may be permitted by applicable law) from the date of
advancement until paid, and any such indebtedness shall be deemed to be secured
by this Deed of Trust.
(38) Grantor will not surrender or abandon the subleasehold estate created
by the Ground Sublease, nor terminate or cancel the Ground Sublease, and Grantor
will not without the express written consent of Beneficiary modify, change,
supplement, alter or amend the Ground Sublease either orally or in writing, and
as further security for the repayment of the indebtedness secured hereby and for
the performance of the covenants herein and in the Ground Sublease contained,
Grantor hereby assigns to Beneficiary (Beneficiary not assuming any obligations
by virtue of such assignment) all of its rights, privileges and prerogatives as
Ground Sublessee under the Ground Sublease or the Ground Lease, if applicable,
to terminate, cancel, modify, change, supplement, alter or amend the Ground
Sublease or the Ground Lease, if applicable, and any such termination,
cancellation, modification, change, supplement, alteration or amendment of the
Ground Sublease or the Ground Lease, if applicable, without the prior written
consent thereby by Beneficiary shall be void and of no force and effect.
(39) Grantor shall notify Beneficiary promptly of (i) the occurrence of any
default by the lessor under the Ground Lease or Ground Sublease or the
occurrence of any event which, with the passage or time or service of notice, or
both, would constitute a default by the lessor under the Ground Lease or Ground
Sublease, and (ii) the receipt by Grantor of any notice (written or oral) from
the lessor under the Ground Lease or Ground Sublessor and of any notice (written
or oral) noting or claiming the occurrence of any event of default under the
Ground Lease or Ground Sublease or the occurrence of any event which, with the
passage of time or service of notice or both, would constitute a default under
the Ground Lease or Ground Sublease.
(40) Promptly upon demand by Beneficiary, Grantor shall obtain from the
Ground Lessor under the Ground Lease and Ground Sublessor under the Ground
Sublease and furnish to Beneficiary an estoppel certificate in form and
substance reasonably satisfactory to Beneficiary.
(41) Promptly upon request by Beneficiary, Grantor shall give its
unqualified consent in writing to any and all modifications of the Ground
Sublease which the Ground Sublessor agrees to make at the request of
Beneficiary for the purpose of maintaining or preserving Beneficiary's security
in the Ground Sublease.
-14-
<PAGE> 94
(42) No release or forbearance of any obligations of Grantor
under the Ground Sublease pursuant to the Ground Sublease or
otherwise, shall release Grantor from any of its obligations under
this Deed of Trust, including its obligations with respect to
payment of rent as provided for in the Ground Sublease and the
performance of all of the terms, provisions, covenants, conditions
and agreements contained in the Ground Sublease, to be kept,
performed and complied with by the lessee therein.
(43) All sub-subleases entered into by Grantor must provide
that (i) the sub-sublease is subordinate to the lien of this Deed of
Trust and any extensions, replacements or modifications hereof, and
(ii) if Beneficiary enters into a new lease with the Ground Lessor
under the Ground Lease or Ground Sublease under the Ground Sublease
under the circumstances therein stated the sublessee or
sub-sublessee, as the case may be, must agree to attorn to
Beneficiary.
(44) So long as the indebtedness shall remain unpaid, unless
Beneficiary shall otherwise consent in writing, the fee title to and
the leasehold estate in the Mortgaged Property shall not merge but
shall always be kept separate and distinct, notwithstanding the
ownership of both such estates by the Ground Lessor or the Ground
Sublessor under the Ground Lease or the Sublessor or Grantor
pursuant to the Ground Sublease, or by a third party. Nothing herein
contained shall be construed as authorizing the sale by Grantor of
any leasehold estate without the written consent of Beneficiary.
(45) The lien of this Deed of Trust shall attach to all of
Grantor's rights arising under Subsection 365(h) of the United
States Bankruptcy Code (the "Bankruptcy Code"). Grantor shall not,
without first obtaining Beneficiary's prior written consent, elect
to treat the Ground Sublease as terminated under Subsection
365(h)(1) of the Bankruptcy Code. Any such election made without
first obtaining Beneficiary's prior written consent shall be null and
void. Grantor hereby unconditionally assigns to Beneficiary all of
Grantor's claims and rights to payment of damages arising in any
rejection by the landlord of the Ground Sublease or Ground Lease
under the Bankruptcy Code. Beneficiary shall have the right to
pursue in its own name or in the name of Grantor in respect of any
such claim relating to the rejection of the Ground Lease or Ground
Sublease, as the case may be. This assignment constitutes a present,
irrevocable and unconditional assignment of the foregoing claims,
and shall continue in effect until the Note and other obligations of
this Deed of Trust have been satisfied and discharged in full. Any
amounts received by Beneficiary as damages arising out of the
rejection of the Ground Lease or Ground Sublease, as the case may
be, shall be applied to the Note in reverse order of maturity. If
there shall be filed by or against Grantor a case under the
Bankruptcy Code, and Grantor, as Ground Sublessee under the Ground
Sublease (or as a lessee pursuant to the Ground Lease if such event
occurs), shall determine to reject the Ground Sublease or Ground
Sublease pursuant to Section 365(a) of the Bankruptcy Code, Grantor
shall give Beneficiary prior written notice of the date on which
Grantor shall apply to the appropriate Bankruptcy Court for
authority to reject the Ground Lease or Ground Sublease, as the case
may be. Such date of application by Grantor shall not be less than
ten (10) days from the date of receipt as provided herein by
Beneficiary. Beneficiary shall have the right, but not the
obligation, to serve upon Grantor within such ten (10) day period a
written notice stating: (i) that Beneficiary demands that Grantor
assume and assign the Ground Lease or Ground Sublease, as the case
may be, to Beneficiary pursuant to Section 365 of the Bankruptcy
Code; and (ii) that Beneficiary covenants to cure or provide
adequate assurance of prompt cure of all defaults and provide
adequate assurance of future performance under the Ground Lease or
Ground Sublease, as the case may be. If Beneficiary serves Grantor
the written notice described in the preceding sentence, Grantor
shall not seek to reject the Ground Lease or Ground Sublease, as the
case may be, and shall comply with the demand provided for in clause
(i) of the preceding sentence within thirty (30) days after such
written notice shall have been given subject to the performance by
Beneficiary of the covenant provided for in clause (ii) of the
preceding sentence. Effective upon the entry of any order for relief
with respect to Grantor under the Bankruptcy Code, Grantor hereby
assigns and transfers to Beneficiary a non-exclusive right to apply
to the bankruptcy court under Subsection 365(d)(1) of the Bankruptcy
Code for an order extending the period during which the Ground Lease
or Ground Sublease, as the case may be, may be rejected or assumed.
(46) Pursuant to the Enhanced-Use Lease, as amended, if Ground
Lessor terminates the Enhanced-Use Lease, Grantors have certain
rights and the Ground Lessor has certain obligations, to enter into
a Replacement Lease (herein so called) with the Ground Lessor
wherein Grantors would be ground lessee, covering the Property
described on Exhibit "A" attached hereto. In the event that Ground
Lessor terminates the Enhanced-Use Lease, Grantors agree to enter
into the Replacement Lease in accordance with the provisions of the
Enhanced Use-Lease. In the event
-15-
<PAGE> 95
Grantors enter into a Replacement Lease and in the event that the liens
evidenced by this Deed of Trust have not theretofore been released by
Beneficiary, Grantors covenant and agree to enter into a new leasehold deed of
trust (the "Replacement Deed of Trust") covering Grantor's interest as ground
lessee in and to the Replacement Lease. The Replacement Deed of Trust shall be
in substantially the same form and substance as this Deed of Trust; however, the
Replacement Deed of Trust shall grant to Beneficiary a first lien interest in
Grantors' leasehold estate in and to the Mortgaged Property and the same shall
secure the indebtedness secured hereby, as the same may be modified, amended,
renewed or increased from time to time.
(47) The term "Loan Agreement" as used herein shall mean that certain
Construction Loan Agreement of even date herewith by and between Grantors as
Borrower and Beneficiary as Lender.
(48) GRANTORS HEREBY EXPRESSLY RECOGNIZE THAT CONTAINED IN SECTIONS 29 AND
32 OF THIS DEED OF TRUST ARE PROVISIONS WHICH REQUIRE GRANTORS TO INDEMNIFY
BENEFICIARY UNDER CERTAIN CIRCUMSTANCES AND GRANTORS HEREBY ACKNOWLEDGE THAT BY
EXECUTING THIS DEED OF TRUST, GRANTORS ACCEPT THESE PROVISIONS AND THE
OBLIGATIONS TO INDEMNIFY BENEFICIARY UNDER SUCH CIRCUMSTANCES.
EXECUTED this 23rd day of November, 1998.
TMX REALTY CORPORATION,
a Delaware corporation
By: /s/ JAMES W. ALBRECHT, JR.
---------------------------------
Name: James W. Albrecht, Jr.
-------------------------------
Title: Chief Financial Officer
------------------------------
THE STATE OF TEXAS )
)
COUNTY OF HARRIS )
This instrument was acknowledged before me on this 23rd day of November,
1998, by James W. Albrecht, Jr., CEO of TMX REALTY CORPORATION, a Delaware
corporation, for and on behalf of said corporation.
[SEAL] /s/ LAWANA HARDIN
------------------------------------
[SEAL] Notary Public in and
for the STATE OF TEXAS
Printed Name of Notary: My Commission Expires:
- ------------------------------- ------------------------------------
-16-
<PAGE> 96
EXHIBIT "A"
Being a tract or parcel containing 2,619 acres (114,085 square feet) of land
situated in the D W C Harris Survey, Abstract Number 325, Harris County, Texas,
and being part of and out of that certain called 118.831 acres, described in
deed to the United States of America, as recorded in Volume 1297, Page 87, Deed
Records of Harris County, Texas, said 2,619 acre tract being more particularly
described as follows (all bearings and coordinates are based on the Texas State
Plane Coordinate System; South Central Zone; all distances and coordinates are
surface and may be converted to grid by multiplying by a combined scale factor
of 0.9998632):
COMMENCING at a 5/8-inch iron rod with plastic cap set marking the intersection
of the south right-of-way (ROW) line of Holcombe Boulevard with the west ROW
line of Almeda Road, and having surface coordinates of X=3,147,967.40,
Y=698,487.10, thence:
South 14 degrees 53'21" West, with said west ROW line, a distance of
206.00 feet to a set 5/8-inch iron rod with plastic cap;
North 75 degrees 06'39" West, a distance of 329.30 feet to a 5/8-inch
iron rod with plastic cap set marking the POINT OF BEGINNING and
northeast corner of the herein described tract;
THENCE, SOUTH 14 degrees 53'21" West, a distance of 330.70 feet to a 5/8-inch
iron rod with plastic cap set marking the southeast corner of the herein
described tract;
THENCE, NORTH 75 degrees 06'39" West, a distance of 432.78 feet to a 5/8-inch
iron rod with plastic cap set marking the southwest corner of the herein
described tract;
THENCE, NORTH 41 degrees 44'27" East, a distance of 334.23 feet to a 5/8-inch
iron rod with plastic cap set marking the beginning of a tangent curve;
THENCE, NORTHEASTERLY, with a curve to the left having a radius of 760.00 feet,
a central angle of 03 degrees 35'59", an arc length of 47.75 feet, and a chord
which bears North 39 degrees 56'28" East, 47.74 feet to a "X" in concrete set
marking the most northwesterly corner of the herein described tract;
THENCE, SOUTHEASTERLY, with a non-tangent curve to the left having a radius of
87.50 feet, an arc length of 93.13 feet, a central angle of 60 degrees 59'01",
and a chord which bears South 58 degrees 25'28" East, 88.80 feet to 5/8-inch
iron rod with plastic cap set marking a point of tangency;
THENCE, SOUTH 88 degrees 54'58" East, a distance of 27.76 feet to a 5/8-inch
iron rod with plastic cap set marking the beginning of a tangent curve;
THENCE, EASTERLY, with a curve to the right having a radius of 281.50 feet, an
arc length of 67.83 feet, a central angle of 13 degrees 48'19", and a chord
which bears South 82 degrees 00'48" East, 67.66 feet to a 5/8-inch iron rod with
plastic cap set marking a point of tangency;
THENCE, SOUTH 75 degrees 06'39" East, a distance of 82.41 feet to the POINT OF
BEGINNING and containing 2,619 acres (114,086 square feet) of land (this
description is based on a Land Title Survey and plat prepared by Terra
Surveying Company, Inc. Project Number 0163-9801-S).
<PAGE> 97
EXHIBIT "B"
There is hereby excepted from the definition of the "Mortgaged
Property", and from all liens and security interests covered by this Leasehold
Deed of Trust or any of the Loan Instruments, all property of Grantors which is
not a part of the plumbing, electrical, heating, cooling, ventilation, standard
lighting, ceiling tile, sprinkler equipment and related equipment together with
other fixtures and equipment necessary for the use and operation of the
buildings for general purposes and all property (save and except the foregoing)
which is not permanently attached or affixed to the building and is not an
integral part of the building and needed for the same to be functional as an
office building. Without limiting the foregoing sentence, the property described
below is excepted from said definition of "Mortgaged Property" and shall not be
in any way secured or encumbered by this Leasehold Deed of Trust or any of the
Loan Instruments (as such term is defined in the Loan Agreement).
Excluded Property
Furniture
Computers and related equipment, computer network equipment and software
Laboratory equipment
Production Equipment
Modular clean room units
Telephone equipment
Office equipment
Artwork
Decorative items
Plants
Inventory, including raw materials, work in progress and finished goods
Office supplies
Lab notebooks
Electronic media
Backup power generator
Cold storage equipment
Waste treatment equipment
Whether now owned or hereafter acquired
[STAMP]
-18-
<PAGE> 98
MEMORANDUM OF SUBLEASE
AND ASSIGNMENT
This Memorandum of Sublease and Assignment is executed by and between
Amelang Partners, Inc., a Texas corporation ("Amelang"), and Introgen
Therapeutics, Inc., a Delaware corporation, and TMX Realty Corporation, a
Delaware corporation.
WHEREAS, a certain Enhanced-Use Lease Agreement was executed by and
between the United States Department of Veterans Affairs and Amelang Partners,
Inc., as set forth in the instrument dated August 25, 1993, and filed for record
under Harris County Clerk's File No. R182160 and supplemented by instrument
filed for record under Harris County Clerk's File No. S319699;
WHEREAS, a portion of the real property described in said Enhanced-Use
Lease was subleased pursuant to a Ground Sublease Agreement ("Sublease") by and
between Amelang Partners, Inc., as sublessor, and Introgen Therapeutics, Inc.,
as sublessee, which Ground Sublease Agreement was signed November 23, 1998, with
an effective date of September 24, 1998, which Sublease covers 2.619 acres of
said real property (the "Subleased Property"), which Subleased Property is
described on Exhibit "A" attached hereto and incorporated herein for all
purposes; and
WHEREAS, by a written Assignment and Assumption of Sublease Agreement
dated November 23, 1998, the said Introgen Therapeutics, Inc., assigned and
transferred all of its interest in the said Sublease and the Subleased Property
to TMX Realty Corporation.
THEREFORE, all persons interested in said 2.619 acres described upon
Exhibit "A" attached hereto or the transactions described above may contact the
parties hereto as follows:
Amelang Partners, Inc.
952 Echo Lane, Suite 100
Houston, Texas 77024
Introgen Therapeutics, Inc.
301 Congress Avenue, Suite 1850
Austin, Texas 78701
TMX Realty Corporation
301 Congress Avenue, Suite 1850
Austin, Texas 78701
1
<PAGE> 99
Signed by each of the undersigned this 24th day of November, 1998.
AMELANG PARTNERS, INC.
By: /s/ WELLINGTON STEVENS III
-----------------------------------
Its: President
-----------------------------------
INTROGEN THERAPEUTICS, INC.
By: /s/ JAMES W. ALBRECHT, JR.
-----------------------------------
Its: Chief Financial Officer
-----------------------------------
TMX REALTY CORPORATION
By: /s/ JAMES W. ALBRECHT, JR.
-----------------------------------
Its: Chief Financial Officer
-----------------------------------
[SEAL]
(Corporate Acknowledgement)
THE STATE OF TEXAS )
) [SEAL]
COUNTY OF HARRIS )
This instrument was acknowledged before me on the 24th day of November,
1998, by Wellington Stevens III, President of Amelang Partners, Inc., a Texas
corporation, on behalf of said corporation.
/s/ FELICIA E. BOWMAN
----------------------------------------
Notary Public, State of Texas
(Corporate Acknowledgement)
THE STATE OF TEXAS )
)
COUNTY OF TRAVIS )
This instrument was acknowledged before me on the 24th day of November,
1998, by James W. Albrecht, Jr., Chief Financial Officer of Introgen
Therapeutics, Inc., a Delaware corporation, on behalf of said corporation.
/s/ LYNNE MADDOX
----------------------------------------
Notary Public, State of Texas
[SEAL]
2
<PAGE> 100
(Corporate Acknowledgement)
STATE OF TEXAS )
)
COUNTY OF TRAVIS )
This instrument was acknowledged before me on the 24 day of November, 1998
by James W. Albrecht, Jr., Chief Financial Officer of TMX Realty Corporation, a
Delaware corporation, on behalf of said corporation.
/s/ LYNNE MADDOX
-----------------------------
[SEAL] LYNNE MADDOX Notary Public, State of Texas
Notary Public, State of Texas
My Commission Expires June 17, 2002
3
<PAGE> 101
[TERRA LETTERHEAD]
METES & BOUNDS DESCRIPTION
2.619 ACRES (114,086 SQUARE FEET)
D W C HARRIS SURVEY, ABSTRACT NUMBER 325
HARRIS COUNTY, TEXAS
Being a tract or parcel containing 2.619 acres (114,086 square feet) of
land situated in the D W C Harris Survey, Abstract Number 325, Harris
County, Texas, and being part of and out of that certain called 118.831
acres, described in deed to the United States of America, as recorded in
Volume 1297, Page 87, Deed Records of Harris County, Texas, said 2.619
acre tract being more particularly described as follows (all bearings and
coordinates are based on the Texas State Plane Coordinate System; South
Central Zone; all distances and coordinates are surface and may be
converted to grid by multiplying by a combined scale factor of 0.9998632):
COMMENCING at a 5/8-inch iron rod with plastic cap set marking the
intersection of the south right-of-way (ROW) line of Holcombe Boulevard
with the west ROW line of Almeda Road, and having surface coordinates of
X=3,147,967.40, Y=698,487.10, thence:
South 14 degrees 53'21" West, with said west ROW line, a distance of
206.00 feet to a set 5/8-inch iron rod with plastic cap;
North 75 degrees 06'39" West, a distance of 329.30 feet to a
5/8-inch iron rod with plastic cap set marking the POINT OF BEGINNING
and northeast corner of the herein described tract;
THENCE, SOUTH 14 degrees 53'21" West, a distance of 330.70 feet to a
5/8-inch iron rod with plastic cap set marking the southeast corner of the
herein described tract;
THENCE, NORTH 75 degrees 06'39" West, a distance of 432.78 feet to a
5/8-inch iron rod with plastic cap set marking the southwest corner of the
herein described tract;
THENCE, NORTH 41 degrees 44'27" East, a distance of 334.23 feet to a
5/8-inch iron rod with plastic cap set marking the beginning of a tangent
curve;
THENCE, NORTHEASTERLY, with a curve to the left having a radius of 760.00
feet, a central angle of 03 degrees 35'59", an arc length of 47.75 feet,
and a chord which bears North 39 degrees 56'28" East, 47.74 feet to an "X"
in concrete set marking the most northwesterly corner of the herein
described tract;
THENCE, SOUTHEASTERLY, with a non-tangent curve to the left having a radius
of 87.50 feet, an arc length of 93.13 feet, a central angle of 60 degrees
59'01", and a chord which bears South 58 degrees 25'28" East, 88.80 feet to
a 5/8-inch iron rod with plastic cap set marking a point of tangency;
THENCE, SOUTH 88 degrees 54'58" East, a distance of 27.76 feet to a
5/8-inch iron rod with plastic cap set marking the beginning of a tangent
curve;
THENCE, EASTERLY, with a curve to the right having a radius of 281.50 feet,
an arc length of 67.83 feet, a central angle of 13 degrees 48'19", and a
chord which bears South 82 degrees 00'48" East, 67.66 feet to a 5/8-inch
iron rod with plastic cap set marking a point of tangency;
<PAGE> 102
METES & BOUNDS DESCRIPTION
2.619 ACRES (114,086 SQUARE FEET)
D W C HARRIS SURVEY, ABSTRACT NUMBER 325
HARRIS COUNTY, TEXAS
Page 2 of 2
THENCE, SOUTH 75 degrees 06'39" East, a distance of 82.41 feet to the POINT OF
BEGINNING and containing 2.619 acres (114,086 square feet) of land (this
description is based on a Land Title Survey and plat prepared by Terra Surveying
Company, Inc. Project Number 0163-9801-S).
Compiled by: Scott D Mandeville [STAMP]
Compiled: October 22, 1998
TSC Project No: 0163-9801-S
SDM: 2-619ac.mb
ANY PROVISION HEREIN WHICH RESTRICTS THE SALE, RENTAL, OR USE OF THE DESCRIBED
REAL PROPERTY BECAUSE OF COLOR OR RACE IS INVALID AND UNENFORCEABLE UNDER
FEDERAL LAW
THE STATE OF TEXAS}
COUNTY OF HARRIS }
I hereby certify that this instrument was FILED in File Number Sequence on
the date and at the time stamped hereon by me; and was duly RECORDED, in the
Official Public Records of Real Property of Harris County, Texas on
DEC 3 1998
[STAMP] COUNTY COURT OF HARRIS /s/ BEVERLY B. KAUFMAN
COUNTY, TEXAS * COUNTY CLERK
HARRIS COUNTY TEXAS
<PAGE> 103
EXHIBIT A
11-23-98
[TERRA SURVEYING COMPANY INC. LETTERHEAD]
METES & BOUNDS DESCRIPTION
2.619 ACRES (114,086 SQUARE FEET)
D W C HARRIS SURVEY, ABSTRACT NUMBER 325
HARRIS COUNTY, TEXAS
Being a tract or parcel containing 2.619 acres (114,086 square feet) of land
situated in the D W C Harris Survey, Abstract Number 325, Harris County, Texas,
and being part of and out of that certain called 118.831 acres, described in
deed to the United States of America, as recorded in Volume 1297, Page 87, Deed
Records of Harris County, Texas, said 2.619 acre tract being more particularly
described as follows (all bearings and coordinates are based on the Texas State
Plane Coordinate System; South Central Zone; all distances and coordinates are
surface and may be converted to grid by multiplying by a combined scale factor
of 0.9998632):
COMMENCING at a 5/8-inch iron rod with plastic cap set marking the intersection
of the south right-of-way (ROW) line of Holcombe Boulevard with the west ROW
line of Almeda Road, and having surface coordinates of X=3,147,967.40,
Y=698,487.10, thence:
South 14 degrees 53'21" West, with said west ROW line, a distance of 206.00
feet to a set 5/8-inch iron rod with plastic cap;
North 75 degrees 06'39" West, a distance of 329.30 feet to a 5/8-inch iron
rod with plastic cap set marking the POINT OF BEGINNING and northeast
corner of the herein described tract;
THENCE, SOUTH 14 degrees 53'21" West, a distance of 330.70 feet to a 5/8-inch
iron rod with plastic cap set marking the southeast corner of the herein
described tract;
THENCE, NORTH 75 degrees 06'39" West, a distance of 432.78 feet to a 5/8-inch
iron rod with plastic cap set marking the southwest corner of the herein
described tract;
THENCE, NORTH 41 degrees 44'27" East, a distance of 334.23 feet to a 5/8-inch
iron rod with plastic cap set marking the beginning of a tangent curve;
THENCE, NORTHEASTERLY, with a curve to the left having a radius of 760.00 feet,
a central angle of 03 degrees 35'59", an arc length of 47.75 feet, and a chord
which bears North 39 degrees 56'28" East, 47.74 feet to an "X" in concrete set
marking the most northwesterly corner of the herein described tract;
THENCE, SOUTHEASTERLY, with a non-tangent curve to the left having a radius of
87.50 feet, an arc length of 93.13 feet, a central angle of 60 degrees 59'01",
and a chord which bears South 58 degrees 25'28" East, 88.80 feet to a 5/8-inch
iron rod with plastic cap set marking a point of tangency;
THENCE, SOUTH 88 degrees 54'58" East, a distance of 27.76 feet to a 5/8-inch
iron rod with plastic cap set marking the beginning of a tangent curve;
THENCE, EASTERLY, with a curve to the right having a radius of 281.50 feet, an
arc length of 67.83 feet, a central angle of 13 degrees 48'19", and a chord
which bears South 82 degrees 00'48" East, 67.66 feet to a 5/8-inch iron rod with
plastic cap set marking a point of tangency;
<PAGE> 104
METES & BOUNDS DESCRIPTION
2.619 ACRES (114,086 SQUARE FEET)
D W C HARRIS SURVEY, ABSTRACT NUMBER 325
HARRIS COUNTY, TEXAS
Page 2 of 2
THENCE, SOUTH 75 degrees 06'39" East, a distance of 82.41 feet to the POINT OF
BEGINNING and containing 2.619 acres (114,086 square feet) of land (this
description is based on a Land Title Survey and plat prepared by Terra Surveying
Company, Inc, Project Number 0163-9801-S).
Compiled by: Scott D Mandeville [STAMP]
Compiled: October 22, 1998
TSC Project No: 0163-9801-S
SDM: 2-619ac.mb
<PAGE> 105
NOTE, DEED OF TRUST AND GUARANTY
MODIFICATION AGREEMENT
This Note, Deed of Trust and Guaranty Modification Agreement ("Agreement")
is made as of the 24th day of September, 1998, by and among AMELANG PARTNERS
INCORPORATED, a Texas corporation ("Borrower"); AID ASSOCIATION FOR LUTHERANS,
a Wisconsin corporation ("Lender"); and KARL J. AMELANG ("Guarantor").
RECITALS
A. Borrower is indebted to Lender for a previous loan evidenced by a
Promissory Note (the "Note") dated February 6, 1997, in the original principal
sum of $2,500,000.00, executed by Borrower, payable to Lender.
B. The Note is secured by (i) a Deed of Trust and Security Agreement ("Deed
of Trust") executed by Borrower to Barry E. Putterman, Trustee, filed under
Clerk's File No. S319696, and recorded under Film Code Reference No. 511-82-2756
in the Official Public Records of Real Property of Harris County, Texas, (ii) an
Assignment of Rents and Leases ("Assignment of Rents") executed by Borrower to
Lender, filed under Clerk's File No. S319697, and recorded under Film Code
Reference No. ###-##-#### in the Official Public Records of Real Property of
Harris County, Texas, and (iii) other and sundry documents and agreements. All
documents and agreements given as security for the Note are referred to
collectively as the "Loan Documents."
C. In connection with Borrower's execution of the Loan Documents,
Guarantor executed and delivered to Lender a Limited Guaranty (the "Guaranty")
and an Environmental Indemnity Agreement (the "Indemnity").
D. Section 5.19 of the Deed of Trust entitles Borrower, upon satisfaction
of certain terms and conditions, to a partial release of the property defined
therein as the "Additional Collateral" and being more particularly described on
Exhibit "A" attached hereto.
E. As a condition of Borrower being entitled to a partial release of the
Additional Collateral, Borrower, Guarantor and Lender are executing this
Agreement.
NOW, THEREFORE, in consideration of the foregoing Recitals, and for other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Borrower, Lender and Guarantor hereby agree as follows:
1. Ratification of Recitals. Borrower, Lender and Guarantor hereby ratify
and confirm the above Recitals.
2. Partial Release. Lender hereby RELEASES and DISCHARGES the Additional
Collateral from the liens, claims, security interests and encumbrances of the
Loan Documents. Without limiting the generality of the preceding sentence, the
definition of the term "Land" contained
<PAGE> 106
5. Restrictions on Released Property. The following provision is hereby
added as new Section 5.21 of the Deed of Trust:
"5.21 Restrictions on Released Property. Except with the prior written
consent of Beneficiary, neither Grantor nor any of its successors or
assigns shall use the Additional Collateral in a manner inconsistent with
the following restrictions, which shall be covenants running with the
Additional Collateral and be binding upon Grantor and its successors and
assigns during the term of the Ground Lease: (a) the exterior design of and
development shall be compatible with the exterior architectural design of
the adjacent VA Medical Center and the improvements situated on the Initial
Development; (b) all buildings shall be situated on the Additional
Collateral at least twenty-five (25) feet away from F.M. 521 (Almeda Road)
and at least ten (10) feet away from the common boundary line with the
Initial Development; (c) adequate on-site parking shall be established,
including, without limitation, meeting the minimum requirements of the City
of Houston parking ordinance as they apply generally to all properties; (d)
the development shall contain adequate surface drainage so that no
excessive drainage flows onto the surface of the Initial Development, and
(e) no curb cuts for vehicular traffic shall be located on any portion of
the Additional Collateral within twenty (20) feet of the Initial
Development. Grantor hereby grants to Beneficiary and any successor to the
interest of Beneficiary in the Initial Development a non-exclusive easement
on and under the Additional Collateral to provide water to the Initial
Development and to treat wastewater from the Initial Development through
the lines presently existing under the Additional Collateral, together with
reasonable rights of access to repair such lines. Grantor, at its sole cost
and expense, may relocate such lines to other locations on the Additional
Collateral so long as utility service to the Initial Development is not
interrupted and the point of connection remains the same. Within fifteen
(15) days of a request from time to time by Beneficiary, Grantor shall
deliver or cause to be delivered to Beneficiary evidence reasonably
satisfactory to Beneficiary that Grantor's successors, assigns and/or
subtenants have been bound by such restrictions and easements. The
provisions of this Section 5.21 shall survive the release of this Deed of
Trust or a foreclosure hereunder for the remainder of the term of the
Ground Lease as it applies to the Initial Development, including a
"Replacement Lease" (as such term is defined in the Ground Lease), and
shall benefit Beneficiary and it successors and assigns."
6. Separate Tax Parcel. Section 1.4 of the Deed of Trust, subparagraph
entitled "Property Taxes", is hereby modified by deleting the last two
sentences and substituting the following:
"By no later than May 1, 1999, and all times thereafter, Grantor shall
cause the Initial Development to be assessed separately for ad valorem tax
purposes from any other property. Grantor shall by no later than May 1,
1999, deliver proof of compliance with the preceding sentence to
Beneficiary."
Page 3
<PAGE> 107
7. Modification to Insurance Provisions. The fire, tornado, windstorm
and extended coverage insurance obligations set forth on Pages 12, 13, and 14 of
the Deed of Trust (including, without limitation, the insurance covering lost
rentals and other revenues) shall apply solely to the Initial Development. By
way of example, Grantor shall keep all improvements situated on the Initial
Development insured against loss as may be reasonably required by Beneficiary,
for the full replacement value, and the insurance covering rentals and other
revenues derived from the Premises shall mean and refer to the rentals and other
revenues derived from the Initial Development, with all of such insurance
policies to provide specifically that they cover the Initial Development in a
form reasonably acceptable to Beneficiary. Any liability policy may cover, at
Beneficiary's option, other property covered by the Ground Lease, in addition to
the Initial Development, or solely the Initial Development.
8. Ratification and Confirmation. Borrower hereby ratifies and confirms
the liens of the Deed of Trust and acknowledges and agrees that the Note and
Loan Documents remain in full force and effect in accordance with their original
terms, except as modified by this Agreement.
9. Ratification of Guaranty and Indemnity. Guarantor hereby ratifies and
confirms the Guaranty and the Indemnity, notwithstanding this Agreement.
10. Representations and Warranties. Borrower and Guarantor represent and
warrant to and for the benefit of Lender that as of the date hereof:
(a) Borrower is a duly formed Texas corporation and has all requisite
power and authority to enter into this Agreement and perform its
obligations hereunder;
(b) Borrower is still the holder of the interest of the Tenant under the
Ground Lease and has not prior to the date hereof transferred,
assigned or encumbered any of its interests in the Ground Lease to
any party other than Lender; and
(c) Neither Borrower nor Guarantor has any defense to any of their
respective obligations under the Loan Documents as amended hereby,
including, without limitation, the Guaranty or the Indemnity.
11. Additional Obligations. This Agreement is conditioned on the
following matters occurring to the satisfaction of Beneficiary by no later than
ten (10) days after the date hereof: (a) Grantor paying to Beneficiary a
one-time transaction fee in the amount of $12,500.00; (b) Grantor paying all
reasonable legal expenses incurred by Beneficiary in connection with the
preparation and negotiation of this Agreement and the transactions described
herein, (c) Grantor providing Beneficiary with a P-9(b)(3) endorsement to the
Mortgagee Policy of Title Insurance insuring the Deed of Trust, confirming that
said policy remains in full force and effect notwithstanding this Agreement; and
(d) Grantor delivering or causing to be delivered to Beneficiary an amendment to
the Ground Lease in a form satisfactory to Beneficiary.
Page 4
<PAGE> 108
12. Further Assurances. Borrower and Guarantor shall each execute,
acknowledge, and delivery all such instruments, and take all such actions as may
be reasonably necessary to further assure to Lender the full benefits of the
Loan Documents, including the collateral therefor, and to preserve and protect
the Loan Documents and all the rights, powers and remedies of Lender provided
for therein.
13. Future Transfers. Borrower and Guarantor acknowledge that Lender's
consent to the partial release of the Additional Collateral does not constitute
a consent by Lender to any future transfer, conveyance, encumbrance or
assignment of any right, title or interest prohibited or restricted under the
Loan Documents.
14. Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the heirs, successors and assigns of the respective parties hereto
(without implying consent to any transfers or assignments prohibited or
restricted by the Loan Documents).
AMELANG PARTNERS
INCORPORATED
By: /s/ KARL J. AMELANG
-------------------------------------
Name: Karl J. Amelang
-------------------------------------
Title: CEO
-------------------------------------
/s/ KARL J. AMELANG
--------------------------------------------
KARL J. AMELANG
AID ASSOCIATION FOR LUTHERANS
By: /s/ DAVID CRIST
-------------------------------------
Name: David Crist
-------------------------------------
Title: Assistant Secretary
-------------------------------------
By: /s/ WAYNE C. STRECK
-------------------------------------
Name: Wayne C. Streck
-------------------------------------
Title: Vice-President Mortgage & Real Estate
-------------------------------------
Page 5
<PAGE> 109
STATE OF TEXAS )
)
COUNTY OF HARRIS )
This instrument was acknowledged before me on November 23rd, 1998, by Karl
J. Amelang, CEO of AMELANG PARTNERS INCORPORATED, a Texas corporation, on behalf
of said corporation.
[SEAL] /s/ DEBORAH D. DUNN
------------------------------------
Notary Public, State of Texas
STATE OF TEXAS )
)
COUNTY OF HARRIS )
This instrument was acknowledged before me on November 23rd, 1998, by Karl
J. Amelang.
[SEAL] /s/ DEBORAH D. DUNN
------------------------------------
Notary Public, State of Texas
STATE OF WISCONSIN )
)
COUNTY OF OUTGAMIE )
This instrument was acknowledged before me on November 30th, 1998, by
Wayne C. Streck and David Crist, the V-P (Mortg. & Real Estate), and Assistant
Secretary respectively, of AID ASSOCIATION FOR LUTHERANS, a Wisconsin
corporation, on behalf of said corporation.
/s/ KATHLEEN M. VAN BOSTEL
------------------------------------
Notary Public, State of Wisconsin
Kathleen M. Van Bostel
Attachments: Exhibit "A" and Exhibit "D"
My commission expires 8-11-2002
Page 6
<PAGE> 110
EXHIBIT "A"
Being a tract or parcel containing 5.119 acres (222,986 square feet) of land
situated in the D W C Harris Survey, Abstract Number 325, Harris County, Texas,
and being part of and out of that certain called 118.831 acres, described in
deed to the United States of America, as recorded in Volume 1297, Page 87, Deed
Records of Harris County, Texas, said 5.119 acre tract being more particularly
described as follows (all bearings and coordinates are based on the Texas State
Plane Coordinate System; South Central Zone; all distances and coordinates are
surface and may be converted to grid by multiplying by a combined scale factor
of 0.9998632):
COMMENCING at a 5/8-inch iron rod with plastic cap set marking the intersection
of the south right-of-way (ROW) line of Holcombe Boulevard with the west ROW
line of Almeda Road, and having surface coordinates of X=3,147,967.40,
Y=698,487.10, thence:
South 14 degrees 53'21" West, with said west ROW line, a distance of
206.00 feet to a 5/8-inch iron rod with plastic cap set marking the
POINT OF BEGINNING and northeast corner of the herein described tract;
THENCE, SOUTH 14 degrees 53'21" West, continuing with said west ROW line, a
distance of 330.70 feet to a 5/8-inch iron rod with plastic cap set marking the
southeast corner of the herein described tract;
THENCE, NORTH 75 degrees 06'39" West, a distance of 762.08 feet to a 5/8-inch
iron rod with plastic cap set marking the southwest corner of the herein
described tract;
THENCE, NORTH 41 degrees 44'27" East, a distance of 334.23 feet to a 5/8-inch
iron rod with plastic cap set marking the beginning of a tangent curve;
THENCE, NORTHEASTERLY, with a curve to the left having a radius of 760.00 feet,
a central angle of 03 degrees 35'59", an arc length of 47.75 feet, and a chord
which bears North 39 degrees 56'28" East, 47.74 feet to an "X" in concrete set
marking the most northwesterly corner of the herein described tract;
THENCE, SOUTHEASTERLY, with a non-tangent curve to the left having a radius of
87.50 feet, an arc length of 93.13 feet, a central angle of 60 degrees 59'01",
and a chord which bears South 58 degrees 25'28" East, 88.80 feet to a 5/8-inch
iron rod with plastic cap set marking a point of tangency;
THENCE, SOUTH, 88 degrees 54'58" East, a distance of 27.76 feet to a 5/8-inch
iron rod with plastic cap set marking the beginning of a tangent curve;
THENCE, EASTERLY, with a curve to the right having a radius of 281.50 feet, an
arc length of 67.83 feet, a central angle of 13 degrees 48'19", and a chord
which bears South 82 degrees 00'48" East, 67.66 feet to a 5/8-inch iron rod with
plastic cap set marking a point of tangency;
THENCE, SOUTH 75 degrees 06'39" East, a distance of 411.72 feet to the POINT OF
BEGINNING and containing 5.119 acres (222,986 square feet) of land (this
description is based on an AVTA/ACSM Land Title Survey and plat prepared by
Terra Surveying Company, Inc, Project Number 0043-9603-S).
<PAGE> 111
EXHIBIT "D"
Being a tract or parcel containing 3.135 acres (136,574 square feet) of land
situated in the D W C Harris Survey, Abstract Number 325, Harris County, Texas,
and being part of and out of that certain called 118.831 acres, described in
deed to the United States of America, as recorded in Volume 1297, Page 87, Deed
Records of Harris County, Texas, said 3.135 acre tract being more particularly
described as follows (all bearings and coordinates are based on the Texas State
Plane Coordinate System; South Central Zone; all distances and coordinates are
surface and may be converted to grid by multiplying by a combined scale factor
of 0.9998632):
BEGINNING at a 5/8-inch iron rod with plastic cap set marking the intersection
of the southerly right-of-way (ROW) line of Holcombe Boulevard with the
westerly ROW line of Almeda Road, and having surface coordinates of
X=3,147,967.40, Y=698,487.10, said iron rod also marking the most easterly
corner of the herein described tract;
THENCE, SOUTH 14 degrees 53'21" West, with said westerly ROW line, a distance
of 206.00 feet to a 5/8-inch iron rod with plastic cap set marking the most
southerly corner of the herein described tract;
THENCE, NORTH 75 degrees 06'39" West, at 380.00 feet pass a set 5/8-inch iron
rod with plastic cap, continuing in all, a distance of 411.72 feet to a
5/8-inch iron rod with plastic cap set marking the beginning of a tangent curve;
THENCE, WESTERLY, with a curve to the left having a radius of 281.50 feet, an
are length of 67.83 feet, a central angle of 13 degrees 48'19", and a chord
which bears North 82 degrees 00'48" West, 67.66 feet to a 5/8-inch iron rod
with plastic cap set marking a point of tangency;
THENCE, NORTH 88 degrees 54'58" West, a distance of 27.76 feet to a 5/8-inch
iron rod with plastic cap set marking the beginning of a tangent curve;
THENCE, NORTHWESTERLY, with a curve to the right having a radius of 87.50 feet,
an arc length of 93.13 feet, a central angle of 60 degrees 59'01", and a chord
which bears North 58 degrees 25'28" West, 88.80 feet to an "X" in the top of a
concrete inlet set marking the southwest corner of the herein described tract,
and being in a non-tangent curve concave northwest;
THENCE, NORTHEASTERLY, with said non-tangent curve to the left, having a radius
of 760.00 feet, a central angle of 07 degrees 08'15", an arc length of 94.68
feet, and a chord which bears North 34 degrees 34'21" East, 94.61 feet to a
5/8-inch iron rod with plastic cap set marking a point of tangency;
THENCE, NORTH 31 degrees 00'14" East, a distance of 65.48 feet to a 5/8-inch
iron rod with plastic cap set for corner;
THENCE, NORTH 18 degrees 49'21" East, a distance of 51.16 feet to a lead plug
with tack set in a concrete footing marking the most westerly north corner of
the herein described tract;
Page 1 of 2
<PAGE> 112
THENCE, SOUTH 71 degrees 10'39" East, a distance of 43.42 feet to a 5/8-inch
iron rod with plastic cap set for corner;
THENCE, NORTH 18 degrees 49'21" East, a distance of 23.88 feet to a 5/8-inch
iron rod with plastic cap set for corner;
THENCE, SOUTH 71 degrees 10'39" East, a distance of 15.90 feet to a lead plug
with tack set in a concrete footing for corner;
THENCE, NORTH 18 degrees 49'21" East, a distance of 20.16 feet to a lead plug
with tack set in a concrete footing for corner;
THENCE, SOUTH 71 degrees 10'39" East, a distance of 20.02 feet to a 5/8-inch
iron rod with plastic cap set for corner;
THENCE, NORTH 18 degrees 49'21" East, a distance of 20.56 feet to the southerly
ROW line of the aforesaid Holcombe Boulevard, also being the most northerly
west corner of the herein described tract;
THENCE, SOUTH 71 degrees 10'39" East, with said southerly ROW line, a distance
of 7.66 feet to the beginning of a tangent curve;
THENCE, SOUTHEASTERLY, with said southerly ROW line and a curve to the right
having a radius of 2,864.93 feet, at an arc length of 66.33 feet pass a set
5/8-inch iron rod with plastic cap, continuing in all, an arc length of 451.48
feet, a central angle of 09 degrees 01'45", and a chord which bears South 66
degrees 39'46" East, 451.01 feet to the POINT OF BEGINNING and containing 3.135
acres (136,574 square feet) of land (this description is based on an ALTA/ACSM
Land Title Survey and plat prepared by Terra Surveying Company, Inc. Project
Number 0043-9601-S).
Page 2 of 2
<PAGE> 113
ISSUED BY OWNER'S POLICY OF TITLE INSURANCE
COMMONWEALTH LAND TITLE INSURANCE COMPANY
- --------------------------------------------------------------------------------
[LOGO]COMMONWEALTH POLICY NUMBER
175-163778
SUBJECT TO THE EXCLUSIONS FROM COVERAGE, THE EXCEPTIONS FROM COVERAGE
CONTAINED IN SCHEDULE B AND THE CONDITIONS AND STIPULATIONS, Commonwealth Land
Title Insurance Company, a Pennsylvania corporation, herein called the Company,
insures, as of Date of Policy shown in Schedule A, against loss or damage, not
exceeding the Amount of Insurance stated in Schedule A, sustained or incurred by
the insured by reason of:
1. Title to the estate or interest described in Schedule A being vested other
than as stated therein;
2. Any defect in or lien or encumbrance on the title;
3. Any statutory or constitutional mechanic's, contractor's, or materialman's
lien for labor or material having its inception on or before Date of Policy;
4. Lack of a right of access to and from the land;
5. Lack of good and indefeasible title.
The Company also will pay the costs, attorneys' fees and expenses incurred
in defense of the title, as insured, but only to the extent provided in the
Conditions and Stipulations.
IN WITNESS WHEREOF, COMMONWEALTH LAND TITLE INSURANCE COMPANY has caused its
corporate name and seal to be hereunto affixed by its duly authorized officers,
the Policy to become valid when countersigned by an authorized officer or agent
of the Company.
COMMONWEALTH LAND TITLE INSURANCE COMPANY
Attest: [STAMP] By:
/s/ [illegible] /s/ [illegible]
Secretary Chairman and Chief Executive Officer
EXCLUSIONS FROM COVERAGE
The following matters are expressly excluded from the coverage of this
policy and the Company will not pay loss or damage, costs, attorneys' fees or
expenses which arise by reason of:
1. (a) Any law, ordinance or governmental regulation (including but not limited
to building and zoning laws, ordinances, or regulations) restricting,
regulating, prohibiting or relating to (i) the occupancy, use, or enjoyment
of the land; (ii) the character, dimensions or location of any improvement
now or hereafter erected on the land; (iii) a separation in ownership or a
change in the dimensions or area of the land or any parcel of which the land
is or was a part; or (iv) environmental protection, or the effect of any
violation of these laws, ordinances or governmental regulations, except to
the extent that a notice of the enforcement thereof or a notice of a defect,
lien or encumbrance resulting from a violation or alleged violation affecting
the land has been recorded in the public records at Date of Policy.
(b) Any governmental police power not excluded by (a) above, except to the
extent that a notice of the exercise thereof or a notice of a defect, lien or
encumbrance resulting from a violation or alleged violation affecting the
land has been recorded in the public records at Date of Policy.
2. Rights of eminent domain unless notice of the exercise thereof has been
recorded in the public records at Date of Policy, but not excluding from
coverage any taking that has occurred prior to Date of Policy which would be
binding on the rights of a purchaser for value without knowledge.
3. Defects, liens, encumbrances, adverse claims or other matters:
(a) created, suffered, assumed or agreed to by the insured claimant;
(b) not known to the Company, not recorded in the public records at Date of
Policy, but known to the insured claimant and not disclosed in writing to the
Company by the insured claimant prior to the date the insured claimant became
an insured under this policy;
(c) resulting in no loss or damage to the insured claimant;
(d) attaching or created subsequent to Date of Policy;
(e) resulting in loss or damage that would not have been sustained if the
insured claimant had paid value for the estate or interest insured by this
policy.
4. The refusal of any person to purchase, lease or lend money on the estate or
interest covered hereby in the land described in Schedule A because of
unmarketability of the title.
5. Any claim which arises out of the transaction vesting in the person named in
paragraph 3 of Schedule A the estate or interest insured by this policy, by
reason of the operation of federal bankruptcy, state insolvency, or other
state or federal creditors' rights laws that is based on either (i) the
transaction creating the estate or interest insured by this Policy being
deemed a fraudulent conveyance or fraudulent transfer or a voidable
distribution or voidable dividend, (ii) the subordination or
recharacterization of the estate or interest insured by this Policy as a
result of the application of the doctrine of equitable subordination or (iii)
the transaction creating the estate or interest insured by this Policy being
deemed a preferential transfer except where the preferential transfer results
from the failure of the Company or its issuing agent to timely file for
record the instrument of transfer to the insured after delivery or the
failure of such recordation to impart notice to a purchaser for value or a
judgment or lien creditor.
Texas Owner Policy T-1 (Rev. 1-1-93)
<PAGE> 114
[COMMONWEALTH LOGO]
COMMONWEALTH LAND TITLE INSURANCE COMPANY
GF Number: 98011250
Policy Number: 175-163778
Premium: N/A
Date of Endorsement: December 3, 1998
LEASEHOLD OWNER POLICY ENDORSEMENT
ISSUED BY
COMMONWEALTH LAND TITLE INSURANCE COMPANY
The conditions and stipulations of said policy are hereby amended in the
following particulars:
Section 1 of the Conditions and Stipulations of said policy is hereby amended
by adding subsection (h) thereto to read as follows:
(h) "leasehold estate": the right of possession for the term or terms
described in Schedule A hereof subject to any provisions contained in
the Lease which limits such right of possession.
The following new subsections (d) and (e) are inserted into Section 7 of said
Conditions and Stipulations:
(d) Valuation of Estate or Interest Insured
If, in computing loss or damages incurred by the Insured, it
becomes necessary to determine the value of the estate or interest insured
by this policy, such value shall consist of the then present worth of the
excess, if any, of the fair market rental value of such estate or interest,
undiminished by any matters for which such claim is made, for that part of
the term stated in Schedule A herein then remaining plus any renewal or
extended term for which a valid option to renew or extend is contained in
the Lease, over the value of the rent and other consideration required to
be paid under the Lease for the same period.
(e) Miscellaneous Items of Loss
In the event the Insured is evicted from possession of all or a part of the
land by reason of any matters insured against by this policy the following,
if applicable, shall be included in computing loss or damage incurred by
the Insured, but not to the extent that the same are included in the
valuation of the estate or interest insured by this policy.
(i) The reasonable cost of removing and relocating any personal property
which the Insured has the right to remove and relocate, situated on
the land at the time of eviction, the cost of transportation of such
personal property for the initial twenty-five miles incurred in
connection with such relocation, and the reasonable cost of repairing
such personal property damaged by reason of said removal and
relocation. The costs referred to above shall not exceed in the
aggregate the value of the personal property prior to its removal and
relocation. "Personal property", above referred to, shall mean
chattels and property which because of its character and manner of
affixation to the land, can be severed therefrom without causing
appreciable damage to the property severed or to the land to which
such property is affixed.
(ii) Rent or damages for use and occupancy of the land prior to such
eviction which the Insured as owner of the leasehold estate may be
obligated to pay to any person having paramount title to that of the
lessor in the Lease.
(iii) The amount of rent which, by the terms of the Lease, the Insured must
continue to pay to the lessor after eviction for the land, or part
thereof, from which the Insured has been evicted.
(iv) The fair market value, at the time of such eviction, of the estate or
interest of the insured in any sublease of all or part of the land
existing at the date of such eviction.
(v) Damages which the Insured may be obligated to pay to any sublease on
account of the breach of any sublease of all or part of the land
caused by such eviction.
The total liability of the Company under said policy and any endorsements
therein shall not exceed, in the aggregate, the face amount of said policy and
costs which the Company is obligated under the Conditions and Stipulations
thereof to pay.
This endorsement, when countersigned below by an Authorized Countersignature,
is made a part of said policy and is subject to the Schedules, Exclusions from
Coverage, and Conditions and Stipulations therein, except as modified by the
provisions hereof.
/s/ GLORIA DORECK
- ---------------------------
Authorized Countersignature
<PAGE> 115
OWNER POLICY OF TITLE INSURANCE
SCHEDULE A
Issued with Policy No. 535-370986
G.F. No. 98011250
Policy No. 175-163778
Amount of Insurance: $10,152,910.00
Premium: $56,515.45
Date of Policy: DECEMBER 3, 1998, 3:11 PM
1. Name of Insured: TMX REALTY, INC., A DELAWARE CORPORATION
2. The estate or interest in the land that is covered by this policy is:
LEASEHOLD ESTATE CREATED IN THAT LEASE AGREEMENT EXECUTED BY AND BETWEEN
THE UNITED STATES DEPARTMENT OF VETERANS AFFAIRS AND AMELANG PARTNERS,
INC., AS SET FORTH IN INSTRUMENT DATED AUGUST 25, 1993, AND FILED FOR
RECORD UNDER HARRIS COUNTY CLERK'S FILE NO. R182160 AND SUPPLEMENTED BY
INSTRUMENT FILED FOR RECORD UNDER HARRIS COUNTY CLERK'S FILE NO. S319699.
SUBLEASE CREATED BY MEMORANDUM OF SUBLEASE AND ASSIGNMENT BY AND BETWEEN
AMELANG PARTNERS, INC., A TEXAS CORPORATION AND INTROGEN THERAPEUTICS,
INC., A DELAWARE CORPORATION AND TMX REALTY CORPORATION, A DELAWARE
CORPORATION DATED NOVEMBER 24, 1998, FILED FOR RECORD UNDER HARRIS COUNTY
CLERK'S FILE NO. T418082.
3. Title to the estate or interest in the land is insured as vested in:
TMX REALTY CORPORATION, A DELAWARE CORPORATION
4. The land referred to in this policy is described as follows:
A TRACT OF LAND CONTAINING 2.619 ACRES, MORE OR LESS, SITUATED IN THE
D.W.C. HARRIS SURVEY, ABSTRACT NO. 325, HARRIS COUNTY, TEXAS, AND BEING
MORE PARTICULARLY DESCRIBED BY METES AND BOUNDS ON EXHIBIT "A" ATTACHED
HERETO AND MADE A PART HEREOF.
NOTE: THE COMPANY DOES NOT REPRESENT THAT THE ABOVE ACREAGE OR SQUARE
FOOTAGE CALCULATIONS ARE CORRECT.
<PAGE> 116
TERRA 4900 Woodway, Suite 1000 -- Houston, Texas 755056
SURVEYING (713) 993-0327 -- Fax (713) 993-9231
COMPANY, INC.
EXHIBIT "A"
METES & BOUNDS DESCRIPTION
2.619 ACRES (114,086 SQUARE FEET)
D W C HARRIS SURVEY, ABSTRACT NUMBER 325
HARRIS COUNTY, TEXAS
Being a tract or parcel containing 2.619 acres (114,086 square feet) of land
situated in the D W C Harris Survey, Abstract Number 325, Harris County, Texas,
and being part of and out of that certain called 118.831 acres, described in
deed to the United States of America, as recorded in Volume 1297, Page 87, Deed
Records of Harris County, Texas, said 2.619 acre tract being more particularly
described as follows (all bearings and coordinates are based on the Texas State
Plane Coordinate System; South Central Zone; all distances and coordinates are
surface and may be converted to grid by multiplying by a combined scale factor
of 0.9998632):
COMMENCING at a 5/8-inch iron rod with plastic cap set marking the intersection
of the south right-of-way (ROW) line of Holcombe Boulevard with the west ROW
line of Almeda Road, and having surface coordinates of X=3,147,967.40,
Y=698,487.10, thence:
South 14 degrees 53'21" West, with said west ROW line, a distance of 206.00
feet to a set 5/8-inch iron rod with plastic cap;
North 75 degrees 06'39" West, a distance of 329.30 feet to a 5/8-inch iron
rod with plastic cap set making the POINT OF BEGINNING and northeast corner
of the herein described tract;
THENCE, SOUTH 14 degrees 53'21" West, a distance of 330.70 feet to a 5/8-inch
iron rod with plastic cap set marking the southeast corner of the herein
described tract;
THENCE, NORTH 75 degrees 06'39" West, a distance of 432.78 feet to a 5/8-inch
iron rod with plastic cap set marking the southwest corner of the herein
described tract;
THENCE, NORTH 41 degrees 44'27" East, a distance of 334.23 feet to a 5/8-inch
iron rod with plastic cap set marking the beginning of a tangent curve;
THENCE, NORTHEASTERLY, with a curve to the left having a radius of 760.00 feet,
a central angle of 03 degrees 35'59", an arc length of 47.75 feet, and a chord
which bears North 39 degrees 56'28" East, 47.74 feet to an "X" in concrete set
marking the most northwesterly corner of the herein described tract;
THENCE, SOUTHEASTERLY, with a non-tangent curve to the left having a radius of
87.50 feet, an arc length of 93.13 feet, a central angle of 60 degrees 59' 01",
and a chord which bears South 58 degrees 25'28" East, 88.80 feet to a 5/8-inch
iron rod with plastic cap set marking a point of tangency;
THENCE, SOUTH 88 degrees 54'58" East, a distance of 27.76 feet to a 5/8-inch
iron rod with plastic cap set marking the beginning of a tangent curve;
THENCE, EASTERLY, with a curve to the right having a radius of 281.50 feet, an
arc length of 67.83 feet, a central angle of 13 degrees 48'19", and a chord
which bears South 82 degrees 00'48" East, 67.66 feet to a 5/8-inch iron rod
with plastic cap set marking a point of tangency;
<PAGE> 117
METES & BOUNDS DESCRIPTION
2.619 ACRES (114,086 SQUARE FEET)
D W C HARRIS SURVEY, ABSTRACT NUMBER 325
HARRIS COUNTY, TEXAS
Page 2 of 2
THENCE, SOUTH 75 degrees 06'39" East, a distance of 82.41 feet to the POINT OF
BEGINNING and containing 2.619 acres (114,086 square feet) of land (this
description is based on a Land Title Survey and plat prepared by Terra Surveying
Company, Inc. Project Number 0163-9801-S).
Compiled by: Scott D. Mandeville [STAMP]
Compiled: October 22, 1998
TSC Project No: 0163-9801-S
SDM: 2-619ac.mb
<PAGE> 118
OWNER POLICY OF TITLE INSURANCE
SCHEDULE B
G.F. No. 98011250
Policy No. 175-163778
EXCEPTIONS FROM COVERAGE
This policy does not insure against loss or damage (and the Company will not
pay costs, attorneys' fees or expenses) that arise by reason of the terms and
conditions of the leases or easements insured, if any, shown in Schedule A and
the following matters:
1. The following restrictive covenants of record itemized below (the Company
must either insert specific recording data or delete this exception):
AS SET FORTH IN INSTRUMENT FILED FOR RECORD UNDER HARRIS COUNTY CLERK'S
FILE NUMBER T415740, HARRIS COUNTY, TEXAS, BUT OMITTING ANY COVENANT OR
RESTRICTION BASED ON RACE, COLOR, RELIGION, SEX, HANDICAP, FAMILIAL STATUS,
OR NATIONAL ORIGIN.
2. Shortages in area.
3. Homestead or community property or survivorship rights, if any, of any
spouse of any insured.
4. Any titles or rights asserted by anyone, including, but not limited to,
persons, the public, corporations, governments or other entities,
a. to tidelands, or land comprising the shores or beds of navigable or
perennial rivers and streams, lakes, bays, gulfs or oceans, or
b. to lands beyond the line of the harbor or bulkhead lines as
established or changed by any government, or
c. to filled-in lands, or artificial islands, or
d. to statutory water rights, including riparian rights, or
e. to the area extending from the line of mean low tide to the line of
vegetation, or the right of access to that area or easement along and
across that area.
5. Standby fees, taxes and assessments by any taxing authority for the year
1999 and subsequent years, and subsequent taxes and assessments by any
taxing authority for prior years due to change in land usage and ownership.
6. The following matters and all terms of the documents creating or offering
evidence of the matters (We must insert matters or delete this exception.):
a. LEASEHOLD DEED OF TRUST DATED NOVEMBER 23, 1998, FILED FOR RECORD
UNDER HARRIS COUNTY CLERK'S FILE NO. T418083, EXECUTED BY TMX REALTY
CORPORATION, A DELAWARE CORPORATION TO JOHN E. PHILLIPS, TRUSTEE, AND
ALL TERMS, CONDITIONS AND STIPULATIONS CONTAINED THEREIN, INCLUDING
ANY ADDITIONAL INDEBTEDNESS SECURED THEREBY, SECURING THE PAYMENT OF
ONE PROMISSORY NOTE OF EVEN DATE THEREWITH IN THE PRINCIPAL AMOUNT OF
See Continuation Page
<PAGE> 119
Continuation of Schedule B G.F. No. 98011250
$6,000,000.00, payable to Riverway Bank. Said Lien being additionally
secured by Assignment of Leases (Space Lease) filed for record on
December 3, 1998, under Harris County Clerk's File No. T418084.
b. Terms, conditions and stipulations of Lease dated August 25, 1993, as
evidenced by Memorandum filed for record under Harris County Clerk's
File No. R182160, as supplemented by Notice of Lease filed for record
under Harris County Clerk's File No. S319699, between The United
States Department of Veterans Affairs and Amelang Partners, Inc.
Sublease created by Memorandum of Sublease and Assignment created by
and between Amelang Partners, Inc., a Texas corporation and Introgen
Therapeutics, Inc., a Delaware corporation and TMX Realty
Corporation, a Delaware corporation dated November 24, 1998, filed
for record under Harris County Clerk's File No. T418082.
c. Subordination, Attornment and Non-Disturbance Agreement by and among
Amelang Partners Incorporated, a Texas corporation, Introgen
Therapeutics, Inc., a Delaware corporation and Aid Association for
Lutherans, a Wisconsin corporation recorded under Harris County
Clerk's File No. T415741.
d. Storm sewer lines in various locations of subject property as shown
on survey dated October 2, 1998, prepared by Ernest Roth, R.P.L.S.
No. 2044.
e. Electric and telephone lines entering subject property as shown
on survey dated October 2, 1998, prepared by Ernest Roth, R.P.L.S.
No. 2044.
f. Any and all liens arising by reason of unpaid bills or claims for
work performed or materials furnished in connection with improvements
placed, or to be placed, upon the subject land. However, the Company
does insure the insured against loss, if any, sustained by the
Insured under this Policy if such liens have been filed with the
County Clerk of Harris County, Texas, prior to the date hereof.
Liability hereunder at the date hereof is limited to $6,000,000.00.
Liability shall increase as contemplated improvements are made, so
that any loss payable hereunder shall be limited to said sum plus the
amount actually expended by the Insured in improvements, subsequent
to the date of this policy, will be deemed made as of the date of the
policy. In no event shall the liability of the Company hereunder
exceed the face amount of this Policy. Nothing contained in this
paragraph shall be construed as limiting any exception or any printed
provision of this policy.
Countersigned
Partners Title Company
By
------------------------------
Authorized Countersignature
Page 2
<PAGE> 120
G.F. No. 98011250
COMMONWEALTH LAND TITLE INSURANCE COMPANY
Owner Policy Number: 175-163778
Issued with Policy Number: 535-370986
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Premium Amount Rate Rules Property County Liability at
Type Code Reissue Rate
<S> <C> <C> <C> <C> <C> <C> <C>
1 2 3 4 5 6 7 8
$ 35,382.45 C 201
- -------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 121
CONDITIONS AND STIPULATIONS
(Continued)
7. DETERMINATION, EXTENT OF LIABILITY AND COINSURANCE.
This policy is a contract of indemnity against actual monetary loss or damage
sustained or incurred by the insured claimant who has suffered loss or damage
by reason of matters insured against by this policy and only to the extent
herein described.
(a) The liability of the Company under this policy shall not exceed
the least of:
(i) the Amount of Insurance stated in Schedule A;
(ii) The difference between the value of the insured estate or
interest as insured and the value of the insured estate or interest subject to
the detect, lien or encumbrance insured against by this policy at the date the
insured claimant is required to furnish to Company a proof of loss or damage in
accordance with Section 5 of these Conditions and Stipulations.
(b) In the event the Amount of Insurance stated in Schedule A at the
Date of Policy is less than 80 percent of the value of the insured estate or
interest or the full consideration paid for the land, whichever is less, or if
subsequent to the Date of Policy an improvement is erected on the land which
increases the value of the insured estate or interest by at least 20 percent
over the Amount of Insurance stated in Schedule A, then this Policy is subject
to the following:
(i) where no subsequent improvement has been made, as to any
partial loss, the Company shall only pay the loss pro rata in the proportion
that the amount of insurance at Date of Policy bears to the total value of the
insured estate or interest at Date of Policy; or
(ii) where a subsequent improvement has been made, as to any
partial loss, the Company shall only pay the loss pro rata in the proportion
that 120 percent of the Amount of Insurance stated in Schedule A bears to the
sum of the Amount of Insurance stated in Schedule A and the amount expended for
the improvement.
The provisions of this paragraph shall not apply to costs,
attorneys' fees and expenses for which the Company is liable under this policy,
and shall only apply to that portion of any loss which exceeds, in the
aggregate, 10 percent of the Amount of Insurance stated in Schedule A.
(c) The Company will pay only those costs, attorneys' fees and
expenses incurred in accordance with Section 4 of these Conditions and
Stipulations.
8. APPORTIONMENT.
If the land described in Schedule A consists of two or more parcels that are not
used as a single site, and a loss is established affecting one or more of the
parcels but not all, the loss shall be computed and settled on a pro rata basis
as if the amount of insurance under this policy was divided pro rata as to the
value on Date of Policy of each separate parcel to the whole, exclusive of any
improvements made subsequent to Date of Policy, unless a liability or value has
otherwise been agreed upon as to each parcel by the Company and the insured at
the time of the issuance of this policy and shown by an express statement or by
an endorsement attached to this policy.
9. LIMITATION OF LIABILITY.
(a) If the Company establishes the title, or removes the alleged
defect, lien or encumbrance, or cures the lack of a right of access to or from
the land, all as insured, or takes action in accordance with Section 3 or
Section 6, in a reasonably diligent manner by any method, including litigation
and the completion of any appeals therefrom, it shall have fully performed its
obligations with respect to that matter and shall not be liable for any loss or
damage caused thereby.
(b) In the event of any litigation, including litigation by the
Company or with the Company's consent, the Company shall have no liability for
loss or damage until there has been a final determination by a court of
competent jurisdiction, and disposition of all appeals therefrom, adverse to
the title as insured.
(c) The Company shall not be liable for loss or damage to any insured
for liability voluntarily assumed by the insured in settling any claim or suit
without the prior written consent of the Company.
10. REDUCTION OF INSURANCE: REDUCTION OR TERMINATION OF LIABILITY.
All payments under this policy, except payments made for costs, attorneys' fees
and expenses, shall reduce the amount of the insurance pro tanto.
11. LIABILITY NONCUMULATIVE.
It is expressly understood that the amount of insurance under this
policy shall be reduced by any amount the Company may pay under any policy
insuring a mortgage to which exception is taken in Schedule B or to which the
insured has agreed, assumed, or taken subject, or which is hereafter executed
by an insured and which is a charge or lien on the estate or interest described
or referred to in Schedule A, and the amount so paid shall be deemed a payment
under this policy to the insured owner.
12. PAYMENT OF LOSS.
(a) No payment shall be made without producing this policy for
endorsement of the payment unless the policy has been lost or destroyed, in
which case proof of loss or destruction shall be furnished to the satisfaction
of the Company.
(b) When liability and the extent of loss or damage has been
definitely fixed in accordance with these Conditions and Stipulations, the loss
or damage shall be payable within 30 days thereafter.
13. SUBROGATION UPON PAYMENT OR SETTLEMENT.
(a) The Company's Right of Subrogation.
Whenever the Company shall have settled and paid a claim under this
policy, all right of subrogation shall vest in the Company unaffected by any
act of the insured claimant.
The Company shall be subrogated to and be entitled to all rights and
remedies that the insured claimant would have had against any person or
property in respect to the claim had this policy not been issued. If requested
by the Company, the insured claimant shall transfer to the Company all rights
and remedies against any person or property necessary in order to perfect this
right of subrogation. The insured claimant shall permit the Company to sue,
compromise or settle in the name of the insured claimant and to use the name of
the insured claimant in any transaction or litigation involving these rights or
remedies.
If a payment on account of a claim does not fully cover the loss of
the insured claimant, the Company shall be subrogated to these rights and
remedies in the proportion which the Company's payment bears to the whole
amount of the loss.
If loss should result from any act of the insured claimant, as stated
above, that act shall not void this policy, but the Company, in that event,
shall be required to pay only that part of any losses insured against by this
policy that shall exceed the amount, if any, lost to the Company by reason of
the impairment by the insured claimant of the Company's right of subrogation.
(b) The Company's Rights Against Non-insured Obligors.
The Company's right of subrogation against non-insured obligors shall
exist and shall include, without limitation, the rights of the insured to
indemnities, guaranties, other policies of insurance or bonds, notwithstanding
any terms or conditions contained in those instruments that provide for
subrogation rights by reason of this policy.
14. ARBITRATION.
"Unless prohibited by applicable law or unless this arbitration
section is deleted by specific provision in Schedule B of this policy, either
the Company of the Insured may demand arbitration pursuant to the Title
Insurance Arbitration Rules or the American Arbitration Association. Arbitrable
matters include, but are not limited to, any controversy or claim between the
Company and the Insured arising out of or relating to this Policy, and service
of the Company in connection with its issuance or the breach of a policy
provision or other obligation. All arbitrable matters when the Amount of
Insurance is $1,000,000 or less SHALL BE arbitrated at the request of either
the Company or the Insured, unless the insured is an individual person (as
distinguished from a corporation, trust, partnership, association or other
legal entity). All arbitrable matters when the Amount of Insurance is in excess
of $1,000,000 shall be arbitrated only when agreed to by both the Company and
the Insured. Arbitration pursuant to this Policy and under the Rules in effect
on the date the demand for arbitration is made or, at the option of the
Insured, the Rules in effect at the Date of Policy shall be binding upon the
parties. The award may include attorneys' fees only if the laws of the state in
which the land is located permit a court to award attorneys' fees to a
prevailing party. Judgment upon the award rendered by the Arbitrator(s) may be
entered in any court having jurisdiction thereof.
The Law of the situs of the land shall apply to any arbitration under
the Title Insurance Arbitration Rules.
A Copy of the Rules may be obtained from the Company upon request."
15. LIABILITY LIMITED TO THIS POLICY: POLICY ENTIRE CONTRACT.
(a) This policy together with all endorsements, if any, attached hereto
by the Company is the entire policy and contract between the insured and the
Company. In interpreting any provision of this policy, this policy shall be
construed as a whole.
(b) Any claim of loss or damage, whether or not based on negligence,
and which arises out of the status of the title to the estate or interest
covered hereby or by any action asserting such claim, shall be restricted to
this policy.
(c) No amendment of or endorsement to this policy can be made except
by a writing endorsed hereon or attached hereto signed by either the President,
a Vice President, the Secretary, an Assistant Secretary, or validating officer
or authorized signatory of the Company.
16. SEVERABILITY.
In the event any provision of the policy is held invalid or unenforceable
under applicable law, the policy shall be deemed not to include that provision,
and all other provisions shall remain in full force and effect.
17. NOTICES, WHERE SENT.
All notices required to be given the Company and any statement in writing
required to be furnished the Company shall include the number of this policy and
shall be addressed to COMMONWEALTH LAND TITLE INSURANCE COMPANY, 1700 MARKET
STREET, PHILADELPHIA, PENNSYLVANIA 19103-3990.
COMPLAINT NOTICE.
SHOULD ANY DISPUTE ARISE ABOUT YOUR PREMIUM OR ABOUT A CLAIM THAT YOU
HAVE FILED, CONTACT THE AGENT OR WRITE TO THE COMPANY THAT ISSUED THE POLICY.
IF THE PROBLEM IS NOT RESOLVED, YOU ALSO MAY WRITE THE TEXAS DEPARTMENT OF
INSURANCE, P.O. BOX 149091, AUSTIN, TX 78714-9091, FAX NO. (512) 475-1771.
THIS NOTICE OF COMPLAINT PROCEDURE IS FOR INFORMATION ONLY AND DOES NOT BECOME
A PART OR CONDITION OF THIS POLICY.
FOR INFORMATION, OR
TO MAKE A COMPLAINT, CALL:
1-800-925-0965
PARA INFORMATION, O
PARA HACER UNA QUEJA, HABLE
1-800-925-0965
Texas Owner Policy T-1 (Rev. 10-1-97)
<PAGE> 122
PROMISSORY NOTE
$6,000,000.00 Houston, Texas November 23,1998
FOR VALUE RECEIVED, TMX REALTY CORPORATION, a Delaware corporation ("Maker"),
promises to pay to the order of RIVERWAY BANK ("Payee"), at its banking house
in the City of Houston, Harris County, Texas, in lawful money of the United
States of America, the sum of SIX MILLION AND NO/100 DOLLARS ($6,000,000.00),
together with interest on the unpaid principal balance hereof from time to time
outstanding until maturity at the following rates:
1. Commencing as of the date hereof and continuing until the first anniversary
date hereof, this note shall accrue interest at the rate of 8.50% per
annum.
2. Commencing as of the first anniversary date hereof and continuing until the
sixth anniversary date hereof, this note shall accrue interest at the rate
of 7.50% per annum.
3. Commencing as of the sixth anniversary date hereof and continuing
throughout the remaining term hereof, this note shall accrue interest at a
rate equal to the lesser of (i) the rate of the 5 Year Treasury Bond Note
as published in the Wall Street Journal, fixed as of the close of business
on the sixth anniversary date hereof, plus 2.0% per annum, or (ii) 8.50%
per annum.
The rate from time to time in effect is herein referred to as the "Stated
Rate"; provided, however, in no event shall interest on this note ever be
charged or paid at a rate greater than the maximum non-usurious rate permitted
by applicable federal or Texas law from time to time in effect, whichever
shall permit the higher lawful rate (the "Highest Lawful Rate").
If at any time or times the Stated Rate would exceed the Highest Lawful
Rate but for the limitation set forth above, the rate of interest to accrue on
the unpaid principal balance of this note during all such times shall be
limited to the Highest Lawful Rate, but any subsequent reduction in the Stated
Rate shall not become effective to reduce the interest rate payable below the
Highest Lawful Rate until the total amount of interest accrued on the unpaid
balance of this note equals the total amount of interest which would have
accrued if the Stated Rate had at all times been in effect.
If, at maturity or final payment of this note, the total amount of
interest paid or accrued under the foregoing provisions is less than the total
amount of interest which would have accrued if the Stated Rate had at all times
been in effect, then Maker agrees to pay to Payee, to the extent allowed by
law, an amount equal to the difference between (a) the lesser of (i) the amount
of interest which would have accrued on this note if the Highest Lawful Rate
had at all times been in effect, or (ii) the amount of interest which would
have accrued if the Stated Rate had at all times been in effect, and (b) the
amount of interest accrued in accordance with the other provisions of this note.
Interest shall be computed on the basis of the actual number of days
elapsed in a year composed of 360 days; however, if such computation would cause
the Stated Rate to exceed the Highest Lawful Rate, interest shall be computed on
the basis of a year composed of 365 or 366 days, as the case may be. At all such
times, if any, as Texas law shall establish the Highest Lawful Rate, the Highest
Lawful Rate shall be the "indicated rate ceiling" (as defined in V.T.C.A.,
Finance Code, Chapter 303, as amended) from time to time in effect; provided
that Payee may also rely on alternative maximum rates of interest from time to
time in effect under other applicable laws, if they are higher.
This note is payable as follows:
Accrued interest shall be due and payable monthly, on the first day of
each and every calendar month, commencing January 1, 1999, and continuing
regularly and monthly thereafter through and including the first
<PAGE> 123
anniversary date hereof. Thereafter, principal and interest shall be due and
payable in equal monthly installments (the "Monthly Payments"), due and payable
on the 1st day of each and every calendar month, commencing January 1, 2000, and
continuing regularly and monthly thereafter until Maturity (as hereinafter
defined). The amount of the Monthly Payments shall be based on an equal
amortization of the principal amount hereof over a three hundred (300) month
period at the Stated Rate in effect from time to time. The amount of the Monthly
Payments shall be recalculated according to the above referenced amortization
schedule at any time that there is a rate adjustment on this note. The entire
balance of this note, principal together with unpaid accrued interest, shall be
due and payable in full eleven (11) years from the date hereof (the "Maturity").
In all cases, interest shall be calculated on the unpaid principal to the date
of each installment paid and the payment made credited first to the discharge of
the interest accrued and the balance to the reduction of the principal.
This note may be prepaid in whole or in part at any time without
penalty; provided, however, that all payments received by Payee from Maker upon
this note shall first be applied to the payment of accrued but unpaid interest,
with the balance thereof to be applied to the reduction of the outstanding
principal of this note. All prepayments in excess of accrued interest shall be
applied to the outstanding principal balance of this note in the inverse order
of maturity.
Whenever any payment to be made under this note shall be stated to be
due on a Saturday, Sunday or legal holiday for commercial banks under the laws
of the State of Texas, then such payment shall be made on the next succeeding
business day.
In addition to all principal and accrued interest on this note, Maker
agrees to pay (a) all reasonable costs and expenses incurred by all owners and
holders of this note in collecting this note through probate, reorganization,
bankruptcy or any other proceeding, (b) the reasonable attorneys' fees when and
if this note is placed in the hands of an attorney for collection after
default, and (c) the reasonable attorneys' fees, costs and expenses incurred by
Payee in connection with the preparation and filing of the agreements and
documents contemplated herein.
Except for the notice of defaults and opportunity to cure them as
provided in the Construction Loan Agreement of even date herewith and unless
otherwise provided by law, Maker and any and all co-makers, endorsers,
guarantors and sureties severally waive notice (including, but not limited to,
notice of protest, notice of dishonor and notice of intent to accelerate and
notice of acceleration), demand, presentment for payment, protest and the filing
of suit for the purpose of fixing liability and consent that the time of payment
hereof may be extended and re-extended from time to time without notice to them
or any of them, and each agrees that his, her or its liability on or with
respect to this note shall not be affected by any release of or change in any
security at any time existing or by any failure to perfect or to maintain
perfection of any lien on or security interest in any such security.
Maker warrants and represents to Payee, and to all other owners and
holders of any indebtedness evidenced hereby, that the loan evidenced by this
Note is and shall be solely for business, commercial or agricultural purposes
and not primarily for personal, family or household use. Maker acknowledges that
the loan evidenced by this Note is specifically exempted under Section 226.3(a)
of Regulation Z issued by the Board of Governors of the Federal Reserve System
and under the Truth-in-Lending Act and that no disclosures are required to be
given under such regulations and federal laws in connection with this Note.
It is agreed that time is of the essence of this agreement, and that in
the event of default in the payment of any installment of principal or interest
when due the holder hereof may declare the unpaid principal balance plus all
accrued but unpaid interest due thereon immediately due and payable without
notice (except as provided in the Loan Agreement), and failure to exercise said
option shall not constitute a waiver on the part of the holder of the right to
exercise the same at any other time.
In the event of (i) the failure of Maker to make any payment herein
provided when due (either of principal and/or interest), or (ii) in the event
the entirety of the unpaid principal balance plus accrued unpaid interest
thereon is declared due, interest on such past-due indebtedness (either
principal and/or interest) shall accrue at the Highest Lawful Rate.
2
<PAGE> 124
All agreements between the Maker and the Payee, whether now existing or
hereafter arising and whether written or oral, are hereby expressly limited so
that in no event, whether by reason of acceleration of maturity hereof or
otherwise, shall the amount paid or agreed to be paid to the Payee for the use,
forbearance, or detention of the money to be loaned hereunder or otherwise
exceed the Highest Lawful Rate. If fulfillment of any provision hereof or of any
mortgage, loan agreement, or other document evidencing or securing the
indebtedness evidenced hereby, at the time performance of such provision shall
be due, shall involve transcending the limit of validity prescribed by law,
then, ipso facto, the obligation to be fulfilled shall be reduced to the limit
of such validity; and if the Payee shall ever receive anything of value deemed
interest under applicable law which would exceed interest at the Highest Lawful
Rate, an amount equal to any excessive interest shall be applied to the
reduction of the principal amount owing hereunder and not to the payment of
interest, or if such excessive interest exceeds the unpaid balance of principal
hereof, such excess shall be refunded to the Maker. All sums paid or agreed to
be paid to the Payee for the use, forbearance, or detention of the indebtedness
of the Maker to the Payee shall, to the extent permitted by applicable law, be
amortized, prorated, allocated, and spread throughout the full term of such
indebtedness until payment in full so that the rate of interest on account of
such indebtedness is uniform throughout the term thereof. The provisions of this
paragraph shall control all agreements between the Maker and the Payee.
Payment of this note is secured by a Leasehold Deed of Trust of even date
herewith from Maker to John E. Phillips, Trustee for the benefit of Payee
covering certain property located in Harris County, Texas, as more particularly
described therein (the "Property").
Contemporaneously with the execution of this note, Maker has delivered to
Payee an Assignment of Leases of even date herewith executed by Maker in favor
of Payee covering the Property and Maker and Payee acknowledge that the
Assignment of Leases is an absolute assignment and not security for the payment
of this note.
Maker shall pay to Payee on or before the closing hereof a commitment fee
in the amount of $120,000 and it is agreed that said fee shall be paid in
consideration for the Payee's taking appropriate action to insure that all of
the funds that it is required to advance pursuant hereto are available to the
Maker when it requests the same, subject to the terms and conditions hereof.
This note is the promissory note referred to in, is subject to and is
entitled to the benefits of, the Construction Loan Agreement (the "Loan
Agreement") of even date herewith between Maker and Payee, as that Loan
Agreement may be amended, modified or supplemented from time to time. The Loan
Agreement contains, among other things, provisions for notice of default and
opportunity to cure same and the acceleration of the maturity hereof upon the
occurrence of certain stated events.
The principal of this note represents funds which Payee will advance to
Maker from time to time, upon the request of Maker, in a series of increments
which will aggregate, in total, the principal sum of this note; each such
increment so advanced shall constitute a part of the principal hereof and shall
bear interest from the respective date of the advance thereof.
This note has been executed and delivered in and shall be construed in
accordance with and governed by the laws of the State of Texas and of the United
States of America, except that Tex. Rev. Civ. Stat. Ann. Art. 5069, Ch. 15, as
amended (which regulates certain revolving credit loan accounts and revolving
tri-party accounts), shall not apply hereto.
For purposes of any suit relating to this note, Maker hereof submits itself
to the jurisdiction of any court sitting in the State of Texas and further
agrees that venue in any suit arising out of this note or any venue shall be
fixed in Harris County, Texas. Final judgment in any suit shall be conclusive
and may be enforced in any jurisdiction within or without the United States of
America, by suit on the judgment, a certified or exemplified copy of which
shall be conclusive evidence of such liability.
3
<PAGE> 125
TMX REALTY CORPORATION, a Delaware corporation
By: /s/ JAMES W. ALBRECHT, JR.
------------------------------------------
Name: JAMES W. ALBRECHT, JR.
----------------------------------------
Title: CHIEF FINANCIAL OFFICER
---------------------------------------
4
<PAGE> 126
PURCHASER'S STATEMENT
Date: December 2, 1998 GF No.: 98011250
Sale From: Amelang Partners, Inc. To: TMX Realty, Inc., a Delaware corporation
925 Echo Lane, Suite 100 301 Congress Avenue, Suite 1850
Houston, TX 77024 Austin, TX 78701
Property: 2.619 Acres, D. W. C. Harris Survey, Abstract No. 325
<TABLE>
<S> <C> <C> <C>
Purchase Price.................................................................................$ 1.00
Plus: Charges
Loan Charges to Riverway Bank...................................................$107,500.00
Commitment Fee (Prepaid $12,500.00) balance outstanding.....$107,500.00
Fees to Partners Title Company..................................................$ 35,688.64
Leasehold Owner Policy $10,152,910.00.......................$ 28,010.87
Mortgage Policy $6,000,000.00...............................$ 125.00
Area & Boundary Deletion....................................$ 7,371.58
1/2 Escrow Fee..............................................$ 100.00
1/2 Tax Certificates........................................$ 81.19
Fees to Partners Title Company..................................................$ 200.00
1/2 Messenger/Delivery Fees.................................$ 50.00
Recording Fees..............................................$ 150.00
Adjustment - Security Deposit...................................................$ 20,000.00
Adjustment - Legal Fees.........................................................$ 10,000.00
Legal Fees to Porter & Hedges LLP...............................................$ 22,834.71
Brokerage Fees to States & Little Mortgage Company..............................$ 60,000.00
Total Charges........................................................................$256,223.35
Gross Amount Due By Purchaser...................................................$256,224.35
Less: Credits
Total Credits........................................................................$ 0.00
Balance Due By Purchaser........................................................$256,224.35
===========
</TABLE>
Purchaser Understands the Closing or Escrow Agent has assembled this
information representing the transaction from the best information available
from other sources and cannot guarantee the accuracy thereof. Any real estate
agent or lender involved may be furnished a copy of this statement.
Purchaser understands that tax and insurance prorations and reserves were based
on figures for the preceding year or supplied by others or estimates for
current year, and in the event of any change for current year, all necessary
adjustments must be made between Purchaser and Seller direct.
The undersigned hereby authorizes Partners Title Company to make expenditure
and disbursements as shown above and approves same for payment. The undersigned
also acknowledges receipt of Loan Funds, if applicable, in the amount shown
above and a receipt of a copy of this statement.
Partners Title Company TMX Realty, Inc., a Delaware corporation
By /s/ GLORIA DORECK By /s/ JAMES W. ALBRECHT
----------------- ------------------------
Gloria Doreck
12/02/98 (4:15 PM) Compliments of PARTNERS TITLE COMPANY
THIS IS TO CERTIFY THAT THIS IS A TRUE AND CORRECT
[illegible]
[STAMP] PARTNERS TITLE COMPANY
BY /s/ [illegible]
-----------
<PAGE> 127
SELLER'S STATEMENT
<TABLE>
DATE: December 2, 1998 GF NO.: 98011250
<S> <C> <C>
SALE FROM: Amelang Partners, Inc. TO: TMX Realty, Inc., a Delaware corporation
925 Echo Lake, Suite 100 301 Congress Avenue, Suite 1850
Houston, TX 77024 Austin, TX 78701
PROPERTY: 2.619 Acres, D.W.C. Harris Survey, Abstract No. 325
Sales Price.................................................................................. $ 1.00
REIMBURSEMENTS/CREDITS
Adjustment - Security Deposit......................................... $ 20,000.00
Adjustment - Legal Fees............................................... $ 10,000.00
TOTAL REIMBURSEMENTS/CREDITS....................................... $ 30,000.00
GROSS AMOUNT DUE TO SELLER................................ $ 30,000.00
LESS: CHARGES AND DEDUCTIONS
Fees to Partners Title Company....................................................... $ 21,314.19
Leasehold Owner Policy $10,152,910.00............................... $ 21,133.00
1/2 Escrow Fee...................................................... $ 100.00
1/2 Tax Certificates................................................ $ 81.19
Fees to Partners Title Company....................................................... $ 75.00
1/2 Messenger/Delivery Fees......................................... $ 50.00
Recording Fees...................................................... $ 25.00
TOTAL CHARGES AND DEDUCTIONS....................................... $ 21,389.19
NET AMOUNT DUE TO SELLER.................................. $ 8,611.81
===========
</TABLE>
Seller Understands the Closing or Escrow Agent has assembled this information
representing the transaction from the best information available from other
sources and cannot guarantee the accuracy thereof. Any real estate agent or
lender involved may be furnished a copy of this statement.
Seller understands that tax and insurance prorations and reserves were based on
figures for the preceding year or supplied by others or estimates for current
year, and in the event of any change for current year, all necessary adjustments
must be made between Purchaser and Seller direct.
The undersigned hereby authorizes Partners Title Company to make expenditure and
disbursements as shown above and approves same for payment. The undersigned also
acknowledges receipt of Loan Funds, if applicable, in the amount shown above
and a receipt of a copy of this Statement.
Partners Title Company Amelang Partners, Inc.
By /s/ GLORIA DORECK By /s/ ROCKY STEVENS
--------------------------- --------------------------------
Gloria Doreck Rocky Stevens
Compliments of PARTNERS TITLE COMPANY
THIS IS TO CERTIFY THAT THIS IS A
TRUE AND CORRECT
[illegible]
BY /s/ [illegible]
--------------------------------
<PAGE> 128
[STEWART TITLE HOUSTON DIVISION LETTERHEAD]
December 3, 1998
Ms. Gloria Doreck
Partners Title Company
Via fax 238-9166
Re: Amelang Partners
Dear Gloria:
Per our telephone conversation, we have recorded the following documents as
indicated:
1) Note, Deed of Trust and Guaranty Modification Agreement having been filed
with the Harris County Clerk's Office on December 3, 1998 under Clerk's File
No. T-415740; and
2) Subordination, Attornment and Non-Disturbance Agreement having been filed
with the Harris County Clerk's Office on December 3, 1998 under Clerk's File
No. T-415741, and
3) UCC-3 having been filed with the Harris County Clerk's Office on December 3,
1998 under Clerk's File No. T-415742.
Please do not hesitate to call me should you have any questions or if anything
further is needed at this time.
Thank you.
/s/ BETH FORREST
Beth Forrest
Commercial Escrow Officer
Bf
encls
<PAGE> 129
SUBORDINATION, ATTORNMENT
AND NON-DISTURBANCE AGREEMENT
THIS AGREEMENT is made as of November 23, 1998, by and among AMELANG
PARTNERS INCORPORATED, a Texas corporation ("Borrower"), whose address is 952
Echo Lane, Suite 100, Houston, Texas 77024; and INTROGEN THERAPEUTICS, INC., a
Delaware corporation, ("Subtenant"), whose address is 301 Congress, Suite 1850,
Austin, Texas 78701 (Attn: James W. Albrecht, Chief Financial Officer); and AID
ASSOCIATION FOR LUTHERANS, a Wisconsin corporation (the "Beneficiary"), whose
address is 4321 North Ballard Road, Appleton, Wisconsin 54919.
A. THE PROPERTY. The term "Property", as used herein, shall mean the real
property situated in the County of Harris, State of Texas, legally described in
EXHIBIT "A" attached hereto and by this reference made a part hereof, together
with all buildings, structures, improvements and fixtures now or hereafter
located thereon, and together with all easements and other rights appurtenant
thereto.
B. THE LOAN; SECURITY DOCUMENTS; DEED OF TRUST. Borrower has previously
borrowed certain sums from Beneficiary as evidenced by a promissory note dated
February 6, 1997, in the amount of $2,500,000.00 (the "Note"). The Note is
secured, in part, by Borrower's leasehold estate under that certain
Enhanced-Use Lease No. 084B-029-92 dated August 25, 1993, between the United
States Department of Veterans Affairs, as landlord (the "Government"), and
Borrower, as tenant, and all subsequent amendments, addendum and supplements
thereto (collectively being referred to as the "Prime Lease"). The Prime Lease
covers certain land more particularly described therein, including the land
described in that certain Notice of Lease filed under Clerk's File No. S319699,
and recorded under Film Code Reference No. 511-82-2828 in the Official Public
Records of Real Property of Harris County, Texas. The land covered by the Prime
Lease includes the Property. Borrower has heretofore encumbered its interest
in the Prime Lease as security for payment of the Note and its obligations to
Beneficiary and, for such purpose, has entered into various instruments and
documents (collectively, as amended, the "Security Documents"), including,
without limitation, that certain Deed of Trust and Security Agreement of even
date with the Note (as amended, the "Deed of Trust") from Borrower to Barry E.
Putterman, Trustee, filed under Clerk's File No. S319696, and recorded under
Film Code Reference No. 511-82-2756 in the Official Public Records of Real
Property of Harris County, Texas, and an Assignment of Rents and Leases of even
date with the Note (as amended, the "Assignment"). The Deed of Trust and the
Assignment have been amended by that certain Note, Deed of Trust and Guaranty
Modification Agreement dated September 24, 1998.
C. THE SUBLEASE. Pursuant to the terms and provisions of that certain
Amended and Restated Ground Sublease Agreement dated effective September 24,
1998, between Borrower and Subtenant (the "Sublease"), for a term of
twenty-eight (28) years plus certain options as therein set forth, a portion of
the Property (the "Subleased Premises") has been subleased to Subtenant, which
Sublease is subordinate to the terms and provisions of the Security Documents.
D. PURPOSES. In connection with the above-mentioned transactions, Borrower
and Subtenant have agreed to offer certain assurances and representations to
the Beneficiary, and all parties agree to provide for (i) confirmation of the
subordination of the Sublease to the Security Documents; (ii) the
<PAGE> 130
continuation of the Sublease notwithstanding any foreclosure of the Deed of
Trust subject only to certain conditions set forth in this Agreement; (iii) the
acknowledgment that Beneficiary reserves the right to foreclose on Borrower's
interest in the Prime Lease as it affects land other than the Subleased
Premises and not to foreclose on its lien and security interest on Borrower's
interest in the Prime Lease as it affects the Subleased Premises; and (iv)
Subtenant's attornment to the Beneficiary or to such other parties as may
succeed to the interest of Borrower in the Prime Lease as the result of any
foreclosure, any conveyance of the Prime Lease in lieu of foreclosure, or
otherwise.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual terms and provisions
hereinafter contained and other good and valuable consideration received by
each party from the other, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
1. NOTICES OF DEFAULT TO BENEFICIARY. Notwithstanding anything to the
contrary in the Sublease, Subtenant shall deliver to Beneficiary by an
independent, nationally recognized courier service or mail to Beneficiary (by
certified mail, return receipt requested, adequate postage prepaid), at
Beneficiary's address set forth above, written notice of any default under the
Sublease by Borrower, and if within the time provided in the Sublease for
curing thereof by Borrower, if any, Beneficiary performs or causes to be
performed all such obligations with respect to which Borrower is in default
which can be cured by the payment of money, any right of Subtenant to terminate
the Sublease by reason of such default shall cease and be null and void;
provided, however, Beneficiary shall not be obligated to cure any such default
by Borrower under the Sublease. Any notice sent to Beneficiary shall be deemed
given upon the earlier to occur of actual receipt or seven (7) days after
deposit in the U.S. Mail as provided above.
2. SUBORDINATION OF SUBLEASE TO SECURITY DOCUMENTS. Subtenant hereby
confirms that its leasehold estate in the Subleased Premises and all of
Subtenant's right under the Sublease are subordinate to the Security Documents
(insofar as the Security Documents encumber Borrower's interest in the Prime
Lease) and to all extensions, renewals, modifications, consolidations and
replacements thereof, to the full extent of all obligations secured or to be
secured thereby including interest thereon and any future advances thereunder.
3. NON-DISTURBANCE OF SUBTENANT. Neither the Sublease nor Subtenant's
rights pursuant thereto (nor the rights, liens or security interests of any
mortgagee of Subtenant) shall be disturbed or affected by any foreclosure of
the lien created by the Deed of Trust or conveyance in lieu of foreclosure, or
by any other act or election by Beneficiary pursuant to the Security Documents.
Beneficiary's obligations under this Paragraph 3 shall be null and void if
Subtenant is at the time of any such foreclosure or conveyance in lieu thereof
then in default in the timely performance of the Subtenant's obligations under
the Sublease or this Agreement and does not cure such default within the time,
if any, allowed in the Sublease. Subtenant acknowledges and agrees that
Beneficiary shall have the right and option in the event of a default by
Borrower under the Security Documents not to perform all or any obligations of
Borrower under the Sublease or the Prime Lease with the possible effect that
Subtenant would have to make arrangements with the Government to preserve and
protect Subtenant's rights and interests under the Sublease.
4. BENEFICIARY AS LESSOR AFTER FORECLOSURE. In the event that
Beneficiary (or any other party) shall succeed to Borrower's interest in the
Sublease, whether through foreclosure of the liens created by the Deed of
Trust, conveyance in lieu of foreclosure, or otherwise, Beneficiary (or such
other party) shall thereupon, and without the necessity of attornment or other
act or agreement, be substituted as Subtenant's
-2-
<PAGE> 131
landlord under the Sublease, and shall be entitled to the rights and benefits
and subject to the obligations thereof; provided that neither Beneficiary nor
any other party shall be:
(a) liable for any act or omission of any prior landlord under
the Sublease (including Borrower) and all liability of Beneficiary (or such
other party) for damages for breach of any covenant, duty or obligation of
landlord under the Sublease shall be satisfied only out of the interest of
Beneficiary (or such other party) in the Subleased Premises; or
(b) subject to any offsets or defenses which Subtenant might have
against any prior landlord (including Borrower); however, if Borrower and
Beneficiary have been given notice by Subtenant of Borrower's default under
the Sublease prior to foreclosure or conveyance in lieu thereof, any such
default has not been cured, Subtenant may offset the reasonable actual
out-of-pocket costs paid by Subtenant to cure such default from the portion
of any net "Annual Basic Rent" (defined in the Sublease) payments later
becoming due under the Sublease, which portion would otherwise be retained
by the landlord under the Sublease (i.e., the portion remaining after such
landlord pays rent under the Prime Lease attributable thereto); or
(c) bound by Subtenant's payment of any rent or additional rent
that Subtenant may have paid to any prior landlord under the Sublease
(including Borrower) for a period in excess of one month in advance; or
(d) bound by any amendment, modification, extension, supplement,
or assignment of the Sublease made without Beneficiary's prior written
consent; or
(e) bound by any agreement for abatement of rent or bound by any
agreement for "free rent" unless the same is specifically provided in the
Sublease or agreed to in writing by Beneficiary; or
(f) liable to Subtenant or any other party for any conflict
between the provisions of the Sublease and the provisions of the Prime
Lease, including, but not limited to, any provisions relating to renewal
options and options to expand, or any breach of the Sublease due to
violations of any restrictions on the use of the Sublease Premises or other
property contained in the Sublease, and in the event of such conflict or
violations, Subtenant shall have no right to take remedial action against
Beneficiary or against any other party succeeding to Borrower. Nothing in
this subparagraph (f) shall preclude Subtenant from asserting any right
under the Sublease that it may have against Borrower; or
(g) liable with respect to any warranties or representations of
any nature whatsoever, either express or implied, made to Subtenant by
Borrower, any agent or employee of Borrower or any other party, whether
pursuant to the Sublease or otherwise, including, without limitation, any
warranties or representations respecting use, compliance with zoning,
Borrower's title, Borrower's authority, habitability, environmental
matters, fitness for purpose or possession; or
(h) liable for any tenant improvements or construction
requirements (including, without limitation, any allowances for tenant
improvements or construction) of any prior landlord under the Sublease
(including Borrower);
-3-
<PAGE> 132
and Subtenant hereby agrees to attorn to and recognize such Beneficiary (or
such other party) as lessor under the Sublease.
5. SPECIAL REMEDIES OF BENEFICIARY. In the event of a default under the
Note or the Security Documents, Beneficiary shall have the right and option
to foreclose on Borrower's interest in the Prime Lease as it affects property
other than the Subleased Premises without foreclosing on Borrower's interest in
the Prime Lease as it affects the Subleased Premises (a "Partial Foreclosure").
Following such a Partial Foreclosure (which may include a foreclosure of other
property and property rights of Borrower), Beneficiary (or its successors and
assigns) may enter into a "Replacement Lease" (as such term is defined in the
Prime Lease) with the Government covering property other than the Subleased
Premises. Subtenant acknowledges and agrees that in the event of a Partial
Foreclosure neither Beneficiary nor its successors or assigns shall have any
obligation or liability whatsoever to Subtenant (or its successors and assigns)
under the Sublease, this Agreement or otherwise. Any Partial Foreclosure that
fails to include the Borrower's interest in the Prime Lease as it affects the
Subleased Premises shall not affect the Sublease which shall continue subject
to Beneficiary's interest therein pursuant to the Security Documents and
Subtenant's rights in the Sublease shall not be disturbed thereby.
6. SPECIAL RIGHTS OF SUBTENANT. Borrower and Beneficiary agree that in
the event of a dispute as to whether Beneficiary, Borrower, or the Government,
or their successors or assigns, is entitled to receive rent or any other
payment which may become due under the Sublease, Subtenant shall have the right
to pay one-half of the Annual Basic Rent directly to the Government, in which
event such payment shall be credited as being properly paid under the terms of
the Sublease at the time it is paid to the Government, provided it interpleads
the remaining portion of the Annual Basic Rent into the registry of any
District Court in Harris County, Texas, in which event such amount shall be
deemed properly paid under the terms of the Sublease at the time it is tendered
to the Clerk of the Court.
7. BINDING EFFECT. The provisions of this Agreement shall be covenants
running with the Subleased Premises, and shall be binding upon and shall inure
to the benefit of the parties hereto and their respective heirs,
representatives, successors and assigns, including, without limitation, any
mortgage whose loan replaces the loan evidenced by the Note. The term
"Beneficiary" shall include, without limitation, any party that acquires an
interest in the Prime Lease (as it relates to the Subleased Premises) pursuant
to the Security Documents, and any subsequent owner and holder of the Note. The
term "Subtenant" shall include, without limitation, TMX Realty Corporation, a
Delaware corporation, as assignee of Subtenant's rights in the Sublease
pursuant to Assignment and Assumption Agreement dated November 23, 1998, and
any mortgagee that succeeds to the rights of Subtenant pursuant to foreclosure
of Subtenant's interest in the Sublease. Notwithstanding this Agreement or any
other matter (including, without limitation, Beneficiary's succession to the
interest of Borrower under the Prime Lease or Beneficiary's abandonment of all
or any portion of its rights under the Security Documents), Subtenant's sole
recourse against Beneficiary (or its successors and assigns) shall be a
judgment against Beneficiary's interest, if any, in the Sublease and the
Subleased Premises; and Subtenant shall have no other rights or remedies
against Beneficiary (or its successors and assigns).
8. MISCELLANEOUS. Borrower, as landlord under the Sublease and grantor
or trustor under the Deed of Trust, acknowledges and agrees for itself and its
successors and assigns that this Agreement does not constitute a waiver by
Beneficiary of any of its rights under the Deed of Trust or any other Security
Documents, or in any way release Borrower from its obligations to comply with
the terms, provisions, conditions, covenants, agreements, or clauses of the
Deed of Trust or any other such Security Document or confer any rights or
benefits upon Borrower. Borrower and Subtenant agree that, in the event of any
conflict between the Sublease and this Agreement, the terms and provisions of
this Agreement shall govern and control. Nothing contained in this Agreement
shall be construed to derogate from or in any way impair or affect the lien or
provisions of the Deed
-4-
<PAGE> 133
of Trust, except as specifically provided in Paragraph 4 above. This Agreement
is subject and subordinate to the Prime Lease.
9. MULTIPLE COUNTERPARTS. This Agreement may be executed in multiple
counterparts where the signature and acknowledgment of one or more parties may
not be on the same page as the other parties. By signing below, each party
authorizes the attorney for Beneficiary or the Title Company recording this
Agreement to affix counterpart signature and acknowledgment pages of one or
more parties into one or more versions of this Agreement so that at least one
counterpart will contain the original signature and acknowledgment pages of
each party hereto (with the same effect as if all signatures and
acknowledgments were made to such counterpart).
BORROWER: SUBTENANT:
AMELANG PARTNERS INCORPORATED INTROGEN THERAPEUTICS, INC.
By: /s/ WELLINGTON STEVENS III By: /s/ JAMES W. ALBRECHT, JR.
------------------------------- -------------------------------
Name: Wellington Stevens III Name: James W. Albrecht, Jr.
----------------------------- -----------------------------
Title: President Title: Chief Financial Officer
---------------------------- ----------------------------
BENEFICIARY:
AID ASSOCIATION FOR LUTHERANS
By: /s/ DAVID CRIST
-------------------------------
Name: David Crist
-----------------------------
Title: Assistant Secretary
----------------------------
By: /s/ WAYNE C. STRECK
-------------------------------
Name: Wayne C. Streck
-----------------------------
Title: Vice-President Mortgage &
Real Estate
----------------------------
-5-
<PAGE> 134
THE STATE OF TEXAS )
)
COUNTY OF HARRIS )
This instrument was acknowledged before me on this 23rd day of
November, 1998, by Wellington Stevens III, the President of AMELANG PARTNERS
INCORPORATED, a Texas corporation, on behalf of said corporation.
TYPE, PRINT OR STAMP NAME
OF NOTARY AND COMMISSION
EXPIRATION DATE BELOW /s/ LAWANA HARDIN
----------------------------------------------------
Notary Public
[SEAL]
THE STATE OF TEXAS )
)
COUNTY OF HARRIS )
This instrument was acknowledged before me on this 23rd day of
November, 1998, by James W. Albrecht, Jr., the CEO of INTROGEN THERAPEUTICS,
INC., a Delaware corporation, on behalf of said corporation.
TYPE, PRINT OR STAMP NAME
OF NOTARY AND COMMISSION
EXPIRATION DATE BELOW /s/ LAWANA HARDIN
----------------------------------------------------
Notary Public
[SEAL]
THE STATE OF WISCONSIN )
)
COUNTY OF OUTGAMIE )
This instrument was acknowledged before me on this 30th day of
November, 1998, by Wayne C. Streck, and David Crist, the V.P. - Mort. & Real
Estate and Assistant Secretary, respectively, of AID ASSOCIATION FOR
LUTHERANS., a Wisconsin corporation, on behalf of said corporation.
TYPE, PRINT OR STAMP NAME
OF NOTARY AND COMMISSION
EXPIRATION DATE BELOW /s/ KATHLEEN M. VAN BOSTEL
----------------------------------------------------
Notary Public in and for the State of Wisconsin
Kathleen M. Van Bostel
My Comm. expires 8-11-2002.
-6-
<PAGE> 135
EXHIBIT "A"
Being a tract or parcel containing 2.619 acres (114,086 square feet) of land
situated in the D W C Harris Survey, Abstract Number 325, Harris County, Texas,
and being part of and out of that certain called 118.831 acres, described in
deed to the United States of America, as recorded in Volume 1297, Page 87, Deed
Records of Harris County, Texas, said 2.619 acre tract being more particularly
described as follows (all bearings and coordinates are based on the Texas State
Plane Coordinate System; South Central Zone; all distances and coordinates are
surface and may be converted to grid by multiplying by a combined scale factor
of 0.9998632):
COMMENCING at a 5/8-inch iron rod with plastic cap set marking the intersection
of the south right-of-way (ROW) line of Holcombe Boulevard with the west ROW
line of Almeda Road, and having surface coordinates of X=3,147,967.40,
Y=698,487.10, thence:
South 14 degrees 53'21" West, with said west ROW line, a distance of
206.00 feet to a set 5/8-inch iron rod with plastic cap;
North 75 degrees 06'39" West, a distance of 329.30 feet to a 5/8-inch iron
rod with plastic cap set marking the POINT OF BEGINNING and northeast
corner of the herein described tract;
THENCE, SOUTH 14 degrees 53'21" West, a distance of 330.70 feet to a 5/8-inch
iron rod with plastic cap set marking the southeast corner of the herein
described tract;
THENCE, NORTH 75 degrees 06'39" West, a distance of 432.78 feet to a 5/8-inch
iron rod with plastic cap set marking the southwest corner of the herein
described tract;
THENCE, NORTH 41 degrees 44'27" East, a distance of 334.23 feet to a 5/8-inch
iron rod with plastic cap set marking the beginning of a tangent curve;
THENCE, NORTHEASTERLY, with a curve to the left having a radius of 760.00 feet,
a central angle of 03 degrees 35'59", an arc length of 47.75 feet, and a chord
which bears North 39 degrees 56'28" East, 47.74 feet to an "X" in concrete set
marking the most northwesterly corner of the herein described tract;
THENCE, SOUTHEASTERLY, with a non-tangent curve to the left having a radius of
87.50 feet, an arc length of 93.13 feet, a central angle of 60 degrees 59'01",
and a chord which bears South 58 degrees 25'28" East, 88.80 feet to a 5/8-inch
iron rod with plastic cap set marking a point of tangency;
THENCE, SOUTH 88 degrees 54'58" East, a distance of 27.76 feet to a 5/8-inch
iron rod with plastic cap set marking the beginning of a tangent curve;
THENCE, EASTERLY, with a curve to the right having a radius of 281.50 feet, an
arc length of 67.83 feet, a central angle of 13 degrees 48'19", and a chord
which bears South 82 degrees 00'48" East, 67.66 feet to a 5/8-inch iron rod with
plastic cap set marking a point of tangency;
THENCE, SOUTH 75 degrees 06'39" East, a distance of 82.41 feet to the POINT OF
BEGINNING and containing 2.619 acres (114,086 square feet) of land (this
description is based on a Land Title Survey and plat prepared by Terra
Surveying Company, Inc, Project Number 0163-9801-S).
<PAGE> 136
GENERAL SERVICES ADMINISTRATION SUPPLEMENTAL AGREEMENT DATE
PUBLIC BUILDING SERVICE NO. 4 2/5/97
SUPPLEMENTAL LEASE AGREEMENT ---------------------------------------
TO: ENHANCED-USE LEASE NO. 084B-029-92,
HOUSTON, TX
- --------------------------------------------------------------------------------
ADDRESS OF PREMISES - 2002 Holcombe Blvd., Houston, Texas
- --------------------------------------------------------------------------------
THIS AGREEMENT, made and entered into this date by and between AMELANG PARTNERS
INCORPORATED
whose address is c/o KARL AMELANG
952 ECHO LANE, SUITE 100
HOUSTON, TX 77024
hereinafter called the DEVELOPER, and the UNITED STATES OF AMERICA, hereinafter
called the Government.
WHEREAS, the parties hereto entered into that certain Enhanced-Use Lease dated
August 25, 1993, as amended by (i) Supplemental Lease Agreement (SLA) No. 1,
dated November 1, 1994; (ii) SLA No. 2, dated March 25, 1995; and (iii) SLA No.
3, dated May 20, 1996,
WHEREAS, the parties hereby desire to amend the Lease.
NOW THEREFORE, these parties for the considerations hereinafter mentioned
covenant and agree that the said Lease is amended, effective______________, as
follows:
THE ENHANCED-USE LEASE IS AMENDED AS FOLLOWS:
1. Amend Paragraph 27 (c) of the Enhanced-Use Lease by modifying the sentence
which begins with the phrase "Notwithstanding that the Developer may
continue under the Lease as to the Mortgaged Property, upon such default by
the Developer, the Developer shall be obligated to pay to the
Government...". Substitute therefore the following:
"Notwithstanding that the Developer may continue under the Lease as to
the Mortgaged Property, upon such default by the Developer, the Developer
(but not the lender) shall be obligated to promptly pay to the
Government...".
2. The phrase, "but not the lender" is to be added to the next to the last
sentence in Paragraph 27c of the Lease so that such sentence shall read,
"...shall be a debt owning by the Developer (but not the lender) to the
Government..."
IN WITNESS WHEREOF, the parties subscribed their names as of the above date.
- --------------------------------------------------------------------------------
DEVELOPER
By /s/ KARL J. AMELANG President
------------------------- --------------------------
(Signature) (Title)
IN THE PRESENCE OF
/s/ [illegible] 952 Echo Lane, #100
------------------------ --------------------------
(Signature) (Address)
Houston, Texas 77024
- --------------------------------------------------------------------------------
UNITED STATES OF AMERICA
By /s/ TANGELA D. COOPER CONTRACTING OFFICER
------------------------- --------------------------
(Signature) (Official Title)
- --------------------------------------------------------------------------------
Page 1 of 3 pages
<PAGE> 137
Supplemental Lease Agreement No. 4
Enhanced-Use Lease No. 084B-029-92, Houston, TX
Page No. 2
3. Amend Paragraph 27 of the Enhanced-Use Lease by adding the following new
subparagraph (d):
"d. Agreement with respect to defaults under the Lease which involve the
Mortgaged Property and other premises. The Government agrees that if the
Mortgaged Property is properly mortgaged per the terms of Paragraph 24 of the
Lease, and if the Developer defaults under the Lease with respect to an
obligation it has which pertains to the Mortgaged Property and other premises
covered by the Lease, the Government must elect whether to treat such default,
notice and opportunity to cure within the remedies provided in either
Paragraph 27(b) or 27(c) of the Lease, irrespective of whether the default
relates solely to the Mortgaged Property. The Government's failing to elect at
the time of the giving of notice of the default shall be its election to
proceed under Paragraph 27(b)."
4. Amend Paragraph 27 of the Enhanced-Use Lease by adding the following new
subparagraphs (e) and (f).
"e. The remedies contained in subparagraphs (b), (c), and (d) of this
Paragraph 27 are the sole and exclusive remedies of the Government against the
lender attributable to any defaults occurring, in whole or in part, prior to the
lender or its successors and assigns succeeding to the interest of the
Developer under the Lease as to the Mortgaged Property.
f. If the Government exercises its remedies under Paragraph 27(b), (c),
or (d) above, and a lender or purchaser at foreclosure sale succeeds to the
interest or the developer as to the Mortgaged Property (but not other
Property), of if Developer should ever reject this lease, in whole or in part,
pursuant to applicable provisions of the United States Bankruptcy Code, then, in
either such event, the Government hereby agrees to enter into a replacement
lease directly with the person succeeding to the interest of Developer in the
Mortgaged Property for the term and upon the conditions hereinafter set forth:
(i) The term of such lease (Replacement Lease) shall commence upon
the date of the termination of the Lease with Developer and
shall expire on the date otherwise set forth as the date of
expiration under the Lease.
(ii) Except as to the lease term and except as otherwise provided in
this Paragraph 27(f), all terms and provisions of the Lease
shall apply to the Replacement Lease as if the Government has
exercised its rights under Paragraphs 27(b), (c), or (d), as
applicable.
(iii) Within thirty (30) days of the request by the lender or
purchaser at foreclosure sale, the Government shall enter into
a Replacement Lease in a form reasonably satisfactory to the
Government consistent with the provisions hereof and without
making reference to any premises other than the Mortgaged
Property, except for the obligation to pay Additional Rent as
provided in SLA No. 2
5. The Mortgaged Property is more particularly described in Exhibit "A"
attached hereto.
6. The Government agrees that any material amendment or material modification
to the Lease that adversely affects Lender's rights or interests under the
lease, without Lender's prior written consent, shall not be binding upon
Lender or its successors or assigns.
7. If the Government ever exercises its purchase rights under Paragraph 28 of
the Lease, (a) any payments shall be made directly to the first lien
mortgagee of the Mortgaged Property, and (b) the "Loan Balance" shall be
deemed to include principal, interest, reasonable costs, and applicable
prepayment premiums.
Page 2 of 3 pages
<PAGE> 138
Supplemental Lease Agreement No. 4
Enhanced-Use Lease No. 084B-029-92, Houston, TX
Page No. 3
8. The Government acknowledges that Developer has constructed a one-story
building ("Building) situated at 2256-2280 Holcombe Boulevard, and
covered by this Lease, over the existing VA 54-inch storm sewer line
traversing a portion of the Mortgaged Property. The Government hereby
consents to such encroachment and agrees that the Lender, its
successors and assigns, will not be responsible for any losses,
damages, liabilities, or expenses attributable to such encroachment.
The Government does hereby further grant to Developer, its successors
and assigns, and all subtenants under this Lease, during the term of
this Lease, the non-exclusive right to drain into all storm sewer
lines, subject to compliance with all applicable laws including
environmental laws, situated on the Mortgaged Property or any portion
thereof. The Government also consents to any approved encroachment of
parking or driveways constructed over any such storm sewer lines,
provided that the Developer takes reasonable precautions not to damage
same.
9. The Government hereby grants to the Developer, its successors and
assigns under this Lease, and all subtenants and invitees of such
parties, in each case during the term of this lease only, the
non-exclusive right of ingress and egress over and across the portions
of Ringness Avenue, being particularly described on Exhibit "B"
attached hereto, provided, however, that any access by vehicles over
3/4 tons shall not be permitted without the prior consent of the
Government and further, that such access shall be subject to such
other controls as the Government determines necessary.
All other terms and conditions of the lease shall remain in force and
effect.
Page 3 of 3 pages
<PAGE> 139
EXHIBIT "A"
[TERRA LETTERHEAD]
METES & BOUNDS DESCRIPTION
8.254 ACRES (359,560 SQUARE FEET)
D W C HARRIS SURVEY, ABSTRACT NUMBER 325
HARRIS COUNTY, TEXAS
TRACT I:
Being a tract or parcel containing 8.254 acres (359,560 square feet) of land
situated in the D W C Harris Survey, Abstract Number 325, Harris County, Texas,
and being part of and out of that certain called 118.831 acres, described in
deed to the United States of America, as recorded in Volume 1297, Page 87, Deed
Records of Harris County, Texas, said 8.254 acre tract being more particularly
described as follows (all bearings and coordinates are based on the Texas State
Plane Coordinate System; South Central Zone; all distances and coordinates are
surface and may be converted to grid by multiplying by a combined scale factor
of 0.9998632):
BEGINNING at a 5/8-inch iron rod with plastic cap set marking the intersection
of the south right-of-way (ROW) line of Holcombe Boulevard with the west ROW
line of Almeda Road, and having surface coordinates of X=3.147,967.40,
Y=698,487.10 said iron rod also marking the northeast corner of the herein
described tract;
THENCE, SOUTH 14 degrees 53'21" West, with said west ROW line, a distance of
536.70 feet to a 5/8-inch iron rod with plastic cap set marking the southeast
corner of the herein described tract;
THENCE, NORTH 75 degrees 06'39" West, a distance of 762.08 feet to a 5/8-inch
iron rod with plastic cap set marking the southwest corner of the herein
described tract;
THENCE, NORTH 41 degrees 44'27" East, a distance of 334.23 feet to a 5/8-inch
iron rod with plastic cap set marking the beginning of a tangent curve;
THENCE, NORTHEASTERLY, with a curve to the left having a radius of 760.00 feet,
a central angle of 10 degrees 44'13", an arc length of 142.42 feet, and a chord
which bears North 36 degrees 22'20" East, 142.21 feet to a 5/8-inch iron rod
with plastic cap set marking a point of tangency;
THENCE, NORTH 31 degrees 00'14" East, a distance of 65.48 feet to a 5/8-inch
iron rod with plastic cap set for corner;
THENCE, NORTH 18 degrees 49'21" East, a distance of 51.16 feet to a lead plug
with tack set in a concrete footing marking the most westerly northwest corner
of the herein described tract;
THENCE, SOUTH 71 degrees 10'39" East, a distance of 43.42 feet to a 5/8 inch
iron rod with plastic cap set for corner;
THENCE, NORTH 18 degrees 49'21" East, a distance of 23.88 feet to a 5/8-inch
iron rod with plastic cap set for corner;
THENCE, SOUTH 71 degrees 10'39" East, a distance of 15.90 feet to a lead plug
with tack set in a concrete footing for corner;
THENCE, NORTH 18 degrees 49'21" East, a distance of 20.16 feet to a lead plug
with tack set in a concrete footing for corner;
THENCE, SOUTH 71 degrees 10'39" East, a distance of 20.02 feet to a 5/8-inch
iron rod with plastic cap set for corner;
THENCE, NORTH 18 degrees 49'21" East, a distance of 20.56 feet to a 5/8-inch
iron rod with plastic cap set marking the south ROW line of the aforesaid
Holcombe Boule-
<PAGE> 140
METES & BOUNDS DESCRIPTION
8.254 ACRES (359,560 SQUARE FEET)
D W C HARRIS SURVEY, ABSTRACT NUMBER 325
HARRIS COUNTY, TEXAS
PAGE 2 OF 2
THENCE, SOUTHEASTERLY, with said south ROW line and a curve to the right having
a radius of 2,864.93 feet, a central angle of 09 degrees 01'45", an arc length
of 451.48 feet, and a chord which bears South 66 degrees 39'46" East, 451.01
feet to the POINT OF BEGINNING and containing 8.254 acres (359,560 square feet)
of land (this description is based on an ALTA/ACSM Land Title Survey and plat
prepared by Terra Surveying Company, Inc. Project Number 0043-9602-S).
Compiled by: Scott D. Mandeville
Compiled: December 17, 1996
TSC Project No: 0043-9602-S
SDM: 00439602.mb
[SEAL OF STATE OF TEXAS LAND SURVEYOR]
<PAGE> 141
METES & BOUNDS DESCRIPTION
RINGNESS AVENUE ACCESS EASEMENT
-------------------------------
0.588 ACRE (28,596 SQUARE FEET)
D W C HARRIS SURVEY, ABSTRACT NUMBER 325
HARRIS COUNTY, TEXAS
TRACT II:
Being a tract or parcel containing 0.588 acre (28,596 square feet) of land
situated in the D W C Harris Survey, Abstract Number 325, Harris County, Texas,
and being part of and out of that certain called 118.831 acres, described in
deed to the United States of America, as recorded in Volume 1297, Page 87, Deed
Records of Harris County, Texas, said 0.588 acre tract being more particularly
described as follows (all bearings and coordinates are based on the Texas State
Plane Coordinate System; South Central Zone; all distances and coordinates are
surface and may be converted to grid by multiplying a combined scale factor of
0.9998632):
COMMENCING at 5/8-inch iron rod with plastic cap set marking the intersection
of the south right-of-way (ROW) line of Holcombe Boulevard with the west ROW
line of Almeda Road, and having surface coordinates of X=3,147,967.40,
Y=698,487.10, thence:
South 14 degrees 83'21" seconds West, with said West ROW line, a distance
of 536.70 feet to a set 5/8-inch iron rod with plastic cap;
North 75 degrees 06'39" seconds West, a distance of 782.08 feet to a
5/8-inch iron rod with plastic cap set marking the POINT OF BEGINNING;
THENCE, NORTH 41 degrees 44'27" seconds East, a distance of 334.23 feet to a
5/8-inch iron rod with plastic cap set marking the beginning of a tangent
curve;
THENCE, NORTHEASTERLY, with a curve to the left having a radius of 760.00 feet,
a central angle of 10 degrees 44'14", an arc length of 142.43 feet, and a
chord which bears North 36 degrees 22' 20" East, 142.22 feet to a 5/8-inch
iron rod with plastic cap set marking a point of tangency;
THENCE, NORTH 31 degrees 0'14" East, a distance of 65.48 feet to a set 5/8-inch
iron rod with plastic cap;
THENCE, NORTH 18 degrees 48'21" East, at 51.16 feet pass a lead plug with tact
set in a concrete footing, continuing in all, a distance of 105.78 feet to an
angle point;
THENCE, NORTH 63 degrees 49'21" seconds East, a distance of 14.14 feet
to a point in the south ROW line of the aforesaid Holcombe Boulevard;
THENCE, NORTH 71 degrees 10'39" seconds West, with said South Row line,
a distance of 102.97 feet to an angle point;
THENCE, SOUTHEASTERLY, with a non-tangent curve concave southwest, having a
radius of 35.00 feet, an arc length of 54.96 feet, a central angle of 89
degrees 57'12", and a chord which bears South 28 degrees 09'15" East, 49.48
feet to a point of tangency:
EXHIBIT "B"
<PAGE> 142
METES & BOUNDS DESCRIPTION
RINGNESS AVENUE ACCESS EASEMENT
0.388 ACRE (25,598 SQUARE FEET)
D W C HARRIS SURVEY, ABSTRACT NUMBER 325
HARRIS COUNTY, TEXAS
PAGE 2 OF 2
THENCE, SOUTH 18 degrees 49'21" West, a distance of 105.05 feet to the
beginning of a tangent curve;
THENCE, SOUTHWESTERLY, with a curve to the right having a radius of 500.00
feet, an arc length of 200.00 feet, a central angle of 22 degrees 55'08", and a
chord which bears South 30 degrees 18'34" West, 198.87 feet to a point
of tangency;
THENCE, SOUTH 41 degrees 44'27" West, a distance of 316.68 feet to an
angle point;
THENCE, SOUTH 75 degrees 06'39" East, a distance of 33.83 feet to the
POINT OF BEGINNING and containing 0.388 acre (25,598 square feet) of land.
<PAGE> 143
GENERAL SERVICES ADMINISTRATION NO. 2 3/23/95
PUBLIC BUILDINGS SERVICE ---------------------------------
TO LEASE NO.
SUPPLEMENTAL LEASE AGREEMENT Enhanced-Use Lease (084B-029-92)
- --------------------------------------------------------------------------------
OF PREMISES
Holcombe Blvd.
Houston, TX
- --------------------------------------------------------------------------------
THIS AGREEMENT, made and entered into this date by and between
AMELANG PARTNERS, INC.
c/o Karl Amelang
whose address is 952 Echo Lane, Suite 100
Houston, TX
hereinafter called the Lessor, and the UNITED STATES OF AMERICA, hereinafter
called the Government:
WHEREAS, the parties hereto desire to amend the above Lease to allow the
Developer flexibility in obtaining financing, to assist the Developer in
completing the obligations imposed upon him by the Lease, and to allow the
Developer to grant as security for such financing a security interest in the
Mortgaged Property which would be acceptable to a lender.
NOW THEREFORE, these parties for the considerations hereinafter mentioned
covenant and agree that the said Lease is amended as follows:
Add the following to "Definitions", Paragraph 1 of the Enhanced-Use
Lease:
"Mortgaged Property" -- means the Developer's Interest(s) in the 8.18
acres and identified as Parcel A in Exhibit A and subject to Paragraph
24.
Amend Paragraph 9(c)(6) of the Enhanced-Use Lease with the following:
The Developer will commence construction of the Mandatory Development
on or before April 3, 1995.
All other terms and conditions of the lease shall remain in force and effect.
IN WITNESS WHEREOF, the parties subscribed their names as of the above date.
- --------------------------------------------------------------------------------
LESSOR AMELANG PARTNERS, INC.
BY /s/ KARL J. AMELANG PRESIDENT
------------------- -------------------
(Signature) (Title)
IN PRESENCE OF
/s/[illegible] 952 ECHO LANE
------------------- -------------------
(Signature) (Address)
- --------------------------------------------------------------------------------
UNITED STATES OF AMERICA HOUSTON, TX 77024
BY /s/ LAWRENCE J. HILL CONTRACTING OFFICER
-------------------- -------------------
(Signature) (Official Title)
- --------------------------------------------------------------------------------
Page 1 of 3 pages
<PAGE> 144
Page 2
Supplemental Lease Agreement No. 2
Enhanced-Use Lease (084B-029-92)
Amend Paragraph 13(a)(2) of the Enhanced-Use Lease with the following:
The Developer will commence construction of the Mandatory Development on or
before April 3, 1995, and the building shell for the Mandatory Development shall
be completed on or before September 15, 1995.
Amend Paragraph 18 of the Enhanced-Use Lease with the following:
The Developer will obtain a firm commitment of funds in an amount
sufficient to construct the Mandatory Development on or before March 24, 1995.
Delete subparagraphs 24(f), (g), (h), and (i).
Amend Paragraph 26 of the Enhanced-Use Lease by substituting "twenty (20)
days" for "fifteen (15) days" wherever it appears in the Paragraph.
Amend Paragraph 27 of the Enhanced-Use Lease by numbering the existing
paragraph as (a) and adding the following new subparagraphs (b) and (c):
(b) Agreement with respect to defaults under the Lease which involve the
Mortgaged Property. The Government agrees that if the Mortgaged Property is
properly mortgaged per the terms of Paragraph 24, of the Lease, and if the
developer defaults with respect to any monetary obligations it has related to
the Mortgaged Property and such default is cured by either a lender or the
Developer prior to the expiration of twenty (20) days after the lender and the
Developer receive notice of such default from the Government, the Government
expressly recognizes the rights of such lender under the Lease and the lender's
right to proceed to act under the Lease as it pertains to the Mortgaged Property
and under its security documents, and agrees that any such default under the
Lease by Developer will be deemed to be cured as to such lender or any successor
or assign of the lender, and deemed cured as to the Developer. If such default
is not cured within the time period stated above by either the lender or the
Developer, the Government is entitled to pursue any rights or remedies which it
has against the Developer including termination of the Lease. In the event that
Developer shall default under a non-monetary obligation of the Lease related
solely to the Mortgaged Property, and if such default is not timely cured by
Developer and if a lender is not a party to such default, the Government may
proceed against the Developer, but the Government shall not terminate a lender's
interest in the Lease but shall recognize the lender's rights as assignee of
Developer's interest and such lender shall assume the obligations of the
Developer under the Lease as it relates solely to the Mortgaged Property;
provided, however, after such interest is in a lender and in the event that
Additional Rent (as defined in Paragraph 27(c) below) becomes due and payable,
the payments due to the Government for the Mortgaged Property shall include the
Additional Rent in the same manner and to the same extent as provided in
Paragraph 27(c).
Page 2 of 3 pages
<PAGE> 145
PAGE 3
SUPPLEMENTAL LEASE AGREEMENT NO. 2
ENHANCED-USE LEASE (084B-029-92)
(c) Agreement with respect to defaults under the Lease which do not involve the
Mortgaged Property. The government agrees that if the Mortgaged Property is
properly mortgaged per the terms of Paragraph 24 of the Lease, and if the
Developer defaults under the Lease with respect to an obligation it has which
does not pertain to the Mortgaged Property, the Government will give written
notice to such lender and the Developer of such defaults. If such default is
cured by either the Developer or a lender prior to the expiration of twenty (20)
days from the date the lender and Developer receive notice of such default, the
Government expressly recognizes the rights of such lender under the Lease and
the lender's right to proceed to act under the Lease as it pertains to the
Mortgaged Property and under its security documents, and agrees that any such
default under the Lease by Developer will be deemed to be cured as to such
lender or any successor or assign of the lender, and will be deemed cured as to
the Developer as to the Mortgaged Property. If such default is not cured within
the time period stated above by either the lender or the Developer, the
Government is entitled to pursue any rights and remedies which it has against
the Developer under the Lease, save and except any rights which the Government
may have to terminate the Developer's rights to lease and operate the Mortgaged
Property. If Developer's default does not relate in any respect to obligations
which the developer has related to the Mortgaged Property, the Government waives
its right to terminate the Developer's interest in the Mortgaged Property as
granted to it by the Lease, based solely on a default which does not pertain to
the Mortgaged Property. Notwithstanding that the Developer may continue under
the Lease as to the Mortgaged Property, upon such default by the Developer, the
Developer shall be obligated to promptly pay to the Government, upon demand,
that amount necessary (i) to reimburse the Government for the actual costs and
expenses for undertaking Developer's obligations as set forth in the Lease for
maintaining and repairing the VA Parking (as defined in the Lease) as it accrues
for the remainder of the original term of the Lease plus, (ii) during the four
years after the commencement of the Government's payment of the Management Fee,
to reimburse the Government for the actual costs and expenses of the Government
for undertaking Developer's obligations as set forth in the Lease and in
procuring a new management company for the VBA Building and the VA Parking (with
any decrease in the management fee cost being credited to the cost of the VA
Parking maintenance expense due from the developer)(The sum of (i) and (ii)
above is referred to hereinafter as "the Additional Rent"). Additional Rent is
due and payable at the same time but in addition to the payments due for the
Mandatory Development as set forth in the lease; provided, however, the maximum,
annual Additional Rent that can be added to the payments due for the Mandatory
Development shall not exceed SIX THOUSAND AND NO/100 DOLLARS ($6,000) per year.
Additional Rent shall be adjusted annually in arrears based on one-hundred (100)
percent of the increase or decrease in the Consumer Price Index for the
Houston-metropolitan area, such indexing to begin on the commencement date of
the Government's payment of the Management Fee. Any remainder of actual costs
and expenses due the Government as reimbursement for undertaking Developer's
obligations defined in (i) and (ii) above, shall be a debt owing by the
Developer to the Government but shall not be an obligation chargeable to the
Mortgaged Property or a default under the Lease as to the Mortgaged Property. In
the event that Developer has constructed or has obtained approval for Optional
Development on the remainder of the Mortgaged Property, the Additional Rent
shall be allocated between the Mandatory Development and the Optional
Development as provided in the Government's approval of the Optional Development
plans or if not expressly addressed, in an equitable manner.
Page 3 of 3 pages
<PAGE> 146
GENERAL SERVICES ADMINISTRATION SUPPLEMENTAL AGREEMENT DATE
PUBLIC BUILDING SERVICE No. 3 5/20/96
SUPPLEMENTAL LEASE AGREEMENT ---------------------------------------
TO: Enhanced-Use Lease No.084B-029-32,
Houston, TX
- --------------------------------------------------------------------------------
ADDRESS OF PREMISES - 2002 Holcombe Blvd., Houston, Texas
- --------------------------------------------------------------------------------
THIS AGREEMENT, made and entered into this date by and between AMELANG PARTNERS
INC.
whose address is c/o Karl Amelang
952 Echo Lane, Suite 100
Houston, TX 77024
hereinafter called the Developer, and the UNITED STATES OF AMERICA, hereinafter
called the Government:
WHEREAS,
Amelang Partners Inc. (API) requested Government's approval, as required by
Section 10 of the Lease, of future development on the Property;
API's proposed future development will include development of 14,175 square
feet for a kidney dialysis clinic, of which 11,900 square feet will be new
construction added to the existing Mandatory Development ("Holcombe Center"),
and the remaining 2,275 square feet will be buildout of existing vacant space
in the Mandatory Development;
The Developer has entered into a sublease (the "Sublease"), a copy of which is
attached and made a part of this Supplemental Lease Agreement as Exhibit "A",
between the Developer and Geraged Eknoyan, M.D., et al, for a 14,175 square
foot kidney dialysis clinic:
The Government approves API's future development of a kidney dialysis clinic
as being consistent with its mission:
The Government further agrees to the amount of additional benefit to be paid
by the Developer in consideration of said future development, the Parties
hereto desire to amend the above Lease.
NOW THEREFORE, these parties for the considerations hereinafter mentioned
covenant and agree that the said Lease is amended, effective upon commencement
of sublease, as follows:
The Developer and Government agree all terms and conditions of the Lease
pertaining to the Mandatory Development, including payment of rent in
accordance with Section 4(b)(3), will apply to use and occupancy of said 2,275
square feet in the Mandatory Development for a kidney dialysis clinic under
API's Sublease.
IN WITNESS WHEREOF, the parties subscribed their names as of the above date.
- --------------------------------------------------------------------------------
DEVELOPER
By /s/ KARL J. AMELANG PRESIDENT
------------------------ ----------------------------
(Signature) (Title)
IN THE PRESENCE OF 952 ECHO LANE #100
/s/ [illegible] HOUSTON, TX 77024
------------------------ ----------------------------
(Signature) (Address)
- --------------------------------------------------------------------------------
UNITED STATES OF AMERICA
By /s/ LAWRENCE J. HILL Contracting Officer
------------------------ ----------------------------
(Signature) (Official Title)
- --------------------------------------------------------------------------------
Page 1 of 2 pages
<PAGE> 147
Supplemental Lease Agreement No. 3
Enhanced-Use Lease No. 084B-029-92, Houston, TX
Page No. 2
Amend Section 4 of the Lease by adding the following new subsection at the end:
(b)(4)(i) Pay to the Government Twelve percent (12%) of Eighty-four percent
(84%) (11,900 square feet of new construction divided by 14,175 square
feet) of the rent described in Section II. FINANCIAL OBLIGATIONS, A. RENT,
of the Sublease to be paid to the Government monthly as if and when such
rent is received by the Developer. It is understood that this payment does
not include any minimum or guaranteed rent to the Government.
(ii) The amount of the financial benefits to be paid to the Government
for this proposed development are subject to re-evaluation and mutual
agreement between Developer and the Government at the end of the primary
term of the sublease as defined in Section I. LEASED PREMISES COMMENCEMENT
AND TERM D, COMMENCEMENT AND LEASE TERM. Within eighty (80) days prior to
the end of the primary term of the sublease, Developer shall provide to the
Government an appraisal of the property described by metes and bounds
(Exhibit "B" attached hereto), along with its proposed financial benefits
to be paid to the Government for such use and occupancy. If the Government
does not believe that the proposed amount reflects a fair market rental
rate to the Government for such use, the Government will notify Developer
within thirty (30) days of receipt of the appraisal and estimated financial
benefits, and the Government may within sixty (60) days obtain an appraisal
using an appraiser of the Government's choosing. If the Government's
appraisal and estimate differ from Developer's, the parties agree to meet
in a attempt to resolve the differences. If within thirty (30) days the
parties do not agree on the financial benefits, such disagreement shall be
resolved pursuant to Section 23 of the Lease. After the end of the primary
term of the sublease, Developer will place into escrow each month, as, if
and when received by API from the sublessee, to be held until either a
final resolution is obtained as to the amount of financial benefit to be
paid by Developer to the Government or an agreement is reached among the
parties with respect to such amount, the greater of the following amounts:
(1). the financial benefits Developer proposes to pay the Government
for use and occupancy of the development or
(2). the amount the Government believes should be the financial
benefits to be paid by Developer to the Government for such use and
occupancy.
This proposal is specific to this sublease proposal. In event of early
termination or other sublease of such space, such shall be negotiated
pursuant to Section 10.b. of the Lease.
The consideration represents a complete equitable adjustment for all costs,
direct and indirect, associated with the work and time agreed to herein,
including but not limited to all costs incurred for extending overhead,
supervision, disruption or suspension of work, labor inefficiencies, and this
changes impact on unchanged work.
All other terms and conditions of the Lease shall remain in force and effect.
<PAGE> 148
GENERAL SERVICES ADMINISTRATION SUPPLEMENTAL AGREEMENT DATE
PUBLIC BUILDING SERVICE No. 5 Sept. 24, 1998
SUPPLEMENTAL LEASE AGREEMENT --------------------------------------------
TO: Enhanced-Use Lease No. 984B-029-92.
Houston, Texas
- -------------------------------------------------------------------------------
ADDRESS OF PREMISES - 2002 Holcombe Blvd., Houston, Texas
- -------------------------------------------------------------------------------
THIS AGREEMENT, made and entered into this date by and between Amazing
Partners, Incorporated whose address is c/o Karl Amelang
952 Echo Lane, Suite 100
Houston, Texas 77024
hereinafter called the Developer, and the UNITED STATES DEPARTMENT OF VETERANS
AFFAIRS, hereinafter called the Government
WHEREAS,
The parties hereto entered into that certain Enhanced-Use Lease dated August 25,
1993, as amended by (i) Supplemental Lease Agreement ("SLA") No. 1, dated
November 1, 1994, (ii) SLA No. 2, dated March 25, 1995, (iii) SLA No. 3, dated
May 20, 1998, and (iv) SLA No. 4, dated February 5, 1997 (the "Lease" or the
"Enhanced-Use Lease"); Amelang Partners, Incorporated (API) requested
Government's consent, as required by Section 10 and Section 21 of the
Enhanced-Use Lease, of future development on the Property:
The parties hereby desire to amend the Lease.
NOW THEREFORE, these parties for the considerations hereinafter mentioned
covenant and agree that the said Enhanced-Use Lease is amended, effective
September 24, 1998, as follows:
1. In the event a lender (currently Aid Association for Lutherans) should ever
succeed to the interest of Developer under the Lease solely as to the
Mortgaged Property, such lender and any permitted assignee shall (a) pay
rent under Paragraph 4(b)(3) of the Lease solely on account of Gross Retail
Receipts from the Mandatory Development, (b) pay rent with respect to the
Optional Development situated on the Mortgaged Property as provided in
Paragraph 4(b)(4) of the Lease, (c) pay $21,000.00 per year of the Annual
Minimum Consideration, and (d) pay $8,000.00 per year of the "Additional
Rent" (described in SLA No. 2 and SLA No. 4), as such amount may be adjusted
due to changes in the Consumer Price Index (as explained in Paragraph 27(c)
of the Lease); provided, furthermore, such lender and any permitted assignee
shall only be liable under the Lease to the extent the liability relates
solely to the Mortgaged Property and not to any other property covered by
the Lease.
2. The Government acknowledges and agrees that a lender (currently Aid
Association for Lutherans) holding a mortgage secured by Developer's
interest in the Mortgaged Property and some or all of Developer's other
interests in the Lease may foreclose solely as to Developer's interest under
the Lease in the Mortgaged Property, and, in such event, shall only be
responsible for obligations thereafter accruing under the Lease solely as
they relate to the Mortgaged Property and not any other property covered by
the Lease.
IN WITNESS WHEREOF, the parties subscribed their names as of the above date.
- -------------------------------------------------------------------------------
DEVELOPER
BY: /s/ [illegible] President
---------------------------------- ------------------------------------
(Signature) (Title)
IN THE PRESENCE OF
/s/ SUSAN V. HUGHES Administrative Assistant
---------------------------------- ------------------------------------
(Signature) (Title)
DEPARTMENT OF VETERANS AFFAIRS
BY: /s/ TANGELA D. COOPER Contracting Officer
---------------------------------- ------------------------------------
(Signature) (Title)
<PAGE> 149
Supplemental Lease Agreement No. 5
Enhanced-Use Lease No. 084B-029-93, Houston, TX
Page 2 of 3
3. No termination or cancellation of the Lease as to the Mortgaged Property
exercised by Developer shall be binding on a lender, unless such lender's
written consent is first obtained.
4. If the nature of a non-monetary default cannot reasonably be cured by a
lender within the time period provided in the Lease, the lender shall have
such additional period of time as is reasonable under the circumstances
(recognizing, in part, that until foreclosure the lender does not have
possession of the Mortgaged Property), so long as the lender is acting in
good faith to cure the default.
5. Whenever the Lease requires the lender to notify the Government of a
default by the Developer or of the termination, sale or transfer, or notice
of the intent to terminate the Loan, the lender may satisfy any such
requirements by sending the Government such notice simultaneously with the
sending of any such notice to the Developer.
AMEND PARAGRAPH 1 OF THE LEASE, "DEFINITIONS", "MORTGAGED PROPERTY" TO READ:
"Mortgaged Property - means the Developer's interest(s) in the
approximately 3.135 acre tract described on Exhibit "A" attached hereto and
all other property interests in such tract of land."
AMEND PARAGRAPH 1 OF THE LEASE, "DEFINITIONS", "i. MANDATORY DEVELOPMENT"
TO READ:
"Mandatory Development - means approximately 17,150 square feet of the
improvements comprising the retail center commonly known as the Holcombe
Center situated on the Mortgaged Property, and identified on Exhibit "B"
attached hereto. The improvements comprising the Mortgaged Property also
include approximately 11,900 square feet of "Optional Development,"
identified on Exhibit "B".
AMEND PARAGRAPH 27(f) (REFER TO SLA NO. 4 DATED FEBRUARY 5, 1997) OF THE LEASE,
"REMEDIES FOR DEFAULT BY DEVELOPER", TO READ:
"(f) if the Government exercises its remedies under Paragraph 27(b), (c)
or (d) above or under any other provision of the Lease, and a lender or
purchaser at foreclosure sale succeeds to the interest of the Developer as to
the Mortgaged Property (but not other Property), or if Developer should ever
terminate or cancel the Lease as to the Mortgaged Property without a lender's
written consent, or if Developer should ever reject this Lease, in whole or in
part, pursuant to applicable provisions of the United States Bankruptcy Code,
or if a lender or purchaser at foreclosure sale succeeds to the interest of the
Developer due to a default under the lender's loan documents, then, in any of
such events, the Government hereby agrees to enter into a replacement lease
directly with the person succeeding to the interest of Developer in the
Mortgaged Property (irrespective of whether the Lease has already been
terminated, canceled or suspended) for the term and upon the conditions
hereinafter set forth:
(i) The term of such lease (the "Replacement Lease") shall
commence upon the date of the termination, cancellation or
suspension of the Lease with Developer or, if applicable, the
date of the foreclosure sale, and shall expire on the date
otherwise set forth as the date of expiration under the Lease.
(ii) Except as to the lease term and except as otherwise provided
in this Paragraph 27(f), all terms and provisions of the Lease
shall apply to the Replacement Lease as if the Government had
exercised its rights under Paragraphs 27(b), (c), or (d), as
applicable.
<PAGE> 150
SUPPLEMENTAL LEASE AGREEMENT NO. 5
ENHANCED-USE LEASE NO. 084B-029-93, HOUSTON, TX
PAGE 3 OF 3
(iii) Within thirty (30) days of the request by the lender or purchaser
at foreclosure sale, the Government shall enter into a
Replacement Lease in a form reasonably satisfactory to the
Government consistent with the provisions hereof and without
making reference to any premises other than the Mortgaged
Property: except for the obligation to pay Additional Rent as
provided in SLA No. 2.
The references in Paragraph 27 of the Lease and in SLA No. 4 and in this
SLA No. 5 to a lender mean and refer to the holder of a first lien on the
Mortgaged Property (currently Aid Association for Lutherans)."
AMEND PARAGRAPH 7 OF SLA NO. 4 DATED FEBRUARY 5, 1997, TO READ:
"7. If the Government ever exercises its purchase rights under Paragraph 38 of
the Lease, (a) any payments shall be made directly to the holder of the first
lien on the Mortgaged Property (currently Aid Association for Lutherans), and
(b) any repurchase shall be for at least the loan balance owed at the time to
the holder of the first lien on the Mortgaged Property."
ALL OTHER TERMS AND CONDITIONS OF THE ENHANCED-USE LEASE SHALL REMAIN IN FORCE
AND EFFECT.
<PAGE> 151
EXHIBIT A
[TERRA LETTERHEAD]
METES & BOUNDS DESCRIPTION
3.135 ACRES (136,574 SQUARE FEET)
D W C HARRIS SURVEY, ABSTRACT NUMBER 325
HARRIS COUNTY, TEXAS
Being a tract or parcel containing 3.135 acres (136,574 square feet) of land
situated in the D W C Harris Survey, Abstract Number 325, Harris County, Texas,
and being part of and out of that certain called 118.831 acres, described in
deed to the United States of America, as recorded in Volume 1297, Page 87, Deed
Records of Harris County, Texas, said 3.135 acre tract being more particularly
described as follows (all bearings and coordinates are based on the Texas State
Plane Coordinate System; South Central Zone; all distances and coordinates are
surface and may be converted to grid by multiplying by a combined scale factor
of 0.9998632):
BEGINNING at a 5/8-inch iron rod with plastic cap set marking the intersection
of the southerly right-of-way (ROW) line of Holcombe Boulevard with the
westerly ROW line of Almeda Road, and having surface coordinates of
X = 3,147,967.40, Y = 698,487.10 , said iron rod also marking the most easterly
corner of the herein described tract;
THENCE, SOUTH 14 degrees 53'21" West, with said westerly ROW line, a distance
of 206.00 feet to a 5/8-inch iron rod with plastic cap set marking the most
southerly corner of the herein described tract;
THENCE, NORTH 75 degrees 06'39" West, at 380.00 feet pass a set 5/8-inch iron
rod with plastic cap, continuing in all, a distance of 411.72 feet to a
5/8-inch iron rod with plastic cap set marking the beginning of a tangent curve;
THENCE, WESTERLY, with a curve to the left having a radius of 281.50 feet, an
arc length of 67.83 feet, a central angle of 13 degrees 48'19", and a chord
which bears North 82 degrees 00'48" West, 67.66 feet to a 5/8-inch iron rod
with plastic cap set marking a point of tangency;
THENCE, NORTH 88 degrees 54'58" West, a distance of 27.76 feet to a
5/8-inch iron rod with plastic cap set marking the beginning of a tangent
curve;
THENCE, NORTHWESTERLY, with a curve to the right having a radius of 87.50 feet,
an arc length of 93.13 feet, a central angle of 60 degrees 59'01", and a chord
which bears North 58 degrees 25'28" West, 88.80 feet to an "X" in the top of a
concrete inlet set marking the southwest corner of the herein described tract,
and being in a non-tangent curve concave northwest;
THENCE, NORTHEASTERLY, with said non-tangent curve to the left, having a radius
of 760.00 feet, a central angle of 07 degrees 08'15", an arc length of 94.68
feet, and a chord which bears North 34 degrees 34'21" East, 94.61 feet to a
5/8-inch iron rod with plastic cap set marking a point of tangency;
THENCE, NORTH 31 degrees 00'14" East, a distance of 65.48 feet to a 5/8-inch
iron rod with plastic cap set for corner;
THENCE, NORTH 18 degrees 49'21" East, a distance of 51.16 feet to a lead plug
with tack set in a concrete footing marking the most westerly north corner of
the herein described tract;
THENCE, SOUTH 71 degrees 10'39" East, a distance of 43.42 feet to a 5/8-inch
iron rod with plastic cap set for corner;
<PAGE> 152
with plastic cap set for corner;
THENCE, SOUTH 71 degrees 10'39" East, a distance of 15.90 feet
to a lead plug with tack set in a concrete footing for corner;
THENCE, NORTH 18 degrees 49'21" East, a distance of 20.16 feet
to a lead plug with tack set in a concrete footing for corner;
THENCE, SOUTH 71 degrees 10'39" East, a distance of 20.02 feet
to a 5/8-inch iron rod with plastic cap set for corner;
<PAGE> 153
[TERRA LETTERHEAD]
METES AND BOUNDS DESCRIPTION
3.135 ACRES (136,574 SQUARE FEET)
D W C HARRIS SURVEY, ABSTRACT NUMBER 325
HARRIS COUNTY, TEXAS
PAGE 2 OF 2
THENCE, NORTH 18 degrees 49'21" East, a distance of 20.56 feet
to the southerly ROW line of the aforesaid Holcombe Boulevard, also being the
most northerly west corner of the herein described tract;
THENCE, SOUTH 71 degrees 10'39" East, with said southerly ROW
line, a distance of 7.66 feet to the beginning of a tangent curve;
THENCE, SOUTHEASTERLY, with said southerly ROW line and a curve to the right
having a radius of 2,864.93 feet, at an arc length of 66.33 feet pass a set
5/8-inch iron rod with plastic cap, continuing in all, an arc length of 451.48
feet, a central angle of 09 degrees 01'45", and a chord which
bears South 66 degrees 39'46" East, 451.01 feet to the POINT OF
BEGINNING and containing 3.135 acres (136,574 square feet) of land (this
description is based on an ALTA/ACSM Land Title Survey and plat prepared by
Terra Surveying Company, Inc, Project Number 0043-9601-S).
Compiled By: Scott D. Mandeville
Compilation Date: April 9, 1996
Revised: January 20, 1997
Project No: 0043-9601-S
SDM: 00439601.mb
[SEAL OF STATE OF TEXAS LAND SURVEYOR]
<PAGE> 154
EXHIBIT B
SLA #5
[MAP]
D W C HARRIS SURVEY
ABSTRACT NO 325
F.M. 521 (ALMEDA ROAD)
<PAGE> 155
GENERAL SERVICES ADMINISTRATION SUPPLEMENTAL AGREEMENT DATE
PUBLIC BUILDINGS SERVICE NO. 1 NOV. 1, 1994
TO LEASE NO.
SUPPLEMENTAL LEASE AGREEMENT Enhanced-Use (084B-029-94)
ADDRESS OF PREMISES Holcombe Blvd.
Houston, TX
THIS AGREEMENT, made and entered into this date by and between AMELANG PARTNERS
INC.
whose address is c/o Karl Amelang
952 Echo Lane, Suite 100
Houston, TX
hereinafter called the Lessor, and the UNITED STATES OF AMERICA, hereinafter
called the Government:
WHEREAS, the parties hereto desire to amend the above Lease.
NOW THEREFORE, these parties for the considerations hereinafter mentioned
covenant and agree that the said Lease is amended, effective ________________
as follows:
Issued to adjust the commencement date in accordance with Paragraph
9(c)(6), "Representations", of the Enhanced Use Lease Agreement, and to
provide definitions for Gross Retail Receipts, Annual Minimum
Consideration, and Annual Percentage Consideration. Paragraphs 1, 4,
9(c)(6); 13(a)(2); 13(d)(2)(a); 13(d)(2)(b), 13(d)(2)(c), and 18 are
amended as follows:
Paragraph 1, "Definitions" add:
q. "GROSS RETAIL RECEIPTS" - means Developer's gross rental income,
which shall include, but not be limited to: all minimum, base and/or
percentage rentals; other monetary consideration paid to the Developer,
excluding reimbursements of Developer's costs for operating the leased
premises, proportionate share charges for common area maintenance, real
estate and other taxes, insurance charges, and other costs incurred by the
Developer with respect to the use and/or occupancy of the sub-lease.
r. "ANNUAL MINIMUM CONSIDERATION" - means $21,000 per year,
throughout the term of the Enhanced-Use lease. This amount is without any
deduction or setoff whatsoever. The annual minimum consideration shall be
paid to the Government in equal monthly installments on the first day of
each calendar month.
s. "ANNUAL PERCENTAGE CONSIDERATION" - means ten percent (10%) of
the Developer's gross retail receipts. This amount is without any deduction
or setoff whatsoever.
All other terms and conditions of the lease shall remain in force and effect.
IN WITNESS WHEREOF, the parties subscribed their names as of the above date.
LESSOR Amelang Partners Inc.
BY /s/ KARL J. AMELANG PRESIDENT
-------------------------------- ------------------------------------
(Signature) (Title)
IN PRESENCE OF
/s/ [illegible] 952 ECHO LANE, SUITE 100, HOUSTON, TX
-------------------------------- ------------------------------------
(Signature) (Address)
UNITED STATES OF AMERICA
BY /s/ LAWRENCE J. HILL Contracting Officer
-------------------------------- ------------------------------------
(Signature) (Official Title)
<PAGE> 156
Supplemental Lease Agreement No. 1
Enhanced-Use Lease No. 084B-029-92
Paragraph "4. Lease" -add the following:
"The Developer shall furnish the Government a statement of gross rental
income within thirty (30) days after the close of each calendar month, and an
annual statement, including a monthly breakdown of gross rental income, on or
before forty-five (45) days following the expiration of each calendar year. The
statement of monthly and annual statement of gross rental income shall be
certified by the Developer's Controller.
Paragraph 6(a)(1): Upon the VA Parking Commencement date as defined in
paragraph 3(a) herein, the Government, as consideration shall pay to the
Developer, VA Parking rental payments at the rate of $100.00 per quarter, in
arrears.
Paragraph 9(c)(6): The Developer will commence construction of the
Mandatory Development and will have awarded the construction contract for the
work on or before November 1, 1994.
Paragraph 13(a)(2): The construction of the Mandatory Development shall
commence on or before November 1, 1994, and shall be completed and Certificates
of Occupancy issued by May 1, 1995.
Paragraph 13(d)(2)(c): Within 30 calendar days of execution of this
Supplemental Lease Agreement, the Developer shall submit working drawings at
the 100% completion stage.
Paragraph 13(f): The Developer shall submit to the Contracting Officer a
finalized construction schedule within 10 days after execution of this SLA. the
schedule shall provide the dates on which the various phases of construction
will be completed to coincide with the delivery date of May 1, 1995.
Paragraph 16(c): Delete "Compass Bank, 24 Greenway Plaza, Houston, TX
77210". Substitute "Frost National Bank, P.O. Box 1315, Houston, TX 77251".
Paragraph 18, "Commitment of Funds": Within forty-five (45) calendar days
from the execution of this SLA, the Developer shall provide the Contracting
Officer evidence of a firm commitment of funds in an amount sufficient to
perform the work. Failure to meet the requirements as set forth in this
paragraph within this time frame shall be a basis for determination of
non-responsibility or for termination of this Lease for default.
Attachment B of the Enhanced-Use Lease is deleted in its entirety.
The consideration set forth in this Supplemental Lease Agreement
represents a complete equitable adjustment for all costs, direct and indirect,
associated with the work and time agreed to herein including, but not limited
to, all costs incurred for extended overhead, supervision, disruption or
suspension of work, labor inefficiencies, and this change's impact on unchanged
work.
<PAGE> 157
GENERAL SERVICES ADMINISTRATION SUPPLEMENTAL AGREEMENT DATE
PUBLIC BUILDING SERVICE No. 6 SEP 24 1998
SUPPLEMENTAL LEASE AGREEMENT
TO: ENHANCED-USE LEASE NO. 084B-029-92.
HOUSTON, TEXAS
ADDRESS OF PREMISES - 2002 Holcombe Blvd., Houston, Texas
THIS AGREEMENT, MADE AND ENTERED INTO THIS DATE BY AND BETWEEN AMELANG
PARTNERS, INC. WHOSE ADDRESS IS C/O KARL AMELANG
952 ECHO LANE, SUITE 100
HOUSTON, TEXAS 77024
HEREINAFTER CALLED THE DEVELOPER, AND THE UNITED STATES DEPARTMENT OF VETERANS
AFFAIRS, HEREINAFTER CALLED THE GOVERNMENT
WHEREAS,
Amelang Partners Inc. (API) requested Government's consent, as required by
Section 10 and Section 21 of the Enhanced-Use Lease, of future development on
the Property;
API's proposed future development will include development of two buildings for
use as a laboratory/pharmaceutical manufacturing facility and office building
on 2.5 acres of land at the corner of Almeda Road and Holcombe Boulevard as
more particularly describe in Exhibit "A" which is attached hereto (the
"Subleased Premises"); such development will consist of new construction added
to the existing Mandatory Development and Non-Mandatory Development ("Holcombe
Center");
The Developer has entered into a sublease (the "Sublease"), with Introgen
Therapeutics, Inc., a copy of which is attached and made a part of this
Supplemental Lease Agreement as Exhibit "B".
The Government acknowledges that the Sublease and the proposed future
development are consistent with its mission, provided that the Sublease and
sub-lessee's rights therein are expressly subordinate to the rights
and interests of the Government in the Lease.
The Government further agrees to the amount of additional benefit to be paid by
the Developer in consideration of said future development, and the Parties
hereto desire to amend the above Lease.
NOW THEREFORE, THESE PARTIES FOR THE CONSIDERATIONS HEREINAFTER MENTIONED
COVENANT AND AGREE THAT THE SAID LEASE IS AMENDED, EFFECTIVE SEP 24 1998, AS
FOLLOWS:
THE DEVELOPER AND GOVERNMENT AGREE THAT AS BETWEEN THE GOVERNMENT AND THE
DEVELOPER, ALL TERMS AND CONDITIONS OF THE LEASE PERTAINING TO THE MANDATORY
DEVELOPMENT, INCLUDING ALL CONSTRUCTION REVIEW AND APPROVALS AND PAYMENT OF
RENT IN ACCORDANCE WITH SECTION 4(b), WILL APPLY TO USE AND OCCUPANCY OF SAID
DEVELOPMENT IN THE NON-MANDATORY DEVELOPMENT UNDER THE SUBLEASE.
IN WITNESS WHEREOF, THE PARTIES SUBSCRIBED THEIR NAMES AS OF THE ABOVE DATE.
DEVELOPER
By: /s/ [ILLEGIBLE] PRESIDENT
--------------------------- -----------------------------
(Signature) (Title)
IN THE PRESENCE OF
/s/ SUSAN V. HUGHES ADMINISTRATIVE ASSISTANT
- ------------------------------ -----------------------------
(Signature) (Title)
DEPARTMENT OF VETERANS AFFAIRS
By: /s/ TANGELA D. COOPER Contracting Officer
--------------------------- -----------------------------
(Signature) (Title)
<PAGE> 158
Supplemental Lease Agreement No. 6
Enhanced-Use Lease No. 084B-029-93, Houston, TX
Page 2 of 3
AMEND SECTION 4 OF THE LEASE BY ADDING THE FOLLOWING NEW SUBSECTION AT THE END:
(b)(5) Except as expressly set forth herein, API agrees to pay the
Government, without prior demand and without any deduction or offset, as
annual rent for the Premises, as such term is defined in the Sublease, the
sum of Sixty-Five Thousand Dollars ($65,000.00) (subject to adjustment as
herein provided) in equal monthly installments. The rental will be adjusted
on the third anniversary of the Commencement Date, as such term is defined
in the Sublease, and triennially thereafter based on eighty percent (80%)
of any increase and sixty percent (60%) of any decrease in the Consumer
Price Index for the Houston metropolitan area from its most recently
published level as of the Commencement Date. The rental as adjusted will be
effective from each such adjustment date until the next adjustment date. In
no instance however, shall the annual rent be less than Sixty-Five Thousand
Dollars ($65,000.00), except as expressly set forth herein. "Consumer Price
Index" means the most current "Consumer Price Index, All Urban Consumers,
All-items, . . ." for the metropolitan area in which the Premises is
located, as compiled by the U.S. Department of Labor, Bureau of Labor
Statistics (the "Bureau"). If the Bureau ceases to publish the Consumer
Price Index, then the successor or most comparable index, as designated by
API under the Sublease, will be used. It is contemplated by the parties
hereto that Sublessee will build the Buildings (as such term is defined in
the Sublease), and that the first Building will be completed several months
before the second Building is completed. API will not be obligated to pay
rent until the earlier of (i) January 1, 2000, or (ii) the first of the
Buildings is completed and a certificate of occupancy for it is issued by
the City of Houston. Upon completion of the first Building. API will be
obligated to pay one-half of the rent provided herein (this being $2,708.34
per month) commencing on the date such Certificate of Occupancy is issued.
Rent shall continue at such rate until the second Building is completed and
a Certificate of Occupancy is issued for it, or January 1, 2000, whichever
is sooner, whereupon the entire rent stipulated herein will become due and
payable monthly. In any event the entire rent stipulated herein will become
due and payable monthly commencing on January 1, 2000.
(b)(5)(1) API further agrees the Government shall be entitled to receive
fifty percent (50%), without prior demand and without any deduction or
offset, of any additional rent or any other amounts received or payments
recovered by API as result of its ground sub-lease, termination or
sub-lessee's default of the ground sub-lease: or in accordance with the
terms of any other agreement between API and its sub-lessee relative to the
occupancy of the Subleased Premises; provided however the Government shall
not be entitled to any amounts received by API pursuant to Sections 5,
12.2, 13, 15, 16, 16.4, 18.1, 20.2(a)-(c), 25, and 43 of the sub-lease.
THE ENHANCED-USE LEASE IS FURTHER AMENDED BY THE FOLLOWING PROVISIONS WITH
RESPECT TO THE PREMISES IDENTIFIED IN EXHIBIT A:
Subject to the provisions in the Enhanced-Use Lease regarding Developer's
default and the rights of mortgagees provided in such Enhanced-Use Lease,
in instances where the Enhanced-Use Lease is terminated by reason of
Developer's default, Sublessee and its successors and assigns, including
any mortgagee and any purchaser of Sublessee's leasehold interest at
foreclosure or by deed in lieu of foreclosure shall have the right to
assume all rights and obligations of the Developer in the Enhanced-Use
Lease with respect to the Premises identified in the Sublease, provided,
however, that in the event of such an assumption by Sublessee: (1) the
rental amount to the Government shall be ONE HUNDRED THIRTY THOUSAND
DOLLARS ($130,000), subject to escalation as provided herein (with no rent
being payable to Developer in that event); (2) the term of this Lease will
be identical to the term of the Sub-Lease including renewal options; (3)
Paragraphs 6, 13, 14(b), 14(d), 18 and 19 of the Enhanced-Use Lease will
not be applicable to Sublessee, its successors or assigns, including
mortgagees; (4) use of the Subleased Premises will be as stated in the
Sublease; (5) Government agrees that any mortgage or security interest
upon sublessee's leasehold interest and sublessee's furniture, equipment,
fixtures and improvements located upon the Subleased Premises on the date
of assumption of the Enhanced-Use Lease by Sublessee, its successors or
assigns, shall be and hereby is deemed approved by the Government pursuant
to Paragraph 24(c) of the Enhanced-Use Lease; (6) Paragraph 24(h) and
24(i) of the Enhanced-Use Lease will not be applicable to Sublessee, its
successors, assigns or mortgagees; (7) upon any assumption by Sublessee,
its successors or assigns, including any mortgagee or purchaser at
foreclosure or by deed in lieu of foreclosure, its obligations under the
Enhanced-Use Lease will be limited so that it is
<PAGE> 159
Supplemental Lease Agreement No. 6
Enhanced-Use Lease No. 084B-029-93, Houston, TX
Page 3 of 3
obligated only to the extent such obligations apply specifically to the
Subleased Premises and improvements thereon, and not to other real property
covered by the Enhanced-Use Lease; (8) the obligations of Sublessee, its
successors or assigns, to pay taxes shall be limited to taxes attributable
to the Subleased Property; (9) Paragraph 38 of the Enhanced-Use Lease will
not apply on or after the date of any such assumption by Sublessee, its
successors or assigns or mortgagees; and in the event the Government shall
exercise its special repurchase rights under Paragraph 38 of the
Enhanced-Use Lease prior to any assumption by Sublessee, its successors or
assigns or mortgagees, then the Government shall allow Sublessee, its
successors or assigns or mortgagees the continued possession, use and
enjoyment of the Subleased Premises for so long as Sublessee, its
successors, assigns, or mortgagees attorn to the Government as its landlord
and is not in default under the Sublease; and (10) the Government and
Developer agree that no amendment or modification of the Enhanced-Use Lease
entered into after the date hereof shall be binding upon Sublessee without
Sublessee's written consent.
The Government agrees that, upon request by Sublessee, from time to time,
it will furnish estoppel certificates to such persons, as Sublessee may
reasonably request certifying (1) the fact that the Enhanced Use Lease is
unmodified and in full force and effect or, if there have been
modifications thereto, that the Enhanced Use Lease is in full force and
effect and stating the date and nature of such modifications; (2) the date
to which the rental and other sums payable under the Enhanced Use Lease
have been paid; (3) that there are no current defaults under the Enhanced
Use Lease by either Lessor or Lessee, except as specified in the statement;
and (4) such other matters reasonably agreed to by Government and Sublessee.
The Government agrees that this Supplemental Lease Agreement is made not
only for the benefit of the Government and Developer, but also for the
benefit of Sublessee, its successors and assigns, expressly including any
mortgagee or purchaser at foreclosure or by deed in lieu of foreclosure.
All proposed development and construction is to be reviewed and approved by
the Department in accordance with the Enhanced-Use Lease.
This proposal is specific to this sublease proposal. In event of early
termination of the sublease or other sublease of such space by the
Developer, such shall be negotiated pursuant to Section 10.b. of the Lease.
ALL OTHER TERMS AND CONDITIONS OF THE ENHANCED-USE LEASE SHALL REMAIN IN FORCE
AND EFFECT.
<PAGE> 160
EXHIBIT A
METES AND BOUNDS DESCRIPTION
OF 2.500 ACRES OF LAND
IN THE D.W.C. HARRIS SURVEY, A-325
HARRIS COUNTY, TEXAS
All that certain 2.500 acres of land, out of the 118.831 acre tract described in
the deed from Brittermann Holding Corporation of Texas to the United States of
America, recorded under Volume 1297, Page 87, in the Deed Records of Harris
County, Texas, and out of the 20.11 acre Extract of Lease recorded under File
No. R182150, in the Official Public Records of Real Property of Harris County,
Texas, in the D.W.C. Harris Survey, A-325, Harris County, Texas, and being more
particularly described by metes and bounds as follows: (All bearings based on
the Texas State Plane Coordinate System, South Central Zone)
Commencing at the intersection of the south right-of-way line of Holcombe
Boulevard (width varies) and the west right-of-way line of Almeda Road (F.M.
521) (width varies); THENCE S 14 degrees 53' 21" W - 206.00', along said west
right-of-way line, to a 5/8" iron rod set for the northeast corner and POINT OF
BEGINNING of the herein described tract;
THENCE S 14 degrees 53' 21" W - 330.70', continuing along said west
right-of-way line to a 5/8" iron rod found for the southeast corner of the
herein described tract;
THENCE N 75 degrees 06' 39" W - 329.30', to a 5/8" iron rod set for the
southwest corner of the herein described tract;
THENCE N 14 degrees 53' 21" E - 330.70', to a 5/8" iron rod set for the
northwest corner of the herein described tract;
THENCE S 75 degrees 06' 39" E - 329.30' to the POINT OF BEGINNING of the herein
described tract and containing 2.500 acres of land.
Compiled by:
G.P. SURVEYORS, a division of [STATE OF TEXAS SEAL]
PATE ENGINEERS, INC.
Job No. 684-002-52
Original Issue Date:
August 5, 1998
/s/ [illegible]
--------------------------------
Certificate Date:
August 5, 1998
THIS LEGAL DESCRIPTION IS ISSUED AS "PART TWO", IN CONJUNCTION WITH THE LAND
TITLE SURVEY BY G. P. SURVEYORS LAST CERTIFIED AUGUST 5, 1998. REFERENCE IS
HEREBY MADE TO THE SURVEY AS "PART ONE".
<PAGE> 161
UNIFORM COMMERCIAL CODE - FINANCING STATEMENT - UCC 1
This instrument is prepared as, and is intended to be, a Financing Statement,
complying with the formal requisites therefor, as set forth in the Texas
Business and Commerce Code, Article 9 (also known as the Texas Uniform
Commercial Code - Secured Transactions), and, in particular, Section 9.402
thereof.
FINANCING STATEMENT
1. Debtor - Name and Mailing Address:
TMX REALTY CORPORATION
301 Congress Avenue, Suite 1850
Austin, Texas 78701
2. The name and address of the secured party ("Secured Party") is:
RIVERWAY BANK
Five Riverway
Houston, Texas 77056
3. This Financing Statement covers the following types (or items) of property
(the" Collateral"):
Construction Contracts: Any and all contracts, subcontracts, and
agreements, written or oral, between Debtor and any other party, and
between parties other than Debtor, in any way relating to the construction
of the Improvements (as hereinafter defined) on the Land (as hereinafter
defined) or the supplying of material (specially fabricated or otherwise),
labor, supplies, or other services therefor.
Contracts: All of the right, title and interest of Debtor in, to, and under
any and all (i) Contracts (herein so called) for the purchase or sale of
all or any portion of that certain real property described in Exhibit "A"
attached hereto and made a part hereof for all purposes (the "Land"),
together with all Improvements (herein so called) thereon and appurtenances
thereto (the Improvements, together with the Land are collectively called
the "Mortgaged Property"), whether such Contracts are now or at any time
hereafter existing, including all amendments and supplements to and
renewals and extensions of the Contracts at any time made, and together
with all payments, earnings, income, and profits arising from the sale of
all or any portion of the Mortgaged Property or from the Contracts and all
other sums due or to become due under and pursuant thereto and together
with any and all earnest money, security, letters of credit or other
deposits under any of the Contracts; *ii) contracts, licenses,
1
THIS IS TO CERTIFY RETURN TO:
THAT THIS IS A TRUE AND CORRECT
[ILLEGIBLE] PARTNERS TITLE COMPANY
712 Main St., Suite 2000E
BY /s/ [ILLEGIBLE] Houston, TX 77002-3218
<PAGE> 162
permits and living unit equivalents of water, wastewater, and other utility
services whether executed, granted, or issued by a private person or entity or
a governmental or quasi-governmental agency, which are directly or indirectly
related to, or connected with, the development of the Mortgaged Property,
whether such contracts, licenses, and permits are now or at any time hereafter
existing, including without limitation, any and all living unit equivalents of
water, wastewater, and other utility services, certificates, licenses, zoning
variances, permits, and no-action letters from each governmental authority
required: (a) to evidence full compliance by Debtor and all improvements
constructed or to be constructed on the Mortgaged Property with all legal
requirements applicable to the Mortgaged Property, and (b) to complete
construction of any improvements on the Mortgaged Property; (iii) any and all
right, title, and interest Debtor may have in any financing arrangements
relating to the financing of the purchase of all or any portion of the
Mortgaged Property by future purchasers; (iv) all plans, specifications, and
drawings prepared for the Mortgaged Property, including all amendments and
supplements to and renewals and extensions of such contracts any time made, and
together with all rebates, refunds or deposits, and all other sums due or to
become due under and pursuant thereto and together with all powers, privileges,
options, and other benefits of Debtor under such contracts; and (v) all other
contracts which in any way relate to the use, enjoyment, occupancy, operation,
maintenance, or ownership of the Mortgaged Property (save and except any and
all leases, subleases, or other agreements pursuant to which Debtor is granted
a possessory interest in the Land), including but not limited to engineer's
contracts, architect's contracts, maintenance agreements and service contracts.
Fixtures: All materials, supplies, equipment, systems, apparatus, and other
items now owned or hereafter acquired by Debtor and now or hereafter attached
to, installed in, or used in connection with (temporarily or permanently) the
Mortgaged Property, which are now owned or hereafter acquired by Debtor and are
now or hereafter attached to the Mortgaged Property and needed in the operations
thereof, and including, but not limited to, any and all motors, engines,
boilers, furnaces, pipes, sprinkler systems, fire extinguishing apparatus and
equipment, water tanks, heating, ventilating, refrigeration, plumbing,
lighting, transportation (of people or things, including, but not limited to,
stairways, elevators, escalators, and conveyors), incinerating, air
conditioning and air cooling equipment and systems, gas and electric machinery,
and water, gas, electrical, storm and sanitary sewer facilities, and all other
utilities whether or not situated in easements, together with all accessions,
appurtenances, replacements, betterments, and substitutions for any of the
foregoing and the proceeds thereof.
Leases: Any and all leases, subleases, sub-subleases licenses, concessions, or
other agreements (written or oral, now or hereafter in effect) which grant to
third parties a possessory interest in and to, or the right to use, all or any
part of the Mortgaged Property, together with all security and other deposits
made in connection therewith.
2
<PAGE> 163
Personalty: All of the right, title and interest of Debtor in and to the
Plans, all building and construction materials and equipment, insurance
proceeds, accounts, contract and subcontract rights pertaining to the
buildings, all refundable, returnable, or reimbursable fees, deposits or
other funds or evidences of credit or indebtedness deposited by or on
behalf of Debtor in connection with the Mortgaged Property with any
governmental agencies, boards, corporations, providers of utility services,
public or private, including specifically, but without limitation, all
refundable, returnable, or reimbursable tap fees, utility deposits,
commitment fees and development costs, any awards, remunerations,
reimbursements, settlements, or compensation heretofore made or hereafter
to be made by any Governmental Authority pertaining to the Land,
Improvements, Fixtures, Construction Contracts, including but not limited
to those for any vacation of, or change of grade in, any streets affecting
the Land or the Improvements and those for municipal utility district or
other utility costs incurred or deposits made in connection with the Land;
which are now owned or hereinafter acquired by Debtor, which are now or
hereafter situated in, on, or about the Land or the Improvements, or used
in or necessary to the complete and proper planning, development,
construction, financing, use, occupancy, or operation thereof, or acquired
(whether delivered to the Land or stored elsewhere) for use in or on the
Land or the Improvements, together with all accessions, replacements, and
substitutions thereto or therefor and the proceeds thereof.
Rents: All of the rents, revenues, income, proceeds, profits, security and
other types of deposits, and other benefit paid or payable by parties to
the Leases other than Debtor for using, leasing, licensing, possessing,
operating from, residing in, selling, or otherwise enjoying the Mortgaged
Property.
Excluded Property: Any other provision hereof notwithstanding, there is
hereby excepted from the definition of the "Mortgaged Property" and the
"Collateral" and from all liens and security interests held by Secured
Party all property of Debtor described on Exhibit "B" attached hereto,
which Exhibit "B" is incorporated herein for all purposes.
4. Proceeds of the Collateral are also covered.
5. Number of additional sheets presented: two (2).
DATED as of the 23rd day of November, 1998.
"DEBTOR"
TMX REALTY CORPORATION,
a Delaware corporation
By: /s/ JAMES W. ALBRECHT, JR.
--------------------------
Name: James W. Albrecht, Jr.
--------------------------
Title: Chief Financial Officer
-------------------------
3
<PAGE> 164
EXHIBIT "A"
Being a tract or parcel containing 2.619 acres (114,086 square feet) of land
situated in the D W C Harris Survey, Abstract Number 325, Harris County, Texas,
and being part of and out of that certain called 118.831 acres, described in
deed to the United States of America, as recorded in Volume 1297, Page 87, Deed
Records of Harris County, Texas, said 2.619 acre tract being more particularly
described as follows (all bearings and coordinates are based on the Texas State
Plane Coordinate System; South Central Zone; all distances and coordinates are
surface and may be converted to grid by multiplying by a combined scale factor
of 0.9998632):
COMMENCING at a 5/8-inch iron rod with plastic cap set marking the intersection
of the south right-of-way (ROW) line of Holcombe Boulevard with the west ROW
line of Almeda Road, and having surface coordinates of X=3,147,967.40,
Y=698,487.10, thence:
South 14 degrees 53'21" West, with said west ROW line, a distance of 206.00
feet to a set 5/8-inch iron rod with plastic cap;
North 75 degrees 06'39" West, a distance of 329.30 feet to a 5/8-inch iron
rod with plastic cap set marking the POINT OF BEGINNING and northeast
corner of the herein described tract;
THENCE, SOUTH 14 degrees 53'21" West, a distance of 330.70 feet to a 5/8-inch
iron rod with plastic cap set marking the southeast corner of the herein
described tract;
THENCE, NORTH 75 degrees 06'39" West, a distance of 432.78 feet to a 5/8-inch
iron rod with plastic cap set marking the southwest corner of the herein
described tract;
THENCE, NORTH 41 degrees 44'27" East, a distance of 334.23 feet to a 5/8-inch
iron rod with plastic cap set marking the beginning of a tangent curve;
THENCE, NORTHEASTERLY, with a curve to the left having a radius of 760.00 feet,
a central angle of 03 degrees 35'59", an arc length of 47.75 feet, and a chord
which bears North 39 degrees 56'28" East, 47.74 feet to an "X" in concrete set
marking the most northwesterly corner of the herein described tract;
THENCE, SOUTHEASTERLY, with a non-tangent curve to the left having a radius of
87.50 feet, an arc length of 93.13 feet, a central angle of 60 degrees 59'01",
and a chord which bears South 58 degrees 25'28" East, 88.80 feet to a 5/8-inch
iron rod with plastic cap set marking a point of tangency;
THENCE, SOUTH 88 degrees 54'58" East, a distance of 27.76 feet to a 5/8-inch
iron rod with plastic cap set marking the beginning of a tangent curve;
THENCE, EASTERLY, with a curve to the right having a radius of 281.50 feet, an
arc length of 67.83 feet, a central angle of 13 degrees 48'19", and a chord
which bears South 82 degrees 00'48" East, 67.66 feet to a 5/8-inch
iron rod with plastic cap set marking a point of tangency;
THENCE, SOUTH 75 degrees 06'39" East, a distance of 82.41 feet to the POINT OF
BEGINNING and containing 2.619 acres (114,086 square feet) of land (this
description is based on a Land Title Survey an plat prepared by Terra Surveying
Company, Inc. Project Number 0163-9801-S).
<PAGE> 165
EXHIBIT "B"
There is hereby excepted from the definition of the "Mortgaged Property",
and the "Collateral", and from all liens and security interests held by Secured
Party, all property of Debtor which is not a part of the plumbing, electrical,
heating, cooling, ventilation, standard lighting, ceiling tile, sprinkler
equipment and related equipment together with other fixtures and equipment
necessary for the use and operation of the buildings for general purposes and
all property (save and except the foregoing) which is not permanently attached
or affixed to the building and is not an integral part of the building and
needed for the same to be functional as an office building. Without limiting the
foregoing sentence, the property described below is excepted from said
definitions of "Mortgaged Property" and "Collateral" and shall not be in any way
secured or encumbered by any lien or security interest held by Secured Party.
Excluded Property
Furniture
Computers and related equipment, computer network equipment and software
Laboratory equipment
Production Equipment
Modular clean room units
Telephone equipment
Office equipment
Artwork
Decorative items
Plants
Inventory, including raw materials, work in progress and finished goods
Office supplies
Lab notebooks
Electronic media
Backup power generator
Cold storage equipment
Waste treatment equipment
Whether now owned or hereafter acquired
<PAGE> 1
EXHIBIT 10.7(b)
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
-2-
<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.
-3-
<PAGE> 4
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
-4-
<PAGE> 5
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.
-5-
<PAGE> 6
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.
-6-
<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:
-7-
<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.
-8-
<PAGE> 9
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
-9-
<PAGE> 10
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.
-10-
<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
-11-
<PAGE> 12
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.
-12-
<PAGE> 13
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
-13-
<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
-14-
<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,
-15-
<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,
-16-
<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
-17-
<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
-18-
<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.
-19-
<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
-20-
<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> 1
Exhibit 10.8(a)
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.
-1-
<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.
-2-
<PAGE> 3
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.
[*] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
-3-
<PAGE> 4
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:
-4-
<PAGE> 5
(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.
[*] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
-5-
<PAGE> 6
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
[*] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
-6-
<PAGE> 7
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 [*].
[*] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
-7-
<PAGE> 8
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
[*] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
-8-
<PAGE> 9
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.
[*] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
-9-
<PAGE> 10
(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.
-10-
<PAGE> 11
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
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-11-
<PAGE> 12
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.
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-12-
<PAGE> 13
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.
-13-
<PAGE> 14
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:
[*]
[*] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
<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
[*] Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to
the omitted portions.
<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
[*] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
-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
[*] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
<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 10.8(b)
AMENDMENT NO. 1
TO THE
PATENT AND TECHNOLOGY LICENSE AGREEMENT
This is AMENDMENT NO. 1 effective this 1st day of September, 1996,
("EFFECTIVE AMENDMENT NO. 1 DATE") to the Patent and Technology License
Agreement dated July 20, 1994 (hereinafter referred to as the "AGREEMENT"), by
and between THE UNIVERSITY OF TEXAS M.D. ANDERSON CANCER CENTER (hereinafter
referred to as "MDA"), located at Houston, Texas, and which is a component
institution of THE UNIVERSITY OF TEXAS SYSTEM (hereinafter referred to as
"SYSTEM") which is governed by a BOARD OF REGENTS (hereinafter referred to as
"BOARD") and INTROGEN THERAPEUTICS, INC., located at 301 Congress Avenue, Suite
1850, Austin, Texas 78701 (hereinafter referred to as "LICENSEE").
RECITALS
A. BOARD is the owner of the PATENT AND TECHNOLOGY RIGHTS of the
invention(s) listed in ATTACHMENT A hereto ("INVENTION(s)").
B. LICENSEE is a company interested in the development and commercialization
of new technologies directed to the treatment of cancer, and other
threatening diseases, to which end LICENSEE, MDA and BOARD entered into the
AGREEMENT noted hereinabove.
C. LICENSEE wishes to add the INVENTION(s) to its rights and obligations under
the AGREEMENT.
D. BOARD wishes to grant LICENSEE rights to the INVENTION(s) under the
AGREEMENT to promote its practical development for the benefit of the
MDA's patients and for the benefit of the people of the state of Texas.
E. The definitions set forth in the AGREEMENT shall apply in this AMENDMENT
NO. 1, except to the extent that a definition herein is specific to this
AMENDMENT NO. 1.
NOW, THEREFORE, in consideration for the mutual covenants contained herein, the
sufficiency of which is hereby acknowledged, the parties hereby agree to the
following:
1
<PAGE> 2
AMENDED TERMS
1. Attachment A to the AGREEMENT is hereby amended by adding to the LICENSED
SUBJECT MATTER thereof the INVENTION(s) listed in Schedule A of this
Amendment.
2. In addition to the reimbursements for patent expenses provided for under
the AGREEMENT and all other amendments thereto, LICENSEE shall reimburse
MDA within thirty (30) days of the EFFECTIVE DATE of this AMENDMENT NO. 1
for [*] outstanding and unreimbursed patent expenses related to the
INVENTION(s) and shall further reimburse MDA for all future and continuing
patent expenses for the INVENTION(s) pursuant to Article 4.1(a) of the
AGREEMENT for the term of the AGREEMENT, pursuant to invoicing by MDA.
OTHERWISE, the terms and provisions of the original AGREEMENT thereto
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
AGREEMENT, the terms and conditions of the AGREEMENT shall prevail.
IN WITNESS WHEREOF, THE PARTIES HERETO HAVE CAUSED THEIR DULY AUTHORIZED
REPRESENTATIVES TO EXECUTE THIS AMENDMENT NO. 1.
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/ CHARLES B. MULLINS, M.D.
-------------------------- --------------------------------
David J. Bachrach Charles B. Mullins, M.D.
Executive Vice President Chancellor
for Administration and Finance
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
INTROGEN THERAPEUTICS, INC.
By: /s/ DAVID G. NANCE
--------------------------
David G. Nance
President
[*] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
2
<PAGE> 3
SCHEDULE A
Patent and Technology rights for U.S. and Foreign Patent Application entitled:
[*]
[*] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
3
<PAGE> 4
COMMERCIAL MATERIALS TRANSFER AGREEMENT
1. The parties of this Agreement are: Introgen Therapeutics, 8080 North Stadium
Drive, Suite #1200, Houston, Texas, USA, 77054, hereinafter "RECIPIENT",
and McMaster University, 1280 Main Street West, Hamilton, Ontario,
Canada, hereinafter "McMaster".
2. The material ("Material") that is covered by this Agreement includes:
a) Plasmids (described in Attachment A), the sequence and map of such
plasmids and the bacterial cell strain to propagate such plasmids.
b) any related biological material or associated know-how and data that
will be received by RECIPIENT from SCIENTIST, namely Dr. Frank Graham and
colleagues as McMaster University. As reasonably requested by RECIPIENT
from time to time during the terms of this agreement, McMaster agrees to
deliver to RECIPIENT reasonable quantities of the Material at the prices
specified in Attachment A.
3. The Material shall be used in research and development activities of
RECIPIENT.
4. RECIPIENT will make payment to McMaster University in the amount of $1000
dollars in U.S. currency per year, for a period of [*], in consideration
for the Material. McMaster shall be in receipt of the financial
consideration within forty-five (45) days of the execution date of this
Agreement. Should such consideration not be received by McMaster from
RECIPIENT during this forty-five (45) day period, and within fifteen (15)
days after McMaster notifies RECIPIENT of such nonpayment, McMaster shall
have the right to terminate this Agreement.
5. RECIPIENT shall not distribute or release the Material to any person other
than laboratory personnel under RECIPIENT's or RECIPIENT's contractor's
supervision, and hereby agrees that no one will be allowed to take or
send this Material to any other location not controlled by RECIPIENT or
RECIPIENT's contractor, unless written permission is obtained from the
SCIENTIST and the Director, Office of Research Contracts and Intellectual
Property at McMaster. This Material is made available for research and
development use only. The Material will not be used in human beings.
RECIPIENT agrees that the Material will not be used for any other
purpose.
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE> 5
6. This Agreement and the resulting transfer of Material constitute a license
to use the Material solely for research and development purposes.
Subject to the provisions in paragraph 8, RECIPIENT agrees that nothing
herein shall be deemed to grant to either any rights under McMaster
patents or any rights to use the Material in a commercial product.
7. Subject to the provisions in paragraph 8, RECIPIENT shall have no rights in
the Material other than as provided in this Agreement, and at the written
request of McMaster, RECIPIENT will return all unused Material.
8. RECIPIENT will provide McMaster with a draft manuscript describing the
results of research describing nonpublic aspects of the materials should
such a manuscript be prepared. RECIPIENT agrees to maintain the
confidentiality of any information respecting the Material, with the
exception, however, that if it is desired to publish or otherwise
disclose such information in a noncommercial scientific communication,
RECIPIENT will provide McMaster with a copy of any manuscript or abstract
disclosing such information, prior to submission thereof to a publisher
or to any third party, and in any case, not less than forty-five (45)
days prior to any public disclosure, for the purpose of protecting
proprietary or intellectual property of McMaster or RECIPIENT that might
be contained in such information. If publication results from research
using the Material, RECIPIENT agrees to acknowledge SCIENTIST and/or give
credit to SCIENTIST, as scientifically appropriate, based on any direct
contribution they may make to the research. McMaster agrees that it will
reference or acknowledge RECIPIENT's publications, as scientifically
appropriate, in its publications, which may refer to the data developed
by RECIPIENT. RECIPIENT shall not be required to provide McMaster with
RECIPIENT's trade secrets, confidential or proprietary information.
9. In the event that RECIPIENT desires to obtain a license from McMaster to use
the Material for commercial purposes other than the research and
development activities permitted hereunder, RECIPIENT will promptly
notify the DIRECTOR, Office of Research Contracts and Intellectual
Property at McMaster, and notify the Director of SCIENTIST's role as
supplier of the Material. Upon such request, McMaster agrees to grant to
RECIPIENT a license for such purposes on commercially reasonable terms
and conditions, it being understood that the amounts to be paid to
McMaster under such license shall not exceed [*] per year.
10. The Material is experimental in nature, and it is provided WITHOUT WARRANTY
OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR ANY OTHER
WARRANTY, EXPRESS OR IMPLIED. McMaster MAKES NO REPRESENTATION OR
WARRANTY THAT THE USE OF THE MATERIAL WILL NOT INFRINGE ANY PATENT OR
OTHER PROPRIETARY RIGHT.
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE> 6
11. In no event shall McMaster be liable for any use by RECIPIENT of the
Material or any loss, claim, damage or liability, or whatsoever kind or
nature, which may arise from or in connection with this Agreement or the
use, handling or storage of the Material.
12. RECIPIENT will use the Material in compliance with all laws and governmental
regulations and guidelines applicable to the Material for work with
McMaster. When the Material is used in the United States, RECIPIENT will
comply with current NLH guidelines, relating to the use of the Material.
13. This Agreement is not assignable, without the prior written consent of the
Director, Office of Research Contracts and Intellectual Property at
McMaster. Notwithstanding the foregoing, RECIPIENT may assign or
transfer its rights and obligations under this Agreement to a party that
succeeds to all or substantially all of RECIPIENT's business or assets
relating to this Agreement whether by sale, merger, operation of law or
otherwise provided that such successor agrees in writing to be bound by
the terms and conditions of this agreement.
14. Microbix warrants and represents that it has been authorized to sign this
Agreement on behalf of McMaster.
15. This agreement may be extended by RECIPIENT upon written notice to
McMaster, in which case RECIPIENT may continue to use the materials
as set forth herein during the term of such extension for so long as
RECIPIENT pays the annual maintenance fee set forth in Section 4 above.
16. Each party hereto agrees not to disclose any terms of this Agreement to any
third party without prior consent of the other party, except as
required by securities or other applicable laws, to prospective
investors and to such party's accountants, attorneys and other
professional advisors, or otherwise under reasonable conditions of
confidentiality.
FOR McMaster University FOR Introgen Therapeutics
/s/ WILLIAM J. CASTLE /s/ MAHENDRA G. SHAH V.P.
- ------------------------ -------------------------
William J. Castle (Name and Title of
President and Chief Authorized Representative)
Executive Officer
Microbix Biosystems, Inc.
Date: December 10, 1996 Date: 12/6/96
------------------- -------------------
<PAGE> 7
Attachment A
Effective May 31, 1996
PLASMID PRICE LIST
[*]
[*] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
<PAGE> 8
Also available are Plasmid Gene Sequences on 3.5" Diskettes, DOS formatted,
WordPerfect 5.1.
[*]
NOTE: All prices are in U.S. Dollars.
Shipping Charges:
Shipping of plasmids and disks only will be by registered mail at a cost of
[*] USD.
Shipping cost for [*] cells are [*] in North America, [*] for all other
international locations.
(Includes dry ice, container and transportation costs).
Payment Terms:
Payment for any of the Adenovirus vector system must be made in advance to
Microbix Biosystems, Inc.
We will accept cheques or direct payment to our bank account as follows:
Bank of Montreal
877 Lawrence Avenue East
Don Mills, Ontario, Canada
M3C 2T3
Account #: 03172-001-4601-028
Transit #: 317
Purchase orders will be shipped once payment has been confirmed, and the
Materials Transfer Agreement is executed and returned to Microbix.
To place orders, please telephone Microbix Biosystems, Inc. at 416-234-1624 or
fax 416-234-1626.
[*] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
<PAGE> 9
A licence fee will apply to each kit and be remitted by the end of the
first month of each year. Microbix will request payment in the 12th month of
the current year for the next year of the agreement. Each licence agreement will
be for a minimum of [*]. Agreements can be renewed and will be renegotiated at
that time. If an agreement expires, the investigator is expected to destroy the
materials.
Kit Licence Fee Per Year
A [*]
B [*]
C [*]
[*] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
<PAGE> 1
EXHIBIT 10.8(c)
AMENDMENT NO. 2
TO THE
PATENT AND TECHNOLOGY LICENSE AGREEMENT
This is AMENDMENT NO. 2 effective this 8th day of August, 1997, ("EFFECTIVE
AMENDMENT NO. 2 DATE") to the Patent and Technology License Agreement dated
July 20, 1994, as amended by that certain Amendment No. 1 effective September
1, 1996 (HEREINAFTER REFERRED TO AS THE "FIRST AMENDED AGREEMENT"), by and
between THE UNIVERSITY OF TEXAS M.D. ANDERSON CANCER CENTER (hereinafter
referred to as "MDA"), located at Houston, Texas, and which is a component
institution of THE UNIVERSITY OF TEXAS SYSTEM (hereinafter referred to as
"SYSTEM") which is governed by a BOARD OF REGENTS (hereinafter referred to as
"BOARD") and INTROGEN THERAPEUTICS, INC., located at 301 Congress Avenue, Suite
1850, Austin, Texas 78701 (hereinafter referred to as "LICENSEE").
RECITALS
A. BOARD is the owner of the invention(s) and other subject matter listed in
SCHEDULE B hereto ("IL-2 INVENTION(s)").
B. LICENSEE is a company interested in the development and commercialization
of new technologies directed to the treatment of cancer, and other
threatening diseases, to which end LICENSEE, MDA and BOARD entered into the
FIRST AMENDED AGREEMENT noted hereinabove.
C. LICENSEE wishes to add the IL-2 INVENTIONS to the LICENSED SUBJECT MATTER
under the FIRST AMENDED AGREEMENT.
D. BOARD wishes to grant LICENSEE rights to the IL-2 INVENTIONS under the
FIRST AMENDED AGREEMENT to promote its practical development for the
benefit of the MDA's patients and for the benefit of the people of the
state of Texas.
E. The definitions set forth in the AGREEMENT and the FIRST AMENDED AGREEMENT
shall apply in this AMENDMENT NO. 2, except to the extent that a definition
herein is specific to this AMENDMENT No. 2.
NOW, THEREFORE, in consideration for the mutual covenants contained herein,
the sufficiency of which is hereby acknowledged, the parties hereby agree to
the following:
<PAGE> 2
THE FIRST AMENDED AGREEMENT IS HEREBY AMENDED AS FOLLOWS:
AMENDED TERMS
1. Add the following as new Schedule B in its entirety:
SCHEDULE B
IL-2 INVENTIONS
[*]
[*]
Inventors: [*]
U.S. Patent Number: [*]
PCT Patent Number: [*]
2. So much of Section 2.3(a) as reads
"...the patents and patent applications described in Schedule A hereto (the
"Existing Patent Rights") and all patents anywhere in the world issuing
thereon;"
is hereby amended to read
"...the patent and patent applications described in Schedules A and B
hereto (the "Existing Patent Rights") and all patents anywhere in the world
issuing thereon;"
3. The title for ATTACHMENT A of the AGREEMENT shall be replaced in its
entirety to read as follows: "SCHEDULE A."
4. Add new paragraph 2.12 that will read in its entirety as follows:
"2.12 IL-2 PRODUCT shall mean a LICENSED PRODUCT the manufacture, use or
sale of which would infringe a VALID CLAIM within the IL-2 PATENTS."
5. Add new paragraph 2.13 that will read in its entirety as follows:
"2.13 IL-2 PATENTS shall mean those PATENT RIGHTS which claim or disclose
an IL-2 INVENTION as described in Schedule B hereto."
6. Paragraph 5.1 of the AGREEMENT shall be amended by the addition of the
following two new paragraphs:
[*] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
2
<PAGE> 3
New 5.1(e) shall read in its entirety:
"(e) [*] of NET SALES attributed to SALES of LICENSED
PRODUCTS that are IL-2 PRODUCTS by LICENSEE, AFFILIATES, and
SUBLICENSEES." For avoidance of doubt, the royalties due on PRODUCTS
other than IL-2 PRODUCTS shall be as specified in Paragraph 5.1(a)
above.
New 5.1(f) shall read in its entirety:
"(f) For any advance payment attributable to an IL-2 PRODUCT or IL-2
PATENT received by LICENSEE from a third party pursuant to a
sublicensee, marketing, distribution, or franchise agreement, other
than amount paid to LICENSEE in reimbursement of development or other
costs, as provided for in Article 4.3 hereof [*]: [*] of said advance
payment attributable to an IL-2 PRODUCT or IL-2 PATENT." For avoidance
of doubt, advanced payments for PRODUCTS other than IL-2 PRODUCTS shall
be as specified in Paragraph 5.1(b) above.
7. The definition of TECHNOLOGY RIGHTS (Paragraph 2.4) shall be amended by
addition of the following text:
"TECHNOLOGY RIGHTS shall also include all information, know-how,
biological materials or other subject matter owned by the BOARD and
reasonably necessary for practicing an IL-2 INVENTION at any time
covered by the IL-2 PATENTS."
OTHERWISE, the terms and provisions of the original AGREEMENT 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
AGREEMENT, the terms and conditionals of this AMENDMENT NO. 2 shall prevail.
THIS AMENDMENT NO. 2 and the SCHEDULES hereto and the AGREEMENT and its
ATTACHMENTS constitute the entire agreement between the parties in connection
with the subject matter hereof and thereof and supersede all prior and
contemporaneous agreements, understandings, negotiations and discussions,
whether oral or written, of the parties.
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
3
<PAGE> 4
IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized representatives to execute this AMENDMENT NO. 2.
THE UNIVERSITY OF TEXAS BOARD OF REGENTS OF THE
M.D. ANDERSON CANCER CENTER UNIVERSITY OF TEXAS SYSTEM
By /s/ MICHAEL J. BEST By /s/ RAY FARABEE
----------------------------- --------------------------
Michael J. Best Ray Farabee
Vice Chancellor and General Counsel
APPROVED AS TO CONTENT APPROVED AS TO FORM
By /s/ WILLIAM J. DOTY By /s/ BETH LYNN MAXWELL
----------------------------- --------------------------
William J. Doty Beth Lynn Maxwell, Ph.D.
Director, Technology Development Office of General Counsel
INTROGEN THERAPEUTICS, INC.
By /s/ DAVID G. NANCE
-----------------------------
David G. Nance
President
4
<PAGE> 5
SCHEDULE B
IL-2 INVENTIONS
[*]
[*]
Inventors: [*]
U.S. Patent Number: [*] Issued: [*]
PCT Patent Number: [*]
[*] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
5
<PAGE> 1
Exhibit 10.9
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
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-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
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-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
[ * ]
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-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.
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
<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
[ * ]
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-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.
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
<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
[ * ]
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-3-
<PAGE> 1
Exhibit 10.10
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:
-2-
<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.
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-3-
<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:
[ * ]
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-4-
<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
-5-
<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
[ * ]
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-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.
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
<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.
-2-
<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 10.11
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.
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-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
-3-
<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.
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-4-
<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
[*]
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
<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.
-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 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.
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
<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
[*]
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
<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
-2-
<PAGE> 16
EXHIBIT I
[*]
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE> 1
Exhibit 10.12
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.
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has
been requested with respect to the omitted portions.
<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
-5-
<PAGE> 6
EXHIBIT A
[*]
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE> 1
Exhibit 10.13
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
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-3-
<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
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-4-
<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
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-5-
<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
__________________________ ---------------------------
-6-
<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
-7-
<PAGE> 8
EXHIBIT
[*]
<PAGE> 1
Exhibit 10.14
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.
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
<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.
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-2-
<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
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-3-
<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.
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-4-
<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.
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-5-
<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:
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-6-
<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.
-7-
<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
[*]
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE> 1
EXHIBIT 10.15
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.
-1-
<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
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-2-
<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
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-3-
<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.
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-4-
<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.
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-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
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-6-
<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.
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-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,
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-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.
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-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
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-10-
<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
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-11-
<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
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-12-
<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.
-13-
<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
---------------------------- ----------------------------------
-14-
<PAGE> 15
EXHIBIT A
PATENT RIGHTS
[*]
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE> 16
EXHIBIT B
EXISTING PATENT RIGHTS
[*]
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
<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.
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE> 18
EXHIBIT D
PUBLICATIONS
[*]
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE> 1
EXHIBIT 10.16
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.
-3-
<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,
-4-
<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.
-5-
<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.
-6-
<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
-7-
<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.
-8-
<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
-9-
<PAGE> 1
EXHIBIT 10.17
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.
-2-
<PAGE> 3
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.
-3-
<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
---------------------------------
-4-
<PAGE> 1
EXHIBIT 10.18(a)
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT made as of the first day of August, 1996, between
Introgen Therapeutics, Inc., a Delaware corporation (the "Company"), and David
G. Nance (the "Employee").
1. Employee Duties. The Company hereby employs the Employee as its
President for the Term (as hereinafter defined), with such responsibilities and
duties as the Board of Directors may from time to time determine consistent with
such job title. The Employee shall devote such time as is reasonably necessary
to the performance of his responsibilities and duties hereunder provided,
however, that nothing herein contained shall restrict the Employee from serving
as a consultant to and/or acting as a director or officer of other entities not
in competition with the Company in the field of in vivo gene therapy for the
development of p53 gene replacement, K-ras inhibition or C-CAM tumor suppressor
gene therapy. The Company acknowledges that as of the date of this Agreement
Employee has numerous outside business interests and activities, including
serving as president of Domecq Technologies, Inc., president of Technology
Capital Corporation, trustee of several private and charitable trusts and
foundations, president of DGX Corporation, Domecq Sebastian Holdings, partner
(as Trustee) of Texas Biomedical Development Partners and its successors,
service in several outside directorships and management of assets including but
not limited to securities and real estate. Through those entities and otherwise
Employee is and will continue to be active outside the Company in the areas of
biotechnology, pharmaceuticals, research and development, medical technology,
and healthcare. The Company agrees that Employee may continue these and other
similar activities throughout the term, provided that such activities do not
violate the provisions of this Agreement.
2. Term of Agreement. The term of employment (the "Term") shall
commence on the date first written above, and end on July 31, 1998, unless
renewed in accordance with the terms hereof.
3. Compensation. Base Salary. Employee shall receive an aggregate base
salary at the rate of $225,000 per annum during the Employment Term; provided,
however, that should the Company become a publicly traded corporation then the
Company and the Employee agree to negotiate in good faith and adjust the amount
of salary and other compensation so that, effective upon the first anniversary
hereof, they will be consistent with those paid by other public companies of
similar valuations and promise to their chief executive officers, and to
reflect the additional responsibilities and duties of a chief executive officer
of a public company. Installments of base salary shall be paid not less
frequently than bi-weekly. Employee may be paid bonuses (in stock, cash or
other consideration), from time to time as determined by the Board of Directors.
<PAGE> 2
4. Other Fringe Benefits. Employee shall receive the following
benefits during the Term of Employment: Pension, profit sharing plan, 401K plan
and stock option plan participation, comprehensive health, accident, major
medical, disability and life insurance protection in accordance with the
general policies of the Company as in effect from time to time.
5. Reimbursement of Expenses. The Company shall reimburse Employee for
all reasonable, ordinary and necessary expenses incurred by him in the
performance of his duties hereunder, provided that Employee accounts to the
Company therefore in the manner prescribed by the Company for reimbursement of
Employee's expenses.
6. Vacation. Employee shall be entitled to a reasonable number of
vacation days each year, and in any event shall receive at least as many
vacation days as allowed any other Company Employee. Unused vacation days may
be accumulated from year to year.
7. Term of Employment. Term of Employment shall mean the period
commencing on the date provided in Section "2" and ending on the earliest to
occur of:
(i) The death of Employee;
(ii) The Termination Date or such later date as may be set by
mutual consent expressed in a writing signed by both parties hereto;
(iii) Termination for cause pursuant to Section 8 of this
Employment Agreement; or
(iv) Termination by Employee pursuant to Section 8.
8.2 Termination of Employment.
8.3 Termination for Cause. The Company may terminate Employee's
employment only for "Cause." A termination for Cause is a termination evidenced
by a finding adopted in good faith by the Board that Employee (i) willfully and
continually failed to substantially perform his duties with the Company (other
than a failure resulting from Employee's incapacity due to illness, physical or
mental disability or other incapacity) and such failure continues after the
Board has given written notice that Employee has failed to perform his duties,
(ii) has been convicted of a felony, (iii) has breached this Agreement in any
material respect if such breach is not cured or remedied reasonably promptly
after the Board has given written notice to Employee providing a reasonable
description of the breach, or (iv) engaged in conduct constituting willful
malfeasance in connection with his employment which is materially and
demonstrably injurious to the Company and
2
<PAGE> 3
its subsidiaries taken as a whole. No act, or failure to act, on Employee's
part, shall be considered "willful" for purposes of (i) or (iv) above unless he
has acted or failed to act with an absence of good faith and without a
reasonable belief that his action or failure to act was in the best interests
of the Company. Notwithstanding anything contained in this Agreement to the
contrary, no failure to perform by Employee after Notice of Termination (as
hereinafter defined) is given by Employer shall constitute Cause for purposes
of this Agreement. Termination for Cause shall be by action of the Board after
giving Employee and his legal advisor an opportunity to meet with the Board,
contest the basis for termination, and to demonstrate that Employee's continued
employment is in the best interests of the Company.
8.2 Termination by Employee. In the event that Employee's
responsibilities, job title, or authority are materially altered by Employer,
then Employee may terminate this Agreement at any time.
8.3 Effect of Termination.
(i) If Employee's employment hereunder shall be terminated by the
Company for cause pursuant to Section 8 hereof, this Agreement shall forthwith
terminate except that Employee's obligations under Section 10 shall continue
unaffected.
(ii) If Employee's employment hereunder shall be terminated by the
Company other than for cause, Employee's obligations under Section 10 shall
terminate and the Company shall pay to the Employee all compensation otherwise
payable to the employee hereunder to the same extent as if this Agreement had
not been terminated.
(iii) If Employee's employment hereunder is terminated by Employee
pursuant to Section 8.2, then all of Employee's obligations and compensation
hereunder shall cease except that Employee shall be entitled to receive all
compensation accrued under Section 3, 4 and 5 but unpaid as of the date of
termination.
9. Death of Employee. If Employee's employment hereunder shall
terminate because of his death, this Agreement shall forthwith terminate,
except that Employee's personal representative shall be entitled to receive all
compensation accrued in favor of Employee under Sections 3, 4, and 5 but unpaid
as of the date of death. All rights of Employee's personal representative to
receive any further compensation hereunder or under any other plan, arrangement
or procedure of the Company shall terminate, to the extent not theretofore
vested, except for any rights which arise by virtue of Employee's death under
any such plan, arrangement or procedure.
3
<PAGE> 4
10. Non-Compete.
10.1 Non-Competition. Employee agrees that he will not during the Term of
this Agreement engage in, or otherwise directly or indirectly be employed by,
or act as a consultant or lender to, or be a director, officer, employee, owner
or partner of, any other business or organization that is now or shall
hereafter be competing with the Company in the field of in vivo gene therapy
for the development of P53 gene replacement, K-ras inhibition, or C-CAM tumor
suppressor gene therapy within any geographical area where the Company is doing
business. Subject to the foregoing, the Company acknowledges that Employee may
continue to serve in the capacities and participate in the activities outside
the Company described in Section 1 hereof and similar capacities and
activities, and that such participation will not constitute prohibited
competition hereunder.
10.2 Nondisclosure of Confidential Information; Non-Competition. (a)
Employee shall not, without the prior written consent of the Company, divulge,
or disclose to any other person, firm, partnership, corporation or other entity
any Confidential Information pertaining to the business of the Company, except
(i) while employed by the Company, in the business of and for the benefit of the
Company, or (ii) when required to do so by a court of competent jurisdiction, by
any governmental agency having supervisory authority over the business of the
Company, or by any administrative body or legislative body (including a
committee thereof) with purported or apparent jurisdiction to order Employee to
divulge, or disclose such information. For purposes of this Section 10(a),
"Confidential Information" shall mean non-public information concerning the
Company's financial data, strategic business plans, product development (or
other proprietary product data), customer lists, marketing plans or other
non-public, proprietary and confidential information of the Company, in each
case which is not otherwise available to the public.
10.3 Branch of Section 10. Since a breach of the provisions of this
Section 10 could not be adequately compensated by money damages, the Company
shall be entitled, in addition to any other right and remedy available to it,
to an injunction restraining such breach or threatened breach. Employee agrees
that the provisions of this Section 10 are necessary and reasonable to protect
the Company in the conduct of its business. If any restriction contained in
this Section 10 shall be deemed to be invalid, illegal, or unenforceable by
reason of the extent, duration, or geographical scope thereof, or otherwise,
than the court making such determination shall have the right to reduce such
extent, duration, geographical scope, or other provisions hereof, and in its
reduced form such restrictions shall then be enforceable in the manner
contemplated hereby.
4
<PAGE> 5
11. Warranties and Representations of the Employee. The Employee
warrants and represents that the Employee is not subject to any agreement,
contract, judgment, decree or limitation the effect of which would prohibit,
limit or otherwise restrict the employment of the Employee by the Company
pursuant to the terms of this Agreement.
12. Notices. All notices, requests, consents and other communications
required or permitted to be given hereunder, shall be in writing and shall be
deemed to have been duly given if delivered personally or sent by prepaid
telegram, or mailed first-class, postage prepaid, by registered mail (notices
sent by telegram or mailed shall be deemed to have been given on the date
sent), as follows (or to such other address as either party shall designate
by notice in writing to the other in accordance herewith):
If to the Employee:
David G. Nance
25 St. Stephens School Road
Austin, Texas 78746
If to the Company:
Introgen Therapeutics, Inc.
301 Congress Avenue, Suite 1850
Austin, Texas 78701
13. Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the local laws of the State of Texas applicable
to agreements made and to be performed entirely in such state. The parties
agree that this Agreement is performable in Travis County, Texas, and that
venue of any action concerning this Agreement shall lie in Travis County, Texas.
14. Heading and Captions. The section headings contained herein are
for reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
15. Entire Agreement. This Agreement sets forth the entire agreement
and understanding of the parties relating to the subject matter hereof, and
supersedes all prior agreements, arrangements, and understandings, written or
oral, relating to the subject matter hereof. No representation, promise or
inducement has been made by either party that is not embodied in this
Agreement, and neither party shall be bound by or liable for the alleged
representation, promise or inducement not so set forth.
16. Amendments To Waivers. This Agreement may be amended, modified,
superseded, cancelled, renewed or extended and the terms or covenants hereof
may be waived only by a written instrument
5
<PAGE> 6
executed by both of the parties hereto, or in the case of a waiver, by the
party waiving compliance. the failure of either party at any time or times to
require performance of any provision hereof shall in no manner affect the right
at a later time to enforce the same. No waiver by either party of the breach of
any term or covenant contained in this Agreement, whether by conduct or
otherwise, in any one or more instances, shall be deemed to be, or construed
as, a further or continuing waiver of any such breach, or a waiver of the
breach of any other term or covenant contained in this Agreement.
6
<PAGE> 7
IN WITNESS WHEREOF, the parties have enacted this Agreement as of the
date first above written.
COMPANY: INTROGEN THERAPEUTICS, INC.
By: /s/ John N. Kapoor
------------------------------
John N. Kapoor, Chairman
EMPLOYEE: /s/ David G. Nance
------------------------------
David G. Nance
7
<PAGE> 1
EXHIBIT 10.18(b)
AMENDMENT #1 TO THE EMPLOYMENT AGREEMENT
BETWEEN
INTROGEN THERAPEUTICS, INC.
AND
DAVID G. NANCE
Introgen Therapeutics, Inc. ("Company") and David G. Nance
("Employee") hereby agree to the following amendments to the Employment
Agreement dated August 1, 1996, between Company and Employee, which Amendments
shall be effective as of August 1, 1998:
Paragraph 2 is deleted and replaced with the following new Paragraph 2:
"2. TERM OF AGREEMENT. The initial term of employment (the "Term")
shall commence on the date written above and end on July 31, 1999,
provided that, unless either party gives written notice that this
Agreement will not be renewed to the other party more than thirty (30)
days prior to expiration of any then existing term of this Agreement,
then upon expiration of such term this Agreement shall be automatically
renewed for an additional term of one year. Such automatic renewals
shall continue annually from year to year until either party timely
gives notice of non-renewal as provided above, or until this Agreement
otherwise terminates pursuant to the provisions of Paragraph 7 or 8
hereof."
The portion of the first sentence of Paragraph 3 that precedes the
first semi-colon of that sentence is deleted and replaced with the following
wording:
"3. COMPENSATION, BASE SALARY. During the Employment Term, Employee
shall receive a minimum aggregate base salary at the rate of $275,000
per annum, or any such greater amount as may be approved by the Board
of Directors of the Company from time to time;"
The parties have executed this Amendment #1 effective August 1, 1998.
COMPANY:
INTROGEN THERAPEUTICS, INC.
By: /s/ John N. Kapoor
------------------------------
John N. Kapoor, Chairman
EMPLOYEE:
/s/ David G. Nance
------------------------------
David G. Nance
<PAGE> 1
EXHIBIT 10.18(c)
AMENDMENT #2 TO THE EMPLOYMENT AGREEMENT
BETWEEN
INTROGEN THERAPEUTICS, INC.
AND
DAVID G. NANCE
Introgen Therapeutics, Inc. ("Company") and David G. Nance ("Employee")
hereby agree to the following amendments to the Employment Agreement
("Employment Agreement") dated August 1, 1996, between Company and Employee,
which Employment Agreement was previously amended by Amendment #1 effective as
of August 1, 1998:
Paragraph 2, providing the term of the Agreement ("Term") is amended
as follows:
The date "July 31, 1999," set forth in the first sentence of Paragraph
2, is changed to "July 31, 2003." The remainder of Paragraph 2 shall
remain in full force and effect.
Paragraph 3 is deleted and replaced with the following new paragraph 3:
"3. COMPENSATION. Employee shall receive an aggregate base salary at
the rate of $275,000 per annum until July 31, 2000. Employee's base
salary will be raised by 10% effective August 1, 2000, by an
additional 10% effective August 1, 20001, and by an additional 10%
effective August 1, 2002. Employee will be granted options to purchase
50,000 shares of the Corporation's common stock pursuant to the
Company's 2000 Stock Plan on August 1, 2000, August 1, 2001, and
August 1, 2002 (for a total of 150,000 shares). Such options will be
exercisable at a price determined by the Plan Administrator, but no
greater than the fair market value of the underlying shares on the
date of each grant, and will vest in full when granted. Installments
of base salary shall be paid not less often than bi-weekly. Employee
may be paid bonuses (in stock, cash or other consideration) from
time-to-time as determined by the Board of Directors or the
Compensation Committee."
This Amendment #2 is conditioned upon and shall become effective upon
closing for an Initial Public Offering of the Company's securities.
Except as amended herein, the Employment Agreement shall continue in
full force and effect.
Signed this 15th day of February, 2000.
COMPANY:
INTROGEN THERAPEUTICS, INC.
By: /s/ JAMES W. ALBRECHT, JR.
--------------------------------------
James W. Albrecht, Jr., Vice President
and Chief Financial Officer
EMPLOYEE:
/s/ DAVID G. NANCE
------------------------------------------
David G. Nance
<PAGE> 1
EXHIBIT 10.19
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
-2-
<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.
-3-
<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
-4-
<PAGE> 1
EXHIBIT 10.20(a)
================================================================================
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>
<CAPTION>
PAGE
<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>
-i-
<PAGE> 3
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
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>
-ii-
<PAGE> 4
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
<S> <C>
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>
-iii-
<PAGE> 5
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
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>
-iv-
<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
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-2-
<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.
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-3-
<PAGE> 9
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
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-4-
<PAGE> 10
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
-5-
<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
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-6-
<PAGE> 12
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.
-7-
<PAGE> 13
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
-8-
<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
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-9-
<PAGE> 15
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.
-10-
<PAGE> 16
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. [*].
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-11-
<PAGE> 17
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
-12-
<PAGE> 18
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.
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-13-
<PAGE> 19
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.
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-14-
<PAGE> 20
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:
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-15-
<PAGE> 21
(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.
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-16-
<PAGE> 22
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
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-17-
<PAGE> 23
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.
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-18-
<PAGE> 24
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.
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-19-
<PAGE> 25
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.
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-20-
<PAGE> 26
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).
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-21-
<PAGE> 27
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.
-22-
<PAGE> 28
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.
-23-
<PAGE> 29
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
-24-
<PAGE> 30
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;
-25-
<PAGE> 31
(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,
-26-
<PAGE> 32
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.
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-27-
<PAGE> 33
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").
-28-
<PAGE> 34
(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.
-29-
<PAGE> 35
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
[*]
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
<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
[*]
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
<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
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
<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.
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-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
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
<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.
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
<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 10.20(b)
ADDENDUM NO. 1
TO COLLABORATION AGREEMENT (p53 PRODUCTS)
This Addendum No. 1 ("Addendum") is made by and between Introgen
Therapeutics, Inc. ("Introgen") and Rhone-Poulenc Rorer Pharmaceuticals Inc.
("RPRP") as of January 23, 1996 ("Effective Date"), to that certain
Collaboration Agreement (p53 Products) dated as of October 7, 1994 between
Introgen and RPRP (the "Collaboration Agreement").
B A C K G R O U N D
A. Section 5.2 of the Collaboration Agreement provides, among other
things, that RPRP and Introgen shall each have the right to develop the
Collaboration Products within the Field in the Co-Exclusive Territory, which
includes Japan (among other countries).
B. Section 7.2 of the Collaboration Agreement provides that RPRP and
Introgen shall each have the co-exclusive right to market, sell and distribute
Collaboration Products in the Co-Exclusive Territory.
C. To expedite commercialization of the initial Collaboration Products,
RPRP and Introgen desire to initiate "first-in-human" clinical trials in Japan
for two (2) initial Collaboration Products on a cooperative basis, on the terms
and conditions set forth below.
A G R E E M E N T
NOW, THEREFORE, in consideration of the mutual covenants and premises
herein contained, the parties hereto, intending to be legally bound, agree as
follows:
1. Except as otherwise expressly defined herein, capitalized terms
shall have the meaning defined in the Collaboration Agreement.
2. RPRP and Introgen agree to conduct in accordance with this Addendum
a [*] in Japan for the adenoviral P53 Collaboration Product that is currently
the subject of clinical trials in the United States (the "P53/AV Product"). In
addition, the parties agree to conduct [*] in Japan for [*] Collaboration
Product [*], by the Development Committee under the Collaboration Agreement [*].
It is understood that RPRP may propose to the Development Committee [*], and
Introgen's representatives on the Development Committee will not unreasonably
withhold their consent to such proposal. If the [*] substantially identical to
this Addendum. Together, the [*] to be conducted hereunder are referred to below
as the "Initial Japanese Clinical Development." [*]
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE> 2
[*]
3. Promptly following the Effective Date, RPRP and Introgen shall form
a development committee (the "Japanese Development Committee"), which will
consist of three (3) representatives from each of RPRP and Introgen. Introgen
and RPRP may each replace its Japanese Development Committee representatives at
any time, with written notice to the other party. The Japanese Development
Committee shall oversee, review and coordinate the Initial Japanese Clinical
Development. All decisions of the Japanese Development Committee shall be by
absolute majority vote. RPRP's lead representative shall chair all meetings of
the Japanese Development Committee.
(a) The Japanese Development Committee shall meet every four
(4) months, or more often as agreed by the parties, in Tokyo, Japan, or
such other location as the parties agree. The parties agree that at
least one meeting of the Japanese Development Committee per full
calendar year will be held at Introgen's facilities in Houston. At its
meetings, the Japanese Development Committee will [*].
(b) RPRP shall be responsible for preparing reasonably
detailed plans and budgets under which the Initial Japanese Clinical
Development will be carried out. Upon approval of the Japanese
Development Committee, and subject to such approval, such plans and
budgets shall be the "Japanese Development Plan and Budget" for all
purposes of this Addendum.
(c) Promptly following the Effective Date, RPRP shall prepare
and provide to the Japanese Development Committee a proposed Japanese
Development Plan and Budget for the P53/AV Product for which the
Initial Japanese Clinical Development will be conducted. [*] The
Japanese 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. The Japanese Development Committee shall review the Japanese
Development Plan and Budget
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-2-
<PAGE> 3
on an ongoing basis and may make changes to the Japanese Development
Plan and Budget then in effect; provided, however, the Japanese
Development Plan and Budget in effect at any time shall not be modified
except as approved by the Japanese Development Committee.
4. RPRP shall conduct the Initial Japanese Clinical Development in
accordance with the Japanese Development Plan and Budget and shall use its
reasonable diligent efforts to meet the time schedules contemplated therein. It
is understood that, subject to the Japanese Development Plan and Budget and the
control of the Japanese Development Committee, RPRP will be responsible for the
clinical management and supervision of the clinical trials conducted under this
Addendum.
(a) RPRP agrees to keep Introgen fully informed of the
progress of the Initial Japanese Clinical Development conducted
hereunder. [*] RPRP agrees to provide Introgen English translations of
information generated in connection with the Initial Japanese Clinical
Development. To the extent permitted by law or regulation, all
regulatory approvals and filings with respect to the Initial Japanese
Clinical Development will be made jointly in the names of RPRP and
Introgen, or in such other manner as the parties agree, and as
requested by Introgen, RPRP shall use reasonable diligent efforts to
take such actions as may be necessary or appropriate to enable Introgen
to transfer or extend to third parties co-equal benefits in such
approvals and filings.
(b) [*] All trial protocols and regulatory submissions with
respect to the Initial Japanese Clinical Development, and all
agreements entered into by RPRP with respect to the conduct of the
Initial Japanese Clinical Development, shall be subject to the review
and approval of the Japanese Development Committee.
(c) Without limiting the foregoing, RPRP shall periodically,
and not less often than semi-annually during the term of this Addendum,
provide the Japanese Development Committee with a written report
summarizing the progress of the Initial Japanese Clinical Development
with respect to each Initial Japanese Product during the preceding two
calendar quarters.
5. Subject to the remainder of this Section 5, RPRP will advance the
costs associated with the Initial Japanese Clinical Development. Introgen will
reimburse [*] of RPRP's out-of-pocket costs approved by the Japanese Development
Committee that are paid to third parties to conduct clinical trials under the
Initial Japanese Clinical Development, and [*], supplied under paragraph 6 below
for use in such Initial Japanese Clinical Development ("Reimbursable Costs"),
regardless of the trial outcome. [*], no later than the date that is [*] after
completion of all clinical trials conducted hereunder (the "Due Date"). At
Introgen's option, however, Introgen may [*].
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-3-
<PAGE> 4
In the event of such election, Introgen shall issue [*]. For the avoidance of
doubt, following such issuance, [*]. In the event [*] or if [*], then so long as
[*]. The foregoing amounts to be reimbursed to RPRP by Introgen shall bear
interest at the [*], as published from time to time by Bank of America NT&SA in
San Francisco, California, from the date the amounts are paid by RPRP until the
date such amounts are reimbursed by Introgen. It is understood that [*].
Notwithstanding anything contained in this Addendum to the contrary, in the
event that [*], and (ii) Introgen and/or the third party shall thereafter be
required to pay on an ongoing basis [*] of the Reimbursable Costs associated
with the Initial Japanese Clinical
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-4-
<PAGE> 5
Development for such Initial Japanese Product and (iii) Introgen and/or the
third party shall reimburse RPRP, on the Due Date in accordance with the
foregoing provisions of this Section 5, any Reimbursable Costs (together with
accrued interest thereon) accrued prior to the date of such Partnering
Arrangement.
6. Introgen shall supply [*] quantities of the P53/AV Product to be
used in the Initial Japanese Clinical Development, on the same terms [*].
7. Section 2.5 of the Collaboration Agreement shall be deemed to apply
to all publications of results of the Initial Japanese Clinical Development
(except that all references to the Development Committee shall be deemed to
refer to the Japanese Development Committee), but neither of the last two
sentences of Section 5.4.2, nor any of Section 5.4.3 of the Collaboration
Agreement, shall apply to preclinical data, clinical data or regulatory filings
generated or made in connection with the Initial Japanese Clinical Development
conducted hereunder.
8. RPRP agrees to use its reasonable diligent efforts to conduct and
complete as expeditiously as possible the Initial Japanese Clinical Development.
9. [*]
10. The term of this Addendum shall continue until completion of each
[*] within the Initial Japanese Clinical Development conducted hereunder;
provided that this Addendum may be extended by the parties for such longer
period as the parties may mutually agree in writing.
11. This Addendum shall be deemed a part of the Collaboration
Agreement. Except as otherwise expressly provided in this Addendum, all rights
and obligations with respect to Collaboration Products in Japan will be as set
forth in the Collaboration Agreement. Following the expiration or termination of
this Addendum, all obligations of the parties under this Addendum, except those
under Paragraphs 4(a), 5 and 7 above, shall terminate and be of no further force
or effect. It is understood that nothing in this Addendum shall be deemed to
[*].
RHONE-POULENC RORER
INTROGEN THERAPEUTICS, INC. PHARMACEUTICALS INC.
By: /s/ David G. Nance By: K. R. Pina
--------------------------------- --------------------------------
DAVID NANCE Vice President &
President General Counsel
Date: 01-23-1996 Date: 01-19-1996
------------------------------- -------------------------------
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-5-
<PAGE> 1
EXHIBIT 10.20(c)
AGREEMENT MEMORANDUM
RPR and Introgen agree as follows (all Section references are to the
Collaboration Agreement):
1. RPR hereby elects under Section 6.1 to proceed with Later Stage
Clinical Development and commercialization of INGN 201 (Ad5CMV-p53).
2. Introgen shall immediately [*] to [*] INGN 201, as contemplated in
Section 2.3.3.
3. With respect to supply of INGN 201:
o Introgen shall use [*] the quantities of INGN 201 clinical
materials, according to the schedule, in Exhibit A, which
shall be used solely for clinical trials in the RPRP
Territory and North America. The price of such materials
shall be as per Section 12.3.2 (Ex Works). RPR and Introgen
shall [*] as contemplated in Section 12.5.
o Introgen and RPR shall supply to each other the quantities
of INGN 201 [*], according to the schedule, specified in
Exhibit B. The transfer price shall be [*]. [*]
o RPR acknowledges that Introgen has the exclusive right under
Section 12.3 to manufacture, or have a third party
manufacture, and supply Collaboration Products for both
clinical trials and commercial sale in North America, and
that this right is a fundamental benefit to Introgen under
the Collaboration Agreement; RPR agrees [*].
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE> 2
[*]
[*]
o RPR and Introgen agree to use their respective best efforts
to collaborate with and assist one another on a reciprocal
basis to ensure the supply of Collaboration Product for use
in North America and the RPRP Territory; provided that such
commitment [*] subject in each case to Article 12 of the
Collaboration Agreement.
o [*]
o [*]
4. Introgen shall file immediately with the U.S. FDA the [*] package.
All capitalized terms shall have the meaning in the Collaboration Agreement (p53
Products) dated October 7, 1994. References to "RPR" include RPRP. This
agreement shall terminate upon a termination of the Collaboration, except that
RPR's obligation to purchase the materials in Exhibit A shall survive any such
termination. This Agreement Memorandum is effective as of July 22, 1997.
INTROGEN THERAPEUTICS, INC. RHONE POULENC RORER
PHARMACEUTICALS, INC.
BY: /s/ James W. Albrecht, Jr. BY: /s/ Christine A. Jacobs
--------------------------- ------------------------
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-2-
<PAGE> 1
EXHIBIT 10.20(d)
INTROGEN THERAPEUTICS
301 CONGRESS AVENUE, SUITE 1850
AUSTIN, TX 78701
(512) 708-9310
April 19, 1999
Rhone-Poulenc Rorer Pharmaceuticals Inc.
500 Arcola Road
P.O. Box 1200
Collegeville, PA 19426-0107
Gentlemen:
This letter confirms the understanding reached by Introgen and RPR with respect
to certain issues regarding the manufacturing process for Ad5CMVp-53 (the "p53
Product"). In particular, the parties agree as follows:
1. Introgen will [*] for the purpose of supplying the p53 Product materials
for clinical trials. Accordingly, until [*].
2. Notwithstanding the provisions of Paragraph 1, above, in the event that
[*].
3. [*]
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE> 2
Rhone-Poulenc Rorer Pharmaceuticals Inc.
April 19, 1999
Page 2
4. RPR represents and warrants that, other than the patent(s) and patent
applications(s) listed on Exhibit A hereto, neither RPR nor its Affiliates
has rights to any patent or patent application (including without
limitation any invention disclosure or draft patent application for which a
patent application is intended to be filed) the rights under which would be
required to carryout the [*]. Introgen represents and warrants that,
other than the patent(s) and patent applications(s) listed on Exhibit
C hereto, Introgen does not have rights to any patent or patent application
(including without limitation any invention disclosure or draft patent
application for which a patent application is intended to be filed) the
rights under which would be required to carryout the [*]. To the
extent that Exhibits A and C are not completed as of the date hereof,
the parties will complete and exchange such Exhibits within 30 days and the
same shall be initialed by the parties and attached hereto.
5. Nothing in this Letter Agreement is intended to modify the terms of the
Collaboration Agreement or the Agreement Memorandum, except as expressly
provided in and subject to Paragraph 2 above.
If RPR agrees with these terms and conditions, please execute in the spaces
provided below, and return a signed copy to me at your earliest convenience.
Best Regards,
/s/ David G. Nance
David G. Nance
Chief Executive Officer
AGREED AND ACCEPTED:
RHONE-POULENC RORER PHARMACEUTICALS INC.
By:
-----------------------------
Title:
--------------------------
Date:
---------------------------
cc: Robert Werner, RPR
Ken Clark, WSGR
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE> 1
EXHIBIT 10.21(a)
===============================================================================
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
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-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.
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-3-
<PAGE> 9
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 [*]
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-4-
<PAGE> 10
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.
-5-
<PAGE> 11
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
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-6-
<PAGE> 12
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
-7-
<PAGE> 13
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.
-8-
<PAGE> 14
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.
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-9-
<PAGE> 15
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
-10-
<PAGE> 16
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
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-11-
<PAGE> 17
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
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-12-
<PAGE> 18
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
-13-
<PAGE> 19
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. [*]
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-14-
<PAGE> 20
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
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-15-
<PAGE> 21
(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
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-16-
<PAGE> 22
(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
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-17-
<PAGE> 23
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
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-18-
<PAGE> 24
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.
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-19-
<PAGE> 25
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
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-20-
<PAGE> 26
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
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-21-
<PAGE> 27
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.
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-22-
<PAGE> 28
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.
-23-
<PAGE> 29
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
-24-
<PAGE> 30
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,
-25-
<PAGE> 31
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
-26-
<PAGE> 32
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.
-27-
<PAGE> 33
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
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-28-
<PAGE> 34
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).
-29-
<PAGE> 35
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
-30-
<PAGE> 36
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
-31-
<PAGE> 37
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.
-32-
<PAGE> 38
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.
-33-
<PAGE> 39
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
--------------------------------- -----------------------------
-34-
<PAGE> 40
EXHIBIT A
Existing Introgen Licensed Patents
[*]
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
<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
[*]
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE> 1
EXHIBIT 10.21(b)
AMENDMENT NO. 1
to
COLLABORATION AGREEMENT (K-ras PRODUCTS)
BY AND BETWEEN
RHONE-POULENC RORER PHARMACEUTICALS, INC.
AND
INTROGEN THERAPEUTICS, INC.
OCTOBER 7, 1994
For good and valuable consideration, receipt of which is acknowledged hereby,
the parties indicated below, intending to be legally bound, agree as follows:
(1) In the introductory statement before the RECITALS, insert after
"("RPRP")",--on behalf of RPR Gencell, a division of Rhone-Poulenc
Rorer Inc.,--.
(2) Insert as the last sentence in Section 2.2,--The ScFV pan-ras
therapeutic product under development by Rhone-Poulenc Rorer S.A. shall
be considered a "Collaboration Product."
The effective date of this amendment shall be September 27, 1995.
RHONE-POULENC RORER
INTROGEN THERAPEUTICS, INC. PHARMACEUTICALS, INC.
By: /s/ DAVID NANCE By: /s/ K. R. PINA
----------------------- ------------------------
DAVID NANCE
President
Date: 9-29-95 Date: 9/27/95
--------------------- ----------------------
<PAGE> 2
September 27, 1995
Introgen Therapeutics, Inc.
301 Congress Avenue, Suite 2025
Austin, Texas 78701
Attn: David G. Nance
Gentlemen:
This letter agreement is being entered into in connection with that certain
Collaboration Agreement for K-ras Products, dated October 7, 1994 by and between
Introgen Therapeutics, Inc. ("Introgen") and Rhone-Poulenc Rorer
Pharmaceuticals, Inc. ("RPRP")(the "Agreement") and Amendment No. 1 to the
Agreement dated as of September 27, 1995. Capitalized terms that are not
otherwise defined in this letter shall have the meaning defined in the
Agreement.
In addition to the Collaboration Products currently being developed under the
Agreement, RPRP has proposed to develop one or more additional products based
upon the transfer into tumor cells of a gene coding for a single chain antibody
that binds to the K-ras protein ("Single Chain Antibody Products"). Since the
proposed product is within the Field, the parties propose to develop and
commercialize such product pursuant to the Agreement, as follows:
1. Product Plan and Budget. RPRP and Introgen will mutually agree upon
a Product Plan and Budget for the Single Chain Antibody Products, as
contemplated in Section 3.4 of the Agreement. Each product being developed under
such Product Plan and Budget (and/or any successor Product Plan and Budget), as
in effect from time to time (and subject to Section 6.1), shall be deemed a
Collaboration Product for all purposes of the Agreement.
2. Reports. It is understood that the Agreement originally contemplated
that preliminary research and preclinical work through filing an IND for a
Collaboration Product would be performed by Introgen. However, RPRP and Introgen
acknowledge that much of the preliminary research and preclinical studies on the
Collaboration Products that are Single Chain Antibody Products may be performed
by RPRP in France.
Accordingly, since Introgen will be responsible (as mutually agreed and
as contemplated in the Agreement) for the filing of an IND in the United States,
and for the conduct of Early Stage Clinical Development in North America, with
respect to such Collaboration Products, RPRP agrees to provide to Introgen in
English as soon as practicable all data, materials, results, reports
<PAGE> 3
Introgen Therapeutics, Inc.
September 27, 1995
Page 2
and other information as is reasonably necessary for Introgen to prepare and
file such IND to prepare and conduct such Early Stage Clinical Development
(including the manufacture of clinical trial materials) for such Collaboration
Products. In addition, RPRP agrees to include in the reports provided to the
Development Committee under Section 2.4.3 of the Agreement a summary of RPRP's
activities with respect to the research and development of the Single Chain
Antibody Products.
3. Other Terms. Except as expressly set forth in this letter agreement,
all terms and conditions of the Agreement shall remain in full force and
effect. Without limiting the foregoing, it is understood that Section 6.2 shall
continue to apply to all Single Chain Antibody Products that are not being
developed as Collaboration Products, and that funding for Introgen's conduct of
the Early Stage Clinical Development of the Collaboration Products that are
Single Chain Antibody Products will be as provided in Article 4 of the
Agreement.
RHONE-POULENC RORER
PHARMACEUTICALS, INC.
By: /s/ K. R. PINA
-------------------------
Name: K. R. Pina
-----------------------
Title: VP and General Counsel
----------------------
Agreed to and Accepted as of this 27th day of September 1995:
/s/ DAVID G. NANCE
- ------------------------------
Introgen Therapeutics
by David G. Nance, President
<PAGE> 1
EXHIBIT 10.22
COOPERATIVE RESEARCH AND
DEVELOPMENT AGREEMENT
(CACR-352)
CLINICAL DEVELOPMENT OF Adp53
[*]
[*]
CTEP
DCTD
[*]
RHONE-POULENC RORER PHARMACEUTICALS, INC.
[*]
INTROGEN THERAPEUTICS, INC.
PREPARED BY
TECHNOLOGY DEVELOPMENT AND COMMERCIALIZATION BRANCH
NATIONAL CANCER INSTITUTE
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE> 2
PUBLIC HEALTH SERVICE
COOPERATIVE RESEARCH AND DEVELOPMENT AGREEMENT
This Cooperative Research and Development Agreement, hereinafter referred to as
"CRADA," consists of this Cover Page, an attached Agreement, 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 ("NIH"), the Food and Drug
Administration ("FDA"), and the Centers for Disease Control and Prevention
("CDC"):
THE CANCER THERAPY EVALUATION PROGRAM
DIVISION OF CANCER TREATMENT AND DIAGNOSIS
THE NATIONAL CANCER INSTITUTE
, hereinafter singly or collectively referred to as the Public Health Service
("PHS"); and
(2) RHONE-POULENC RORER PHARMACEUTICALS, INC.,
which has offices at 500 ARCOLA ROAD
COLLEGEVILLE, PENNSYLVANIA 19426
, hereinafter referred to as "RPRP"
and
(3) INTROGEN THERAPEUTICS, INC.,
which has offices at 301 CONGRESS AVENUE, SUITE 1850
AUSTIN, TEXAS 78701
, hereinafter referred to as "Introgen"
PHS CRADA CACR-0352
<PAGE> 3
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 "AFFILIATE" means any corporation or other business entity controlled
by, controlling, or under common control with Collaborator. For this
purpose, "control" means direct or indirect beneficial ownership of at
least fifty (50) percent of the voting stock or at least fifty (50)
percent interest in the income of such corporation or other business.
2.2 "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.
2.3 "GOVERNMENT" means the Government of the United States as represented
through the PHS agency that is a Party to this agreement.
2.4 "IP" means intellectual property.
2.5 "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.).
2.6 "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.
2.7 "PROPRIETARY/CONFIDENTIAL INFORMATION" means confidential scientific,
business, or financial information provided that such information does
not include:
2.7.1 information that is publicly known or available from other
sources who are not under a confidentiality obligation to the
source of the information;
2.7.2 information which has been made available by its owners to
others without a confidentiality obligation;
2.7.3 information which is already known by or available to the
receiving Party without a confidentiality obligation; or
2.7.4 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.
2.8 "RESEARCH MATERIALS" means all tangible materials other than Subject
Data first produced in the
Model PHS CRADA
Form 053096 Page 2 of 11
<PAGE> 4
performance of this CRADA.
2.9 "RESEARCH PLAN" or "RP" means the statement in Appendix A of the
respective research and development commitments of the Parties to this
CRADA.
2.10 "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.
2.11 "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 schedule agreed to by the PIs, but at least
within [*] after this CRADA becomes effective and at least within [*]
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 [*] after completing the projects described
in the RP or after the expiration or termination of this CRADA.
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
[*] 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
Model PHS CRADA
Form 053096 Page 3 of 11
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE> 5
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 IP 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.
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.
[*]
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
Model PHS CRADA
Form 053096 Page 4 of 11
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE> 6
Collaborator, the Collaborator shall be responsible for [*] 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.
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 that are reduced to practice under this CRADA, if prior
to that reduction to practice, 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. The field of use of the license will be commensurate
with the scope of the RP.
7.2 EXERCISE OF LICENSE OPTION. The option of Article 7.1 must be exercised
by written notice mailed within [*] after either (i) Collaborator
receives written notice from PHS that the patent or other IP
application has been filed; or (ii) the date Collaborator files such IP
application; whichever comes first. Exercise of this option by the
Collaborator initiates a negotiation period that expires [*] after the
exercise of the option. If the last proposal by the Collaborator has
not been responded to in writing by PHS within this [*] period, the
negotiation period shall be extended to expire [*] after PHS
so responds, during which month the Collaborator may accept in writing
the final license proposal of PHS. [*]. 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 [*] without first offering Collaborator
those more favorable terms.
7.3 LICENSE FOR PHS EMPLOYEE INVENTIONS AND JOINT INVENTIONS. Pursuant to
15 U.S.C. 3710a(b)(1)(A), for inventions made by PHS employees or
jointly with a Collaborator under this CRADA, pursuant to Articles 6.3
and 6.4, the Collaborator grants to PHS a nonexclusive,
nontransferable, irrevocable, paid-up license to practice the invention
or have the invention practiced throughout the world by or on behalf of
the Government. In the exercise of such license, the Government shall
not publicly disclose trade secrets or commercial or financial
information that is privileged or confidential within the meaning of 5
U.S.C. 552(b)(4) or which would be considered as such if it had been
obtained from a non-Federal party.
7.4 LICENSE IN COLLABORATOR INVENTIONS. Pursuant to 15 U.S.C. 3710a(b)(2),
for inventions made solely by
Model PHS CRADA
Form 053096 Page 5 of 11
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE> 7
Collaborator employees under this CRADA, pursuant to Article 6.2, the
Collaborator grants to PHS a nonexclusive, nontransferable,
irrevocable, paid-up license to practice the invention or have the
invention practiced throughout the world by or on behalf of the
Government for research or other Government purposes.
7.5 THIRD PARTY LICENSE. Pursuant to 15 U.S.C. 3710a(1)(B), if PHS grants
an exclusive license to a Subject Invention made wholly by PHS
employees or jointly with a Collaborator under this CRADA, pursuant to
Articles 6.3 and 6.4, the Government shall [*] to use the invention in
Collaborator's licensed field of use on terms that are [*]; or if the
Collaborator fails to [*], to [*]. The exercise of such rights by the
Government shall only be in exceptional circumstances and only if the
Government determines (i) the action is necessary to meet health or
safety needs that are not reasonably satisfied by Collaborator, (ii)
the action is necessary to meet requirements for public use specified
by Federal regulations, and such requirements are not reasonably
satisfied by the Collaborator; or (iii) the Collaborator has failed to
comply with an agreement containing provisions described in 15 U.S.C.
3710a(c)(4)(B). The determination made by the Government under this
Article is subject to administrative appeal and judicial review under
35 U.S.C. 203(2).
7.6 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
requirements 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 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
Model PHS CRADA
Form 053096 Page 6 of 11
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE> 8
information as Proprietary/Confidential Information by another Party.
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 intends 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 necessary 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.
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
Model PHS CRADA
Form 053096 Page 7 of 11
<PAGE> 9
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
[*] 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.
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 9, 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
Model PHS CRADA
Form 053096 Page 8 of 11
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE> 10
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.
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.
Model PHS CRADA
Form 053096 Page 9 of 11
<PAGE> 11
13.4 WAIVERS. None of the provisions of this 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 agents of each other or
joint venturers or partners. 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.
Model PHS CRADA
Form 053096 Page 10 of 11
<PAGE> 12
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 revised
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.
Model PHS CRADA
Form 053096 Page 11 of 11
<PAGE> 13
CRADA SIGNATURE PAGE
By executing this Agreement, each of the undersigned represents and confirms
that he or she is fully authorized to bind the identified entity to its terms.
Each of the undersigned expressly certifies or affirms that the contents of any
statement made or reflected in this document are truthful and accurate.
AGREED TO AND ACCEPTED BY:
FOR THE NATIONAL CANCER INSTITUTE:
/s/ ALAN S. RABSON 9/11/98
- ------------------------------------------ ----------------
ALAN S. RABSON, M.D. DATE
DEPUTY DIRECTOR, NCI
Mailing Address for Notices:
National Cancer Institute
Technology Development and Commercialization Branch
Executive Plaza South, Room 450
6120 Executive Boulevard
Rockville, MD, 20852
FOR RHONE-POULENC RORER PHARMACEUTICALS, INC. FOR INTROGEN THERAPEUTICS, INC.
/s/ ROSS J. OEHLER /s/ DAVID G. NANCE
- --------------------------- -----------------------------
ROSS J. OEHLER DAVID G. NANCE
ASSISTANT SECRETARY PRESIDENT AND CEO
10/13/98 October 30, 1998
- --------------------------- -----------------------------
Date Date
Page S-1
<PAGE> 14
CACR-352
APPENDIX A
RESEARCH PLAN
TITLE OF CRADA: [*]
NIH/ADAMHA PRINCIPAL INVESTIGATORS: [*]
and his/her laboratory: [*]
CTEP DCTD
COLLABORATOR PRINCIPAL INVESTIGATOR: [*]
[*]
RHONE-POULENC RORER
PHARMACEUTICALS, INC.
[*]
[*]
INTROGEN THERAPEUTICS, INC.
TERM OF CRADA: [*]
CONFLICTS OF INTEREST INFORMATION: Describe any relevant past, present or
contemplated relationships between the NIH/ADAMHA Principal Investigator and
his/her Laboratory and the Collaborator in sufficient detail to permit reviewers
of this CRADA to determine whether or not any conflicts of interest exist:
SEE CONFLICT OF INTEREST FORM ATTACHED HERETO.
The Research Plan which follows this page should be concise but of sufficient
detail to permit reviewers of this CRADA to evaluate the scientific merit of the
proposed collaboration. The RP should explain the scientific importance of the
collaboration and the research goals of NIH/ADAMHA and the Collaborator. The
respective contributions in terms of expertise and/or research materials of
NIH/ADAMHA and Collaborator should be summarized. Initial and subsequent
projects contemplated under the RP, and the time periods estimated for their
completion, should be described, and pertinent methodological considerations
summarized. Pertinent literature references may be cited and additional relevant
information included. Include additional pages to identify the Principal
Investigators of all other Parties to this CRADA.
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
Page A-i
<PAGE> 15
APPENDIX A
RESEARCH PLAN
[*]
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
Al
<PAGE> 16
[*]
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
A2
<PAGE> 17
[*]
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
A3
<PAGE> 18
[*]
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
A4
<PAGE> 19
[*]
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
A5
<PAGE> 20
[*]
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
A6
<PAGE> 21
CACR-352
APPENDIX B
FINANCIAL AND STAFFING CONTRIBUTIONS OF THE PARTIES
[Insert the Financial and Staffing Contributions
as Appendix B behind this page.]
Page B-i
<PAGE> 22
APPENDIX B
FINANCIAL AND STAFFING CONTRIBUTIONS OF THE PARTIES
ALLOCATION OF RESOURCES
[*]
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
B1
<PAGE> 23
[*]
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
B2
<PAGE> 24
[*]
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
B3
<PAGE> 25
CACR-352
APPENDIX C
EXCEPTIONS OR MODIFICATIONS TO THIS CRADA
Page C-i
<PAGE> 26
APPENDIX C
EXCEPTIONS OR MODIFICATIONS TO THIS CRADA
AMEND ARTICLE 1 "INTRODUCTION" TO READ AS FOLLOWS:
ARTICLE 1. INTRODUCTION
This Cooperative Research and Development Agreement (CRADA) among PHS,
RHONE-POULENC RORER PHARMACEUTICALS, INC., AND INTROGEN THERAPEUTICS, INC., will
be effective when signed by all Parties, retroactive to April 9, 1996 (Letter of
Intent). 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. The Intellectual Property and Licensing is
set forth in Appendix D. A sample "Annual Scientific, Commercial, and Financial
Report" is included as Appendix E. A model Amendment is included as Appendix F.
A model termination letter is included as Appendix G. A model expiration letter
is included in Appendix H. This CRADA is made under the authority of the Federal
Technology Transfer Act, 15 U.S.C. Section 3710a and is governed by its terms.
AMEND SECTION 2.1 TO READ AS FOLLOWS:
2.1 "AFFILIATE" means any corporation or other business entity controlled by,
controlling, or under common control with RPRP and/or Introgen. For this
purpose, "control" means direct or indirect beneficial ownership of at
least fifty (50) percent of the voting stock or at least fifty (50) percent
interest in the income of such corporation or other business.
AMEND SECTION 2.6 TO READ AS FOLLOWS:
2.6 "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 Research Plan (as
C 2
<PAGE> 27
defined in Section 2.9)
AMEND SECTION 2.7.4 TO READ AS FOLLOWS:
2.7.4 information which relates to potential hazards or cautionary warnings
associated with the production, handling or use of the Agent
designated in the Research Plan of this CRADA (as defined in Section
2.13 below).
ADD THE FOLLOWING NEW SECTIONS TO ARTICLE 2. "DEFINITIONS":
2.12 "ADVERSE DRUG EXPERIENCE" means an adverse clinical experience as defined
under 21 C.F.R. 310.305 and 312.32 where applicable.
2.13 "AGENT" means Adenovirus p53 vector (Adp53).
2.14 "ANNUAL REPORT" means the brief report of the progress of an IND associated
investigation which the IND sponsor is required to submit to the FDA within
60 days of the anniversary date that the IND went into effect (pursuant to
21 C.F.R. 312.33).
2.15 "CLINICAL DATA AND RESULTS" means all information, data and results
developed or obtained in connection with clinical trials conducted under
the Research Plan whether by intramural research scientists or extramural
grantee or contract investigators.
2.16 "CLINICAL DATA AND RESULTS AND RAW DATA IN NIH'S POSSESSION AND CONTROL"
means all information, data and results collected from NIH intramural
preclinical or clinical studies performed pursuant to the Research Plan,
all data obtained by NIH under contracts with extramural contract
investigator(s) for completion of studies within the scope of the Research
Plan, and all information and data in the NCI-sponsored IND for Agent.
2.17 "CONTRACT" means a funding agreement that is a research and development
contract that provides that the contractor perform for the benefit of the
Government, with an expectation of completion of the stated research goals
and the delivery of a report, data, materials or other product. Generally,
Contracts are administered under the Federal
C 3
<PAGE> 28
Acquisition Regulations (FAR) codified at Title 48 C.F.R., Chapter 1 or the
Health Services Acquisition Regulations (HSAR) codified at Title 48 C.F.R.,
Chapter 3.
2.18 "CTA" means Clinical Trial Agreement.
2.19 "CTEP" means the Cancer Therapy Evaluation Program, DCTD, NCI, the program
within NCI which plans, assesses and coordinates all aspects of clinical
trials including extramural clinical research programs, internal resources,
treatment methods and effectiveness, and compilation and exchange of data.
2.20 "DCTD" means Division of Cancer Treatment and Diagnosis, NCI.
2.21 "ENTITY" means a party that is not a Party to this CRADA.
2.22 "FDA" means the US Food and Drug Administration.
2.23 "GRANT" means a funding agreement that is an award of financial assistance
which may be provided for support of basic research in a specific field of
interest to the funding Federal agency.
2.24 "IND" means an Investigational New Drug Application submitted to the FDA to
receive approval to conduct experimental clinical trials.
2.25 "MULTI-PARTY DATA" means clinical data from clinical studies sponsored by
NCI pursuant to CTAs or CRADAs, where such data are collected under
protocols involving combinations of investigational agents from more that
one CTA or CRADA collaborator.
2.26 "NCI" means the National Cancer Institute, NIH, PHS, DHHS.
2.27 "PROTOCOL REVIEW COMMITTEE" (OR "PRC") means the CTEP/DCTD committee that
reviews and approves studies involving NCI investigational agents and/or
activities supported by NCI.
2.28 "RAW DATA" means the primary quantitative and empirical data first
collected by the intramural and extramural investigators from experiments
and clinical trials conducted within the scope of the
C 4
<PAGE> 29
Research Plan of this CRADA.
2.29 "STEERING COMMITTEE" means the joint NCI, RPRP, and Introgen research and
development team whose composition and responsibilities with regard to the
clinical experiments performed under this CRADA are described in Article
3.3 of this CRADA.
2.30 "SUMMARY DATA" means a summary of the Raw Data provided to the NCI by the
extramural investigators that will be included by NCI in an Annual Report
to an NCI-sponsored IND, and made available by NCI to RPRP and Introgen.
AMEND SECTION 3.1 TO READ AS FOLLOWS:
3.1 PRINCIPAL INVESTIGATORS. The PHS Principal Investigators (PIs) designated
in the RP will be responsible for the scientific and technical conduct of
this project on behalf of PHS. RPRP and Introgen have jointly designated
[*] and [*] respectively, as the Collaborator PIs who will be responsible
for the scientific and technical conduct of this project on behalf of RPRP
and Introgen, coordinating RPRP and Introgen's activities under this
CRADA. [*] will be the primary contact and correspondent under the CRADA
with respect to Phase II and later clinical trials conducted under the
CRADA. [*] will be the Primary contact and correspondent under the CRADA
with respect to Phase I clinical trials conducted under the CRADA.
ADD A NEW SECTION 3.3 AS FOLLOWS:
3.3 STEERING COMMITTEE AND CRADA RESEARCH. The Parties agree to establish a
Steering Committee comprising at least the Principal Investigators
designated pursuant to Article 3.1 to conduct and monitor the research of
the Agent in accordance with the Research Plan. Members of the Steering
Committee shall continue to remain employed by their respective employers
under their
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
C 5
<PAGE> 30
respective terms of employment.
Agent's clinical development under the Research Plan shall be a
collaborative undertaking by RPRP, Introgen, and NCI. Details of this
development beyond those set forth in the Research Plan shall be formulated
and approved in Steering Committee meeting(s) before implementation of
large-scale or resource intensive studies. The clinical development plans
formulated and approved by the Steering Committee shall be implemented
either intramurally at the NCI or extramurally under NCI-sponsored funding
agreements.
Additional CRADA information, including Steering Committee meeting reports,
Protocol Review Committee records, clinical trial protocols, Institutional
Review Board approval information, IND and general regulatory information,
and preclinical and clinical data in NCI's possession and control shall
remain on file with NCI.
RPRP and/or Introgen, have the option to sponsor their own clinical trials
and hold their own IND(s) for studies performed which are independent of
this CRADA from which all data is proprietary solely to the sponsoring
Party or Parties.
ADD A NEW SECTION 3.4 AS FOLLOWS:
3.4 CLINICAL PROTOCOLS. Clinical protocol proposals for each study within the
scope of the Research Plan will be solicited from selected intramural and
extramural clinical investigators. Each clinical protocol should describe
in detail the research to be conducted at each center and must be submitted
to the PRC for approval prior to implementation. Each clinical protocol
received by NCI will be forwarded to RPRP and Introgen for review and
comment approximately two weeks before it is reviewed by the PRC. Comments
from RPRP and/or Introgen received by CTEP before the PRC meeting will be
discussed by the PRC, will be given due consideration, and will
incorporated into the protocol, absent good cause. Comments from RPRP,
Introgen or the CTEP staff that are agreed upon in the PRC meeting
C 6
<PAGE> 31
will be formatted as a consensus review, which is returned to the
investigator for necessary and/or suggested changes before the protocol can
be given final approval and submitted to the FDA. A copy of the final
approved protocol will be forwarded to RPRP and Introgen at the same time
as it is submitted to the FDA consistent with Section 3.5 below.
3.4.1 CLINICAL BROCHURES. Introgen and RPRP shall provide all clinical
brochures for use in studies conducted hereunder, and only such
clinical brochures which are inclusive of NCI study information if
pertinent and appropriate, on Adp53 shall be used.
ADD A NEW SECTION 3.5 AS FOLLOWS TO REFLECT THE IND SPONSORSHIP UNDER THIS
CRADA:
3.5 INVESTIGATIONAL NEW DRUG APPLICATION. The Parties expect that either NCI,
RPRP and/or Introgen will submit an IND or INDs for the studies conducted
under the Research Plan, which may cross-reference an IND or Drug Master
File held by the other(s). All information in INDs will be fully shared
among NCI, RPRP, and Introgen for the studies conducted under the Research
Plan, except as follows: If NCI files an IND for AGENT that is the subject
of this CRADA, RPRP and/or Introgen, may, at its/their option, supply
information in support of the IND in the form of a Drug Master File
directly to the FDA so long as RPRP and/or Introgen grant(s) NIH a right to
cross-reference such information in its IND filing. In the event that RPRP
and/or Introgen supplies CONFIDENTIAL information directly to NCI in
support of an NCI IND, such information will be protected in accordance
with the corresponding Confidentiality provisions of Article 8 of this
Agreement. All protocols and clinical studies conducted under this CRADA
will be as mutually agreed by RPRP, Introgen and NCI.
ADD A NEW SECTION 3.6 AS FOLLOWS:
3.6 DRUG INFORMATION AND SUPPLY. Introgen and/or RPRP agree to provide NCI
[*] clinical-grade Agent in
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
C 7
<PAGE> 32
sufficient quantity to complete the preclinical studies and clinical trial
protocol(s) sponsored by NCI that are within the scope of the Research
Plan. Furthermore, Introgen agrees to provide [*] Agent or
unformulated analytical grade Agent or metabolites, if available, to NCI to
supply extramural investigators for the development of mutually agreed upon
analytical assays or ancillary correlative studies conducted in conjunction
with NCI-sponsored protocols. Introgen will provide Certificates of
Analysis to NCI for each lot of finished product provided. PHS agrees to
use any materials provided by Introgen and/or RPRP, including, but not
limited to Agent, solely for the purposes of conducting approved studies
under this CRADA. [*]
The contact person for NCI will be Mr. Alfred Fallavollita, Chief,
Pharmaceutical Management Branch (Telephone Number 301-496-5725) and the
Introgen contact will be Dr. James Merritt, (Telephone Number
713-797-9960).
ADD A NEW SECTION 3.7 AS FOLLOWS:
3.7 PROTECTION OF HUMAN SUBJECTS AND APPROPRIATE CARE OF LABORATORY ANIMALS.
All human clinical trials performed under this CRADA shall conform to the
appropriate Federal law, including, but not limited to all applicable FDA
regulations and DHHS regulations relating to the protection of human
subjects (see 45 C.F.R. Part 46). NCI, RPRP and Introgen also agree to
comply with all applicable Federal statutes and Public Health Service
policies relating to the use and care of laboratory animals (see 7 U.S.C.
2131 et seq.) Additional information is available from the Office of
Protection from Research Risk, Telephone: 301-496-7163.
ADD THE FOLLOWING TO THE END OF ARTICLE 4.1 "INTERIM REPORTS":
Steering Committee reports or copies of Annual Reports updating the
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
C 8
<PAGE> 33
progress of the CRADA research shall satisfy the reporting requirements
under this Article 4.1. In addition, copies of the Annual Reports and other
pertinent IND data (including, but not limited to, clinical brochure data,
and formulation and preclinical data, including toxicology findings)
created hereunder, shall be exchanged by the Parties as they become
available.
ADD A NEW SECTION 4.3 AS FOLLOWS:
4.3 ADVERSE DRUG EXPERIENCE REPORTING. DCTD shall report all serious or
unexpected adverse events to FDA in accordance with the reporting
obligations of 21 CFR 312.32 and will, concurrently, forward all such
reports to RPRP and Introgen. All other adverse event reports received by
DCTD shall be reported to the FDA consistent with 21 CFR 312.32 and 312.33.
In addition, copies of the Annual Reports and other pertinent IND data
(including, but not limited to, Clinical Brochure data, formulation and
preclinical data, including toxicology findings) will be provided to RPRP
and Introgen as they become available.
In the event that RPRP and/or Introgen, inform(s) the FDA of any serious or
unexpected adverse events, RPRP and/or Introgen must notify the NCI at the
same time. NCI will then notify the investigator(s) conducting studies
under NCI-sponsored protocols.
ADD A NEW SECTION 4.4 AS FOLLOWS:
4.4 ANNUAL REPORTS. NCI shall provide RPRP and Introgen with a copy of the
Annual Report simultaneously with the submission of the Annual Report to
the FDA.
AMEND ARTICLE 5 "FINANCIAL AND STAFFING OBLIGATIONS" TO READ AS FOLLOWS:
5.1 PHS, RPRP AND INTROGEN 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
C 9
<PAGE> 34
action required by this CRADA if the funding is not provided as set forth
in Appendix B. PHS shall return excess funds to RPRP when it sends its
final fiscal report pursuant to Article 5.2, except for staffing support
pursuant to Article 10.3. RPRP and Introgen acknowledge that the U.S.
Government will have the authority to retain and expend any excess funds
for up to [*] 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 RPRP and Introgen a final fiscal report
pursuant to Article 4.2.
5.3 CAPITAL EQUIPMENT. Equipment purchased by PHS with funds provided by RPRP
and/or Introgen shall be the property of PHS. All capital equipment
provided under this CRADA by a Party or Parties for the use of another
Party or Parties remains the property of the providing Party or Parties
unless other disposition is mutually agreed upon by in writing by the
respective Parties. If title to this equipment remains with the providing
Party or Parties, that/those Party/Parties shall be responsible for
maintenance of the equipment and the costs of its transportation to and
from the site where it will be used.
AMEND ARTICLE 6 "INTELLECTUAL PROPERTY RIGHTS AND PATENT APPLICATIONS" TO READ
AS FOLLOWS:
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 Parties in sufficient detail to
determine inventorship. Such reports shall be treated as Proprietary/
Confidential Information in accordance with Article 8.4.
6.2 RPRP AND/OR INTROGEN EMPLOYEE INVENTIONS. RPRP and Introgen may elect to
retain intellectual property rights to each
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
C 10
<PAGE> 35
Subject Invention made solely or jointly by their respective employees.
If RPRP and/or Introgen does not elect to retain its respective sole or
joint IP rights, RPRP and/or Introgen shall offer to assign said IP
rights to the Subject Invention to PHS pursuant to Article 6.5. If PHS
declines such assignment, RPRP and/or Introgen may release their IP
rights as they may individually or jointly 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 IP rights, PHS shall
offer to assign these IP rights to such Subject Invention to RPRP and
Introgen collectively pursuant to Article 6.5. If RPRP or Introgen
decline such an offer, the other company may obtain these IP rights.
If both RPRP and Introgen decline such assignment, PHS may release IP
rights in such Subject Invention to its employee inventors pursuant
to Article 6.6.
6.4 PHS JOINT INVENTIONS WITH RPRP AND/OR INTROGEN. Each Subject Invention
made jointly by PHS and RPRP and/or Introgen employees shall be jointly
owned by PHS and the Party or Parties making the invention. In
accordance with Section 6.7, Introgen may elect to file the joint
patent or other IP application(s) on behalf of both Introgen and RPRP
thereon and shall notify PHS promptly upon making this election whether
the joint Subject Invention is owned by PHS and Introgen and/or RPRP.
If Introgen decides to file such applications, it shall do so in a
timely manner and at its own expense. If Introgen 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 any Party decides not to retain its IP rights to
a jointly owned Subject Invention, it shall offer to assign such rights
to the other inventing Party/Parties 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.
C 11
<PAGE> 36
6.5 FILING OF PATENT APPLICATIONS. With respect to Subject Inventions made by
RPRP and/or Introgen 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
Parties. The Parties shall notify the other Parties of their decision
regarding filing in countries other than the United States in a timely
manner. The Parties may elect not to file a patent or other IP application
thereon in any particular country or countries provided it so advises the
other Parties ninety (90) days prior to the expiration of any applicable
filing deadline, priority period or statutory bar date, and hereby agrees
to assign its/their IP right, title and interest in such country or
countries to the Subject Invention to the other Parties 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 made under this CRADA
is transferred to RPRP and/or Introgen, RPRP and/or Introgen agrees that
PHS inventors will share in any royalty distribution that RPRP and/or
Introgen pays to its own inventors.
6.6 RELEASE TO INVENTORS. In the event none of the Parties to this CRADA elects
to file a patent or other IP application on a Subject Invention, the
Parties (if a joint invention) may retain or release their IP rights in
accordance with their respective policies and procedures.[*]
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.
Introgen expressly agrees to assume full responsibility, at its expense,
for taking all action with respect to filing, prosecuting, and obtaining
patents and other suitable forms of protection for Collaborator Subject
Inventions made by Introgen and/or RPRP, and if Introgen so elects under
Article 6.4 for PHS joint inventions made with RPRP and/or Introgen under
the RP provided that Introgen's
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
C 12
<PAGE> 37
choice of patent counsel is mutually acceptable to RPRP. If an exclusive or a
co-exclusive license to any Subject Invention is granted to either or both RPRP
and Introgen, the respective Party or Parties shall be responsible for [*] past
and future out-of-pocket expenses in connection with the preparation, filing,
prosecution and maintenance of any applications claiming such licensed
inventions and any patents or other IP grants that may issue on such
applications. RPRP and/or Introgen may waive its 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.
6.8 PROSECUTION OF INTELLECTUAL PROPERTY APPLICATIONS. Within one month of
receipt or filing, each Party shall provide the other Parties 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 Parties 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 co-exclusive licensing is
contemplated by RPRP and Introgen, 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.
Introgen expressly agrees to assume full responsibility at its expense for
taking all action with respect to filing, prosecuting, and obtaining patents and
other suitable forms of protection for Subject Inventions made by Introgen
and/or RPRP, and if Introgen so elects under Article 6.4 for PHS joint
inventions made with RPRP and/or Introgen under the RP provided that Introgen's
choice of patent counsel is mutually acceptable to RPRP. If either RPRP and/or
Introgen elect 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.
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
C 13
<PAGE> 38
AMEND ARTICLE 7 "LICENSING" TO READ AS FOLLOWS:
7.1 OPTION FOR COMMERCIALIZATION LICENSE. With respect to Government IP rights
to any Subject Invention not made solely by the employees of RPRP or
Introgen, for which a patent or other IP application is filed, PHS grants
to RPRP and Introgen, individually, an option to elect a co-exclusive
commercialization license which is substantially in the form of the
appropriate model PHS license agreement/s. In the event that either party
declines the option for a co-exclusive license, the other Party may
exercise the option to an exclusive license. Unless agreed otherwise,
Introgen shall negotiate on behalf of Introgen and/or RPRP. This option
does not apply to Subject Inventions conceived prior to the effective date
of this CRADA that are reduced to practice under this CRADA, if prior to
that reduction to practice, PHS has filed a patent application on the
invention and has licensed it or offered to license it to an Entity. 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 RPRP and Introgen individually, and the costs of
subsequent research and development needed to bring the invention to the
marketplace. The field of use of the license will be commensurate with the
scope of the RP. PHS acknowledges that Agent has been actually reduced to
practice with respect to the treatment of cancer, independent of the CRADA
and prior to the performance of the Research Plan.
7.2 EXERCISE OF LICENSE OPTION. The option of Article 7.1 must be exercised by
written notice mailed within [*] after either (i) RPRP and
Introgen, respectively, receives written notice from PHS that the patent or
other IP application has been filed; or (ii) the date Introgen files such
IP application (Party responsible for patent prosecution); whichever comes
first. Exercise of this option by either or both RPRP and Introgen
initiates a negotiation period that expires [*] after the
exercise of the option. If the last proposal by RPRP and/or Introgen has
not been responded to in writing by PHS within this [*] period,
the negotiation period shall be extended
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
C 14
<PAGE> 39
to expire [*] after PHS so responds, during which month RPRP and/or
Introgen may accept in writing the final license proposal of PHS. [*]
In the event that RPRP and/or Introgen elects the option for a
co-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 an Entity for a period of [*]
without first offering RPRP and Introgen those more favorable terms.
These times may be extended at the sole discretion of PHS upon good
cause shown in writing by Collaborator.
7.3 LICENSE FOR PHS EMPLOYEE INVENTIONS AND JOINT INVENTIONS. Pursuant to
15 U.S.C. Section 3710a(b)(1)(A), for Subject Inventions made under
this CRADA by PHS employee(s) or jointly by such employee(s) and
employees of RPRP and/or Introgen pursuant to Articles 6.3 and 6.4 and
licensed pursuant to the option of Article 7.1, RPRP and/or Introgen,
as applicable, grant(s) to PHS a nonexclusive, nontransferable,
irrevocable, paid-up license to practice the invention or have the
invention practiced throughout the world by or on behalf of the
Government. In the exercise of such license, the Government shall not
publicly disclose trade secrets or commercial or financial information
that is privileged or confidential within the meaning of 5 U.S.C.
552(b)(4) or which would be considered as such if it had been obtained
from a non-Federal party.
7.4 LICENSE IN RPRP AND INTROGEN INVENTIONS. Pursuant to 15 U.S.C. Section
3710a(b)(2), for inventions made solely by RPRP and/or Introgen
employees under this CRADA, pursuant to Article 6.2, RPRP and Introgen
grants to the Government a nonexclusive, nontransferable, irrevocable,
paid-up license to practice the invention or have the invention
practiced throughout the world by or on behalf of the Government for
research or other Government purposes.
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
C 15
<PAGE> 40
7.5 LICENSE TO AN ENTITY. Pursuant to 15 U.S.C. Section 3710a(1)(B), if PHS
grants an exclusive or co-exclusive license to a Subject Invention made
wholly by PHS employees or jointly with RPRP and/or Introgen under this
CRADA, pursuant to Articles 6.3 and 6.4, the Government shall [*] to use
the [*] on terms that are [*]; or if RPRP and/or Introgen fail to [*], to
[*]. The exercise of such rights by the Government shall only be in
exceptional circumstances and only if the Government determines (i) the
action is necessary to meet health or safety needs that are not reasonably
satisfied by RPRP and/or Introgen, (ii) the action is necessary to meet
requirements for public use specified by Federal regulations, and such
requirements are not reasonably satisfied by RPRP and/or Introgen or (iii)
RPRP and/or Introgen has failed to comply with an agreement containing
provisions described in 15 U.S.C. 3710a(c)(4)(B). The determination made by
the Government under this Article is subject to administrative appeal and
judicial review under 35 U.S.C. 203(2).
7.6 JOINT INVENTIONS NOT EXCLUSIVELY LICENSED. In the event that RPRP and/or
Introgen do(es) not acquire a co-exclusive or 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 or co-exclusively licensed to RPRP and Introgen. The Parties
may agree to a joint licensing approach for such IP rights.
AMEND SECTION 8.1 TO READ AS FOLLOWS:
8.1 RIGHT OF ACCESS. PHS, RPRP and Introgen agree to exchange all Subject Data
produced in the course of research under this CRADA, whether developed
solely or jointly by and Party/Parties. Research Materials will be shared
equally by the Parties to the CRADA unless other disposition is agreed to
by the
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
C 16
<PAGE> 41
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.
AMEND SECTION 8.3 TO READ AS FOLLOWS:
8.3 DISSEMINATION OF SUBJECT DATA AND RESEARCH MATERIALS. To the extent
allowed under law, RPRP, Introgen 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. To the extent permitted by
law, RPRP and Introgen, respectively, shall have the co-exclusive right
to use any and all CRADA Subject Data in and for any regulatory filing,
or for any commercialization purpose, consistent with Articles 8.7 and
13.10, except that PHS shall have the exclusive right to use Subject
Data for said purpose/s, and authorize others to do so, if the CRADA is
terminated or if RPRP and Introgen abandon their commercialization
efforts consistent with the terms of Section 10.6.
AMEND SECTION 8.4 AS FOLLOWS:
8.4 PROPRIETARY/CONFIDENTIAL INFORMATION. Each Party agrees to limit its
disclosure of Proprietary/Confidential Information received from
another Party to this CRADA to other Entities 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 of another Party pursuant to this CRADA, agrees that any
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. Subject Data and Research Materials developed solely by
RPRP or Introgen may be designated as Proprietary/Confidential
Information when they are wholly separable from the Subject Data and
Research Materials developed jointly with
C 17
<PAGE> 42
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 RPRP and/or
Introgen 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.
In addition, a Party may disclose Proprietary/Confidential
Information of another Party with the written consent of such
other Party, which consent will not be unreasonably withheld.
AMEND SECTION 8.6 AS FOLLOWS:
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/Confidential Information as defined in Article 2.7 or
three (3) years after the expiration or termination date of this CRADA
unless, after the said three (3) years, any Party informs the other
Parties that the Proprietary/Confidential Information is still secret
and confidential, in which case the obligation shall extend for a
further period of two (2) additional years. RPRP and/or Introgen may
request additional extensions to this term when necessary to protect
Proprietary/Confidential Information relating to products not yet
commercialized.
AMEND SECTION 8.7 AS FOLLOWS:
8.7 PUBLICATION. The Parties are encouraged to make publicly available the
results of their research. Except as provided at the end of this
paragraph with respect to abstracts, before NCI, RPRP, Introgen or any
combination thereof, submits a paper for publication or otherwise
intends to publicly disclose information about a Subject Invention,
Subject Data, additional Clinical Data and Results and Raw Data in
NIH's Possession and Control, or Research Materials, the other Parties
shall be provided thirty (30) days to review the proposed publication
or disclosure to assure that
C 18
<PAGE> 43
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 necessary to preserve U.S. or foreign
patent or other IP rights. Abstracts presented by NCI investigators will be
sent to NCI's Regulatory Affairs Branch for forwarding to RPRP and Introgen
after submission but prior to presentation or publication to permit
preservation of U.S. and foreign patent rights.
ADD A NEW SECTION 8.8 AS FOLLOWS:
8.8 EXTRAMURAL RESEARCH AND DATA. In pursuing the development of Agent pursuant
to this CRADA, NIH may utilize extramural investigators for part or all of
the completion of this Research Plan through either Federal Grants or
Federal Contracts. Participation by extramural contract or grantee
investigators shall be determined after competitive solicitation and review
of study protocols by NIH. However, said extramural contract or grantee
investigators are not Parties to this CRADA, and this CRADA does not
address rights to intellectual property created by such investigators.
Nonetheless:
a. Subject to the other provisions of Article 8 of this CRADA, NIH shall
maintain, to the extent permitted by law, all IND, Clinical Data and
Results and Raw Data in NIH's Possession and Control as Proprietary and
CONFIDENTIAL, and make them available co-exclusively to RPRP and
Introgen for each Party's (including sublicensees and affiliates) own
use and for use in obtaining FDA approval for the commercial marketing
of Subject Inventions and Agent products. Accordingly, said data shall
not be transferable to an Entity without the written permission of the
NCI.
b. NIH shall not execute a Contract for preclinical studies or clinical
trials for the development of Agent unless the extramural contract
investigator agrees to confidentiality provisions at least as
restrictive as provided in this CRADA and to the co-exclusive use of
data, by RPRP and Introgen, in accordance with Article 8.8 (a), for
each Party's own use and for use in obtaining FDA approval for
C 19
<PAGE> 44
the commercial marketing of Agent. The NCI investigators agree to use
Agent only for the conduct of the approved protocols.
c. NCI shall urge all extramural grantee investigators participating in
the studies sponsored by NCI and using Agent to cooperate
co-exclusively with RPRP and Introgen in providing Clinical Data and
Results and Raw Data for use in obtaining pharmaceutic regulatory
approval for the commercial marketing of Agent. However, NCI's urging
will not constitute a term or condition for making a grant award to
said extramural investigators.
d. In seeking direct access to Clinical Data and Results and Raw Data or
any other information that is in the possession of extramural contract
or grantee investigators working with Agent under the sponsorship of
NCI, RPRP and/or Introgen shall first contact the Regulatory Affairs
Branch, (RAB) NCI [telephone: 301-496-7912]. Subsequent to
authorization by RAB, RPRP and/or Introgen may directly contact the
extramural investigators. Costs associated with providing Clinical
Data and Results or Raw Data to RPRP and/or Introgen in customized
formats shall be borne by the requesting party or parties.
e. RPRP's and Introgen's co-exclusive access under subsection (a) above
to Clinical Data and Results and Raw Data in NIH's Possession and
Control is dependent, however, upon RPRP and/or Introgen's continued
development and commercialization of the technology. In the event that
RPRP and Introgen discontinue development or commercialization of the
technology without the transfer of its development efforts to another
party, NCI retains the right to make the Clinical Data and Results and
Raw Data in NIH's Possession and Control available to another
collaborator, consistent with the terms of Section 10.6.
C 20
<PAGE> 45
ADD A NEW ARTICLE 8.9 "MULTI-PARTY DATA RIGHTS" AS FOLLOWS:
8.9 MULTI-PARTY DATA RIGHTS. For clinical protocol(s) where Agent is used in
combination with another proprietary investigational agent supplied to NCI
pursuant to a CTA or CRADA between NCI and an Entity, the access and use of
Multi-Party Data by RPRP and Introgen, and Entity, shall be co-exclusive as
follows:
a. NCI will provide RPRP, Introgen and Entity with notice regarding the
existence and nature of the agreements governing their collaborations
with NIH, the design of the proposed combination protocol(s), and the
existence of any obligations that might restrict NCI's participation in
the proposed combination protocols.
b. RPRP and Introgen shall agree to permit use of the Multi-Party Data
from these trials by Entity to the extent necessary to allow Entity to
develop, obtain regulatory approval for, or commercialize its own
investigational agent(s). However, this provision will not apply unless
Entity also agrees to RPRP's and Introgen's reciprocal use of
Multi-Party Data.
c. RPRP, Introgen and Entity must agree in writing prior to the
commencement of the combination trials that each will use the
Multi-Party Data solely for the development, regulatory approval, and
commercialization of its own investigational agent(s).
AMEND ARTICLE 9 "REPRESENTATIONS AND WARRANTIES" TO READ AS FOLLOWS:
9.1 REPRESENTATIONS AND WARRANTIES OF PHS. PHS hereby represents and warrants
to RPRP and Introgen that the official signing this CRADA has authority to
do so.
9.2 REPRESENTATIONS AND WARRANTIES OF RPRP AND INTROGEN.
C 21
<PAGE> 46
(a) RPRP and Introgen, each individually, hereby represents and warrants to
PHS that it has the requisite power and authority to enter into this CRADA
and to perform according to its terms, and that RPRP's Official and
Introgen's Official signing this CRADA, each individually, has authority to
do so. RPRP and Introgen, each individually, further represents that it is
financially able to satisfy any funding commitments made in Appendix B.
(b) RPRP and Introgen, each individually, certifies that the statements
herein are true, complete, and accurate to the best of its knowledge. RPRP
and Introgen, respectively, is aware that any false, fictitious, or
fraudulent statements or claims may subject it to criminal, civil, or
administrative penalties.
AMEND SECTION 10.1 TO READ AS FOLLOWS:
10.1 TERMINATION BY MUTUAL CONSENT. PHS, RPRP and/or Introgen, 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.
AMEND SECTION 10.2 TO READ AS FOLLOWS:
10.2 UNILATERAL TERMINATION. Either PHS or RPRP or Introgen 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. However, in the event of unilateral termination
or early expiration, RPRP's and Introgen's respective obligations under
Article 3.6 will survive termination to the extent necessary to complete
approved clinical studies under mutually agreed upon protocols.
C 22
<PAGE> 47
AMEND SECTION 10.3 TO READ AS FOLLOWS:
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 RPRP and/or Introgen pursuant to Article
5.1 above and Appendix B, if applicable, for a period of [*] after such
termination. If there are insufficient funds to cover this expense, RPRP
and/or Introgen agree/s to pay the difference.
AMEND SECTION 10.5 TO READ AS FOLLOWS:
10.5 TERMINATION COSTS. Concurrently with the exchange of final reports pursuant
to Articles 4.2 and 5.2, PHS shall submit to RPRP and/or Introgen, as
applicable, 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 RPRP and/or Introgen's property or removal of abandoned
property, for which RPRP and/or Introgen shall be responsible.
ADD A NEW SECTION 10.6 AS FOLLOWS:
10.6 RESEARCH LICENSE AND ALTERNATIVE SOURCES OF SUPPLY IN THE EVENT RPRP AND
INTROGEN TERMINATE DEVELOPMENT OF AGENT.
If both RPRP and Introgen terminate development of AGENT without the
transfer of development efforts to another Entity, and NCI elects to
continue its development of the Agents, then:
a. RPRP and Introgen hereby grant/s to NCI a nonexclusive, nontransferable,
irrevocable, paid-up license to practice or have practiced solely for use
in preclinical studies and clinical trials described in the Research Plan
any patentable invention which RPRP and/or Introgen owns on Agent, its
manufacture, or on the process of the use of the Agent, throughout the
world, and solely for [*];
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
C 23
<PAGE> 48
and
b. For use solely in preclinical studies and approved clinical trials, RPRP
and/or Introgen will supply to NCI, [*], Agent from RPRP's and/or Introgen's
inventory, or arrange for an independent contractor to manufacture and supply
NCI with Agent, [*].
RPRP's and/or Introgen's obligation shall last until either a date on which an
alternate source of equivalent materials, acceptable to NCI, can be obtained by
NCI, or [*] after the date of notification from RPRP and/or Introgen to NCI that
RPRP and Introgen terminate their development of Agent whichever comes first.
AMEND SECTION 12.1 TO READ AS FOLLOWS:
12.1 PROPERTY. The U.S. Government shall not be responsible for damages to any
RPRP and/or Introgen property provided to PHS, where RPRP and/or Introgen
retains title to the property, or any property acquired by RPRP and/or
Introgen for its own use pursuant to this CRADA.
AMEND SECTION 12.3 TO READ AS FOLLOWS:
12.3 INDEMNIFICATION. No indemnification for any loss, claim, damage or
liability is intended or provided by any party under this agreement. Each
party shall be liable for any loss, claim, damage or liability that said
party incurs as a result of its activities under this agreement, except
that the NIH, as an agency of the United States, assumes liability only to
the extent provided under the Federal Tort claims Act, 28 U.S.C. 2671 et
seq.
AMEND SECTION 12.4 TO READ AS FOLLOWS:
12.4 FORCE MAJEURE. No 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
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
C 24
<PAGE> 49
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 Parties. The Party shall further use reasonable
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.
ADD SECTION 12.5 AS FOLLOWS:
12.5 LIABILITIES OF RPRP AND INTROGEN. It is understood and agreed that all
liabilities and obligations of RPRP and Introgen hereunder are the separate
obligations of such Parties and not joint several liabilities.
ADD SECTION 12.6 AS FOLLOWS:
12.6 NO EFFECT ON EXISTING AGREEMENTS BETWEEN RPRP AND INTROGEN.
The provisions of this Agreement are not intended to modify or amend the
provisions of any existing agreement between RPRP and Introgen.
AMEND SECTION 13.4 TO READ AS FOLLOWS:
13.4 WAIVERS. None of the provisions of this CRADA shall be considered waived by
any Party unless such waiver is given in writing to the other Parties. 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.
AMEND SECTION 13.6 TO READ AS FOLLOWS:
13.6 AMENDMENTS. If any 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
C 25
<PAGE> 50
amendment is signed by the signatories to this CRADA or by their
representatives duly authorized to execute such amendment.
AMEND SECTION 13.7 TO READ AS FOLLOWS:
13.7 ASSIGNMENT. Neither this CRADA nor any rights or obligations of any Party
hereunder shall be assigned or otherwise transferred by any Party without
the prior written consent of the other Parties. Such consent will not
unreasonably be withheld by any Party. Not withstanding the foregoing,
Introgen and RPRP each shall have the right to assign this Agreement to
their subsidiaries, affiliates or successors.
AMEND SECTION 13.9 TO READ AS FOLLOWS:
13.9 INDEPENDENT CONTRACTORS. The relationship of the Parties to this CRADA is
that of independent contractors and to agents of each other or joint
venturers or partners. Except as set forth herein, no Party shall have the
authority to bind or act on behalf of any other Party. Each Party shall
maintain sole and exclusive control over its personnel and operations.
RPRP and Introgen 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.
AMEND SECTION 13.10 TO READ AS FOLLOWS:
13.10 USE OF NAME OF 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. RPRP and Introgen 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. RPRP and/or Introgen 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.
C 26
<PAGE> 51
ADD A NEW SECTION 13.13 "FDA MEETINGS" AS FOLLOWS:
13.13 FDA MEETINGS. All meetings with FDA concerning clinical studies for the
development of Agent within the scope of the Research Plan will be
discussed by RPRP, Introgen and NCI in advance and will be held on
mutually agreed upon dates. RPRP and Introgen each reserve the right to
set, jointly with NCI, the agenda for and attend any such meeting.
AMEND SECTION 14.2 "SURVIVABILITY" BY INCLUDING ARTICLES 4.3 (ADVERSE DRUG
EXPERIENCE REPORTING) AND 10.6 (RESEARCH LICENSE AND ALTERNATIVE SOURCES OF
SUPPLY IN THE EVENT THAT COLLABORATOR TERMINATES DEVELOPMENT OF AGENT) AND THE
LAST SENTENCE OF ARTICLE 10.2 (REGARDING DRUG SUPPLY IN THE EVENT OF EITHER
RPRP'S OR INTROGEN'S UNILATERAL TERMINATION) AS PROVISIONS THAT WILL
SURVIVE TERMINATION OF THIS CRADA.
C 27
<PAGE> 52
CACR-352
APPENDIX D
INTELLECTUAL PROPERTY AND LICENSING
PAGE D-i
<PAGE> 53
CACR-352
APPENDIX D
INTELLECTUAL PROPERTY AND LICENSING
- --------------------------------------------------------------------------------
[*]
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
D-1
<PAGE> 54
[*]
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
D-2
<PAGE> 55
CACR-352
APPENDIX E
ANNUAL SCIENTIFIC, COMMERCIAL, AND FINANCIAL REPORTS
Page E-i
<PAGE> 56
NCI Office of Technology Development and Commercialization Branch, 1992 CACR-352
ANNUAL SCIENTIFIC, COMMERCIAL
AND FINANCIAL REPORT
As required under Article 4, "Reports," the NIH/ADAMHA Principal Investigator
and Collaborator Principal Investigator will complete this report by "setting
forth technical progress made, identifying such problems as may have been
encountered and establishing goals and objectives requiring further effort." If
necessary, please use additional space and send this report to the NCI Office
of Technology Development and Commercialization Branch, Executive Plaza South,
Room 450, 6120 Executive Boulevard, Rockville, Maryland, 20852.
Please describe any scientific or technical progress:
Please describe any commercial development including staffing and financial
resources involved:
Please provide an accounting and balance of staffing and financial resources
provided to the NIH/ADAMHA principal investigator (i.e.: personnel, equipment
and supplies):
- --------------------------------------------------------------------------------
I certify that, to the best of my knowledge, all of the above information is
true and accurate.
NIH/ADAMHA Principal Investigator's Signature
------------------------------------------------ -------------------------
[*] Date
------------------------------------------------ -------------------------
[*] Date
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE> 57
CACR-352
APPENDIX F
AMENDMENTS
A model Amendment follows this cover page.
Page F-i
<PAGE> 58
AMENDMENT
CURRENT CRADA TERMS
- --------------------------------------------------------------------------------
CURRENT CRADA TERMS
<TABLE>
<S> <C> <C>
CRADA #: 00352 TERM EXTENSION(s)(mo): NIH PI: [*]
EFFECTIVE DATE: 4/9/96 [ ] INSTITUTE: NCI
EXECUTED DATE: [ ] DIVISION: DCTD
ORIG.TERM (MO): [ ] LABORATORY: CTEP
TOTAL TERM (MO): [ ] COLLABORATING PI: [*]
EXPIRATION: [ ] COLLABORATOR: RPRP & INTROGEN
</TABLE>
Title: CLINICAL DEVELOPMENT OF Adp53
- --------------------------------------------------------------------------------
NEW CRADA TERMS
The purpose of this amendment is to change certain terms of the above
referenced Cooperative Research and Development Agreement. These changes are
reflected below and except for these changes and those of any previous
amendments, all other provisions including the research plan of the original
CRADA remain in full force and effect. Two originals of this amendment are
provided for execution--one is to remain with NCI and the other with the
collaborator.
================================================================================
ACCEPTED AND AGREED TO:
NCI RPRP & INTROGEN
- ----------------------- -----------------------
ALAN S. RABSON, M.D.
Deputy Director, NCI
- ----------------------- -----------------------
Date Date
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE> 59
APPENDIX G
TERMINATION
A model termination letter follows this cover page.
Page G-i
<PAGE> 60
[DEPARTMENT OF HEALTH AND HUMAN SERVICES LETTERHEAD]
Dear Collaborator:
As stipulated in Article 10, "Termination," the NIH/ADAMHA and/or the
Collaborator may terminate the CRADA referenced below by the either mutual
consent (Article 10.1) or unilaterally (Article 10.2). If terminated by mutual
consent, both parties will sign below and shall specify the disposition of all
property, inventions, patent or other intellectual property rights. Two
originals of this termination letter are provided for execution -- one is to
remain with the NCI and the other with the collaborator. If unilateral
termination occurs, this CRADA will cease to exist in thirty (30) days to the
date of this letter and, again, any rights accrued in property, patents or any
other intellectual rights will be specified and disposited.
If this CRADA is either mutually or unilaterally terminated prior to its
expiration, any remaining funds will nevertheless remain available to
NIH/ADAMHA for any continuing staffing commitments made by the Collaborator
pursuant to Articles 5.2 & 10.3 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 (Article 10.3). In
addition, all reasonable termination costs will also be incurred by the
Collaborator. Finally, pursuant to Articles 4.2 and 5.2, a final report is
enclosed and provisions of article 4.2, 5.1, 5.2, 5.3, Articles 6-8, 10.3,
10.5, 11.1, 12.3 and 13.10 shall survive the termination of this CRADA.
CRADA MANAGEMENT MODULE
<TABLE>
<S> <C>
CACR 00352 NIH/ADAMHA Principal Investigator [*]
Institute NCI
Effective Date Division DCTD
Laboratory CTEP
Term (years) [*] Collaborating Principal Investigator [*]
Collaborator RPRP & INTROGEN
Expiration
Title CLINICAL DEVELOPMENT OF Adp53
</TABLE>
Accepted and Agreed To:
NATIONAL CANCER INSTITUTE RPRP & INTROGEN
- ---------------------------------- ------------------------------------
Alan S. Rabson, M.D.
Deputy Director, NCI
- ----------------------- -----------------------
Date Date
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE> 61
APPENDIX H
EXPIRATION
A model expiration letter follows this cover page.
Page H-i
<PAGE> 62
APPENDIX A
[DEPARTMENT OF HEALTH & HUMAN SERVICES LETTERHEAD]
Coordinator
Document Type:
-----
File Numbers: 00352
-----
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: [*]
Collaborator Investigator: [*]
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.
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 NIH Model CRADA.
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
1
<PAGE> 63
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, M.D. /s/ KENNETH R. PINA, ESQ.
- ----------------------------- -----------------------------------
ALAN RABSON, M.D. KENNETH R. PINA, ESQ.
Deputy Director, NCI Vice President, General Counsel &
Secretary
March 29, 1996 April 8, 1996
- ----------------- -----------------
Date Date
INTROGEN THERAPEUTICS, INC.
/s/ DAVID NANCE
- -----------------------------
DAVID NANCE
President
April 9, 1996
- -----------------
Date
Attachments:
Appendix A: Proposed Research Plan
Appendix B: NCI Model CRADA
2
<PAGE> 64
Appendix B
[DEPARTMENT OF HEALTH & HUMAN SERVICES LETTERHEAD]
March 28, 1997
Mr. Robert Werner
General Counsel
RPR Gencell
500 Arcola Road
P.O. Box 1200
Collegeville, PA 19426
Re: Proposed Cooperative Research and Development Agreement (CRADA)
CRADA #: 352
NCI Principal Investigator: [*]
Collaborator Investigator: [*]
Title: Clinical Development of Adenovirus - p53
Dear Mr. Werner:
It is my understanding that a cooperative research and development project
between the parties referenced below is being considered. Accordingly, until a
formal Cooperative 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 extend the original Letter of Intent, executed
April 8, 1996, in order to permit the joint research to continue. A copy of the
Original Letter of Intent is attached as Appendix A.
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 U.S. Food and Drug Administration IND approval (or
international equivalents thereof).
o The Parties acknowledge that cooperative research pursuant to the
Research Plan, attached as Appendix B, 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 original Letter of Intent
(April 8, 1996) for any inventions that may be made under this Research
Plan.
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE> 65
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 NIH Model CRADA,
revised 5/30/96 (this model supersedes the CRADA model revised
12/15/95 attached as Appendix B to the original Letter of Intent
executed April 8, 1996).
o The NIH Model CRADA (revised 5/30/96) 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
this 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 C.
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 not to exceed six (6)
months.
Assuming the necessary approvals are forthcoming, we look forward to a
successful collaboration.
Sincerely,
/s/ THOMAS D. MAYS, PH.D., J.D.
- -------------------------------
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 S. RABSON, M.D. /s/ KENNETH R. PINA, ESQ.
- ----------------------------- -----------------------------------
Alan S. Rabson, M.D. Kenneth R. Pina, Esq.
Deputy Director NCI Vice President, General Counsel &
Secretary
April 4, 1997 April 4, 1997
- ----------------- -----------------
Date Date
INTROGEN THERAPEUTICS, INC.
/s/ DAVID NANCE
- -----------------------------
David Nance
President
April 16, 1997
- -----------------
Date
Attachments:
Appendix A: Original Letter of Intent
Appendix B: Proposed Research Plan
Appendix C: NCI Model CRADA
2
<PAGE> 66
[DEPARTMENT OF HEALTH AND HUMAN SERVICES LOGO] PUBLIC HEALTH SERVICE
- -------------------------------------------------------------------------------
National Institutes of Health
National Cancer Institute
Technology Development and
Commercialization Branch
Executive Plaza South, Room 450
6120 Executive Blvd.
Rockville, MD 20852
(301) 496-0477
(301) 402-2117 Fax
Dear Collaborator:
The Cooperative Research and Development Agreement (CRADA) referenced below is
to or has recently expired. It is agreed that both parties do not want the term
of this CRADA to extend beyond the term indicated. Pursuant to Articles 4.2 and
5.2, a final report is enclosed and provisions of article 4.2, 5.1, 5.2, 5.3,
Articles 6-8, 10.3, 10.5, 11.1, 12.3, and 13.10 shall survive the termination of
this CRADA.
Please sign this letter acknowledging that the CRADA has expired and return a
copy so that this file can be closed out. We hope that this collaboration has
been a positive experience and look forward to future cooperative projects.
Please contact me should you have any questions.
Sincerely,
Suzanne M. Frisbie, Ph.D.
CRADA MANAGEMENT MODULE
<TABLE>
<S> <C>
CACR 00352 NIH/ADAMHA Principal Investigator [*]
Institute NCI
Effective Date Division DCTD
Laboratory CTEP
Term (years) [*] Collaborating Principal Investigator [*]
Collaborator RPRP & INTROGEN
Expiration
Title CLINICAL DEVELOPMENT OF Adp53
</TABLE>
I hereby acknowledge that this CRADA has expired.
NATIONAL CANCER INSTITUTE RPRP & INTROGEN
- ---------------------------------- ------------------------------------
Sherry S. Ansher & James Zwiebel Martine George & James Merritt
- ----------------------- -----------------------
Date Date
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE> 1
EXHIBIT 10.23
LICENSE AGREEMENT
This agreement ("Agreement") is entered into by and between the University of
Iowa Research Foundation ("UIRF") located at 214 Technology Innovation Center,
Iowa City, IA 52242 and Introgen Therapeutics. Inc. ("Company") having a
principal place of business at 301 Congress Avenue, Suite 1850, Austin, Texas
78701.
WITNESSETH
WHEREAS, UIRF is owner by assignment from [*] of U.S. Patent
Nos. [*] and [*] issued [*] and [*] respectively, titled [*]
(no foreign filings have been undertaken by the UIRF);
WHEREAS, Company desires a non-exclusive license to the above United States
patents for their use in [*];
WHEREAS, UIRF wishes to grant such a license in accordance with the terms of
this Agreement.
NOW THEREFORE, the parties agree as follows:
ARTICLE I - DEFINITIONS
1.1 Licensed Patents shall mean U.S. Patent Nos. [*] and [*] titled
by [*] issued [*] and [*] respectively, or any U.S. patents
issuing thereon, including any continuations, continuations-in-part, divisions,
reissues, reexaminations and extensions thereof and patents corresponding
thereto.
1.2 Licensed Products shall mean and include any and all biological materials
and products the making, using, selling or importing of which would, but for
this Agreement, constitute an infringement of one or more Valid Claims of the
Licensed Patents.
1.3 Valid Claim shall mean any claim in an issued and unexpired patent included
within Licensed Patents which claim has not been disclaimed or held invalid or
unenforceable by an unappealed or unappealable decision of a court.
1.4 Licensed Field shall mean the use and/or sale of the Licensed Products [*].
1.5 Licensed Territory shall mean all countries and territories worldwide.
1.6 Net Sales shall mean the gross amount received by Company and/or its
Affiliates from the sales of Licensed Products within the Licensed Field in the
Licensed Territory to third party customers less:
a) normal and customary rebates, cash and trade discounts actually allowed;
b) credits allowed for returned or damaged goods;
c) insurance, packaging, handling and transportation costs; and
d) sales, excise, value added, import and export taxes, and any tariffs and
duties paid with respect to sales; and
e) provisions for uncollectible accounts determined in accordance with
reasonable accounting procedures, consistent with Company's normal practices.
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE> 2
1.7 Effective Date shall mean the date of the last signature appearing at the
end of this Agreement.
1.8 Yearly Accounting Period shall mean an annual period beginning on January 1
and ending on December 31 of the same year.
1.9 Earned Royalties shall mean royalties paid or payable by Company to UIRF as
determined with respect to Net Sales.
1.10 Affiliate shall mean any corporation owning or controlling, directly or
indirectly, at least forty-nine (49%) of the stock normally entitled to vote for
election of directors of a party.
ARTICLE II - THE GRANT
2.1 UIRF hereby grants to Company, subject to the terms and conditions hereof, a
non-exclusive license under Licensed Patents to make, have made, use, import,
sell, offer to sell and have sold the Licensed Products within the Licensed
Field to practice any method, process or procedure covered by Licensed Patents,
and to otherwise exploit the Licensed Patents in the Licensed Territory.
ARTICLE III - PAYMENTS, REPORTS, RECORD-KEEPING
3.1 In consideration of the rights granted to Company pursuant to Article II of
this Agreement, Company agrees to make the following payments to the UIRF:
(a) A non-refundable payment [*] upon execution of this Agreement.
(b) Earned Royalties in an amount equal to [*] of the
Net Sales of Licensed Products to be paid on a calendar quarterly
basis. Company agrees to submit to UIRF within sixty (60) days after
December 31, March 31, June 30, and September 30, reports setting forth
for the preceding three (3) month period, the Net Sales of Licensed
Products and royalty due thereon and with each such royalty report to
pay the amount of royalty due.
(c) A payment of [*] for each of the first [*]
Licensed Products to successfully complete [*] FDA trials. Such
payment shall accrue for each Licensed Product upon approval by FDA for
the product to proceed to [*] FDA trials and shall be payable
within thirty (30) days of accrual.
(d) A payment of [*] for each of the first
four Licensed Products to successfully complete [*] FDA trials.
Such payment for each Licensed Product shall accrue upon approval by
FDA for the product to proceed to [*] FDA trials and shall be
payable within thirty (30) days of accrual.
(e) A payment of [*] for each of the first [*] Licensed Products to receive
[*]. Such a payment for each Licensed Product shall accrue upon receipt
of [*] for the product and shall be payable within thirty (30) days
of accrual.
(f) An annual payment [*], payable on each anniversary date of the License
Agreement.
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
2
<PAGE> 3
3.2 In the event that Company becomes obligated at any time or from time to time
during the term of this Agreement to pay royalties to any third party for the
practice of any method or use of any composition of matter covered by any claim
of the Licensed Patents, or for the sale of any Licensed Products, Company's
royalty obligation to the UIRF shall be reduced by an amount equal to its
royalty obligation to such third party; provided, however, that Company's
royalty obligation shall not be reduced by more than [*] for any
one calendar quarter.
3.3 Company's obligation to pay royalties hereunder shall be suspended during
any period of time that Company is enjoined, or reasonably believes it may be
enjoined, from exercising any of its rights hereunder with respect to the
Licensed Patents or any Licensed Products. Upon resolution of any such matter,
Company shall promptly pay to UIRF all amounts previously withheld with respect
to such matter, less (i) any reduction which may be applicable pursuant to the
paragraph above, and (ii) expenses incurred in the resolution thereof.
3.4 Company shall report not any less frequently than annually, on its efforts
and progress made towards commercialization of any products involving Licensed
Patents.
3.5 Company shall keep accurate and correct records of Licensed Products made,
used or sold under this Agreement. Such records shall be retained for at least
three (3) years following a given reporting period. UIRF is hereby granted by
Company the right, upon reasonable written notice to Company, to retain an
independent certified public accountant reasonably acceptable to Company and
appropriately bound by confidentiality, to audit Company's records, at UIRF's
expense, solely to verify sales of the Licensed Products. UIRF may designate an
agent for purposes of this verification and this verification shall be upon
reasonable notice to Company.
3.6 All payments due hereunder shall be payable in United States dollars.
Conversion of foreign currency to U.S. dollars shall be made at the conversion
rate existing in the United States as reported in The Wall Street Journal on the
last working day of each royalty period. Such payments shall be without
deduction of exchange, collection or other charges.
3.7 Late payments shall be subject to an interest charge of [*] per month.
ARTICLE IV - TERM AND TERMINATION
4.1 Unless terminated earlier in accordance with this Agreement, the term of the
license granted hereunder shall expire upon the expiration of the last to expire
of the Licensed Patents.
4.2 In the event Company fails to make payments due hereunder, UIRF shall have
the right to terminate this Agreement upon ninety (90) days written notice,
unless Company makes such payments plus interest within the ninety (90) day
notice period. However, if Company disputes such payment in good faith within
such ninety (90) day period, UIRF shall retain the right to terminate this
Agreement if the default is not resolved or cured within ninety (90) days of the
notification of such disputed payment.
4.3 In the event that Company shall become insolvent, shall make an assignment
for the benefit of its creditors, or shall have a petition in bankruptcy filed
for or against it and such petition shall not have been discharged within ninety
(90) days, UIRF may, at its option, terminate this license upon thirty (30) days
written notice.
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
3
<PAGE> 4
4.4 Company shall have the right to terminate this Agreement at any time by
written notice to UIRF to that effect.
4.5 Company shall have the right during a period of [*] following the effective
date of such termination to sell or otherwise dispose of the Licensed Products
existing at the time of such termination, and shall make a final report and
payment of all royalties related thereto within sixty (60) days following the
end of such period or the date of the final disposition of such inventory,
whichever first occurs.
ARTICLE V - ASSIGNMENT
5.1 This Agreement may be assigned by Company as part of a transfer of all, or
substantially all, of the business to which this Agreement relates. This
Agreement shall be binding upon and inure to the benefit of successors in
interest and assigns of Company. Company agrees to inform UIRF of such transfer
promptly.
ARTICLE VI - REPRESENTATIONS: LIMITATIONS
6.1 Nothing in this Agreement shall be construed as:
(a) A warranty or representation by UIRF as to the validity or scope of any
Licensed Patents; or
(b) A warranty or representation that anything made, used, sold or otherwise
commercialized under the license granted in this Agreement is or will be free
from infringement of patents owned by third parties; or
(c) Conferring a right to use in advertising, publicity or otherwise the name of
the University of Iowa ("UI") or UIRF, unless UIRF has specifically approved the
same in writing.
6.2 UIRF expressly disclaims any and all implied or express warranties and makes
no express or implied warranties of merchantability or fitness for any
particular purpose of the Licensed Patents, biological materials or processes or
Licensed Products contemplated by this Agreement.
ARTICLE VII - GENERAL
7.1 Company shall not distribute or resell the Licensed Products to others
except in accordance with this Agreement. Company agrees to comply with all
applicable laws and regulations.
7.2 UIRF shall have the responsibility for the prosecution, filing and
maintenance of all Licensed Patents, including the conduct of all interference,
opposition, nullity and revocation proceedings, as well as responsibility for
all fees and costs associated therewith.
7.3 A party shall inform the other of any suspected infringement of any
Licensed Patents in the Licensed Field by a third party. UIRF shall have the
right but not the obligation at its expense to initiate any proceeding relating
to any infringement by a third party of any Licensed Patents in the Licensed
Field.
7.4 UIRF shall have no obligation to defend any action for infringement brought
against Company by a third party.
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
4
<PAGE> 5
7.5 The relationship between UIRF and Company shall be that of independent
contractors. UIRF and Company shall have no other relationship other than as
independent contracting parties. UIRF shall have no power to bind or obligate
Company in any manner, except as is expressly set forth in this Agreement.
7.6 Company shall indemnify and hold harmless UIRF and UI and their employees
and officers and their respective successors, heirs and assigns, from any
action, claim or liability, including, without limitation, liability for death,
personal injury, or property damages arising directly or indirectly from
Company's possession, distribution or other use of Licensed Products under this
Agreement and/or from Company's publication or distribution of test reports,
data and other information relating to Licensed Products, provided that Company
shall not be responsible or liable for any action, claim or liability to the
extent attributable to any negligent or wrongful act of UIRF. Any party seeking
indemnification under this Section shall (i) promptly notify the Company in
writing of the action, claim or liability with respect to which such party
intends to claim indemnification, (ii) give Company sole control of the defense
and/or settlement thereof ONLY in those instances where action is brought for
solely Company's products, and (iii) provide Company, at Company's expense, with
reasonable assistance and full information with respect to such action, claim or
liability.
7.7 If any provision of this Agreement is ultimately held to be invalid, illegal
or unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
7.8 Any delay in enforcing a party's rights under this Agreement or any waiver
as to a particular default or other matter shall not constitute a waiver of a
party's right to the future enforcement of its rights under this Agreement,
except in the event of written and signed waiver.
7.9 The captions herein are solely for convenience of reference and shall not
affect the construction or interpretation of this Agreement.
ARTICLE VIII - MARKING
8.1 Company agrees to comply with marking provisions of Title 35, U.S. Code
Section 287, if required, or any future equivalent provisions of the United
States relating to the marking of patented devices, or with marking complying
with the law of the country where the Licensed Products are shipped, used or
sold.
ARTICLE IX - NOTICES; APPLICABLE LAW
9.1 Any notice, report or payment provided for in this Agreement shall be deemed
sufficiently given when sent by facsimile or regular, certified or registered
mail addressed to the party for whom intended at the following addresses, or to
such address as either party may hereafter designate in writing to the other:
For UIRF:
University of Iowa Research Foundation,
Attn : Ms. Usha R. Balakrishnan, Associate Director
214 Technology Innovation Center, Iowa City, IA 52242-5000
Phone: 319-335-4546 / Fax: 319-335-4489
5
<PAGE> 6
For Company:
Introgen Therapeutics, Inc., Attn: Dr. David Nance, President
301 Congress Avenue, Suite 1850, Austin, Texas 78701
Phone: 512-320-5010 / Fax: 512-320-4166
with a copy to:
E.J. Financial Enterprises. Inc., Attn: Dr. Mahendra G. Shah, Vice President,
Corporate Development
225 East Deer Path, Suite 250
Lake Forest, IL 60045
Phone: 847-295-8665, Ext. 114 / Fax: 847-295-8680
9.2 This agreement shall be construed, interpreted, and applied in accordance
with the laws of the State of Iowa.
ARTICLE X - INTEGRATION
10.1 This Agreement contains the entire agreement of the parties with respect to
the subject matter hereof, all prior understandings relating thereto being
merged herein. This Agreement cannot be changed or terminated orally, but only
in writing and if signed by both parties. This Agreement shall be binding on the
heirs, successors, and assigns of the parties hereto.
AGREED to on the dates set forth below.
LICENSOR LICENSEE
University of Iowa Research Foundation Company
By /s/ W. BRUCE WHEATON By /s/ MAHENDRA G. SHAH
------------------------------------- ----------------------------
Date: 4/11/97 Date: 4/16/97
---------------------------------- -------------------------
Name: W. Bruce Wheaton, Ph.D. Name: Mahendra G. Shah
-------------------------
Title: Executive Director Title: V.P.
------------------------
6
<PAGE> 1
EXHIBIT 10.24
DATED 1998
(1) IMPERIAL CANCER RESEARCH TECHNOLOGY LIMITED
(2) INTROGEN THERAPEUTICS, INC
OPTION AGREEMENT
21/05/1998
REFERENCE
DM/97 - 58598
<PAGE> 2
CONTENTS
<TABLE>
<CAPTION>
CLAUSE
<S> <C>
1 INTRODUCTION ................................................ 1
2 INTERPRETATION .............................................. 1
3 GRANT OF THE FIRST OPTION ................................... 5
4 EXERCISE OF THE FIRST OPTION ................................ 7
5 THE PROJECT ................................................. 8
6 OWNERSHIP OF TECHNOLOGY AND INTELLECTUAL PROPERTY ...........11
7 CONFIDENTIALITY AND PUBLICATION .............................16
8 TERMINATION .................................................20
9 GENERAL .....................................................22
10 NOTICES AND SERVICE ........................................26
11 MISCELLANEOUS ..............................................27
SCHEDULES
SCHEDULE 1 ....................................................28
THE EXISTING PATENTS .......................................28
SCHEDULE 2 ....................................................29
THE TERMS OF THE FIRST LICENCE .............................29
SCHEDULE 3 ....................................................35
OBJECTIVES OF THE PROJECT ..................................35
SCHEDULE 4 ....................................................36
THE TERMS OF THE SECOND LICENCE ............................36
</TABLE>
<PAGE> 3
CONTENTS AGREEMENT dated 1998
BETWEEN:
(1) IMPERIAL CANCER RESEARCH TECHNOLOGY LIMITED, incorporated in England and
Wales with registered number 1662284, whose registered office is at
Sardinia House, Sardinia Street, London WC2A 3NL, England ('ICRT')
(2) INTROGEN THERAPEUTICS, INC, incorporated in the State of Delaware, whose
principal office is at 301 Congress Avenue, Suite 1850, Austin, Texas
78701, USA ('INTROGEN')
1 INTRODUCTION
1.1 Imperial Cancer Research Fund ('ICRF') and ICRT have identified and carried
out a programme of research work relating to a tumour suppressor gene known
as 'PTEN' which has potential diagnostic and therapeutic uses, and in
respect of which certain patent applications have been made by ICRT,
details of which are given in Schedule 1.
1.2 Introgen wishes to acquire rights in relation to the Gene in order to
develop DNA based therapeutic products, in particular for the treatment of
cancer.
1.3 ICRT is a company wholly owned by ICRF and, by arrangement with ICRF, owns
and is responsible for the management and exploitation of ICRF technology.
2 INTERPRETATION
2.1 In this Agreement -
'AFFILIATE' means, in relation to either party, a company which controls
that party, or is controlled by that party or by a company which controls
that party; and for these
PAGE 1
<PAGE> 4
purposes a company controls another company if, either directly or
indirectly through one or more other companies, it can -
o exercise a majority of the votes attached to the shares in the other
company; or
appoint or remove a majority of the board of directors of the other
company;
'THE EFFECTIVE DATE' means 1st June 1998;
'THE EXISTING PATENTS' means the patent applications referred to in clause
1.1, any patents issued in pursuance of any such application, any
extension, reissue, division, continuation or continuation-in-part of any
such application or patent and any patent of addition, supplementary
protection certificate or similar rights based on any such patent;
'EXISTING TECHNOLOGY' means any Technology relating to the Gene which has
been obtained, developed, found, produced or made by or for ICRF or ICRT at
any time prior to the Effective Date;
'THE FIELD' means the field of [*];
'THE FIRST LICENCE' means the licence to be granted pursuant to clause 4.1;
'THE FIRST OPTION' means the option granted by ICRT under clause 3.1;
'THE FIRST OPTION PERIOD' means the period of [*] from the Effective
Date;
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
PAGE 2
<PAGE> 5
'THE GENE' means the PTEN gene referred to in clause 1.1 including, for the
avoidance of doubt, any splice variants or other derivatives of that gene
and for the purposes of the foregoing, a "derivative" means a nucleotide
sequence derived from that gene (including fragments thereof) the product of
which has tumour suppressor activity;
'ICRF' means Imperial Cancer Research Fund;
'INTELLECTUAL PROPERTY' means any patent application or patent (including
any extension, reissue, division, continuation or continuation-in-part of
any such application or patent and any patent of addition, supplementary
protection certificate or similar rights based on any patent), copyright or
other form of protection, the right to make any application for any such
protection in any part of the world, and any right in respect of any trade
secret or other confidential information;
'THE INVENTION' means the invention(s) claimed or disclosed in the Existing
Patents;
'MATERIALS' means any model, prototype, material or substance (including,
without limitation, any living organism or genetic material), and includes
any progeny or derivative of any of the foregoing;
'THE NEGOTIATION PERIOD' means the period of [*] from the date of exercise
of the First Option or the Second Option, as the case may be, or such longer
period as the parties may agree in either case;
'THE PROJECT' means the programme of collaborative research referred to in
clause 5.1;
'PROJECT TECHNOLOGY' means any Technology obtained, developed, found,
produced or made at any time on or after the Effective Date in the course of
the Project;
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
PAGE 3
<PAGE> 6
'PROJECT PATENTS' means any patent applications claiming any Project
Technology, any patents issued in pursuance of any such application, any
extension, reissue, division, continuation or continuation-in-part of any
such application or patent and any patent of addition, supplementary
protection certificate or similar rights based on any such patent;
'THE SECOND LICENCE' means the agreement to be entered into pursuant to
clause 6.7;
'THE SECOND OPTION' and 'THE SECOND OPTION PERIOD' have the meanings given
in clause 6.6;
'TECHNOLOGY' means any methods, techniques, processes, discoveries,
inventions (whether patentable or not), formulae, results of
experimentation, statistics, data, computer software or plans, any
Materials and any records in any form relating to any of the foregoing; and
'YEAR' means a period of 365 (or, in the case of a leap year, 366) days.
2.2 Unless the context otherwise requires, each reference in this Agreement
to -
(a) 'WRITING', and any cognate expression, includes a reference to any
communication effected by facsimile transmission or similar means (but
not electronic mail);
(b) a licence includes a sub-licence; and 'LICENSE' (as a verb) and
cognate expressions shall be construed accordingly;
(c) a statute or a provision of a statute is a reference to that statute
or provision as amended, re-enacted or extended at the relevant time,
and includes any statute or a corresponding provision in a statute
replacing that statute or provision;
PAGE 4
<PAGE> 7
(d) 'THIS AGREEMENT' is a reference to this Agreement and each of the
Schedules, as amended or supplemented at the relevant time;
(e) a Schedule is a reference to a schedule to this Agreement;
(f) a clause or a paragraph is a reference to a clause of this Agreement
(other than the Schedules) or a paragraph of the relevant Schedule;
(g) any reference to the parties includes a reference to their respective
successors in title and permitted assignees;
(h) any reference to a person includes any body corporate, unincorporated
association, partnership or other legal entity;
(i) the singular includes the plural and vice versa; and
(j) words importing any gender include any other gender.
2.3 The headings in this Agreement are for convenience only and shall not
affect its interpretation.
3 GRANT OF THE FIRST OPTION
3.1 ICRT hereby grants to Introgen, on and subject to the terms of this
Agreement, the exclusive option to obtain an exclusive, world-wide licence
(to the extent that ICRT is able to grant such a licence under any
applicable law) in respect of the Existing Patents and any Materials or
other Existing Technology referred to in clause 5.4, on the terms referred
to in clause 4.1.
3.2 The First Option shall be exercisable by Introgen, subject to payment of
the sum referred to in clause 3.3, by giving written notice to ICRT at any
time during the First Option Period.
PAGE 5
<PAGE> 8
3.3 In consideration of the grant of the First Option, Introgen shall pay to
ICRT the sum of [*] on the Effective Date.
3.4 The sum referred to in clause 3.3 shall not be refunded in any
circumstances.
3.5 If Introgen does not duly exercise the First Option during the First
Option Period, it shall forthwith lapse.
3.6 During the First Option Period ICRT shall diligently prosecute and maintain
the Existing Patents and keep Introgen fully informed as to the prosecution
status of the Existing Patents (including, without limitation, furnishing
to Introgen information relevant to such prosecution and maintenance) and
shall give fair consideration to suggestions made by Introgen in respect of
the prosecution strategy in so far as they relate to the Field, but if ICRT
notifies Introgen in writing that -
(a) it wishes to abandon any patent application or patent within the
Existing Patents which relates to the Field, it shall give a prompt
written notice Introgen offering to assign it to Introgen at the
expense of Introgen but otherwise free of charge, and if Introgen does
not accept the offer in writing within 30 days, ICRT shall have no
further obligation with respect to the patent or patent application;
or
(b) it does not wish to elect to proceed from PCT stage to national stage
with respect to any such application in any country, it shall give a
prompt written notice to Introgen, and ICRT shall have no further
obligation with respect to the application unless Introgen notifies
ICRT in writing within thirty (30) days that it wishes ICRT so to
proceed, in which event ICRT shall do so but at the sole expense of
Introgen, and accordingly for the purposes of -
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
PAGE 6
<PAGE> 9
(i) clause 3.7(b), that application and any Existing Patent granted
pursuant to it in the relevant country shall be treated as if
they had been assigned to Introgen; and
(ii) the provisions of the First Licence as to royalties summarised in
paragraph 9 of Schedule 2, that application and any Existing
Patent granted pursuant to it shall be deemed not to exist in the
relevant country.
3.7 During the First Option Period the out-of-pocket costs and expenses of
prosecuting and maintaining the Existing Patents shall be borne -
(a) in respect of any of the Existing Patents the claims of which relate
exclusively to any matter outside the Field, by [*];
(b) in respect of any of the Existing Patents the claims of which relate
exclusively to the Field, or which have been assigned to Introgen
pursuant to clause 3.6(a) (or are treated as if they had been so
assigned pursuant to clause 3.6(b)(i), [*];
(c) in respect of any other of the Existing Patents, by [*];
and Introgen shall accordingly pay to ICRT the [*] of those
costs and expenses incurred from time to time within 30 days after receipt
from ICRT of an account setting out the relevant information to enable its
share to be ascertained.
4 EXERCISE OF THE FIRST OPTION
4.1 If Introgen exercises the First Option in accordance with clause 3.2, ICRT
and Introgen shall forthwith use their best endeavours during the
Negotiation Period to negotiate in good faith the terms and conditions for
the grant to Introgen of the
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
PAGE 7
<PAGE> 10
licence referred to in clause 3.1 ('THE FIRST LICENCE'), which shall
include the terms and conditions set out in Schedule 2 and such other terms
and conditions (consistent with those set out in Schedule 2) as are
reasonable and customary in the biopharmaceutical industry for arrangements
of the type contemplated by the First Licence.
4.2 Upon agreement being reached between ICRT and Introgen as to the terms of
the First Licence, the parties shall forthwith execute an agreement
containing the terms so agreed between ICRT and Introgen.
4.3 If, notwithstanding their best endeavours, ICRT and Introgen do not agree
upon the terms for the grant of the First Licence to Introgen during the
Negotiation Period, Introgen shall have the right, exercisable by notifying
ICRT in writing at any time within fifteen (15) days after the expiration
of the Negotiation Period, to initiate a binding arbitration proceeding,
pursuant to which the terms and conditions of the First Licence shall be
established. Any arbitration under this provision shall be held in
accordance with clause 9.12 by a single arbitrator and the sole issue
before such arbitrator shall be to establish the terms and conditions of
the First Licence in accordance with clause 4.1, to the extent that they
have not been agreed. If Introgen does not exercise the foregoing right to
initiate arbitration within the applicable fifteen (15) day period, the
First Option shall lapse.
4.4 If the First Option lapses pursuant to clause 3.5 or 4.3 then, except to
the extent that clauses 5, 6 and 7 continue to operate, this Agreement
shall terminate automatically, in which case all rights and obligations of
the parties shall terminate except as provided in clause 8.4.
5 THE PROJECT
5.1 As further consideration for the grant of the First Option, Introgen shall
co-operate with ICRT on a programme of collaborative research on the
following terms.
PAGE 8
<PAGE> 11
5.2 Subject to the following provisions, the Project shall be carried on for a
period of [*] from the Effective Date.
5.3 The overall objectives of the Project shall be as set out in Schedule 3.
Within those overall objectives, the detailed objectives and implementation
of the Project, and the work to be carried out by ICRT and Introgen
respectively as part of the Project, shall be as agreed between Dr David
Snary of ICRT and Dr Sunil Chadaof Introgen from time to time, but
initially as set out in the document attached to this Agreement as Appendix
A and initialled on behalf of the parties.
5.4 ICRT shall, as soon as practicable after the Effective Date -
(a) Supply to Introgen samples of such of the Materials relating to the
Gene and in the possession or control of ICRT as are reasonably
necessary to enable Introgen to carry its tasks in relation to the
Project or as are otherwise requested by Introgen from time to time in
connection with its evaluation of the Gene with a view to deciding
whether or not to exercise the First Option or the Second Option; and
(b) disclose to Introgen such other of the Existing Technology as is
relevant to the Project or it exercise of the First Option or the
Second Option;
and Introgen shall be entitled to use and practice the Invention, and to use
any Materials so supplied and any Existing Technology so disclosed during
the continuance of the Project, for the purposes only of carrying out its
part of the Project and planning the development and exploitation in the
Field of the Existing Technology and Project Technology or as otherwise
reasonably necessary to evaluate the Gene with a view to deciding whether or
not to exercise the First Option or the Second Option.
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
PAGE 9
<PAGE> 12
5.5 Subject as provided in clause 5.4, the resources to be applied to the
Project by each of ICRT and Introgen shall be solely at its discretion.
5.6 Introgen shall pay to ICRT, as a contribution to the work to be carried out
by ICRT as part of the Project, the sum of [*].
5.7 For the avoidance of doubt, each sum payable pursuant to clause 5.6 shall
not be refunded in any circumstances, and if Introgen exercises the First
Option before the end of that period, any such sum which is outstanding
shall continue to be payable.
5.8 [*].
5.9 If within [*] from the Effective Date Introgen has not commenced good
faith active steps with a view to carrying out its part of the Project for
any reason, ICRT shall be entitled to terminate the Project by giving to
Introgen not less than [*] written notice provided that Introgen
does not commence such steps within such [*] period, in which
case the parties shall forthwith take such steps as may be necessary to
terminate the Project, and subject to those steps being taken this
Agreement shall terminate automatically.
5.10 For the purposes of the Project the principal points of contact between the
parties will be as follows -
for ICRT: Dr David Snary
for Introgen: Dr Sunil Chada
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
PAGE 10
<PAGE> 13
5.11 ICRT and Introgen shall ensure that Dr Snary and Dr Chada respectively
shall communicate and meet with one another as necessary to progress the
work on the Project, and that each of them shall report their research data
at semi-annual intervals in a short written report to Introgen and ICRT
respectively.
5.12 If any employees or other representatives of ICRT are requested to visit
the premises of Introgen for the purposes of the Project, Introgen shall -
(a) at its own cost give all reasonable assistance required by any of them
for that purpose; and
(b) reimburse ICRT for their reasonable travel, accommodation and other
expenses incurred, within 30 days after receipt of an invoice for the
sum in question.
5.13 If by agreement with ICRT any employees or other representatives of
Introgen visit the premises of ICRT for the purposes of the Project -
(a) ICRT shall at the cost of Introgen give all reasonable assistance
required by any of them for that purpose, and Introgen shall reimburse
to ICRT any out-of-pocket sum incurred by ICRT for that purpose
within 30 days after receipt of an invoice for the sum in question;
and
(b) Introgen shall be responsible for their travel, accommodation and
other expenses.
6 OWNERSHIP OF TECHNOLOGY AND INTELLECTUAL PROPERTY
6.1 Subject to provisions of this Agreement, the Invention, the Existing
Patents, the Existing Technology and all Intellectual Property in respect
of any of the Existing Technology shall remain the exclusive property of
ICRT.
PAGE 11
<PAGE> 14
6.2 Any Project Technology, and any Project Patents or other Intellectual
Property in respect of any Project Technology, shall -
(a) if made solely by ICRT staff working on the Project, belong
exclusively to ICRT;
(b) if made solely by Introgen staff working on the Project, belong
exclusively to Introgen;
(c) if made jointly by ICRT staff and Introgen staff working on the
Project, belong to ICRT and Introgen jointly in equal undivided
shares.
6.3 Except as otherwise provided in this Agreement and subject to the rights
and licences granted herein, neither party shall have any obligation to
account to the other for profits, or to obtain any approval or consent of
the other party to license or exploit any Intellectual Property, by reason
of their joint ownership of such Intellectual Property.
6.4 ICRT and Introgen shall discuss and seek to agree upon the extent to which,
and the countries in which, patent protection for any Project Technology
owned by ICRT or jointly owned by ICRT and Introgen should be obtained and,
except to the extent that they otherwise agree in writing -
(a) the protection shall be applied for by ICRT in the name of ICRT, or
jointly in the names of ICRT and Introgen, as the case may be;
(b) ICRT shall diligently prosecute and maintain the Project Patents in
question and keep Introgen fully informed as to the prosecution status
of the Project Patents (including, without limitation, furnishing to
Introgen information relevant to such prosecution and maintenance) and
shall give fair consideration to suggestions made by Introgen in
respect of the prosecution
PAGE 12
<PAGE> 15
strategy in as far as they relate to the Field, but if ICRT notifies
Introgen in writing that -
(i) it wishes to abandon any such patent application or patent, it
shall give a prompt written notice to Introgen offering to assign
it to Introgen at the expense of Introgen but otherwise free of
charge, and if Introgen does not accept the offer in writing
within 30 days, ICRT shall have no further obligation with
respect to the patent or patent application in question; or
(ii) it does not wish to elect to proceed from PCT stage to national
stage with respect to any such application in any country, it
shall give a prompt written notice to Introgen;
(c) where ICRT gives such a notice pursuant to clause 6.4(b)(ii) above,
ICRT shall have no further obligation with respect to the application
unless Introgen notifies ICRT in writing within 30 days that it
wishes ICRT so to proceed, in which event ICRT shall do so but at the
sole expense of Introgen, and accordingly for the purposes of -
(i) clause 6.4(d), that application and any Project Patent granted
pursuant to it in the relevant country shall be treated as if
they had been assigned to Introgen; and
(ii) the provisions of the First Licence as to royalties summarised in
paragraph 9 of Schedule 2 (as they apply to Project Patents
pursuant to paragraph 3 of Schedule 4), that application and any
Existing Patent granted pursuant to it shall be deemed
not to exist in the relevant country;
PAGE 13
<PAGE> 16
(d) the out of pocket costs and expenses of prosecuting and maintaining
the Project Patents in question shall be borne, as if they were
Existing Patents, in the manner provided in clause 3.7 which shall
apply with the necessary changes (and so that the reference therein to
clause 3.6(b)(i) shall be deemed to be a reference to clause
6.4(c)(i));
(e) Introgen shall keep ICRT informed as to the prosecution status of all
patent applications within the Project Patents owned by Introgen; and
(f) each of ICRT and Introgen shall give the other such assistance as the
other may reasonably require and at the other party's expense in order
to obtain and maintain such protection.
6.5 ICRT hereby grants to Introgen the exclusive option to take an exclusive
licence under any or all of the Project Patents and Project Technology
owned exclusively by ICRT and the exclusive right to exploit any and all
Project Patents owned jointly by ICRT and Introgen.
6.6 The option granted under clause 6.5 ('THE SECOND OPTION') shall be
exercisable by Introgen by giving written notice to ICRT at any time during
the period ('THE SECOND OPTION PERIOD') of [*] after the termination of the
Project (except where this Agreement is terminated by ICRT pursuant to
clause 8.2 or 8.3).
6.7 If Introgen exercises the Second Option in accordance with clause 6.6, the
First Licence shall be modified to include such Project Patents and Project
Technology within the scope of the First Licence, in accordance with the
provisions of Schedule 4, and ICRT and Introgen shall forthwith execute an
agreement ('THE SECOND LICENCE') to effect such a modification. In the
event of any disagreement as to the terms of the Second Licence, the
provisions of clause 4.3 shall apply with the necessary changes.
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
PAGE 14
<PAGE> 17
6.8 Notwithstanding any licence or right granted by ICRT pursuant to this
Agreement, ICRT (for itself and ICRF) shall retain -
(a) the exclusive right to use any Existing Technology (and any Existing
Patents or other Intellectual Property in respect thereof) for any
purpose outside the Field;
(b) the exclusive right to use any Project Technology which belongs
exclusively to ICRT (and any Project Patents or other Intellectual
Property in respect thereof), for any purpose outside the Field;
(c) the exclusive right to use any Project Technology which belongs to
ICRT and Introgen jointly (and any Project Patents or other
Intellectual Property in respect thereof) for [*]; and
(d) the non-exclusive right to use any Project Technology which belongs to
ICRT and Introgen jointly (and any Project Patents or other
Intellectual Property in respect thereof) for research and all other
applications (except [*]) outside the Field.
6.9 Introgen hereby grants to ICRT (for itself and ICRF) an irrevocable,
perpetual non-exclusive, worldwide, royalty-free licence, with the right to
grant sublicenses, in respect of any Introgen Improvement, and any Project
Patents or other Intellectual Property in respect of any such Introgen
Improvement, for the purposes of research and the manufacture, sale and use
of products for [*] outside the Field.
For the purposes of this Agreement, 'Introgen Improvement' means any
Project Technology which belongs exclusively to Introgen and which is a
derivative (as defined in clause 2.1) of the Gene or a method of using the
Gene (including derivatives thereof); provided, however, Introgen
Improvements shall not include
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
PAGE 15
<PAGE> 18
any vector, delivery system, method, compositions or other subject matter
which is proprietary to Introgen, or any such Project Technology which
necessarily involves or includes the use of or combination of any vector,
delivery system, method, composition or other subject matter.
6.10 If Introgen does not duly exercise the Second Option during the Second
Option Period, the Second Option shall lapse, and ICRT shall have the
option, exercisable within a further [*] by giving written notice to
Introgen, to negotiate for the grant to ICRT of an exclusive licence in
respect of any Introgen Improvement, a non-exclusive licence in respect of
any other Project Technology which belongs to ICRT and Introgen jointly,
and all Project Patents or other Intellectual Property in respect thereof
(but excluding any rights in respect of any vector, delivery system,
method, compositions or other technology which is proprietary to Introgen,
or any such Project Technology which necessarily involves or includes the
use of or combination of any vector, delivery system, method), to use the
same for any purpose, on a world-wide, royalty-bearing basis, to the extent
that Introgen is able to grant such a licence or right.
6.11 If ICRT exercises the option referred to in clause 6.10, ICRT and Introgen
shall forthwith use their best endeavours to negotiate in good faith the
terms of an agreement for the grant of the licence or right within the
period of [*] from the date of exercise of the option (provided that any
such agreement shall contain the right for ICRT to grant licences (or
sub-licences) under the Project Patents and Project Technology in question
to any other person). In the event of any disagreement as to the terms of
such agreement, the provisions of clause 4.3 shall apply with the necessary
changes.
7 CONFIDENTIALITY AND PUBLICATION
7.1 Except as provided herein, each party shall maintain in confidence during
the term of this Agreement and for seven (7) years thereafter, and shall
not use for any
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
PAGE 16
<PAGE> 19
purpose or disclose to any third party, any Technology or other information
disclosed by the other party in writing and marked "Confidential" or that
is disclosed orally and confirmed in writing as confidential within
forty-five (45) days following such disclosure (collectively, 'CONFIDENTIAL
INFORMATION'), except to the extent that any such Confidential
Information -
(a) is at the time of being so provided or after that time through no
fault of the party to whom it was so provided becomes public
knowledge; or
(b) was lawfully available on a non-confidential basis to the party to
whom it was so provided before that time; or
(c) can be shown by the party to whom it was so provided to have been
independently produced by that party without any use of such
confidential information provided to it by the other party; or
(d) is made available to the party to whom it was so provided otherwise
than in breach of an obligation of confidentiality owed to the other
party.
7.2 The results of the Project may be made public by either party (or, in the
case of ICRT, by ICRF) except to the extent that -
(a) publication would include any Confidential Information of the other
party; or
(b) publication would prejudice the obtaining of patent protection for an
invention constituting Project Technology, or the commercial
exploitation of any unpatented or unpatentable Project Technology
which remains unpublished.
7.3 To allow time for review of any proposed disclosure of any subject matter
which may be precluded from being made public under clause 7.2, each of
ICRT and Introgen shall provide to the other -
PAGE 17
<PAGE> 20
(a) a copy of any manuscript disclosing any results of the Project not
less than 45 days notice before submitting the manuscript for
publication; and
(b) a copy of any slides to be used in an oral presentation disclosing any
results of the Project together with an outline of the presentation
not less than 20 working days before making any such oral
presentation.
7.4 The party receiving any such material pursuant to clause 7.3 shall promptly
and in any event prior to the proposed date of submission for publication
review the proposed disclosure and notify the other party in writing of its
conclusions, failing which the other party shall be free to make the
proposed disclosure.
7.5 If in the reasonable opinion of the party receiving the material the
proposed disclosure does not include subject matter which is precluded from
being made public under clause 7.2, it shall promptly notify the other
party which shall thereupon be free to make the proposed disclosure.
7.6 If in the reasonable opinion of either party -
(a) the proposed disclosure includes subject matter which is precluded
from being made public under clause 7.2 and which is patentable,
neither party shall publish or otherwise disclose the material in
question for a period of three months from the date on which the
relevant material was received by the party in question and, if a
patent application is made within that period of three months, for a
further period as agreed but in any event not exceeding a total of 18
months from that date (including such period of three months),
following which the other party shall be free to make the proposed
disclosure; or
(b) the proposed disclosure includes unpatented (or unpatentable) Project
Technology which that party wishes to maintain as unpublished and
which
PAGE 18
<PAGE> 21
has been identified in Project reports pursuant to clause 5.11 as
being of potential commercial significance, neither party shall
publish or otherwise disclose the material in question for a period of
18 months from that date, following which either party shall be free
to make the proposed disclosure; or
(c) the proposed disclosure includes Confidential Information of the
reviewing party, the disclosing party shall remove such Confidential
Information prior to such disclosure.
7.7 Notwithstanding the foregoing provisions of this clause 7 above, the
receiving party may use or disclose Confidential Information of the
disclosing party
(a) to the extent necessary to exercise its rights hereunder (including
providing such information to bona fide licensees or prospective
licensees as contemplated by this Agreement or otherwise and to
potential investors or partners on reasonable terms of
confidentiality) or to fulfil its obligations and/or duties hereunder;
(b) in filing for, prosecuting or maintaining any proprietary rights,
prosecuting or defending litigation; and
(c) in complying with applicable governmental regulations and/or
submitting information to tax or other governmental authorities; or as
otherwise required by law;
provided that if the receiving party is required by law to make any public
disclosures of Confidential Information of the disclosing party then, to
the extent it may legally do so, it shall give reasonable advance notice to
the disclosing party of such disclosure and shall use its reasonable
efforts to secure confidential treatment of
PAGE 19
<PAGE> 22
Confidential Information prior to its disclosure (whether through
protective orders or otherwise).
8 TERMINATION
8.1 This Agreement shall be deemed to have come into force on the
Effective Date and, subject to the following provisions, shall
continue in force for the respective periods of time provided for in
this Agreement and otherwise without any time limit.
8.2 ICRT shall be entitled to terminate this Agreement forthwith by giving
fifteen (15) days' prior written notice to Introgen if any sum payable
under this Agreement is not paid in full within seven (7) days after
the due date for payment and Introgen falls to make such payment
within such fifteen (15) day period.
8.3 Either party shall be entitled to terminate this Agreement forthwith
by giving written notice to the other party if -
(a) the other party commits a breach of any of its obligations under
this Agreement (other than, in the case of Introgen, a breach to
which clause 8.2 applies) and, falls to remedy to breach within
thirty (30) days after receiving a written notice from the first
mentioned party specifying the breach and requiring it to be
remedied; or
(b) the other party goes into liquidation, has a receiver appointed
over any of its assets, has an administrator appointed, makes any
voluntary arrangement with any of its creditors, or ceases to
carry on business, or any similar event under the law of any
foreign jurisdiction occurs in relation to the other party.
8.4 On the termination of this Agreement for any reason (including, for
the avoidance of doubt, any termination or partial termination
pursuant to clause 4.4 or clause 5.9)
PAGE 20
<PAGE> 23
(a) the rights and obligations of Introgen under the First Licence
(if it has been executed) and the Second Licence (if it has been
executed) or of ICRT under any agreement entered into pursuant to
clause 6.11 (if it has been executed) shall continue in force;
(b) subject to paragraph (a), Introgen shall forthwith cease all use
of the Gene, the Invention, the Existing Technology and any
Project Technology which belongs exclusively to ICRT, and destroy
all Materials in the possession or control of Introgen which have
been supplied by ICRT or produced or derived from any Materials
so supplied;
(c) except to the extent that paragraph (a) above applies (and that
accordingly this paragraph (c) does riot apply), ICRT shall be
entitled to license the Existing Patents and the Existing
Technology, any Project Patents (other than any of them which
belong exclusively to Introgen) and any unpatented (or
unpatentable) Project Technology (other than data which Introgen
reasonably considers proprietary to itself) to any other person;
(d) the provisions of clause 6.1, 6.2, 6.3, 6.8, 6.9, 6.10, 6.11, 7,
9.10, 9.11 and 9.12 shall continue in force in accordance with
their terms,
but subject to the foregoing, and except for any accrued right or
obligation of either ICRT or Introgen, neither of them shall be under
any further obligation to the other.
8.5 Notwithstanding anything herein to the contrary, if either party
disputes in good faith the other party's right to terminate this
Agreement pursuant to the foregoing provisions of this clause 8 by
reason of a breach by the other party, the other party's right to
terminate shall be stayed unless or until it has been determined in
accordance with clause 9.12 that such party has such a right and, if
it is so determined, the party in breach has failed to remedy the
breach in question within thirty (30) days after such determination.
PAGE 21
<PAGE> 24
9 GENERAL
9.1 This Agreement and the rights granted under it are personal to each
party, which may not assign, transfer or charge to any other person
any of its rights under this Agreement, or subcontract or otherwise
transfer to any other person any of its obligations under this
Agreement.
9.2 Notwithstanding clause 9.1, either party may assign this Agreement
and its obligations hereunder to a party that is an Affiliate of the
assigning party at the time of the assignment or a party that succeeds
to all or substantially all of its business or assets relating to this
Agreement whether by sale, merger, operation of law or otherwise;
provided that in either case such assignee promptly enters into an
agreement in writing with the other party to be bound by the terms and
conditions of this Agreement.
9.3 ICRT warrants to Introgen that -
(a) except as disclosed in writing to Introgen, ICRT owns all right,
title and interest in and to the Existing Technology, the
Existing Patents and all other Intellectual Property of ICRT in
respect of the Existing Technology and, subject to clause 9.4, it
has the authority to enter into this Agreement and to grant the
rights granted by it under this Agreement;
(b) the execution by ICRT of, and the performance of its obligations
under, this Agreement require no governmental or other approvals
or, if required, all such approvals have been obtained;
(c) it has not granted and, except as otherwise provided in this
Agreement, will not during the continuance of this Agreement
grant to any third party any rights which are inconsistent with
the rights granted by it under or pursuant to this Agreement;
PAGE 22
<PAGE> 25
(d) except as disclosed in writing to Introgen, it is not aware of
any third party claims or governmental restrictions (other than
legal provisions of general application) which would restrict its
ability to grant the rights agreed to be granted by it under this
Agreement; and
(e) except for the Existing Patents, as at the Effective Date ICRT
does not own or control any patents or patent applications the
claims of which would dominate the practice of the rights to be
granted to Introgen pursuant to this Agreement.
9.4 Without limiting clause 9.3, ICRT does not warrant -
(a) the efficacy or usefulness of the Existing Technology or any
Project Technology; or
(b) that the exercise of the rights granted under this Agreement will
not infringe the patent or other Intellectual Property rights of
any third party; or
(c) that any of the Existing Patents or Project Patents is or will be
valid or enforceable, or (in the case of an application) will
proceed to grant.
9.5 Introgen warrants to ICRT that -
(a) it has the authority to enter into this Agreement and to grant
the rights granted by it under this Agreement;
(b) the execution by Introgen of, and the performance of its
obligations under, this Agreement require no governmental or
other approvals or, if required, all such approvals have been
obtained;
(c) it has not granted and, except as otherwise provided in this
Agreement, will not during the continuance of this Agreement
grant to any third party any
PAGE 23
<PAGE> 26
rights which are inconsistent with the rights granted by it under
or pursuant to this Agreement; and
(d) it is not aware of any third party claims or governmental
restrictions (other than legal provisions of general application)
which would restrict its ability to grant the rights agreed to be
granted by it under this Agreement.
9.6 Subject to the terms of the First Licence (if executed), the Second
Licence (if executed) or any agreement entered into pursuant to clause
6.11, if either party becomes aware of any infringement of any of the
Existing Patents or the Project Patents, or any claim is made or
threatened against either party that the exercise of any rights
granted under this Agreement infringes the patent or other
Intellectual Property rights of any third party, it shall forthwith
notify the other party, whereupon the parties shall consult and seek
to decide what steps if any to take, and each of them shall give the
other party (at the other party's expense) such assistance as the
other party may reasonably request in connection therewith.
9.7 Neither party nor its representatives or employees (or, in the case of
ICRT, those of ICRF) shall be deemed in any circumstances to be the
employees or representatives of the other party (or, in the case of
ICRT, to be those of ICRF), or shall have any authority or power to
bind the other party or to contract in its name.
9.8 This Agreement contains the entire agreement between the parties with
respect to its subject matter and may not be modified except by an
instrument in writing signed by the duly authorised representatives of
the parties, and each party acknowledges that, in entering into this
Agreement, it does not do so in reliance on any representation,
warranty or other provision, except as expressly provided herein, and
any implied warranties are hereby excluded to the fullest extent
permitted by law, but nothing in this provision shall affect the
liability of either party for any fraudulent misrepresentation.
PAGE 24
<PAGE> 27
9.9 Except with regard to the exercise of the First Option and the Second
Option, no failure or delay by either party in exercising any of its
rights under this Agreement shall be deemed to be a waiver of that
right, and no waiver by either party of a breach of any provision of
this Agreement shall be deemed to be a waiver of any subsequent
breach of the same or any other provision.
9.10 If any provision of this Agreement is held by any court or other
competent authority to be invalid or unenforceable in whole or in
part, the other provisions of this Agreement and the remainder of the
affected provision shall continue to be valid.
9.11 This Agreement (and any licence to be entered into pursuant to this
Agreement) shall be governed and construed in all respects in
accordance with the laws of England, and the parties agree to submit
to the non-exclusive jurisdiction of the English Courts.
9.12 Any dispute or arising out of, in relation to, or in connection with
this Agreement, or the validity, enforceability, construction,
performance or breach hereof, shall be settled by binding arbitration
in London, England, under the then-current Rules of Arbitration of
the International Chamber of Commerce Court of Arbitration by a single
arbitrator appointed in accordance with such rules, provided that if
either party so requests (and unless otherwise provided hereunder) the
arbitration shall be conducted by a panel of three (3) arbitrators
appointed in accordance with the Rules. The decision and/or award
rendered by the arbitrator(s) shall be written, final and
non-appealable and may be entered in any court of competent
jurisdiction. Accordingly, the parties hereby waive any and all rights
of appeal to the Court under the Arbitration Act 1996. The parties
agree that, any provision of applicable law notwithstanding, they will
not request, and the arbitrator shall have no authority to award,
punitive or exemplary damages against any party. The costs of any
arbitration, including administrative fees and fees of the
arbitrator(s), shall be shared equally by the parties, unless
otherwise determined by the arbitrator(s). Each
PAGE 25
<PAGE> 28
party shall bear the cost of its own legal and expert fees; provided
that the arbitrator(s) may in his or their discretion award to the
prevailing party the costs and expenses incurred by the prevailing
party in connection with the arbitration proceeding.
10 NOTICES AND SERVICE
10.1 Any notice or other information required or authorized by this
Agreement to be given by either party to the other shall be given by -
(a) delivering it by hand;
(b) sending it by pre-paid registered post; or
(c) sending it by facsimile transmission or similar means of
communication (but not electronic mail);
to the other party at the address given in clause 10.4.
10.2 Any notice or information sent by post in the manner provided by
clause 10.1(b) which is not returned to the sender as undelivered
shall be deemed to have been given on the seventh day after the
envelope containing it was so posted; and proof that the envelope
containing any such notice or information was properly addressed,
pre-paid, registered and posted, and that it has not been so returned
to the sender, shall be sufficient evidence that the notice or
information has been duly given.
10.3 Any notice or information sent by facsimile transmission or similar
means of communication (but not electronic mail) shall be deemed to
have been duly given on the date of transmission, provided that a
confirming copy is sent as provided in clause 10.1(b) to the other
party at the address given in clause 10.4 within 24 hours after
transmission.
PAGE 26
<PAGE> 29
10.4 The address of either party for service of any legal proceedings
concerning or arising out of this Agreement, or for the purposes of
clause 10.1, shall be that of its registered or principal office, or
such other address as it may last have notified to the other party in
writing from time to time.
11 MISCELLANEOUS
11.1 Each sum payable pursuant to this Agreement is exclusive of any
applicable Value Added Tax or other taxes or duties (other than taxes
on profits or income), which shall be additionally payable by Introgen
together with the relevant sum.
11.2 Each party shall from time to time do all such acts and execute all
such documents as may be reasonably necessary in order to give effect
to the provisions of this Agreement.
11.3 The parties shall bear their own costs of and incidental to the
preparation, execution and implementation of this Agreement.
11.4 Except as required by law, neither party shall make any press or other
public announcement concerning any aspect of this Agreement or use
the name of the other (including, in the case of ICRT, that of ICRF)
without first obtaining the agreement in writing of an authorised
representative of the other party.
11.5 This Agreement may be executed in more than one counterpart and shall
come into force once each party has executed such a counterpart in
identical form and exchanged it with the other party.
PAGE 27
<PAGE> 30
SCHEDULE 1
THE EXISTING PATENTS
<TABLE>
<CAPTION>
TITLE COUNTRY APPLICATION
NUMBER DATE
<S> <C> <C> <C>
[*]
</TABLE>
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
PAGE 28
<PAGE> 31
SCHEDULE 2
THE TERMS OF THE FIRST LICENCE
1 Parties: ICRT (the Licensor) and Introgen (the Licensee).
2 Definitions: 'LICENSED PRODUCT' will mean any product (i) which
incorporates the Gene, or (ii) the manufacture, use or sale
of which would in the absence of the licence granted to
Introgen infringe a valid claim within any of the Existing
Patents in the country for which the product is sold.
A "valid claim" will include the claims of issued patents
(including patents of addition, supplementary protection
certificates or similar rights based on any such patent) and
patent applications; provided that in the case of a patent
application which has not been issued, not more than [*]
have elapsed from the earliest priority filing date to which
the claim is entitled.
'LICENSED SUBJECT MATTER' will mean the Existing Technology,
the Existing Patents and any other Intellectual Property of
ICRT in respect of the Existing Technology.
Subject as provided above, the provisions of clause 2 shall
apply.
3 Licence: ICRT will grant to Introgen an exclusive, worldwide licence,
with the right to grant and authorise sublicences, under the
Licensed Subject Matter to make, have made, use and sell
Licensed Products, practice any method, process or procedure
and otherwise exploit the Licensed Subject Matter, in each
case within the Field. For the avoidance of
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
PAGE 29
<PAGE> 32
doubt, Introgen will not have any rights in respect of any
[*] or in respect of any [*] outside the Field.
4 Retained Notwithstanding the foregoing, ICRT (for itself and ICRF)
Rights: will retain the rights under the Licensed Subject Matter
referred to in clause 6.8.
5 Clinical Introgen will be responsible for conducting, directly or
Development: through third parties, clinical development with respect to
Licensed Products. Such clinical development shall include
carrying out clinical trials sufficient to market a Licensed
Product in all Major Markets. Without limiting the
foregoing, Introgen will use the same diligent efforts to
initiate and complete such clinical trials as it expends for
its other products being developed with similar market
potential. The detailed plans and budgets for clinical
development will be determined by Introgen in consultation
with ICRT (and in default of agreement settled by
arbitration pursuant to clause 4.3) and set forth in the
Agreement. Introgen will consult with and keep ICRT
reasonably informed relating to the scope and progress of
such clinical development and will provide semi-annual
reports to ICRT on each stage of product development.
'MAJOR MARKET' will mean the [*], [*] and the [*].
6 Data Access: During the term of the Agreement, Introgen will have access
to copies of data, reports, analyses and other information
in ICRT's possession or control, which are reasonably
necessary for Introgen's exercise of its rights under the
Licensed Subject Matter. In addition, ICRT will provide
Introgen with reasonable quantities of the Gene from time to
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
PAGE 30
<PAGE> 33
time.
7 Licence Fee: Introgen shall pay to ICRT on the execution of the First
Licence [*], which shall be non-refundable and
non-creditable against royalties.
8 Milestone Upon the occurrence of the events set forth below for the
Payments: first Licensed Product, Introgen will make the corresponding
payment below to ICRT -
<TABLE>
<CAPTION>
MILESTONE AMOUNT
--------- ------
<S> <C>
Completion of [*] trials [*]
Completion of [*] trials [*]
First approval for [*] [*]
First approval for [*] [*]
First year where Net Sales of a [*]
Licensed Product exceeds [*]
TOTAL [*]
</TABLE>
9 Royalties: Introgen will pay to ICRT as royalties the following
percentages of Net Sales by Introgen and its sublicensees,
based upon the aggregate Net Sales of all Licensed
Products -
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
PAGE 31
<PAGE> 34
<TABLE>
<CAPTION>
Annual Net Sales Royalties on Incremental
---------------- ------------------------
Amount
------
<S> <C> <C>
[*] [*]
[*] [*]
</TABLE>
The foregoing royalties will be reduced by [*] in countries
where no valid claim of any of the Existing Patents covers a
Licensed Product.
In the event that Licensed Products are sold in combination
with one or more other registered products for which a
royalty would not otherwise be due, it is understood that
Net Sales from the combination product will be reasonably
allocated as to be set forth in the First Licence.
In the event Introgen, its affiliate or sublicensee becomes
obligated to pay a royalty to a third party in respect of
patent rights covering the Gene or use thereof such that the
total royalty burden on the Gene or use thereof (prior to
reductions) is in excess of [*] Introgen may deduct [*] of
such excess royalty from the royalty owing to ICRT on the
applicable net sales; provided, however, the royalty rate
payable on applicable net sales to such third party after
adjustments will not exceed the royalty rate payable (after
adjustments) to ICRT on such net sales (except with the
consent of ICRT, which consent will not be unreasonably
withheld) and in no case will the amount paid to ICRT be so
reduced to less than [*] of the amount that would otherwise
be due to ICRT on such net sales.
Each royalty payment will be accompanied by a proper
statement and will be made without deduction. Introgen will
keep proper accounts
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
PAGE 32
<PAGE> 35
to enable the accuracy of royalty payments to be confirmed,
and will allow ICRT access to inspect and take copies.
10 Marketing: Introgen will be responsible for the establishment, control
and implementation of the promotion and marketing strategy,
plans and budgets for Licensed Products. Introgen will use
the same diligent efforts with respect to the marketing,
sale and promotion of Licensed Products for each Major
Market as Introgen expends for its own products being
developed with similar market potential.
11 Patent The provisions of clauses 3.6 and 3.7 above will apply
Prosecution: throughout the term of the First Licence as they apply
during the First Option Period.
12 Miscellaneous: Each party will keep Confidential Information of the other
confidential on the same terms as under clause 7 above.
The First Licence will be subject to termination on the
same terms as under clause 8 above. On termination all
rights will revert to ICRT.
Introgen will assume responsibility for the exploitation of
the Licensed Subject Matter and will indemnify ICRT (and
ICRF) accordingly. ICRT (or ICRF) will have no liability
howsoever arising under or in connection with the First
Licence for loss of profit or indirect or consequential loss
or for sums exceeding the amount of royalties paid by
Introgen.
Clauses 9, 10 and 11 above will apply to the First Licence.
The First Licence will include other reasonable and
customary terms and conditions contained in similar
agreements of this type, in so far
PAGE 33
<PAGE> 36
as they are consistent with the above.
PAGE 34
<PAGE> 37
SCHEDULE 3
OBJECTIVES OF THE PROJECT
[*]
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
PAGE 35
<PAGE> 38
SCHEDULE 4
THE TERMS OF THE SECOND LICENCE
1 'LICENSED SUBJECT MATTER' will include, in addition to the Existing
Patents and Existing Technology, any Project Technology and Project
Patent owned exclusively by ICRT or owned jointly by ICRT and
Introgen.
2 'LICENSED PRODUCT' will mean any product (i) which incorporates the
Gene, or (ii) the manufacture, use or sale of which would in the
absence of the licence granted to Introgen infringe a valid claim
within any of the Existing Patents or the Project Patents owned
exclusively by ICRT or owned jointly by ICRT and Introgen (or, in the
latter case, would do so if the Project Patent in question was owned
exclusively by ICRT) in the country for which the product is sold.
3 Royalties will be payable, at the rates specified in Schedule 2, on
Net Sales of Licensed Products (as defined above), where the product
(i) incorporates the Gene or (ii) is covered by a valid claim of an
Existing Patent or a Project Patent owned exclusively by ICRT. The
foregoing royalties will be reduced by [*] in countries where no valid
claim of an Existing Patent or a Project Patent owned exclusively by
ICRT covers a Licensed Product.
4 Clauses 6.3, 6.4, 6.8 and 6.9 shall apply throughout the term of the
Second Licence.
5 Subject to paragraphs 1 to 4 above, the provisions of Schedule 2 shall
apply with the necessary changes (and so that references to Existing
Technology and Existing Patents shall be construed as references to
Existing Technology and Existing Patents and/or Project Technology and
Project Patents owned exclusively by ICRT or owned jointly by ICRT and
Introgen).
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
PAGE 36
<PAGE> 39
For IMPERIAL CANCER RESEARCH TECHNOLOGY LIMITED
/s/ JOHN C. WALL
--------------------------------
Director
For INTROGEN THERAPEUTICS, INC.
/s/ MAHENDRA G. SHAH
--------------------------------
Director
PAGE 37
<PAGE> 1
EXHIBIT 10.25
DATED 1998
(1) IMPERIAL CANCER RESEARCH TECHNOLOGY
LIMITED
(2) INTROGEN THERAPEUTICS, INC
OPTION AGREEMENT
FOR TUMOUR SUPPRESSOR GENES
[RICHARDS BUTLER
INTERNATIONAL LAW FIRM LOGO]
[CONFIDENTIAL]
<PAGE> 2
CONTENTS
CLAUSE
1 INTRODUCTION ............................................................. 1
2 INTERPRETATION ........................................................... 1
3 GRANT OF THE FIRST OPTION ................................................ 5
4 EXERCISE OF THE FIRST OPTION ............................................. 7
5 THE PROJECT .............................................................. 8
6 OWNERSHIP OF TECHNOLOGY AND INTELLECTUAL PROPERTY ........................ 11
7 CONFIDENTIALITY AND PUBLICATION .......................................... 16
8 TERMINATION .............................................................. 19
9 GENERAL .................................................................. 21
10 NOTICES AND SERVICE ..................................................... 25
11 MISCELLANEOUS............................................................ 26
SCHEDULES
SCHEDULE 1 ................................................................. 27
THE EXISTING PATENTS .................................................. 27
SCHEDULE 2 ................................................................. 28
THE TERMS OF THE FIRST LICENCE ........................................ 28
SCHEDULE 3 ................................................................. 34
OBJECTIVES OF THE PROJECT ............................................. 34
SCHEDULE 4 ................................................................. 36
THE TERMS OF THE SECOND LICENCE ....................................... 36
[CONFIDENTIAL]
<PAGE> 3
AGREEMENT dated 1998
BETWEEN:
(1) IMPERIAL CANCER RESEARCH TECHNOLOGY LIMITED, incorporated in England and
Wales with registered number 1662284, whose registered office is at
Sardinia House, Sardinia Street, London WC2A 3NL, England ('ICRT')
(2) INTROGEN THERAPEUTICS, INC, incorporated in the State of Delaware, whose
principal office is at 301 Congress Avenue, Suite 1850, Austin, Texas
78701, USA ('INTROGEN')
1 INTRODUCTION
1.1 Imperial Cancer Research Fund ('ICRF') and ICRT have identified and
carried out a programme of research work relating to certain tumour
suppressor genes which have potential therapeutic uses, and in respect of
which certain patent applications have been or are to be made by ICRT,
details of which are given in Schedule 1.
1.2 Introgen wishes to acquire rights in relation to the Genes in order to
develop DNA based therapeutic products for the treatment of cancer, and is
willing to fund a project in ICRT's laboratory to evaluate the potential
of the Genes in cancer gene therapy.
1.3 ICRT is a company wholly owned by ICRF and, by arrangement with ICRF, owns
and is responsible for the management and exploitation of ICRF technology.
2 INTERPRETATION
2.1 In this Agreement -
'AFFILIATE' means, in relation to either party, a company which controls
that party, or is controlled by that party or by a company which controls
that party; and for these purposes a company controls another company if,
either directly or indirectly through one or more other companies, it can
exercise a majority of the votes attached to the
[CONFIDENTIAL]
<PAGE> 4
shares in the other company, or appoint or remove a majority of the board
of directors of the other company;
'THE EFFECTIVE DATE' means 1st January 1999;
'THE EXISTING PATENTS' means the patent applications referred to in clause
1.1, and any other patent application which relates to the Field and
claims the composition, use and/or method of action of any of the Genes,
as disclosed in any of the patent applications referred to in clause 1.1,
and which is made by ICRT at any time during the period from the Effective
Date until the expiration of the First Option Period, any extension,
reissue, division, continuation or continuation-in-part of any such
application or patent and any patent of addition, supplementary protection
certificate or similar rights based on any such patent;
'EXISTING TECHNOLOGY' means any Technology relating to any of the Genes
which has been obtained, developed, found, produced or made by or for ICRF
or ICRT at any time prior to the Effective Date;
'THE FIELD' means the field of [*];
'THE FIRST LICENCE' means the licence to be granted pursuant to clause
4.1;
'THE FIRST OPTION' means the option granted by ICRT under clause 3.1;
'THE FIRST OPTION PERIOD' means the period of [*] from the Effective
Date;
'THE GENES' means the tumour suppressor genes referred to in clause 1.1
(i.e. Rsk3, DBCCR1, 11q24 and 16q23) including, for the avoidance of
doubt, any splice variants or other derivatives of any such gene and for
the purposes of the foregoing, a
[CONFIDENTIAL]
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
PAGE 2
<PAGE> 5
"derivative" means a nucleotide sequence derived from that gene (including
fragments thereof) the product of which has tumour suppressor activity;
'ICRF' means Imperial Cancer Research Fund;
'INTELLECTUAL PROPERTY' means any patent application or patent (including
any extension, reissue, division, continuation or continuation-in-part of
any such application or patent and any patent of addition, supplementary
protection certificate or similar rights based on any patent), copyright
or other form of protection, the right to make any application for any
such protection in any part of the world, and any right in respect of any
trade secret or other confidential information;
'THE INVENTIONS' means the inventions claimed or disclosed in the Existing
Patents;
'MATERIALS' means any model, prototype, material or substance (including,
without limitation, any living organism or genetic material), and includes
any progeny or derivative of any of the foregoing;
'THE NEGOTIATION PERIOD' means the period of [*] from the date of exercise
of the First Option or the Second Option, as the case may be, or such
longer period as the parties may agree in either case;
'THE PROJECT' means the programme of collaborative research referred to in
clause 5.1;
'PROJECT TECHNOLOGY' means any Technology obtained, developed, found,
produced or made at any time on or after the Effective Date in the course
of the Project;
'PROJECT PATENTS' means any patent applications claiming any Project
Technology, any patents issued in pursuance of any such application, any
extension, reissue, division, continuation or continuation-in-part of any
such application or patent and any patent of addition, supplementary
protection certificate or similar rights based on any such patent;
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
[CONFIDENTIAL]
PAGE 3
<PAGE> 6
'THE SECOND LICENCE' means the agreement to be entered into pursuant to
clause 6.7;
'THE SECOND OPTION' and 'THE SECOND OPTION PERIOD' have the meanings given
in clause 6.6;
'TECHNOLOGY' means any methods, techniques, processes, discoveries,
inventions (whether patentable or not), formulae, results of
experimentation, statistics, data, computer software or plans, any
Materials and any records in any form relating to any of the foregoing;
and
'YEAR' means a period of 365 (or, in the case of a leap year, 366) days.
2.2 Unless the context otherwise requires, each reference in this Agreement to
(a) 'WRITING', and any cognate expression, includes a reference to any
communication effected by facsimile transmission or similar means
(but not electronic mail);
(b) a licence includes a sub-licence; and 'LICENSE' (as a verb) and
cognate expressions shall be construed accordingly;
(c) a statute or a provision of a statute is a reference to that statute
or provision as amended, re-enacted or extended at the relevant time,
and includes any statute or a corresponding provision in a statute
replacing that statute or provision;
(d) 'THIS AGREEMENT' is a reference to this Agreement and each of the
Schedules, as amended or supplemented at the relevant time;
(e) a Schedule is a reference to a schedule to this Agreement;
(f) a clause or a paragraph is a reference to a clause of this Agreement
(other than the Schedules) or a paragraph of the relevant Schedule;
[CONFIDENTIAL]
PAGE 4
<PAGE> 7
(g) any reference to the parties includes a reference to their
respective successors in title and permitted assignees;
(h) any reference to a person includes any body corporate, unincorporated
association, partnership or other legal entity;
(i) the singular includes the plural and vice versa; and
(j) words importing any gender include any other gender.
2.3 The headings in this Agreement are for convenience only and shall not
affect its interpretation.
3 GRANT OF THE FIRST OPTION
3.1 ICRT hereby grants to Introgen, on and subject to the terms of this
Agreement, the exclusive option to obtain an exclusive, world-wide licence
(to the extent that ICRT is able to grant such a licence under any
applicable law) in respect of the Existing Patents relating to any one
or more of the Genes and any Materials or other Existing Technology
referred to in clause 5.4, in respect of the Gene or Genes in question, on
the terms referred to in clause 4.1.
3.2 The First Option shall be exercisable by Introgen, in respect of any
one or more of the Genes, subject to payment of the sum referred to in
clause 3.3, by giving written notice to ICRT at any time during the First
Option Period, specifying the Gene or Genes in respect of which it is
exercised. If Introgen so exercises the First Option in respect of one or
more but not all of the Genes it may do so at any subsequent time within
the First Option Period in respect of the remaining Gene or Genes.
3.3 In consideration of the grant of the First Option, Introgen shall pay to
ICRT the sum of [*] on the Effective Date.
3.4 The sum referred to in clause 3.3 shall not be refunded in any
circumstances.
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
[CONFIDENTIAL]
PAGE 5
<PAGE> 8
3.5 If Introgen does not duly exercise the First Option during the First
Option Period in respect of one or more of the Genes, it shall forthwith
lapse in respect of the Gene or Genes in question for which Introgen did
not so exercise the First Option.
3.6 During the First Option period ICRT shall diligently prosecute and
maintain the Existing Patents and keep Introgen fully informed as to the
prosecution status of the Existing Patents (including, without limitation,
furnishing to Introgen information relevant to such prosecution and
maintenance) and shall give fair consideration to suggestions made by
Introgen in respect of the prosecution strategy in so far as they relate
to the Field, but if ICRT notifies Introgen in writing that -
(a) it wishes to abandon any patent application or patent within the
Existing Patents which relates to the Field, it shall give a prompt
written notice Introgen offering to assign it to Introgen at the
expense of Introgen but otherwise free of charge, and if Introgen does
not accept the offer in writing within 30 days, ICRT shall have no
further obligation with respect to the patent or patent application;
or
(b) it does not wish to elect to proceed from PCT stage to national stage
with respect to any such application in any country, it shall give a
prompt written notice to Introgen, and ICRT shall have no further
obligation with respect to the application unless Introgen notifies
ICRT in writing within thirty (30) days that it wishes ICRT so to
proceed, in which event ICRT shall do so but at the sole expense of
Introgen, and accordingly for the purposes of -
(i) clause 3.7(b), that application and any Existing Patent granted
pursuant to it in the relevant country shall be treated as if
they had been assigned to Introgen; and
(ii) the provisions of the First Licence as to royalties summarised in
paragraph 9 of Schedule 2, that application and any Existing
Patent
[CONFIDENTIAL]
PAGE 6
<PAGE> 9
granted pursuant to it shall be deemed not to exist in the
relevant country.
3.7 During the First Option Period the out-of-pocket costs and expenses of
prosecuting and maintaining the Existing Patents shall be borne -
(a) in respect of any of the Existing Patents the claims of which relate
exclusively to any matter outside the Field, [*];
(b) in respect of any of the Existing Patents the claims of which relate
exclusively to the Field, or which have been assigned to Introgen
pursuant to clause 3.6(a) (or are treated as if they had been so
assigned pursuant to clause 3.6(b)(i), [*];
(c) in respect of any other of the Existing Patents, [*];
and Introgen shall accordingly pay to ICRT the [*] of those costs and
expenses incurred from time to time within 30 days after receipt from ICRT
of an account setting out the relevant information to enable its share to
be ascertained.
4 EXERCISE OF THE FIRST OPTION
4.1 If Introgen exercises the First Option in accordance with clause 3.2, in
respect of one or more of the Genes, ICRT and Introgen shall forthwith use
their best endeavours during the Negotiation Period to negotiate in good
faith the terms and conditions for the grant to Introgen of the licence
referred to in clause 3.1 ('THE FIRST LICENCE'), which shall include the
terms and conditions set out in Schedule 2 and such other terms and
conditions (consistent with those set out in Schedule 2) as are reasonable
and customary in the biopharmaceutical industry for arrangements of the
type contemplated by the First Licence. If Introgen subsequently exercises
the First Option in respect of any of the Genes, the Gene or Genes in
question shall be deemed as from the date of exercise to be covered by the
terms of the First Licence.
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
[CONFIDENTIAL]
PAGE 7
<PAGE> 10
4.2 Upon agreement being reached between ICRT and Introgen as to the terms of
the First Licence, the parties shall forthwith execute an agreement
containing the terms so agreed between ICRT and Introgen.
4.3 If, notwithstanding their best endeavours, ICRT and Introgen do not agree
upon the terms for the grant of the First Licence to Introgen during the
Negotiation Period, Introgen shall have the right, exercisable by
notifying ICRT in writing at any time within fifteen (15) days after the
expiration of the Negotiation Period, to initiate a binding arbitration
proceeding, pursuant to which the terms and conditions of the First
Licence shall be established. Any arbitration under this provision shall
be held in accordance with clause 9.12 by a single arbitrator and the sole
issue before such arbitrator shall be to establish the terms and
conditions of the First Licence in accordance with clause 4.1, to the
extent that they have not been agreed. If Introgen does not exercise the
foregoing right to initiate arbitration within the applicable fifteen (15)
day period, the First Option shall lapse in respect of the Gene or Genes
in question.
4.4 If the First Option lapses pursuant to clause 3.5 or 4.3 (and if Introgen
has no further right to exercise the First Option in respect of any of the
Genes) then, except to the extent that clauses 5, 6 and 7 continue to
operate, this Agreement shall terminate automatically, in which case all
rights and obligations of the parties shall terminate except as provided
in clause 8.4.
5 THE PROJECT
5.1 As further consideration for the grant of the First Option, Introgen
shall co-operate with ICRT on a programme of collaborative research on the
following terms.
5.2 Subject to the following provisions, the Project shall be carried on for a
period of [*] from the Effective Date.
5.3 The overall objectives of the Project shall be as set out in Schedule 3.
Within those overall objectives, the detailed objectives and
implementation of the Project, and the
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
[CONFIDENTIAL]
PAGE 8
<PAGE> 11
work to be carried out by ICRT and Introgen respectively as part of the
Project, shall be as agreed between Dr. David Snary of ICRT and Dr. Sunil
Chada of Introgen from time to time, but initially as set out in Schedule
3.
5.4 ICRT shall, as soon as practicable after the Effective Date -
(a) supply to Introgen samples of such of the Materials relating to the
Genes and in the possession or control of ICRT as are reasonably
necessary to enable Introgen to carry its tasks in relation to the
Project or as are otherwise requested by Introgen from time to time in
connection with its evaluation of the Genes with a view to deciding
whether or not to exercise the First Option or the Second Option; and
(b) disclose to Introgen such other of the Existing Technology as is
relevant to the Project or it exercise of the First Option or the
Second Option;
and Introgen shall be entitled to use and practice the Inventions, and to
use any Materials so supplied and any Existing Technology so disclosed
during the continuance of the Project, for the purposes only of carrying
out its part of the Project and planning the development and exploitation
in the Field of the Existing Technology and Project Technology or as
otherwise reasonably necessary to evaluate the Genes with a view to
deciding whether or not to exercise the First Option or the Second Option.
5.5 Subject as provided in clause 5.4, the resources to be applied to the
Project by each of ICRT and Introgen shall be solely at its discretion.
5.6 Introgen shall pay to ICRT, as a contribution to the work to be carried
out by ICRT as part of the Project, the sum of [*] on the
Effective Date and [*].
5.7 For the avoidance of doubt, each sum payable pursuant to clause 5.6 shall
not be refunded in any circumstances, and if Introgen exercises the First
Option before the
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
[CONFIDENTIAL]
PAGE 9
<PAGE> 12
end of the First Option Period, any such sum which is outstanding shall
continue to be payable.
5.8 [*]
5.9 If within [*] from the Effective Date Introgen has not commenced good
faith active steps with a view to carrying out its part of the Project for
any reason, ICRT shall be entitled to terminate the Project by giving to
Introgen not less than [*] written notice provided that Introgen does
not commence such steps within such [*] which case the parties shall
forthwith take such steps as may be necessary to terminate the Project,
and subject to those steps being taken this Agreement shall terminate
automatically.
5.10 For the purposes of the Project the principal points of contact between
the parties will be as follows -
for ICRT: Dr David Snary
for Introgen: Dr Sunil Chada.
5.11 ICRT and Introgen shall ensure that Dr Snary and Dr Chada respectively
shall communicate and meet with one another as necessary to progress the
work on the Project, and that each of them shall report their research
data at semi-annual intervals in a short written report to Introgen and
ICRT respectively.
5.12 If any employees or other representatives of ICRT are requested to visit
the premises of Introgen for the purposes of the Project, Introgen shall -
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
[CONFIDENTIAL]
PAGE 10
<PAGE> 13
(a) at its own cost give all reasonable assistance required by any of them
for that purpose; and
(b) reimburse ICRT for their reasonable travel, accommodation and other
expenses incurred, within 30 days after receipt of an invoice for the
sum in question.
5.13 If by agreement with ICRT any employees or other representatives of
Introgen visit the premises of ICRT for the purposes of the Project -
(a) ICRT shall at the cost of Introgen give all reasonable assistance
required by any of them for that purpose, and Introgen shall reimburse
to ICRT any out-of-pocket sum incurred by ICRT for that purpose
within 30 days after receipt of an invoice for the sum in question;
and
(b) Introgen shall be responsible for their travel, accommodation and
other expenses.
6 OWNERSHIP OF TECHNOLOGY AND INTELLECTUAL PROPERTY
6.1 Subject to provisions of this Agreement, the Inventions, the Existing
Patents, the Existing Technology and all Intellectual Property in respect
of any of the Existing Technology shall remain the exclusive property of
ICRT.
6.2 Any Project Technology, and any Project Patents or other Intellectual
Property in respect of any Project Technology, shall -
(a) if made solely by ICRT staff working on the Project, belong
exclusively to ICRT;
(b) if made solely by Introgen staff working on the Project, belong
exclusively to Introgen;
[CONFIDENTIAL]
PAGE 11
<PAGE> 14
(c) if made jointly by ICRT staff and Introgen staff working on the
Project, belong to ICRT and Introgen jointly in equal undivided
shares.
6.3 Except as otherwise provided in this Agreement and subject to the rights
and licences granted herein, neither party shall have any obligation to
account to the other for profits, or to obtain any approval or consent of
the other party to license or exploit any Intellectual Property, by reason
of their joint ownership of such Intellectual Property.
6.4 ICRT and Introgen shall discuss and seek to agree upon the extent to
which, and the countries in which, patent protection for any Project
Technology owned by ICRT or jointly owned by ICRT and Introgen should be
obtained and, except to the extent that they otherwise agree in writing -
(a) the protection shall be applied for by ICRT in the name of ICRT, or
jointly in the names of ICRT and Introgen, as the case may be;
(b) ICRT shall diligently prosecute and maintain the Project Patents in
question and keep Introgen fully informed as to the prosecution status
of the Project Patents (including, without limitation, furnishing to
Introgen information relevant to such prosecution and maintenance) and
shall give fair consideration to suggestions made by Introgen in
respect of the prosecution strategy in as far as they relate to the
Field, but if ICRT notifies Introgen in writing that -
(i) it wishes to abandon any such patent application or patent, it
shall give a prompt written notice to Introgen offering to assign
it to Introgen at the expense of Introgen but otherwise free of
charge, and if Introgen does not accept the offer in writing
within 30 days, ICRT shall have no further obligation with
respect to the patent or patent application in question; or
[CONFIDENTIAL]
PAGE 12
<PAGE> 15
(ii) it does not wish to elect to proceed from PCT stage to national
stage with respect to any such application in any country, it
shall give a prompt written notice to Introgen;
(c) where ICRT gives such a notice pursuant to clause 6.4(b)(ii) above,
ICRT shall have no further obligation with respect to the application
unless Introgen notifies ICRT in writing within 30 days that it wishes
ICRT so to proceed, in which event ICRT shall do so but at the sole
expense of Introgen, and accordingly for the purposes of -
(i) clause 6.4(d), that application and any Project Patent granted
pursuant to it in the relevant country shall be treated as if
they had been assigned to Introgen; and
(ii) the provisions of the First Licence as to royalties summarised in
paragraph 9 of Schedule 2 (as they apply to Project Patents
pursuant to paragraph 3 of Schedule 4), that application and any
Existing Patent granted pursuant to it shall be deemed not to
exist in the relevant country;
(d) the out of pocket costs and expenses of prosecuting and maintaining
the Project Patents in question shall be borne, as if they were
Existing Patents, in the manner provided in clause 3.7 which shall
apply with the necessary changes (and so that the reference therein to
clause 3.6(b)(i) shall be deemed to be a reference to clause
6.4(c)(i));
(e) Introgen shall keep ICRT informed as to the prosecution status of all
patent applications within the Project Patents owned by Introgen; and
(f) each of ICRT and Introgen shall give the other such assistance as the
other may reasonably require and at the other party's expense in order
to obtain and maintain such protection.
[CONFIDENTIAL]
PAGE 13
<PAGE> 16
6.5 ICRT hereby grants to Introgen the exclusive option to take an exclusive
licence under any or all of the Project Patents and Project Technology
owned exclusively by ICRT and the exclusive right to exploit any and all
Project Patents owned jointly by ICRT and Introgen, in each case insofar
as the Project Patents and Project Technology relate to any one or more of
the Genes in respect of which Introgen has exercised the First Option.
6.6 The option granted under clause 6.5 ('THE SECOND OPTION') shall be
exercisable by Introgen by giving written notice to ICRT at any time
during the period ('THE SECOND OPTION PERIOD') of [*] after the
termination of the Project (except where this Agreement is terminated by
ICRT pursuant to clause 8.2 or 8.3).
6.7 If Introgen exercises the Second Option in accordance with clause 6.6, the
First Licence shall be modified to include such Project Patents and
Project Technology within the scope of the First Licence, in accordance
with the provisions of Schedule 4, and ICRT and Introgen shall forthwith
execute an agreement ('THE SECOND LICENCE') to effect such a modification.
In the event of any disagreement as to the terms of the Second Licence,
the provisions of clause 4.3 shall apply with the necessary changes.
6.8 Notwithstanding any licence or right granted by ICRT pursuant to this
Agreement, ICRT (for itself and ICRF) shall retain -
(a) the exclusive right to use any Existing Technology (and any Existing
Patents or other Intellectual Property in respect thereof) for any
purpose outside the Field;
(b) the exclusive right to use any Project Technology which belongs
exclusively to ICRT (and any Project Patents or other Intellectual
Property in respect thereof), for any purpose outside the Field;
(c) the exclusive right to use any Project Technology which belongs to
ICRT and Introgen jointly (and any Project Patents or other
Intellectual Property in respect thereof) for [*]; and
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
[CONFIDENTIAL]
PAGE 14
<PAGE> 17
(d) the non-exclusive right to use any Project Technology which belongs to
ICRT and Introgen jointly (and any Project Patents or other
Intellectual Property in respect thereof) for research and all other
applications (except [*]) outside the Field.
6.9 Introgen hereby grants to ICRT (for itself and ICRF) an irrevocable,
perpetual, nonexclusive, worldwide, royalty-free licence, with the right
to grant sublicences, in respect of any Introgen Improvement, and any
Project Patents or other Intellectual Property in respect of any such
Introgen Improvement, for the purposes of research and the manufacture,
sale and use of products for [*] outside the Field.
For the purpose of this Agreement 'INTROGEN IMPROVEMENT' means any Project
Technology which belongs exclusively to Introgen and which is a derivative
(as defined in clause 2.1) of any of the Genes or a method of using any of
the Genes (including derivative thereof); provided, however, that an
'Introgen Improvement' shall not include any vector, delivery system,
method, composition or other subject matter which is proprietary to
Introgen, or any such Project Technology which necessarily involves or
includes the use of or combination of any such vector, delivery system,
method, composition or other subject matter.
6.10 If Introgen does not duly exercise the Second Option during the Second
Option Period in respect of any one or more of the Genes, the Second
Option shall lapse in respect of the Gene or Genes in question, and ICRT
shall have the option, exercisable within a further [*] by giving written
notice to Introgen, to negotiate for the grant to ICRT of an exclusive
licence in respect of any Introgen Improvement, a nonexclusive licence in
respect of any other Project Technology which belongs to ICRT and Introgen
jointly, and all Project Patents or other Intellectual Property in respect
thereof relating to the Gene or Genes in question (but excluding any
rights in respect of any vector, delivery system, method, composition or
other technology which is proprietary to Introgen, or any such Project
Technology which necessarily involves or includes the use of or
combination of any such vector, delivery system, method,
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
[CONFIDENTIAL]
PAGE 15
<PAGE> 18
composition or other technology), to use the same for any purpose, on a
world-wide, royalty-bearing basis, to the extent that Introgen is able to
grant such a licence or right.
6.11 If ICRT exercises the option referred to in clause 6.10, ICRT and Introgen
shall forthwith use their best endeavours to negotiate in good faith the
terms of an agreement for the grant of the licence or right within the
period of [*] from the date of exercise of the option (provided that any
such agreement shall contain the right for ICRT to grant licences (or
sub-licences) under the Project Patents and Project Technology in question
to any other person). In the event of any disagreement as to the terms of
such agreement, the provisions of clause 4.3 shall apply with the
necessary changes.
7 CONFIDENTIALITY AND PUBLICATION
7.1 Except as provided herein, each party shall maintain in confidence during
the term of this Agreement and for seven (7) years thereafter, and shall
not use for any purpose or disclose to any third party, any Technology or
other information disclosed by the other party in writing and marked
"Confidential" or that is disclosed orally and confirmed in writing as
confidential within forty-five (45) days following such disclosure
(collectively 'CONFIDENTIAL INFORMATION'), except to the extent that any
such Confidential Information -
(a) is at the time of being so provided or after that time through no
fault of the party to whom it was so provided becomes public
knowledge; or
(b) was lawfully available on a non-confidential basis to the party to
whom it was so provided before that time; or
(c) can be shown by the party to whom it was so provided to have been
independently produced by that party without any use of such
confidential information provided to it by the other party; or
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
[CONFIDENTIAL]
PAGE 16
<PAGE> 19
(d) is made available to the party to whom it was so provided otherwise
than in breach of an obligation of confidentiality owed to the other
party.
7.2 The results of the Project may be made public by either party (or, in the
case of ICRT, by ICRF) except to the extent that -
(a) publication would include any Confidential Information of the other
party; or
(b) publication would prejudice the obtaining of patent protection for an
invention constituting Project Technology, or the commercial
exploitation of any unpatented or unpatentable Project Technology
which remains unpublished.
7.3 To allow time for review of any proposed disclosure of any subject matter
which may be precluded from being made public under clause 7.2, each of
ICRT and Introgen shall provide to the other -
(a) a copy of any manuscript disclosing any results of the Project not
less than 45 days notice before submitting the manuscript for
publication; and
(b) a copy of any slides to be used in an oral presentation disclosing any
results of the Project together with an outline of the presentation
not less than 20 working days before making any such oral
presentation.
7.4 The party receiving any such material pursuant to clause 7.3 shall
promptly and in any event prior to the proposed date of submission for
publication review the proposed disclosure and notify the other party in
writing of its conclusions, failing which the other party shall be free to
make the proposed disclosure.
7.5 If in the reasonable opinion of the party receiving the material the
proposed disclosure does not include subject matter which is precluded
from being made public under clause 7.2, it shall promptly notify the
other party which shall thereupon be free to make the proposed disclosure.
[CONFIDENTIAL]
PAGE 17
<PAGE> 20
7.6 If in the reasonable opinion of either party -
(a) the proposed disclosure includes subject matter which is precluded
from being made public under clause 7.2 and which is patentable,
neither party shall publish or otherwise disclose the material in
question for a period of three months from the date on which the
relevant material was received by the party in question and, if a
patent application is made within that period of three months, for a
further period as agreed but in any event not exceeding a total of 18
months from that date (including such period of three months),
following which the other party shall be free to make the proposed
disclosure; or
(b) the proposed disclosure includes unpatented (or unpatentable) Project
Technology which that party wishes to maintain as unpublished and
which has been identified in Project reports pursuant to clause 5.11
as being of potential commercial significance, neither party shall
publish or otherwise disclose the material in question for a period of
18 months from that date, following which either party shall be free
to make the proposed disclosure; or
(c) the proposed disclosure includes Confidential Information of the
reviewing party, the disclosing party shall remove such Confidential
Information prior to such disclosure.
7.7 Notwithstanding the foregoing provisions of this clause 7 above, the
receiving party may use or disclose Confidential Information of the
disclosing party -
(a) to the extent necessary to exercise its rights hereunder (including
providing such information to bona fide licensees or prospective
licensees as contemplated by this Agreement or otherwise and to
potential investors or partners on reasonable terms of
confidentiality) or to fulfill its obligations and/or duties
hereunder;
(b) in filing for, prosecuting or maintaining any proprietary rights,
prosecuting or defending litigation; and
[CONFIDENTIAL]
PAGE 18
<PAGE> 21
(c) in complying with applicable governmental regulations and/or
submitting information to tax or other governmental authorities; or as
otherwise required by law;
provided that if the receiving party is required by law to make any public
disclosures of Confidential Information of the disclosing party then, to
the extent it may legally do so, it shall give reasonable advance notice
to the disclosing party of such disclosure and shall use its reasonable
efforts to secure confidential treatment of Confidential Information prior
to its disclosure (whether through protective orders or otherwise).
8 TERMINATION
8.1 This Agreement shall be deemed to have come into force on the Effective
Date and, subject to the following provisions, shall continue in force for
the respective periods of time provided for in this Agreement and
otherwise without any time limit.
8.2 ICRT shall be entitled to terminate this Agreement forthwith by giving
fifteen (15) days' prior written notice to Introgen if any sum payable
under this Agreement is not paid in full within seven (7) days after the
due date for payment and Introgen fails to make such payment within such
fifteen (15) day period.
8.3 Either party shall be entitled to terminate this Agreement forthwith by
giving written notice to the other party if -
(a) the other party commits a breach of any of its obligations under this
Agreement (other than, in the case of Introgen, a breach to which
clause 8.2 applies) and fails to remedy to breach within thirty (30)
days after receiving a written notice from the first mentioned party
specifying the breach and requiring it to be remedied; or
(b) the other party goes into liquidation, has a receiver appointed over
any of its assets, has an administrator appointed, makes any voluntary
arrangement with
[CONFIDENTIAL]
PAGE 19
<PAGE> 22
any of its creditors, or ceases to carry on business, or any similar
event under the law of any foreign jurisdiction occurs in relation to
the other party.
8.4 On the termination of this Agreement for any reason (including, for the
avoidance of doubt, any termination or partial termination pursuant to
clause 4.4 or clause 5.9) -
(a) the rights and obligations of Introgen under the First Licence (if it
has been executed) and the Second Licence (if it has been executed) or
of ICRT under any agreement entered into pursuant to clause 6.11 (if
it has been executed) shall continue in force;
(b) subject to paragraph (a), Introgen shall forthwith cease all use of
the Genes, the Inventions, the Existing Technology and any Project
Technology which belongs exclusively to ICRT, and destroy all
Materials in the possession or control of Introgen which have been
supplied by ICRT or produced or derived from any Materials so
supplied;
(c) except to the extent that paragraph (a) above applies (and that
accordingly this paragraph (c) does not apply), ICRT shall be entitled
to license the Existing Patents and the Existing Technology, any
Project Patents (other than any of them which belong exclusively to
Introgen) and any unpatented (or unpatentable) Project Technology
(other than data which Introgen reasonably considers proprietary to
itself) to any other person;
(d) the provisions of clause 6.1, 6.2, 6.3, 6.8, 6.9, 6.10, 6.11, 7, 9.10,
9.11 and 9.12 shall continue in force in accordance with their terms,
but subject to the foregoing, and except for any accrued right or
obligation of either ICRT or Introgen, neither of them shall be under
any further obligation to the other.
8.5 Notwithstanding anything herein to the contrary, if either party disputes
in good faith the other party's right to terminate this Agreement
pursuant to the foregoing provisions of this clause 8 by reason of a
breach by the other party, the other party's
[CONFIDENTIAL]
PAGE 20
<PAGE> 23
right to terminate shall be stayed unless or until it has been determined
in accordance with clause 9.12 that such party has such a right and, if it
is so determined, the party in breach has failed to remedy the breach in
question within thirty (30) days after such determination.
9 GENERAL
9.1 This Agreement and the rights granted under it are personal to each party,
which may not assign, transfer or charge to any other person any of its
rights under this Agreement, or subcontract or otherwise transfer to any
other person any of its obligations under this Agreement.
9.2 Notwithstanding clause 9.1, either party may assign this Agreement and its
obligations hereunder to a party that is an Affiliate of the assigning
party at the time of the assignment or a party that succeeds to all or
substantially all of its business or assets relating to this Agreement
whether by sale, merger, operation of law or otherwise; provided that in
either case such assignee promptly enters into an agreement in writing
with the other party to be bound by the terms and conditions of this
Agreement.
9.3 ICRT warrants to Introgen that -
(a) except as disclosed in writing to Introgen, ICRT owns all right, title
and interest in and to the Existing Technology, the Existing Patents
and all other Intellectual Property of ICRT in respect of the Existing
Technology and, subject to clause 9.4, it has the authority to enter
into this Agreement and to grant the rights granted by it under this
Agreement;
(b) the execution by ICRT of, and the performance of its obligations
under, this Agreement require no governmental or other approvals or,
if required, all such approvals have been obtained;
(c) it has not granted and, except as otherwise provided in this
Agreement, will not during the continuance of this Agreement grant to
any third party any rights
[CONFIDENTIAL]
PAGE 21
<PAGE> 24
which are inconsistent with the rights granted by it under or
pursuant to this Agreement;
(d) except as disclosed in writing to Introgen, it is not aware of any
third party claims or governmental restrictions (other than legal
provisions of general application) which would restrict its ability to
grant the rights agreed to be granted by it under this Agreement; and
(e) except for the Existing Patents, as at the Effective Date ICRT does
not own or control any patents or patent applications the claims of
which would dominate the practice of the rights to be granted to
Introgen pursuant to this Agreement.
9.4 Without limiting clause 9.3, ICRT does not warrant -
(a) the efficacy or usefulness of the Existing Technology or any Project
Technology; or
(b) that the exercise of the rights granted under this Agreement will not
infringe the patent or other Intellectual Property rights of any third
party; or
(c) that any of the Existing Patents or Project Patents is or will be
valid or enforceable, or (in the case of an application) will proceed
to grant.
9.5 Introgen warrants to ICRT that -
(a) it has the authority to enter into this Agreement and to grant the
rights granted by it under this Agreement;
(b) the execution by Introgen of, and the performance of its obligations
under, this Agreement require no governmental or other approvals or,
if required, all such approvals have been obtained;
(c) it has not granted and, except as otherwise provided in this
Agreement, will not during the continuance of this Agreement grant to
any third party any rights
[CONFIDENTIAL]
PAGE 22
<PAGE> 25
which are inconsistent with the rights granted by it under or
pursuant to this Agreement; and
(d) it is not aware of any third party claims or governmental restrictions
(other than legal provisions of general application) which would
restrict its ability to grant the rights agreed to be granted by it
under this Agreement.
9.6 Subject to the terms of the First Licence (if executed), the Second
Licence (if executed) or any agreement entered into pursuant to clause
6.11, if either party becomes aware of any infringement of any of the
Existing Patents or the Project Patents, or any claim is made or
threatened against either party that the exercise of any rights granted
under this Agreement infringes the patent or other Intellectual Property
rights of any third party, it shall forthwith notify the other party,
whereupon the parties shall consult and seek to decide what steps if any
to take, and each of them shall give the other party (at the other party's
expense) such assistance as the other party may reasonably request in
connection therewith.
9.7 Neither party nor its representatives or employees (or, in the case of
ICRT, those of ICRF) shall be deemed in any circumstances to be the
employees or representatives of the other party (or, in the case of ICRT,
to be those of ICRF), or shall have any authority or power to bind the
other party or to contract in its name.
9.8 This Agreement contains the entire agreement between the parties with
respect to its subject matter and may not be modified except by an
instrument in writing signed by the duly authorised representatives of the
parties, and each party acknowledges that, in entering into this
Agreement, it does not do so in reliance on any representation, warranty
or other provision, except as expressly provided herein, and any implied
warranties are hereby excluded to the fullest extent permitted by law, but
nothing in this provision shall affect the liability of either party for
any fraudulent misrepresentation.
[CONFIDENTIAL]
PAGE 23
<PAGE> 26
9.9 Except with regard to the exercise of the First Option and the Second
Option, no failure or delay by either party in exercising any of its
rights under this Agreement shall be deemed to be a waiver of that right,
and no waiver by either party of a breach of any provision of this
Agreement shall be deemed to be a waiver of any subsequent breach of the
same or any other provision.
9.10 If any provision of this Agreement is held by any court or other competent
authority to be invalid or unenforceable in whole or in part, the other
provisions of this Agreement and the remainder of the affected provision
shall continue to be valid.
9.11 This Agreement (and any licence to be entered into pursuant to this
Agreement) shall be governed and construed in all respects in accordance
with the laws of England, and the parties agree to submit to the
non-exclusive jurisdiction of the English Courts.
9.12 Any dispute or arising out of, in relation to, or in connection with this
Agreement, or the validity, enforceability, construction, performance or
breach hereof, shall be settled by binding arbitration in London, England,
under the then-current Rules of Arbitration of the International Chamber
of Commerce Court of Arbitration by a single arbitrator appointed in
accordance with such rules, provided that if either party so requests (and
unless otherwise provided hereunder) the arbitration shall be conducted by
a panel of three (3) arbitrators appointed in accordance with the Rules.
The decision and/or award rendered by the arbitrator(s) shall be written,
final and non-appealable and may be entered in any court of competent
jurisdiction. Accordingly, the parties hereby waive any and all rights of
appeal to the Court under the Arbitration Act 1996. The parties agree
that, any provision of applicable law notwithstanding, they will not
request, and the arbitrator shall have no authority to award, punitive or
exemplary damages against any party. The costs of any arbitration,
including administrative fees and fees of the arbitrator(s), shall be
shared equally by the parties, unless otherwise determined by the
arbitrator(s). Each party shall bear the cost of its own legal and expert
fees; provided that the arbitrator(s) may in his or their discretion
award to the prevailing party the costs and expenses incurred by the
prevailing party in connection with the arbitration proceeding.
[CONFIDENTIAL]
PAGE 24
<PAGE> 27
10 NOTICES AND SERVICE
10.1 Any notice or other information required or authorised by this Agreement
to be given by either party to the other shall be given by -
(a) delivering it by hand;
(b) sending it by pre-paid registered post; or
(c) sending it by facsimile transmission or similar means of communication
(but not electronic mail);
to the other party at the address given in clause 10.4.
10.2 Any notice or information sent by post in the manner provided by clause
10.1(b) which is not returned to the sender as undelivered shall be deemed
to have been given on the seventh day after the envelope containing it was
so posted; and proof that the envelope containing any such notice or
information was properly addressed, pre-paid, registered and posted, and
that it has not been so returned to the sender, shall be sufficient
evidence that the notice or information has been duly given.
10.3 Any notice or information sent by facsimile transmission or similar means
of communication (but not electronic mail) shall be deemed to have been
duly given on the date of transmission, provided that a confirming copy is
sent as provided in clause 10.1(b) to the other party at the address given
in clause 10.4 within 24 hours after transmission.
10.4 The address of either party for service of any legal proceedings
concerning or arising out of this Agreement, or for the purposes of clause
10.1, shall be that of its registered or principal office, or such other
address as it may last have notified to the other party in writing from
time to time.
[CONFIDENTIAL]
PAGE 25
<PAGE> 28
11 MISCELLANEOUS
11.1 Each sum payable pursuant to this Agreement is exclusive of any applicable
Value Added Tax or other taxes or duties (other than taxes on profits or
income), which shall be additionally payable by Introgen together with the
relevant sum.
11.2 Each party shall from time to time do all such acts and execute all such
documents as may be reasonably necessary in order to give effect to the
provisions of this Agreement.
11.3 The parties shall bear their own costs of and incidental to the
preparation, execution and implementation of this Agreement.
11.4 Except as required by law, neither party shall make any press or other
public announcement concerning any aspect of this Agreement or use the
name of the other (including, in the case of ICRT, that of ICRF) without
first obtaining the agreement in writing of an authorised representative
of the other party.
11.5 This Agreement may be executed in more than one counterpart and shall come
into force once each party has executed such a counterpart in identical
form and exchanged it with the other party.
[CONFIDENTIAL]
PAGE 26
<PAGE> 29
SCHEDULE 1
THE EXISTING PATENTS
<TABLE>
<CAPTION>
GENE ORIGINATING PATENT DATE
SCIENTIST APPLICATION
<S> <C> <C> <C>
[*]
</TABLE>
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
[CONFIDENTIAL]
PAGE 27
<PAGE> 30
SCHEDULE 2
THE TERMS OF THE FIRST LICENCE
1 Parties: ICRT (the Licensor) and Introgen (the Licensee).
2 Definitions: 'LICENSED PRODUCT' will mean any product (i) which
incorporates any of the Genes, in respect of which the First
Option is exercised by Introgen, or (ii) the manufacture,
use or sale of which would in the absence of the licence
granted to Introgen infringe a valid claim within any of
the Existing Patents in respect of the Gene or Genes in
question in the country for which the product is sold.
A 'VALID CLAIM' will include the claims of issued patents
(including patents of addition, supplementary protection
certificates or similar rights based on any such patent) and
patent applications; provided that in the case of a patent
application which has not been issued, not more than [*]
have elapsed from the earliest priority filing date to,
which the claim is entitled.
'LICENSED SUBJECT MATTER' will mean the Existing Technology,
the Existing Patents and any other Intellectual Property of
ICRT in respect of the Existing Technology, relating to the
Gene or Genes in question.
Subject as provided above, the provisions of clause 2 shall
apply.
3 Licence: ICRT will grant to Introgen an exclusive, worldwide licence,
with the right to grant and authorise sublicences, under the
Licensed Subject Matter to make, have made, use and sell
Licensed Products, practice any method, process or procedure
and otherwise exploit the Licensed Subject Matter, in each
case within the Field. For the avoidance of
[CONFIDENTIAL]
PAGE 28
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE> 31
doubt, Introgen will not have any rights in respect of any
[*] or in respect of any
[*] outside the Field.
4 Retained Rights: Notwithstanding the foregoing, ICRT (for itself and ICRF)
will retain the rights under the Licensed Subject Matter
referred to in clause 6.8.
5 Clinical Introgen will be responsible for conducting, directly or
Development: through third parties, clinical development with respect to
Licensed Products. Such clinical development shall include
carrying out clinical trials sufficient to market a Licensed
Product in all Major Markets. Without limiting the
foregoing, Introgen will use the same diligent efforts to
initiate and complete such clinical trials as it expends for
its other products being developed with similar market
potential. The detailed plans and budgets for clinical
development will be determined by Introgen in consultation
with ICRT (and in default of agreement settled by
arbitration pursuant to clause 4.3) and set forth in the
Agreement. Introgen will consult with and keep ICRT
reasonably informed relating to the scope and progress of
such clinical development and will provide semi-annual
reports to ICRT on each stage of product development.
'MAJOR MARKET' will mean the [*], [*] and
the [*].
6 Data Access: During the term of the Agreement, Introgen will have access
to copies of data, reports, analyses and other information
in ICRT's possession or control, which are reasonably
necessary for Introgen's exercise of its rights under the
Licensed Subject Matter. In addition, ICRT will provide
Introgen with reasonable quantities of the Gene or Genes in
question from time to time.
7 Licence Fee: Introgen shall pay to ICRT on the execution of the First
Licence (and on any subsequent exercise of the First Option)
a licence fee, in respect
[CONFIDENTIAL]
PAGE 29
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE> 32
of each of the Genes in respect of which the First Licence
is granted, of [*], which shall be non-refundable and
non-creditable against royalties.
8 Milestone Upon the occurrence of the events set forth below for the
Payments: first Licensed Product relating to each of the Genes in
respect of which the First Licence is granted, Introgen will
make the corresponding payment below to ICRT -
<TABLE>
<CAPTION>
Milestone Amount
--------- ------
<S> <C>
Completion of [*] trials [*]
Completion of [*] trials [*]
First approval for [*] [*]
First approval for [*] [*]
First year where Net Sales of a [*]
Licensed Product exceeds [*]
TOTAL IN RESPECT OF EACH GENE [*]
</TABLE>
[CONFIDENTIAL]
PAGE 30
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE> 33
9 Royalties: Introgen will pay to ICRT as royalties the following
percentages of Net Sales by Introgen and its sublicensees,
based upon the aggregate Net Sales of all Licensed
Products in respect of each of the Genes -
<TABLE>
<CAPTION>
ROYALTIES ON INCREMENTAL
ANNUAL NET SALES AMOUNT
---------------- ------------------------
<S> <C>
[*] [*]
[*] [*]
</TABLE>
The foregoing royalties will be reduced by [*] in countries
where no valid claim of any of the Existing Patents covers a
Licensed Product in respect of the Gene in question.
In the event that Licensed Products are sold in combination
with one or more other registered products for which a
royalty would not otherwise be due, it is understood that
Net Sales from the combination product will be reasonably
allocated as to be set forth in the First Licence.
In the event that Introgen or any of its Affiliates or
sublicensees becomes obligated to pay a royalty to a third
party in respect of patent rights covering the Gene or the
use thereof such that the total royalty burden on the Gene
or use thereof (prior to reductions) is in excess of [*]
Net Sales, Introgen may deduct [*] of such excess royalty
from the royalty owing to ICRT on the applicable Net Sales;
provided, however, that the royalty rate payable on
applicable Net Sales to such third party after adjustments
will not exceed the royalty rate payable (after adjustments)
to ICRT on such Net Sales (except with the consent of ICRT,
which consent will not be unreasonably withheld) and in no
case will the amount paid to ICRT be so reduced to less than
[*] of the amount that would otherwise be due to ICRT on
such Net Sales.
[CONFIDENTIAL]
PAGE 31
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE> 34
Each royalty payment will be accompanied by a proper
statement and will be made without deduction. Introgen will
keep proper accounts to enable the accuracy of royalty
payments to be confirmed, and will allow ICRT access to
inspect and take copies.
10 Marketing: Introgen will be responsible for the establishment, control
and implementation of the promotion and marketing strategy,
plans and budgets for Licensed Products. Introgen will use
the same diligent efforts with respect to the marketing,
sale and promotion of Licensed Products for each Major
Market as Introgen expends for its own products being
developed with similar market potential.
11 Patent The provisions of clauses 3.6 and 3.7 above will apply
Prosecution: throughout the term of the First Licence as they apply
during the First Option Period.
12 Miscellaneous: Each party will keep Confidential Information of the other
confidential on the same terms as under clause 7 above.
The First Licence will be subject to termination on the same
terms as under clause 8 above. On termination all rights
will revert to ICRT.
Introgen will assume responsibility for the exploitation of
the Licensed Subject Matter and will indemnify ICRT (and
ICRF) accordingly. ICRT (or ICRF) will have no liability
howsoever arising under or in connection with the First
Licence for loss of profit or indirect or consequential loss
or for sums exceeding the amount of royalties paid by
Introgen.
Clauses 9,10 and 11 above will apply to the First Licence.
The First Licence will include other reasonable and
customary terms and conditions contained in similar
agreements of this type, in so far as
[CONFIDENTIAL]
PAGE 32
<PAGE> 35
they are consistent with the above.
[CONFIDENTIAL]
PAGE 33
<PAGE> 36
SCHEDULE 3
OBJECTIVES OF THE PROJECT
[*]
[CONFIDENTIAL]
PAGE 34
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE> 37
[*]
[CONFIDENTIAL]
PAGE 35
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE> 38
SCHEDULE 4
THE TERMS OF THE SECOND LICENCE
1 'LICENSED SUBJECT MATTER' will include, in addition to the Existing
Patents and Existing Technology, any Project Technology and Project Patent
owned exclusively by ICRT or owned jointly by ICRT and Introgen.
2 'LICENSED PRODUCT' will mean any product (i) which incorporates any of the
Genes, or (d) the manufacture, use or sale of which would in the absence
of the licence granted to Introgen infringe a valid claim within any of
the Existing Patents or the Project Patents in respect of the Gene or
Genes in question owned exclusively by ICRT or owned jointly by ICRT and
Introgen (or, in the latter case, would do so if the Project Patent in
question was owned exclusively by ICRT) in the country for which the
product is sold.
3 Royalties will be payable, at the rates specified in Schedule 2, on Net
Sales of Licensed Products (as defined above), where the product (i)
incorporates any of the Genes or (ii) is covered by a valid claim of an
Existing Patent or a Project Patent owned exclusively by ICRT in respect
of the Gene or Genes in question. The foregoing royalties will be reduced
by [*] in countries where no valid claim of an Existing Patent or a
Project Patent owned exclusively by ICRT covers a Licensed Product.
4 Clauses 6.3, 6.4, 6.8, and 6.9 shall apply throughout the term of the
Second Licence.
5 Subject to paragraphs 1 to 4 above, the provisions of Schedule 2 shall
apply with the necessary changes (and so that references to Existing
Technology and Existing Patents shall be construed as references to
Existing Technology and Existing Patents and/or Project Technology and
Project Patents owned exclusively by ICRT or owned jointly by ICRT and
Introgen).
[CONFIDENTIAL]
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
PAGE 36
<PAGE> 39
SCHEDULE 1
THE EXISTING PATENTS
<TABLE>
<S> <C> <C> <C>
GENE ORIGINATING SCIENTIST PATENT APPLICATION DATE
[*]
</TABLE>
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE> 40
For IMPERIAL CANCER RESEARCH TECHNOLOGY LIMITED
/s/ JOHN C. WALL
- -----------------------------------
Director
For INTROGEN THERAPEUTICS, INC.
/s/ MAHENDRA G. SHAH 11/24/98
- -----------------------------------
Director
[CONFIDENTIAL]
PAGE 37
<PAGE> 1
EXHIBIT 10.26
EXCLUSIVE LICENSE AGREEMENT
This Exclusive License Agreement (this "Agreement") is made as of this ___
day of July, 1999 (the "Effective Date") by and between Introgen Therapeutics,
Inc., a Texas corporation having its principal place of business at 301 Congress
Avenue, Suite 1850, Austin, Texas 78701 ("Introgen"), Corixa Corporation, a
Delaware corporation having its principal place of business at 1124 Columbia
Street, Suite 200, Seattle, Washington 98104 (the "Company"), and Chinook
Corporation, a Delaware corporation and a wholly-owned subsidiary of the Company
("Chinook," and, collectively with the Company, "Corixa").
RECITALS
A. GenQuest, Inc., a Delaware corporation ("GenQuest"), and Introgen
entered into a Special Biological Materials Transfer and Collaboration Agreement
dated February 4, 1998 (the "Prior Agreement"), pursuant to which GenQuest
granted to Introgen (i) an exclusive license to use the Licensed Technology (as
defined below) to conduct the research set forth on Schedule 1 to the Prior
Agreement (the "Research") upon the terms and subject to the conditions of the
Prior Agreement and (ii) an option to obtain an exclusive license to the
Licensed Technology as described in the Prior Agreement (the "Option").
B. Effective September 15, 1998, GenQuest was acquired by Corixa by
merger with and into Chinook Corporation, which is wholly owned by Corixa and
was the surviving entity in such merger.
C. In satisfaction of the Option, Introgen desires to obtain, and Corixa
is willing to grant to Introgen, an exclusive license to the Licensed
Technology, including the results of the Research, upon the terms and subject to
the conditions of this Agreement.
NOW, THEREFORE, in consideration of the promises and the mutual covenants
herein set forth, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:
1. DEFINITIONS
In addition to the terms defined elsewhere in this Agreement, the following
words and phrases, whenever capitalized in this Agreement, shall have the
following meanings:
1.1 "Affiliate" shall mean, with respect to a party, any entity that
controls, is controlled by, or is under common control of a party. For this
purpose, control of an entity shall mean direct or indirect ownership of fifty
percent (50%) or more of the voting interest in, or a fifty percent (50%) or
greater interest in the equity of, such corporation or other business entity, or
the maximum percentage allowed by law in the country of the controlled entity.
1.2 "Annual Net Sales" shall mean, in each calendar year during the
term of this Agreement, the gross amounts received by Introgen or its Affiliates
in the case of sales by Introgen or its Affiliates to Third Parties (or to
Affiliates that are end users), or the gross amounts received by sublicensees of
Introgen or its Affiliates in the case of sales by such sublicensees to Third
Parties (or to Affiliates that are end users), for sales of Licensed Products to
Third Parties (or to Affiliates that
-1-
<PAGE> 2
are end users) less the following amounts: (a) normal customary trade, quantity,
cash and other discounts allowed and actually taken; (b) allowances for credits
granted for returns, rebates and the like; (c) sales, use, value added and
similar taxes and duties paid; and (d) packaging and handling fees and prepaid
shipping, freight and insurance. For the removal of doubt, Annual Net Sales
shall not include sales by Introgen to its Affiliates for resale, provided that
if Introgen sells a Licensed Product to an Affiliate for resale, Annual Net
Sales shall include the amounts received by such Affiliate to Third Parties on
the resale of such Licensed Product. Notwithstanding the foregoing, Annual Net
Sales shall not include amounts received in consideration of a transfer or sale
of reasonable quantities of Licensed Products for use in research and
development or in clinical trials.
1.3 "Combination Product" shall mean any subject matter, including,
but not limited to, products and processes, containing both a component that
constitutes a Licensed Product and one or more devices or active components that
would not alone constitute Licensed Products.
1.4 "Fair Market Value," with respect to equity securities, shall
mean a price per share of not greater than [*] of, (a) if such securities are
traded on a securities exchange or The Nasdaq Stock Market, the average of the
closing prices over the ten (10) trading days preceding the date of calculation,
(b) if such securities are actively traded over-the-counter, the average of the
closing bid or sales price (whichever is applicable) over the ten (10) trading
days preceding the date of calculation and (c) if such securities are not so
traded, the fair market value as determined in good faith by the Board of
Directors of the issuer, with due consideration given to the potential earnings,
business and prospects of such issuer and the price at which other equity
securities of the issuer have been issued.
1.5 "Field" shall mean [*]. Notwithstanding the foregoing, the Field
shall not include any administration of the Licensed Gene or Gene Products in
any formulation for the primary purpose of [*].
1.6 "Gene Products" shall mean any and all peptide(s) and protein(s)
encoded by the Licensed Gene, any derivatives of such peptide(s) and protein(s),
and antibodies to such protein(s) and derivatives.
1.7 "Licensed Gene" shall mean the MDA-7 gene and any fragments or
derivatives thereof, as and to the extent covered by the Licensed Patents.
1.8 "Licensed Know-How" shall mean any and all technical information,
processes, compositions, formulae, data, engineering, materials, reports,
analyses, know-how, trade secrets and other subject matter owned and/or
controlled by Corixa relating directly and specifically to the Licensed Gene and
that is reasonably necessary for the development, manufacture and/or
commercialization of the Licensed Products in the Field.
1.9 "Licensed Patents" shall mean any and all rights owned and/or
controlled by Corixa in and to:
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-2-
<PAGE> 3
(a) all worldwide patents and patent applications owned or
controlled by Corixa or its Affiliates claiming or disclosing the subject matter
claimed or disclosed in those patent applications listed on Exhibit 1.9 hereto
or in any foreign counterpart of the foregoing;
(b) all worldwide patents and patent applications claiming or
disclosing inventions owned or controlled by Corixa or its Affiliates relating
to the MDA-7 gene of any fragment or derivatives thereof that are made prior to
the second anniversary of the Effective Date; and
(c) all divisions, continuations, continuations-in-part, foreign
counterparts, patents of addition, and substitutions of, and all patents issuing
on, any of the foregoing patents, together with all registrations, reissues,
reexaminations or extensions of any kind with respect to any of the foregoing
patents.
1.10 "Licensed Technology" shall mean, collectively, (a) the Licensed
Gene, (b) the Licensed Patents and (c) the Licensed Know-How.
1.11 "Licensed Products" shall mean any product, composition or
material the manufacture, sale or use of which would, but for the license
granted herein, infringe a Valid Claim in the country for which such product,
composition or material is sold.
1.12 "Major Indication" shall mean any indication in humans for which
the parties mutually agree that at least [*] patients exist in the
United States.
1.13 "Major Market" shall mean any one of the following: [*].
1.14 "Market Launch" shall mean the date on which Introgen or an
Affiliate in the case of sales by Introgen or its Affiliates to Third Parties
(or to an Affiliate that is an end-user) or a sublicensee of Introgen or any of
its Affiliates in the case of sales by such sublicensee to Third Parties (or to
an Affiliate that is an end-user), first transfers title to or otherwise sells a
Licensed Product to a Third Party in exchange for revenue. The transfer of a
reasonable amount of Licensed Products intended for clinical use or for research
or other non-commercial use shall not be included in the calculation of the date
of Market Launch.
1.15 "Net Licensing Proceeds" shall mean the license fees received by
Introgen from a sublicensee in consideration of a sublicense under the Licensed
Technology, including up-front license fees, sublicense fees and technology
access fees, and all milestone payments so received, less (i) any applicable
withholding taxes and any other amounts credited or deducted against the amounts
actually received by Introgen, unless and until Introgen recoups such taxes or
charges through a credit against taxes due or against other cash payments that
Introgen otherwise would be required to make, and (ii) any amounts paid to a
Third Party (including without limitation the Fair Market Value as of the date
of issuance of any equity issued to such Third Party to the extent that such
equity is issued as a license fee and is not purchased for other consideration
by such Third Party) with respect to the license, sublicense or acquisition of
additional intellectual property rights and relating to a Licensed Product
covered by such sublicense agreement. Net Licensing Proceeds
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-3-
<PAGE> 4
shall not include (a) any equity or amounts received as payment for equity
securities (up to the Fair Market Value of such securities as of the date of
issuance), (b) any amounts received in direct connection with the sale or
provision of products or materials or services or (c) any amounts received in
consideration of bona fide research or development activities. For the avoidance
of doubt, it is understood that in no event shall Net Licensing Proceeds be
deemed to include Annual Net Sales, running royalties or any amount other than
cash payments expressly included above in this Section 1.15; nor shall Net
Licensing Proceeds be deemed to include amounts received in consideration for a
sale of all or substantially all of the business or assets of Introgen to which
this Agreement pertains (whether by way of merger, sale of stock, sale of assets
or otherwise) or in connection with any other transaction resulting in an
assignment of this Agreement in accordance with Section 13.3.
1.16 "Regulatory Authority" shall mean the U.S. Food and Drug
Administration or its foreign equivalent.
1.17 "Third Party" shall mean a party other than Introgen, Corixa or
either of their Affiliates.
1.18 "Valid Claim" shall mean a claim of an issued and unexpired
patent or a claim of a pending patent application within the Joint Patents or
the Licensed Patents which has not been held unpatentable, invalid or
unenforceable by a court or other government agency of competent jurisdiction
and has not been admitted to be invalid or unenforceable through reissue,
re-examination, disclaimer or otherwise; provided, however, that if the holding
of such court or agency is later reversed by a court or agency with overriding
authority, the claim shall be reinstated as a Valid Claim with respect to Annual
Net Sales made after the date of such reversal.
1.19 "Singular and Plural". Where the context hereto requires, the
singular number shall be deemed to include the plural and vice versa.
2. LICENSE GRANT; SUMMARY DATA
2.1 Exclusive License. Corixa hereby grants to Introgen an exclusive,
worldwide license, with the right to sublicense under the Licensed Technology
solely to research, make, have made, use, sell, offer to sell, have sold, import
and otherwise distribute Licensed Products, practice any method, process or
procedure, or otherwise exploit the Licensed Technology; provided that such
license shall in each case be limited to the Field (the "Exclusive License").
2.2 Sublicensing. Introgen may grant and authorize sublicenses within
the scope of the Exclusive License. Introgen shall keep Corixa reasonably
informed as to its progress in entering into sublicense agreements. Each such
sublicense agreement shall comply with the terms and conditions of this
Agreement.
2.3 Summary Data. During the term of this Agreement, Introgen will
supply Corixa with summary data pertaining to research, development and uses of
the Licensed Technology, including, without limitation, the Licensed Products,
in the Field. The type and frequency of the disclosure of such summary data
shall be mutually agreed upon by the parties. Such summary data shall be
considered Confidential Information of Introgen under Section 8 of this
Agreement.
-4-
<PAGE> 5
2.4 Supply of Materials. Upon reasonable request by Introgen and in
consideration for the research and development payments set forth in Section
4.3, Corixa shall provide reasonable quantities of the materials, reagents and
other items within the Licensed Technology listed on Exhibit A attached hereto.
Such reagents shall be delivered subject to the Terms and Conditions of Purchase
and Supply of Reagents attached hereto as Exhibit B.
2.5 Notwithstanding any provision in this Agreement to the contrary,
Corixa shall not assert against Introgen or a Licensed Product any patent now or
hereafter obtained or controlled by Corixa or its Affiliate, solely to the
extent that such patent claims cover the Licensed Gene or Gene Products, or the
use or production thereof.
3. DUE DILIGENCE; RESEARCH PROGRAM
3.1 Due Diligence. Introgen shall use diligent efforts (itself or
through others) to achieve the following milestones for the Licensed Products
within the specified number of months after the Effective Date:
<TABLE>
<CAPTION>
----------------------------------------------- ------------------------------------------
EVENT MONTHS AFTER THE EFFECTIVE DATE
----------------------------------------------- ------------------------------------------
<S> <C>
(a) Acquisition or development of [*]
[*] either internally or through a
funded collaboration with a Third Party,
reasonably sufficient to enable Introgen to
deliver Licensed Technology for [*].
----------------------------------------------- ------------------------------------------
(b) Completion of [*] in an [*]
animal model using [*].
----------------------------------------------- ------------------------------------------
(c) Commencement of [*] Clinical Trial of [*]
a Licensed Product for a Major Indication.
----------------------------------------------- ------------------------------------------
(d) Completion of [*] Clinical Trial of a [*]
Licensed Product for a Major Indication.
----------------------------------------------- ------------------------------------------
(e) Completion of [*] Clinical Trial of a [*]
Licensed Product for a Major Indication.
----------------------------------------------- ------------------------------------------
(f) Completion of [*] Clinical Trial of a [*]
Licensed Product for a Major Indication.
----------------------------------------------- ------------------------------------------
</TABLE>
With respect to Introgen's obligations under events (a) and (b) above, the
parties acknowledge that, notwithstanding Introgen's use of diligent efforts,
Introgen may not achieve the event described therein. In such event, so long as
Introgen is conducting research or development activities (directly or through
others) with respect to [*] or using diligent efforts to seek to acquire
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-5-
<PAGE> 6
[*] to achieve the milestones in (a) and (b) above, Introgen shall not be
considered in breach of same by reason of its failure to achieve such
milestones. In addition, in any event, the sole remedy for any breach by
Introgen of its obligations with respect to (a) and (b) above, shall be that the
Exclusive License granted hereunder shall be converted to a non-exclusive
license with respect to the delivery of the Licensed Genes by means of a
delivery system that does not involve viral vectors or viral particles. In the
event that Corixa shall be obligated or shall elect to make any payments to
Columbia as set forth in Section 6(b) of the Amended and Restated Research and
License Agreement (the "Columbia Agreement") dated July 18, 1997 by and between
GenQuest and The Trustees of Columbia University in the City of New York
("Columbia") and as amended by Paragraph 3 of Amendment No. 1 to the Columbia
Agreement dated March 5, 1999 (including, without limitation, Appendix C) for
failure to achieve, or to extend, its due diligence milestones thereunder,
Introgen shall reimburse Corixa for [*] of such payments at the time Corixa is
obligated to make such payment to Columbia.
3.2 Research Program.
(a) During the term of the Research Program (as set forth below), the
parties shall collaborate with respect to a research program, as described on
Exhibit C attached hereto (the "Research Program"). The Research Program may be
amended from time to time by mutual agreement of the parties, and any such
revised Research Program shall be set forth in writing and attached hereto as
Exhibit C. No material deviation in the subject matter or scope of the Research
Program shall be made without the mutual written agreement of both parties. The
term of the Research Program shall commence on the Effective Date and terminate
on the [*] anniversary of the Effective Date, subject to extension on
mutually agreeable terms and conditions by agreement of the parties; provided,
however, that the Research Program shall terminate effective upon any
termination of this Agreement in accordance with Section 9.
(b) Corixa shall keep Introgen reasonably informed as to the progress
and results of the Research Program, including without limitation, submitting to
Introgen biannual written reports within thirty (30) days of the end of each
calendar half year summarizing the research and results obtained therefrom
during the prior six (6) month period relating to the research in connection
with the Research Program. Without limiting the foregoing, Corixa shall promptly
notify Introgen in writing of all discoveries and inventions developed during
the Research Program and, with respect to such discoveries or inventions, either
file a patent application [*] in accordance with Article 12 below or authorize
and cooperate fully to permit Introgen to do so. It is understood and agreed
that Corixa shall expend the funds paid to Corixa by Introgen under Section 4.3
solely to conduct the Research Program, subject to Section 9.4 below.
4. FEES AND PAYMENTS
4.1 License Fee. In consideration of the Exclusive License, within
five (5) days of the Effective Date Introgen shall pay to Corixa a one-time fee
of [*].
4.2 Initial Research and Development Payment. In consideration of the
research and development services performed by Corixa prior to the Effective
Date, within five (5) days of
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-6-
<PAGE> 7
the Effective Date Introgen shall pay to Corixa a one-time fee of [*].
4.3 Future Research and Development Payments. In consideration of the
research and development services to be performed by Corixa under the Research
Program, Introgen shall pay to Corixa [*] payments in the amount of [*] each,
the first of which shall be due and payable within five (5) days of the
Effective Date and the remainder of which shall be due and payable at the end of
each three-month period thereafter.
4.4 Milestones; Net Licensing Proceeds; Payments.
(a) In further consideration of the Exclusive License, Introgen
shall make the following milestone payments to Corixa with respect to the first
Licensed Product to meet the corresponding milestone event specified below:
(i) [*] within thirty (30) days following the successful
completion by Introgen of the [*] for such Licensed Product for the first Major
Indication that is [*];
(ii) [*] within thirty (30) days following the successful
completion by Introgen of the [*] for a Licensed Product for the first Major
Indication that is [*];
(iii) [*] within thirty (30) days following the successful
completion by Introgen of the [*] for such Licensed Product for the first Major
Indication that is [*];
(iv) [*] within thirty (30) days following the successful
completion by Introgen of the [*] for a Licensed Product for the first Major
Indication that is [*];
(v) [*] within thirty (30) days following the [*] of such
Licensed Product for the first Major Indication that is [*];
(vi) [*] within thirty (30) days following the [*] of a
Licensed Product for the first Major Indication that is [*];
(vii) [*] within thirty (30) days following the [*] of a
Licensed Product for the first Major Indication that is [*]; and
(viii) [*] within thirty (30) days following the [*] of a
Licensed Product for an additional Major Indication that is [*] (each, an
"Additional Major Indication"). It is understood that payments under this
Section 4.2(a)(viii) shall be due for no more than [*]
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-7-
<PAGE> 8
Additional Major Indications, and, accordingly, the total amount due under this
Section 4.2(a)(viii) shall not exceed [*].
For purposes of this Section 4.4, "successful completion"
shall be deemed to occur, with respect to a particular clinical trial for a
Licensed Product, upon the earlier of (i) the dosing of all patients to be
treated in such clinical trial, and completion in all material respects of any
monitoring period, as described in the protocol for such trial, and the
completion of a summary report of such trial by the principal investigator, or
(ii) initiation of a later phase clinical trial for the same Licensed Product.
It is understood that, except as noted in milestone (viii) above, each of the
foregoing milestone payments shall be due only once and that, accordingly, the
total amount to be paid under this Section 4.4(a) shall not exceed [*].
(b) Introgen shall pay to Corixa [*] of all Net Licensing
Proceeds; but in no event shall the aggregate cumulative amount paid under this
Section 4.4(b) exceed [*]. Payment of such amounts shall be made in accordance
with Section 5.1 hereof. [*].
4.5 Royalties.
(a) Introgen shall pay to Corixa a royalty equal to the
following percentages of Annual Net Sales:
<TABLE>
<CAPTION>
--------------------------------------------------------- ---------------------------------------------------
PERCENTAGE OF ANNUAL NET SALES TO BE
ANNUAL NET SALES PAID TO CORIXA
--------------------------------------------------------- ---------------------------------------------------
<S> <C>
[*] [*]
--------------------------------------------------------- ---------------------------------------------------
[*] [*]
--------------------------------------------------------- ---------------------------------------------------
</TABLE>
(b) In the event that Annual Net Sales are at least [*]
in the first [*] following Market Launch, then Introgen shall pay to Corixa a
[*], payable along with the royalty payment for the fourth quarter of such year
in accordance with Section 5.1.
4.6 Credit. [*]
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-8-
<PAGE> 9
[*]
4.7 Single Royalty; Non-Royalty Sales. In the event that more than
one Valid Claim(s) within the Licensed Patents is applicable to any Licensed
Product subject to royalties under this Section 4, then only one royalty shall
be paid to Corixa in respect of such Licensed Product. It is understood that
royalties shall only be payable under this Section 4 with respect to sales of
Licensed Products that would, but for the license granted hereunder, infringe a
Valid Claim in the country in which such Licensed Product is sold or
manufactured. In no event shall more than one royalty be due hereunder with
respect to any Licensed Product unit.
4.8 Combination Products. For purposes of calculating the amounts due
under this Section 4 for Combination Products, Annual Net Sales shall be
reasonably allocated between such Licensed Product and the device or active
component(s) of such Combination Product that do not constitute Licensed
Products based upon their relative importance and proprietary protection and the
gross selling price of such device or active component(s) sold separately;
provided, however, that in no event shall less than [*] of the Annual Net Sales
of a Combination Product be allocated to the Licensed Product. Similarly, in the
event that a Combination Product is sublicensed without a separate license fee,
then, for purposes of determining Net Licensing Proceeds, the license fees paid
for the Combination Product shall be reasonably allocated between the Licensed
Product and such other subject matter; provided, however, that in no event shall
less than [*] of the Net Licensing Proceeds of a Combination Product be
allocated to the Licensed Product.
5. PAYMENTS AND REPORTS
5.1 Payments and Reports. The payments required pursuant to Sections
4.4(b) and 4.5 shall be paid on a quarterly basis, and shall be due and payable
within forty-five (45) days after the last day of March, June, September and
December of each year. All amounts past due shall bear interest at an annual
rate of [*] from the date they are due until the date they are paid. Each such
payment shall be accompanied by a statement, in sufficient detail describing the
Annual Net Sales invoiced, Net Licensing Proceeds received, the Licensed
Products sold, the amount of Licensed Product sold and the basis for calculating
the accrued royalties. All information provided by Introgen pursuant to this
Section 5.1 shall be deemed Confidential Information of Introgen.
5.2 Calculation of Payment. The calculation of the payments required
hereunder shall be based on Annual Net Sales and Net Licensing Proceeds in U.S.
Dollars. Annual Net Sales or Net Licensing Proceeds paid in any foreign currency
shall be converted into and paid on the basis of an average rate of exchange,
which shall be computed as the rate of exchange quoted under Foreign Exchange in
The Wall Street Journal (U.S. West Coast edition) for the last business day of
the calendar quarter to which such payment pertains. If at any time legal
restrictions in a particular country prevent the prompt remittance of any
amounts from such jurisdiction, Introgen may make such payments with respect to
such jurisdiction by depositing the amount thereof in local currency in
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-9-
<PAGE> 10
a bank account or other depository in such country in the name of Corixa, and
Introgen shall have no further obligations under this Agreement with respect
thereto.
5.3 Payment of Applicable Taxes. Each party shall bear and pay any
and all taxes, duties, levies, and other similar charges (and any related
interests and penalties), however designated, imposed on that party as a result
of the existence or operation of this Agreement.
5.4 Records. Introgen shall keep full, complete and proper records
and accounts of Annual Net Sales and Net Licensing Proceeds. Upon reasonable
notice to Introgen, Corixa shall have the right to have an independent certified
public accountant, selected by Corixa and acceptable to Introgen, audit
Introgen's records pertaining to the Licensed Products during normal business
hours to verify the amounts payable pursuant to this Agreement; provided,
however, that: (a) such audit shall not take place more frequently than once
each calendar year, and (b) shall not cover such records for more than the
preceding three (3) years. The independent certified public accountant will be
obliged to execute a reasonable confidentiality agreement prior to commencing
any such inspection. Such audit shall be at Corixa's expense unless Introgen has
paid Corixa less than ninety-two and a half percent (92.5%) of the amount
determined to be due for the time period covered by such audit, in which case
such audit shall be at Introgen's expense. Introgen shall preserve and maintain
all such records and accounts required for audit for a period of at least three
(3) years after the quarter to which such records and accounts apply.
6. OWNERSHIP OF INTELLECTUAL PROPERTY
6.1 Acknowledgement. The parties hereby acknowledge that except as
expressly set forth herein, neither party shall receive any right, title or
interest to any proprietary rights or intellectual property rights of the other
party.
6.2 Corixa Inventions. All inventions, discoveries and improvements
("Inventions") related to the Licensed Technology, whether or not patentable,
made solely by employees or others acting on behalf of Corixa during the term of
this Agreement ("Corixa Inventions") shall be owned solely and exclusively by
Corixa. For purposes of this Article 6, an Invention shall be deemed "made" by
an individual if such individual would be the inventor thereof under applicable
patent law (or the author or creator thereof under applicable intellectual
property law, for non-patentable inventions).
6.3 Introgen Inventions. All Inventions related to the Licensed
Products or based in whole or in part upon any Licensed Technology in the Field,
whether or not patentable, made solely by employees or others acting on behalf
of Introgen during the term of this Agreement ("Introgen Inventions") shall be
owned solely and exclusively by Introgen.
6.4 Joint Inventions and Joint Patents.
(a) Joint Inventions. All Inventions related to Licensed
Technology in the Field, whether or not patentable, made jointly by employees or
others acting on behalf of Introgen and Corixa during the term of this Agreement
("Joint Inventions"), shall be jointly owned by Introgen and Corixa under United
States federal laws pertaining to joint ownership of inventions. All of Corixa's
right, title and
-10-
<PAGE> 11
interest in the Joint Inventions (other than Corixa's right, title and interest
in the Joint Patents, as defined below) shall be considered part of Licensed
Know-How. Each party shall promptly disclose in writing the existence of Joint
Inventions to the other party.
(b) Joint Patents; License Grant. All patents and patent
applications covering Joint Inventions, including without limitation all patents
and/or patent applications arising during or after the term of this Agreement
which claim the priority of any patent and/or patent application claiming and
disclosing Joint Inventions ("Joint Patents"), shall be jointly owned by
Introgen and Corixa under United States federal laws pertaining to joint
ownership of patents. Corixa hereby grants to Introgen an exclusive, worldwide
license, with right of sublicense, to all of Corixa's right, title and interest
in the Joint Patents, to develop, make, have made, use, sell, have sold, import
and otherwise distribute Licensed Products within the Field. Introgen shall have
the first right, but not the obligation, to prosecute and reasonably maintain
the Joint Patents to effectively cover discoveries and inventions relating to
the Field. All costs and expenses incurred in such prosecution will be borne by
Introgen. In the event that Introgen decides not to continue the prosecution or
maintenance of any Joint Patent in general or in any particular country,
Introgen will promptly notify Corixa in writing in reasonably sufficient time
for Corixa to assume such prosecution or maintenance, and Introgen will take the
necessary steps and execute the necessary documents to permit Corixa to assume
such prosecution or maintenance. Corixa will have the right but not the
obligation to assume such prosecution or maintenance at its own expense. At the
request of the party performing the prosecution of any patent application under
this Section 6.4(b), the other party will cooperate, in all reasonable ways, in
connection with the prosecution and maintenance of all such patent applications.
Each party will make available to the other party or its respective authorized
attorneys, agents or representatives such of its employees as the other party in
its reasonable judgment deems necessary in order to assist such other party with
the prosecution and maintenance of such patents. Each party will sign or use its
best efforts to have signed at no charge to the other party all legal documents
necessary in connection with such prosecution and maintenance. Upon request,
each party shall advise the other promptly of any action or development in the
prosecution of Joint Patents, including without limitation those involving the
question of scope or the issuance of, the rejection of, an interference
involving, or an opposition to any such patent application or patent.
Additionally, each party shall provide the other party copies of all such
patents and draft patent applications to be filed by such party on Joint
Inventions, and the other party shall have the opportunity to review all such
pending applications and other proceedings and make recommendations to the
filing party concerning them and their conduct.
7. PATENT INFRINGEMENT AND ENFORCEMENT
7.1 Defense. If the development, manufacture, sale or use of any
Licensed Product within the Field pursuant to this Agreement results in a claim,
suit or proceeding alleging patent infringement against Introgen, its Affiliates
or any of its or any of its Affiliates' suppliers, sublicensees, distributors,
or customers (collectively, "Actions"), Introgen shall promptly notify Corixa
and send Corixa copies of all papers that have been served, to the extent
Introgen has the right to do so. As between the parties to this Agreement,
Introgen shall be entitled to control the defense of such Action and Corixa
shall, and Corixa shall cause its Affiliates to, at all times cooperate with
Introgen. In the event of any such Action relating to the portion of the coding
region of the Licensed Gene that codes for any portion of the Gene Product,
Introgen shall have the right to withhold [*] of the amounts otherwise payable
to Corixa under Article 4 with respect to the Licensed Products that are the
subject of such Action, and use the withheld amounts to reimburse
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-11-
<PAGE> 12
up to [*] of the legal defense costs, attorneys' fees and liability
incurred in such Actions. Notwithstanding the foregoing, Introgen agrees to
withhold only that portion of such amounts as may be reasonably necessary to
reimburse amounts in accordance with this Section 7.1. [*]
7.2 Infringement. If during the term of this Agreement, either party
becomes aware of a third party infringement or threatened infringement of any
Licensed Patents, the following provisions shall apply:
(a) Introgen shall have the right, but not the obligation, to
bring suit (itself or through a designee) to enforce the Licensed Patents,
and/or to defend any declaratory judgment action with respect thereto, in each
case with respect to the manufacture, sale or use of a product within the Field;
provided, however, that Introgen shall keep Corixa reasonably informed as to the
defense and/or settlement of such action. Corixa shall have the right to
participate in any such action with counsel of its own choice at its own
expense. Without limiting the provisions of Section 7.3 below, Corixa agrees to
cooperate with Introgen with respect to actions brought by Introgen under this
Section 7.2(a) at Introgen's request and expense. If Introgen decides to
undertake such suit, then [*] received by Introgen in such Action with
respect to infringement that occurred prior to the judgment awarding such
amounts shall be [*].
(b) If Introgen elects not to so initiate an action to enforce
the Licensed Patents against a commercially significant infringement by a Third
Party within the Field, within one hundred eighty (180) days of a request by
Corixa to do so, Corixa may initiate such action at its expense; provided,
however, that Corixa shall keep Introgen reasonably informed as to the defense
and/or settlement of such action, as requested from time to time by Introgen,
and provided that there is not then ongoing a litigation in any country with
respect to the Licensed Technology. Introgen shall have the right to participate
in any such action with counsel of its own choice at its own expense. Introgen
agrees to cooperate with Corixa with respect to actions brought by Corixa under
this Section 7.2(b) at Corixa's request and expense. If Corixa undertakes such
suit, then, after deducting the costs incurred by Corixa in connection with such
Action, Introgen shall be entitled to receive [*] of any amounts received by
Corixa in such action.
(c) Upon Introgen's reasonable request, Corixa agrees to use
reasonable efforts, including, but not limited to, with respect to the exercise
of rights under the Columbia Agreement (as defined in Section 10.1) to cause
Columbia (as defined in Section 10.1) to cooperate in any suit, action or other
proceeding under this Section 7.2, at Introgen's expense.
7.3 Cooperation. In any suit, action or other proceeding in
connection with enforcement and/or defense of the Licensed Patents, the party
not bringing such suit, action or proceeding shall cooperate fully, at the other
party's expense, including without limitation by joining as a party plaintiff
and executing such documents as the other party may reasonably request. Upon the
request of and at the expense of the party bringing such suit, the other party
shall use reasonable efforts to make available at reasonable times and under
appropriate conditions all relevant personnel,
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-12-
<PAGE> 13
records, papers, information, samples, specimens and other similar materials in
such party's possession.
7.4 Settlement. Neither party shall be permitted to settle a legal
action, to the extent such settlement expressly admits that the Licensed Patents
are invalid, without the consent of the other party, which consent shall not be
unreasonably withheld.
8. CONFIDENTIALITY
8.1 Definition of Confidential Information. It is contemplated that
in the course of the performance of this Agreement each party may, from time to
time, disclose proprietary and confidential information to the other
("Confidential Information"). Confidential Information shall include all
disclosures made hereunder or under previous confidentiality agreements between
the Parties in writing and identified as being "Confidential," or if disclosed
orally, which are reduced to writing within thirty (30) days of oral disclosure
and clearly identified as being "Confidential." Introgen and Corixa agree that
this Agreement shall supersede all previous confidentiality agreements between
the parties and all disclosures made under any previous confidentiality
agreements shall be subject to the terms of this Section 8.
8.2 Nondisclosure of Confidential Information. Except to the extent
expressly authorized by this Agreement or otherwise agreed to in writing, during
the term of this Agreement and for a period of five (5) years following the
termination of this Agreement, each party shall take such reasonable measures to
protect the secrecy of and avoid disclosure or use of such Confidential
Information of the other party in order to prevent it from falling into the
public domain or the possession or person other than those persons authorized
under this Agreement to have any such information. Such measures shall include,
but not be limited to, the highest degree of care the receiving party takes to
protect its own proprietary and confidential information of a similar nature,
which shall be no less than reasonable care. Neither party shall disclose or
permit disclosure of any Confidential Information of the other party to third
parties or to employees of the party receiving Confidential Information, other
than directors, officers, employees, consultants and agents who are required to
have the information in order to carry out the terms of this Agreement and who
are bound by appropriate confidentiality restrictions. Each party shall notify
the other in writing of any actual or suspected misuse, misappropriation or
unauthorized disclosure of the other party's Confidential Information that may
come to such party's attention.
8.3 Exceptions. The following information shall not be considered
Confidential Information:
(a) information which was already known to the receiving
party, other than under an obligation of confidentiality to the disclosing
party, at the time of disclosure by the other party;
(b) information which was generally available to the public
or otherwise part of the public domain at the time of its disclosure to the
receiving party;
(c) information which becomes 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;
-13-
<PAGE> 14
(d) information which was disclosed to the receiving party,
other than under an obligation of confidentiality, by a third party who had no
obligation to the disclosing party not to disclose such information; or
(e) information which was developed independently without
reference to Confidential Information received from the other party hereunder as
evidenced by the receiving party's own written records.
8.4 Permitted Usage. Notwithstanding the provisions of Section 8.1
above, the receiving party may use or disclose Confidential Information of the
disclosing party in connection with the exercise of its rights hereunder
(including commercialization and/or sublicensing) or the fulfillment of its
obligations and/or duties hereunder and in filing for, prosecuting or
maintaining any proprietary rights, prosecuting or defending litigation,
complying with applicable governmental regulations and/or submitting information
to tax or other governmental authorities; provided that if the receiving party
is required by law to make any public disclosures of Confidential Information of
the disclosing party, to the extent it may legally do so, it shall give
reasonable advance notice to the disclosing party of such disclosure and shall
use its reasonable efforts to secure confidential treatment of Confidential
Information prior to its disclosure (whether through protective orders or
otherwise).
9. TERM/TERMINATION
9.1 Term and Expiration. Unless earlier terminated pursuant to this
Article 9 the term of this Agreement shall expire upon the expiration of the
last to expire patent of the Licensed Patents. Sections 2.1 and 2.2 shall, with
respect to the Licensed Know-How, survive the expiration (but not an earlier
termination) of this Agreement.
9.2 Termination For Material Breach. In the event of a material
breach of this Agreement, the nonbreaching party shall be entitled to terminate
this Agreement by written notice to the breaching party, if such breach is not
cured within ninety (90) days 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
ninety (90) day period, the nonbreaching party shall not have the right to
terminate this Agreement unless it has been determined in accordance with
Section 13.9 below that this Agreement was materially breached, and the
breaching party fails to comply with its obligations hereunder within ninety
(90) days after such determination.
9.3 Termination for Insolvency. Either party may terminate this
Agreement upon written notice to the other in the event of (a) the appointment,
by a court of competent jurisdiction, of a receiver for all or any substantial
part of the other party's properties, provided that such receiver is not
discharged within sixty (60) days of its appointment; (b) the adjudication of
the other party as bankrupt; or (c) the execution by the other party of an
assignment of substantially all of its assets for the benefit of its creditors.
9.4 Termination Upon Notice. Any provision herein notwithstanding,
Introgen may terminate this Agreement, in its entirety, as to any particular
patent or patent application within the Licensed Patents or as to any particular
Licensed Product, at any time by giving Corixa written
-14-
<PAGE> 15
notice thereof. From and after the effective date of a termination under this
Section 9.4 with respect to a particular patent or application, such patent(s)
and patent application(s) in the particular country shall cease to be within the
Licensed Patents for all purposes of this Agreement, and all rights and
obligations of Introgen with respect to such patent(s) and patent application(s)
shall terminate. From and after the effective date of a termination under this
Section 9.4 with respect to a particular Licensed Product, the Exclusive License
shall terminate with respect to such Licensed Product, and the same shall cease
to be a Licensed Product for all purposes of this Agreement. Upon a termination
of this Agreement in its entirety under this Section 9.4, (a) all rights and
obligations of the parties shall terminate, except as provided in Section 9.9
below and (b) all payments set forth in Sections 4.1, 4.2 and 4.3 shall
accelerate and shall be due and payable to Corixa on the effective date of such
termination.
9.5 Consequences of Early Termination. If this Agreement is
terminated pursuant to Section 9.2 above, each party shall return or destroy,
and certify to such destruction of, all Confidential Information of the other
party, except that each party may maintain one (1) copy for archival purposes
solely to confirm compliance with the provisions of Section 8.
9.6 Survival of Sublicenses. Upon termination of this Agreement for
any reason, any sublicense granted by Introgen hereunder shall survive; provided
that, upon request by Corixa, such sublicensee agrees in writing to be bound by
all the applicable terms and conditions of this Agreement.
9.7 Inclusive Remedy. Except as otherwise provided in this Agreement,
each party shall have the rights and remedies set forth herein in addition to
any other remedies which it may have under applicable statutory or common law.
Each party shall have the sole discretion to determine which of its rights and
remedies, if any, it shall pursue and such party shall not be required to
exhaust any of its other rights or remedies before pursuing any one of the
rights and remedies set forth in this Agreement.
9.8 Inventory. Upon any termination of this Agreement, Corixa hereby
grants Introgen a license to sell, or otherwise dispose of, any of Introgen's or
its Affiliates' inventories of Licensed Products in process of manufacture, in
use or in stock that have not previously been sold on the date of such
termination, provided that Introgen shall make all applicable royalty or other
payments on such sales pursuant to Section 4 above.
9.9 Survival. Expiration or early termination of this Agreement shall
not relieve either party of its obligations for payments that were due or
accrued prior to expiration or early termination, included, but not limited to,
any payments due or accrued. In addition, the provisions of Sections 1, 6, 8, 9,
10, 11 and 13 shall survive any expiration or early termination of this
Agreement.
10. REPRESENTATIONS AND WARRANTIES
10.1 By Introgen. Introgen represents and warrants to Corixa that (a)
Introgen has full right and authority to enter into this Agreement, and that
this Agreement is a valid and binding obligation of Introgen enforceable in
accordance with its terms, and (b) Introgen shall use its best commercial
efforts to ensure that all of the Licensed Products manufactured by it or on its
behalf comply with all relevant legislation in force from time to time in each
country where the Licensed
-15-
<PAGE> 16
Products are manufactured or sold, including but not limited to the requirements
of any relevant Regulatory Authority or legislation requiring that the Licensed
Products be manufactured in accordance with current good manufacturing
practices. Introgen acknowledges that the Exclusive License includes sublicenses
under technology that has been licensed to Corixa pursuant to the Columbia
Agreement, and Introgen represents, warrants and covenants that it will comply
with Section 12 of the Columbia Agreement.
10.2 By Corixa. Corixa warrants and represents to Introgen that: (a)
it has and will maintain the full right and authority to enter into this
Agreement and grant the rights and licenses granted herein, subject to the
provisions of the Columbia Agreement; (b) it has not previously granted and will
not grant any rights or licenses in conflict with the rights and licenses
granted herein; (c) to its knowledge, no action, suit or claim has been
initiated or threatened with respect to the Licensed Technology that would call
into question Corixa's right to enter into and perform its obligations under
this Agreement; (d) Corixa has provided to Introgen true, correct and complete
copies of the Columbia Agreement, except for the redaction of financial terms
that do not affect Introgen's rights or obligations hereunder; (e) the Columbia
Agreement is in full force and effect as of the Effective Date and grants to
Corixa the right and power to grant the rights and licenses granted to Introgen
herein, subject to Introgen's obligation pursuant to Section 10.1 to comply with
all applicable terms and conditions of the Columbia Agreement; (f) to Corixa's
knowledge, neither Corixa, nor Columbia is in breach of any provision of the
Columbia Agreement, and Corixa has neither given to, nor received from, Columbia
notice of any such breach and there is no dispute pending that relates to the
Columbia Agreement; (g) as of the Effective Date, except for those patents and
patent applications set forth on Exhibit 1.9 (including any foreign counterparts
of such patent applications and patents and all divisions, continuations,
continuations-in-part, patents of addition, substitutions, registrations,
reissues, reexaminations or extensions of any kind with respect to any of the
foregoing), neither Corixa nor any of its Affiliates control any patent or
patent application claiming or disclosing inventions relating to the Licensed
Gene or the Gene Products or that would reasonably be expected to cover the
commercialization of a product within the Field incorporating the Licensed Gene;
and (h) to Corixa's knowledge as of the Effective Date, except as set forth on
Exhibit 10.2 attached hereto, the practice of the Licensed Patents within the
Field will not infringe any intellectual property right of a third party, and
Exhibit 10.2 lists all patents and patent applications of which, as of the
Effective Date, Corixa is aware that Corixa expects to have a direct material
adverse effect on Introgen's ability to commercialize a product within the Field
incorporating the Licensed Gene; and (i) as of the Effective Date, Corixa is not
aware of any reason that would reasonably be expected to preclude the issuance
as a valid patent the pending claims of patent applications within the Licensed
Patents, or that would reasonably be expected to render invalid or unenforceable
any claims of an issued patent within the Licensed Patents.
10.3 Extent of Warranties. EXCEPT AS SPECIFICALLY PROVIDED IN THIS
AGREEMENT, NEITHER CORIXA NOR INTROGEN MAKES ANY WARRANTIES OF ANY KIND, WHETHER
EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, ANY IMPLIED WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
-16-
<PAGE> 17
11. INDEMNIFICATION
11.1 Indemnification by Corixa. Corixa shall defend, indemnify and
hold Introgen and its directors, officers and employees harmless from and
against any and all liabilities, damages, losses, costs or expenses (including
legal fees) resulting from claims, actions, suits or proceedings brought by
third parties arising out of or resulting from Corixa's (a) material breach of
its obligations hereunder, (b) breach of its representations and warranties set
forth in Section 10.2 above or (c) gross negligence or willful misconduct.
11.2 Indemnification by Introgen. Introgen shall defend, indemnify and
hold Corixa and Columbia and their respective directors, officers and employees
harmless from and against any and all liabilities, damages, losses, costs or
expenses (including legal fees) resulting from claims, actions, suits or
proceedings brought by third parties arising out of or resulting from Introgen's
(a) material breach of its obligations hereunder, (b) breach of its
representations and warranties set forth in Section 10.1 above, (c) gross
negligence or willful misconduct, (d) manufacture, packaging, use, sale, rental
or lease of Licensed Products by or under the authority of Introgen, even if
altered for use for a purpose not intended, or (e) use of the Licensed
Technology by or under the authority of Introgen.
11.3 Conditions of Indemnification. The agreements of indemnity set
forth in Sections 10.1 and 10.2 above are conditioned upon the indemnified
party's obligation to: (i) advise the indemnifying party of any claim or suit,
in writing, within sixty (60) days after the indemnified party has received
notice of such claim or suit, and (ii) assist the indemnifying party and its
representatives in the investigation and defense of any claim and/or suit for
which indemnification is provided. This agreement of indemnity shall not be
valid as to any settlement of a claim or suit or offer of settlement or
compromise without the prior written approval of the indemnifying party.
11.4 Insurance. No later than the initiation of the first clinical
trial for a Licensed Product and continuing during the term of this Agreement
and for five (5) years thereafter, Introgen shall, at its sole cost and expense,
obtain and keep in force a policy of comprehensive general liability insurance
with bodily injury, death and property damage limits of [*] per occurrence and
[*] in the aggregate, including product liability coverage and such additional
provisions or coverage as is reasonable and customary under the circumstances.
Such insurance shall include Corixa and Columbia and their respective trustees,
directors, officers, employees and agents as additional insureds, and shall
provide that the insurer will give Corixa not less than thirty (30) days advance
notice of any material change in or cancellation of coverage. At Corixa's
request, Introgen shall furnish a certificate of insurance evidencing the
insurance required hereunder.
11.5 No Consequential Damages. NOTWITHSTANDING ANY OTHER PROVISION OF
THIS AGREEMENT, NEITHER PARTY SHALL BE LIABLE TO THE OTHER WITH RESPECT TO THE
SUBJECT MATTER OF THE AGREEMENT UNDER ANY CONTRACT, NEGLIGENCE, STRICT LIABILITY
OR OTHER LEGAL OR EQUITABLE THEORY FOR (A) ANY CONSEQUENTIAL, INCIDENTAL,
SPECIAL OR INDIRECT DAMAGES WHATSOEVER, (B) COST OF PROCUREMENT OF SUBSTITUTE
GOODS, TECHNOLOGY OR SERVICES OR (C) LOSS OF PROFIT OR ANTICIPATED BUSINESS.
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-17-
<PAGE> 18
12. PATENT PROSECUTION; PAYMENT OF PATENT EXPENSES
12.1 Prosecution and Payment. The parties acknowledge and agree that
all patent applications relating to the Licensed Technology will be prepared,
filed and prosecuted by Columbia upon the terms and subject to the conditions of
the Columbia Agreement. All costs incurred by Corixa prior to the Effective Date
with respect to the Licensed Patents are the sole responsibility of Corixa, and
all costs incurred by Corixa during the term of this Agreement pursuant to the
Columbia Agreement with respect to the reimbursement of patent expenses incurred
by Columbia are the sole responsibility of Introgen to the extent such Licensed
Patents pertain to the Field. To the extent that Corixa has the right to
prosecute Licensed Patents within the Field under the Columbia Agreement or
otherwise and Corixa reasonably elects to do so (which election Corixa shall not
withhold unreasonably if Introgen so requests), Introgen shall bear all expenses
incurred in connection therewith. In any event, Corixa agrees to keep Introgen
fully informed on a timely basis with respect to the prosecution and
maintenance, and any proceedings (including without limitation any interference
or opposition proceedings, or the like) with respect to, the Licensed Patents.
Notwithstanding the foregoing, Introgen shall be responsible for all costs
incurred by Corixa from the Effective Date through August 20, 1999 on Licensed
Patents in Exhibit 1.9 to the extent necessary to effect the filing of
divisionals and continuations within the Field during such time.
12.2 [*]
13. MISCELLANEOUS
13.1 Notices. All notices, requests or other communications required
or permitted to be given under this Agreement to any party shall be in writing
and shall be deemed to have been sufficiently given when delivered by personal
service or sent by registered mail, telex or facsimile, to the recipient
addressed as follows:
(a) If to Corixa:
Corixa Corporation
1124 Columbia Street
Suite 200
Seattle, WA 98104
Facsimile: (206) 754-5762
Attention: President
Director of Legal Affairs
With a copy to:
William W. Ericson
Venture Law Group
4750 Carillon Point
Kirkland, WA 98033
Facsimile: (425) 739-8750
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-18-
<PAGE> 19
(b) If to Introgen:
Introgen Therapeutics, Inc.
301 Congress Avenue
Suite 1850
Austin, TX 78701
Facsimile: (512) 320-4166
Attn: Vice President, Corporate Development
With a copy to:
Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, CA 94304
Attn: Kenneth A. Clark
Facsimile: (650) 493-6811
All such communications shall be deemed to be effective on the day on which
personally served, or, if sent by registered mail, on the fourth day following
the date presented to the postal authorities for delivery to the other party
(the cancellation date stamped on the envelope being evidence of the date of
such delivery), or if by telex or facsimile, on the telex or facsimile date.
Either party may give to the other written notice of change of address, in which
event any communication shall thereafter be given to such party as above
provided at such changed address.
13.2 Publication. If either party shall desire to publish or present,
orally or in writing, including, without limitation at symposia, national or
regional professional meetings, or to publish in journals or other publications,
any Confidential Information of the other party derived from or in anyway
related to its activities under this Agreement, including without limitation
Confidential Information of the other party relating to the Licensed Patents or
the Licensed Know-How, such party shall first provide the other party with
copies of the proposed presentation or publication materials at least sixty (60)
days in advance of the presentation or publication date. Within thirty (30) days
after its receipt of such information, the party receiving such materials shall
advise the other party whether it consents to the disclosure of the submitted
information. If the party receiving the materials does not provide its written
consent thereto, the party desiring to publish or present shall modify the
proposed presentation or publication to eliminate the other party's Confidential
Information or cancel its plans for publications. The parties agree that
publication can be delayed for an appropriate period of time in the event that
either party reasonably determines that it needs time to seek patent or other
intellectual property counsel and/or protection of its Confidential Information.
13.3 Assignment. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their successors and assigns. Notwithstanding
the foregoing, neither party hereto shall have the right to assign any of its
rights or obligations under this Agreement without the prior written consent of
the other party; provided, however, that either party may assign this Agreement
to either (a) a party that succeeds to all or substantially all of the assigning
party's business or assets involving the Licensed Technology, whether by sale,
merger, acquisition, other consolidation of such party with or into another
party, operation of law or otherwise, so long as such assignee or transferee
agrees in writing to be bound by the terms and conditions of this Agreement,
-19-
<PAGE> 20
or (b) an entity that is an Affiliate of the assigning party at the time of such
assignment. Notwithstanding the foregoing, upon a termination of the Columbia
Agreement, the rights and obligations of Corixa under this Agreement shall be
assigned to Columbia. Upon a permitted assignment of this Agreement by a party,
all references herein to such party shall be deemed a reference to the assignee.
13.4 Waivers. The failure of a party hereto to enforce any provision
of this Agreement shall not be construed as a waiver of other breaches of the
same nature or other covenants or conditions of this Agreement.
13.5 No Agency, Etc. This Agreement is not intended to create, nor
should it be construed as creating, an agency, joint venture, partnership or
employer-employee relationship between Introgen and Corixa. Each party shall act
solely as an independent contractor and shall have no right to act for or to
sign the name of or bind the other party in any way or to make quotations or to
write letters under the name of the other party or to represent that the party
is in any way responsible for any acts or omissions of such party.
13.6 Force Majeure. Introgen and Corixa shall not be liable for loss,
damage, detention or delay resulting from any cause whatsoever beyond its
reasonable control or resulting from a force majeure, including, without
limitation, earthquake, fire, flood, strike, lockout, civil or military
authority, insurrection, war, embargo, container or transportation shortage or
delay of suppliers due to such causes, and delivery dates shall be extended to
the extent of any delays resulting from the foregoing or similar causes. The
party so affected shall give prompt notice to the other party of such cause, and
shall take whatever reasonable steps are necessary to relieve the effect of such
cause as rapidly as reasonably possible. The party giving such notice shall
thereupon be excused from such of its obligations hereunder as it is thereby
disabled from performing for so long as it is so disabled and for thirty (30)
days thereafter, whichever is longer; provided, however, that such affected
party commences and continues to take reasonable and diligent actions to cure
such cause.
13.7 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Washington, without regard to its
principles of conflicts of laws.
13.8 Public Announcements. During the term of this Agreement, the
parties agree to consult with each other before issuing any press release or
making any public statement with respect to this Agreement or any other
transaction contemplated herein and, except as may be required by applicable law
or any listing agreement with any national securities exchange, shall not issue
any such press release or make any such public statement prior to obtaining the
written consent of the other party.
13.9 Disputes and Alternative Dispute Resolution. If Corixa and
Introgen are unable to resolve any dispute, controversy or claim arising out of
or in relation to this Agreement or the breach, termination or invalidity hereof
(each, a "Dispute"), either party may, by written notice to the other, have such
Dispute referred to the Chief Executive Officers of the respective parties for
attempted resolution. The Chief Executive Officers of the respective parties
shall attempt in good faith within thirty (30) days after such notice is
received to resolve such Dispute. Any Dispute that
-20-
<PAGE> 21
cannot be settled amicably by agreement of the parties pursuant to the preceding
sentence shall be finally settled by binding arbitration in accordance with the
Licensing Rules of the American Arbitration Association ("AAA") then in force by
three (3) arbitrators appointed in accordance with said rules, unless the
parties agree that such arbitration shall be conducted by a single arbitrator.
If arbitration is initiated by Corixa, the arbitration shall occur in Austin,
Texas, and, if arbitration is initiated by Introgen, the arbitration shall occur
in Seattle, Washington. The decision and/or award rendered shall be written,
final, non-appealable and binding on both parties. The judgment rendered by the
arbitrator(s) shall include costs of arbitration, reasonable attorneys' fees and
reasonable costs for any expert and other witnesses. Nothing in this Agreement
shall be deemed as preventing either party from seeking injunctive relief (or
any other provisional remedy) from any court having jurisdiction over the
parties and the subject matter of the dispute as necessary to preserve either
party's name, proprietary information, trade secrets, know-how or any other
proprietary rights. Judgment upon the award may be entered in any court having
jurisdiction, or application may be made to such court for judicial acceptance
of the award and/or an order of enforcement as the case may be.
13.10 Severability. If any provision of this Agreement is finally held
to be invalid, illegal or unenforceable by a court or agency of competent
jurisdiction, that provision shall be severed or shall be modified by the
parties so as to be legally enforceable (and to the extent modified, it shall be
modified so as to reflect, to the extent possible, the intent of the parties)
and the validity, legality and enforceability of the remaining provisions shall
not be affected or impaired in any way.
13.11 Amendments. Except as otherwise expressly provided herein,
neither this Agreement nor any provision hereof may be amended or waived except
by a written instrument signed by the party against whom enforcement of the
amendment or waiver is sought.
13.12 Headings. The headings of the paragraphs and subparagraphs of
this Agreement have been added for the convenience of the parties and shall not
be deemed a part hereof.
13.13 Counterparts. This Agreement may be executed in any number of
counterparts, all of which together shall constitute a single Agreement.
13.14 Final Agreement. This Agreement is the agreement of the parties
hereto with respect to the subject matter hereof and supersedes all other such
prior agreements and understandings, including without limitation the Prior
Agreement.
-21-
<PAGE> 22
IN WITNESS WHEREOF, each of the parties has caused this Exclusive License
Agreement to be executed by its duly authorized representative.
CORIXA CORPORATION INTROGEN THERAPEUTICS, INC.
By: By:
---------------------------------- -------------------------------
Name: Name:
-------------------------------- -----------------------------
Title: Title:
------------------------------- ----------------------------
CHINOOK CORPORATION
By:
----------------------------------
Name:
-------------------------------
Title:
-------------------------------
-22-
<PAGE> 23
EXHIBIT A
REAGENTS TO BE SUPPLIED TO INTROGEN
1. [*]
2. [*]
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE> 24
EXHIBIT B
TERMS AND CONDITIONS OF PURCHASE AND SUPPLY OF REAGENTS
In accordance with the terms and conditions of the Exclusive License
Agreement to which this Exhibit A is attached (the "Agreement"), any Licensed
Technology provided by Corixa to Introgen shall be subject to the terms and
conditions set forth below. Unless otherwise defined herein, all capitalized
terms used herein shall have the respective meanings given them in the
Agreement.
1. Any other terms provided by Introgen in connection with any purchase order,
the receipt or acceptance of the reagents hereunder, or otherwise, which are
different than, or in addition to, the terms hereof are hereby objected to by
Corixa. Shipment of the reagents hereunder shall not constitute acceptance by
Corixa of any conflicting terms and conditions proposed by Introgen.
2. All shipments of reagents hereunder shall be F.O.B. Corixa's place of
manufacture and Introgen shall bear the risk of loss and cost of transportation
of such reagents.
3. Unless otherwise expressly agreed by Corixa in writing, Introgen shall use
the reagents only in accordance with the terms and conditions of the Agreement.
4. THE REAGENTS ARE SUPPLIED HEREUNDER "AS IS" AND CORIXA HEREBY DISCLAIMS ANY
AND ALL REPRESENTATIONS AND WARRANTIES WITH REGARD TO THE REAGENTS, EXPRESS OR
IMPLIED, AND SPECIFICALLY DISCLAIMS ANY OTHER EXPRESS OF IMPLIED WARRANTIES,
INCLUDING ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE OR USE AND ANY OTHER STATUTORY WARRANTIES OR ANY WARRANTY OF
PATENTABILITY OR NONINFRINGEMENT.
5. In the event of any conflict between these terms and conditions of this
Exhibit A and the Agreement, the terms and conditions of the Agreement shall
govern.
<PAGE> 25
EXHIBIT C
RESEARCH PROGRAM
[*]
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE> 26
EXHIBIT 1.9
LICENSED PATENTS
<PAGE> 27
EXHIBIT 10.2
THIRD PARTY PATENTS
[*]
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE> 1
EXHIBIT 10.27(a)
EVALUATION AND EXCLUSIVE OPTION AGREEMENT
This Evaluation and Exclusive Option Agreement (the "Agreement") is
made as of _______, 1998 (the "Effective Date") by and between LXR
Biotechnology, Inc., a Delaware corporation, having a place of business at 1401
Marina Way South, Richmond, CA 94804 ("LXR") and Introgen Therapeutics, Inc., a
Delaware corporation, having a place of business at 301 Congress Avenue, suite
2025, Austin, TX 78701 ("Introgen").
BACKGROUND
A. LXR owns certain Patent Rights (as defined below) relating to the
"bak" gene;
B. Introgen desires to evaluate the Patent Rights and Related
Technology (as defined below) to determine whether Introgen desires to obtain an
exclusive license under the Patent Rights and Related Technology subject to the
terms and conditions set forth in the License Agreement Outline of Terms in
Exhibit A attached hereto and made a part hereof (the "Term Sheet"); and
C. LXR desires to grant to Introgen an option to obtain an exclusive
license under the Patent Rights and Related Technology, all on the terms and
conditions set forth herein below.
NOW, THEREFORE, in consideration of the mutual covenants and promises
herein contained, the parties hereto agree as follows:
1. DEFINITIONS. As used in this Agreement, the following capitalized
terms shall have the meanings indicated:
1.1 "Evaluation Period" shall mean the period commencing on the
Effective Date and ending [*] after Introgen's receipt of Samples hereunder.
1.2 "Field" shall mean [*]. For the purposes of this Agreement, the
"bak" gene shall include all fragments, derivatives and splice variants thereof;
a "derivative" shall mean a nucleotide sequence directly derived from the "bak"
gene claimed in the Existing Patent Rights defined in Section 1.5.1 (i.e., the
"bak" gene described in Exhibit B hereto and made a part hereof), the gene
product of which has a apoptotic activity substantially similar to that of the
protein encoded by the gene described in Exhibit B.
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE> 2
1.3 "License Agreement" shall have the meaning set forth in the
provisions of Article 5 below.
1.4 "Patented Product" shall mean any product containing or
encompassing the "bak" gene, the manufacture, use of sale of which would, but
for the license granted under the License Agreement, infringe a Valid Claim (as
that term is defined in Exhibit A) of the Patent Rights in the country where it
is sold. "Non-Patented Product" shall mean any product containing or
encompassing the "bak" gene that embodies Related Technology, but the
manufacture, formulation or use thereof is not the subject of any patent
application or patent, or any issued patents covering such product have been
abandoned or declared invalid in a non-appealable order. For the purposes of
this Agreement, a Patented Product or Non-Patented Product shall be individually
referred to herein as a "Licensed Product", and collectively referred to herein
as "Licensed Products".
1.5 "Patent Rights" shall mean any and all rights in:
1.5.1 all worldwide patents and patent applications claiming the
subject matter claimed in U.S. Patent Application numbers: [*], filed [*] and
[*], field [*], and in U.S. Patent Number [*], and any foreign counterparts of
the foregoing, existing as of the Effective Date (the "Existing Patent Rights");
and
1.5.2 all divisions, continuations, continuations-in-part,
foreign counterparts, patents of addition, and substitutions of, and all patents
issuing on any of the foregoing or of any patent application which claim
priority from any Existing Patent Rights, together with all registrations,
reissues, reexaminations, supplementary protection certificates or extensions of
any kind with respect to any of such patents.
1.6 "Related Technology" shall, subject to the provisions of Section
1.2 (including the exclusions and limitations on the Field set forth therein),
mean all technical information, know-how, processes, procedures, compositions,
methods, techniques, data or other subject matter owned by LXR as of the
Effective Date, and relating to the manufacture, formulation, use or sale of
Licensed Products, and that are necessary or useful for the exercise of the
rights granted under the License Agreement.
2. EVALUATION.
2.1 During the Evaluation Period, Introgen agrees to use
commercially reasonable efforts to evaluate the Patent Rights and Related
Technology to determine whether it desires to enter into the License Agreement
as contemplated in Article 5 below (the "Evaluation"). Introgen's Evaluation
shall be limited to the conduct of certain studies [*] using samples of the
"bak" gene that are provided by LXR (the "Samples") for purposes of assessing
[*] of the "bak" gene.
2.2 If Introgen formulates, modifies and/or tests the Samples in any
way, or conducts any experiments using the Samples, Introgen shall submit all
resulting information and/or test results to LXR. All right, title and interest
in and to all inventions solely made by Introgen or its agents or employees
resulting from the formulation, modification, testing or other experimentation
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-2-
<PAGE> 3
with the Samples pursuant to the Evaluation under this Agreement, and any and
all intellectual property rights arising therefrom, shall be owned by Introgen.
All right, title and interest in and to all inventions made jointly by LXR and
Introgen and/or their respective agents or employees resulting from the
formulation, modification, testing or other experimentation with the Samples
pursuant to the Evaluation under this Agreement, and any and all intellectual
property rights arising therefrom, shall be jointly owned by LXR and Introgen.
In that connection, each party shall require and cause its employees and agents
to assign to it any and all inventions made during and in connection with the
Evaluation.
2.2.1 Introgen hereby agrees to grant to LXR, without payment of
any consideration, an irrevocable, perpetual, transferable, sublicenseable,
royalty-free, non-exclusive, worldwide license under any Introgen Improvement
solely for purposes of manufacturing, selling, importing and using the "bak"
gene for applications outside of the Field. For purposes of the foregoing,
"Introgen Improvement" shall mean any invention solely owned by Introgen (as set
forth in Section 2.2 above) solely consisting of compositions of the "bak" gene
(i.e., fragments, derivatives and splice variants of the "bak" gene described in
Exhibit B or any Patent Rights) or methods of using the "bak" gene (including
fragments, derivatives and splice variants thereof) and all intellectual
property rights (including patent applications and patents) therein. For
avoidance of doubt, Introgen Improvement shall not include subject matter made
outside of the Evaluation. Notwithstanding the foregoing, in the event that
Introgen does not exercise the Option under Section 5 of this Agreement, or if
LXR and Introgen do not enter into the License Agreement, or if the License
Agreement is terminated (but not upon expiration) pursuant to its terms, the
foregoing license shall not be limited to the Field (i.e., in such case, the
words "for applications outside the Field" above shall be replaced with "for all
applications").
2.2.2 In addition to the rights granted to LXR under Section
2.2.1 above, to the extent that Introgen has the right to do so Introgen hereby
agrees to grant to LXR an option to obtain an exclusive, transferable,
sublicenseable, worldwide license under any Introgen Improvement solely for
purposes of manufacturing, selling, importing and using the "bak" gene for
applications outside of the Field; provided, however, in the event that Introgen
does not exercise the Option under Section 5 of this Agreement, or if LXR and
Introgen do not enter into the License Agreement, or if the License Agreement is
terminated (but not upon expiration) pursuant to its terms, such license shall
not be limited to the Field (i.e., in such case, the words "for applications
outside the Field" above shall be replaced with "for all applications"). After
receipt of notification from Introgen of such an Introgen Improvement, LXR shall
notify Introgen within 60 days whether it desires to exercise the foregoing
option with respect to the particular Introgen Improvement. If LXR so elects the
parties shall negotiate in good faith for a period of [*] the terms and
conditions of an agreement including such license, including milestone and
royalty payments to Introgen; provided, however, such royalty to Introgen shall
not exceed the royalty rates set forth in the "Royalty" section of Exhibit A
hereto and such rates shall be subject to reduction to the same extent as
provided for in the "Royalty" section of Exhibit A.
2.2.3 With respect to inventions and intellectual property
rights that are jointly owned by LXR and Introgen pursuant to Section 2.2, it is
agreed that unless otherwise expressly provided for herein or in the License
Agreement, neither party shall have an obligation to
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-3-
<PAGE> 4
account to the other party for profits, or to obtain the approval of the other
party to license or exploit such jointly-owned intellectual property rights, by
reason of such joint ownership thereof.
2.2.4 Introgen agrees to provide LXR a copy of all analyses,
compilations, studies or other documents containing the Confidential Information
(as defined below) of LXR prepared by or on behalf of Introgen hereunder for use
in exercising its rights under Sections 2.2.1 and 2.2.2 above. In addition, in
the event that Introgen does not exercise the Option under Section 5 of this
Agreement, or if LXR and Introgen do not enter into the License Agreement, each
party agrees to promptly return to the other party such other parties
Confidential Information.
2.3 Introgen shall notify LXR promptly in writing as soon as
Introgen determines not to exercise the Option (as defined in Section 5) and
further agrees to provide LXR, upon LXR's request, in reasonable detail, the
basis for such determination. This Agreement will terminate automatically upon
the giving of such notice by Introgen and the provisions of Section 8.3 shall
apply.
3. NO IMPLIED LICENSE. Nothing in this Agreement shall be construed as
a grant to Introgen of any license, express or implied, under any of LXR's
intellectual property rights (including but not limited to Patent Rights and
Related Technology) relating to the "bak" gene or any Licensed Products or their
manufacture, formulation, use or sale.
4. CONSIDERATION. In consideration of the Option granted by LXR to
Introgen hereunder, Introgen agrees to pay to LXR a non-refundable fee of [*].
5. OPTION TO ENTER LICENSE AGREEMENT. LXR hereby grants to Introgen an
exclusive option (the "Option") exercisable at any time during the Evaluation
Period to enter into a license agreement with LXR pursuant to which LXR shall
grant to Introgen an exclusive, worldwide license, with the right to grant
sublicenses subject to LXR's approval as set forth in Exhibit A, under the
Patent Rights and Related Technology to make, have made, use and sell Licensed
Products, practice any method, process or procedure and otherwise exploit the
Patent Rights and Related Technology, and to have any of the foregoing performed
on its behalf by a third party, in each case solely for applications within the
Field (the "License Agreement"), subject to the terms and conditions set forth
in the Term Sheet and such other additional terms and conditions agreed to by
the parties in the License Agreement.
5.1 Exercise of the Option. Introgen may exercise the foregoing
Option at any time during the Evaluation Period by providing written notice to
LXR declaring Introgen's desire to commence good faith negotiations to enter
into the License Agreement. If Introgen so elects to exercise the Option, the
parties agree to promptly commence negotiations in good faith of the License
Agreement for a period of [*] days.
5.2 Exclusive Negotiation. It is agreed that, unless this Agreement
is terminated by Introgen under Section 8.2 before the end of the Evaluation
Period, during the Evaluation Period (until such time that Introgen exercises
the Option) and during the [*] day period described in Section 5.1, LXR
shall not engage in discussions or negotiate with any third party regarding the
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-4-
<PAGE> 5
licensing of rights with respect to the "bak" gene for use in the Field, nor
shall LXR enter into any agreement with a third party regarding use of the "bak"
gene in the Field.
5.3 Arbitration. In the event that LXR and Introgen do not enter
into the License Agreement within [*] after Introgen's exercise of the Option
under Section 5.1, Introgen shall have the right to (i) initiate a binding
arbitration proceeding, pursuant to which the terms and conditions of the
License Agreement shall be established by such panel of three (3) arbitrators in
accordance with the Term Sheet by notifying LXR in writing within thirty (30)
days after the end of such [*] period; or (ii) allow the Option to lapse by so
notifying LXR in writing within such thirty (30) day period. Any arbitration
under this Section 5.3 shall be held in Palo Alto, California under the
then-current Commercial Rules of the American Arbitration Association by a panel
of three (3) arbitrators appointed as set forth below. The arbitrators shall
have significant experience in the area of the research and development of
biotechnology products. Any judgment upon the award rendered by the arbitrators
may be entered in any court having jurisdiction thereof. In any arbitration
pursuant to this Section 5.3, the award shall be rendered by a majority of the
three (3) arbitrators, one (1) of whom shall be appointed by each party and the
third of whom shall be appointed by mutual agreement of the two (2)
party-appointed arbitrators. In the event of failure of a party to appoint an
arbitrator within thirty (30) days after commencement of the arbitration
proceeding or in the event of failure of the two (2) party-appointed arbitrators
to agree upon the appointment of the third arbitrator within sixty (60) days
after commencement of the arbitration proceeding, such arbitrator shall be
appointed by the American Arbitration Association in accordance with the
Commercial Rules. The arbitrators shall apply the laws of the State of
California in any such arbitration. The costs of the arbitration, including
administrative fees and fees of the arbitrator, shall be shared equally by the
parties.
6. CONFIDENTIALITY.
6.1 Confidential Information. Except as provided herein, each party
shall maintain in confidence, and shall not (a) use for any purpose except as
explicitly provided in Section 2 of this Agreement or (b) disclose to any third
party, any information, data or materials (whether of a business or technical
nature and in whatever form) disclosed by the other party in writing and marked
"Confidential" or that is disclosed orally and confirmed in writing as
confidential within forty-five (45) days following such disclosure
(collectively, "Confidential Information"). It is agreed that Samples and other
materials provided by LXR to Introgen shall be deemed Confidential Information
of LXR. Introgen shall not disclose any Confidential Information of LXR to its
directors, officers, employees or agents except on a need-to-know basis and only
under a similar binder of non-use and non-disclosure, subject to Section 2. It
is agreed that the furnishing of Confidential Information by one party to the
other party hereunder does not and shall not constitute any grant, option or
license to the receiving party under any patent or other rights now or hereafter
held by the disclosing party with respect to such Confidential Information.
Confidential Information shall not include any information that is: (i) already
known to the receiving party at the time of disclosure hereunder (other than
from the other party hereto) as demonstrated by its written records, (ii) now or
hereafter becomes publicly known other than through acts or omissions of the
receiving party, or anyone to whom the receiving party disclosed such
information, (iii) disclosed to the receiving party by a third party under no
obligation of confidentiality to the disclosing party or any other party, or
(iv) subject to Section 2.2, independently developed by the receiving party
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-5-
<PAGE> 6
without reliance on the Confidential Information of the disclosing party as
shown by its written records.
6.2 Permitted Usage. The receiving party may use or disclose
Confidential Information of the disclosing party to the extent necessary to
exercise its rights hereunder (including Introgen's performing the Evaluation or
exercising its rights under the License Agreement) or in filing for, prosecuting
or maintaining any proprietary rights (including patents), prosecuting or
defending litigation, or complying with applicable governmental regulations;
provided, however, if the receiving party is required by law or a court of
competent jurisdiction to make any public disclosures of Confidential
Information of the disclosing party, to the extent it may legally do so, it will
give reasonable advance notice to the disclosing party of such disclosure and
will use its reasonable good faith efforts, or, at the option of the disclosing
party, enable the disclosing party, to secure confidential treatment of
Confidential Information prior to its disclosure (whether through protective
orders or otherwise). It is understood that in the event the License Agreement
is entered into by and between LXR and Introgen, Introgen shall have the right
to continue to use Confidential Information of LXR to exercise its rights
thereunder as to be set forth therein.
6.3 Prohibited Actions. Subject to Section 6.1 above, Introgen
hereby agrees to consult with LXR prior to filing any patent application
containing any claim the subject matter of which contains, is based upon, or is
derived from the Confidential Information of LXR. In addition, the parties agree
to consult with respect to the filing and prosecution of patent applications
claiming inventions that are jointly owned under Section 2.2 above. Moreover,
Introgen shall not use Confidential Information of LXR for any purpose or in any
manner which would constitute a violation of any laws or regulations of the
United States.
6.4 Injunctive Relief. The parties recognize that any breach of this
Article 6 would irreparably harm the disclosing party, and that the disclosing
party is thereby entitled to equitable relief (including without limitation,
injunctions) with respect to any such breach or potential breach by the
receiving party, in addition to any other remedies.
6.5 Retroactive Effect. This Article 6 shall be made retroactive to
March 7, 1998, the date on which the parties commenced their discussions
regarding the subject matter of this Agreement.
7. WARRANTIES.
7.1 LXR. LXR hereby represents and warrants to Introgen that as of
the Effective Date (i) it has the right to enter into this Agreement and grant
the Option granted herein, (ii) it has not granted and will not grant during the
term of this Agreement rights in or to the Patent Rights or Related Technology
that would prevent LXR from entering into the License Agreement; and (iii) to
its knowledge, there are no claims of third parties that would prohibit or
restrict LXR from granting to Introgen the Option contemplated hereunder.
7.2 Introgen. Introgen hereby represents and warrants to LXR that
(i) it has the right to enter into this Agreement, and (ii) to its knowledge,
there are no claims of third parties that would prohibit or restrict Introgen's
ability to perform its obligations under this Agreement. Introgen
-6-
<PAGE> 7
further warrants that no use will be made of any information, data or Samples
provided by LXR to Introgen under this Agreement other than for purposes of
Evaluation of the "bak" gene through the conduct of [*] in the laboratory
setting only as provided under Section 2, and such use shall be in accordance
with all applicable laws and regulations, including without limitation, current
Good Laboratory Practices (as applicable), and that no studies, tests or trials
using such information, data or Samples will be used in or for humans in the
course of the Evaluation.
7.3 Disclaimer of Warranties and Limitation of Liability. EXCEPT AS
PROVIDED IN THIS ARTICLE 7, NEITHER PARTY MAKES ANY WARRANTIES OR
REPRESENTATIONS (EXPRESS, IMPLIED, STATUTORY OR OTHERWISE) WITH RESPECT TO THE
SUBJECT MATTER HEREOF INCLUDING, BUT NOT LIMITED TO ANY PATENT, TRADEMARK,
SOFTWARE, NON-PUBLIC OR OTHER DATA OR INFORMATION, OR TANGIBLE RESEARCH PROPERTY
INCLUDING SAMPLES. LXR SPECIFICALLY DISCLAIMS ANY AND ALL IMPLIED WARRANTIES OR
REPRESENTATIONS OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. NOTHING
IN THIS AGREEMENT SHALL BE CONSTRUED AS A REPRESENTATION MADE OR WARRANTY GIVEN
BY LXR: WITH REGARD TO THE UTILITY OF ANY SAMPLES; THE SCOPE, VALIDITY OR
ENFORCEABILITY OF THE PATENT RIGHTS; THAT ANY PATENT WILL ISSUE BASED UPON ANY
PENDING PATENT APPLICATION INCLUDED IN THE PATENT RIGHTS; OR THAT THE EXERCISE
OF THE PATENT RIGHTS OR USE OF THE RELATED TECHNOLOGY WILL NOT INFRINGE THE
PATENT OR PROPRIETARY RIGHTS OF ANY OTHER THIRD PARTY. TO THE EXTENT SAMPLES ARE
FURNISHED HEREUNDER, LXR MAKES NO REPRESENTATION THAT SUCH SAMPLES OR THE
METHODS USED IN MAKING OR USING SUCH SAMPLES ARE FREE FROM LIABILITY FOR PATENT
INFRINGEMENT. LXR SHALL HAVE NO LIABILITY OF ANY KIND WHATSOEVER TO INTROGEN
RESULTING FROM THE EVALUATION HEREUNDER, WHETHER SUCH LIABILITY ARISES IN
CONTRACT, TORT OR STRICT LIABILITY, WITH THE EXCEPTION OF INTROGEN'S DEFEND,
INDEMNIFY AND HOLD HARMLESS OBLIGATIONS UNDER SECTION 9, IN NO EVENT WILL EITHER
PARTY BE LIABLE FOR ANY INDIRECT, INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES
RESULTING FROM THE EVALUATION HEREUNDER (INCLUDING THE USE OF THE PATENT RIGHTS,
RELATED TECHNOLOGY OR SAMPLES), EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES.
8. TERM/TERMINATION.
8.1 Term. The term of this Agreement shall commence on the Effective
Date and shall continue in full force and effect until expiration of the
Evaluation Period, unless sooner terminated as expressly provided herein. In the
event the License Agreement is entered into by and between LXR and Introgen,
this Agreement shall be superseded thereby and, thereafter any and all
provisions of this Agreement other than those expressly provided to survive
under Section 8.4 shall cease to be effective.
8.2 Termination. Introgen shall have the right to terminate this
Agreement upon written notice to LXR at any time before expiration of the
Evaluation Period and the provisions of
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-7-
<PAGE> 8
Section 2.2, 6.2 and 8.3 shall apply. This Agreement shall automatically
terminate if Introgen commits a material breach or defaults in the performance
of a material obligation hereunder, and fails to remedy or cure such breach or
default within thirty (30) days after being called upon in writing to do so by
LXR.
8.3 Effect of Termination. Upon expiration or termination of this
Agreement for any reason other than by execution of the License Agreement,
Introgen shall return to LXR and shall cease all use of all Confidential
Information of LXR including without limitation, all information, data,
materials, Samples and documents provided by LXR under this Agreement, except
that Introgen may retain one (1) copy of such information, data and documents in
the files of its legal counsel solely for the purposes of complying with its
ongoing confidentiality obligations hereunder. All consideration paid for the
Option pursuant to Section 4 shall be retained by LXR.
8.4 Survival. Section 2.2, 5.2, and 8.3, and Article 3, 6, 7, 9 and
10 shall survive the expiration or termination of this Agreement.
9. INDEMNIFICATION.
9.1 Indemnification. Introgen shall indemnify, defend and hold
harmless LXR, its affiliates, and their respective directors, officers,
employees, agents, successors and assigns (the "Indemnitees") against any
liability, damage, loss, cost or expense (including reasonable attorneys' fees
and expenses of litigation, regardless of outcome) incurred by or imposed upon
the Indemnitees, or any one of them, in connection with any third party claims,
suits, actions demands or judgments arising out of any acts or omissions by or
on behalf of Introgen pursuant to this Agreement or the Materials Transfer
Agreement, or any negligence, misconduct or breach of this Agreement or the
Materials Transfer Agreement by Introgen or its employees, agents or
contractors; provided that an Indemnitee that intends to claim indemnification
under this Section 9 shall: (i) promptly notify Introgen in writing of such
claim, suit or action with respect to which Indemnitee intends to claim such
indemnification, (ii) subject to Section 9.3., give Introgen sole control of the
defense and/or settlement thereof, (iii) provide Introgen, at Introgen's
expense, with reasonable assistance and full information with respect thereto.
Notwithstanding the foregoing, Introgen shall have no obligations for any claim
if the Indemnitee seeking indemnification makes any admission or settlement
regarding such claim without the prior written consent of Introgen, which
consent shall not be unreasonably withheld.
9.2 Exception. Introgen's indemnification under Section 9.1 shall
not apply to any liability, damage, loss, cost or expense to the extent
attributable to the gross negligence or intentional misconduct of the
Indemnitees.
9.3 Attorneys. Introgen agrees at Introgen's sole expense, to
provide counsel reasonably acceptable to LXR to defend against any actions
brought or filed against any Indemnitee with respect to any indemnification
obligation herein, whether or not such actions are rightfully brought. LXR shall
have the right to participate with counsel of its own choosing at its own
expense.
-8-
<PAGE> 9
10. MISCELLANEOUS.
10.1 Independent Contractors. The relationship of LXR and Introgen
established by this Agreement is that of independent contractors. Nothing in
this Agreement shall be construed to create any other relationship between LXR
and Introgen. Neither party shall have any right, power or authority to assume,
create or incur any expense, liability or obligation, expressed or implied, on
behalf of the other.
10.2 Confidential Terms. Except as expressly provided herein, each
party agrees not to disclose any terms of this Agreement to any third party
without the prior written consent of the other party, except as required by
securities or other applicable laws, or such party's accountants, attorneys and
other professional advisors, potential investors and partners, under binders of
confidentiality no less stringent than those contained herein.
10.3 Assignment. This Agreement shall not be assignable by either
party to any third party without the prior written consent of the other party
hereto. Notwithstanding the foregoing, either party may assign this Agreement
without the consent of the other party to a party that is an affiliate of the
assigning party at the time of the assignment, or to an entity that acquires
substantially all of the business or assets of such party whether by merger,
acquisition, sale or otherwise, provided that in either case, such assignee
agrees in writing to be bound by the terms and conditions of this Agreement. In
the event of any such assignment all references to the assigning party shall be
deemed to be references to the assignee. Any purported assignment in violation
of this section shall be null and void. For the purposes hereof, an "affiliate"
of a party shall mean any corporation or other business entity that controls, is
controlled by or under common control with such party.
10.4 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 by the other party in writing:
If to LXR: LXR Biotechnology, Inc.
1401 Marina Way South
Richmond, CA 94804
Attention: Donald Picker
Phone: (510) 412-9100
Fax: (510) 412-9109
If to Introgen: Introgen Therapeutics, Inc.
301 Congress Avenue, Suite 2025
Austin, Texas 78701
Attn: David Nance
Phone: (512) 320-4169
Fax: (512) 320-6166
-9-
<PAGE> 10
10.5 Compliance with Law. Each party shall comply with all
applicable federal, state and local laws and regulations in connection with its
activities pursuant to this Agreement. Each party hereby acknowledges that its
rights and obligations under this Agreement are subject to the laws and
regulations of the United States relating to the export of products and
technical information. Without limitation, each party shall comply with all such
laws and regulations.
10.6 Governing Law. This Agreement shall be governed by, and
construed and interpreted in accordance with, the laws of the State of
California, without reference to its or any other jurisdiction's principles of
conflicts of law.
10.7 No Waiver. A waiver, express or implied, by either LXR or
Introgen 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.
10.8 Severability. If any provision of this Agreement shall be
found by a court to be void, invalid or unenforceable, the same shall be
conformed 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.
10.9 Entire Agreement. This Agreement (including the Exhibits
hereto) constitutes the entire understanding of the agreement between the
parties with respect to the subject matter hereof and supersede 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.
10.10 Counterparts. This Agreement shall be executed in two
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 have caused their duly authorized
representatives to execute this Agreement.
LXR BIOTECHNOLOGY, INC. INTROGEN THERAPEUTICS, INC.
By: By:
-------------------------------- -------------------------------------
Name: Name:
------------------------------ -----------------------------------
Title: Title:
----------------------------- ----------------------------------
-10-
<PAGE> 11
EXHIBIT A
LICENSE AGREEMENT
OUTLINE OF TERMS
PARTIES: Introgen Therapeutics, Inc. ("Introgen") and LXR
Biotechnology, Inc. ("LXR").
DEFINITIONS: Capitalized terms that are not otherwise defined in
this Outline of Terms shall have the meaning defined
for such terms in the Evaluation and Exclusive Option
Agreement (the "Agreement") to which this Outline of
Terms is attached as Exhibit A. Subject to the terms
and conditions of the Agreement, Introgen and LXR
will enter into a License Agreement, under which LXR
will grant to Introgen an exclusive, worldwide
license, with the right to grant and authorize
sublicenses, under the Patent Rights and Related
Technology to make, have made, use and sell Licensed
Products, practice any method, process or procedure
and otherwise exploit the Patent Rights and Related
Technology, and to have any of the foregoing
performed on its behalf by a third party, in each
case solely for applications within the Field.
Notwithstanding the foregoing, LXR shall have the
right to approve any sublicense granted by Introgen
to a third party (where such third party has a
capitalization of less than [*] as determined by
Introgen and such third party in good faith), which
approval shall not be unreasonably withheld;
otherwise, LXR shall have no right to approve
sublicenses. In addition, in the event that Introgen
grants a sublicense under the Patent Rights and
Related Technology to any party, it agrees to provide
LXR a copy of such agreement (reasonably redacted).
A "Valid Claim" means any claim contained in any
patent application or in any issued patent included
within the Patent Rights, which has not been
abandoned or declared invalid in a non-appealable
order, as the case may be, and which would be
infringed by the manufacture, use, sale, offer for
sale or import of a Licensed Product in the absence
of the license granted under the License Agreement;
provided that, in the case of a patent application
that has not issued, not more than [*] has elapsed
from the filing date to which the claim is entitled.
DATA: Promptly following the execution of the License
Agreement and for the duration of the License
Agreement, to the extent LXR may legally do so, LXR
will provide to Introgen all data,
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE> 12
materials (including reasonable samples of biological
materials), reports, analyses and other information
in its possession necessary for Introgen to exercise
its rights under the license granted for use in the
Field. Introgen may provide such data, materials and
other information, on a need-to-know basis, to those
third parties who require such data, materials or
information in order to (i) obtain regulatory
approvals to manufacture and market Licensed Products
for use in the Field, or (ii) commercialize Licensed
Products for use in the Field, under binders of
confidentiality no less stringent than those
contained in the Agreement. LXR shall have the right,
without restriction, to use any and all such data,
materials, reports, analyses and other information
for uses outside the Field.
[*]
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-ii-
<PAGE> 13
[*].
MILESTONES: Introgen will pay to LXR the following amounts in
United States dollars (which amounts shall be
non-refundable) upon accomplishment of each of the
following milestones with respect to the first
Licensed Product for which such milestone is
accomplished:
[*] Upon the first successful completion of
[*] for the first Licensed Product.
[*] Upon the first successful completion [*]
for the first Licensed Product; and
[*] Upon first [*] of the first Licensed
Product in the [*].
A phase of clinical trials for a Licensed Product
shall be deemed to be "successfully completed" when
all studies appropriate to that phase have been
completed to the reasonable satisfaction of Introgen,
and Introgen certifies in writing to LXR such
satisfactory completion.
Introgen will be responsible for all costs and
expenses of developing, testing and registering
Licensed Products and for obtaining and maintaining
regulatory approvals therefor, and for all costs of
manufacturing, promoting, marketing and selling
Licensed Products.
ROYALTIES: Introgen will pay to LXR royalties at the rate of
[*] of Net Sales by Introgen, its affiliates and
sublicensees of Patented Products to unaffiliated
third parties, such royalties to be paid quarterly.
Such [*] royalty rate shall apply even if the
Patented Product includes the "bak" gene and
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-iii-
<PAGE> 14
one or more other products and/or technologies
(including without limitation delivery systems
therefor). [*] royalty payment shall continue on a
country-by-country basis until the later of: [*] from
the first commercial sale of a Patented Product in a
particular country, or the last to expire of any
Valid Claim under the Patent Rights in such country.
In addition to the foregoing, in those countries
where Non-Patented Products are sold, Introgen will
pay to LXR royalties for know-how included in the
Related Technology at the rate of [*] of Net Sales of
Non-Patented Products by Introgen, its affiliates and
sublicensees to unaffiliated third parties, such [*]
royalties to be paid quarterly. Such [*] royalty rate
shall apply even if the Non-Patented Product includes
the "bak" gene and one or more other products and/or
technologies (including without limitation delivery
systems therefor). Such [*] royalty payment for
know-how shall continue on a country-by-country basis
until [*] from the first commercial sale of a
Non-Patented Product in a particular country.
Notwithstanding the foregoing, if during such [*], a
patent application covering the manufacture,
formulation or use of a Non-Patented Product is filed
in such country, then the royalty rate shall increase
to [*] from the date such patent application is
filed, and such [*] royalty payment shall continue in
such country until the later of: [*] from the first
commercial sale of such Licensed Product in that
country, or the last to expire of any Valid Claim
under the Patent Rights in such country.
"Net Sales" will be defined more specifically in the
License Agreement to include the gross amounts
invoiced by Introgen, its affiliates and sublicensees
for the sale of Licensed Products to unaffiliated
third parties, less (i) all trade, cash and quantity
discounts or government rebates actually granted and
taken; (ii) refunds, allowances or credits to
customers because of rejections or returns; (iii)
prepaid freight, sales taxes, duties and other
governmental taxes (including value added tax); and
(iv) provisions for uncollectible accounts determined
in accordance with reasonable accounting practices,
consistently applied to all products of the selling
party.
In the event a third party claims that the "bak" gene
alone, or its use alone infringes such third party's
patent rights, and Introgen; or an affiliate or
sublicensee becomes obligated to make
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-iv-
<PAGE> 15
payments of any kind to such third party solely with
respect to such third party's patent rights covering
the "bak" gene or use thereof, provided Introgen's
use of the "bak" gene is within the Field, Introgen
may deduct [*] of the amounts owing to such third
party from the royalty payments owing to LXR under
the License Agreement; provided, however, that no
royalty payment to be made by Introgen to LXR under
the License Agreement shall be reduced by more than
[*] of the royalty payment that is otherwise due to
LXR under the License Agreement.
DUE DILIGENCE: Introgen will agree to exercise commercially
reasonable efforts to research, develop, manufacture,
obtain all necessary governmental approvals for, and
sell Licensed Products throughout the world, first in
[*] and then in other major markets of the world
including but not limited to [*]. The License
Agreement will contain other obligations on the part
of Introgen relating to its diligence in developing
and commercializing Licensed Products.
PATENT PROSECUTION: LXR will have the right to control prosecution of the
Patent Rights. Introgen shall reimburse LXR for [*]
the out-of-pocket fees and expenses incurred after
the execution of the License Agreement for any and
all filing, prosecution and maintenance of patents
and patent applications included within the Patent
Rights. If LXR elects not to prosecute any patent
application or maintain any patent in the Patent
Rights, or fails to do so, LXR will notify Introgen
and Introgen will have the right to pursue such
prosecution or maintenance at Introgen's sole
expense. The License Agreement will include
provisions for Introgen to be consulted in a timely
fashion with respect to the prosecution of the Patent
Rights.
ENFORCEMENT: Introgen shall have the first right to enforce the
Patent Rights with respect to infringements within
the Field; provided, however if Introgen fails to
bring an action to enforce the Patent Right within 6
months after LXR's request to do so, LXR shall have
the right to bring such action. In either case the
noncontrolling party will cooperate in such action at
the other's expense. The party initiating any such
action will keep the other party reasonably informed
of the progress thereof, and such other party will
have the right to participate with counsel of its own
choice. All awards from such enforcement actions
(after reimbursing the parties' costs and expenses
related thereto) shall be treated as follows: [*]
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-v-
<PAGE> 16
[*]
PATENT INFRINGEMENT: If the production, sale or use of any Licensed
Product within the Field results in a claim, suit or
proceeding alleging patent infringement against
Introgen, its affiliates or sublicensees, Introgen
will have the exclusive right to defend and control
the defense of any such action using counsel of its
own choice at its expense; provided, however, that
LXR may participate in the defense and/or settlement
thereof at its own expense with counsel of its
choice. Except as agreed in writing by LXR, Introgen
will not enter into any settlement relating to a
Licensed Product, if such settlement admits the
invalidity or unenforceability of any patent within
the Patent Rights. Introgen agrees to keep the LXR
reasonably informed of all material developments in
connection with any such action. [*].
Notwithstanding the foregoing, in the event such
claim of infringement does not involve allegations
that the manufacture, use or sale of the "bak" gene
infringes a third party patent, then Introgen shall
defend, indemnify and hold harmless LXR and its
affiliates and their respective directors, officers,
agents, employees, successors and assigns from and
against such claim and any and all liabilities,
damages, losses, costs and expenses (including
without limitation attorney's fees and costs of
litigation, regardless of outcome) arising therefrom,
subject to standard indemnification procedure and
provided that LXR shall have the right to participate
in any such action with counsel of its own choosing
at its own expense. [*].
INDEMNIFICATION: Introgen will defend, indemnify and hold harmless LXR
and its affiliates and their respective directors,
officers, employees, agents, successors and assigns
against any and all claims, liabilities, suits,
losses, damages, costs, fees and expenses
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-vi-
<PAGE> 17
(including without limitation attorney's fees and
costs of litigation, regardless of outcome) resulting
directly or indirectly from Introgen's exercise of
the rights under the License Agreement, subject to
standard indemnification procedures.
WARRANTIES: The License Agreement will include all warranties
provided in the Agreement and additional warranties
on the part of Introgen regarding) the research,
development, manufacture and sale of Licensed
Products in accordance with all applicable laws and
regulations.
In addition, LXR will warrant to Introgen that: (i)
LXR has the right to enter into the License Agreement
and grant the rights granted therein; (ii) LXR has
not granted and will not grant during the term of the
License Agreement, rights in or to the Licensed
Products or Related Technology that are inconsistent
with the rights granted to Introgen under the License
Agreement, (iii) to the best of its knowledge, as of
the effective date of the License Agreement, there
are no claims of third parties challenging the right
of LXR to grant to Introgen the rights under the
License Agreement and (iv) except for the Patent
Rights, as of the effective date of the License
Agreement, LXR does not own or control any patents or
patent applications the claims of which would
dominate any practice of the Patent Rights by
Introgen under the License Agreement.
MISCELLANEOUS: The License Agreement will include other customary
terms and conditions contained in license agreements
of this type.
This Term Sheet shall not be binding on LXR and
Introgen, and there are no enforceable obligations on
the part of either party, other than as set forth in
the Agreement, with respect to the matters contained
in this Term Sheet, unless and until a definitive
License Agreement is fully executed and delivered by
the parties. It is understood that any definitive
License Agreement will be subject to the prior
approval of the parties' respective senior management
and Boards of Directors.
-vii-
<PAGE> 18
EXHIBIT B
(ATTACHED)
<PAGE> 1
EXHIBIT 10.27(b)
[INTROGEN THERAPEUTICS, INC. LETTERHEAD]
CERTIFIED MAIL
RETURN RECEIPT REQUESTED
January 28, 2000 VIA FAX 510 758-4397
Mr. Paul Hastings
President & COO
Dr. John Statler, Ph.D.
General Manager
LXR Biotechnology, Inc.
3095 Richmond Parkway, Suite 213
Richmond, CA 94806
Re: Exercise of Option to Negotiate
Dear Mr. Hastings and Dr. Statler:
Introgen hereby exercises its option to commence good faith negotiations to
enter into a license agreement, as provided for in Article 5 of the Evaluation
and Exclusive Option Agreement, with respect to the BAK technology.
Please advise us who to contact on your side to commence negotiations. In the
meantime, please feel free to contact me if you have any questions or comments.
Very truly yours,
/s/ DAVID L. PARKER/CPL
David L. Parker
V.P., Intellectual Property
Cc: David Nance
Dr. Mahendra Shah
<PAGE> 1
EXHIBIT 10.28
ADMINISTRATIVE SERVICES AND MANAGEMENT AGREEMENT
This Administrative Services and Management Agreement (this "Agreement"),
effective as of January 1, 1999 (the "Effective Date"), is entered into by and
between Introgen Therapeutics, Inc., a Delaware corporation ("Introgen"), and
Gendux, Inc., a Delaware corporation ("Gendux").
BACKGROUND
A. Introgen and Gendux are parties to that certain Delivery Technology
License Agreement of even date herewith (the "DTLA") pursuant to which Introgen
licensed certain technology and rights to Gendux, that certain Target Gene
License Agreement of even date herewith (the "TGLA") pursuant to which Introgen
licensed certain genes and rights to Gendux, and that certain Research and
Development Agreement of even date herewith (the "Development Agreement")
pursuant to which Introgen has agreed to assist Gendux in performing a certain
developmental research program within the Field; and
B. Gendux desires that Introgen provide certain administrative and
management services to Gendux in addition to assisting Gendux in performing such
developmental research program under the Development Agreement, and Introgen
desires to provide such administrative and management services, on the terms set
forth herein below.
NOW, THEREFORE, in consideration of the mutual covenants expressed
herein and for other good and valuable consideration; the receipt and adequacy
of which are hereby acknowledged, the parties agree as follows:
1 DEFINITIONS.
1.1 "Affiliate" shall mean any entity which controls, is controlled by
or is under common control with Introgen or Gendux. For purposes of this
definition, "control" shall mean beneficial ownership (direct or indirect) of at
least fifty percent (50%) 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).
Notwithstanding the foregoing, neither Introgen nor Gendux shall be deemed to be
an Affiliate of the other for purposes of this Agreement.
1.2 "First Financing" shall mean the closing of the sale and/or
issuance of equity and/or debt securities by Gendux, as a result of which the
cumulative total of cash proceeds from such financings received by Gendux
exceeds [*].
1.3 "GAAP" shall mean generally accepted accounting principles in the
United States.
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE> 2
1.4 "Reimbursable Costs" shall mean the direct and indirect costs
incurred by or on behalf of Introgen in performing Services hereunder, all as
calculated using GAAP.
1.5 "Services" shall have the meaning as set forth in Section 2.1
below.
2 SERVICES TO BE PROVIDED.
2.1 Services. Gendux hereby engages Introgen to provide, or arrange to
provide, to Gendux general, administrative and management services, including,
without limitation, the services described generally below (collectively,
"Services"). Introgen agrees to use its diligent efforts to provide specific
Services, at the times and in the manner in which Introgen deems necessary or
appropriate to effect the day-to-day business operations of Gendux:
2.1.1 General. Advice and services with respect to accounting
and financial matters, marketing, government and public relations, industrial
relations, personnel and human resource administration, employee benefits
administration, procurement, purchasing, inventory control, business
development, corporate partnering, planning and investigation, management
information systems, facilities occupancy (including renting, leasing and
maintaining), administrative matters and insurance;
2.1.2 Treasury. Treasury services, including, but not limited
to, opening and maintaining bank accounts, reconciling bank accounts to
accounting records, disbursing funds for goods, services and payroll either by
check or electronically, collection and deposit of funds, general money
management assistance (including investing funds in interest bearing accounts or
instruments), and preparation of cash flow budgets and forecasts;
2.1.3 Finance, Accounting and Recordkeeping. Finance,
accounting and recordkeeping services, including but not limited to, design and
implementation of accounting policies, procedures and internal controls, general
ledger and related subledger maintenance, transaction processing, financial
statement preparation, tax return preparation and filing, coordination with
independent accountants and auditors, maintenance of stockholder records, and
maintenance of records of meetings of the board of directors and director and
related committees;
2.1.4 Recruiting. Advice and services with respect to
selection, recruiting, supervision and evaluation of personnel;
2.1.5 Legal. Advice and services with respect to intellectual
property, regulatory, legal and tax matters, including, without limitation,
filings and hearings before foreign, federal, state and municipal agencies or
authorities; and
2.1.6 Other. Such other advice and services as are reasonably
requested by Gendux in order to carry out the day-to-day business operations of
Gendux.
2.2 Standard of Care. In providing Services hereunder, Introgen shall
use, and Gendux hereby agrees to accept in all respects, the same standard of
skill and care that Introgen uses in the course of undertaking similar services
for itself. To the extent reasonably possible, such services shall
-2-
<PAGE> 3
be substantially identical in nature and quality to similar services currently
provided or otherwise obtained by Introgen on its own behalf.
2.3 Introgen Activities. Gendux hereby acknowledges that Introgen's
business interests, activities, and opportunities are and will continue to be
substantially similar to the interests, activities and opportunities of Gendux.
Gendux further acknowledges that Introgen will pursue such interests, activities
and opportunities of Introgen for its own account and/or the account of others.
Gendux agrees that Introgen may pursue Introgen's business interests, activities
and opportunities without any obligation to offer any such interests, activities
or opportunities to Gendux, except as expressly provided under the DTLA or the
TGLA. Gendux further agrees that it shall not have any rights by virtue of this
Agreement or the relationship created hereby in any such business interests,
activities or opportunities. Introgen agrees to keep the Gendux Board of
Directors duly informed of its activities under this Agreement.
2.4 Approval of Contracts and Commitments. Prior to making or entering
into any written commitment or contract on behalf of Gendux that involves: (i)
obligations of, or payments by, Gendux in excess of [*] or (ii) the grant of
[*], Introgen shall first obtain the written approval of Gendux.
2.5 Commitment of Resources. It is understood that Gendux is entering
into this Agreement, the DTLA, the TGLA and the Development Agreement in
reliance upon the commitment by Introgen to make available the services of a
management team, which team consists of [*] (or such other representatives as
Introgen reasonably designates from time to time), to provide and oversee
appropriate Services under this Agreement. Without limiting any other provision
of this Agreement, so long as the members of such management team remain
employed by Introgen, Introgen will use commercially reasonable efforts to
provide that such individuals are available to perform the Services, as
appropriate, to be provided by Introgen hereunder.
2.6 Subcontracting. Subject to Gendux's written consent, which consent
shall not be unreasonably withheld or delayed, Introgen may engage third parties
to perform all or any portion of the Services hereunder; provided, however, that
no such consent shall be required for the engagement by Introgen of any third
party to perform such Services if Introgen customarily engages third parties to
perform similar services for itself.
3 REIMBURSABLE COSTS.
3.1 Reimbursable Costs. During the term of this Agreement, Gendux shall
reimburse Introgen for its Reimbursable Costs. It is understood that the
Reimbursable Costs will include without limitation amounts paid to consultants
or third-party service providers or the like. In addition, Reimbursable Costs
may include costs for equipment and facilities acquired for purposes of the
Services; provided that if such equipment or facilities are used both (i) in the
course of providing Services to Gendux and (ii) for other purposes (including
providing services to Introgen), then the costs of such equipment or facilities
shall be allocated between the Services and such other purposes in accordance
with GAAP. It is understood that if Introgen acquires any capital equipment or
facilities in
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-3-
<PAGE> 4
connection with the Services, Introgen shall own all such capital equipment and
facilities, unless the parties otherwise agree.
3.2 Management Fee. In addition to the Reimbursable Costs set forth in
Section 3.1 above and in consideration of the services of Introgen's management
team as set forth in Article 2 above, Gendux shall pay to Introgen an annual
management fee, which fee shall be equal to [*] per annum for the 1999 through
2000 calendar years and shall accrue from the date of the First Financing. The
amount of such management fee for subsequent calendar years is subject to
adjustment on an annual basis and shall be agreed upon by Introgen and the Board
of Directors of Gendux by no later than October 1 of the preceding year. Gendux
shall pay [*] of each such annual management fee to Introgen [*] during the term
of this Agreement. In the event this Agreement is terminated prior to the end of
any calendar year, such management fee shall be prorated for the number of days
that Introgen actually performs services, based on the number of days in such
year.
3.3 First Financing Payment. Upon the closing of the First Financing,
Gendux shall pay to Introgen an amount equal to Gendux's share of Reimbursable
Costs and organizational costs incurred by Introgen, on behalf of Gendux, prior
to the First Financing. For such purposes, "organizational costs" shall include
out of pocket costs associated with (i) the establishment and organization of
Gendux, (ii) the R&D Program (as defined in the Development Agreement) and (iii)
the acquisition, maintenance and protection of rights to the Subject Genes (as
defined in the TGLA) and the Licensed Technology (as defined in the DTLA)
(including patent costs); in each case which were incurred prior to the First
Financing. It is understood that such organizational costs shall not exceed [*].
3.4 Payment Method. Unless otherwise specified herein, all payments
hereunder shall be due and payable thirty (30) days after invoicing therefor.
All payments under this Agreement shall be made by bank wire transfer in
immediately available funds to an account designated by Introgen, or as
otherwise agreed. All dollar amounts specified in this Agreement, and all
payments made hereunder, are and shall be made in U.S. dollars. Any payments due
under this Agreement which are not paid by the date such payments are due under
this Agreement shall bear interest to the extent permitted by applicable law at
[*], calculated on the number of days such payment is delinquent. This Section
3.4 shall in no way limit any other remedies available to either party.
4 REPRESENTATIONS AND WARRANTIES.
4.1 Representations and Warranties of Introgen. Introgen represents and
warrants to Gendux as follows:
4.1.1 Introgen is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware with
corporate powers adequate for executing and delivering, and performing its
obligations under, this Agreement;
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-4-
<PAGE> 5
4.1.2 the execution, delivery and performance of this
Agreement have been duly authorized by all necessary corporate action on the
part of Introgen;
4.1.3 this Agreement has been duly executed and delivered by
Introgen and is a legal, valid and binding obligation of Introgen, enforceable
against Introgen in accordance with its terms; and
4.1.4 the execution, delivery and performance of this
Agreement do not conflict with or contravene any provision of the charter
documents or bylaws of Introgen or any agreement, document, instrument,
indenture or other obligation of Introgen.
4.2 Representations and Warranties of Gendux. Gendux represents and
warrants to Introgen as follows:
4.2.1 Gendux is a corporation duly organized, validly existing
and in good standing under the laws of Delaware with corporate powers adequate
for executing and delivering, and performing its obligations under, this
Agreement;
4.2.2 the execution, delivery and performance of this
Agreement have been duly authorized by all necessary corporate action on the
part of Gendux;
4.2.3 this Agreement has been duly executed and delivered by
Gendux and is a legal, valid and binding obligation of Gendux, enforceable
against Gendux in accordance with its terms; and
4.2.4 the execution, delivery and performance of this
Agreement do not conflict with or contravene any provision of the charter
documents or bylaws of Gendux or any agreement, document, instrument, indenture
or other obligation of Gendux.
4.3 Disclaimer. EXCEPT AS OTHERWISE EXPLICITLY PROVIDED IN THIS ARTICLE
4, INTROGEN AND GENDUX EXPRESSLY DISCLAIM ANY WARRANTIES OR CONDITIONS, EXPRESS,
IMPLIED, STATUTORY OR OTHERWISE, WITH RESPECT TO THE SERVICES, INCLUDING,
WITHOUT LIMITATION, ANY WARRANTY OF MERCHANTABILITY, NONINFRINGEMENT, OR FITNESS
FOR A PARTICULAR PURPOSE.
5 CONFIDENTIALITY AGREEMENTS.
Introgen and Gendux hereby agree that they will have each of their
respective employees, consultants and officers who have access to confidential
or proprietary information of the other party execute a confidential information
and nondisclosure agreement in form and substance reasonably satisfactory to
such other party.
6 INDEPENDENT CONTRACTOR.
All debts and liabilities of and arrangements or agreements with any
person or entity incurred or entered into in the name of or on behalf of Gendux
by Introgen in the management or performance of the Services hereunder in
accordance with this Agreement shall be the debt and liability of and be binding
upon Gendux. Introgen shall not be liable to any person or entity for any debt,
liability or
-5-
<PAGE> 6
obligation of Gendux incurred or created in accordance with this Agreement or by
reason of Introgen's management, direction or performance of the Services
hereunder unless Introgen, by written agreement, expressly assumes or guarantees
any such liability. Introgen shall not be required, under any circumstances, to
guarantee or assume any obligation or liability of Gendux as a result of this
Agreement. Gendux's Board of Directors shall be deemed to control all aspects of
the manner in which Gendux's business is conducted. Introgen shall not be liable
by virtue of the performance of its duties hereunder for any breach of any
arrangement between Gendux and any third party, or for any liability for any
unfair competition, patent infringement or other violation of the intellectual
property rights of another entity as a result of the manner in which Gendux's
business is conducted, except to the extent such violation is the result of the
gross negligence or willful misconduct of Introgen.
7 INDEMNIFICATION.
7.1 Indemnification of Introgen. Subject to Section 7.3 below, Gendux
shall indemnify each of Introgen and its Affiliates and the directors, officers,
and employees of Introgen and such Affiliates and the successors and assigns of
any of the foregoing (the "Introgen Indemnitees"), and hold each Introgen
Indemnitee harmless from and against any and all liabilities, damages,
settlements, claims, actions, suits, penalties, fines, costs or expenses
(including, without limitation, reasonable attorneys' fees and other expenses of
litigation) incurred by any Introgen Indemnitee as a result of a claim by a
third party brought against any Introgen Indemnitee of whatever kind or nature,
including, without limitation, any claim or liability based upon negligence,
warranty, strict liability, violation of government regulation or infringement
of patent, copyright, trademark, trade secret or other proprietary rights,
arising from or occurring as a result of the Services provided by Introgen to
Gendux under this Agreement, except claims based upon the gross negligence or
willful misconduct of Introgen in providing the Services hereunder in accordance
with this Agreement.
7.2 Indemnification of Gendux. Subject to Section 7.3 below, Introgen
shall indemnify each of Gendux and its Affiliates and the directors, officers,
and employees of Gendux and such Affiliates and the successors and assigns of
any of the foregoing (the "Gendux Indemnitees"), and hold each Gendux Indemnitee
harmless from and against any and all liabilities, damages, settlements, claims,
actions, suits, penalties, fines, costs or expenses (including, without
limitation, reasonable attorneys' fees and other expenses of litigation)
incurred by any Gendux Indemnitee as a result of a claim by a third party
brought against any Gendux Indemnitee arising from or occurring as a result of
the gross negligence or willful misconduct of Introgen hereunder.
7.3 Procedure. A party (the "Indemnitee") that intends to claim
indemnification under this Article 7 shall: (i) promptly notify the indemnifying
party (the "Indemnitor") in writing of any claim, action, suit, or other
proceeding brought by third parties in respect of which the Indemnitee or any of
its Affiliates, or their directors, officers, employees, successors or assigns
intend to claim such indemnification hereunder; (ii) provide the Indemnitor sole
control of the defense and/or settlement thereof, and (iii) provide the
Indemnitor, at the Indemnitor's request and expense, with reasonable assistance
and full information with respect thereto. Indemnitor shall not settle any
claim, suit or proceeding subject to this Article 7 or otherwise consent to an
adverse judgment in such claim, suit or proceeding if the same materially
diminishes the rights or interests of the Indemnitee without the express written
consent of the Indemnitee. Notwithstanding the foregoing, the indemnity
agreement in this
-6-
<PAGE> 7
Article 7 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, to the extent such consent is not unreasonably withheld or
delayed. Notwithstanding anything herein to the contrary, the Indemnitee shall
have the right to participate in any such claim, suit or proceeding with counsel
of its choosing at its own expense.
8 TERM AND TERMINATION.
8.1 Term and Termination for Convenience. The term of this Agreement
shall commence on the Effective Date and continue thereafter in full force and
effect until terminated by either party, for any reason or for no reason, [*],
or unless terminated in accordance with the other provisions of this Article 8.
8.2 Termination for Breach. In the event of a material breach of this
Agreement, the nonbreaching party shall be entitled to terminate this Agreement
by written notice to the breaching party, if such breach is not cured within
thirty (30) days after written notice is given by the nonbreaching party to the
breaching party specifying the breach. Notwithstanding the foregoing, if the
party alleged to be in breach of this Agreement disputes such breach within such
thirty (30) day period, the nonbreaching party shall not have the right to
terminate this Agreement unless it has been determined by a court of competent
jurisdiction that this Agreement was materially breached, and the breaching
party fails to comply with its obligations hereunder within thirty (30) days
after such determination.
8.3 Termination of the Development Program. Either party may terminate
this Agreement on written notice in the event of termination of the R&D Program
in accordance with Section 8.1 of the Development Agreement.
8.4 Survival.
8.4.1 Accrued Obligations. Termination of this Agreement for
any reason shall not release either party hereto from any liability which at the
time of such termination has already accrued to the other party.
8.4.2 Other. Articles 1, 6, 7 and 9 and Sections 4.3 and 8.4
shall survive the expiration and any termination of this Agreement. Except as
otherwise provided in this Article 8, all rights and obligations of the parties
under this Agreement shall terminate upon the expiration or termination of this
Agreement.
9 MISCELLANEOUS.
9.1 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 Texas, without reference to conflicts
of laws principles.
9.2 Force Majeure. Nonperformance of any party (except for payment of
amounts due hereunder) shall be excused to the extent that performance is
rendered impossible by strike, fire, earthquake, flood, governmental acts or
orders or restrictions, or any other reason, including failure of
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-7-
<PAGE> 8
suppliers, where failure to perform is beyond the reasonable control of the
nonperforming party. Without limiting the foregoing, the party subject to such
inability shall use reasonable efforts to minimize the duration of any force
majeure event.
9.3 No Implied Waivers; Rights Cumulative. No failure on the part of
Introgen or Gendux 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.
9.4 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; facsimile
transmission (receipt verified); or express courier service (signature
required), in each case to the respective address or fax number specified below,
or such other address or fax number as may be specified in writing to the other
parties hereto:
<TABLE>
<S> <C>
Gendux: Gendux, Inc.
301 Congress Avenue, Suite 1850
Austin, Texas 78701
Attn: President
Fax: (512) 708-9311
with copy to: Wilson Sonsini Goodrich & Rosati
Professional Corporation
650 Page Mill Road
Palo Alto, California 94304-1050
Attn: Kenneth A. Clark, Esq.
Fax: (650) 493-6811
Introgen: Introgen Therapeutics, Inc.
301 Congress Avenue, Suite 1850
Austin, Texas 78701
Attn: President
Fax: (512) 708-9311
with a copy to: Wilson Sonsini Goodrich & Rosati
Professional Corporation
650 Page Mill Road
Palo Alto, California 94304-1050
Attn: Kenneth A. Clark, Esq.
Fax: (650) 493-6811
</TABLE>
9.5 Limitation of Liability. NEITHER PARTY SHALL BE LIABLE TO THE OTHER
PARTY FOR ANY SPECIAL, CONSEQUENTIAL, EXEMPLARY OR INCIDENTAL DAMAGES
-8-
<PAGE> 9
(INCLUDING LOST OR ANTICIPATED REVENUES OR PROFITS RELATING TO THE SAME),
ARISING FROM ANY CLAIM RELATING TO THIS AGREEMENT, WHETHER SUCH CLAIM IS BASED
ON CONTRACT, TORT (INCLUDING NEGLIGENCE) OR OTHERWISE, EVEN IF AN AUTHORIZED
REPRESENTATIVE OF SUCH PARTY IS ADVISED OF THE POSSIBILITY OR LIKELIHOOD OF
SAME.
9.6 Assignment. This Agreement shall not be assignable by either party
to any third party without the written consent of the other party hereto; except
that either party may assign this Agreement without the other party's consent to
an entity that acquires substantially all of the business or assets of the
assigning party, in each case whether by merger, transfer of assets, or
otherwise. Upon a permitted assignment of this Agreement, all references herein
to the assigning party shall be deemed references to the party to whom the
Agreement is so assigned. Any assignment not permitted under this Section 10.6
shall be null and void.
9.7 Modification. No amendment or modification of any provision of this
Agreement shall be effective unless in writing signed by both 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 both parties hereto.
9.8 Severability. If any provision hereof should be held invalid,
illegal or unenforceable in any jurisdiction, the parties shall negotiate in
good faith a valid, legal and enforceable substitute provision that most nearly
reflects the original intent of the parties and 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.
9.9 Confidential Terms. Except as expressly provided herein, each party
agrees not to disclose any terms of this Agreement to any third party without
the consent of the other party, except as required by securities or other
applicable laws, to prospective and other investors and such party's
accountants, attorneys and other professional advisors.
9.10 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, and both of which
together shall constitute one and the same instrument.
9.11 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.
9.12 Entire Agreement. This Agreement, together with the DTLA, the TGLA
and the Development Agreement (including the respective Exhibits thereto), each
entered into by the parties of even date, 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 Gendux with respect to such subject matter.
-9-
<PAGE> 10
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.
By: /s/ James W. Albrecht, Jr.
------------------------------------
Name: James W. Albrecht, Jr.
----------------------------------
Title: Chief Financial Officer
---------------------------------
GENDUX, INC.
By: /s/ David G. Nance
------------------------------------
Name: David G. Nance
----------------------------------
Title: President and CEO
---------------------------------
<PAGE> 1
EXHIBIT 10.29
RESEARCH AND DEVELOPMENT AGREEMENT
This Research and Development Agreement (this "Agreement"), effective as of
January 1, 1999 (the "Effective Date"), is entered into by and between Introgen
Therapeutics, Inc., a Delaware corporation ("Introgen"), and Gendux, Inc., a
Delaware corporation ("Gendux").
BACKGROUND
A. Introgen and Gendux are parties to the Delivery Technology License
Agreement (all capitalized terms used but not defined herein shall have the
respective meanings set forth in Section 1 hereof) pursuant to which Introgen
licensed certain technology and rights to Gendux, the Target Gene License
Agreement pursuant to which Introgen granted to Gendux rights in certain genes,
and the Services Agreement pursuant to which Gendux engaged Introgen to provide
administrative and management services; and
B. In connection with the Delivery Technology License Agreement and the
Target Gene License Agreement, Gendux desires that Introgen assist Gendux in
performing a certain developmental research program, and Introgen desires to
assist Gendux in performing such developmental research program, on the terms
set forth herein below.
NOW, THEREFORE, in consideration of the mutual covenants, conditions and
undertakings herein contained and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and in order to induce
Introgen to enter into the Delivery Technology License Agreement and the Target
Gene License Agreement, the parties hereto agree as follows:
Section 1. Definitions. As used herein, capitalized terms shall have the
respective meanings set forth below:
1.1 "Affiliate" shall mean any entity which controls, is controlled
by or is under common control with Introgen or Gendux. For purposes of this
definition, "control" shall mean beneficial ownership (direct or indirect) of
more than fifty percent (50%) 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).
Notwithstanding the foregoing, neither Introgen nor Gendux shall be deemed to be
an Affiliate of the other for purposes of this Agreement.
1.2 "Agreement Subject Matter" shall mean collectively, the Subject
Genes (as defined in the Target Gene License Agreement) and the Licensed
Technology (as defined in the Delivery Technology License Agreement).
1.3 "Claim" shall have the meaning set forth in Section 7.1 hereof.
1.4 "Confidential Information" shall have the meaning set forth in
Section 5 hereof.
1
<PAGE> 2
1.5 "Development Plan and Budget" shall mean the plan and budget for
the R&D Program in effect from time to time, as established in accordance with
Section 2 hereof.
1.6 "Delivery Technology License Agreement" shall mean that certain
Delivery Technology License Agreement of even date herewith between Introgen and
Gendux, as amended, modified or supplemented from time to time.
1.7 "Field" shall mean [*].
1.8 "First Financing" shall mean the closing of the sale and/or
issuance of equity and/or debt securities by Gendux, as a result of which the
cumulative total of cash proceeds from such financings received by Gendux
exceeds [*].
1.9 "GAAP" shall mean generally accepted accounting principles in the
United States.
1.10 "Gendux Indemnitees" shall have the meaning set forth in Section
7.1 hereof.
1.11 "Inventions" shall mean any and all discoveries, compositions of
matter and other inventions (whether patentable or not) conceived, reduced to
practice or otherwise made in connection with the R&D Program, and all
intellectual property rights therein.
1.12 "Management Fee" shall, for any period, have the meaning set
forth in Section 3.4 hereof.
1.13 "R&D Costs" shall mean all direct or indirect costs, fees and
out-of-pocket or other expenses incurred, paid or accrued by Introgen in
connection with the R&D Program, determined in accordance with Section 2.1.3
hereof, and excluding any such costs, fees or expenses paid by Gendux to
Introgen under the Services Agreement.
1.14 "R&D Personnel" shall mean employees of Introgen assigned (full-
or part-time) to perform research, development or regulatory affairs activities
under the R&D Program, including project managers, scientists, clinical research
and manufacturing staff, post-doctoral fellows, quality control and assurance
personnel, technicians or the like. As used in this Agreement, a "full-time
equivalent" or "FTE" shall mean a full-time person, or in the case of less than
a full-time dedicated person, a full-time, equivalent person year, based upon a
total of one thousand eight hundred eighty (1,880) hours per year, of work
related to the R&D Program. For purposes of the foregoing, "employees" shall
include "contract workers" who work at Introgen's facilities under Introgen's
direction, but do not include outside consultants, such as regulatory affairs
consultants, academic collaborators or the like.
1.15 "R&D Program" shall have the meaning set forth in Section 2.1
hereof.
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
2
<PAGE> 3
1.16 "Research Committee" shall have the meaning set forth in Section
2.1 hereof.
1.17 "Services Agreement" shall mean that certain Administrative
Services and Management Agreement of even date herewith between Introgen and
Gendux, as amended, modified or supplemented from time to time.
1.18 "Target Gene License Agreement" shall mean that certain Target
Gene License Agreement of even date herewith between Introgen and Gendux, as
amended, modified or supplemented from time to time.
1.19 "Target Gene Therapy Product" shall mean any product, composition
or material the development, manufacture, use or sale of which incorporates,
utilizes, is derived from, or is otherwise based upon the Licensed Technology
and/or the Subject Genes.
Section 2. R&D Program.
2.1 R&D Program Services. Gendux hereby engages Introgen, and
Introgen hereby agrees to undertake, a program for the research and development
of the Agreement Subject Matter for the purpose of allowing Gendux to develop
and market within the Field one or more of the Target Gene Therapy Products (the
"R&D Program"). It is understood that portions of the preclinical research
within the Field may be conducted in the form of sponsored research programs at
academic institutions in Europe and/or at other locations, contractors or
collaborators, and that in such event Introgen shall manage such sponsored
research programs as part of the R&D Program.
2.1.1 Research Committee. Gendux and Introgen shall establish a
research committee to oversee, review and coordinate the research and
development of Target Gene Therapy Products for applications within the Field
pursuant to the R&D Program (the "Research Committee"). The Research Committee
shall be comprised of an equal number of representatives selected by each of
Gendux and Introgen, respectively. The exact number of such representatives
shall be two (2) for each of Gendux and Introgen, or such other number as the
parties may agree. Subject to the foregoing provisions of this Section 2.1.1,
Introgen and Gendux may replace its respective Research Committee
representatives at any time, with prior written notice to the other party.
During the term of this Agreement, the Research Committee shall meet no fewer
than two (2) times each calendar year, or as otherwise agreed by the parties, at
such locations as the parties agree, and thereafter as the parties agree.
Decisions of the Research Committee shall be made by unanimous agreement of the
members present in person or by other means (e.g., teleconference) at any
meeting; provided that at least one (1) representative of each party is present
at such meeting. In the event that the Research Committee is unable to reach
unanimous approval of an issue that is expressly stated in another Section of
this Agreement to be decided by the Research Committee, the issue may be
approved by a three-fourths (3/4) vote of the Board of Directors of Gendux
(i.e., by the approval of three-fourths of the total number of Gendux Directors
then in office), which shall be deemed the approval of the Research Committee.
2.1.2 Development Plan and Budget. Prior to the First Financing,
the parties shall mutually agree upon a reasonably detailed Development Plan and
Budget for the R&D Program outlining the objectives, activities, timing and
projected R&D Costs of the R&D Program
3
<PAGE> 4
to be performed during the period beginning on the Effective Date and ending on
December 31, 2001.
(a) Beginning September 1, 2001 and by September 1 of each year
thereafter during the term of this Agreement, Introgen shall submit to the
Research Committee a proposed Development Plan and Budget, setting forth the
objectives, activities, timing and projected costs of the R&D Program to be
performed in the following calendar year. The Research Committee shall review
such proposals as soon as possible and shall approve the Development Plan and
Budget for the next succeeding year (i.e., in accordance with the Section 2.1.1
above, including escalation to the Gendux Board of Directors), with such changes
as the Research Committee and Introgen may agree to the plan and budget proposed
by Introgen, no later than December 15 of such year.
(b) Periodic Reviews. Introgen and Gendux may make changes in
the Development Plan and Budget from time to time as approved in writing by an
authorized representative of each party.
2.1.3 R&D Costs.
(a) FTEs. An FTE rate determined in accordance with this Section
2.1.3 shall be used for purposes of determining the R&D Costs incurred with
respect to R&D Personnel; provided, however, that in the event such FTE rate
does not accurately reflect Introgen's actual costs associated with the R&D
Program, Introgen may, at its option, determine such R&D Costs in accordance
with GAAP and provide Gendux with a written description of such determination.
The FTE rate shall be [*]) (as adjusted below). The FTE rate includes all
salary, employee benefits, materials and other expenses including support staff
and overhead for or associated with an FTE, but does not include travel and
lodging expenses incurred by such FTEs in performance of the R&D Program (which
travel and lodging expenses shall be included in R&D Costs separately under
Section 2.1.3(b) below). Effective beginning with the calendar year 2001, the
FTE rate shall increase no more than once annually by the greater of the
percentage increase, if any, in (1) the Radford Associates Annual Biotechnology
Compensation and Benefits Survey (for the smallest geographic region that
includes Houston, Texas) or (2) the Consumer Price Index, in either case since
the Effective Date, or the last such increase, whichever is later, upon thirty
(30) days prior written notice to Gendux and such increase shall be effective
for the then-current and all subsequent Development Plans and Budgets hereunder
until further modified under this Section 2.1.3.
(b) Non-FTE Costs. It is understood that the R&D Costs will
include out-of-pocket costs incurred by Introgen for items other than FTEs,
including without limitation amounts paid to consultants or for sponsored
research or the like. In addition, R&D Costs may include costs for equipment and
facilities acquired for purposes of the R&D Program; provided that if such
equipment or facilities are used both (i) in the course of performing the R&D
Program and (ii) for other purposes by Introgen, then the costs of such
equipment or facilities shall be allocated between the R&D Program and such
other purposes in accordance with generally accepted accounting principles. It
is understood that if Introgen acquires any capital equipment or facilities in
connection with the R&D Program, whether or not separately identified in the
Development Plan and Budget, Introgen shall own all such capital equipment and
facilities, unless the parties otherwise agree.
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
4
<PAGE> 5
2.1.4 Other Activities; Subcontracts. It is understood and agreed
by Gendux that Introgen shall have the right to engage in its own research and
development activities and in other business activities with other persons, and
Gendux shall not, 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 and, nothing set forth in this Agreement shall limit or reduce the
ability of Introgen to carry on such other activities. Gendux acknowledges and
agrees that, in performing the R&D Program Introgen may and is hereby authorized
to, without the prior consent of Gendux, engage or agree or otherwise
collaborate with other persons, including without limitation Affiliates of
Introgen or research institutions performing other research and development
activities for Introgen, to provide assistance in carrying out the R&D Program.
2.1.5 Reports and Records. Introgen shall provide to Gendux with
periodic reports, as reasonably requested by Gendux (but no more frequently than
one each calendar quarter), summarizing (a) the work performed hereunder by
Introgen and its R&D Personnel during such quarter and (b) any material
developments with respect to the Target Gene Therapy Products during such
quarter. Introgen shall prepare a final report within ninety (90) days after the
expiration or termination of this Agreement setting forth in reasonable detail a
summary of the work performed hereunder and the material developments with
respect thereto.
2.2 Disclaimer of Warranties. Introgen cannot and does not guarantee
that the R&D Program will be successful in whole or in part. The failure of
Introgen to develop successfully any Target Gene Therapy Product will not in and
of itself constitute a breach by Introgen of any representation, warranty,
covenant or other obligation under this Agreement, the Delivery Technology
License Agreement or the Target Gene License Agreement.
2.3 Ownership of Inventions. Title to all Inventions made solely by
R&D Personnel in connection with the R&D Program (collectively, "R&D
Inventions") shall (as between Introgen and Gendux) be owned by Introgen. Title
to all Inventions made jointly by R&D Personnel and Gendux personnel in
connection with the R&D Program (collectively, "Joint Inventions") shall be
jointly owned by Gendux 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
Joint Invention, and each party hereby waives any such right it may have under
applicable laws in any country. All matters relating to patent applications with
respect to Inventions shall be governed by Section 7.4 of the Delivery
Technology License Agreement.
2.4 Division of Responsibility. It is understood and agreed that all
preclinical research and preclinical development activities to be conducted with
respect to Agreement Subject Matter and Target Gene Therapy Products within the
Field shall be conducted only by Introgen pursuant to the R&D Program, but that
Introgen and Gendux may otherwise allocate responsibility for clinical
development of the Target Gene Therapy Products as they may agree from time to
time. Accordingly, during the term of this Agreement, Gendux agrees not to
conduct or cooperate with any third party to conduct, any such preclinical
research or preclinical development activities outside of the R&D Program. The
foregoing shall not be deemed to restrict the activities of Introgen with
respect to research and/or development activities directed to subject matter
that may be used outside the Field.
5
<PAGE> 6
Section 3. Payment for Services; Timing of Payments.
3.1 Payments. In consideration of the activities to be carried out by
Introgen hereunder, Gendux shall reimburse Introgen for all of its [*], as set
forth below.
3.2 Timing of Payments. Gendux shall pay to Introgen [*], all [*]
budgeted for such calendar quarter. [*] Introgen shall deliver a statement to
Gendux for the [*] actually incurred in such calendar quarter, and Gendux shall
pay to Introgen [*] after receipt of such statement any additional [*] in excess
of Gendux's actual payments to Introgen hereunder during such calendar quarter,
subject to Section 3.3 below. If the amount reflected in the quarterly statement
for [*] is less than the [*] actually paid by Gendux to Introgen in such
calendar quarter, Introgen shall apply such excess against the [*] incurred in
the succeeding calendar quarters.
3.3 Excess Costs. To the extent the [*] incurred in a calendar
year exceed by more than [*] the [*] budgeted for such calendar year in the
Development Plan and Budget then in effect, Gendux shall not be responsible to
reimburse any portion of such excess [*] unless it approves such excess [*],
which approval shall not be unreasonably withheld or delayed; likewise, unless
otherwise mutually agreed by the parties, Introgen shall not be obligated to
incur [*] in excess of the amounts set forth in the then-current Development
Plan and Budget.
3.4 Management Fee. In addition to the [*] to be reimbursed as
set forth above, Gendux agrees to pay to Introgen a management fee equal to [*]
of such [*] (the "Management Fee"). Each payment of [*] pursuant to Section 3.2
above shall include with it the corresponding Management Fee (i.e., an
additional payment equal to [*] of such [*]).
Section 4. Representations, Warranties and Covenants.
4.1 Representations, Warranties and Covenants of Introgen. Introgen
represents, warrants and covenants to Gendux as follows:
(a) Introgen is a corporation duly organized validly existing
and in good standing under the laws of the state of Delaware with corporate
powers adequate for executing and delivering, and performing its obligations
under, this Agreement;
(b) the execution, delivery and performance of this Agreement
have been duly authorized by all necessary corporate action on the part of
Introgen;
(c) this Agreement has been duly executed and delivered by
Introgen and is a legal, valid and binding obligation of Introgen, enforceable
against Introgen in accordance with its terms;
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
6
<PAGE> 7
(d) the execution, delivery and performance of this Agreement do
not and will not conflict with or contravene any provision of the charter
documents or by-laws of Introgen or any agreement, document, instrument,
indenture or other obligation of Introgen;
(e) the R&D Plan was prepared in good faith by Introgen, based
upon information and assumptions that Introgen believes to be reasonable and
correct and, as of the Effective Date, Introgen is not aware of any discovery,
change or development concerning any of the Target Gene Therapy Products having
a material adverse effect upon the accuracy or appropriateness of information or
assumptions contained in the R&D Plan; and
(f) the representations and warranties of Introgen under Section
10.1 of the Delivery Technology License Agreement and Section 10.1 of the Target
Gene License Agreement are true and correct as of the Effective Date.
4.2 Representations, Warranties and Covenants of Gendux. Gendux represents,
warrants and covenants to Introgen as follows:
(a) Gendux is a corporation duly organized validly existing and
in good standing under the laws of Delaware with corporate powers adequate for
executing and delivering, and performing its obligations under, this Agreement;
(b) the execution, delivery and performance of this Agreement
have been duly authorized by all necessary corporate action on the part of
Gendux;
(c) this Agreement has been duly executed and delivered by
Gendux and is a legal, valid and binding obligation of Gendux, enforceable
against Gendux in accordance with its terms;
(d) the execution, delivery and performance of this Agreement do
not and will not conflict with or contravene any provision of the charter
documents or by-laws of Gendux or any agreement, document, instrument, indenture
or other obligation of Gendux;
(e) the representations and warranties of Gendux under Section
10.2 of the Delivery Technology License Agreement and Section 10.2 of the Target
Gene License Agreement are true and correct as of the Effective Date; and
(f) Gendux shall not, during the term of this Agreement without
the prior written consent of Introgen, solicit the employment of, or employ any
person, in any capacity who, at any time during the term of this Agreement,
shall have been an officer, director, employee or agent of Introgen.
Section 5. Confidentiality. Confidentiality of information disclosed
between Introgen and Gendux shall be governed by Section 11 of the Delivery
Technology License Agreement.
7
<PAGE> 8
Section 6. Disclaimer of Warranty.
EXCEPT AS OTHERWISE EXPLICITLY PROVIDED IN SECTION 4.1, INTROGEN
EXPRESSLY DISCLAIMS ANY WARRANTIES OR CONDITIONS, EXPRESS, IMPLIED, STATUTORY OR
OTHERWISE, WITH RESPECT TO THE R&D PROGRAM OR THE AGREEMENT SUBJECT MATTER,
INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE, VALIDITY OF THE AGREEMENT SUBJECT MATTER, PATENTED OR
UNPATENTED, AND NONINFRINGEMENT OF THE INTELLECTUAL PROPERTY RIGHTS OF THIRD
PARTIES.
Section 7. Indemnification and Insurance.
7.1 Gendux Right to Indemnification. Introgen shall indemnify each of
Gendux, its successors and assigns, and the directors, officers, employees,
agents and counsel thereof (the "Gendux Indemnitees"), pay on demand and
protect, defend, save and hold each Gendux Indemnitee harmless from and against,
on an after-tax basis, any and all liabilities, damages, losses, settlements,
claims, actions, suits, penalties, fines, costs or expenses (including, without
limitation, reasonable attorneys' fees) (any of the foregoing, a "Claim")
asserted by a third party against any Gendux Indemnitee of whatever kind or
nature, including, without limitation, any claim or liability based upon
negligence, warranty, strict liability, violation of government regulation or
infringement of patent or other proprietary rights, arising from or occurring as
a result of (a) any use of the Agreement Subject Matter by Introgen or its
Affiliates or sublicensees (other than Gendux outside this Agreement), (b) any
of the activities or services to be performed by Introgen hereunder or (c) any
breach by Introgen of this Agreement, except in all cases claims based upon the
willful misconduct of Gendux. Gendux shall promptly notify Introgen of any
Claim, upon becoming aware thereof, and permit Introgen at Introgen's cost to
defend against such Claim and shall cooperate in the defense thereof. Neither
Gendux nor Introgen shall enter into, or permit, any settlement of any such
Claim without the express written consent of the other party. Gendux may, at its
option and expense, have its own counsel participate in any proceeding which is
under the direction of Introgen and will cooperate with Introgen and its insurer
in the disposition of any such matter.
7.2 Insurance. Introgen shall, to the extent available at
commercially reasonable rates, maintain, with insurers or underwriters of good
repute, such insurance relating to the R&D Program as is customary for
comparable businesses undertaking research programs of a similar nature, to
maintain against such risks and pursuant to such terms (including deductible
limits or self-insured retentions) as are customary and reasonable for such
businesses.
Section 8. Term and Termination.
8.1 Term. This Agreement shall be effective as of the Effective Date
and shall continue in full force and effect during the term of the R&D Program,
unless earlier terminated as provided in Sections 8.2 and 8.3 hereof. For such
purposes, the "term of the R&D Program" shall continue until the later of (i)
December 31, 2001 or (ii) the end of the last period for which a Development
Plan and Budget has been established in accordance with Section 2.1.2 above. If
for any period after 2001, a Development Plan and Budget has not been
established for a period of one
8
<PAGE> 9
hundred twenty (120) days, then either party shall have the right to terminate
the term of R&D Program upon written notice to the other party.
8.2 Termination for Breach. Either Gendux or Introgen may terminate
this Agreement, in the event the other shall have materially breached or
defaulted in the performance of any of its obligations hereunder and such breach
shall have continued for thirty (30) days after written notice is given by the
nonbreaching party to the breaching party specifying the breach. For such
purposes, a breach of the Target Gene License Agreement, the Delivery Technology
License Agreement or the Services Agreement shall be deemed a breach of this
Agreement.
8.3 Termination upon Notice. Either Gendux or Introgen may terminate
this Agreement at anytime, for any reason or for no reason, by giving the other
party [*].
8.4 Effect of Termination. Sections 1, 2.2, 2.3, 5, 6, 7, 8.4 and 9 of
this Agreement, and all obligations to pay any amounts due hereunder, shall
survive, and shall not be affected by, any termination or expiration of this
Agreement.
Section 9. General.
9.1 Independent Contractors. The relationship of Gendux and Introgen
established by this Agreement is that of independent contractors. Nothing in
this Agreement shall be construed to create any other relationship between the
parties. Neither party shall have any express or implied right, power or
authority to assume, create or incur any expense, liability or obligation on
behalf of or in the name of the other party.
9.2 Confidential Terms. Except as expressly provided herein, each
party agrees not to disclose any terms of this Agreement to any third party
without the prior written consent of the other party, except as required by
securities or other applicable laws and (subject to reasonable conditions of
confidentiality) to prospective and other investors and such party's
accountants, attorneys and other professional advisors.
9.3 Assignment. This Agreement shall not be assignable by either
party to any third party without the prior written consent of the other party
hereto, except that either party may assign this Agreement without the other
party's consent to an entity that acquires all or substantially all of the
business or assets of the assigning party, in each case whether by sale, merger,
transfer of assets, operation of law or otherwise; provided that in either case,
such assignee or transferee promptly agrees in writing to be bound by the terms
and conditions of this Agreement. Without limiting the foregoing, in the event
of such merger or transfer or acquisition of assets, no intellectual property
rights of the assignee or its affiliate shall be included in the Agreement
Subject Matter, to the extent that such intellectual property rights were owned
or controlled by the assignee or its affiliate prior to such merger or transfer
or acquisition of assets, or are created outside the R&D Program by personnel
who were not employees of the assigning party prior to the merger or transfer or
acquisition of assets. Upon a permitted assignment of this Agreement, all
references herein to the assigning party shall be deemed references to the
assignee. Any assignment not permitted under this Section 9.3 shall be null and
void.
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
9
<PAGE> 10
9.4 Force Majeure. Nonperformance of either party (except for payment
of amounts due hereunder) shall be excused to the extent that performance is
rendered impossible by strike, fire, earthquake, flood, governmental acts or
orders or restrictions, or any other reason, including failure of suppliers,
where failure to perform is beyond the reasonable control of the nonperforming
party. Without limiting the foregoing, the party subject to such inability shall
use reasonable efforts to minimize the duration of any force majeure event.
9.5 Notices. All notices, requests and other communications hereunder
shall be made in writing and shall be sent by registered or certified mail,
return receipt requested, postage prepaid; facsimile transmission (receipt
verified); or express courier service (signature required), in each case to the
respective address or fax number specified below, or such other address or fax
number as may be specified in writing to the other party:
Gendux: Gendux, Inc.
301 Congress Avenue, Suite 1850
Austin, Texas 78701
Attn: President
Fax: (512) 708-9311
with a copy to: Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, California 94304-1050
Attn: Kenneth A. Clark, Esq.
Fax: (650) 493-6811
Introgen: Introgen Therapeutics, Inc.
301 Congress Avenue, Suite 1850
Austin, Texas 78701
Attn: President
Fax: (512) 708-9311
with a copy to: Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, California 94304-1050
Attn: Kenneth A. Clark, Esq.
Fax: (650) 493-6811
9.6 Governing Law. This Agreement shall be governed by, and construed
and interpreted in accordance with, the laws of the State of Texas, without
regard to conflicts of laws principles. Exclusive venue and jurisdiction of any
disputes governed by this Agreement shall be in the federal courts for the State
of Texas. The parties hereby consent to the jurisdiction of such courts.
9.7 Compliance with Law. Gendux shall comply with all applicable laws
and regulations in connection with its activities pursuant to this Agreement.
10
<PAGE> 11
9.8 Modification; Waiver. No amendment or modification of any
provision of this Agreement shall be effective unless in writing signed by the
party to be charged. 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 both parties hereto. No failure on the part of either party 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.
9.9 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.
9.10 Severability. If any provision hereof should be held invalid,
illegal or unenforceable in any jurisdiction, the parties shall negotiate in
good faith a valid, legal and enforceable substitute provision that most nearly
reflects the original intent of the parties (or shall strike such provision in
the absence of such substitute provision) and 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.
9.11 Entire Agreement. This Agreement (including the Exhibit hereto)
together with the Target Gene License Agreement, the Delivery Technology License
Agreement and the Services Agreement (including the respective Exhibits
thereto), each entered into by the parties of even date, constitute the entire
understanding and agreement between the parties with respect to the subject
matter hereof and supersede any and all prior negotiations, representations,
agreements, and understandings, whether written or oral, between the parties
with respect to such subject matter.
9.12 Counterparts. This Agreement may be executed in two counterparts,
each of which shall be deemed an original, but both of which together shall
constitute one and the same instrument.
(The remainder of this page is intentionally left blank.)
11
<PAGE> 12
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the date first above written.
INTROGEN THERAPEUTICS, INC.
By /s/ JAMES W. ALBRECHT, JR.
------------------------------
Its Chief Financial Officer
------------------------------
GENDUX, INC.
By /s/ DAVID G. NANCE
------------------------------
Its President & CEO
------------------------------
12
<PAGE> 1
EXHIBIT 10.30
DELIVERY TECHNOLOGY LICENSE AGREEMENT
This Delivery Technology License Agreement ("Agreement") is made as of
January 1, 1999 (the "Effective Date") by and between Introgen Therapeutics,
Inc., a Delaware corporation ("Introgen"), and Gendux, Inc., a Delaware
corporation ("Gendux").
BACKGROUND
A. Introgen and Gendux are parties to that certain Administrative
Services and Management Agreement of even date herewith (the "Services
Agreement"), pursuant to which Introgen will provide certain administrative and
management services, all as set forth therein;
B. Introgen owns and/or controls rights to certain gene therapy
technologies;
C. Gendux desires to obtain from Introgen a license to such gene
therapy technologies, all on the terms and conditions set forth below; and
D. The parties desire that Gendux commercialize such gene therapy
technologies for applications within the Field (as defined below). In this
connection, Introgen and Gendux have entered into that certain Target Gene
License Agreement of even date herewith (the "TGLA Agreement"), pursuant to
which Introgen licensed certain genes and rights to Gendux, all on the terms and
conditions set forth therein, and that certain Research and Development
Agreement of even date herewith (the "Development Agreement"), pursuant to which
Introgen has agreed to assist Gendux in performing a certain developmental
research program within the Field, all as set forth therein.
NOW, THEREFORE, in consideration of the mutual covenants, conditions
and undertakings 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 "Affiliate" shall mean any entity which controls, is controlled by
or is under common control with Introgen or Gendux. For purposes of this
definition, "control" shall mean beneficial ownership (direct or indirect) of
more than fifty percent (50%) 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).
Notwithstanding the foregoing, neither Introgen nor Gendux shall be deemed to be
an Affiliate of the other for purposes of this Agreement.
-1-
<PAGE> 2
1.2 "Control" shall mean, except only for the purposes of Section 1.1
above, possession of the ability to grant a license or sublicense under this
Agreement without violating the terms of any agreement or other arrangement with
a third party.
1.3 "Field" shall mean [*].
1.4 "First Financing" shall mean the closing of the sale and/or
issuance of equity and/or debt securities by Gendux, as a result of which the
cumulative total of cash proceeds from such financings received by Gendux
exceeds [*].
1.5 "Licensed Patents" shall mean any and all rights in:
(a) all worldwide patents and patent applications that are
Controlled by Introgen as of the Effective Date (collectively, the "Existing
Patents");
(b) all worldwide patents and patent applications that are
Controlled by Introgen during the term of this Agreement, to the extent the
same claim and disclose a Development Invention (as defined in the Development
Agreement) (collectively, the "Development Patents"); and
(c) all divisions, continuations, continuations-in-part, foreign
counterparts, patents of addition, and substitutions of, and all patents issuing
on, any of the foregoing, together with all registrations, reissues,
reexaminations or extensions of any kind with respect to any of such patents, in
each case that are Controlled by Introgen during the term of this Agreement and
to the extent the same claim and disclose a Development Invention or an
invention claimed and disclosed in an Existing Patent.
1.6 "Licensed Product" shall mean any product, composition or material
the development, manufacture, use or sale of which incorporates, utilizes, is
derived from, or is otherwise based upon the Licensed Technology.
1.7 "Licensed Technology" shall mean the Licensed Patents and the
Related Materials.
1.8 "Manufacturing Costs" shall mean, with respect to a Licensed
Product, the costs that are incurred by Introgen, or its respective Affiliate,
associated with the manufacture, filling, packaging, labeling and/or other
preparation of such Licensed Product, as determined in accordance with generally
accepted accounting principles in the United States.
1.9 "Net Sales" shall mean the total amount invoiced to non-Affiliate
third parties on sales of Licensed Products by Gendux, its Affiliates, or
Sublicensees, less the following reasonable
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-2-
<PAGE> 3
and customary deductions: (i) all trade, cash and quantity credits, discounts,
refunds or rebates actually allowed to the customer; (ii) amounts for claims,
allowances or credits for returns, and retroactive price reductions actually
allowed to the customer; (iii) handling fees and prepaid freight, sales taxes,
duties and other governmental charges (including value added tax), in each case
to the extent stated separately on the invoice and paid by the customer; and
(iv) provisions for uncollectable accounts determined in accordance with
reasonable accounting practices, consistently applied to all products of the
selling party. For the removal of doubt, Net Sales shall not include sales by
Gendux to its Affiliates for resale, provided that if Gendux sells a Licensed
Product to an Affiliate for resale, Net Sales shall include the amounts invoiced
by such Affiliate to third parties on the resale of such Licensed Product.
1.10 "Related Materials" shall mean such technical information,
processes, procedures, compositions, biological materials, data and know-how as
the parties mutually agree are reasonably necessary for the proper conduct of
the R&D Program (as defined in the Development Agreement), in each case to the
extent the same are Controlled by Introgen.
1.11 "Sublicensee" shall mean any non-Affiliate third party to whom
Gendux has granted, directly or indirectly, a right or license to market, sell
or distribute Licensed Products.
1.12 "Target Genes" shall have the meaning defined in the TGLA.
1.13 "Third Party Agreements" shall mean collectively those agreements
between Introgen and a third party existing as of the Effective Date, as listed
on Exhibit A hereto, pursuant to which Introgen obtained rights to Licensed
Technology applicable to the Field. If after the Effective Date either Introgen
and/or Gendux enter into an agreement to license or acquire rights from a third
party with respect to subject matter in accordance with Section 3.3.2 below,
such agreements shall also be deemed Third Party Agreements for purposes for
this Agreement.
ARTICLE 2
LICENSE
2.1 Grant. Introgen hereby grants to Gendux a worldwide, non-exclusive,
royalty-bearing license under the Licensed Technology to make, use, import and
sell Licensed Products, in each case for purposes solely within the Field.
2.2 Sublicenses. Gendux may grant sublicenses within the scope of the
license granted to Gendux under Section 2.1 above to the extent necessary or
useful for exercising such license. Gendux agrees to provide to Introgen a copy
of any agreement pursuant to which a sublicense is granted to the Licensed
Technology promptly after the signing of such agreement.
2.3 Restrictions. Notwithstanding Sections 2.1 and 2.2 above, Gendux
covenants not to manufacture or have manufactured Licensed Products (or to grant
any third party the right to manufacture or have manufactured Licensed Products)
except to the extent expressly permitted in
-3-
<PAGE> 4
Section 4.3 below. In such event, Introgen shall provide to Gendux copies of all
documentation within Introgen's Control that is reasonably necessary for Gendux
to manufacture or have manufactured Licensed Products in accordance with Section
4.3 below, and shall reasonably cooperate with Gendux to establish supply
thereof, including sources of materials. Without limiting the foregoing, in the
event that Gendux has any Licensed Product manufactured by a third party, such
third party shall enter into a confidentiality agreement with Introgen to
protect against the unauthorized use and disclosure of Introgen's Confidential
Information.
2.4 Improvements. Gendux hereby grants to Introgen a worldwide,
perpetual, non-exclusive, fully paid-up license for all purposes, with the right
to grant and authorize sublicenses, under any and all improvements to the
Licensed Technology, which improvements are made by Gendux or by third parties
on behalf or under the authority of Gendux. As used herein, "improvements" to
the Licensed Technology shall mean any invention, biological material or other
subject matter that is made using, or derived in whole or in part from, any
Licensed Technology, and shall in any event be deemed to include (without
limiting the foregoing) any invention, material and subject matter useful in
connection with the delivery of genetic constructs or gene therapy; it being
further understood that the license granted in this Section 2.4 shall extend to
all patent and other rights in such improvements. Gendux agrees to (i) promptly
notify Introgen of any such improvements, (ii) provide with such notice samples
in reasonable quantities of any tangible materials within such improvements, and
(iii) keep Introgen fully informed of the status of any patents and patent
applications with respect to such improvements.
2.5 No Implied Licenses. Nothing herein shall be construed as granting
to either party, by implication, estoppel or otherwise, any license or other
right to any intellectual property of the other party other than those rights
expressly granted herein. Without limiting the foregoing provision of this
Section 2.5, nothing herein shall be deemed to grant to Gendux rights with
respect to any gene other than a Target Gene, or for any product that includes
any subject matter not expressly included within the Field.
ARTICLE 3
PATENT EXPENSES, ROYALTY PAYMENTS AND REPORTS
3.1 Royalty. In consideration of the rights and licenses granted by
Introgen to Gendux under this Agreement, except as otherwise provided in this
Article 3, Gendux shall pay to Introgen running royalties equal to [*] of Net
Sales by Gendux, its Affiliates or Sublicensees of Licensed Products.
3.1.1 Royalty Term. The obligation of Gendux to pay royalties under
this Article 3 shall continue with respect to each Licensed Product, on a
country-by-country basis, until the later of (i) the expiration of the
last-to-expire patent within the Licensed Patents covering such Licensed Product
in such country; or (ii) the abandonment, cancellation or withdrawal of the last
pending application for a patent within the Licensed Patents covering such
Licensed Product in such country; or (iii) ten (10) years after the date of the
first full commercial sale of such Licensed Product in such country.
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-4-
<PAGE> 5
3.1.2 TGLA Royalties. It is understood and agreed that Gendux's
total royalty obligation under this Agreement and the TGLA shall not exceed a
cumulative total of [*] of Net Sales [*].
3.1.3 Combination Products. In the event that a Licensed Product is
sold in combination with another product or pharmaceutically active ingredient
which is not a Licensed Product or an Agreement Product (as defined in the
TGLA), Net Sales for purposes of calculating the amounts due under Section 3.1
above shall be allocated between said Licensed Product and such other product or
pharmaceutically active ingredient, as mutually agreed by Introgen and Gendux.
3.2 Sublicense Revenues.
3.2.1 General. In addition to the amounts due under Section 3.1
above, Gendux shall pay to Introgen [*] of all fees or other consideration
(other than running royalties calculated on Net Sales of a Licensed Product)
received by Gendux from its Sublicensees (including, without limitation,
up-front fees and milestone payments), [*]. Without limiting the foregoing, in
the event that Introgen and Gendux enter into an agreement such that Introgen
licenses from Gendux delivery technology other than the Licensed Technology, the
parties will negotiate in good faith with respect to Sublicense revenues on
terms substantially similar to those set forth in this Section 3.2.
3.2.2 Coordination with TGLA. In the event that Gendux receives
sublicense fees as described in Section 3.2 of the TGLA in connection with a
Sublicense under this Agreement, Introgen shall not be entitled to receive more
than [*] of the total amounts received for such a combined Sublicense of the
rights under this Agreement and under the TGLA.
3.2.3 Cap. It is understood that such Development Costs will not
exceed [*], less any amounts paid to Introgen pursuant to Section 3.2 of the
TGLA.
3.3 Third Party Payments.
3.3.1 Generally. Gendux shall promptly reimburse Introgen for any
amounts paid or payable by Introgen to third parties pursuant to a Third Party
Agreement (including agreements entered into as set forth in 3.3.2 below),
including without limitation any royalties, patent expenses, license fees or
milestone payments due to such third parties, which in each case become due as a
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-5-
<PAGE> 6
result of the exercise by, on behalf of or under the authority of Gendux in
accordance with this Agreement of the licenses granted to Gendux under Section
2.1. Without limiting the foregoing, it is understood that all [*]. In the event
that amounts are due under a Third Party Agreement that are not directly
attributable to activities of Gendux (such as annual license fee payments,
patent expenses, milestone payments that are triggered by achievements of
Introgen or third parties but that reduce or eliminate corresponding payments by
Gendux for the achievement of such milestones), Gendux shall reimburse Introgen
for a reasonable portion of such payments, based on the relative benefit to
Gendux of such payments.
3.3.2 Future Agreements. It is understood and agreed Introgen may
choose to license or otherwise acquire technology from third parties which would
be subject to the licenses granted hereunder, but Introgen has no obligation to
do so. In the event that Introgen proposes to acquire such technology and offer
to Gendux to include the same within the Licensed Technology hereunder
("Acquired Technology"), Introgen shall disclose the same to Gendux, including
any royalty or other payment obligations that would apply to the exercise of
Gendux's license hereunder. Gendux shall notify Introgen in writing within
fifteen (15) days whether it desires such Acquired Technology to be included in
licenses granted hereunder. If Gendux so notifies and so desires, the Acquired
Technology shall be included in the Licensed Technology and if Gendux fails to
notify Introgen or notifies that it does not desire a license to such Acquired
Technology, then the Acquired Technology shall be excluded from the Licensed
Technology and Gendux shall not have a license thereto. The agreement under
which Introgen acquires Acquired Technology included within the Licensed
Technology as set forth above shall be a "Third Party Agreement" for purposes of
this Agreement.
3.3.3 Payment; Reports. If Introgen is obligated to pay amounts to
a third party pursuant to a Third Party Agreement subject to reimbursement
pursuant to Section 3.3.1 above, Introgen shall notify Gendux reasonably in
advance, and Gendux shall reimburse its share of such payments by the earlier of
(i) ten (10) days before such amounts are payable to such third party or (ii)
thirty (30) days after receipt of notice therefor. In addition, to the extent
that Introgen is obligated to provide reports to a third party pursuant to a
Third Party Agreement as a result of or reporting on the status of activities of
Gendux, Gendux shall reasonably assist Introgen by providing information in its
possession or control and in sufficient detail to complete and submit such
reports as required.
3.4 Royalty Reports and Payments. After the first sale of a Licensed
Product by Gendux, its Affiliates or Sublicensees, Gendux shall deliver to
Introgen within forty-five (45) days after the end of each calendar quarter, a
written report, certified by an officer of Gendux, setting forth in reasonable
detail the calculation of the royalties due to Introgen for such calendar
quarter, which calculation shall include, without limitation, the number,
description, and aggregate Net Sales of Licensed Products sold during such
calendar quarter. Simultaneously with the delivery of each such report, Gendux
shall pay to Introgen the total royalties, if any, due to Introgen for the
period of such report. If no royalties are due, Gendux shall so report. All
financial information contained in reports
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-6-
<PAGE> 7
provided to Introgen pursuant to this Section 3.4 shall be treated as
Confidential Information of Gendux pursuant to Article 11.
3.5 Payment Method. All amounts payable under this Agreement shall be
made by bank wire transfer in immediately available funds to an account
designated by Introgen. All dollar amounts specified in this Agreement are
expressed, and all payments hereunder shall be made, in U.S. dollars. Any
payments or portions thereof due under this Agreement which are not paid on the
date such payments are due under this Agreement shall, to the extent permitted
by applicable law, bear interest at [*], on the first business day after such
payment is due, calculated on the number of days such payment is delinquent.
3.6 Currency Conversion. If Gendux receives revenues from Net Sales of
Licensed Products in currency other than U.S. dollars, for purposes of
calculating royalties hereunder, such revenues shall be converted 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 (U.S.) for
the last business day of the applicable calendar quarter.
3.7 Records; Inspection. Gendux shall keep, and require its Affiliates
and Sublicensees to keep, complete, true and accurate books of account and
records for the purpose of determining the amounts payable pursuant to this
Agreement. Such books and records shall be kept for at least three (3) years
following the end of the calendar quarter to which they pertain. Such records
will be open for inspection during such three (3) year period by a
representative or agent of Introgen for the purpose of verifying the amounts
payable by Gendux hereunder. Such inspections may be made no more than once each
calendar year, at reasonable times and on reasonable notice. Introgen's
representative or agent will be obliged to execute a reasonable confidentiality
agreement prior to commencing any such inspection. Introgen shall bear the costs
and expenses of inspections conducted under this Section 3.7, unless a variation
or error producing an underpayment in amounts payable exceeding ten percent
(10%) of the amount paid for the period covered by the inspection is established
in the course of any such inspection, whereupon all costs relating to the
inspection and any unpaid amounts that are discovered shall be paid by Gendux,
together with interest on such unpaid amounts at the rate specified in Section
3.5 above.
3.8 Taxes. All payments by Gendux specified hereunder are expressed as
net amounts and shall be made free and clear of, and without reduction for, any
taxes. Any such taxes (including, without limitation, foreign withholding taxes)
which are otherwise imposed on payments to Introgen shall be the sole
responsibility of Gendux. Gendux shall provide Introgen with official receipts
issued by the appropriate taxing authority or such other evidence as is
reasonably requested by Introgen to establish that such taxes have been paid. If
Introgen has the legal obligation to collect and/or pay any sales, use, excise
or value added taxes, the appropriate amount shall be added to Gendux's invoice
and paid by Gendux, unless Gendux provides Introgen with a valid tax exemption
certificate authorized by the appropriate taxing authority.
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-7-
<PAGE> 8
ARTICLE 4
MANUFACTURING RIGHTS
4.1 Manufacture and Supply. Subject to Section 4.3 below, Introgen
shall have the worldwide, exclusive right to manufacture, or have manufactured,
and supply to Gendux Licensed Products for use or sale in the Field, and except
as set forth below, Gendux shall purchase exclusively from Introgen all of
Gendux', its Affiliates' and Sublicensees' Requirements of Licensed Products. It
is understood that Introgen may, at its election, engage subcontractors with
respect to the manufacture of Licensed Products for supply to Gendux.
4.2 Transfer Price. Licensed Products to be supplied by Introgen to
Gendux for use or sale within the Field shall be supplied at a price equal to
Introgen's Manufacturing Costs therefor [*]; provided, however, that with
respect to Licensed Products used for clinical research and regulatory affairs
necessary to obtain the government approvals required to market such Licensed
Products, the price will be equal to Introgen's Manufacturing Costs therefor
[*]. Notwithstanding the foregoing, as long as Introgen owns forty percent (40%)
or more of the fully diluted capitalization of Gendux, the price will be equal
to Introgen's Manufacturing Costs therefor [*].
4.3 Gendux Right to Supply. In the event that Introgen elects not to
supply quantities of Licensed Products within the Field, or fails to supply such
quantities under the terms and conditions established under Section 4.4 below,
Gendux shall have the right to manufacture, or have manufactured, and supply
(and/or authorize its Sublicensees to do so, subject to Section 2.3 above) the
quantities that Introgen so elects not to or fails to supply, for use or sale
(as the case may be) within the Field.
4.4 Supply Agreement. Upon request by Introgen or Gendux, the parties
shall enter into a supply agreement on reasonable and customary terms with
respect to the supply arrangements contemplated in this Article 4.
ARTICLE 5
DUE DILIGENCE
5.1 Gendux shall use its best efforts, itself or though a Sublicensee
on a worldwide basis, to develop for commercial sale, obtain regulatory approval
to market, and to market, promote and distribute Licensed Products for each of
the Target Genes, in each case as soon as practicable. Any efforts of Gendux's
Sublicensees shall be considered efforts of Gendux for the sole purpose of
determining Gendux's compliance with its obligation under this Section 5.1.
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-8-
<PAGE> 9
5.2 Upon request by Introgen, Gendux shall provide Introgen on each
December 1 with written progress reports, summarizing in reasonable detail the
progress of the development, evaluation, testing and commercialization of each
Licensed Product.
ARTICLE 6
TERM AND TERMINATION
6.1 Term. Unless terminated earlier pursuant to this Article 6, 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 patent application within the Licensed Patents,
whichever is later.
6.2 Termination by Introgen. In the event the First Financing does not
occur on or before [*], Introgen may terminate this Agreement upon
written notice.
6.3 Termination for Breach. Either Gendux or Introgen may terminate
this Agreement, in the event the other shall have materially breached or
defaulted in the performance of any of its obligations hereunder and such breach
shall have continued for thirty (30) days after written notice is given by the
nonbreaching party to the breaching party specifying the breach. For such
purposes, a breach of the TGLA, the Development Agreement or the Services
Agreement shall be deemed a breach of this Agreement.
6.4 Termination of TGLA. Without limiting the foregoing, this Agreement
shall terminate automatically upon termination of the TGLA.
6.5 Survival.
6.5.1 Termination of this Agreement for any reason shall not
release either party hereto from any liability which, at the time of such
termination, has already accrued to the other party or which is attributable to
a period prior to such termination, nor preclude either party from pursuing any
rights or remedies it may have hereunder or at law or in equity with respect to
any breach of this Agreement.
6.5.2 In the event this Agreement is terminated for any reason,
Gendux and its Affiliates shall have the right to sell or otherwise dispose of
the stock of any Licensed Products then on hand within one hundred twenty (120)
days of such termination, all subject to the payment to Introgen of fees and
royalties pursuant to Article 3 hereof.
6.5.3 Articles 1, 8, 9, 10, 11, and 12 and Sections 2.4, 3.7 and
6.5 shall survive the expiration and any termination of this Agreement. Except
as otherwise provided in this Article 6, all rights and obligations of the
parties under this Agreement shall terminate upon the expiration or termination
of this Agreement.
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-9-
<PAGE> 10
ARTICLE 7
INFRINGEMENT BY THIRD PARTY
7.1 Enforcement. During the term of this Agreement, in the event that
Gendux reasonably believes that any Licensed Technology is being infringed or
otherwise misappropriated by a third party by reason of the manufacture or sale
of a product within the Field, Gendux shall promptly notify Introgen in writing.
In the event Introgen does not initiate an action to enforce such Licensed
Technology against a commercially significant infringement in the Field by a
third party within one hundred eighty (180) days of a written request by Gendux
to do so, Gendux may initiate such action with Introgen's prior written consent.
Any amount recovered in such action shall first be applied to reimburse the
out-of-pocket costs of such action, and the remainder shall be [*].
7.2 Defense. If Gendux, its Affiliate, Sublicensee, distributor or
other customer is sued by a third party charging infringement of patent rights
that dominate a claim of the Licensed Patents or that otherwise cover the
manufacture, use, distribution or sale of a Licensed Product, Gendux will
promptly notify Introgen in writing. As between the parties to this Agreement,
Gendux will be entitled to control the defense in any such action, provided that
Introgen shall have the right to participate in the defense or settlement
thereof at its own expense with counsel of its own choosing. Except as agreed in
writing by Introgen, Gendux shall not enter into any settlement of any such
action if such settlement admits the unpatentability, invalidity or
unenforceability of any Licensed Technology. Gendux agrees to keep Introgen
reasonably informed of all developments in connection with any such action.
7.3 Cooperation. In any suit, action or other proceeding in connection
with defense of the Licensed Technology , Introgen shall reasonably cooperate
with Gendux with respect to such proceeding, at Gendux's expense. In any suit,
action or other proceeding in connection with enforcement of the Licensed
Technology, Gendux shall reasonably cooperate with Introgen with respect to such
proceeding, at Introgen's expense.
7.4 Patent Prosecution.
7.4.1 Prosecution by Introgen. Introgen shall have the right, at
its option, to control the filing for, prosecution and maintenance of the
Licensed Patents. Upon request by Gendux from time to time, Introgen shall
advise Gendux as to the status of any particular patent or patent application
within the Licensed Patents within the Field.
7.4.2 Prosecution by Gendux. If Introgen elects not to file,
prosecute or maintain any patent application or issued patent within the
Licensed Patents or pay any fee related thereto, in any country, Introgen shall
promptly notify Gendux of such election, but in no case later than sixty (60)
days prior to any required action relating to the filing, prosecution or
maintenance of such patent application or patent. In such event, upon notice to
Introgen, Gendux shall have the right, at its option, to control the filing,
prosecution and/or maintenance of any such patent applications or
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-10-
<PAGE> 11
patents within the Licensed Patents at its own expense. In the event that Gendux
takes over the filing, prosecution and/or maintenance of any such patent
application or patent within the Licensed Patents, Gendux shall keep Introgen
reasonably informed on matters regarding such filing, prosecution and
maintenance. Without limiting the foregoing, Gendux shall consult with Introgen
in a timely manner concerning (i) the scope and content of patent applications
within the Licensed Patents prior to filing such applications, and (ii) the
content of and proposed responses to official actions of the U.S. Patent and
Trademark Offices and foreign patent offices during the prosecution of such
patent applications. For purposes of this Section 7.4.2, "timely" shall mean
sufficiently in advance of any decisions by Gendux or any deadline imposed upon
written response by Gendux so as to allow Introgen to review such decision
and/or written response and also provide comments to Gendux in advance of such
decision or deadline.
7.4.3 Other. If Gendux elects not to file, prosecute or maintain
any patent application or issued patent within the Licensed Patents or pay any
fee related thereto, in any country, Gendux shall promptly notify Introgen of
such election, but in no case later than sixty (60) days prior to any required
action relating to the filing, prosecuting or maintenance of such patent
application or patent. In such event, upon notice to Gendux, Introgen shall have
the right, at its option, to take over the filing, prosecution and/or
maintenance of any such patent application or patent within the Licensed Patents
at its own expense.
In addition if during the exercise of its rights under Section 7.4.2
above, Gendux fails, in Introgen's judgment, to appropriately file, prosecute
or maintain any particular patent or patent application within the Licensed
Patents, then upon notice from Introgen, Gendux's right to file, prosecute
and/or maintain such patent or patent application shall terminate and Introgen
shall have the right, at its option, to control the filing, prosecution and/or
maintenance of such patent or patent application within the Licensed Patents at
its own expense. In such event, Gendux shall cooperate and take all steps
necessary to transfer to Introgen the filing, prosecution and/or maintenance of
such patent or patent application within the Licensed Patents.
7.5 No Implied Obligations. Neither party has any obligation to bring
or prosecute actions or suits against any third party for patent infringement.
Notwithstanding the foregoing, it is understood that the parties' rights and
obligations hereunder are subject to the Third Party Agreements.
ARTICLE 8
INSURANCE; INDEMNIFICATION
8.1 Insurance. Gendux shall secure and maintain in effect during the
term of this Agreement and for a period of three (3) years thereafter insurance
policy(ies) underwritten by a reputable insurance company and in a form and
having limits standard and customary for entities in the biotechnology industry
for exposures related to Gendux's indemnification obligations pursuant to this
Article 8 below. Such insurance shall include general liability, clinical trial
liability and
-11-
<PAGE> 12
product liability coverage with respect to the development and commercialization
of Licensed Products and shall name the Indemnitees (as defined below) as
additional insureds thereunder. Upon request by Introgen, Gendux shall provide
to Introgen certificates of insurance evidencing the coverage required above.
8.2 Indemnification. Gendux shall indemnify each of Introgen and its
directors, officers and employees and the successors and assigns of the
foregoing (collectively, the "Indemnitees"), and hold each Indemnitee harmless
from and against any and all liabilities, damages, settlements, claims, actions,
suits, penalties, fines, costs or expenses (including, without limitation,
reasonable attorneys' fees and other expenses of litigation) incurred by any
Indemnitee arising from or occurring as a result any claim, action, suit, or
other proceeding brought by third parties against an Indemnitee arising from or
occurring as a result of (i) the exercise of the rights granted to Gendux under
Section 2.1, including without limitation product liability claims relating to
any Licensed Product used, sold or otherwise distributed by or on behalf of
Gendux or its Affiliates or (ii) Introgen's performance of its responsibilities
with respect to the R&D Program or the manufacture and supply of Licensed
Products hereunder or (iii) the gross negligence or willful tortious misconduct
of Gendux or any of its directors, officers or employees or the successors or
assigns of any of the foregoing. Notwithstanding the foregoing, Gendux shall
have no obligation under this Section 8.2 with respect to liabilities, damages,
settlements, claims, actions, suits, penalties, fines, costs or expenses to the
extent the same is caused by the gross negligence or willful tortious misconduct
of an Indemnitee.
8.3 Procedure. An Indemnitee that intends to claim indemnification
under this Article 8 shall: (i) promptly notify Gendux in writing of any claim,
action, suit, or other proceeding brought by third parties in respect of which
the Indemnitee intends to claim such indemnification; (ii) provide Gendux sole
control of the defense and/or settlement thereof, and (iii) provide Gendux, at
Gendux's request and expense, with reasonable assistance and full information
with respect thereto. Notwithstanding the foregoing, the indemnity obligation in
this Article 8 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 Gendux, to the extent such consent is not withheld unreasonably or delayed.
Without limiting the foregoing provisions of this Section 8.3, Gendux shall keep
Introgen reasonably informed of the progress of any claim, suit or proceeding
under this Section 8.3 and Introgen shall have the right to participate in any
such claim, suit or proceeding with counsel of its choosing at its own expense.
ARTICLE 9
USE OF NAMES
Except as required by law or in the normal course of business
identification and description, neither party shall issue any press release or
other public statements in connection with this Agreement intended for use in
the public media in a manner suggesting any endorsement by the other party,
without the prior written approval of such other party, which approval shall
not be unreasonably withheld.
-12-
<PAGE> 13
ARTICLE 10
REPRESENTATIONS AND WARRANTIES
10.1 Introgen. Introgen hereby represents and warrants to Gendux 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 during the term of this Agreement any rights in the Licensed
Technology in the Field that are inconsistent with the rights and licenses
granted to Gendux herein; and (iii) to its knowledge, there are no claims of any
third parties pending against it that would call into question its right to
grant to Gendux the rights and licenses contemplated hereunder.
10.2 Gendux. Gendux hereby represents and warrants to Introgen 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 during the term of this Agreement any rights in conflict with the
rights and licenses granted herein; and (iii) to its knowledge, there are no
claims of any third parties pending against it that would call into question its
right to enter into and perform its obligations under this Agreement.
10.3 Disclaimer. EXCEPT AS EXPRESSLY PROVIDED IN THIS ARTICLE 10,
NEITHER PARTY MAKES ANY WARRANTIES OR CONDITIONS (EXPRESS, IMPLIED, STATUTORY,
OR OTHERWISE) WITH RESPECT TO THE SUBJECT MATTER HEREOF, INCLUDING WITHOUT
LIMITATION, THE SUPPLY AND DEVELOPMENT OF LICENSED PRODUCTS, THE LICENSED
PRODUCTS THEMSELVES AND THE LICENSED TECHNOLOGY, AND INTROGEN SPECIFICALLY
DISCLAIMS ANY AND ALL IMPLIED WARRANTIES OR CONDITIONS OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE, AND ALL WARRANTIES AND CONDITIONS OF THE
VALIDITY OF THE PATENT RIGHTS OR NONINFRINGEMENT OF THIRD PARTY INTELLECTUAL
PROPERTY RIGHTS.
ARTICLE 11
CONFIDENTIALITY
11.1 Confidential Information. Except as expressly provided herein,
each party shall maintain in confidence, and shall not use for any purpose or
disclose to any third party, information disclosed by the other party in writing
and marked "confidential" or that is disclosed orally and confirmed in writing
as confidential within a reasonable time following such disclosure
(collectively, "Confidential Information"). Notwithstanding the foregoing,
Confidential Information shall not include any information that, in each case as
demonstrated by contemporaneous written documentation: (i) was already known to
the receiving party, other than under an obligation of confidentiality, at the
time of disclosure hereunder, or (ii) was generally available to the public or
otherwise part of the public domain at the time of its disclosure to the
receiving party, or (iii) became generally available to the public or otherwise
part of the public domain after its disclosure, other than
-13-
<PAGE> 14
through any act or omission of the receiving party, or (iv) was subsequently
lawfully disclosed to the receiving party by a person other than a party hereto
or (v) was independently developed by the receiving party without reference to
any information or materials disclosed by the disclosing party. For purposes of
this Article 11, the Licensed Technology shall be deemed Confidential
Information of Introgen.
11.2 Permitted Usage. Notwithstanding the provisions of Section 11.1
above, each party may use or disclose the other party's Confidential Information
to the extent such use and disclosure is reasonably necessary in filing or
prosecuting patent applications, prosecuting or defending litigation, complying
with applicable governmental regulations, submitting information to tax or other
governmental authorities conducting clinical trials or exercising its rights
hereunder (including granting any permitted sublicenses); provided that if a
party is legally required to make any public disclosures of the other party's
Confidential Information, to the extent it may legally do so, it will give
reasonable advance notice to the other party of such disclosure and will use its
reasonable efforts to secure confidential treatment of such Confidential
Information prior to its disclosure (whether through protective orders or
otherwise).
ARTICLE 12
GENERAL
12.1 Independent Contractors. The relationship of Gendux and Introgen
established by this Agreement is that of independent contractors. Nothing in
this Agreement shall be construed to create any other relationship between the
parties. Neither party shall have any express or implied right, power or
authority to assume, create or incur any expense, liability or obligation on
behalf of or in the name of the other party.
12.2 Confidential Terms. Except as expressly provided herein, each
party agrees not to disclose any terms of this Agreement to any third party
without the prior written consent of the other party, except as required by
securities or other applicable laws and (subject to reasonable conditions of
confidentiality) to prospective and other investors and such party's
accountants, attorneys and other professional advisors.
12.3 Assignment. This Agreement shall not be assignable by either party
to any third party without the prior written consent of the other party hereto,
except that either party may assign this Agreement without the other party's
consent to an entity that acquires all or substantially all of the business or
assets of the assigning party, in each case whether by sale, merger, transfer of
assets, operation of law or otherwise; provided that in either case, such
assignee or transferee promptly agrees in writing to be bound by the terms and
conditions of this Agreement. Without limiting the foregoing, in the event of
such merger or transfer or acquisition of assets, no intellectual property
rights of the assignee or its affiliate shall be included in the Licensed
Technology, to the extent that such intellectual property rights were owned or
Controlled by the assignee or its affiliate prior to such merger or transfer or
acquisition of assets, or are created outside the Development Agreement
-14-
<PAGE> 15
or by personnel who were not employees of the assigning party prior to the
merger or transfer or acquisition of assets. Upon a permitted assignment of this
Agreement, all references herein to the assigning party shall be deemed
references to the assignee. Any assignment not permitted under this Section 12.3
shall be null and void.
12.4 Force Majeure. Nonperformance of either party (except for payment
of amounts due hereunder) shall be excused to the extent that performance is
rendered impossible by strike, fire, earthquake, flood, governmental acts or
orders or restrictions, or any other reason, including failure of suppliers,
where failure to perform is beyond the reasonable control of the nonperforming
party. Without limiting the foregoing, the party subject to such inability shall
use reasonable efforts to minimize the duration of any force majeure event.
12.5 Patent Marking. Gendux agrees to mark, and have its Affiliates and
Sublicensees mark, all Licensed Products sold or otherwise distributed pursuant
to this Agreement in accordance with the applicable patent statutes or
regulations in the country or countries of manufacture and sale thereof.
12.6 Notices. All notices, requests and other communications hereunder
shall be made in writing and shall be sent by registered or certified mail,
return receipt requested, postage prepaid; facsimile transmission (receipt
verified); or express courier service (signature required), in each case to the
respective address or fax number specified below, or such other address or fax
number as may be specified in writing to the other party:
Gendux: Gendux, Inc.
301 Congress Avenue, Suite 1850
Austin, Texas 78701
Attn: President
Fax: (512) 708-9311
with a copy to: Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, California 94304-1050
Attn: Kenneth A. Clark, Esq.
Fax: (650) 493-6811
Introgen: Introgen Therapeutics, Inc.
301 Congress Avenue, Suite 1850
Austin, Texas 78701
Attn: President
Fax: (512) 708-9311
with a copy to: Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, California 94304-1050
Attn: Kenneth A. Clark, Esq.
Fax: (650) 493-6811
-15-
<PAGE> 16
12.7 Governing Law. This Agreement shall be governed by, and construed
and interpreted in accordance with, the laws of the State of Texas, without
regard to conflicts of laws principles. Exclusive venue and jurisdiction of any
disputes governed by this Agreement shall be in the federal courts for the State
of Texas. The parties hereby consent to the jurisdiction of such courts.
12.8 Compliance with Law. Gendux shall comply with all applicable laws
and regulations in connection with its activities pursuant to this Agreement.
12.9 Modification; Waiver. No amendment or modification of any
provision of this Agreement shall be effective unless in writing signed by the
party to be charged. 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 both parties hereto. No failure on the part of either party 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.
12.10 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.
12.11 Severability. If any provision hereof should be held invalid,
illegal or unenforceable in any jurisdiction, the parties shall negotiate in
good faith a valid, legal and enforceable substitute provision that most nearly
reflects the original intent of the parties (or shall strike such provision in
the absence of such substitute provision) and 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.
12.12 Entire Agreement. This Agreement (including the Exhibit hereto)
together with the TGLA, the Development Agreement and the Services Agreement
(including the respective Exhibits thereto), each entered into by the parties of
even date, constitute the entire understanding and agreement between the parties
with respect to the subject matter hereof and supersede any and all prior
negotiations, representations, agreements, and understandings, whether written
or oral, between the parties with respect to such subject matter.
12.13 Counterparts. This Agreement may be executed in two counterparts,
each of which shall be deemed an original, but both of which together shall
constitute one and the same instrument.
-16-
<PAGE> 17
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered in duplicate originals.
INTROGEN THERAPEUTICS, INC.
By: /s/ JAMES W. ALBRECHT, JR.
---------------------------------------------------
Name: James W. Albrecht, Jr.
-------------------------------------------------
Title: Chief Financial Officer
------------------------------------------------
GENDUX, INC.
By: /s/ DAVID G. NANCE
---------------------------------------------------
Name: David G. Nance
-------------------------------------------------
Title: President & CEO
------------------------------------------------
-17-
<PAGE> 18
EXHIBIT A
THIRD PARTY AGREEMENTS
[To be completed]
<PAGE> 1
EXHIBIT 10.31
TARGET GENE LICENSE AGREEMENT
This Target Gene License Agreement ("Agreement") is made as of January
1, 1999 (the "Effective Date") by and between Introgen Therapeutics, Inc., a
Delaware corporation ("Introgen"), and Gendux, Inc., a Delaware corporation
("Gendux").
BACKGROUND
A. Introgen and Gendux are parties to that certain Administrative
Services and Management Agreement of even date herewith (the "Services
Agreement"), pursuant to which Introgen will provide certain administrative and
management services, all as set forth therein;
B. Introgen controls rights to certain genes;
C. Gendux desires to obtain from Introgen a license to certain of such
genes, and an assignment of Introgen's rights in certain other of such genes,
all on the terms and conditions set forth below; and
D. The parties desire that Gendux commercialize such genes for
applications within the Field (as defined below). In this connection, Introgen
and Gendux have entered into that certain Delivery Technology License Agreement
of even date herewith (the "DTLA Agreement"), pursuant to which Introgen
licensed certain gene therapy technologies and rights to Gendux, all on the
terms and conditions set forth therein, and that certain Research and
Development Agreement of even date herewith (the "Development Agreement"),
pursuant to which Introgen has agreed to assist Gendux in performing a certain
developmental research program within the Field, all as set forth therein.
NOW, THEREFORE, in consideration of the mutual covenants, conditions
and undertakings 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 "Affiliate" shall mean any entity which controls, is controlled by
or is under common control with Introgen or Gendux. For purposes of this
definition, "control" shall mean beneficial ownership (direct or indirect) of
more than fifty percent (50%) 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).
Notwithstanding the foregoing, neither Introgen nor Gendux shall be deemed to be
an Affiliate of the other for purposes of this Agreement.
-1-
<PAGE> 2
1.2 "Agreement Product" shall mean any product, composition or material
the development, manufacture, use or sale of which incorporates, utilizes, is
derived from, or is otherwise based upon the Subject Genes.
1.3 "Assigned Rights" shall mean all rights and obligations of Introgen
in and to those agreements listed on Exhibit A hereto (collectively, the
"Assigned Agreements").
1.4 "Completion" shall be deemed to occur, subject to the terms of
Section 5.3 with respect to a particular phase for an Agreement Product, upon
the earlier of: (i) when all patients called for in the protocol for such phase
clinical trials have been dosed and all patient follow-up as defined in such
protocol has been completed or (ii) initiation of a later phase clinical trial
for the same Agreement Product.
1.6 "Control" shall mean, except only for the purposes of Section 1.1
above, possession of the ability to grant a license or sublicense under this
Agreement without violating the terms of any agreement or other arrangement with
a third party.
1.7 "Field" shall mean [*].
1.8 "First Financing" shall mean the closing of the sale and/or
issuance of equity and/or debt securities by Gendux, as a result of which the
cumulative total of cash proceeds from such financings received by Gendux
exceeds [*].
1.9 "Licensed Patents" shall mean any and all rights in all worldwide
patents and patent applications that are Controlled by Introgen during the term
of this Agreement, to the extent the same claim and disclose the composition of
a Licensed Gene.
1.10 "Major Country" shall mean [*] or a [*].
1.11 "Manufacturing Costs" shall mean, with respect to an Agreement
Product, the costs that are incurred by Introgen, or its respective Affiliate,
associated with the manufacture, filling, packaging, labeling and/or other
preparation of such Agreement Product, as determined in accordance with
generally accepted accounting principles in the United States.
1.12 "Net Sales" shall mean the total amount invoiced to non-Affiliate
third parties on sales of Agreement Products by Gendux, its Affiliates, or
Sublicensees, less the following reasonable and customary deductions: (i) all
trade, cash and quantity credits, discounts, refunds or rebates actually allowed
to the customer; (ii) amounts for claims, allowances or credits for returns, and
retroactive price reductions actually allowed to the customer; (iii) handling
fees and prepaid freight, sales taxes, duties and other governmental charges
(including value added tax), in each case to the
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-2-
<PAGE> 3
extent stated separately on the invoice and paid by the customer; and (iv)
provisions for uncollectable accounts determined in accordance with reasonable
accounting practices, consistently applied to all products of the selling party.
For the removal of doubt, Net Sales shall not include sales by Gendux to its
Affiliates for resale, provided that if Gendux sells an Agreement Product to an
Affiliate for resale, Net Sales shall include the amounts invoiced by such
Affiliate to third parties on the resale of such Agreement Product.
1.13 "Own" shall mean possession of the ability to assign, as provided
for herein, all of one's rights without violating the terms of an agreement with
a third party.
1.14 "Related Materials" shall mean technical information, processes,
procedures, compositions, biological materials, data and know-how related to the
Licensed Genes that Introgen provides to Gendux in connection with this
Agreement, in each case to the extent the same are Controlled by Introgen.
1.15 "Subject Genes" shall mean the Licensed Patents, the Assigned
Rights, and the Related Materials.
1.16 "Sublicensee" shall mean any non-Affiliate third party to whom
Gendux has granted, directly or indirectly, a right or license to market, sell
or distribute Agreement Products.
1.17 "Target Genes" shall mean (i) the genes PTEN, C-CAM, DBCCR1,
RSK-3, and (ii) any other genes substituted or added to this Agreement upon the
written mutual agreement of the parties hereto. The Target Genes consist of both
Licensed Genes and Assigned Genes, where:
(i) "Assigned Genes" shall mean those Target Genes listed on
Exhibit A hereto, as amended from time to time; and
(ii) "Licensed Genes" shall mean those Target Genes listed on
Exhibit B hereto, as amended from time to time.
1.18 "Third Party Agreements" shall mean collectively those agreements
between Introgen and a third party pursuant to which Introgen obtained rights to
the Subject Genes.
ARTICLE 2
LICENSE
2.1 Grant. Introgen hereby grants to Gendux a worldwide, exclusive
(except as otherwise expressly provided in Section 2.4 below), royalty-bearing
license under the Licensed Patents and Related Materials to make, use, import
and sell Agreement Products, in each case for purposes solely within the Field.
-3-
<PAGE> 4
2.2 Assignment. Promptly following the Effective Date, Introgen agrees
to assign to Gendux the Assigned Rights, to the extent that Introgen has the
right to do so. In the event that Introgen does not have the right to do so as
of the Effective Date, Introgen agrees to use commercially reasonable to obtain
such right, and upon obtaining such right, to assign the particular Assigned
Rights to Gendux.
2.3 Sublicenses. Gendux may grant sublicenses within the scope of the
license granted to Gendux under Section 2.1 above to the extent necessary or
useful for exercising such license. Gendux agrees to provide to Introgen a copy
of any agreement pursuant to which a sublicense is granted to the Licensed
Patents or Related Materials or pursuant to which a sublicense is granted under
the Assigned Rights, promptly after the signing of such agreement.
2.4 Restrictions. Notwithstanding Sections 2.1, 2.2 or 2.3 above,
Gendux covenants not to manufacture or have manufactured Agreement Products (or
to grant any third party the right to manufacture or have manufactured Agreement
Products) except to the extent expressly permitted in Section 4.3 below. In such
event, Introgen shall provide to Gendux copies of all documentation within
Introgen's Control that is reasonably necessary for Gendux to manufacture or
have manufactured Agreement Products in accordance with Section 4.3 below, and
shall reasonably cooperate with Gendux to establish supply thereof, including
sources of materials. Without limiting the foregoing, in the event that Gendux
has any Agreement Product manufactured by a third party, such third party shall
enter into a confidentiality agreement with Introgen to protect against the
unauthorized use and disclosure of Introgen's Confidential Information.
2.5 Development License. It is understood that Introgen retains a
royalty-free license to the Subject Genes for purposes of performing its duties
under the Development Agreement.
2.6 No Implied Licenses. Nothing herein shall be construed as granting
to either party, by implication, estoppel or otherwise, any license or other
right to any intellectual property of the other party other than those rights
expressly granted herein. Without limiting the foregoing provision of this
Section 2.6, nothing herein shall be deemed to grant to Gendux rights with
respect to any gene other than a Target Gene, or for any product that includes
any subject matter not expressly included within the Field.
ARTICLE 3
PATENT EXPENSES, ROYALTY PAYMENTS AND REPORTS
3.1 Royalty. In consideration of the rights and licenses granted by
Introgen to Gendux under this Agreement, except as otherwise provided in this
Article 3, Gendux shall pay to Introgen running royalties equal to [*] of Net
Sales by Gendux, its Affiliates or Sublicensees of Agreement Products.
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-4-
<PAGE> 5
3.1.1 Royalty Term. The obligation of Gendux to pay royalties
under this Article 3 shall continue with respect to each Agreement Product, on a
country-by-country basis, until the later of (i) the expiration of the
last-to-expire patent within the Licensed Patents or Assigned Rights covering
such Agreement Product in such country; or (ii) the abandonment, cancellation or
withdrawal of the last pending application for a patent within the Licensed
Patents or Assigned Rights covering such Agreement Product in such country; or
(iii) [*] after the date of the first full commercial sale of such Agreement
Product in such country.
3.1.2 DTLA Royalties. It is understood and agreed that
Gendux's total royalty obligation under this Agreement and the DTLA shall not
exceed a cumulative total of [*] of Net Sales and [*].
3.1.3 Combination Products. In the event that an Agreement
Product is sold in combination with another product or pharmaceutically active
ingredient which is not an Agreement Product or a Licensed Product (as defined
in the DTLA), Net Sales for purposes of calculating the amounts due under
Section 3.1 above shall be allocated between said Agreement Product and such
other product or pharmaceutically active ingredient, as mutually agreed by
Introgen and Gendux.
3.2 Sublicense Revenues.
3.2.1 General. In addition to the amounts due under Section
3.1 above, Gendux shall pay to Introgen [*] of all fees or other consideration
(other than running royalties calculated on Net Sales of an Agreement Product)
received by Gendux from its Sublicensees (including, without limitation,
up-front fees and milestone payments), [*]. Without limiting the foregoing, in
the event that Introgen and Gendux enter into an agreement such that Introgen
licenses certain genes from Gendux, the parties will negotiate in good faith
with respect to Sublicense revenues on terms substantially similar to those set
forth in this Section 3.2.
3.2.2 Coordination with DTLA. In the event that Gendux
receives sublicense fees as described in Section 3.2 of the DTLA in connection
with Sublicense under this Agreement, Introgen shall not be entitled to receive
more than [*] of the total amounts received for such a combined Sublicense of
the rights under this Agreement and under the DTLA.
3.2.3 Cap. It is understood that such Development Costs will
not exceed [*].
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-5-
<PAGE> 6
3.3 Third Party Payments.
3.3.1 Generally. Gendux shall promptly reimburse Introgen for
any amounts paid or payable by Introgen to third parties pursuant to a Third
Party Agreement, including without limitation any royalties, patent expenses,
license fees or milestone payments due to such third parties. Without limiting
the foregoing, it is understood that all [*].
3.3.2 Payment; Reports. If Introgen is obligated to pay
amounts to a third party pursuant to a Third Party Agreement subject to
reimbursement pursuant to Section 3.3.1 above, Introgen shall notify Gendux
reasonably in advance, and Gendux shall reimburse its share of such payments by
the earlier of (i) ten (10) days before such amounts are payable to such third
party or (ii) thirty (30) days after receipt of notice therefor. In addition, to
the extent that Introgen is obligated to provide reports to a third party
pursuant to a Third Party Agreement, Gendux shall reasonably assist Introgen by
providing information in its possession or control and in sufficient detail to
complete and submit such reports as required.
3.4 Royalty Reports and Payments. After the first sale of an Agreement
Product by Gendux, its Affiliates or Sublicensees, Gendux shall deliver to
Introgen within forty-five (45) days after the end of each calendar quarter, a
written report, certified by an officer of Gendux, setting forth in reasonable
detail the calculation of the royalties due to Introgen for such calendar
quarter, which calculation shall include, without limitation, the number,
description, and aggregate Net Sales of Agreement Products sold during such
calendar quarter. Simultaneously with the delivery of each such report, Gendux
shall pay to Introgen the total royalties, if any, due to Introgen for the
period of such report. If no royalties are due, Gendux shall so report. All
financial information contained in reports provided to Introgen pursuant to this
Section 3.4 shall be treated as Confidential Information of Gendux pursuant to
Article 11.
3.5 Payment Method. All amounts payable under this Agreement shall be
made by bank wire transfer in immediately available funds to an account
designated by Introgen. All dollar amounts specified in this Agreement are
expressed, and all payments hereunder shall be made, in U.S. dollars. Any
payments or portions thereof due under this Agreement which are not paid on the
date such payments are due under this Agreement shall, to the extent permitted
by applicable law, bear interest at the U.S. prime rate per annum quoted in the
"Money Rates" column of The Wall Street Journal (U.S.), on the first business
day after such payment is due, calculated on the number of days such payment is
delinquent.
3.6 Currency Conversion. If Gendux receives revenues from Net Sales of
Agreement Products in currency other than U.S. dollars, for purposes of
calculating royalties hereunder, such revenues shall be converted 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 (U.S.) for
the last business day of the applicable calendar quarter.
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-6-
<PAGE> 7
3.7 Records; Inspection. Gendux shall keep, and require its Affiliates
and Sublicensees to keep, complete, true and accurate books of account and
records for the purpose of determining the amounts payable pursuant to this
Agreement. Such books and records shall be kept for at least three (3) years
following the end of the calendar quarter to which they pertain. Such records
will be open for inspection during such three (3) year period by a
representative or agent of Introgen for the purpose of verifying the amounts
payable by Gendux hereunder. Such inspections may be made no more than once each
calendar year, at reasonable times and on reasonable notice. Introgen's
representative or agent will be obliged to execute a reasonable confidentiality
agreement prior to commencing any such inspection. Introgen shall bear the costs
and expenses of inspections conducted under this Section 3.7, unless a variation
or error producing an underpayment in amounts payable exceeding ten percent
(10%) of the amount paid for any period covered by the inspection is established
in the course of any such inspection, whereupon all costs relating to the
inspection and any unpaid amounts that are discovered shall be paid by Gendux,
together with interest on such unpaid amounts at the rate specified in Section
3.5 above.
3.8 Taxes. All payments by Gendux specified hereunder are expressed as
net amounts and shall be made free and clear of, and without reduction for, any
taxes. Any such taxes (including, without limitation, foreign withholding taxes)
which are otherwise imposed on payments to Introgen shall be the sole
responsibility of Gendux. Gendux shall provide Introgen with official receipts
issued by the appropriate taxing authority or such other evidence as is
reasonably requested by Introgen to establish that such taxes have been paid. If
Introgen has the legal obligation to collect and/or pay any sales, use, excise
or value added taxes, the appropriate amount shall be added to Gendux's invoice
and paid by Gendux, unless Gendux provides Introgen with a valid tax exemption
certificate authorized by the appropriate taxing authority.
ARTICLE 4
MANUFACTURING RIGHTS
4.1 Manufacture and Supply. Subject to Section 4.3 below, Introgen
shall have the worldwide, exclusive right to manufacture, or have manufactured,
and supply to Gendux Agreement Products for use or sale in the Field, and except
as set forth below, Gendux shall purchase exclusively from Introgen all of
Gendux', its Affiliates' and Sublicensees' requirements of Agreement Products.
It is understood that Introgen may, at its election, engage subcontractors with
respect to the manufacture of Agreement Products for supply to Gendux.
4.2 Transfer Price. Agreement Products to be supplied by Introgen to
Gendux for use or sale within the Field shall be supplied at a price equal to
Introgen's Manufacturing Costs therefor [*]; provided, however, that with
respect to Agreement Products used for clinical research and regulatory affairs
necessary to obtain the government approvals required to market such Agreement
Products, the price will be equal to Introgen's Manufacturing Costs thereof [*].
Notwithstanding the foregoing, as long as Introgen owns [*] or more of the fully
diluted capitalization of Gendux, the
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-7-
<PAGE> 8
price will be equal to Introgen's Manufacturing Costs therefor [*]. Without
limiting the foregoing, in the event that Introgen and Gendux enter into an
agreement such that Gendux supplies products similar to Agreement Products to
Introgen, the parties will negotiate in good faith with respect to the transfer
price of such Agreement Products on terms substantially similar to those set
forth in this Section 4.2.
4.3 Gendux Right to Supply. In the event that Introgen elects not to
supply quantities of Agreement Products within the Field, or fails to supply
such quantities under the terms and conditions established under Section 4.4
below, Gendux shall have the right to manufacture, or have manufactured, and
supply (and/or to authorize its Sublicensees to do so, subject to Section 2.4
above) the quantities that Introgen so elects not to or fails to supply, for use
or sale (as the case may be) within the Field.
4.4 Supply Agreement. Upon request by Introgen or Gendux, the parties
shall enter into a supply agreement on reasonable and customary terms with
respect to the supply arrangements contemplated in this Article 4.
ARTICLE 5
DUE DILIGENCE
5.1 Due Diligence. Gendux shall use its best efforts, itself or though
a Sublicensee on a worldwide basis, to develop for commercial sale, obtain
regulatory approval to market, and to market, promote and distribute Agreement
Products for each of the Target Genes, in each case as soon as practicable. Any
efforts of Gendux's Sublicensees shall be considered efforts of Gendux for the
sole purpose of determining Gendux's compliance with its obligation under this
Section 5.1.
5.2 Progress Reports. Upon request by Introgen, Gendux shall provide
Introgen on each December 1 with written progress reports, summarizing in
reasonable detail the progress of the development, evaluation, testing and
commercialization of each Agreement Product.
5.3 Milestones.
5.3.1 PTEN; C-CAM. With respect to each Agreement Product
based upon PTEN or C-CAM, Gendux shall accomplish each of the following
milestones on or before the times set forth below:
<TABLE>
<S> <C>
Initiation of [*] clinical trials
in a Major Country: [*]
Initiation of [*] clinical trials
in a Major Country: [*]
</TABLE>
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-8-
<PAGE> 9
<TABLE>
<S> <C>
Initiation of [*] clinical trials
in a Major Country: The earlier of [*]
Filing of [*] in a Major Country: The earlier of [*]
</TABLE>
5.3.2 DBCCR1; RSK-3. With respect to each Agreement Product
based upon DBCCR1 or RSK-3, Gendux shall accomplish each of the following
milestones on or before the times set forth below:
<TABLE>
<S> <C>
Initiation of [*] clinical trials
in a Major Country: [*]
Initiation of [*] clinical trials [*]
Initiation of [*] clinical trials
in a Major Country: [*]
Filing of [*] in a Major Country: [*]
</TABLE>
5.4 Failure to Meet Milestones. In the event Gendux fails to meet the
milestones of Section 5.3 with respect to any Agreement Product, Gendux's rights
and license with respect to such Agreement Product shall terminate, Gendux shall
promptly re-assign to Introgen all of the Assigned Rights relating to such
Agreement Product, and Introgen shall have the exclusive right to manufacture,
market, sell and distribute such Agreement Product. Notwithstanding the
foregoing, Gendux's rights to any Agreement Product shall not terminate by
reason of a delay in meeting one or
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-9-
<PAGE> 10
more of the foregoing milestones, to the extent that circumstances outside of
Gendux's reasonable control (i.e., legal requirements to suspend clinical trials
or the like) require such delay. However, it is understood that a decision not
to proceed or to delay proceeding based on lower than expected efficacy, or any
other factors that may affect the likelihood of approval or marketability of the
Agreement Product, shall not be deemed a circumstance beyond Gendux's reasonable
control.
ARTICLE 6
TERM AND TERMINATION
6.1 Term. Unless terminated earlier pursuant to this Article 6, 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 patent application within the Licensed Patents or
Assigned Rights, whichever is later.
6.2 Termination by Introgen. In the event the First Financing does not
occur on or before [*], Introgen may terminate this Agreement upon written
notice.
6.3 Termination for Breach. Either Gendux or Introgen may terminate
this Agreement, in the event the other shall have materially breached or
defaulted in the performance of any of its obligations hereunder and such breach
shall have continued for thirty (30) days after written notice is given by the
nonbreaching party to the breaching party specifying the breach. For such
purposes, breach of the DTLA, the Development Agreement or the Services
Agreement shall be deemed a breach of this Agreement.
6.4 Survival.
6.4.1 Termination of this Agreement for any reason shall not
release either party hereto from any liability which, at the time of such
termination, has already accrued to the other party or which is attributable to
a period prior to such termination, nor preclude either party from pursuing any
rights or remedies it may have hereunder or at law or in equity with respect to
any breach of this Agreement.
6.4.2 In the event this Agreement is terminated for any
reason, Gendux and its Affiliates shall have the right to sell or otherwise
dispose of the stock of any Agreement Products then on hand within one hundred
twenty (120) days of such termination, all subject to the payment to Introgen of
fees and royalties pursuant to Article 3 hereof.
6.4.3 Articles 1, 8, 9, 10, 11 and 12 and Sections 3.7 and 6.4
shall survive the expiration and any termination of this Agreement. Except as
otherwise provided in this Article 6, all rights and obligations of the parties
under this Agreement shall terminate upon the expiration or termination of this
Agreement.
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-10-
<PAGE> 11
6.4.4 In addition, upon any termination of this Agreement,
Gendux shall promptly re-assign to Introgen all of the Assigned Rights. In the
event that Gendux does not have the right to do so under the agreements
comprising the Assigned Rights, Gendux shall use its best efforts to obtain such
right as soon as possible, and upon obtaining such right, Gendux shall re-assign
the particular Assigned Rights to Introgen. Gendux hereby grants to Introgen a
worldwide right and sublicense, including the right to grant and authorize
further sublicenses, to practice and exercise for all purposes the Assigned
Rights; provided that Introgen agrees not to exercise such right and sublicense
during the term of this Agreement.
6.4.5 Following the re-assignment of the Assigned Rights by
Gendux to Introgen pursuant to Section 6.4.4 above, Introgen agrees to pay to
Gendux running royalties equal to [*] of Net Sales by Introgen, its Affiliates
or Sublicensees of Agreement Products covered by such Assigned Rights, under the
same principles set forth in Section 3.1 above (as applicable), [*].
ARTICLE 7
INFRINGEMENT BY THIRD PARTY
7.1 Enforcement. During the term of this Agreement, in the event that
Gendux reasonably believes that any Licensed Patent is being infringed or
otherwise misappropriated by a third party by reason of the manufacture or sale
of a product within the Field, Gendux shall promptly notify Introgen in writing.
In the event Introgen does not initiate an action to enforce such Licensed
Patent against a commercially significant infringement in the Field by a third
party within one hundred eighty (180) days of a written request by Gendux to do
so, Gendux may initiate such action with Introgen's prior written consent. Any
amount recovered in such action shall first be applied to reimburse the
out-of-pocket costs of such action and the remainder shall be [*].
7.2 Defense. If Gendux, its Affiliate, Sublicensee, distributor or
other customer is sued by a third party charging infringement of patent rights
that dominate a claim of the Licensed Patents or that otherwise cover the
manufacture, use, distribution or sale of an Agreement Product, Gendux will
promptly notify Introgen in writing. As between the parties to this Agreement,
Gendux will be entitled to control the defense in any such action, provided that
Introgen shall have the right to participate in the defense or settlement
thereof at its own expense with counsel of its own choosing. Except as agreed in
writing by Introgen, Gendux shall not enter into any settlement of any such
action if such settlement admits the unpatentability, invalidity or
unenforceability of any Licensed Patent. Gendux agrees to keep Introgen
reasonably informed of all developments in connection with any such action.
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-11-
<PAGE> 12
7.3 Cooperation. In any suit, action or other proceeding in connection
with defense of the Licensed Patents, Introgen shall reasonably cooperate with
Gendux with respect to such proceeding, at Gendux's expense. In any suit, action
or other proceeding in connection with enforcement of the Licensed Patents,
Gendux shall reasonably cooperate with Introgen with respect to such proceeding,
at Introgen's expense.
7.4 Patent Prosecution.
7.4.1 Prosecution by Introgen. Introgen shall have the right,
at its option, to control the filing for, prosecution and maintenance of the
Licensed Patents. Upon request by Gendux from time to time, Introgen shall
advise Gendux as to the status of any particular patent or patent application
within the Licensed Patents within the Field.
7.4.2 Prosecution by Gendux. If Introgen elects not to file,
prosecute or maintain any patent application or issued patent within the
Licensed Patents or pay any fee related thereto, in any country, Introgen shall
promptly notify Gendux of such election, but in no case later than sixty (60)
days prior to any required action relating to the filing, prosecution or
maintenance of such patent application or patent. In such event, upon notice to
Introgen, Gendux shall have the right, at its option, to control the filing,
prosecution and/or maintenance of any such patent applications or patents within
the Licensed Patents at its own expense. In the event that Gendux takes over the
filing, prosecution and/or maintenance of any such patent application or patent
within the Licensed Patents, Gendux shall keep Introgen reasonably informed on
matters regarding such filing, prosecution and maintenance. Without limiting the
foregoing, Gendux shall consult with Introgen in a timely manner concerning (i)
the scope and content of patent applications within the Licensed Patents prior
to filing such applications, and (ii) the content of and proposed responses to
official actions of the U.S. Patent and Trademark Offices and foreign patent
offices during the prosecution of such patent applications. For purposes of this
Section 7.4.2, "timely" shall mean sufficiently in advance of any decisions by
Gendux or any deadline imposed upon written response by Gendux so as to allow
Introgen to review such decision and/or written response and also provide
comments to Gendux in advance of such decision or deadline.
7.4.3 Other. If Gendux elects not to file, prosecute or
maintain any patent application or issued patent within the Licensed Patents or
pay any fee related thereto, in any country, Gendux shall promptly notify
Introgen of such election, but in no case later than sixty (60) days prior to
any required action relating to the filing, prosecuting or maintenance of such
patent application or patent. In such event, upon notice to Gendux, Introgen
shall have the right, at its option, to take over the filing, prosecution and/or
maintenance of any such patent application or patent within the Licensed Patents
at its own expense.
In addition if during the exercise of its rights under Section 7.4.2
above, Gendux fails, in Introgen's judgment, to appropriately file, prosecute or
maintain any particular patent or patent application within the Licensed
Patents, then upon notice from Introgen, Gendux's right to file, prosecute
and/or maintain such patent or patent application shall terminate and Introgen
shall have
-12-
<PAGE> 13
the right, at its option, to control the filing, prosecution and/or maintenance
of such patent or patent application within the Licensed Patents at its own
expense. In such event, Gendux shall cooperate and take all steps necessary to
transfer to Introgen the filing, prosecution and/or maintenance of such patent
or patent application within the Licensed Patents.
7.5 No Implied Obligations. Neither party has any obligation to bring
or prosecute actions or suits against any third party for patent infringement.
Notwithstanding the foregoing, it is understood that the parties' rights and
obligations hereunder are subject to the Third Party Agreements.
ARTICLE 8
INSURANCE; INDEMNIFICATION
8.1 Insurance. Gendux shall secure and maintain in effect during the
term of this Agreement and for a period of three (3) years thereafter insurance
policy(ies) underwritten by a reputable insurance company and in a form and
having limits standard and customary for entities in the biotechnology industry
for exposures related to Gendux's indemnification obligations pursuant to this
Article 8 below. Such insurance shall include general liability, clinical trial
liability and product liability coverage with respect to the development and
commercialization of Agreement Products and shall name the Indemnitees (as
defined below) as additional insureds thereunder. Upon request by Introgen,
Gendux shall provide to Introgen certificates of insurance evidencing the
coverage required above.
8.2 Indemnification. Gendux shall indemnify each of Introgen and its
directors, officers and employees and the successors and assigns of the
foregoing (collectively, the "Indemnitees"), and hold each Indemnitee harmless
from and against any and all liabilities, damages, settlements, claims, actions,
suits, penalties, fines, costs or expenses (including, without limitation,
reasonable attorneys' fees and other expenses of litigation) incurred by any
Indemnitee arising from or occurring as a result any claim, action, suit, or
other proceeding brought by third parties against an Indemnitee arising from or
occurring as a result of (i) the exercise of the rights granted to Gendux under
Section 2.1, including without limitation product liability claims relating to
any Agreement Product used, sold or otherwise distributed by or on behalf of
Gendux or its Affiliates or (ii) Introgen's performance of its responsibilities
with respect to the R&D Program (as defined in the Development Agreement) or the
manufacture and supply of Agreement Products hereunder or (iii) the gross
negligence or willful tortious misconduct of Gendux or any of its directors,
officers or employees or the successors or assigns of any of the foregoing.
Notwithstanding the foregoing, Gendux shall have no obligation under this
Section 8.2 with respect to liabilities, damages, settlements, claims, actions,
suits, penalties, fines, costs or expenses to the extent the same is caused by
the gross negligence or willful tortious misconduct of an Indemnitee.
8.3 Procedure. An Indemnitee that intends to claim indemnification
under this Article 8 shall: (i) promptly notify Gendux in writing of any claim,
action, suit, or other proceeding brought
-13-
<PAGE> 14
by third parties in respect of which the Indemnitee intends to claim such
indemnification; (ii) provide Gendux sole control of the defense and/or
settlement thereof, and (iii) provide Gendux, at Gendux's request and expense,
with reasonable assistance and full information with respect thereto.
Notwithstanding the foregoing, the indemnity obligation in this Article 8 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 Gendux, to the
extent such consent is not withheld unreasonably or delayed. Without limiting
the foregoing provisions of this Section 8.3, Gendux shall keep Introgen
reasonably informed of the progress of any claim, suit or proceeding under this
Section 8.3 and Introgen shall have the right to participate in any such claim,
suit or proceeding with counsel of its choosing at its own expense.
ARTICLE 9
USE OF NAMES
Except as required by law or in the normal course of business
identification and description, neither party shall issue any press release or
other public statements in connection with this Agreement intended for use in
the public media in a manner suggesting any endorsement by the other party,
without the prior written approval of such other party, which approval shall not
be unreasonably withheld.
ARTICLE 10
REPRESENTATIONS AND WARRANTIES
10.1 Introgen. Introgen hereby represents and warrants to Gendux 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 during the term of this Agreement any rights in the Subject Genes
in the Field that are inconsistent with the rights and licenses granted to
Gendux herein; and (iii) to its knowledge, there are no claims of any third
parties pending against it that would call into question its right to grant to
Gendux the rights and licenses contemplated hereunder.
10.2 Gendux. Gendux hereby represents and warrants to Introgen 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 during the term of this Agreement any rights in conflict with the
rights and licenses granted herein; and (iii) to its knowledge, there are no
claims of any third parties pending against it that would call into question its
right to enter into and perform its obligations under this Agreement.
10.3 Disclaimer. EXCEPT AS EXPRESSLY PROVIDED IN THIS ARTICLE 10,
NEITHER PARTY MAKES ANY WARRANTIES OR CONDITIONS (EXPRESS, IMPLIED, STATUTORY,
OR OTHERWISE) WITH RESPECT TO THE SUBJECT MATTER HEREOF, INCLUDING WITHOUT
LIMITATION, THE SUPPLY AND DEVELOPMENT OF
-14-
<PAGE> 15
AGREEMENT PRODUCTS, THE AGREEMENT PRODUCTS THEMSELVES AND THE SUBJECT GENES,
AND INTROGEN SPECIFICALLY DISCLAIMS ANY AND ALL IMPLIED WARRANTIES OR CONDITIONS
OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, AND ALL WARRANTIES AND
CONDITIONS OF THE VALIDITY OF THE PATENT RIGHTS OR NONINFRINGEMENT OF THIRD
PARTY INTELLECTUAL PROPERTY RIGHTS.
ARTICLE 11
CONFIDENTIALITY
11.1 Confidential Information. Except as expressly provided herein,
each party shall maintain in confidence, and shall not use for any purpose or
disclose to any third party, information disclosed by the other party in writing
and marked "confidential" or that is disclosed orally and confirmed in writing
as confidential within a reasonable time following such disclosure
(collectively, "Confidential Information"). Notwithstanding the foregoing,
Confidential Information shall not include any information that, in each case as
demonstrated by contemporaneous written documentation: (i) was already known to
the receiving party, other than under an obligation of confidentiality, at the
time of disclosure hereunder, or (ii) was generally available to the public or
otherwise part of the public domain at the time of its disclosure to the
receiving party, or (iii) became generally available to the public or otherwise
part of the public domain after its disclosure, other than through any act or
omission of the receiving party, or (iv) was subsequently lawfully disclosed to
the receiving party by a person other than a party hereto or (v) was
independently developed by the receiving party without reference to any
information or materials disclosed by the disclosing party.
11.2 Permitted Usage. Notwithstanding the provisions of Section 11.1
above, each party may use or disclose the other party's Confidential Information
to the extent such use and disclosure is reasonably necessary in filing or
prosecuting patent applications, prosecuting or defending litigation, complying
with applicable governmental regulations, submitting information to tax or other
governmental authorities conducting clinical trials or exercising its rights
hereunder (including granting any permitted sublicenses); provided that if a
party is legally required to make any public disclosures of the other party's
Confidential Information, to the extent it may legally do so, it will give
reasonable advance notice to the other party of such disclosure and will use its
reasonable efforts to secure confidential treatment of such Confidential
Information prior to its disclosure (whether through protective orders or
otherwise).
ARTICLE 12
GENERAL
12.1 Improvements. Gendux hereby grants to Introgen a [*],
license for all purposes, with the right to grant and
authorize sublicenses, under any and all improvements to the Subject Genes
(including, without limitation, improvements to any subject
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
-15-
<PAGE> 16
matter covered by the Assigned Rights), which improvements are made by Gendux or
by third parties on behalf or under the authority of Gendux. As used herein,
"improvements" to the Subject Genes shall mean any invention, biological
material or other subject matter that is made using, or derived in whole or in
part from, the Subject Genes and shall in any event be deemed to include
(without limiting the foregoing) any invention, material and subject matter
useful in connection with a Target Gene or gene therapy; it being further
understood that the license granted in this Section 12.1 shall extend to all
patent and other rights in such improvements. Gendux agrees to (i) promptly
notify Introgen of any such improvements, (ii) provide with such notice samples
in reasonable quantities of any tangible materials within such improvements, and
(iii) keep Introgen fully informed of the status of any patents and patent
applications with respect to such improvements. Introgen agrees not to exercise
such license during the term of this Agreement with respect to any improvement
that consists of a modification of a Target Gene for so long as Gendux retains
its exclusive rights under the Licensed Patents or Assigned Rights with respect
to such Target Gene. It is understood that the license granted herein shall be
exclusive, but to the extent and during such period that Introgen agrees not to
exercise such license, this license shall be deemed to be nonexclusive.
12.2 Independent Contractors. The relationship of Gendux and Introgen
established by this Agreement is that of independent contractors. Nothing in
this Agreement shall be construed to create any other relationship between the
parties. Neither party shall have any express or implied right, power or
authority to assume, create or incur any expense, liability or obligation on
behalf of or in the name of the other party.
12.3 Confidential Terms. Except as expressly provided herein, each
party agrees not to disclose any terms of this Agreement to any third party
without the prior written consent of the other party, except as required by
securities or other applicable laws and (subject to reasonable conditions of
confidentiality) to prospective and other investors and such party's
accountants, attorneys and other professional advisors.
12.4 Assignment. This Agreement shall not be assignable by either party
to any third party without the prior written consent of the other party hereto,
except that either party may assign this Agreement without the other party's
consent to an entity that acquires all or substantially all of the business or
assets of the assigning party, in each case whether by sale, merger, transfer of
assets, operation of law or otherwise; provided that in either case, such
assignee or transferee promptly agrees in writing to be bound by the terms and
conditions of this Agreement. Without limiting the foregoing, in the event of
such merger or transfer or acquisition of assets, no intellectual property
rights of the assignee or its affiliate shall be included in the Licensed
Patents, Related Materials, Assigned Rights or Subject Genes, to the extent that
such intellectual property rights were owned or Controlled by the assignee or
its affiliate prior to such merger or transfer or acquisition of assets, or are
created outside the Development Agreement or by personnel who were not employees
of assigning party prior to the merger or transfer or acquisition of assets.
Upon a permitted assignment of this Agreement, all references herein to the
assigning party shall be deemed references to the assignee. Any assignment not
permitted under this Section 12.4 shall be null and void.
-16-
<PAGE> 17
12.5 Force Majeure. Nonperformance of either party (except for payment
of amounts due hereunder) shall be excused to the extent that performance is
rendered impossible by strike, fire, earthquake, flood, governmental acts or
orders or restrictions, or any other reason, including failure of suppliers,
where failure to perform is beyond the reasonable control of the nonperforming
party. Without limiting the foregoing, the party subject to such inability shall
use reasonable efforts to minimize the duration of any force majeure event.
12.6 Patent Marking. Gendux agrees to mark, and have its Affiliates and
Sublicensees mark, all Agreement Products sold or otherwise distributed pursuant
to this Agreement in accordance with the applicable patent statutes or
regulations in the country or countries of manufacture and sale thereof.
12.7 Notices. All notices, requests and other communications hereunder
shall be made in writing and shall be sent by registered or certified mail,
return receipt requested, postage prepaid; facsimile transmission (receipt
verified); or express courier service (signature required), in each case to the
respective address or fax number specified below, or such other address or fax
number as may be specified in writing to the other party:
Gendux: Gendux, Inc.
301 Congress Avenue, Suite 1850
Austin, Texas 78701
Attn: President
Fax: (512) 708-9311
with a copy to: Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, California 94304-1050
Attn: Kenneth A. Clark
Fax: (650) 493-6811
Introgen: Introgen Therapeutics, Inc.
301 Congress Avenue, Suite 1850
Austin, Texas 78701
Attn: President
Fax: (512) 708-9311
with a copy to: Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, California 94304-1050
Attn: Kenneth A. Clark
Fax: (650) 493-6811
-17-
<PAGE> 18
12.8 Governing Law. This Agreement shall be governed by, and construed
and interpreted in accordance with, the laws of the State of Texas, without
regard to conflicts of laws principles. Exclusive venue and jurisdiction of any
disputes governed by this Agreement shall be in the federal courts for the State
of Texas. The parties hereby consent to the jurisdiction of such courts.
12.9 Compliance with Law. Gendux shall comply with all applicable laws
and regulations in connection with its activities pursuant to this Agreement.
12.10 Modification; Waiver. No amendment or modification of any
provision of this Agreement shall be effective unless in writing signed by the
party to be charged. 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 both parties hereto. No failure on the part of either party 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.
12.11 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.
12.12 Severability. If any provision hereof should be held invalid,
illegal or unenforceable in any jurisdiction, the parties shall negotiate in
good faith a valid, legal and enforceable substitute provision that most nearly
reflects the original intent of the parties (or shall strike such provision in
the absence of such substitute provision) and 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.
12.13 Entire Agreement. This Agreement (including the Exhibits hereto)
together with the DTLA, the Development Agreement and the Services Agreement
(including the respective Exhibits thereto), each entered into by the parties of
even date, constitute the entire understanding and agreement between the parties
with respect to the subject matter hereof and supersede any and all prior
negotiations, representations, agreements, and understandings, whether written
or oral, between the parties with respect to such subject matter.
12.14 Counterparts. This Agreement may be executed in two counterparts,
each of which shall be deemed an original, but both of which together shall
constitute one and the same instrument.
(The remainder of this page is intentionally left blank.)
-18-
<PAGE> 19
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered in duplicate originals.
INTROGEN THERAPEUTICS, INC.
By: /s/ JAMES W. ALBRECHT, JR.
----------------------------------
Name: James W. Albrecht, Jr.
--------------------------------
Title: Chief Financial Officer
-------------------------------
GENDUX, INC.
By: /s/ DAVID G. NANCE
----------------------------------
Name: David G. Nance
--------------------------------
Title: President & CEO
-------------------------------
-19-
<PAGE> 20
EXHIBIT A
ASSIGNED GENES
<TABLE>
<CAPTION>
ASSIGNED GENE CORRESPONDING ASSIGNED AGREEMENT
------------- --------------------------------
<S> <C>
PTEN Option Agreement, dated May 21, 1998, by and
between Imperial Cancer Research Technology
Limited and Introgen Therapeutics, Inc.
</TABLE>
<PAGE> 21
EXHIBIT B
LICENSED GENES
<TABLE>
<CAPTION>
LICENSED GENE CORRESPONDING THIRD PARTY RIGHTS
------------- --------------------------------
<S> <C>
C-CAM Patent and Delivery Technology License
Agreement, dated July 20, 1994 by and
between The University of Texas, M.D.
Anderson Cancer Center and Introgen
Therapeutics, Inc., as amended
DBCCRI Option Agreement for Tumor Suppressor Genes,
effective January 1, 1999, by and between
Imperial Cancer Research Technology Limited
and Introgen Therapeutics, Inc.
RSK-3 Option Agreement for Tumor Suppressor Genes,
effective January 1, 1999, by and between
Imperial Cancer Research Technology Limited
and Introgen Therapeutics, Inc.
</TABLE>
<PAGE> 1
EXHIBIT 10.32
[CONFIDENTIAL]
PUBLIC HEALTH SERVICE
PATENT LICENSE AGREEMENT-NONEXCLUSIVE
COVER PAGE
For Office of Technology Transfer/NIH internal use only:
Patent License Number: L-052-98/0
Serial Numbers of Licensed Patents: 60/024,386
Licensee: Introgen Therapeutics, Inc., 301 Congress Avenue, Suite 1850, Austin,
TX 78701
CRADA Number (if applicable): None
Additional Remarks:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This Patent License Agreement, hereinafter referred to as the "AGREEMENT,"
consists of this Cover Page, an attached agreement, a Signature Page, Appendix A
(Patent or Patent Application), Appendix B (Fields of Use and Territory),
Appendix C (Royalties), and Appendix D (Modifications). This Cover Page serves
to identify the Parties to this AGREEMENT as follows:
1. The National Institutes of Health ("NIH") or the Centers for Disease
Control ("CDC"), hereinafter singly or collectively referred to as "PHS,"
agencies of the United States Public Health Service within the Department
of Health and Human Services ("DHHS"); and
2. The person, corporation, or institution identified above and/or on the
Signature Page, having offices at the address indicated on the Signature
Page, hereinafter referred to as "LICENSEE."
NIH Office of Technology Transfer
PHS PATENT LICENSE AGREEMENT-NONEXCLUSIVE
L-052-98/0 Final Introgen Therapeutics Inc. 07/22/98 - Page 1 of 17
<PAGE> 2
PHS PATENT LICENSE AGREEMENT-NONEXCLUSIVE
PHS and LICENSEE agree as follows:
1. BACKGROUND
1.01 In the course of conducting biomedical and behavioral research, PHS
investigators made inventions that may have commercial applicability.
1.02 By assignment of rights from PHS employees and other inventors, DHHS,
on behalf of the United States Government, owns intellectual property
rights claimed in any United States and foreign patent applications
or patents corresponding to the assigned inventions. DHHS also owns
any tangible embodiments of these inventions actually reduced to
practice by PHS.
1.03 The Assistant Secretary for Health of DHHS has delegated to PHS the
authority to enter into this AGREEMENT for the licensing of the
rights to these inventions under 35 U.S.C. Sections 200-212, the
Federal Technology Transfer Act of 1986, 15 U.S.C. Section 3710a,
and/or the regulations governing the licensing of Government-owned
inventions, 37 CFR Part 404.
1.04 PHS desires to transfer these inventions to the private sector
through commercialization licenses to facilitate the commercial
development of products and processes for public use and benefit.
1.05 LICENSEE desires to acquire commercialization rights to certain of
these inventions in order to develop processes, methods, or
marketable products for public use and benefit.
2. DEFINITIONS
2.01 "LICENSED PATENT RIGHTS" shall mean:
a) U.S. patent applications and patents listed in Appendix A, all
divisions and continuations of these applications, all patents
issuing from such applications, divisions, and continuations,
and any reissues, reexaminations, and extensions of all such
patents;
b) to the extent that the following contain one or more claims
directed to the invention or inventions claimed in a) above: i)
continuations-in-part of a) above; ii) all divisions and
continuations of these continuations-in-part; iii) all patents
issuing from such continuations-in-part, divisions, and
continuations; and iv) any reissues, reexaminations, and
extensions of all such patents;
c) to the extent that the following contain one or more claims
directed to the invention or inventions claimed in a) above: all
counterpart foreign applications and patents to a) and b) above,
including those listed in Appendix A.
LICENSED PATENT RIGHTS shall not include b) or c) above to the
extent that they contain one or more claims directed to new
matter which is not the subject matter of a claim in a) above.
2.02 "LICENSED PRODUCT(S)" means tangible materials which, in the
course of manufacture,
NIH Office of Technology Transfer
PHS PATENT LICENSE AGREEMENT-NONEXCLUSIVE
L-052-98/0 Final Introgen Therapeutics Inc. 07/22/98 - Page 2 of 17
<PAGE> 3
use, or sale would, in the absence of this AGREEMENT, infringe one or
more claims of the LICENSED PATENT RIGHTS that have not been held
invalid or unenforceable by an unappealed or unappealable judgement
of a court of competent jurisdiction.
2.03 "LICENSED PROCESS(ES)" means processes which, in the course of being
practiced would, in the absence of this AGREEMENT, infringe one or
more claims of the LICENSED PATENT RIGHTS that have not been held
invalid or unenforceable by an unappealed or unappealable judgment of
a court of competent jurisdiction.
2.04 "LICENSED TERRITORY" means the geographical area identified in
Appendix B.
2.05 "NET SALES" means the total gross receipts for sales of LICENSED
PRODUCTS or practice of Licensed Processes by or on behalf of
LICENSEE and from leasing, renting, or otherwise making LICENSED
PRODUCTS available to others without sale or other dispositions,
whether invoiced or not, less returns and allowances actually
granted, packing costs, insurance costs, freight out, taxes or excise
duties imposed on the transaction (if separately invoiced), and
wholesaler and cash discounts in amounts customary in the trade. No
deductions shall be made for commissions paid to individuals, whether
they be with independent sales agencies or regularly employed by
LICENSEE and on its payroll, or for the cost of collections.
2.06 "FIRST COMMERCIAL SALE" means the initial transfer by or on behalf of
LICENSEE of LICENSED PRODUCTS or the initial practice of a LICENSED
PROCESS in exchange for cash or some equivalent to which value can be
assigned for the purpose of determining NET SALES.
2.07 "GOVERNMENT" means the government of the United States of America.
2.08 "LICENSED FIELDS OF USE" means the fields of use identified in
Appendix B.
3. GRANT OF RIGHTS
3.01 PHS hereby grants and LICENSEE accepts, subject to the terms and
conditions of this AGREEMENT, a nonexclusive license to LICENSEE
under the LICENSED PATENT RIGHTS in the LICENSED TERRITORY to make
and have made, to use and have used, and to sell and have sold any
LICENSED PRODUCTS in the LICENSED FIELDS OF USE and to practice and
have practiced any LICENSED PROCESSES in the LICENSED FIELDS OF USE.
3.02 LICENSEE has no right to grant sublicenses.
3.03 This AGREEMENT confers no license or rights by implication, estoppel,
or otherwise under any patent applications or patents of PHS other
than the LICENSED PATENT RIGHTS regardless of whether such patents
are dominant or subordinate to LICENSED PATENT RIGHTS.
4. STATUTORY AND PHS REQUIREMENTS AND RESERVED GOVERNMENT RIGHTS
4.01 LICENSEE agrees that products used or sold in the United States
embodying LICENSED PRODUCTS or produced through use of LICENSED
PROCESSES shall be manufactured substantially in the United States,
unless a written waiver is obtained in advance from PHS.
NIH Office of Technology Transfer
PHS PATENT LICENSE AGREEMENT-NONEXCLUSIVE
L-052-98/0 Final Introgen Therapeutics Inc. 07/22/98 - Page 3 of 17
<PAGE> 4
5. ROYALTIES AND REIMBURSEMENT
5.01 LICENSEE agrees to pay to PHS a noncreditable, nonrefundable license
issue royalty as set forth in Appendix C within thirty (30) days from
the date that this AGREEMENT becomes effective.
5.02 LICENSEE agrees to pay to PHS a nonrefundable minimum annual royalty
as set forth in Appendix C. The minimum annual royalty is due and
payable on January 1 of each calendar year [*]. The minimum annual
royalty for the first calendar year of this AGREEMENT is due and
payable within thirty (30) days from the effective date of this
AGREEMENT and will be prorated according to the fraction of the
calendar year remaining between the effective date of this AGREEMENT
and the next subsequent January 1.
5.03 LICENSEE agrees to pay PHS benchmark royalties as set forth in
Appendix C.
5.04 LICENSEE agrees to pay PHS earned royalties as set forth in Appendix
C.
5.05 A claim of a patent licensed under this AGREEMENT shall cease to fall
within the LICENSED PATENT RIGHTS for the purpose of computing the
minimum annual royalty and earned royalty payments in any given
country on the earliest of the dates that a) the claim has been
abandoned but not continued, b) the patent expires, c) the patent is
no longer maintained by the Government, or d) all claims of the
LICENSED PATENT RIGHTS have been held to be invalid or unenforceable
by an unappealed or unappealable decision of a court of competent
jurisdiction or administrative agency.
5.06 No multiple royalties shall be payable because any LICENSED PRODUCTS
or LICENSED PROCESSES are covered by more than one of the LICENSED
PATENT RIGHTS.
5.07 On sales of LICENSED PRODUCTS by LICENSEE in other than an
arm's-length transaction, the value of the NET SALES attributed under
this Article 5 to such a transaction shall be that which would have
been received in an arm's-length transaction, based on sales of like
quantity and quality products on or about the time of such
transaction.
5.08 As an additional royalty, LICENSEE agrees to pay PHS within (60) days
of PHS's submission of a statement and request for payment, an amount
equivalent to all patent expenses previously incurred by PHS in the
preparation, filing, prosecution, and maintenance of LICENSED PATENT
RIGHTS, to be divided equally among all nonexclusive
commercialization licensees of record as of the date the statement
and request for payment is sent by PHS to LICENSEE. LICENSEE further
agrees to pay PHS annually, within sixty (60) days of PHS's
submission of a statement and request for payment, a royalty amount
equivalent to all such future patent expenses incurred during the
previous calendar year divided equally among all nonexclusive
commercialization licensees of record as of the date the statement
and request for payment are sent by PHS to LICENSEE. [*] of the
cumulative amount of the payments due under this Paragraph 5.07 may
be credited against royalties due under Paragraph 5.03; however, the
net royalty payment in any calendar year may not be lower than the
minimum annual royalty specified in Appendix C. LICENSEE may elect to
surrender its rights in any country of the LICENSED TERRITORY under
any LICENSED PATENT RIGHTS upon sixty (60) days' written notice to
PHS and owe no payment obligation under this Paragraph for subsequent
patent-related expenses incurred in that country.
NIH Office of Technology Transfer
PHS PATENT LICENSE AGREEMENT-NONEXCLUSIVE
L-052-98/0 Final Introgen Therapeutics Inc. 07/22/98 - Page 4 of 17
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE> 5
6. RECORD KEEPING
6.01 LICENSEE agrees to keep accurate and correct records of LICENSED
PRODUCTS made, used, or sold and LICENSED PROCESSES practiced under
this AGREEMENT appropriate to determine the amount of royalties due
PHS. Such records shall be retained for at least five (5) years
following a given reporting period. They shall be available during
normal business hours for inspection at the expense of PHS by an
accountant or other designated auditor selected by PHS for the sole
purpose of verifying reports and payments hereunder. The accountant
or auditor shall only disclose to PHS information relating to the
accuracy of reports and payments made under this AGREEMENT. If an
inspection shows an underreporting or underpayment in excess of five
percent (5%) for any twelve (12) month period, then LICENSEE shall
reimburse PHS for the cost of the inspection at the time LICENSEE
pays the unreported royalties, including any late charges as required
by Paragraph 7.06 of this AGREEMENT. All payments required under this
Paragraph shall be due within thirty (30) days of the date PHS
provides LICENSEE notice of the payment due.
7. REPORTS ON PROGRESS, SALES, AND PAYMENTS
7.01 Prior to signing this AGREEMENT, LICENSEE has provided to PHS a
written commercialization plan ("COMMERCIAL DEVELOPMENT PLAN") under
which LICENSEE intends to bring the subject matter of the LICENSED
PATENT RIGHTS into commercial use. The COMMERCIAL DEVELOPMENT PLAN is
hereby incorporated by reference into this AGREEMENT.
7.02 LICENSEE shall provide written annual reports on its product
development progress or efforts to commercialize under the COMMERCIAL
DEVELOPMENT PLAN for each of the LICENSED FIELDS OF USE within sixty
(60) days after December 31 of each calendar year. These progress
reports shall include, but not be limited to: progress on research
and development, status of applications for regulatory approvals,
manufacturing, marketing, and sales during the preceding calendar
year, as well as plans for the present calendar year. LICENSEE agrees
to provide any additional data reasonably required by PHS to evaluate
LICENSEE's performance.
7.03 LICENSEE shall report to PHS the date of the FIRST COMMERCIAL SALE in
each country in the LICENSED TERRITORY within thirty (30) days of
such occurrence.
7.04 LICENSEE shall submit to PHS within sixty (60) days after each
calendar half-year ending June 30 and December 31 a royalty report
setting forth for the preceding half-year period the amount of the
LICENSED PRODUCTS sold or LICENSED PROCESSES practiced by or on
behalf of LICENSEE in each country within the LICENSED TERRITORY, the
NET SALES, and the amount of royalty accordingly due. With each such
royalty report, LICENSEE shall submit payment of the earned royalties
due. If no earned royalties are due to PHS for any reporting period,
the written report shall so state. The royalty report shall be
certified as correct by an authorized officer of LICENSEE and shall
include a detailed listing of all deductions made under Paragraph
2.05 to determine NET SALES made under Article 5 to determine
royalties due.
7.05 Royalties due under Article 5 shall be paid in U.S. dollars. For
conversion of foreign currency to U.S. dollars, the conversion rate
shall be the rate quoted in The Wall Street Journal on the day that
the payment is due. All checks and bank drafts shall be drawn on
United States banks and shall be payable to NIH/Patent Licensing at
the address shown
NIH Office of Technology Transfer
PHS PATENT LICENSE AGREEMENT-NONEXCLUSIVE
L-052-98/0 Final Introgen Therapeutics Inc. 07/22/98 - Page 5 of 17
<PAGE> 6
on the Signature Page below. Any loss of exchange, value, taxes, or
other expenses incurred in the transfer or conversion to U.S. dollars
shall be paid entirely by LICENSEE. All royalty payments due under
this AGREEMENT shall be mailed to the following address: NIH
P.O. Box 360120, Pittsburgh, Pennsylvania 15251-6120. The royalty
report required by paragraph 7.04 of this AGREEMENT shall accompany
each such payment and a copy of such report shall also be mailed to
PHS at its address for notices indicated on the Signature Page of
this AGREEMENT.
7.06 Late charges will be applied to any overdue payments as required by
the U.S. Department of Treasury in the Treasury Fiscal Requirements
Manual, Section 8025.40. The payment of such late charges shall not
prevent PHS from exercising any other rights it may have as a
consequence of the lateness of any payment.
7.07 All plans and reports required by this Article 7 and marked
"confidential" by LICENSEE shall be treated by PHS as commercial and
financial information obtained from a person, and as privileged and
confidential and, to the extent permitted by law, shall not be
subject to disclosure under the Freedom of Information Act, 5 U.S.C.
Section 552.
8. PERFORMANCE
8.01 LICENSEE shall use its reasonable best efforts to introduce the
LICENSED PRODUCTS into the commercial market or apply the LICENSED
PROCESSES to commercial use as soon as practicable. "Reasonable best
efforts" for the purpose of this provision shall include, but not be
limited to, adherence to the COMMERCIAL DEVELOPMENT PLAN.
8.02 Upon the FIRST COMMERCIAL SALE, until the expiration of this
AGREEMENT, LICENSEE shall use its reasonable best efforts to keep
LICENSED PRODUCTS and LICENSED PROCESSES reasonably accessible to the
public.
9. INFRINGEMENT AND PATENT ENFORCEMENT
9.01 PHS and LICENSEE agree to notify each other promptly of each
infringement or possible infringement, as well as any facts which may
affect the validity, scope, or enforceability of the LICENSED PATENT
RIGHTS of which either Party becomes aware.
9.02 If PHS has been unable to eliminate a substantial infringement within
one (1) year of written notification to the Office of Technology
Transfer from LICENSEE of the existence of a substantial infringement
and has not instituted infringement litigation, LICENSEE shall be
excused from [*]. Thereafter, when the substantial infringement has
ceased or an infringement suit has been initiated, PHS shall so
notify the LICENSEE in writing, at which time [*] shall resume as
of the date of such notification.
9.03 In the event that a declaratory judgment action alleging invalidity
of any of the LICENSED PATENT RIGHTS shall be brought against PHS,
PHS agrees to notify LICENSEE that an action alleging invalidity has
been brought. PHS does not represent that it will commence legal
action to defend against a declaratory action alleging invalidity.
LICENSEE shall take no action to compel the GOVERNMENT either to
initiate or to join in any such declaratory judgment action. Should
the GOVERNMENT be made a party to any such suit by motion or
NIH Office of Technology Transfer
PHS PATENT LICENSE AGREEMENT-NONEXCLUSIVE
L-052-98/0 Final Introgen Therapeutics Inc. 07/22/98 - Page 6 of 17
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE> 7
any other action of LICENSEE, LICENSEE shall reimburse the GOVERNMENT
for any costs, expenses, or fees which the GOVERNMENT incurs as a
result of its defending against such motion or other action taken in
response to the motion. Upon LICENSEE's payment of all costs incurred
by the GOVERNMENT as a result of LICENSEE's joinder motion or other
action, these actions by LICENSEE will not be considered a default in
the performance of any material obligation under this AGREEMENT.
10. NEGATION OF WARRANTIES AND INDEMNIFICATION
10.01 PHS offers no warranties other than those specified in Article 1.
10.02 PHS does not warrant the validity of the LICENSED PATENT RIGHTS and
makes no representations whatsoever with regard to the scope of the
LICENSED PATENT RIGHTS, or that the LICENSED PATENT RIGHTS may be
exploited without infringing other patents or other intellectual
property rights of third parties.
10.03 PHS MAKES NO WARRANTIES, EXPRESSED OR IMPLIED, OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE OF ANY SUBJECT MATTER DEFINED BY THE
CLAIMS OF THE LICENSED PATENT RIGHTS.
10.04 PHS does not represent that it will commence legal actions against
third parties infringing the LICENSED PATENT RIGHTS.
10.05 LICENSEE shall indemnify and hold PHS, its employees, students,
fellows, agents, and consultants harmless from and against all
liability, demands, damages, expenses, and losses, including but not
limited to death, personal injury, illness, or property damage in
connection with or arising out of a) the use by or on behalf of
LICENSEE, ALSO sublicensees or its directors, employees, or third
parties of any LICENSED PATENT RIGHTS, or b) the design, manufacture,
distribution, or use of any LICENSED PRODUCTS, LICENSED PROCESSES, or
other products or processes developed in connection with or arising
out of the LICENSED PATENT RIGHTS. LICENSEE agrees to maintain a
liability insurance program consistent with sound business practice.
11. TERMINATION AND MODIFICATION OF RIGHTS
11.01 This AGREEMENT is effective when signed by all parties and shall
extend to the expiration of the last to expire of the LICENSED PATENT
RIGHTS unless sooner terminated as provided in this Article 11.
11.02 In the event that LICENSEE is in default in the performance of any
material obligations under this AGREEMENT, and if the default has not
been remedied within ninety (90) days after the date of notice in
writing of such default, PHS may terminate this AGREEMENT by written
notice.
11.03 At least thirty (30) days prior to filing a petition in bankruptcy,
LICENSEE must inform PHS in writing of its intention to file the
petition in bankruptcy or of a third party's intention to file an
involuntary petition in bankruptcy.
11.04 In the event that LICENSEE becomes insolvent, files a petition in
bankruptcy, has such a petition filed against it, determines to file
a petition in bankruptcy, or receives notice of a
NIH Office of Technology Transfer
PHS PATENT LICENSE AGREEMENT-NONEXCLUSIVE
L-052-98/0 Final Introgen Therapeutics Inc. 07/22/98 - Page 7 of 17
<PAGE> 8
third party's intention to file an involuntary petition in
bankruptcy, LICENSEE shall immediately notify PHS in writing.
Furthermore, PHS shall have the right to terminate this AGREEMENT by
giving LICENSEE written notice. Termination of this AGREEMENT is
effective upon LICENSEE's receipt of the written notice.
11.05 LICENSEE shall have a unilateral right to terminate this AGREEMENT
and/or its rights in any country by giving PHS sixty (60) days'
written notice to that effect.
11.06 PHS shall specifically have the right to terminate or modify, at its
option, this AGREEMENT, if PHS determines that the LICENSEE: 1) is
not executing the COMMERCIAL DEVELOPMENT PLAN submitted with its
request for a license and the LICENSEE cannot otherwise demonstrate
to PHS's satisfaction that the LICENSEE has taken, or can be expected
to take within a reasonable time, effective steps to achieve
practical application of the LICENSED PRODUCTS or LICENSED PROCESSES;
2) has willfully made a false statement of, or willfully omitted, a
material fact in the license application or in any report required by
the license agreement; 3) has committed a substantial breach of a
covenant or agreement contained in the license; 4) is not keeping
LICENSED PRODUCTS or LICENSED PROCESSES reasonably available to the
public after commercial use commences; 5) cannot reasonably satisfy
unmet health and safety needs; or 6) cannot reasonably justify a
failure to comply with the domestic production requirement of
Paragraph 4.01 unless waived. In making this determination, PHS will
take into account the normal course of such commercial development
programs conducted with sound and reasonable business practices and
judgment and the annual reports submitted by LICENSEE under Paragraph
7.02. Prior to invoking this right, PHS shall give written notice to
LICENSEE providing LICENSEE specific notice of, and a ninety (90) day
opportunity to respond to, PHS's concerns as to the previous items 1)
to 6). If LICENSEE fails to alleviate PHS's concerns as to the
previous items 1) to 6) or fails to initiate corrective action to
PHS's satisfaction, PHS may terminate this AGREEMENT.
11.07 PHS reserves the right according to 35 U.S.C. Section 209(f)(4) to
terminate or modify this AGREEMENT if it is determined that such
action is necessary to meet requirements for public use specified by
Federal regulations issued after the date of the license and such
requirements are not reasonably satisfied by LICENSEE.
11.08 Within thirty (30) days of receipt of written notice of PHS's
unilateral decision to terminate this AGREEMENT, LICENSEE may,
consistent with the provisions of 37 CFR Section 404.11, appeal the
decision by written submission to the Director of NIH or designee.
The decision of the NIH Director or designee shall be the final
agency decision. LICENSEE may thereafter exercise any and all
administrative or judicial remedies that may be available.
11.09 Within ninety (90) days of termination of this AGREEMENT under this
Article 11 or expiration under Paragraph 11.01, a final report shall
be submitted by LICENSEE. Any royalty payments and unreimbursed
patent expenses due to PHS become immediately due and payable upon
termination or expiration of this AGREEMENT, and LICENSEE shall
return all LICENSED PRODUCTS or other materials included within the
LICENSED PATENT RIGHTS to PHS or provide PHS with certification of
their destruction.
11.10 Paragraphs 6.01, 7.05-7.07, 10.01, 10.03, 10.05, and 11.08 of this
AGREEMENT shall survive termination of this AGREEMENT.
NIH Office of Technology Transfer
PHS PATENT LICENSE AGREEMENT-NONEXCLUSIVE
L-052-98/0 Final Introgen Therapeutics Inc. 07/22/98 - Page 8 of 17
<PAGE> 9
12. GENERAL PROVISIONS
12.01 Neither Party may waive or release any of its rights or interests in
this AGREEMENT except in writing. The failure of the GOVERNMENT to
assert a right hereunder or to insist upon compliance with any term
or condition of this AGREEMENT shall not constitute a waiver of that
right by the GOVERNMENT or excuse a similar subsequent failure to
perform any such term or condition by LICENSEE.
12.02 This AGREEMENT constitutes the entire agreement between the Parties
relating to the subject matter of the LICENSED PATENT RIGHTS, and all
prior negotiations, representations, agreements, and understandings
are merged into, extinguished by, and completely expressed by this
AGREEMENT.
12.03 The provisions of this AGREEMENT are severable, and in the event that
any provision of this AGREEMENT shall be determined to be invalid or
unenforceable under any controlling body of law, such determination
shall not in any way affect the validity or enforceability of the
remaining provisions of this AGREEMENT.
12.04 If either Party desires a modification to this AGREEMENT, the Parties
shall, upon reasonable notice of the proposed modification by the
Party desiring the change, confer in good faith to determine the
desirability of such modification. No modification will be effective
until a written amendment is signed by the signatories to this
AGREEMENT or their designees.
12.05 The construction, validity, performance, and effect of this AGREEMENT
shall be governed by Federal law as applied by the Federal courts in
the District of Columbia.
12.06 All notices required or permitted by this AGREEMENT shall be given by
prepaid, first class, registered or certified mail properly addressed
to the other Party at the address designated on the following
Signature Page, or to such other address as may be designated in
writing by such other Party, and shall be effective as of the date of
the postmark of such notice.
12.07 This AGREEMENT shall not be assigned by LICENSEE except a) with the
prior written consent of PHS; or b) as part of a sale or transfer of
substantially the entire business of LICENSEE relating to operations
which concern this AGREEMENT. LICENSEE shall notify PHS within ten
(10) days of any assignment of this AGREEMENT by LICENSEE.
12.08 LICENSEE agrees in its use of any PHS-supplied materials to comply
with all applicable statutes, regulations, and guidelines, including
Public Health Service and National Institutes of Health regulations
and guidelines. LICENSEE agrees not to use the materials for research
involving human subjects or clinical trials in the United States
without complying with 21 CFR Part 50 and 45 CFR Part 46. LICENSEE
agrees not to use the materials for research involving human subjects
or clinical trials outside of the United States without notifying
PHS, in writing, of such research or trials and complying with the
applicable regulations of the appropriate national control
authorities. Written notification to PHS of research involving human
subjects or clinical trials outside of the United States shall be
given no later than sixty (60) days prior to commencement of such
research or trials.
12.09 LICENSEE acknowledges that it is subject to and agrees to abide by
the United States laws and regulations (including the Export
Administration Act of 1979 and Arms Export Control Act) controlling
the export of technical data, computer software, laboratory
NIH Office of Technology Transfer
PHS PATENT LICENSE AGREEMENT-NONEXCLUSIVE
L-052-98/0 Final Introgen Therapeutics Inc. 07/22/98 - Page 9 of 17
<PAGE> 10
prototypes, biological material, and other commodities. The transfer
of such items may require a license from the cognizant agency of the
U.S. GOVERNMENT or written assurances by LICENSEE that it shall not
export such items to certain foreign countries without prior approval
of such agency. PHS neither represents that a license is or is not
required or that, if required, it shall be issued.
12.10 LICENSEE agrees to mark the LICENSED PRODUCTS or their packaging sold
in the United States with all applicable U.S. patent numbers and
similarly to indicate "Patent Pending" status. All LICENSED PRODUCTS
manufactured in, shipped to, or sold in other countries shall be
marked in such a manner as to preserve PHS patent rights in such
countries.
12.11 By entering into this AGREEMENT, PHS does not directly or indirectly
endorse any product or service provided, or to be provided, by
LICENSEE whether directly or indirectly related to this AGREEMENT.
LICENSEE shall not state or imply that this AGREEMENT is an
endorsement by the GOVERNMENT, PHS any other GOVERNMENT
organizational unit, or any GOVERNMENT employee. Additionally,
LICENSEE shall not use the names of PHS, NIH, or CDC or their
employees in any advertising, promotional, or sales literature
without the prior written consent of PHS.
12.12 The Parties agree to attempt to settle amicably any controversy or
claim arising under this AGREEMENT or a breach of this AGREEMENT,
except for appeals of modification or termination decisions provided
for in Article 11. LICENSEE agrees first to appeal any such unsettled
claims or controversies to the Director of NIH, or designee, whose
decision shall be considered the final agency decision. Thereafter,
LICENSEE may exercise any administrative or judicial remedies that
may be available.
12.13 Nothing relating to the grant of a license, nor the grant itself,
shall be construed to confer upon any person any immunity from or
defenses under the antitrust laws or from a charge of patent misuse,
and the acquisition and use of rights pursuant to 37 CFR Part 404
shall not be immunized from the operation of state or Federal law by
reason of the source of the grant.
SIGNATURES BEGIN ON NEXT PAGE
NIH Office of Technology Transfer
PHS PATENT LICENSE AGREEMENT-NONEXCLUSIVE
L-052-98/0 Final Introgen Therapeutics Inc. 07/22/98 - Page 10 of 17
<PAGE> 11
PHS PATENT LICENSE AGREEMENT-NONEXCLUSIVE
SIGNATURE PAGE
FOR PHS
by: /s/ JACK SPIEGEL 8/17/98
------------------------------------ ------------------
Jack Spiegel, Ph.D. Date
Director, Division of Technology Development and Transfer
National Institutes of Health
Mailing Address for Notices:
Office of Technology Transfer
National Institutes of Health
6011 Executive Boulevard, Suite 325
Rockville, Maryland 20852
FOR LICENSEE (Upon information and belief, the undersigned expressly certifies
or affirms that the contents of any statements of LICENSEE made or referred to
in this document are truthful and accurate.):
INTROGEN THERAPEUTICS, INC.
- ----------------------------------------
LICENSEE
by: /s/ MAHENDRA G. SHAH 7/27/98
------------------------------------- ------------------
Signature of Authorized Official Date
MAHENDRA G. SHAH
- ----------------------------------------
Printed Name
V.P.
- ----------------------------------------
Title
Mailing Address for Notices:
301 Congress Avenue
- ----------------------------------------
Suite - 1850
- ----------------------------------------
Austin, Texas 78701
- ----------------------------------------
NIH Office of Technology Transfer
PHS PATENT LICENSE AGREEMENT-NONEXCLUSIVE
L-052-98/0 Final Introgen Therapeutics Inc. 07/22/98 - Page 11 of 17
<PAGE> 12
APPENDIX A-PATENT OR PATENT APPLICATION
PATENT OR PATENT APPLICATION:
U.S. Patent Application No. [*] entitled [*]
NIH Office of Technology Transfer
PHS PATENT LICENSE AGREEMENT-NONEXCLUSIVE
L-052-98/0 Final Introgen Therapeutics Inc. 07/22/98 - Page 12 of 17
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE> 13
APPENDIX B-LICENSED FIELDS OF USE AND TERRITORY
LICENSED TERRITORY:
Worldwide
LICENSED FIELDS OF USE:
[*]
NIH Office of Technology Transfer
PHS PATENT LICENSE AGREEMENT-NONEXCLUSIVE
L-052-98/0 Final Introgen Therapeutics Inc. 07/22/98 - Page 13 of 17
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE> 14
APPENDIX C-ROYALTIES
ROYALTIES:
LICENSEE agrees to pay to PHS a noncreditable, nonrefundable license issue
royalty in the amount of [*].
LICENSEE agrees to pay to PHS a nonrefundable minimum annual royalty in the
amount of [*].
LICENSEE agrees to pay PHS earned royalties on NET SALES:
[*] on NET SALES of LICENSED PRODUCTS in LICENSED TERRITORY.
LICENSEE agrees to pay PHS Benchmark Royalties for each LICENSED PRODUCT as
follows:
[*] for a LICENSED PRODUCT: [*]
Initiation of the first [*] Clinical Trials for a LICENSED PRODUCT:
[*]
Initiation of the first [*] Clinical Trials for a LICENSED PRODUCT:
[*]
Initiation of the first [*] Clinical Trials for a LICENSED PRODUCT:
[*]
Approval of the first [*] for a LICENSED PRODUCT:
[*]
The benchmark royalty amounts shall be reduced by [*] with respect to [*] to
meet such milestone. [*] For purposes of the foregoing benchmark payments,
a LICENSED PRODUCT shall be deemed to include all LICENSED PRODUCTS (as
defined in Paragraph 2.02) which incorporate the same gene.
LICENSEE agrees to pay PHS benchmark royalties for EACH SUBLICENSED PRODUCT as
follows:
In the event that LICENSEE grants a SUBLICENSE, which includes intellectual
property other than LICENSED PATENT RIGHTS, LICENSEE shall pay the following
percentage of SUBLICENSING payments based on the phase of development of all
LICENSED PRODUCTS:
[*] of the total SUBLICENSING FEE prior to [*].
NIH Office of Technology Transfer
PHS PATENT LICENSE AGREEMENT-NONEXCLUSIVE
L-052-98/0 Final Introgen Therapeutics Inc. 07/22/98 - Page 14 of 17
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE> 15
[*] of the total SUBLICENSING FEE in the event the LICENSEE has initiated at
least one [*] study with respect to any LICENSED PRODUCT subject to the
SUBLICENSE arrangement.
[*] of the total SUBLICENSING FEE in the event the LICENSEE has initiated at
least one [*] study with respect to any LICENSED PRODUCT subject to the
SUBLICENSE arrangement.
[*] of the total SUBLICENSING FEE in the event the LICENSEE has initiated at
least one [*] study with respect to any LICENSED PRODUCT subject to the
SUBLICENSE arrangement.
For purposes of the foregoing payments, "SUBLICENSING FEE" shall mean all
up-front cash payments received by LICENSEE from a SUBLICENSEE for rights to the
LICENSED PATENTS, but excluding (i) amounts received in reimbursement for
research or development related to the LICENSED PATENTS, (ii) amounts received
as payment for marketing services, equity, or goods or products, and (iii)
amounts received in consideration for the sale of all or substantially all of
the business or assets of LICENSEE relating to this Agreement.
NIH Office of Technology Transfer
PHS PATENT LICENSE AGREEMENT-NONEXCLUSIVE
L-052-98/0 Final Introgen Therapeutics Inc. 07/22/98 - Page 15 of 17
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE> 16
APPENDIX D-MODIFICATIONS
PHS and LICENSEE agree to the following modifications to the Articles and
Paragraphs of this AGREEMENT:
2.05 "NET SALES" means the total gross receipts for sales of LICENSED PRODUCTS
or practice of LICENSED PROCESSES by or on behalf of LICENSEE or its
Sublicensees and from leasing, renting, or otherwise making LICENSED PRODUCTS
available to others without sale or other dispositions, whether invoiced or not,
less returns and allowances actually granted, packing costs, insurance costs,
freight out, taxes or excise duties imposed on the transaction (if separately
invoiced), and wholesaler and cash discounts in amounts customary in the trade.
No deductions shall be made for commissions paid to individuals, whether they be
with independent sales agencies or regularly employed by LICENSEE or its
Sublicensees and on its payroll, or for the cost of collections.
2.09 "Sublicensee" means any non-affiliate third party to whom LICENSEE has
granted the right to make and sell a LICENSED PRODUCT and/or practice a LICENSED
PROCESS, with respect to the LICENSED PRODUCTS made and sold or the LICENSED
PROCESSES practiced by such third party.
3.02 Upon written approval by PHS, which approval will not be unreasonably
withheld or delayed, Licensee has the right to grant sublicenses to the LICENSED
PATENT Rights to third parties. LICENSEE shall forward a copy of the executed
sublicense agreement within (60) days of its execution.
3.04 LICENSEE agrees that any sublicenses granted by it hereunder shall provide
that the obligations to PHS of Paragraphs 4.01, 6.01, 7.01, 7.03, 8.01, 8.02,
9.01, 9.02, 9.03, 10.05, and 11.06-11.08 of this Agreement shall be binding upon
the Sublicensee as if it were a party to this Agreement. LICENSEE further agrees
to attach copies of these Paragraphs to all such sublicense agreements.
3.05 Any sublicenses granted by LICENSEE shall provide for the termination of
the sublicense or the conversion to a license directly between such Sublicensees
and PHS on the applicable terms and conditions herein, at the option of the
Sublicensee, upon termination of this Agreement under Article 11. Such
conversion is subject and contingent upon acceptance by the Sublicensee of the
applicable provisions of this Agreement.
5.08 As an additional royalty, LICENSEE agrees to pay PHS within (60) days of
PHS's submission of a statement and request for payment, an amount equivalent to
all patent expenses previously incurred by PHS in the preparation, filing,
prosecution, and maintenance of LICENSED PATENT RIGHTS, to be divided equally
among all nonexclusive commercialization LICENSEES of record as of the date the
statement and request for payment is sent by PHS to LICENSEE. LICENSEE further
agrees to pay PHS annually, within sixty (60) days of PHS's submission of a
statement and request for payment, a royalty amount equivalent to all such
future patent expenses incurred during the previous calendar year divided
equally among all nonexclusive commercialization LICENSEES of record as of the
date the statement and request for payment are sent by PHS to LICENSEE. [*] of
the cumulative amount of the payments due under this Paragraph 5.08 may be
credited against royalties due under Paragraph 5.03; however, the net royalty
payment in any calendar year may not be lower than the minimum annual royalty
specified in Appendix C. LICENSEE may elect to surrender its rights in any
country of the LICENSED TERRITORY under any LICENSED PATENT RIGHTS upon sixty
(60) days' written notice to PHS and owe [*] under this Paragraph for subsequent
patent-related expenses incurred in that country.
5.09 LICENSEE agrees to pay PHS the sublicensing royalties as set forth in
Appendix C.
NIH Office of Technology Transfer
PHS PATENT LICENSE AGREEMENT-NONEXCLUSIVE
L-052-98/0 Final Introgen Therapeutics Inc. 07/22/98 - Page 16 of 17
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE> 17
10.05 LICENSEE shall indemnify and hold PHS, its employees, students, fellows,
agents, and consultants harmless from and against all liability, demands,
damages, expenses, and losses, including but not limited to death, personal
injury, illness, or property damage in connection with or arising out of a) the
use by or on behalf of LICENSEE its Sublicensees and their officers, directors,
employees, or third parties acting on their behalf of any LICENSED PATENT
RIGHTS, or b) the design, manufacture, distribution, or use of any LICENSED
PRODUCTS, LICENSED PROCESSES, or other products or processes developed in
connection with or arising out of the LICENSED PATENT RIGHTS hereunder; provided
that any party seeking indemnification under this Paragraph 10.5 shall: (i)
promptly notify LICENSEE in writing of any claim, suit or other proceeding with
respect to which the party intends to claim such indemnification: (ii) provide
LICENSEE the opportunity as is afforded by applicable laws, rules or regulations
to jointly control the defense and/or settlement of such claim suit or
proceeding: (iii) provide LICENSEE, at LICENSEE's request and expense, with
reasonable assistance and full information with respect to such claim, suit or
proceeding. LICENSEE agrees to maintain a liability insurance program consistent
with sound business practice.
11.03 [Delete]
11.04 PHS may terminate this Agreement on written notice to LICENSEE, if the
LICENSEE becomes the subject of a voluntary: Petition in bankruptcy, or any
proceeding relating to insolvency, receivership, liquidation, or composition for
the benefit of creditors, if that petition or proceeding is not dismissed with
prejudice within sixty (60) days after filing. Without limiting the foregoing,
LICENSEE shall promptly notify PHS upon the filing of any of the foregoing
petitions or proceedings.
12.07 This Agreement shall not be assigned by LICENSEE except a) with the prior
written consent of PHS, or b) as part of a sale or transfer of substantially the
entire business of LICENSEE relating to operations which concern this Agreement
or to a party that is an affiliate or subsidiary of LICENSEE at the time of the
assignment. LICENSEE shall notify PHS within ten (10) days of any assignment of
this Agreement by LICENSEE.
NIH Office of Technology Transfer
PHS PATENT LICENSE AGREEMENT-NONEXCLUSIVE
L-052-98/0 Final Introgen Therapeutics Inc. 07/22/98 - Page 17 of 17
<PAGE> 1
EXHIBIT 21.1
Subsidiaries of the Registrant
Subsidiaries of the Registrant Jurisdiction of Incorporation
- ------------------------------ -----------------------------
Gendux, Inc. Delaware
Gendux AB Sweden
TMX Realty Corporation Delaware
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our
report (and to all references to our Firm) included in or made a part of this
registration statement.
/s/ Arthur Andersen LLP
Houston, Texas
February 11, 2000
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS BEGINNING ON F-1 OF THIS
FORM S-1 AND IS QUALIFIED ENTIRETY BY REFERENCE TO SUCH UNAUDITED FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> YEAR 6-MOS
<FISCAL-YEAR-END> JUN-30-1999 JUN-30-1999
<PERIOD-START> JUL-01-1998 JUL-01-1999
<PERIOD-END> JUN-30-1999 DEC-31-1999
<CASH> 2,146 2,399
<SECURITIES> 13,615 11,183
<RECEIVABLES> 0 0
<ALLOWANCES> 0 0
<INVENTORY> 1,625 414
<CURRENT-ASSETS> 17,392 14,790
<PP&E> 9,822 12,937
<DEPRECIATION> (1,761) (1,825)
<TOTAL-ASSETS> 25,741 26,320
<CURRENT-LIABILITIES> 3,166 1,806
<BONDS> 0 0
0 0
6 6
<COMMON> 3 3
<OTHER-SE> 19,178 16,416
<TOTAL-LIABILITY-AND-EQUITY> 25,741 26,320
<SALES> 1,475 1,786
<TOTAL-REVENUES> 8,189 5,702
<CGS> 994 1,153
<TOTAL-COSTS> 994 1,153
<OTHER-EXPENSES> 10,516 8,504
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 5 152
<INCOME-PRETAX> (2,646) (3,747)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (2,646) (3,747)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (2,646) (3,747)
<EPS-BASIC> (1.06) (1.48)
<EPS-DILUTED> (1.06) (1.48)
</TABLE>
