<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 6, 1998
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
AMENDMENT NO. 1
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------
COLLATERAL THERAPEUTICS, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
CALIFORNIA 8731 33-0661290
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer Identification
incorporation or organization) Classification Code Number) Number)
</TABLE>
--------------------------
9360 TOWNE CENTRE DRIVE, SAN DIEGO, CALIFORNIA 92121 (619) 824-6500
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
------------------------------
JACK W. REICH, PH.D.
PRESIDENT AND CHIEF EXECUTIVE OFFICER
CHRISTOPHER J. REINHARD
CHIEF OPERATING AND FINANCIAL OFFICER
COLLATERAL THERAPEUTICS, INC.
9360 TOWNE CENTRE DRIVE
SAN DIEGO, CALIFORNIA 92121
(619) 824-6500
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------------
WITH COPIES TO:
<TABLE>
<S> <C>
Faye H. Russell, Esq. Jeffrey E. Cohen, Esq.
Maria P. Sendra, Esq. Carol B. Stubblefield, Esq.
BROBECK, PHLEGER & HARRISON LLP COUDERT BROTHERS
550 West "C" Street, Suite 1300 1114 Avenue of the Americas
San Diego, California 92101 New York, New York 10036
(619) 234-1966 (212) 626-4400
</TABLE>
--------------------------
Approximate date of commencement of proposed sale to the public:
AS SOON AS PRACTICABLE AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE.
--------------------------
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box: / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act 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 delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: / /
--------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED PROPOSED
AMOUNT MAXIMUM MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF TO BE OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED(1) PER SHARE(2) OFFERING PRICE(2) FEE
<S> <C> <C> <C> <C>
Common Stock, par value $.001............... 3,829,500 shares $13.00 $49,783,500 $15,086
</TABLE>
(1) Includes 499,500 shares of Common Stock that the Underwriters have the
option to purchase to cover over-allotments, if any.
(2) Estimated solely for the purpose of computing the amount of the registration
fee.
--------------------------
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 THE REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 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>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth all expenses, other than underwriting
discounts and commissions, payable by the Registrant in connection with the sale
of the Common Stock being registered. All the amounts shown are estimates,
except for the registration fee and the NASD filing fee.
<TABLE>
<S> <C>
Registration fee.................................................. 15,086
Nasdaq National Market fee........................................ 17,500
NASD fee.......................................................... 5,479
Blue Sky fees and expenses........................................ 15,000
Printing and engraving expenses................................... 150,000
Legal fees and expenses........................................... 350,000
Accounting fees and expenses...................................... 190,000
Transfer Agent and Registrar fees................................. 10,000
Miscellaneous expenses............................................ 53,414
---------
TOTAL........................................................... $ 800,000
---------
---------
</TABLE>
ITEM 14. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
The following is applicable assuming the shareholders approve the
reincorporation of the Company in Delaware.
Section 145 of the Delaware General Corporation Law permits indemnification
of officers and directors of the Company under certain conditions and subject to
certain limitations. Section 145 of the Delaware General Corporation Law also
provides that a corporation has the power to purchase and maintain insurance on
behalf of its officers and directors against any liability asserted against such
person and incurred by him or her in such capacity, or arising out of his or her
status as such, whether or not the corporation would have the power to indemnify
him or her against such liability under the provisions of Section 145 of the
Delaware General Corporation Law.
Article VII, Section 1 of the Restated Bylaws of the Company provides that
the Company shall indemnify its directors, officers, employees and agents to the
fullest extent not prohibited by the Delaware General Corporation Law. The
rights to indemnity thereunder continue as to a person who has ceased to be a
director, officer, employee or agent and inure to the benefit of the heirs,
executors and administrators of the person. In addition, expenses incurred by a
director or officer in defending any civil, criminal, administrative or
investigative action, suit or proceeding by reason of the fact that he or she is
or was a director or officer of the Company (or was serving at the Company's
request as a director or officer of another corporation) shall be paid by the
Company in advance of the final disposition of such action, suit or proceeding
upon receipt of an undertaking by or on behalf of such director or officer to
repay such amount if it shall ultimately be determined that he or she is not
entitled to be indemnified by the Company as authorized by the relevant section
of the Delaware General Corporation Law.
As permitted by Section 102(b)(7) of the Delaware General Corporation Law,
Article V, Section (A) of the Company's Certificate of Incorporation provides
that a director of the Company shall not be personally liable for monetary
damages or breach of fiduciary duty as a director, except for liability (i) for
any breach of the director's duty of loyalty to the Company or its stockholders,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 174 of the
Delaware General Corporation Law or (iv) for any transaction from which the
director derived any improper personal benefit.
The Company has entered into indemnification agreements with certain of its
directors. Generally, the indemnification agreements attempt to provide the
maximum protection permitted by California law as
II-1
<PAGE>
such law may be amended from time to time. In addition, the indemnification
agreements provide for additional indemnification for certain amounts not
otherwise covered by directors and officers liability insurance. Under such
additional indemnification provisions, such directors shall not be indemnified
for judgments, settlements or expenses if such director is found liable to the
Company (except to the extent the court determines that such director is fairly
and reasonably entitled to indemnity for expenses), for settlements and expenses
if the settlement is not approved by the court, for settlements not approved by
the Company or in certain other situations. The indemnification agreements
provide for the Company to advance to the individual any and all reasonable
expenses (including legal fees and expenses) incurred in investigating or
defending any such action, suit or proceeding. The director must repay such
advances upon a final judicial decision that such director is not entitled to
indemnification.
The Company has directors and officers liability insurance now in effect
which insures directors and officers of the Company.
The Company intends to enter into indemnification agreements under Delaware
law with each of its directors and executive officers. Generally, the
indemnification agreements attempt to provide the maximum protection permitted
by Delaware law as it may be amended from time to time. Moreover, the
indemnification agreements provide for additional indemnification for certain
amounts not otherwise covered by directors and officers liability insurance.
Under such additional indemnification provisions, however, such director or
executive officer will not be indemnified for settlements not approved by the
Company. The indemnification agreements provide for the Company to advance to
the individual any and all reasonable expenses (including legal fees and
expenses) incurred in investigating or defending any such action, suit or
proceeding. Also, the individual must repay such advances upon a final judicial
decision that he or she is not entitled to indemnification. The obligations of
the Company under these indemnification agreements shall continue during the
period that such director or officer is serving the Company as such and shall
continue for so long thereafter as such director or officer shall be subject to
any possible claim, action, suit or proceeding. For six years after the
effective time of the acquisition of the Company by another entity or the sale
of all or substantially all of the assets of the Company, the Company shall
cause the acquiring or surviving corporation to indemnify such director or
officer in accordance with the terms of this indemnification agreement and use
such acquiring or surviving corporation's best efforts to provide director's and
officer's liability insurance on terms substantially similar to those of the
Company's.
The Underwriting Agreement (Exhibit 1.1 hereto) contains provisions by which
the Underwriters have agreed to indemnify the Company, each person, if any, who
controls the Company within the meaning of Section 15 of the Securities Act,
each director of the Company, and each officer of the Company who signs this
Registration Statement, with respect to information furnished in writing by or
on behalf of the Underwriters specifically for use in the Registration
Statement.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
Since April 1995, the Company has sold and issued the following unregistered
securities:
(1) From April 1995 to March 31, 1998, the Company granted an aggregate of
1,262,550 options to purchase Common Stock with exercise prices ranging from
$.0005 to $.74 per share under the Predecessor Plan and an aggregate of
549,997 shares of Common Stock were issued through the exercise of options
granted under the Predecessor Plan for aggregate proceeds of $43,472. For
additional information concerning these transactions, reference is made to
the information contained under the caption "Management--Benefit Plans" in
the Prospectus included herein.
(2) On April 5, 1995, the Company issued an aggregate of 1,159,000 shares of
Common Stock to executive officers of the Company for an aggregate
consideration of $610.00
(3) On August 9, 1995, the Company issued 3,789,740 shares of Common Stock to
executive officers and consultants of the Company for an aggregate
consideration of $1,995.00.
II-2
<PAGE>
(4) On November 20, 1995, the Company issued 190,000 shares of Common Stock to a
director of the Company for an aggregate consideration of $100.00.
(5) In March 1996, the Company issued 206,530 shares of Common Stock to
executive officers, directors and consultants of the Company for an
aggregate consideration of $1,087.00.
(6) On May 7, 1996, the Company issued 347,532 shares of Series A Preferred
Stock to Schering Berlin Venture Corp. for an aggregate consideration of
$2,500,000.00.
(7) On June 11, 1997, the Company issued 347,532 shares of Series B Preferred
Stock to Schering Berlin Venture Corp. for an aggregate consideration of
$2,500,000.00.
(9) On June 30, 1997, the Company issued an aggregate of 375,000 shares of
Series C Preferred Stock to The Wellcome Trust, Schering Berlin Venture
Corp. and Jerry C. Benjamin, respectively, for an aggregate consideration of
$3,779,808.00.
The sales and issuances of securities in the above transactions were deemed
to be exempt under the Securities Act by virtue of Section 4(2) thereof and/or
Regulation D and Rule 701 promulgated thereunder as transactions not involving
any public offering. The purchasers in each case represented their intention to
acquire the securities for investment only and not with a view to the
distribution thereof. Appropriate legends were affixed to the stock certificates
issued in such transactions. Similar representations of investment intent were
obtained and similar legends imposed in connection with any subsequent transfers
of any such securities. The Company believes that all recipients had adequate
access, through employment or other relationships, to information about the
Company to make an informed investment decision.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(A) EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ---------- ------------------------------------------------------------------------------------------------------
<C> <S>
1.1+ Underwriting Agreement.
3.1+ Certificate of Incorporation of the Company, as amended.
3.2+ Form of Second Restated Certificate of Incorporation of the Company to become effective immediately
prior to the Offering.
3.3+ Bylaws of the Company.
3.4+ Form of Restated Bylaws of the Company to be effective upon completion of the Offering.
4.1+ Form of the Certificate for Common Stock.
5.1++ Opinion of Brobeck, Phleger & Harrison LLP with respect to the Common Stock being registered.
10.1++ Form of Restricted Stock Issuance Agreement between the Company and certain individuals listed on the
attached schedule.
10.2++ Form of Stock Issuance Agreement between the Company and certain individuals listed on the attached
schedule.
10.3* Preferred Stock Purchase Agreement between the Company and Schering Berlin Venture Corp., dated May 7,
1996.
10.4* Series C Preferred Stock Purchase Agreement by and among the Company and the investors listed on
Schedule A thereto, dated June 30, 1997.
10.5++ Amended and Restated Investors' Rights Agreement by and among the Company and the investors listed on
Schedule A thereto, dated June 30, 1997.
10.6++ Amended and Restated Co-Sale Agreement by and among the Company and the individuals listed on Schedule
A thereto, dated June 30, 1997.
10.7++ Security Agreement between the Company and Schering Berlin Venture Corp., dated August 16, 1995.
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ---------- ------------------------------------------------------------------------------------------------------
<C> <S>
10.8++ Amended and Restated Promissory Note between the Company and Schering AG, dated August 16, 1995, as
amended May 16, 1996.
10.9++ Amended and Restated Promissory Note between the Company and Schering AG, dated October 12, 1995, as
amended May 16, 1996.
10.10++ Side Letter between the Company and Schering Berlin Venture Group, dated May 6, 1996.
10.11* Exclusive License Agreement between The Regents of the University of California and the Company for
Angiogenesis Gene Therapy, dated September 27, 1995, as amended.
10.12* Collaboration, License and Royalty Agreement between Schering AG and the Company, dated May 6, 1996.
10.13* License Agreement by and among Dimotech Ltd., Gera Neufeld and the Company, dated October 17, 1996.
10.14* Exclusive License Agreement between The Regents of the University of California and the Company for
Gene Therapy for Congestive Heart Failure, dated January 22, 1997.
10.15* Agreement between New York University and the Company, dated March 24, 1997.
10.16* License Agreement by and among AMRAD Developments Pty. Ltd., Ludwig Institute for Cancer Research and
the Company, dated March 25, 1997.
10.17* Research Agreement between the University of Washington and the Company, dated April 21, 1997.
10.18* Exclusive License Agreement between The Regents of the University of California and the Company for
Angiogenic Gene Therapy for Congestive Heart Failure, dated June 18, 1997.
10.19* Letter Agreement between the Company and Veterans Medical Research Foundation, dated August 13, 1997.
10.20* Sponsored Research Contract between the Curators of The University of Missouri and the Company, dated
October 22, 1997.
10.21* Biological Materials Agreement between Targeted Genetics Corporation and the Company, dated January
26, 1998.
10.22* Research Agreement between The Regents of the University of California and the Company, dated February
23, 1998.
10.23* Letter Agreement between the Company and Veterans Medical Research Foundation, dated March 20, 1998.
10.24++ Sublease Agreement between the Company and Gensia, Inc., dated June 15, 1995, as amended.
10.25++ Standard Industrial/Commercial Multi-Tenant Lease-Modified Net between the Company and ARE 11025
Roselle Street, LLC, dated November 24, 1997, as amended.
10.26++ Torrey Reserve Office Lease between Pacific Torrey Reserve Holding, L.P. and the Company, dated April
7, 1998.
10.27++ Form of Scientific Advisor Consulting Agreement between the Company and certain individuals listed on
the attached schedule.
10.28++ Form of Scientific Advisory Board Agreement between the Company and certain individuals listed on the
attached schedule.
10.29++ Form of Consulting Agreement between the Company and certain individuals listed on the attached
schedule.
10.30++ 1995 Stock Option/Stock Issuance Plan.
10.31++ 1995 Stock Option/Stock Issuance Plan Form of Notice of Grant.
10.32++ 1995 Stock Option/Stock Issuance Plan Form of Stock Option Agreement.
10.33++ 1995 Stock Option/Stock Issuance Plan Form of Stock Purchase Agreement.
10.34 1995 Stock Option/Stock Issuance Plan Form of Restricted Stock Issuance Agreement.
10.35 1998 Stock Incentive Plan.
10.36 1998 Stock Incentive Plan Form of Notice of Grant.
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ---------- ------------------------------------------------------------------------------------------------------
<C> <S>
10.37 1998 Stock Incentive Plan Form of Stock Option Agreement.
10.38 1998 Stock Incentive Plan Form of Stock Issuance Agreement.
10.39 1998 Employee Stock Purchase Plan.
10.40 Form of Indemnification Agreement between the Company and each of its directors.
10.41 Form of Indemnification Agreement between the Company and each of its officers.
23.1++ Consent of Brobeck, Phleger & Harrison LLP (contained in their opinion filed as Exhibit 5.1).
23.2++ Consent of Ernst & Young LLP, Independent Auditors.
23.3+ Consent of Lyon & Lyon LLP.
24.1++ Power of Attorney (see page II-6).
27.1++ Financial Data Schedule.
</TABLE>
- ------------------------
+ To be filed by amendment.
++ Previously filed with the Commission.
* Certain confidential portions of this Exhibit were omitted by means of
redacting a portion of the text (the "Mark"). This Exhibit has been filed
separately with the Secretary of the Commission without the Mark pursuant to
the Company's Application Requesting Confidential Treatment under Rule 406
under the Securities Act.
(B) FINANCIAL STATEMENT SCHEDULES INCLUDED SEPARATELY IN THE REGISTRATION
STATEMENT.
None
All schedules are omitted because they are not required, are not applicable
or the information is included in the Financial Statements or notes thereto.
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes to provide to the Underwriters
at the closing 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.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the Company
pursuant to the provisions described in Item 14, or otherwise, the Company has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Company of expenses
incurred or paid by a director, officer or controlling person of the Company in
the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Company will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act, 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-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all the
requirements for filing on Form S-1 and has duly caused this Amendment No. 1 to
this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of San Diego, State of California, on the
6th day of May, 1998.
COLLATERAL THERAPEUTICS, INC.
BY: /S/ JACK W. REICH
-----------------------------------------
Jack W. Reich
PRESIDENT AND CHIEF EXECUTIVE OFFICER
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
- ------------------------------ --------------------------- -------------------
Director, President And
/s/ JACK W. REICH Chief Executive Officer
- ------------------------------ (Principal Executive May 6, 1998
(Jack W. Reich) Officer)
Director, Chief Operating
* And Chief Financial
- ------------------------------ Officer (Principal May 6, 1998
(Christopher J. Reinhard) Financial and Accounting
Officer)
* Director And Secretary
- ------------------------------ May 6, 1998
(Craig S. Andrews)
* Director, Vice President,
- ------------------------------ Medical Director May 6, 1998
(Robert L. Engler)
* Director, Vice President,
- ------------------------------ Research May 6, 1998
(H. Kirk Hammond)
* Director
- ------------------------------ May 6, 1998
(Elise G. Klein)
II-6
<PAGE>
SIGNATURE TITLE DATE
- ------------------------------ --------------------------- -------------------
* Director
- ------------------------------ May 6, 1998
(David F. Hale)
* Director
- ------------------------------ May 6, 1998
(David E. Robinson)
By: /s/ JACK W. REICH
-------------------------
Jack W. Reich
Attorney-in-Fact
II-7
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ---------- ------------------------------------------------------------------------------------------------------
<C> <S>
1.1+ Underwriting Agreement.
3.1+ Certificate of Incorporation of the Company, as amended.
3.2+ Form of Second Restated Certificate of Incorporation of the Company to become effective immediately
prior to the Offering.
3.3+ Bylaws of the Company.
3.4+ Form of Restated Bylaws of the Company to be effective upon completion of the Offering.
4.1+ Form of the Certificate for Common Stock.
5.1++ Opinion of Brobeck, Phleger & Harrison LLP with respect to the Common Stock being registered.
10.1++ Form of Restricted Stock Issuance Agreement between the Company and certain individuals listed on the
attached schedule.
10.2++ Form of Stock Issuance Agreement between the Company and certain individuals listed on the attached
schedule.
10.3* Preferred Stock Purchase Agreement between the Company and Schering Berlin Venture Corp., dated May 7,
1996.
10.4* Series C Preferred Stock Purchase Agreement by and among the Company and the investors listed on
Schedule A thereto, dated June 30, 1997.
10.5++ Amended and Restated Investors' Rights Agreement by and among the Company and the investors listed on
Schedule A thereto, dated June 30, 1997.
10.6++ Amended and Restated Co-Sale Agreement by and among the Company and the individuals listed on Schedule
A thereto, dated June 30, 1997.
10.7++ Security Agreement between the Company and Schering Berlin Venture Corp., dated August 16, 1995.
10.8++ Amended and Restated Promissory Note between the Company and Schering AG, dated August 16, 1995, as
amended May 16, 1996.
10.9++ Amended and Restated Promissory Note between the Company and Schering AG, dated October 12, 1995, as
amended May 16, 1996.
10.10++ Side Letter between the Company and Schering Berlin Venture Group, dated May 6, 1996.
10.11* Exclusive License Agreement between The Regents of the University of California and the Company for
Angiogenesis Gene Therapy, dated September 27, 1995, as amended.
10.12* Collaboration, License and Royalty Agreement between Schering AG and the Company, dated May 6, 1996.
10.13* License Agreement by and among Dimotech Ltd., Gera Neufeld and the Company, dated October 17, 1996.
10.14* Exclusive License Agreement between The Regents of the University of California and the Company for
Gene Therapy for Congestive Heart Failure, dated January 22, 1997.
10.15* Agreement between New York University and the Company, dated March 24, 1997.
10.16* License Agreement by and among AMRAD Developments Pty. Ltd., Ludwig Institute for Cancer Research and
the Company, dated March 25, 1997. +_>
10.17* Research Agreement between the University of Washington and the Company, dated April 21, 1997.
10.18* Exclusive License Agreement between The Regents of the University of California and the Company for
Angiogenic Gene Therapy for Congestive Heart Failure, dated June 18, 1997.
10.19* Letter Agreement between the Company and Veterans Medical Research Foundation, dated August 13, 1997.
10.20* Sponsored Research Contract between the Curators of The University of Missouri and the Company, dated
October 22, 1997.
10.21* Biological Materials Agreement between Targeted Genetics Corporation and the Company, dated January
26, 1998.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ---------- ------------------------------------------------------------------------------------------------------
<C> <S>
10.22* Research Agreement between The Regents of the University of California and the Company, dated February
23, 1998.
10.23* Letter Agreement between the Company and Veterans Medical Research Foundation, dated March 20, 1998.
10.24++ Sublease Agreement between the Company and Gensia, Inc., dated June 15, 1995, as amended.
10.25++ Standard Industrial/Commercial Multi-Tenant Lease-Modified Net between the Company and ARE 11025
Roselle Street, LLC, dated November 24, 1997, as amended.
10.26++ Torrey Reserve Office Lease between Pacific Torrey Reserve Holding, L.P. and the Company, dated April
7, 1998.
10.27++ Form of Scientific Advisor Consulting Agreement between the Company and certain individuals listed on
the attached schedule.
10.28++ Form of Scientific Advisory Board Agreement between the Company and certain individuals listed on the
attached schedule.
10.29++ Form of Consulting Agreement between the Company and certain individuals listed on the attached
schedule.
10.30++ 1995 Stock Option/Stock Issuance Plan.
10.31++ 1995 Stock Option/Stock Issuance Plan Form of Notice of Grant.
10.32++ 1995 Stock Option/Stock Issuance Plan Form of Stock Option Agreement.
10.33++ 1995 Stock Option/Stock Issuance Plan Form of Stock Purchase Agreement.
10.34 1995 Stock Option/Stock Issuance Plan Form of Restricted Stock Issuance Agreement.
10.35 1998 Stock Incentive Plan.
10.36 1998 Stock Incentive Plan Form of Notice of Grant.
10.37 1998 Stock Incentive Plan Form of Stock Option Agreement.
10.38 1998 Stock Incentive Plan Form of Stock Issuance Agreement.
10.39 1998 Employee Stock Purchase Plan.
10.40 Form of Indemnification Agreement between the Company and each of its directors.
10.41 Form of Indemnification Agreement between the Company and each of its officers.
23.1++ Consent of Brobeck, Phleger & Harrison LLP (contained in their opinion filed as Exhibit 5.1).
23.2++ Consent of Ernst & Young LLP, Independent Auditors.
23.3+ Consent of Lyon & Lyon LLP.
24.1++ Power of Attorney (see page II-6).
27.1++ Financial Data Schedule.
</TABLE>
- ------------------------
+ To be filed by amendment.
++ Previously filed with the Commission.
* Certain confidential portions of this Exhibit were omitted by means of
redacting a portion of the text (the "Mark"). This Exhibit has been filed
separately with the Secretary of the Commission without the Mark pursuant to
the Company's Application Requesting Confidential Treatment under Rule 406
under the Securities Act.
<PAGE>
EXHIBIT 10.3
COLLATERAL THERAPEUTICS, INC.
PREFERRED STOCK PURCHASE AGREEMENT
_________________
May 7, 1996
<PAGE>
TABLE OF CONTENTS
PAGE
1. Purchase and Sale of Stock..................................... 1
1.1 Sale and Issuance of Preferred Stock..................... 1
1.2 First Closing............................................ 1
1.3 Second Closing........................................... 1
1.4 Delivery................................................. 1
2. Representations and Warranties of the Company.................. 2
2.1 Organization; Good Standing; Qualification............... 2
2.2 Authorization............................................ 2
2.3 Valid Issuance of Preferred and Common Stock............. 2
2.4 Governmental Consents.................................... 3
2.5 Capitalization and Voting Rights......................... 3
2.6 Subsidiaries............................................. 4
2.7 Contracts and Other Commitments.......................... 4
2.8 Related-Party Transactions............................... 4
2.9 Registration Rights...................................... 4
2.10 Permits.................................................. 4
2.11 Compliance with Other Instruments........................ 5
2.12 Litigation............................................... 5
2.13 Disclosure............................................... 5
2.14 Offering................................................. 6
2.15 Title to Property and Assets; Leases..................... 6
2.16 Financial Statements..................................... 6
2.17 Changes.................................................. 6
2.18 Patents and Trademarks................................... 7
2.19 Proprietary Information and Inventions Agreements........ 7
2.20 Tax Returns, Payments, and Elections..................... 7
2.21 Section 83(b) Elections.................................. 7
2.22 Minute Books............................................. 7
2.23 Real Property Holding Corporation........................ 7
3. Representations and Warranties of Investor..................... 7
3.1 Authorization............................................ 7
3.2 Purchase Entirely for Own Account........................ 8
3.3 Reliance Upon Investors' Representations................. 8
3.4 Receipt of Information................................... 8
3.5 Investment Experience.................................... 8
3.6 Accredited Investor...................................... 9
3.7 Restricted Securities.................................... 10
3.8 Legends.................................................. 10
3.9 Public Sale.............................................. 10
3.10 Non U.S. Persons......................................... 11
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4. Conditions of Investor's Obligations at Each Closing........... 11
4.1 Representations and Warranties........................... 11
4.2 Performance.............................................. 11
4.3 Compliance Certificate................................... 11
4.4 Qualifications........................................... 11
4.5 Proceedings and Documents................................ 11
4.6 Due Diligence............................................ 12
4.7 Bylaws................................................... 12
4.8 Board of Directors....................................... 12
4.9 Opinion of Company Counsel............................... 12
4.10 Rights Agreement......................................... 12
4.11 Co-Sale Agreement........................................ 12
4.12 Collaboration Agreement.................................. 12
5. Conditions of the Company's Obligations at Closing............. 12
5.1 Representations and Warranties........................... 12
5.2 Qualifications........................................... 12
5.3 Co-Sale Agreements....................................... 12
5.4 Collaboration Agreement.................................. 13
6. Miscellaneous.................................................. 13
6.1 Entire Agreement......................................... 13
6.2 Survival of Warranties................................... 13
6.3 Successors and Assigns................................... 13
6.4 Governing Law............................................ 13
6.5 Counterparts............................................. 13
6.6 Titles and Subtitles..................................... 13
6.7 Notices.................................................. 13
6.8 Finder's Fees............................................ 14
6.9 Expenses................................................. 14
6.10 Attorneys Fees........................................... 14
6.11 Amendments and Waivers................................... 14
6.12 Severability............................................. 14
6.13 Corporate Securities Law................................. 14
Exhibit A -- Amended and Restated Articles of Incorporation
Exhibit B -- Holders of Common Stock
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COLLATERAL THERAPEUTICS, INC.
PREFERRED STOCK PURCHASE AGREEMENT
THIS PREFERRED STOCK PURCHASE AGREEMENT (this "Agreement") is made as of
the 7th day of May, 1996, by and between Collateral Therapeutics, Inc., a
California corporation (the "Company"), and Schering Berlin Venture Corp., a
Delaware corporation (the "Investor").
THE PARTIES HEREBY AGREE AS FOLLOWS:
1. PURCHASE AND SALE OF STOCK.
1.1 SALE AND ISSUANCE OF PREFERRED STOCK.
(a) The Company shall adopt and file with the Secretary of
State of California on or before the First Closing (as defined below) an Amended
and Restated Articles of Incorporation in the form attached hereto as EXHIBIT A
(the "Restated Articles").
(b) Subject to the terms and conditions of this Agreement, the
Investor agrees to purchase and the Company agrees to sell and issue to the
Investor: (i) 374,532 shares of the Company's Series A Preferred Stock at a
price of $6.675 per share at the First Closing (as defined below); (ii) and
374,532 shares of the Company's Series B Preferred Stock at a price of $6.675
per share at the Second Closing (as defined below). (The Series A Preferred and
Series B Preferred Stock shall hereinafter be referred to as "Preferred Stock.")
1.2 FIRST CLOSING. The purchase and sale of the Series A Preferred
Stock shall take place at the offices of Brobeck, Phleger & Harrison LLP, 550
West C Street, Suite 1200, San Diego, California, at 10:00 a.m., on May 7, 1996,
or at such other time and place as the Company and the Investor shall mutually
agree, either orally or in writing (which time and place are designated as the
"First Closing").
1.3 SECOND CLOSING. The purchase and sale of the Series B Preferred
Stock shall take place within five (5) business days after there has been an
Acceptance of a Qualified Gene by Schering AG, an Affiliate of Investor (as
defined in that certain Collaboration, License and Royalty Agreement dated the
date hereof by and between Schering AG and the Company, the "Collaboration
Agreement") or such condition is waived by the Investor, at such place as the
Company and the Investor shall mutually agree, either orally or in writing
(which time shall be designated as the Second Closing"). (The First Closing and
Second Closing may each be referred to as a "Closing.")
1.4 DELIVERY. At each Closing, the Company shall deliver to the
Investor a certificate representing the shares of Preferred Stock that the
Investor is purchasing at such Closing against payment of the purchase price
therefor by check or wire transfer.
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2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to Investor that, except as set forth on a Schedule of
Exceptions furnished Investor and special counsel for Investor, which exceptions
shall be deemed to be representations and warranties as if made hereunder:
2.1 ORGANIZATION; GOOD STANDING; QUALIFICATION. The Company is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of California, has all requisite corporate power and authority
to own and operate its properties and assets and to carry on its business as now
conducted and as proposed to be conducted, to execute and deliver this
Agreement, that certain Investor Rights Agreement dated the date hereof in a
form mutually agreed upon by the Company and the Investor (the "Rights
Agreement") and that certain Co-Sale Agreement dated the date hereof in a form
mutually agreed upon by the Company, the Investor and the shareholders listed
under the heading "Founders" (the "Founders") on EXHIBIT B hereto (the "Co-Sale
Agreement"), to issue and sell the Preferred Stock and the Common Stock issuable
upon conversion thereof, and to carry out the provisions of this Agreement, the
Rights Agreement, the Co-Sale Agreement and the Restated Articles. The Company
is not qualified to do business as a foreign corporation in any jurisdiction and
such qualification is not now required.
2.2 AUTHORIZATION. All corporate action on the part of the Company,
its officers, directors and shareholders necessary for the authorization,
execution and delivery of this Agreement, the Rights Agreement and the Co-Sale
Agreement, the performance of all obligations of the Company hereunder and
thereunder at the Closing and the authorization, issuance (or reservation for
issuance), sale, and delivery of the Preferred Stock being sold hereunder and
the Common Stock issuable upon conversion thereof has been taken or will be
taken prior to the First Closing, and this Agreement, the Rights Agreement and
the Co-Sale Agreement constitute valid and legally binding obligations of the
Company, enforceable in accordance with their respective terms except (i) as
limited by applicable bankruptcy, insolvency, reorganization, moratorium, and
other laws of general application affecting enforcement of creditors' rights
generally (ii) as limited by laws relating to the availability of specific
performance, injunctive relief, or other equitable remedies, and (iii) to the
extent the indemnification provisions contained in the Rights Agreement may be
limited by applicable federal or state securities law.
2.3 VALID ISSUANCE OF PREFERRED AND COMMON STOCK. The Preferred
Stock that is being purchased by the Investor hereunder, when issued, sold and
delivered in accordance with the terms of this Agreement for the consideration
expressed herein, will be duly and validly issued, fully paid, and
nonassessable, and will be free of restrictions on transfer other than
restrictions on transfer under this Agreement, the Rights Agreement, the Co-Sale
Agreement and the Company's Bylaws and under applicable state and federal
securities laws. The Common Stock issuable upon conversion of the Preferred
Stock purchased under this Agreement has been duly and validly reserved for
issuance and, upon issuance in accordance with the terms of the Restated
Articles, will be duly and validly issued, fully paid, and nonassessable and
will be free of restrictions on transfer other than restrictions on transfer
under this Agreement, the Rights Agreement, the Co-Sale Agreement and the
Company's Bylaws and under applicable state and federal securities laws.
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2.4 GOVERNMENTAL CONSENTS. No consent, approval, qualification,
order or authorization of, or filing with, any local, state or federal
governmental authority is required on the part of the Company in connection with
the Company's valid execution, delivery or performance of this Agreement, the
offer, sale or issuance of the Preferred Stock by the Company or the issuance of
Common Stock upon conversion of the Preferred Stock, except (i) the filing of
the Restated Articles with the Secretary of State of the State of California and
(ii) such filings as have been made prior to the First Closing, except that such
post-closing filings as may be required under applicable state securities laws
which will be timely filed within the applicable periods therefor.
2.5 CAPITALIZATION AND VOTING RIGHTS. The authorized capital
of the Company consists, or will consist prior to the First Closing, of:
(a) PREFERRED STOCK. 749,064 shares of Preferred Stock, no par
value, of which 374,532 shares have been designated Series A Preferred Stock and
374,532 shares have been designated Series B Preferred Stock, up to all of which
will be sold pursuant to this Agreement. The rights, privileges and preferences
of the Preferred Stock will be as stated in the Restated Articles.
(b) COMMON STOCK. 10,000,000 shares of common stock ("Common
Stock"), no par value, of which 2,853,500 shares are issued and outstanding.
(c) The outstanding shares of Common Stock are owned by the
shareholders and in the numbers specified in EXHIBIT B hereto.
(d) The outstanding shares of Common Stock have been issued in
accordance with the registration or qualification provisions of the Securities
Act of 1933, as amended (the "Securities Act") and any relevant state securities
laws or pursuant to valid exemptions therefrom.
(e) Except for (i) the conversion privileges of the Preferred Stock,
(ii) the rights provided in Sections 2.3 and 3.2 of the Rights Agreement, and
(iii) the rights provided in the Co-Sale Agreement and (iv) currently
outstanding options to purchase 146,500 shares of Common Stock, there are not
outstanding any options, warrants, rights (including conversion or preemptive
rights and rights of first refusal) or agreements for the purchase or
acquisition from the Company of any shares of its capital stock. In addition to
the previously mentioned options, the Company has reserved an additional 562,359
shares of its Common Stock for restricted stock purchases or for purchases upon
exercise of options to be granted in the future. The Company is not a party or
subject to any agreement or understanding, and, to the best of the Company's
knowledge, there is no agreement or understanding between any persons that
affects or relates to the voting or giving of written consents with respect to
any security or the voting by a director of the Company.
2.6 SUBSIDIARIES. The Company does not own or control, directly or
indirectly, any interest in any other corporation, association or other business
entity. The Company is not a participant in any joint venture, partnership or
similar arrangement.
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2.7 CONTRACTS AND OTHER COMMITMENTS. The Company does not have any
contract, agreement, lease, commitment or proposed transaction, written or oral,
absolute or contingent, other than (i) contracts for the purchase of supplies
and services that were entered into in the ordinary course of business and that
do not involve more than $50,000, and do not extend for more than one (1) year
beyond the date hereof, (ii) sales contracts entered into in the ordinary course
of business, and (iii) contracts terminable at will by the Company on no more
than thirty (30) days notice without cost or liability to the Company and that
do not involve any employment or consulting arrangement and are not material to
the conduct of the Company's business. For the purpose of this paragraph,
employment and consulting contracts and contracts with labor unions, and license
agreements and any other agreements relating to the acquisition or disposition
of the Company's technology, shall not be considered to be contracts entered
into in the ordinary course of business.
2.8 RELATED-PARTY TRANSACTIONS. No employee, officer or director of
the Company or member of his or her immediate family thereof is indebted to the
Company, nor is the Company indebted (or committed to make loans or extend or
guarantee credit) to any of them. To the best of the Company's knowledge, none
of such persons has any direct or indirect ownership interest in any firm or
corporation with which the Company is affiliated or with which the Company has a
business relationship, or any firm or corporation that competes with the
Company, except that employees, officers or directors of the Company and members
of their immediate families may own stock in publicly traded companies that may
compete with the Company. To the best of the Company's knowledge, no officer or
director or any member of their immediate families is, directly or indirectly,
interested in any material contract with the Company.
2.9 REGISTRATION RIGHTS. Except as provided in the Rights
Agreement, the Company is not obligated to register under the Securities Act
any of its presently outstanding securities or any of its securities that may
subsequently be issued.
2.10 PERMITS. The Company has all governmental franchises,
governmental permits, governmental licenses and any similar governmental
authority necessary for the conduct of its business as now being conducted by
it, the lack of which could materially and adversely affect the business,
properties, prospects or financial condition of the Company and believes it can
obtain, without undue burden or expense, any similar authority for the conduct
of its business as planned to be conducted. The Company is not in default in any
material respect under any of such governmental franchises, governmental
permits, governmental licenses or other similar governmental authority.
2.11 COMPLIANCE WITH OTHER INSTRUMENTS. The Company is not in
violation or default in any material respect of any provision of its Restated
Articles or Bylaws or in any material respect of any provision of any mortgage,
indenture, agreement, instrument or contract to which it is a party or by which
it is bound or, to the best of its knowledge, of any federal or state judgment,
order, writ, decree, statute, rule or regulation applicable to the Company. The
execution, delivery and performance by the Company of this Agreement, the Rights
Agreement and the Co-Sale Agreement, and the consummation of the transactions
contemplated hereby and thereby will not result in any such violation or be in
material
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conflict with or constitute, with or without the passage of time or giving of
notice, either a material default under any such provision or an event that
results in the creation of any material lien, charge or encumbrance upon any
assets of the Company or the suspension, revocation, impairment, forfeiture or
nonrenewal of any material permit, license, authorization or approval applicable
to the Company, its business or operations, or any of its assets or properties.
2.12 LITIGATION. There is no action, suit, proceeding or
investigation pending or currently threatened against the Company that questions
the validity of this Agreement, the Rights Agreement or the Co-Sale Agreement or
the right of the Company to enter into such agreements, or to consummate the
transactions contemplated hereby or thereby, or that might result, either
individually or in the aggregate, in any material adverse change in the assets,
business properties, prospects or financial condition of the Company, or in any
material change in the current equity ownership of the Company. The foregoing
includes, without limitation, any action, suit, proceeding or investigation
pending or currently threatened 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, their obligations under any agreements with prior employers, or
negotiations by the Company with potential backers of, or investors in, the
Company or its proposed business. The Company is not a party to, or to the best
of its knowledge, named in any order, writ, injunction, judgment or decree of
any court or government agency or instrumentality. There is no action, suit or
proceeding by the Company currently pending or that the Company currently
intends to initiate.
2.13 DISCLOSURE. The Company has provided Investor with all the
information reasonably available to it without undue expense that Investor has
requested for deciding whether to purchase the Preferred Stock and all
information which the Company believes is reasonably necessary to enable
Investor to make such decision. To the best of the Company's knowledge after
reasonable investigation, neither this Agreement nor any other written
statements or certificates made or delivered in connection herewith 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.
2.14 OFFERING. Subject in part to the truth and accuracy of each
Investor's representations set forth in this Agreement, the offer, sale and
issuance of the Preferred Stock as contemplated by this Agreement are exempt
from the registration requirements of the Securities Act, and neither the
Company nor any authorized agent acting on its behalf will take any action
hereafter that would cause the loss of such exemption.
2.15 TITLE TO PROPERTY AND ASSETS; LEASES. Except (i) for liens for
current taxes not yet delinquent, (ii) for liens imposed by law and incurred in
the ordinary course of business for obligations not past due to carriers,
warehousemen, laborers, materialmen and the like, (iii) for liens in respect of
pledges or deposits under workers' compensation laws or similar legislation, or
(iv) for minor defects in title, none of which, individually or in the aggregate
materially interferes with the use of such property, the Company owns its
tangible property and tangible assets free and clear of all mortgages, liens,
claims and encumbrances.
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With respect to the property and assets it leases, the Company is in compliance
with such leases and, to the best of its knowledge, holds a valid leasehold
interest free of any liens, claims or encumbrances, subject to clauses (a)-(d)
above.
2.16 FINANCIAL STATEMENTS. The Company has delivered to the Investor
its audited financial statements (balance sheet and profit and loss statement,
statement of shareholders' equity and statement of changes in financial position
including notes thereto) at December 31, 1995 and for the fiscal year then ended
and its unaudited financial statements (balance sheet and profit and loss
statement including notes thereto) as at and for the two-month period ended
February 29, 1996 (the "Financial Statements"). The Financial Statements have
been prepared in accordance with general accepted accounting principles applied
on a consistent basis throughout the periods indicated and with each other,
except that unaudited Financial Statements may not contain all footnotes
required by generally accepted accounting principles. The Financial Statements
fairly present the financial condition and operating results of the Company as
of the dates, and for the periods, indicated therein, subject in the case of
unaudited Financial Statements to normal year-end audit adjustments. 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 February 29, 1996 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 on 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.
2.17 CHANGES. To the best of the Company's knowledge, since February
29, 1996, there has not been any event or condition of any type that has
materially and adversely affected the business, properties, prospects or
financial condition of the Company.
2.18 PATENTS AND TRADEMARKS. The Company hereby confirms the
representations and warranties made to Schering AG in Sections 12.1(f), (g) and
(h) of the Collaboration Agreement.
2.19 PROPRIETARY INFORMATION AND INVENTIONS AGREEMENTS. Each
employee and officer of the Company has executed a Proprietary Information and
Inventions Agreement substantially in the form or forms that have been delivered
to special counsel for the Investors.
2.20 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 paid all taxes and other
assessments due, except those contested by it in good faith. The Company has not
elected pursuant to the Internal Revenue Code of 1986, as amended ("Code"), to
be treated as an S corporation or a collapsible corporation pursuant to Section
341(f) of Section 1362(a) of the Code, nor has it made any
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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 business, properties, prospects or financial condition of
the Company.
2.21 SECTION 83(B) ELECTIONS. To the best of the Company's
knowledge, all individuals who have purchased shares of the Company's Common
Stock have timely filed elections under Section 83(b) of the Internal Revenue
Code and any analogous provisions of applicable state tax laws.
2.22 MINUTE BOOKS. The copy of the minute books of the Company
provided to Investor's special counsel contain minutes of all meetings of
directors and shareholders and all actions by written consent without a meeting
by the directors and shareholders since the time of incorporation and reflect
all actions by the directors (and any committee of directors) and shareholders
with respect to all transactions referred to in such minutes accurately in all
material respects.
2.23 REAL PROPERTY HOLDING CORPORATION. The Company is not a
real property holding corporation within the meaning of Internal Revenue Code
Section 897(c)(2) and any regulations promulgated thereunder.
3. REPRESENTATIONS AND WARRANTIES OF INVESTOR. Investor hereby
represents and warrants that:
3.1 AUTHORIZATION. Investor represents that it has full power and
authority to enter into this Agreement and that this Agreement constitutes a
valid and legally binding obligation of Investor.
3.2 PURCHASE ENTIRELY FOR OWN ACCOUNT. This Agreement is made with
Investor in reliance upon Investor's representation to the Company, which by
Investor's execution of this Agreement Investor hereby confirms, that the
Preferred Stock to be purchased by Investor and the Common Stock issuable upon
conversion thereof (collectively, the "Securities") will be acquired for
investment for 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 Investor has no present intention of selling, granting any
participation in or otherwise distributing the same. By executing this
Agreement, Investor further represents that Investor does not have any contract,
undertaking, agreement or arrangement with any person to sell, transfer or grant
participations to such person or to any third person, with respect to any of the
Securities.
3.3 RELIANCE UPON INVESTORS' REPRESENTATIONS. Investor understands
that the Preferred Stock is not, and any Common Stock acquired on conversion
thereof at the time of issuance may not be, registered under the Securities Act
on the ground that the sale provided for in this Agreement and the issuance of
securities hereunder is exempt from registration under the Securities Act
pursuant to Section 4(2) thereof, and that the Company's reliance on such
exemption is predicated on Investor's representations set forth herein. Investor
realizes that the basis for the exemption may not be present if, notwithstanding
such representations,
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Investor has in mind merely acquiring the Securities for a fixed or determinable
period in the future, or for a market rise, or for sale if the market does not
rise. Investor has no such intention.
3.4 RECEIPT OF INFORMATION. Investor believes it has received all
the information it considers necessary or appropriate for deciding whether to
purchase the Preferred Stock. 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 Preferred Stock and the business,
properties, prospects and financial condition of the Company and to obtain
additional information (to the extent the Company possessed such information or
could acquire it without unreasonable effort or expense) necessary to verify the
accuracy of any information furnished to it or to which it had access. The
foregoing, however, does not limit or modify the representations and warranties
of the Company in Section 2 of this Agreement or the right of Investor to rely
thereon.
3.5 INVESTMENT EXPERIENCE. Investor represents that it is
experienced in evaluating and investing in securities of companies in the
development stage and acknowledges that it is able to fend for itself, can 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 Preferred Stock. Investor also represents it has
not been organized for the purpose of acquiring the Preferred Stock.
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3.6 ACCREDITED INVESTOR.
(a) The term "Accredited Investor" as used herein refers to a
person or entity who:
(1) is a director or executive officer of the
Company; or
(2) Any bank as defined in section 3(a)(2) of the Act,
or any savings and loan association or other institution as defined in
section 3(a)(5)(A) of the Act whether acting in its individual or
fiduciary capacity; any broker or dealer registered pursuant to section 15
of the Securities Exchange Act of 1934; insurance company as defined in
section 2(13) of the Act; investment company registered under the
Investment Company Act of 1940 or a business development company as
defined in section 2(a)(48) of that Act; Small Business Investment Company
licensed by the U.S. Small Business Administration under section 301(c) or
(d) of the Small Business Investment Act of 1958; employee benefit
Retirement Income Security Act of 1974, if the investment decision is made
by a plan fiduciary, as defined in section 3(21) of such Act, which is
either a bank, savings and loan association, insurance company, or
registered investment adviser, or if the employee benefit plan has total
assets in excess of $5,000,000 or, if a self-directed plan, with
investment decisions made solely by persons that are accredited investors;
(3) Any private business development company as
defined in section 202(a)(22) of the Investment Advisers Act of 1940;
(4) Any organization described in section 501(c)(3) of
the Internal Revenue Code, corporation, Massachusetts or similar business
trust, or partnership, not formed for the specific purpose of acquiring
the securities offered, with total assets in excess of $5,000,000;
(5) Any natural person whose individual net worth, or
joint net worth with that person's spouse, at the time of his purchase
exceeds $1,000,000;
(6) Any natural person who had an individual income in
excess of $200,000 in each of the two most recent years or joint income
with that person's spouse in excess of $300,000 in each of those years and
has a reasonable expectation of reaching the same income level in the
current year;
(7) Any trust, with total assets in excess of
$5,000,000, not formed for the specific purpose of acquiring the
securities offered, whose purchase is directed by a person who has such
knowledge and experience in financial and business matters that he is
capable of evaluating the merits and risks of the prospective investment;
or
(8) Any entity in which all of the equity owners
are accredited investors.
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(b) Investor further represents to the Company that except as
otherwise disclosed to the Company, in writing, prior to its execution hereof,
Investor is an Accredited Investor and that the capital contribution of the
Investor does not exceed 10% of the Investor's net worth.
3.7 RESTRICTED SECURITIES. Investor understands that the Securities
may not be sold, transferred, or otherwise disposed of without registration
under the Securities Act or an exemption therefrom, and that in the absence of
an effective registration statement covering the Securities or an available
exemption from registration under the Securities Act, the Securities must be
held indefinitely. In particular, Investor is aware that the Securities may not
be sold pursuant to Rule 144 promulgated under the Securities Act unless all of
the conditions of that Rule are met. Among the conditions for use of Rule 144 is
the availability of current information to the public about the Company. Such
information is not now available and the Company has no present plans to make
such information available.
3.8 LEGENDS. To the extent applicable, each certificate or other
document evidencing any of the Securities shall be endorsed with the legends set
forth below, and Investor covenants that, except to the extent such restrictions
are waived by the Company, Investor shall not transfer the shares represented by
any such certificate without complying with the restrictions on transfer
described in the legends endorsed on such certificate:
(a) "THE SHARES REPRESENTED HEREBY HAVE NOT
BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT
OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED,
ASSIGNED, PLEDGED, OR HYPOTHECATED ABSENT AN EFFECTIVE
REGISTRATION THEREOF UNDER SUCH ACT OR COMPLIANCE WITH
RULE 144 PROMULGATED UNDER SUCH ACT, OR UNLESS THE
COMPANY HAS RECEIVED AN OPINION OF COUNSEL, SATISFACTORY
TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION
IS NOT REQUIRED."
(b) Any legend required by the laws of the State of
California, including any legend required by the California Department of
Corporations and Sections 417 and 418 of the California Corporations Code.
3.9 PUBLIC SALE. Investor agrees not to make, without the prior
written consent of the Company, any public offering or sale of the Securities,
or any Common Stock issued upon the conversion thereof, although permitted to do
so pursuant to Rule 144(k) promulgated under the Securities Act, until the
earlier of (i) the date on which the Company effects its initial registered
public offering pursuant to the Securities Act or (ii) the date on which it
becomes a registered company pursuant to Section 12(g) of the Securities
Exchange Act of 1934, as amended, or (iii) five years after the Closing of the
sale of such Stock to Investor by the Company.
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3.10 NON U.S. PERSONS. If Investor is not a U.S. Person, Investor
hereby represents that it has satisfied itself as to the full observance of the
laws of its jurisdiction in connection with any invitation to subscribe for the
Securities or any use of this Agreement, including (i) the legal requirements
within its jurisdiction for the purchase of the shares of Preferred Stock, (ii)
any foreign exchange restrictions applicable to such purchase, (iii) any
governmental or other consents which may need to be obtained, and (iv) the
income tax and other tax consequences, if any, which may be relevant to the
purchase, holding, redemption, sale or transfer of the Securities. Investor's
subscription and payment for, and its continued beneficial ownership of the
Securities will not violate any applicable securities or other laws of its
jurisdiction.
4. CONDITIONS OF INVESTOR'S OBLIGATIONS AT EACH CLOSING. The
obligations of Investor under subparagraph 1.1(b) of this Agreement are
subject to the fulfillment on or before the applicable Closing of each of the
following conditions:
4.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company contained in Section 2 shall be true on and as of the
applicable Closing with the same effect as though such representations and
warranties had been made on and as of the date of such Closing, except, with
respect to the Second Closing, as otherwise set forth on an updated Schedule of
Exceptions.
4.2 PERFORMANCE. The Company shall have performed and complied with
all agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by it on or before each Closing.
4.3 COMPLIANCE CERTIFICATE. The President of the Company shall
deliver to Investor at each Closing a certificate certifying that the conditions
specified in paragraphs 4.1, 4.2, 4.4, 4.7, 4.8, 4.10 and 4.11 have been
fulfilled.
4.4 QUALIFICATIONS. All authorizations, approvals or permits, if
any, of any governmental authority or regulatory body of the United States or of
any state that are required in connection with the lawful issuance and sale of
the Securities pursuant to this Agreement shall be duly obtained and effective
as of each Closing.
4.5 PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings
in connection with the transactions contemplated at each Closing and all
documents incident thereto shall be reasonably satisfactory in form and
substance to the Investor's special counsel, which shall have received all such
counterpart original and certified or other copies of such documents as it may
reasonably request.
4.6 DUE DILIGENCE. Investor shall have completed its due
diligence of the Company, to its reasonable satisfaction.
4.7 BYLAWS. Article III, Section 2 of the Bylaws of the Company
shall be amended to provide that the exact number of directors of the Company
presently authorized shall be eight (8).
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4.8 BOARD OF DIRECTORS. Upon the request of the Investor, the
Company shall cause one person chosen by the Investor to be elected to the Board
of Directors of the Company.
4.9 OPINION OF COMPANY COUNSEL. Investor shall have received from
Brobeck, Phleger & Harrison LLP, counsel for the Company, an opinion, dated the
date of each Closing, in form and substance satisfactory to special counsel to
the Investor.
4.10 RIGHTS AGREEMENT. The Company and Investor shall have
entered into the Rights Agreement.
4.11 CO-SALE AGREEMENT. The Company, Investor and each Founder shall
each have entered into a Co-Sale Agreement in a form mutually agreed upon by
those parties.
4.12 COLLABORATION AGREEMENT. The Company and Schering AG shall
have entered into a Collaboration Agreement a form mutually agreed upon by
those parties.
5. CONDITIONS OF THE COMPANY'S OBLIGATIONS AT CLOSING. The
obligations of the Company to Investor under this Agreement are subject to
the fulfillment on or before the applicable Closing of each of the following
conditions by Investor:
5.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Investor contained in Section 3 shall be true on and as of the
applicable Closing with the same effect as though such representations and
warranties had been made on and as of such Closing.
5.2 QUALIFICATIONS. All authorizations, approvals or permits, if
any, of any governmental authority or regulatory body of the United States or of
any state that are required in connection with the lawful issuance and sale of
the Stock pursuant to this Agreement shall be duly obtained and effective as of
each Closing.
5.3 CO-SALE AGREEMENTS. The Company, Investor and each Founder shall
each have entered into a Co-Sale Agreement in a form mutually agreed upon by
those parties.
5.4 COLLABORATION AGREEMENT. The Company and Schering AG shall
have entered into a Collaboration Agreement in a form mutually agreed upon by
those parties.
6. MISCELLANEOUS.
6.1 ENTIRE AGREEMENT. This Agreement and the documents referred to
herein constitute the entire agreement among the parties and no party shall be
liable or bound to any other party in any manner by any warranties,
representations or covenants except as specifically set forth herein or therein.
12
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6.2 SURVIVAL OF WARRANTIES. The warranties, representations and
covenants of the Company and Investor contained in or made pursuant to this
Agreement shall survive the execution and delivery of this Agreement, the First
Closing and the Second Closing.
6.3 SUCCESSORS AND ASSIGNS. Except as otherwise provided herein, 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 (including
permitted transferees of any Securities. 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.
6.4 GOVERNING LAW. This Agreement shall be governed by and construed
under the laws of the State of California as applied to agreements among
California residents entered into and to be performed entirely within
California.
6.5 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.
6.6 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.
6.7 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 by hand or
professional courier service or five days after deposit with the United States
Post Office, by registered or certified mail, postage prepaid and addressed to
the party to be notified at the address indicated for such party on the
signature page hereof, or at such other address as such party may designate by
ten (10) days' advance written notice to the other parties.
6.8 FINDER'S FEES. Each party represents that it neither is
nor will be obligated for any finder's fee or commission in connection with
this transaction.
Investor agrees to indemnify and to hold harmless the Company
from any liability for any commission or compensation in the nature of a
finders' fee (and the costs and expenses of defending against such liability or
asserted liability) for which Investor or any of its officers, partners,
employees, or representatives is responsible.
The Company agrees to indemnify and hold harmless Investor
from any liability for any commission or compensation in the nature of a
finder's fee (and the costs and expenses of defending against such liability or
asserted liability) for which the Company or any of its officers, employees or
representatives is responsible.
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6.9 EXPENSES. Irrespective of whether the Closings are effected,
each party shall pay all costs and expenses that it incurs with respect to the
negotiation, execution, delivery and performance of this Agreement.
6.10 ATTORNEYS FEES. If any action at law or in equity is necessary
to enforce or interpret the terms of this Agreement, the Rights Agreement, the
Co-Sale 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.
6.11 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 holders of
more than 50% of the Common Stock (that has not been sold to the public) issued
or issuable upon conversion of the Preferred Stock. Any amendment or waiver
effected in accordance with this paragraph shall be binding upon each holder of
any securities purchased under this Agreement at the time outstanding (including
securities into which such securities have been converted), each future holder
of all such securities, and the Company.
6.12 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.
6.13 CORPORATE SECURITIES LAW. THE SALE OF THE SECURITIES WHICH ARE
THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER OF
CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF SUCH SECURITIES OR
THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION FOR SUCH SECURITIES
PRIOR TO SUCH QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT
FROM QUALIFICATION BY SECTION 25100, 25102 OR 25105 OF THE CALIFORNIA
CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY
CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS SO
EXEMPT.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
COLLATERAL THERAPEUTICS, INC.
By: /s/ Jack Reich
----------------------------------
Jack Reich, President
Address: 9360 Towne Center Drive
San Diego, California 92121
SCHERING BERLIN VENTURE CORP.
By: /s/ Illegible
----------------------------------
Its: TREASURER
Address: 110 E. HANOVER AVE
CEDAR KNOLLS, N.J. 07927
[SIGNATURE PAGE TO PREFERRED STOCK PURCHASE AGREEMENT]
<PAGE>
EXHIBIT A
AMENDED AND RESTATED ARTICLES OF INCORPORATION
A-1
<PAGE>
AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF COLLATERAL THERAPEUTICS, INC.,
a California Corporation
The undersigned Jack Reich and Christopher J. Reinhard hereby certify
that:
ONE: They are the duly elected and acting President and Secretary,
respectively, of said corporation.
TWO: The Articles of Incorporation of said corporation shall be
amended and restated to read in full as follows:
ARTICLE I
The name of this corporation is Collateral Therapeutics, Inc.
ARTICLE II
The purpose of this corporation is to engage in any lawful act or activity
for which a corporation may be organized under the General Corporation Law of
California other than the banking business, the trust company business or the
practice of a profession permitted to be incorporated by the California
Corporations Code.
ARTICLE III
A. CLASSES OF STOCK. This corporation is authorized to issue two classes
of stock to be designated, respectively, "Common Stock" and "Preferred Stock."
The total number of shares which the corporation is authorized to issue is Ten
Million Seven Hundred Forty-Nine Thousand Sixty-Four (10,749,064) shares. Ten
Million (10,000,000) shares shall be Common Stock and Seven Hundred Forty-Nine
Thousand Sixty-Four (749,064) shares shall be Preferred Stock. The Preferred
Stock authorized by these Restated Articles of Incorporation shall be issued by
series as set forth herein. The first series of Preferred Stock shall be
designated "Series A Preferred Stock" and shall consist of Three Hundred
Seventy-Four Thousand Five Hundred Thirty-Two (374,532) shares. The second
series of Preferred Stock shall be designated "Series B Preferred Stock" and
shall consist of Three Hundred Seventy- Four Thousand Five Hundred Thirty-Two
(374,532) shares.
B. RIGHTS, PREFERENCES AND RESTRICTIONS OF PREFERRED STOCK. The
rights, preferences, privileges and restrictions granted to and imposed on
the Preferred Stock are as set forth below in this Article III(B).
<PAGE>
1. DIVIDEND PROVISIONS. Subject to the rights of series of Preferred
Stock which may from time to time come into existence, the holders of shares of
Series A Preferred Stock and Series B Preferred Stock shall be entitled to
receive dividends, out of any assets legally available therefor, pro-rata and
prior and in preference to any declaration or payment of any dividend (payable
other than in Common Stock or other securities and rights convertible into or
entitling the holder thereof to receive, directly or indirectly, additional
shares of Common Stock of this corporation) on the Common Stock of this
corporation, at the rate of $0.334 per share per annum when, as and if declared
by the Board of Directors. Such dividends shall not be cumulative.
2. LIQUIDATION PREFERENCE.
(a) In the event of any liquidation, dissolution or winding up
of this corporation, either voluntary or involuntary, subject to the rights of
series of Preferred Stock that may from time to time come into existence, the
holders of Series A Preferred Stock and Series B Preferred Stock shall be
entitled to receive, pro-rata and prior and in preference to any distribution of
any of the assets of this corporation to the holders of Common Stock by reason
of their ownership thereof, (i) with respect to the Series A Preferred Stock, an
amount per share equal to the sum of (A) $6.675 for each outstanding share of
Series A Preferred Stock (the "Original Series A Issue Price") and (B) an amount
equal to the sum of (I) five percent (5%) return on the Original Series A Issue
Price, compounded annually from the Series A Purchase Date (as defined herein)
through the date of liquidation, dissolution or winding up of this corporation
and (II) declared but unpaid dividends on each share and (ii) with respect to
the Series B Preferred Stock, an amount per share equal to the sum of (A) $6.675
for each outstanding share of Series B Preferred Stock (the "Original Series B
Issue Price") and (B) an amount equal to the sum of (I) five percent (5%) return
on the Original Series B Issue Price, compounded annually from the Series B
Purchase Date (as defined herein) through the date of liquidation, dissolution
or winding up of this corporation and (II) declared but unpaid dividends on each
share. If upon the occurrence of such event, the assets and funds thus
distributed among the holders of the Series A Preferred Stock and Series B
Preferred Stock shall be insufficient to permit the payment to such holders of
the full aforesaid preferential amounts, then, subject to the rights of series
of Preferred Stock that may from time to time come into existence, the entire
assets and funds of the corporation legally available for distribution shall be
distributed ratably among the holders of the Series A Pre- ferred Stock and
Series B Preferred Stock in proportion to the amount of such stock owned by each
such holder.
(b) After the distributions described in subsection (a) above
have been paid, subject to the rights of series of Preferred Stock which may
from time to time come into existence, the remaining funds and assets of the
corporation available for distribution to shareholders shall be distributed
among the holders of Common Stock pro rata based on the number of shares of
Common Stock held by each.
(c) (i) For purposes of this Section 2, a liquidation,
dissolution or winding up of this corporation shall be deemed to be occasioned
by, or to include, (A) the acquisition of the corporation by another entity by
means of any transaction or series of
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related transactions (including, without limitation, any reorganization, merger
or consolidation but, excluding any merger effected exclusively for the purpose
of changing the domicile of the corporation); or (B) a sale of all or
substantially all of the assets of the corporation; UNLESS the corporation's
shareholders of record as constituted immediately prior to such acquisition or
sale will, immediately after such acquisition or sale (by virtue of securities
issued as consideration for the corporation's acquisition or sale or otherwise)
hold at least 50% of the voting power of the surviving or acquiring entity.
(ii) In any of such events, if the consideration received by
the corporation is other than cash, its value will be deemed its fair market
value. Any securities shall be valued as follows:
(A) Securities not subject to investment letter or
other similar restrictions on free marketability covered by (B) below:
(1) If traded on a securities exchange or
through Nasdaq National Market, the value shall be deemed to be the average of
the closing prices of the securities on such exchange over the thirty-day period
ending three (3) days prior to the closing;
(2) If actively traded over-the-counter, the
value shall be deemed to be the average of the closing bid or sale prices
(whichever is applicable) over the thirty-day period ending three (3) days prior
to the closing; and
(3) If there is no active public market, the
value shall be the fair market value thereof, as mutually determined by the
corporation and the holders of at least a majority of the voting power of all
then outstanding shares of Preferred Stock.
(B) The method of valuation of securities subject
to investment letter or other restrictions on free marketability (other than
restrictions arising solely by virtue of a shareholder's status as an affiliate
or former affiliate) shall be to make an appropriate discount from the market
value determined as above in (A) (1), (2) or (3) to reflect the approximate fair
market value thereof, as mutually determined by the corporation and the holders
of at least a majority of the voting power of all then outstanding shares of
such Preferred Stock.
(iii) In the event the requirements of this subsection 2(c)
are not complied with, this corporation shall forthwith either:
(A) cause such closing to be postponed until such
time as the requirements of this Section 2 have been complied with; or
(B) cancel such transaction, in which event the
rights, preferences and privileges of the holders of the Preferred Stock shall
revert to and be the same as such rights, preferences and privileges existing
immediately prior to the date of the first notice referred to in subsection
2(c)(iv) hereof.
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(iv) The corporation shall give each holder of record of
Preferred Stock written notice of such impending transaction not later than
twenty (20) days prior to the shareholders' meeting called to approve such
transaction, or twenty (20) days prior to the closing of such transaction,
whichever is earlier, and shall also notify such holders in writing of the final
approval of such transaction. The first of such notices shall describe the
material terms and conditions of the impending transaction and the provisions of
this Section 2, and the corporation shall thereafter give such holders prompt
notice of any material changes. The transaction shall in no event take place
sooner than twenty (20) days after the corporation has given the first notice
provided for herein or sooner than ten (10) days after the corporation has given
notice of any material changes provided for herein; provided, however, that such
periods may be shortened upon the written consent of the holders of Preferred
Stock that are entitled to such notice rights or similar notice rights and that
represent at least a majority of the voting power of all then outstanding shares
of such Preferred Stock.
3. CONVERSION. The holders of the 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 this corporation or any transfer agent
for such stock, into such number of fully paid and nonassessable shares of
Common Stock as is determined, with respect to the Series A Preferred Stock, by
dividing the Original Series A Issue Price by the Conversion Price applicable to
such share, determined as hereafter provided, in effect on the date the
certificate is surrendered for conversion and, with respect to the Series B
Preferred Stock, by dividing the Original Series B Issue Price by the Conversion
Price applicable to such share, determined as hereafter provided, in effect on
the date the certificate is surrendered for conversion. The initial Conversion
Price per share for shares of Series A Preferred Stock shall be the Original
Series A Issue Price; provided, however, that the Conversion Price for the
Series A Preferred Stock shall be subject to adjustment as set forth in
subsection 3(d). The initial Conversion Price per share for shares of Series B
Preferred Stock shall be the Original Series B Issue Price as adjusted prior to
issuance as set forth in subsection 3(d)(i)(B); provided, however, that the
Conversion Price for the Series B Preferred Stock shall be subject to further
adjustment as set forth in subsequent subsections of subsection 3(d).
(b) AUTOMATIC CONVERSION. Each share of Preferred Stock shall
automatically be converted into shares of Common Stock at the Conversion Price
at the time in effect for such series of Preferred Stock immediately upon the
earlier of (i) except as provided below in subsection 3(c), the corporation's
sale of its Common Stock in a firm commitment underwritten public offering
pursuant to a registration statement under the Securities Act of 1933, as
amended, the aggregate net proceeds to the corporation of which were not less
than $10,000,000 (provided the corporation has a fully-diluted valuation prior
to such offering of at least $25,000,000) or (ii) the date specified by written
consent or agreement of the holders of a majority of the then-outstanding shares
of Preferred Stock.
(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
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certificate or certificates therefor, duly endorsed, at the office of this
corporation or of any transfer agent for the Preferred Stock, and shall give
written notice to this corporation at its principal corporate office, of the
election to convert the same and shall state therein the name or names in which
the certificate or certificates for shares of Common Stock are to be issued.
This corporation shall, as soon as practicable thereafter, issue and deliver at
such office to such holder of Preferred Stock, or to the nominee or nominees of
such holder, a certificate or certificates for the number of shares of Common
Stock to which such holder 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 as of such date. If the conversion is in
connection with an underwritten offering of securities registered pursuant to
the Securities Act of 1933, the conversion may, at the option of any holder
tendering Preferred Stock for conversion, be conditioned upon the closing with
the underwriters of the sale of securities pursuant to such offering, in which
event the person(s) entitled to receive the Common Stock upon conversion of the
Preferred Stock shall not be deemed to have converted such Preferred Stock until
immediately prior to the closing of such sale of securities.
(d) CONVERSION PRICE ADJUSTMENTS OF PREFERRED STOCK FOR
CERTAIN DILUTIVE ISSUANCES, SPLITS AND COMBINATIONS. The Conversion Price of the
Series A Preferred Stock and Series B Preferred Stock shall be subject to
adjustment from time to time as follows:
(i) (A) If the corporation shall issue, after the
date upon which any shares of Series A Preferred Stock were first issued (the
"Series A Purchase Date") and prior to the date four (4) months following the
Series A Purchase Date (the "Series A Ratchet Date"), any Additional Stock (as
defined below) without consideration or for a consideration per share less than
the Conversion Price for such series in effect immediately prior to the issuance
of such Additional Stock, the Conversion Price for such Series A Preferred Stock
in effect immediately prior to each such issuance shall forthwith (except as
otherwise provided in this clause (i)) be adjusted to a price equal to the price
paid per share for such Additional Stock. The period of time from the Series A
Purchase Date through the Series A Ratchet Date shall be known as the "Series A
Ratchet Period."
(B) If the corporation shall issue, after the
Series A Purchase Date and prior to the date upon which any shares of Series B
Preferred Stock were first issued (the "Series B Purchase Date"), any Additional
Stock (as defined below) without consideration or for a consideration per share
less than the initial Conversion Price for Series B Preferred Stock, the initial
Conversion Price for such Series B Preferred Stock shall forthwith (except as
otherwise provided in this clause (i)) be adjusted to a price equal to the price
paid per share for such Additional Stock.
(C) If the corporation shall issue, after the
Series A Ratchet Date (with respect to the Series A Preferred Stock) or after
the Series B Purchase Date (with respect to the Series B Preferred Stock), any
Additional Stock (as defined below)
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without consideration or for a consideration per share less than the Conversion
Price for such series in effect immediately prior to the issuance of such
Additional Stock, the Conversion Price for such series in effect immediately
prior to each such issuance shall forthwith (except as otherwise provided in
this clause (i)) be adjusted to a price determined by multiplying such
Conversion Price by a fraction, the numerator of which shall be the number of
shares of Common Stock outstanding immediately prior to such issuance plus the
number of shares of Common Stock that the aggregate consideration received by
the corporation for such issuance would purchase at such Conversion Price; and
the denominator of which shall be the number of shares of Common Stock
outstanding immediately prior to such issuance plus the number of shares of such
Additional Stock.
(D) No adjustment of the Conversion Price for
the Preferred Stock shall be made in an amount less than one cent per share,
provided that any adjustments which are not required to be made by reason of
this sentence shall be carried forward and shall be either taken into account in
any subsequent adjustment made prior to three (3) years from the date of the
event giving rise to the adjustment being carried forward, or shall be made at
the end of three (3) years from the date of the event giving rise to the
adjustment being carried forward. Except to the limited extent provided for in
subsections (G)(3) and (G)(4), no adjustment of such Conversion Price pursuant
to this subsection 3(d)(i) shall have the effect of increasing the Conversion
Price above the Conversion Price in effect immediately prior to such adjustment.
(E) In the case of the issuance of Common
Stock for cash, the consideration shall be deemed to be the amount of cash paid
therefor before deducting any reasonable discounts, commissions or other
expenses allowed, paid or incurred by this corporation for any underwriting or
otherwise in connection with the issuance and sale thereof.
(F) In the case of the issuance of the Common
Stock for a consideration in whole or in part other than cash, the consideration
other than cash shall be deemed to be the fair value thereof as determined by
the Board of Directors irrespective of any accounting treatment.
(G) In the case of the issuance (whether
before, on or after the applicable Purchase Date) of options to purchase or
rights to subscribe for Common Stock, securities by their terms convertible into
or exchangeable for Common Stock or options to purchase or rights to subscribe
for such convertible or exchangeable securities, the following provisions shall
apply for all purposes of this subsection 3(d)(i) and subsection 3(d)(ii):
(1) The aggregate maximum number of
shares of Common Stock deliverable upon exercise of such options to
purchase or rights to subscribe for Common Stock shall be deemed to
have been issued at the time such options or rights were issued and
for a consideration equal to the consideration (determined in the
manner provided in subsections 3(d)(i)(E) and (d)(i)(F)), if any,
received by the corporation upon the issuance of such options
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or rights plus the minimum exercise price provided in such options
or rights (without taking into account potential antidilution
adjustments) for the Common Stock covered thereby.
(2) The aggregate maximum number of
shares of Common Stock deliverable upon conversion of or in exchange
for any such convertible or exchangeable securities or upon the
exercise of options to purchase or rights to subscribe for such
convertible or exchangeable securities and subsequent conversion or
exchange thereof shall be deemed to have been issued at the time
such securities were issued or such options or rights were issued
and for a consideration equal to the consideration, if any, received
by the corporation for any such securities and related options or
rights (excluding any cash received on account of accrued interest
or accrued dividends), plus the minimum additional consideration, if
any, to be received by the corporation upon the conversion or
exchange of such securities or the exercise of any related options
or rights (the consideration in each case to be determined in the
manner provided in subsections 3(d)(i)(E) and (d)(i)(F)).
(3) In the event of any change in the
number of shares of Common Stock deliverable or in the consideration
payable to this corporation upon exercise of such options or rights
or upon conversion of or in exchange for such convertible or
exchangeable securities, including, but not limited to, a change
resulting from the antidilution provisions thereof, the Conversion
Price of the Series A Preferred Stock or Series B Preferred Stock,
to the extent in any way affected by or computed using such options,
rights or securities, shall be recomputed to reflect such change,
but no further adjustment shall be made for the actual issuance of
Common Stock or any payment of such consideration upon the exercise
of any such options or rights or the conversion or exchange of such
securities.
(4) Upon the expiration of any such
options or rights, the termination of any such rights to convert or
exchange or the expiration of any options or rights related to such
convertible or exchangeable securities, the Conversion Price of the
Series A Preferred Stock or Series B Preferred Stock, to the extent
in any way affected by or computed using such options, rights or
securities or options or rights related to such securities, shall be
recomputed to reflect the issuance of only the number of shares of
Common Stock (and convertible or exchangeable securities which
remain in effect) actually issued upon the exercise of such options
or rights, upon the conversion or exchange of such securities or
upon the exercise of the options or rights related to such
securities.
(5) The number of shares of Common
Stock deemed issued and the consideration deemed paid therefor
pursuant to subsections 3(d)(i)(G)(1) and (2) shall be appropriately
adjusted to reflect any
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change, termination or expiration of the type described in either
subsection 3(d)(i)(G)(3) or (4).
(ii) "Additional Stock" shall mean any shares of
Common Stock issued (or deemed to have been issued pursuant to subsection
3(d)(i)(G)) by this corporation after the Purchase Date other than:
(A) Common Stock issued pursuant to a
transaction described in subsection 3(d)(iii) hereof: or
(B) shares of Common Stock issuable or issued to
employees, consultants, directors or vendors (if in transactions
with primarily non-financing purposes) of this corporation directly
or pursuant to a stock option plan or restricted stock plan approved
by the Board of Directors of this corporation at any time when the
total number of shares of Common Stock so issuable or issued (and
not repurchased at cost by the corporation in connection with the
termination of employment) does not exceed 562,359 or
(C) shares of Common Stock issued or issuable (I)
in a public offering before or in connection with which all
outstanding shares of Preferred Stock will be converted to Common
Stock or (II) upon exercise of warrants or rights granted to
underwriters in connection with such a public offering; or
(D) securities issued pursuant to the acquisition
of another business entity or business segment of any such entity by
this corporation by merger, purchase of substantially all the assets
or organization whereby the corporation will own not less than
fifty-one (51%) percent of the voting power of such a business
entity or business segment of any such entity; or
(E) securities issued (I) to vendors or customers
or to other persons in similar commercial situations with the
corporation or (II) in connection with obtaining lease financing,
whether issued to a lessor, guarantor or other person.
(iii) In the event the corporation should at any time
or from time to time after the Purchase Date fix a record date for the
effectuation of a split or subdivision of the outstanding shares of Common Stock
or the determination of holders of Common Stock entitled to receive a dividend
or other distribution payable in additional shares of Common Stock or other
securities or rights convertible into, or entitling the holder thereof to
receive directly or indirectly, additional shares of Common Stock (hereinafter
referred to as "Common Stock Equivalents") without payment of any consideration
by such holder for the additional shares of Common Stock or the Common Stock
Equivalents (including the additional shares of Common Stock issuable upon
conversion or exercise thereof), then, as of such record date (or the date of
such dividend distribution, split or subdivision if no record
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date is fixed), the Conversion Price of the Series A Preferred Stock or Series B
Preferred Stock shall be appropriately decreased so that the number of shares of
Common Stock issuable on conversion of each share of such series shall be
increased in proportion to such increase of the aggregate of shares of Common
Stock outstanding and those issuable with respect to such Common Stock
Equivalents with the number of shares issuable with respect to Common Stock
Equivalents determined from time to time in the manner provided for deemed
issuances in subsection 3(d)(i)(G).
(iv) If the number of shares of Common Stock
outstanding at any time after the Purchase Date is decreased by a combination of
the outstanding shares of Common Stock, then, following the record date of such
combination, the Conversion Price for the Series A Preferred Stock or Series B
Preferred Stock shall be appropriately increased so that the number of shares of
Common Stock issuable on conversion of each share of such series shall be
decreased in proportion to such decrease in outstanding shares.
(e) OTHER DISTRIBUTIONS. In the event this corporation shall
declare a distribution payable in securities of other persons, evidences of
indebtedness issued by this corporation or other persons, assets (excluding cash
dividends) or options or rights not referred to in subsection 3(d)(iii), then,
in each such case for the purpose of this subsection 3(e), the holders of the
Preferred Stock shall be entitled to a proportionate share of any such
distribution as though they were the holders of the number of shares of Common
Stock of the corporation into which their shares of Preferred Stock are
convertible as of the record date fixed for the determination of the holders of
Common Stock of the corporation entitled to receive such distribution.
(f) RECAPITALIZATIONS. If at any time or from time to time
there shall be a recapitalization of the Common Stock (other than a subdivision,
combination or merger or sale of assets transaction provided for elsewhere in
this Section 3 or Section 2) provision shall be made so that the holders of the
Preferred Stock shall thereafter be entitled to receive upon conversion of the
Preferred Stock the number of shares of stock or other securities or property of
the Company or otherwise, to which a holder of Common Stock deliverable upon
conversion would have been entitled on such recapitalization. In any such case,
appropriate adjustment shall be made in the application of the provisions of
this Section 3 with respect to the rights of the holders of the Preferred Stock
after the recapitalization to the end that the provisions of this Section 3
(including adjustment of the Conversion Price then in effect and the number of
shares purchasable upon conversion of the Preferred Stock) shall be applicable
after that event as nearly equivalent as may be practicable.
(g) NO IMPAIRMENT. This corporation will not, by amendment of
its Articles of Incorporation or through any reorganization, recapitalization,
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 this
corporation, but will at all times in good faith assist in the carrying out of
all the provisions of this Section 3 and in the taking of all such action as may
be necessary or appropriate in order to protect the Conversion Rights of the
holders of the Preferred Stock against impairment.
-10-
<PAGE>
(h) NO FRACTIONAL SHARES AND CERTIFICATE AS TO
ADJUSTMENTS.
(i) No fractional shares shall be issued upon
the conversion of any share or shares of the Preferred Stock, and the number of
shares of Common Stock to be issued shall be rounded to the nearest whole share.
Whether or not fractional shares are issuable upon such conversion shall be
determined on the basis of the total number of shares of Preferred Stock the
holder is at the time converting into Common Stock and the number of shares of
Common Stock issuable upon such aggregate conversion.
(ii) Upon the occurrence of each adjustment or
readjustment of the Conversion Price of Series A Preferred Stock or Series B
Preferred Stock pursuant to this Section 3, this 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 such series 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. This
corporation shall, upon the written request at any time of any holder of such
series of Preferred Stock, furnish or cause to be furnished to such holder a
like certificate setting forth (A) such adjustment and readjustment, (B) the
Conversion Price for such series of Preferred Stock at the time in effect, and
(C) the number of shares of Common Stock and the amount, if any, of other
property which at the time would be received upon the conversion of a share of
such series of Preferred Stock.
(i) NOTICES OF RECORD DATE. In the event of any taking by this
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, any right to
subscribe for, purchase or otherwise acquire any shares of stock of any class or
any other securities or property, or to receive any other right, this
corporation shall mail to each holder of Preferred Stock, at least 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, distribution or right,
and the amount and character of such dividend, distribution or right.
(j) RESERVATION OF STOCK ISSUABLE UPON CONVERSION. This
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 the 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 the 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 the Preferred Stock, in
addition to such other remedies as shall be available to the holder of such
Preferred Stock, this 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
purposes, including, without limitation, engaging in best efforts to obtain the
requisite shareholder approval of any necessary amendment to these articles.
-11-
<PAGE>
(k) NOTICES. Any notice required by the provisions of this
Section 3 to be given to the holders 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 this
corporation.
4. VOTING RIGHTS.
(a) GENERAL VOTING RIGHTS. In addition to the voting rights
described in Sections 5 and 6 of this Article III, the holder of each share of
Preferred Stock shall have the right to one vote for each share of Common Stock
into which such Preferred Stock could then be converted, and with respect to
such vote, such holder shall have full voting rights and powers equal to the
voting rights and powers of the holders of Common Stock, and shall be entitled,
notwithstanding any provision hereof, to notice of any shareholders' meeting in
accordance with the bylaws of this corporation, and shall be entitled to vote,
together with holders of Common Stock, with respect to any question upon which
holders of Common Stock have the right to vote. Fractional votes shall not,
however, be permitted and any fractional voting rights available on an
as-converted basis (after aggregating all shares into which shares of Preferred
Stock held by each holder could be converted) shall be rounded to the nearest
whole number (with one-half being rounded upward).
(b) ELECTION OF DIRECTORS. With respect to the election of
directors, the holders of Series A Preferred Stock and Series B Preferred Stock,
voting separately as a class, shall have the right to elect one (1) director,
and the holders of Common Stock and Preferred Stock, voting together as a single
class, shall have the right to elect all other directors.
5. PROTECTIVE PROVISIONS. Subject to the rights of series of
Preferred Stock which may from time to time come into existence, so long as any
shares of Series A Preferred Stock and Series B Preferred Stock are outstanding,
this corporation shall not without first obtaining the approval (by vote or
written consent, as provided by law) of the holders of at least a majority of
the then outstanding shares of Series A Preferred Stock and Series B Preferred
Stock:
(a) authorize, create or issue, or obligate itself to issue
(including by reclassification of any outstanding shares), any other equity
security, including any other security convertible into or exercisable for any
equity security having a preference superior to any series of
currently-outstanding Preferred Stock with respect to dividends or upon
liquidation; or
(b) alter or change the rights, preferences, privileges or
powers of, or the restrictions provided for the benefit of, the shares of Series
A Preferred Stock or Series B Preferred Stock so as to affect adversely such
shares.
6. ADDITIONAL PROTECTIVE PROVISION. Subject to the rights of
series of Preferred Stock which may from time to time come into existence,
this corporation shall not:
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<PAGE>
(a) sell, convey or otherwise dispose of or encumber all or
substantially all of its property or business or merge into or consolidate with
any other corporation (other than a wholly-owned subsidiary corporation) or
effect any transaction or series of related transactions in which more than
fifty percent (50%) of the voting power of the corporation is disposed of
without first obtaining the approval (by vote or written consent, as provided by
law) (a) for a period of two years following the Purchase Date (the "Protective
Period"), by the holders of at least a majority of the then outstanding shares
of Series A Preferred Stock and Series B Preferred Stock and (b) following the
Protective Period, by the holders of at least a majority of the then outstanding
shares of Preferred Stock.
(b) issue during the Series A Ratchet Period any security (I)
to vendors or customers or to other persons in similar commercial situations
with the corporation or (II) in connection with obtaining lease financing,
whether issued to a lessor, guarantor or other person without first obtaining
the approval (by vote or written consent, as provided by law) of the holders of
at least a majority of the then outstanding shares of Series A Preferred Stock.
7. STATUS OF CONVERTED STOCK. In the event any shares of Preferred
Stock shall be converted pursuant to Section 3 hereof, the shares so converted
shall be cancelled and shall not be issuable by the corporation. The Articles of
Incorporation of this corporation shall be appropriately amended to effect the
corresponding reduction in the corporation's authorized capital stock.
8. REPURCHASE OF SHARES. In connection with repurchases by this
Corporation of its Common Stock pursuant to its agreements with certain of the
holders thereof, Sections 502 and 503 of the California General Corporation Law
shall not apply in whole or in part with respect to such repurchases.
C. COMMON STOCK.
1. DIVIDEND RIGHTS. Subject to the prior rights of holders of all
classes of stock at the time outstanding having prior rights as to dividends,
the holders of the Common Stock shall be entitled to receive, when and as
declared by the Board of Directors, out of any assets of the corporation legally
available therefor, such dividends as may be declared from time to time by the
Board of Directors.
2. LIQUIDATION RIGHTS. Upon the liquidation, dissolution or
winding up of the corporation, the assets of the corporation shall be
distributed as provided in Section 2 of Division (B) of this Article III
hereof.
3. REDEMPTION. The Common Stock is not redeemable.
4. VOTING RIGHTS. The holder of each share of Common Stock shall
have the right to one vote, and shall be entitled to notice of any shareholders'
meeting in accordance with the bylaws of this corporation, and shall be entitled
to vote upon such matters and in such manner as may be provided by law.
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<PAGE>
ARTICLE IV
A. The liability of the directors of this corporation for monetary
damages shall be eliminated to the fullest extent permissible under
California law.
B. This corporation is authorized to provide indemnification of agents (as
defined in Section 317 of the California Corporations Code) through bylaw
provisions, agreements with the agents, vote of shareholders or disinterested
directors, or otherwise in excess of the indemnification otherwise permitted by
Section 317 of the California Corporations Code, subject only to applicable
limits set forth in Section 204 of the California Corporations Code with respect
to actions for breach of duty to the corporation and its shareholders.
* * *
THREE: The foregoing amendment has been approved by the Board of
Directors of said corporation.
FOUR: The foregoing amendment was approved by the holders of the requisite
number of shares of said corporation in accordance with Sections 902 and 903 of
the California General Corporation Law; the total number of outstanding shares
of each class entitled to vote with respect to the foregoing amendment was
2,851,500 shares of Common Stock. The number of shares voting in favor of the
foregoing amendment equaled or exceeded the vote required, such required vote
being a majority of the outstanding shares of Common Stock.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
-14-
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this certificate on
October March 10, 1996.
/s/ Jack Reich, Ph.d.
-------------------------------------------
Jack Reich, President
/s/ Christopher J. Reinhard
-------------------------------------------
Christopher J. Reinhard, Secretary
The undersigned certify under penalty of perjury that they have read
the foregoing Restated Articles of Incorporation and know the contents thereof,
and that the statements therein are true.
Executed at San Diego, California, on March 10, 1996.
/s/ Jack Reich, Ph.D.
-------------------------------------------
Jack Reich, President
/s/ Christopher J. Reinhard
-------------------------------------------
Christopher J. Reinhard, Secretary
<PAGE>
CERTIFICATE OF CORRECTION
OF
AMENDED AND RESTATED ARTICLES OF INCORPORATION
JACK REICH and CHRISTOPHER J. REINHARD certify that:
1. They are the president and the secretary, respectively, of
COLLATERAL THERAPEUTICS, INC., a California corporation.
2. The name of the corporation is COLLATERAL THERAPEUTICS, INC.
3. The instrument being corrected is entitled "Amended and Restated
Articles of Incorporation of COLLATERAL THERAPEUTICS, INC., a California
corporation," and said instrument was filed with the Secretary of State of
California on March 18, 1996.
4. Section B(3)(d)(i)(A) of Article III of the Amended and Restated
Articles of Incorporation, as corrected, shall read as follows:
"(i) (a) If the corporation shall issue, after the date upon which
any shares of Series A Preferred Stock were first issued (the "Series A
Purchase Date") and prior to the date which is the earlier of (I) the
Series B Purchase Date (as defined below) or (II) eighteen (18) months
following the Series A Purchase Date (collectively, the "Series A Ratchet
Date"), or (III) the effective date of any termination pursuant to Section
15.2(f) of the Collaboration, License and Royalty Agreement dated as of
March 29, 1996 by Schering AG, any Additional Stock (as defined below)
without consideration or for a consideration per share less than the
Conversion Price for such series in effect immediately prior to the
issuance of such Additional Stock, the Conversion Price for such Series A
Preferred Stock in effect immediately prior to each such issuance shall
forthwith (except as otherwise provided in this clause (i)) be adjusted to
a price equal to the price paid per share for such Additional Stock. The
period of time from the Series A Purchase Date through the Series A
Ratchet Date shall be known as the "Series A Ratchet Period." "
5. That said Section B(3)(d)(i)(A) of Article III, as corrected, conforms
the wording of the amended article to that adopted by the board of directors and
shareholders.
-1-
<PAGE>
We further declare under penalty of perjury under the laws of the State of
California that the matters set forth in this certificate are true and correct
of my own knowledge.
DATE: March 18, 1996
/s/ Jack Reich, Ph.D.
-----------------------------------
Jack Reich, President
/s/ Christoper J. Reinhard
-----------------------------------
Christopher J. Reinhard, Secretary
-2-
<PAGE>
EXHIBIT B
HOLDERS OF COMMON STOCK
<TABLE>
<CAPTION>
NAME NUMBER OF SHARES OF COMMON STOCK
FOUNDERS
<S> <C>
Craig Andrews 142,687
Brad Duft 110,887
Robert Engler(1)(2) 506,688
David Hale 139,887
H. Kirk Hammond 941,688
Jack Reich 706,688
Christopher Reinhard 192,688
David Robinson 110,887
OTHER SHAREHOLDERS
Sara Alaimo 1,400
---------
Total 2,853,500
=========
</TABLE>
- --------
(1) Robert Engler's shares are held by the Robert L. Engler Separate
Property Trust.
(2) Robert Engler has indicated that 25,000 of his shares have been
transferred to his son Matthew Lawrence Engler and 25,000 of his shares
have been transferred to his son Eric Hershel Engler.
B-1
<PAGE>
SCHEDULE OF EXCEPTIONS
TO STOCK PURCHASE AGREEMENT
THE FOLLOWING MATTERS ARE EXCEPTIONS TO THE REPRESENTATIONS AND WARRANTIES
OF COLLATERAL THERAPEUTICS, INC., A CALIFORNIA CORPORATION (THE "COMPANY"), AS
SET FORTH IN THE PREFERRED STOCK PURCHASE AGREEMENT (THE "AGREEMENT"). THE
SECTION NUMBERS IN THIS SCHEDULE OF EXCEPTIONS CORRESPOND TO THE SECTION NUMBERS
IN THE AGREEMENT; HOWEVER, ANY INFORMATION DISCLOSED HEREIN UNDER ANY SECTION
NUMBER SHALL BE DEEMED TO BE DISCLOSED AND INCORPORATED INTO ANY OTHER SECTION
NUMBER UNDER THE AGREEMENT WHERE SUCH DISCLOSURE WOULD OTHERWISE BE APPROPRIATE.
WHERE THE TERMS OF A CONTRACT OR OTHER DISCLOSURE ITEM HAVE BEEN SUMMARIZED OR
DESCRIBED IN THIS SCHEDULE OF EXCEPTIONS, SUCH SUMMARY OR DESCRIPTION DOES NOT
PURPORT TO BE A COMPLETE STATEMENT OF THE MATERIAL TERMS OF SUCH CONTRACT OR
OTHER ITEM. ANY TERMS DEFINED IN THE AGREEMENT SHALL HAVE THE SAME MEANING WHEN
USED IN THIS SCHEDULE OF EXCEPTIONS AS WHEN USED IN THE AGREEMENT UNLESS THE
CONTEXT OTHERWISE REQUIRES.
NOTHING HEREIN CONSTITUTES AN ADMISSION OF ANY LIABILITY OR OBLIGATION ON
THE PART OF THE COMPANY NOR AN ADMISSION AGAINST THE COMPANY'S INTEREST. THE
INCLUSION OF ANY SCHEDULE HEREIN OR ANY EXHIBIT HERETO SHOULD NOT BE INTERPRETED
AS INDICATING THAT THE COMPANY HAS DETERMINED THAT SUCH AN AGREEMENT OR OTHER
MATTER IS NECESSARILY MATERIAL TO THE COMPANY. THE INVESTORS ACKNOWLEDGE THAT
CERTAIN INFORMATION CONTAINED IN THESE SCHEDULES MAY CONSTITUTE MATERIAL
CONFIDENTIAL INFORMATION RELATING TO THE COMPANY WHICH MAY NOT BE USED FOR ANY
PURPOSE OTHER THAN THAT CONTEMPLATED IN THE AGREEMENT.
2.5 CAPITALIZATION AND VOTING RIGHTS.
Reference is made to Sections 2.7(c) and (d) below.
2.7 CONTRACTS AND OTHER COMMITMENTS.
(a) Reference is made to Section 2.16 below.
(b) The Company is a party to that certain Security Agreement between
the Company and the Investor dated August 16, 1995.
(c) The Company has issued and sold 2,744,800 shares of Common Stock
to certain officers, directors and employees of the Company
pursuant to certain Restricted Stock Purchase Agreements, under
which the Company has a right of first refusal to purchase such
shares. Pursuant to such Restricted Stock Purchase Agreements,
1,372,400 shares have a vesting start date of August 9, 1995 and
vest monthly in equal installments for thirty-six (36) months
thereafter, with immediate vesting upon death or disability.
With respect to the unvested shares, the Company has, in addition
to its right of first refusal, a repurchase right under certain
circumstances. The remainder of the shares were fully vested
upon issuance.
<PAGE>
(d) The Company has issued and sold 108,700 shares of Common Stock to
certain employees, consultants and outside advisors of the Company
pursuant to certain Stock Purchase Agreements, under which the
Company has a right of first refusal with respect to such shares.
(e) The Company entered into consulting agreements with Drs. Robert
Engler and H. Kirk Hammond on October 1, 1995. Such agreements
are to be effective only upon the Company's completion of an
initial capital funding of at least $2,000,000 within 220 days of
October 1, 1995. Drs. Engler and Hammond each received
restricted shares of Common Stock in connection with their
consulting agreements. See Section 2.7(d) above. Dr. Hammond
currently has an employment contract with The Regents of the
University of California (the "University") and his primary
responsibility is to the University. University employees are
restricted as the amount of time they may devote to providing
consulting services to outside companies.
(f) The Company is a party to that certain Exclusive License Agreement
between the Company and the University dated September 27, 1995 (the
"UC Agreement"), a copy of which was previously provided to the
Investor.
(g) Effective November 27, 1995, the Company entered into a certain
agreement (the "Veterans Agreement") with the Veterans Medical
Research Foundation (the "Foundation"), under which the
Foundation provides certain research services for up to
twenty-four (24) months. Amounts payable under the Veterans
Agreement aggregate $224,000 per year. Due to financial
constraints and based on subsequent negotiations with the
Foundation, the Company has suspended payments payable thereunder
pending the First Closing.
(h) On June 15, 1995, the Company entered into a certain Sublease
Agreement with Gensia, Inc. ("Gensia") for up to 4431 square feet
located at 9360 Towne Centre Drive, San Diego, California. The
term of the sublease expires on December 31, 1996. Due to
financial constraints, the Company has suspended monthly lease
payments to Gensia and, based on negotiations with Gensia, the
Company has deferred the payment of rent pending the First
Closing. Rent payable to Gensia totalled approximately $28,000
as of March 31, 1996.
(i) The Company has outstanding obligations consisting of legal expenses
deferred and unpaid salaries payable to certain employees,
consultants and advisors for services provided through March 31,
1996.
(j) The Company intends to enter into the Collaboration Agreement in
connection with the First Closing.
2.8 RELATED PARTY TRANSACTIONS.
-2-
<PAGE>
(a) Mr. Andrews, a member of Brobeck, Phleger & Harrison LLP, is a
member of the Company's Board of Directors and a holder of 142,687
shares of the Company's Common Stock.
(b) David Hale, a member of the Company's Board of Directors and a
holder of 139,887 shares of the Company's Common Stock, is Chief
Executive Officer of Gensia, which is the landlord for the Company's
executive offices. Reference is made to Section 2.7(h) above.
2.10 PERMITS.
The Company was incorporated April 3, 1995 and has conducted no business
to date other than the execution of the UC Agreement, the Veterans
Agreement, consulting agreements and other start-up and initial financing
activities. The Company has obtained no franchises, permits, licenses and
similar authority necessary for the conduct of its business as planned to
be conducted.
2.11 COMPLIANCE WITH OTHER INSTRUMENTS.
Reference is made to Sections 2.7(g), (h) and (i) above.
2.16 FINANCIAL STATEMENTS.
(a) The Company has borrowed money from the Investor in the aggregate
amount of $500,000, evidenced by those certain Secured Promissory
Notes dated as of August 16, 1995 and October 12, 1995 (the
"Notes"). The Notes are due and payable on demand by the Investor on
or after December 31, 1996. The amounts owing under the Notes shall
be forgiven for a reduction in a milestone payment outlined in the
Collaboration Agreement.
(b) Reference is made to Section 2.7(b) above.
(c) The Financial Statements provided to Investor are unaudited and
subject to to review by Ernst & Young LLP, the Company's independent
auditors.
2.19 PROPRIETARY INFORMATION AND INVENTIONS AGREEMENTS.
The Company will use its best efforts to ensure that each employee and
officer of the Company has executed a Proprietary Information and
Inventions Agreement immediately following the First Closing.
2.20 TAX RETURNS, PAYMENTS AND ELECTIONS.
The Company has filed a Form 7004 application with the Internal Revenue
Service to receive an automatic extension of the time to file its 1995
income tax return.
-3-
<PAGE>
2.21 SECTION 83(B) ELECTIONS.
Each of the holders of Common Stock has filed elections under Section
83(b) of the Code and any analogous provisions of applicable state tax
law.
-4-
<PAGE>
COLLATERAL THERAPEUTICS, INC.
SCHEDULE OF EXCEPTIONS, DATED JUNE 10, 1997
STOCK PURCHASE AGREEMENT, DATED AS OF
MAY 7.1996 IN CONNECTION WITH SECOND CLOSING
THE FOLLOWING MATTERS ARE EXCEPTIONS TO THE REPRESENTATIONS AND WARRANTIES
OF COLLATERAL THERAPEUTICS, INC., A CALIFORNIA CORPORATION (THE "COMPANY"), AS
SET FORTH IN THE PREFERRED STOCK PURCHASE AGREEMENT, DATED AS OF MAY 7, 1996
(THE "AGREEMENT"), AS OF JUNE 10, 1997. THE SECTION NUMBERS IN THIS SCHEDULE OF
EXCEPTIONS CORRESPOND TO THE SECTION NUMBERS IN THE AGREEMENT; HOWEVER, ANY
INFORMATION DISCLOSED HEREIN UNDER ANY SECTION NUMBER SHALL BE DEEMED TO BE
DISCLOSED AND INCORPORATED INTO ANY OTHER SECTION NUMBER UNDER THE AGREEMENT
WHERE SUCH DISCLOSURE WOULD OTHERWISE BE APPROPRIATE. WHERE THE TERMS OF A
CONTRACT OR OTHER DISCLOSURE ITEM HAVE BEEN SUMMARIZED OR DESCRIBED IN THIS
SCHEDULE OF EXCEPTFONS, SUCH SUMMARY OR DESCRIPTION DOES NOT PURPORT TO BE A
COMPLETE STATEMENT OF THE MATERIAL TERMS OF SUCH CONTRACT OR OTHER ITEM. ANY
TERMS DEFINED IN THE AGREEMENT SHALL HAVE THE SAME MEANING WHEN USED IN THIS
SCHEDULE OF EXCEPTIONS AS WHEN USED IN THE AGREEMENT UNLESS THE CONTEXT
OTHERWISE REQUIRES.
NOTHING HEREIN CONSTITUTES AN ADMISSION OF ANY LIABILITY OR OBLIGATION ON
THE PART OF THE COMPANY NOR AN ADMISSION AGAINST THE COMPANY'S INTEREST. THE
INCLUSION OF ANY SCHEDULE HEREIN OR ANY EXHIBIT HERETO SHOULD NOT BE INTERPRETED
AS INDICATING THAT THE COMPANY HAS DETERMINED THAT SUCH AN AGREEMENT OR OTHER
MATTER IS NECESSARILY MATERIAL TO THE COMPANY. THE INVESTORS ACKNOWLEDGE THAT
CERTAIN INFORMATION CONTAINED IN THESE SCHEDULES MAY CONSTITUTE MATERIAL
CONFIDENTIAL INFORMATION RELATING TO THE COMPANY WHICH MAY NOT BE USED FOR ANY
PURPOSE OTHER THAN THAT CONTEMPLATED IN THE AGREEMENT.
SECTION 2.5. CAPITALIZATION AND VOTING RIGHTS. As of June 10, 1997 there were
3,103,500 shares of Common Stock issued and outstanding and 374,532 shares of
Series A Preferred Stock issued and outstanding. In addition, as of June 10,
1997 stock options to purchase up to 312,500 shares of Common Stock were
outstanding, and the weighted average purchase price of such stock options was
$0.3407 per share. Since the inception of the Company, stock options covering
the purchase of up to 562,500 shares of Common Stock have been issued, of which
stock options to purchase up to 497,500 shares of Common Stock have been issued
pursuant to the Company's 1995 Stock Option/Stock Issuance Plan (hereafter the
"Stock Plan"). As of June 10, 1997, the Company's Board of Directors has
authorized the issuance of up to 708,859 shares of Common Stock pursuant to the
Stock Plan. As of June 10, 1997, 211,359 shares of Common Stock were available
for future award under the Stock Plan.
<PAGE>
COLLATERAL THERAPEUTICS, INC.
SCHEDULE OF EXCEPTIONS
PAGE 2 OF 8
SECTION 2.7. CONTRACTS AND OTHER COMMITMENTS. Set forth below is a summary
of all contracts and commitments of the Company as of the date hereof greater
than $50,000:
PRIVATE PLACEMENT EQUITY OFFERING. The Company has entered into
negotiations with the Welcome Trust Limited and Mr. Jerry Benjamin with
respect to the sale of up to 387,500 shares of Common Stock to raise
$3,100,000 to support the Company's research programs and corporate
development activities.
COLLABORATION, LICENSE AND ROYALTY AGREEMENT WITH SCHERING AG - GENE
THERAPY TO PROMOTE ANGIOGENESIS. On May 6, 1996, the Company entered into
a strategic alliance with Schering AG pursuant to the Collaboration,
License and Royalty Agreement covering the development and
commercialization of gene therapy products to promote anglogenesis.
UNIVERSITY OF CALIFORNIA LICENSE AGREEMENT - ANAIOAENESIS GENE Therapy. On
September 27, 1995, the Company entered into a worldwide exclusive license
agreement with the Regents of the University of California for certain
technology relating to a patent application filed by the University of
California relating to angiogenesis gene therapy, based on scientific
discovery research conducted at the laboratory of *** at the *** and the
Department of Medicine of the University of California, San Diego. This
agreement provides the Company with exclusive rights to develop and
commercialize technology covered by patent applications that have been
filed in the United States and in foreign countries. Pursuant to such
agreement, the Company has, agreed to pay the University of California a
license fee totalling *** payable in *** installments over a *** and to
pay the University of California an annual royalty fee of *** based on
net sales of products covered by such patents. Under the terms of this
agreement, the Company is required to satisfy certain due diligence
provisions with respect to the timely development and commercialization
of products covered by the patent application thereunder, and pay certain
minimum annual royalty payments following successful commercial
development of a product. As of June 10, 1997, the Company has paid a
total of $75,000 pursuant to the terms of this agreement.
UNIVERSITY OF CALIFORNIA LICENSE AGREEMENT - GENE THERAPY FOR CONGESTIVE
HEART FAILURE. On January 22, 1997, the Company entered into an exclusive
worldwide license agreement with the Regents of the University of
California for certain technology relating to a patent application filed
by the University of California relating to a gene therapy approach for
congestive heart failure based on myocardial adrenergic responsiveness,
which resulted from scientific discovery research conducted at the
laboratory of ***
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
<PAGE>
COLLATERAL THERAPEUTICS, INC.
SCHEDULE OF EXCEPTIONS
PAGE 3 OF 8
*** at the *** and the Department of Medicine of the University of
California, San Diego. This agreement provides the Company with exclusive
rights to develop and commercialize technology covered by patent
applications that have been filed in the United States and in foreign
countries. Pursuant to such agreement, the Company has agreed to pay the
University of California a license fee totalling *** payable in ***
installments over a *** and to pay the University of California an annual
royalty fee of *** based on net sales of products covered by such
patents. Under the terms of this agreement, the Company is required to
satisfy certain due diligence provisions with respect to the timely
development and commercialization of products covered by patent
applications thereunder, and pay certain minimum annual royalty payments
following successful commercial development of a product.
As of June 10, 1997, the Company has paid a total of $100,000 pursuant to
the terms of this agreement.
UNIVERSITY OF CALIFORNIA LICENSE AGREEMENT - ANGIOGENIC GENE THERAPY for
CONGESTIVE HEART FAILURE. The Company entered into a letter agreement with
The Regents of the University of California to exclusively negotiate an
exclusive worldwide license to develop and commercialize certain
technology relating to gene angiogenic gene therapy for heart failure,
based on scientific discovery research conducted at the laboratory of ***
at the *** *** and the Department of Medicine of the University of
California, San Diego. Based on the terms and conditions of the proposed
agreement, the Company will have exclusive rights to develop and
commercialize technology covered by patent applications that have been
filed in the United States and in foreign countries. Pursuant to such
proposed agreement, the Company has agreed to pay the University of
California a license fee totalling *** payable in *** installments over a
*** and to pay the University of California an annual royalty fee of ***
based on net sales of products covered by such patents. Under the terms
of this agreement, the Company is required to satisfy certain due
diligence provisions with respect to the timely development and
commercialization of products covered by patent applications thereunder,
and pay certain minimum annual royalty payments following successful
commercial development of a product. Final draft agreements have been
circulated between the parties and the Company believes that this
agreement will be finalized within the next sixty (60) days.
NEW YORK UNIVERSITY LICENSE AGREEMENT - USE OF FIBROBLAST GROWTH FACTOR 4
FOR GENE THERAPY FOR CORONARY ARTERY DISEASE, CONGESTIVE HEART FAILURE AND
PERIPHERAL VASCULAR DISEASE. On March 24, 1997, the Company has entered
into an exclusive worldwide license agreement with New York University for
the use of certain technology relating to issued patents and
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
<PAGE>
COLLATERAL THERAPEUTICS, INC.
SCHEDULE OF EXCEPTIONS
PAGE 4 OF 8
patent applications owned by New York University covering the Company's
use of Fibroblast Growth Factor 4 (hereafter "FGF-4") for gene therapy
products developed and commercialized by the Company, or its licensees,
for the treatment of coronary artery disease, congestive heart failure and
peripheral vascular disease. This agreement provides the Company with
exclusive rights to develop and commercialize technology covered by
patents that have been filed in the United States and in foreign
countries. Pursuant to such agreement, the Company has agreed to pay New
York University (i) an initial license fee of *** ; (ii) an annual license
fee of *** until first commercial sale of a product pursuant to the
Agreement; (iii) milestone payments of *** payable in *** installments
based on the Company's successful achievement of certain *** benchmarks,
for each product developed thereunder; (iv) *** research funding totalling
*** payable in *** installments to support Company directed research
activities focused on the development of the Company's core technology;
and (v) an annual royalty fee of *** based on net sales of products
covered by such patents. Under the terms of this agreement, the Company
is required to satisfy certain due diligence provisions with respect to
the timely development and commercialization of products covered by
patents thereunder, and pay certain minimum annual royalty payments
following successful commercial development of a product. As of
June 10, 1997, the Company has paid license fees totaling $100,000
and research funding totalling $100,000 pursuant to the terms of this
agreement.
AMRAD OPERATIONS PTY LTD. AND LUDWIG INSTITUTE FOR CANCER RESEARCH LICENSE
AGREEMENT - USE OF VASCULAR ENDOTHELIAL GROWTH FACTOR B GENES FOR GENE
THERAPY FOR CORONARY ARTERY DISEASE, CONGESTIVE HEART FAILURE AND
PERIPHERAL VASCULAR DISEASE. On March 25, 1997, the Company has entered
into an exclusive worldwide license agreement with AMRAD Operations Pty
Ltd and the Ludwig Institute for Cancer Research (hereafter
"AMRAD/Ludwig") covering the use of certain technology relating to patent
applications filed by AMRAD/Ludwig covering the Company's use of Vascular
Endothelial Growth Factor B (hereafter "VEGF-B") for gene therapy products
developed and commercialized by the Company, or its licensees, for the
treatment of coronary artery disease, congestive heart failure and
peripheral vascular disease. This agreement provides the Company with
exclusive rights to develop and commercialize technology covered by
patents that have been filed in the United States and in foreign
countries. Pursuant to such agreement, the Company has agreed to pay
AMRAD/Ludwig (i) license fees totalling *** payable in *** installments
during the period from *** ; (ii) a *** license fee upon the ***
*** ; (III)
milestone
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
<PAGE>
COLLATERAL THERAPEUTICS, INC.
SCHEDULE OF EXCEPTIONS
PAGE 5 OF 8
payments totalling up to *** based on the Company's successful achievement
of certain product development benchmarks; (iv) an additional *** payment
for each product developed beyond the initial product for a medical
indication; and (v) an annual royalty fee *** on net sales of products
covered by such patents issued thereunder. Pursuant to the
terms of this agreement, the Company is required to satisfy certain due
diligence provisions with respect to the timely development and
commercialization of products covered by patents thereunder, and pay
certain minimum annual royalty payments following successful commercial
development of a product. As of June 10, 1997, the Company has paid a
total of $250,000 pursuant to the terms of this agreement.
DIMOTECH LTD. AND TECHNION RESEARCH & DEVELOPMENT FOUNDATION LICENSE
AGREEMENT - USE OF VASCULAR ENDOTHELIAL GROWTH FACTOR GENE FOR GENE
THERAPY CARDIOVASCULAR DISEASE. On October 17, 1996, the Company entered
into an exclusive worldwide license agreement with Dimotech Ltd. and the
Technion Research and Development Foundation located at the Gurtwith
Science Based Industrial Center in Haifa, Israel (hereafter "Technion")
relating to a patent application filed by Technion covering the Company's
use of a novel vascular endothelial growth factor (hereafter "VEGF/CTIO1")
for gene therapy products developed and commercialized by the Company, or
its licensees, for the treatment of cardiovascular disease. This agreement
provides the Company with exclusive rights to develop and commercialize
technology covered by patents that have been filed in the United States
and in foreign countries. Pursuant to such agreement, the Company has
agreed to pay Technion (i) license fees totalling *** payable in ***
installments based on the Company's successful achievement of certain ***
benchmarks; and (ii) an annual royalty fee of *** based on net sales of
products covered by patents. Under the terms of this agreement, the
Company is required to satisfy certain due diligence provisions with
respect to the timely development and commercialization of products
covered by patents thereunder, and pay certain minimum annual royalty
payments following successful commercial development of a product. As of
June 10, 1997, the Company has paid a total of $16,000 pursuant to the
terms of this agreement.
VETERANS' MEDICAL RESEARCH FOUNDATION. On November 13, 1996, the Company
entered into an agreement with the Veterans' Medical Research Foundation
(the "Medical Research Foundation') which operates at the Veterans'
Affairs Medical Center covering certain research studies directed at the
Company's core technology. Under the terms and conditions of this
agreement, Dr. H. Kirk Hammond, a shareholder and executive officer of the
Company, serves as the investigator for such studies. The agreement
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
<PAGE>
COLLATERAL THERAPEUTICS, INC.
SCHEDULE OF EXCEPTIONS
PAGE 6 OF 8
covers a one year term; however, this term may be extended by mutual
consent of both parties. In consideration for such services, the Company
has agreed to pay the Medical Research Foundation a primary monthly fee of
$20,000, payable in monthly installments (including certain administrative
overhead charges), plus a supplemental payment, payable monthly, for
additional amounts expended by the Medical Research Foundation for
Company-directed research activities (including certain administrative
overhead charges).
UNIVERSITY OF WASHINGTON DISCOVERY RESEARCH AGREEMENT - MUSCLE
DIFFERENTIATION DURING REPAIR OF MYOCARDIAL NECROSIS THROUGH GENE THERAPY
WITH THE MYOD GENE. *** , the Company has entered into an agreement with
the University of Washington, Seattle, School of Medicine, Department of
Pathology, for the University of Washington to conduct Company-directed
discovery research into the study of muscle differentiation during repair
of myocardial necrosis, resulting from a myocardial infarction, through
gene therapy using the MyoD gene, under the direction of Dr. Charles
Murry, M.D., Ph.D. Pursuant to the terms of this agreement, the Company
has agreed to provide the University of Washington with research funding
totalling up to *** . Under this agreement, the Company has a right of
first negotiation for the Company to enter an agreement with the
University of Washington to exclusively license all technology that may
result from such research. As of June 10, 1997, the Company has paid *** .
***
***
***
***
***
***
***
***
***
CORPORATE OFFICE REAL ESTATE LEASE. On July 17, 1995, the Company entered
into a real estate sublease agreement with Gensia, Inc. covering office
space located at 9360 Towne Centre Drive, San Diego, California, which
currently serves as the Company's corporate office. The sublease covered
by this agreement will expire on December 31, 1997. The Company has an
option to extend the term of such sublease for an additional year to
expire as of December 31, 1998. Rent payable to Gensia, Inc. for the
remainder of the
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
<PAGE>
COLLATERAL THERAPEUTICS, INC.
SCHEDULE OF EXCEPTIONS
PAGE 7 OF 8
lease covering the current lease period (June 1, 1997 to December 31,
1997) totals $52,836.
RESEARCH LABORATORY REAL ESTATE LEASE. On June 9, 1997, the Company
submitted a term sheet covering a proposal to lease an 11,200 square foot
research facility located at 11045 Roselle Street, San Diego, California.
The major terms and conditions of such lease as proposed by the Company to
the landlord are as follows: (i) annual base rent: $207,000, with a 3.5%
annual rent escalation; (ii) annual operating charges: $30,360; (iii)
tenant improvement allowance: $240,000; (iv) lease term three (3) years.
There can be no assurance that the Company will agree on final terms and
enter into a lease agreement covering such research facility. The Company
awaits approval of such proposal or counter-proposal covering such lease.
If this facility is leased, the Company estimates that it will invest up
to $1,500,000 for leasehold improvements, equipment and other related
start-up expenses to develop this lease space as a fully-operational
research facility.
CONTRACT RESEARCH SERVICES. On March 17, 1997, the Company entered into an
agreement with HTI Bio-Services, Inc. (hereafter "HTI") for HTI to conduct
certain contract research services. For such services the Company agreed
to pay HTI $99,400. As of June 10, 1997, the unpaid balance payable to HTI
by the Company for such services totalled $19,880.
CONSULTING AGREEMENTS. The Company has entered into consulting agreements
with five (5) individuals who have been appointed as members of the
Company's Scientific Advisory Board and with twelve (12) other
individuals, as set forth in the schedule attached hereto.
NOTES PAYABLE AND SECURITY AGREEMENT. In 1995, the Company entered into
two Promissory Notes with Schering Berlin Venture Corporation ("Payor")
totalling $500,000 to fund operations. The Notes were each amended and
restated as of May 16, 1996. Since there has been an Acceptance of a
Qualified Gene, the Notes are due on Payor's demand on or after June 30,
1999 and bear interest at 1% below the prime rate. These Notes are secured
by all of the assets of the Company pursuant to a Security Agreement dated
August 16, 1995.
SECTION 2.8 RELATED PARTY TRANSACTIONS. Mr. Craig Andrews, a member of Brobeck,
Phleger & Harrison LLP (hereinafter "Brobeck") is a member of the Company's
Board of Directors and a holder of 142,687 shares of Common Stock. During 1996,
the Company paid Brobeck $148,974 and $19,272 for legal services for 1996 and
1997, respectively. In addition, Mr. David Hale, a member of the Company's Board
Directors and a holder of 139,887 shares of Common Stock is Chief Executive
Officer of Gensia, Inc., which is the landlord of the Company's executive
office. During 1996, the Company paid Gensia, Inc. rent of $98,496 and $46,586
for 1996 and 1997, respectively.
<PAGE>
COLLATERAL THERAPEUTICS, INC.
SCHEDULE OF EXCEPTIONS
PAGE 8 OF 8
SECTION 2.16 FINANCIAL STATEMENTS. The Company has delivered to the Investor
audited financial statements (balance sheet, profit and loss statement,
statement of shareholders' equity and statement of changes of financial
position, including notes thereto) at December 31, 1997, as prepared by Ernst &
Young, the Company's independent public accountants. In addition, the Company
has provided the Investor with unaudited financial statements, (balance sheet,
profit and loss statement, statement of shareholders' equity and statement of
changes of financial position) for the period from January 1, 1997 to May 30,
1997. Reference is made to Section 2.7 disclosure under the caption "Notes
Payable and Security" above.
-8-
<PAGE>
EXHIBIT 10.4
COLLATERAL THERAPEUTICS, INC.
SERIES C PREFERRED STOCK PURCHASE AGREEMENT
___________________
June 30, 1997
<PAGE>
TABLE OF CONTENTS
PAGE
1. Purchase and Sale of Stock..................................... 1
1.1 Sale and Issuance of Series C Preferred Stock............ 1
1.2 Closing.................................................. 1
2. Representations and Warranties of the Company.................. 1
2.1 Organization; Good Standing; Qualification............... 1
2.2 Authorization............................................ 2
2.3 Valid Issuance of Preferred and Common Stock............. 2
2.4 Governmental Consents.................................... 2
2.5 Capitalization and Voting Rights......................... 3
2.6 Subsidiaries............................................. 3
2.7 Contracts and Other Commitments.......................... 4
2.8 Related-Party Transactions............................... 4
2.9 Registration Rights...................................... 4
2.10 Permits.................................................. 4
2.11 Compliance with Other Instruments........................ 4
2.12 Litigation............................................... 5
2.13 Disclosure............................................... 5
2.14 Offering................................................. 5
2.15 Title to Property and Assets; Leases..................... 5
2.16 Financial Statements..................................... 6
2.17 Changes.................................................. 6
2.18 Patents and Trademarks................................... 6
2.19 Proprietary Information and Inventions Agreements........ 7
2.20 Tax Returns, Payments, and Elections..................... 7
2.21 Section 83(b) Elections.................................. 7
2.22 Minute Books............................................. 7
2.23 Real Property Holding Corporation........................ 8
3. Representations and Warranties of Investors.................... 8
3.1 Authorization............................................ 8
3.2 Purchase Entirely for Own Account........................ 8
3.3 Reliance Upon Investors' Representations................. 8
3.4 Receipt of Information................................... 8
3.5 Investment Experience.................................... 9
3.6 Accredited Investor...................................... 9
3.7 Restricted Securities.................................... 10
3.8 Legends.................................................. 10
3.9 Public Sale.............................................. 11
3.10 Non U.S. Persons......................................... 11
4. Conditions of Investor's Obligations at the Closing............ 11
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4.1 Representations and Warranties........................... 11
4.2 Performance.............................................. 11
4.3 Compliance Certificate................................... 12
4.4 Qualifications........................................... 12
4.5 Proceedings and Documents................................ 12
4.6 Due Diligence............................................ 12
4.7 Opinion of Company Counsel............................... 12
4.8 Rights Agreement......................................... 12
5. Conditions of the Company's Obligations at the Closing......... 12
5.1 Representations and Warranties........................... 12
5.2 Payment of Purchase Price................................ 12
5.3 Qualifications........................................... 12
6. Miscellaneous.................................................. 13
6.1 Entire Agreement......................................... 13
6.2 Survival of Warranties................................... 13
6.3 Successors and Assigns................................... 13
6.4 Governing Law............................................ 13
6.5 Counterparts............................................. 13
6.6 Titles and Subtitles..................................... 13
6.7 Notices.................................................. 13
6.8 Finder's Fees............................................ 14
6.9 Expenses................................................. 14
6.10 Attorneys' Fees.......................................... 14
6.11 Amendments and Waivers................................... 14
6.12 Severability............................................. 14
6.13 Corporate Securities Law................................. 14
Exhibit A -- Amended and Restated Articles of Incorporation
Schedule A -- Schedule of Investors
Attachment A
ii
<PAGE>
COLLATERAL THERAPEUTICS, INC.
SERIES C PREFERRED STOCK PURCHASE AGREEMENT
THIS SERIES C PREFERRED STOCK PURCHASE AGREEMENT (this "Agreement") is
made as of the 30th day of June, 1997, by and between Collateral Therapeutics,
Inc., a California corporation (the "Company"), and the investors listed on
SCHEDULE A hereto, each of which is herein referred to as an "Investor" and
collectively referred to as the "Investors."
THE PARTIES HEREBY AGREE AS FOLLOWS:
1. PURCHASE AND SALE OF STOCK.
1.1 SALE AND ISSUANCE OF SERIES C PREFERRED STOCK.
(a) The Company shall adopt and file with the Secretary of
State of California on or before the Closing (as defined below) an Amended and
Restated Articles of Incorporation in the form attached hereto as EXHIBIT A (the
"Restated Articles").
(b) Subject to the terms and conditions of this Agreement,
each Investor agrees, severally, to purchase at the Closing pursuant to Section
1.2, and the Company agrees to sell and issue to each Investor at the Closing
pursuant to Section 1.2, that number of shares of the Company's Series C
Preferred Stock set forth opposite each Investor's name on SCHEDULE A hereto for
the purchase price of $8.00 per share.
1.2 CLOSING. The purchase and sale of the Series C Preferred Stock
shall take place at the offices of Brobeck, Phleger & Harrison LLP, 550 West "C"
Street, Suite 1200, San Diego, California at 11:00 A.M., on June 30, 1997, or at
such other time and place as the Company and Investors acquiring in the
aggregate more than half the shares of Series C Preferred Stock sold pursuant
hereto mutually agree upon orally or in writing (which time and place are
designated as the "Closing"). At the Closing, the Company shall deliver to each
Investor a certificate representing the shares of Series C Preferred Stock that
such Investor is purchasing against payment of the purchase price therefor by
check, wire transfer or such other form of payment as shall be mutually agreed
upon by such Investor and the Company.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to Investor that, except as set forth on a Schedule of
Exceptions furnished to special counsel for the Investors, which exceptions
shall be deemed to be representations and warranties as if made hereunder:
2.1 ORGANIZATION; GOOD STANDING; QUALIFICATION. The Company is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of California, has all requisite corporate power and authority
to own and operate its properties
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and assets and to carry on its business as now conducted and as proposed to be
conducted, to execute and deliver this Agreement, the Amended and Restated
Investor Rights Agreement (the "Rights Agreement") and the Amended and Restated
Co-Sale Agreement (the "Co-Sale Agreement"), to issue and sell the Series C
Preferred Stock and the Common Stock issuable upon conversion thereof, and to
carry out the provisions of this Agreement, the Rights Agreement, the Co-Sale
Agreement and the Restated Articles. The Company is not qualified to do business
as a foreign corporation in any jurisdiction and such qualification is not now
required.
2.2 AUTHORIZATION. All corporate action on the part of the Company,
its officers, directors and shareholders necessary for the authorization,
execution and delivery of this Agreement, the Rights Agreement and the Co-Sale
Agreement, the performance of all obligations of the Company hereunder and
thereunder at the Closing and the authorization, issuance (or reservation for
issuance), sale, and delivery of the Series C Preferred Stock being sold
hereunder and the Common Stock issuable upon conversion thereof has been taken
or will be taken prior to the Closing, and this Agreement, the Rights Agreement
and the Co-Sale Agreement constitute valid and legally binding obligations of
the Company, enforceable in accordance with their respective terms except (i) as
limited by applicable bankruptcy, insolvency, reorganization, moratorium, and
other laws of general application affecting enforcement of creditors' rights
generally, (ii) as limited by laws relating to the availability of specific
performance, injunctive relief or other equitable remedies and (iii) to the
extent the indemnification provisions contained in the Rights Agreement may be
limited by applicable federal or state securities law.
2.3 VALID ISSUANCE OF PREFERRED AND COMMON STOCK. The Series C
Preferred Stock that is being purchased by the Investors hereunder, when issued,
sold and delivered in accordance with the terms of this Agreement for the
consideration expressed herein, will be duly and validly issued, fully paid and
nonassessable, and will be free of restrictions on transfer other than
restrictions on transfer under this Agreement, the Rights Agreement, the Co-Sale
Agreement and the Company's Bylaws and under applicable state and federal
securities laws. The Common Stock issuable upon conversion of the Series C
Preferred Stock purchased under this Agreement has been duly and validly
reserved for issuance and, upon issuance in accordance with the terms of the
Restated Articles, will be duly and validly issued, fully paid and nonassessable
and will be free of restrictions on transfer other than restrictions on transfer
under this Agreement, the Rights Agreement, the Co-Sale Agreement and the
Company's Bylaws and under applicable state and federal securities laws.
2.4 GOVERNMENTAL CONSENTS. No consent, approval, qualification,
order or authorization of, or filing with, any local, state or federal
governmental authority is required on the part of the Company in connection with
the Company's valid execution, delivery or performance of this Agreement, the
offer, sale or issuance of the Series C Preferred Stock by the Company or the
issuance of Common Stock upon conversion of the Series C Preferred Stock, except
(i) the filing of the Restated Articles with the Secretary of State of the State
of California and (ii) such filings as have been made prior to the Closing,
except that such
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post-closing filings as may be required under applicable state securities laws
which will be timely filed within the applicable periods therefor.
2.5 CAPITALIZATION AND VOTING RIGHTS. The authorized capital
of the Company consists, or will consist prior to the Closing, of:
(a) PREFERRED STOCK. 1,221,540 shares of Preferred Stock, no par
value, of which 374,532 shares have been designated Series A Preferred Stock,
all of which are issued and outstanding, 374,532 shares have been designated
Series B Preferred Stock, all of which are issued and outstanding, and 472,476
have been designated Series C Preferred Stock, up to all of which will be sold
pursuant to this Agreement. The rights, privileges and preferences of the Series
C Preferred Stock will be as stated in the Restated Articles.
(b) COMMON STOCK. 10,000,000 shares of common stock ("Common
Stock"), no par value, of which 3,103,500 shares are issued and outstanding.
A listing of the Common Stockholders and the number of shares owned is set
forth on the Schedule of Exceptions.
(c) The outstanding shares of Common Stock have been issued in
accordance with the registration or qualification provisions of the Securities
Act of 1933, as amended (the "Securities Act") and any relevant state securities
laws or pursuant to valid exemptions therefrom.
(d) Except for (i) the conversion privileges of the outstanding
Series A Preferred Stock and the outstanding Series B Preferred Stock, (ii) the
conversion privileges of the Series C Preferred Stock to be issued under this
Agreement, (iii) the rights provided in Sections 2.3 and 3.2 of the Rights
Agreement, and (iv) the rights provided in the Co-Sale Agreement and (v)
currently outstanding options to purchase 312,500 shares of Common Stock, there
are no outstanding any options, warrants, rights (including conversion or
preemptive rights and rights of first refusal) or agreements for the purchase or
acquisition from the Company of any shares of its capital stock. In addition to
the previously mentioned options, the Company has reserved an additional 211,359
shares of its Common Stock for restricted stock purchases or for purchases upon
exercise of options to be granted in the future. The Company is not a party or
subject to any agreement or understanding, and, to the best of the Company's
knowledge, there is no agreement or understanding between any persons that
affects or relates to the voting or giving of written consents with respect to
any security or the voting by a director of the Company.
2.6 SUBSIDIARIES. The Company does not own or control, directly or
indirectly, any interest in any other corporation, association or other business
entity. The Company is not a participant in any joint venture, partnership or
similar arrangement.
2.7 CONTRACTS AND OTHER COMMITMENTS. The Company does not have any
contract, agreement, lease, commitment or proposed transaction, written or oral,
absolute or contingent, other than (i) individual contracts for the purchase of
supplies and services that were entered into in the ordinary course of business
and that do not, in the aggregate, involve
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more than $50,000, and do not extend for more than one (1) year beyond the date
hereof, (ii) sales contracts entered into in the ordinary course of business,
and (iii) contracts terminable at will by the Company on no more than thirty
(30) days notice without cost or liability to the Company and that do not
involve any employment or consulting arrangement and are not material to the
conduct of the Company's business. For the purpose of this paragraph, employment
and consulting contracts and contracts with labor unions, and license agreements
and any other agreements relating to the acquisition or disposition of the
Company's technology, shall not be considered to be contracts entered into in
the ordinary course of business.
2.8 RELATED-PARTY TRANSACTIONS. No employee, officer or director of
the Company or member of his or her immediate family thereof is indebted to the
Company, nor is the Company indebted (or committed to make loans or extend or
guarantee credit) to any of them. To the best of the Company's knowledge, none
of such persons has any direct or indirect ownership interest in any firm or
corporation with which the Company is affiliated or with which the Company has a
business relationship, or any firm or corporation that competes with the
Company, except that employees, officers or directors of the Company and members
of their immediate families may own stock in publicly traded companies that may
compete with the Company. To the best of the Company's knowledge, no officer or
director or any member of their immediate families is, directly or indirectly,
interested in any material contract with the Company.
2.9 REGISTRATION RIGHTS. Except as provided in the Rights
Agreement, the Company is not obligated to register under the Securities Act
any of its presently outstanding securities or any of its securities that may
subsequently be issued.
2.10 PERMITS. The Company has all governmental franchises,
governmental permits, governmental licenses and any similar governmental
authority necessary for the conduct of its business as now being conducted by
it, the lack of which could materially and adversely affect the business,
properties, prospects or financial condition of the Company and believes it can
obtain, without undue burden or expense, any similar authority for the conduct
of its business as planned to be conducted. The Company is not in default in any
material respect under any of such governmental franchises, governmental
permits, governmental licenses or other similar governmental authority.
2.11 COMPLIANCE WITH OTHER INSTRUMENTS. The Company is not in
violation or default in any material respect of any provision of its Restated
Articles or Bylaws or in any material respect of any provision of any mortgage,
indenture, agreement, instrument or contract to which it is a party or by which
it is bound or, to the best of its knowledge, of any federal or state judgment,
order, writ, decree, statute, rule or regulation applicable to the Company. The
execution, delivery and performance by the Company of this Agreement, the Rights
Agreement and the Co-Sale Agreement, and the consummation of the transactions
contemplated hereby and thereby will not result in any such violation or be in
material conflict with or constitute, with or without the passage of time or
giving of notice, either a material default under any such provision or an event
that results in the creation of any material lien, charge or encumbrance upon
any assets of the Company or the suspension,
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<PAGE>
revocation, impairment, forfeiture or nonrenewal of any material permit,
license, authorization or approval applicable to the Company, its business or
operations, or any of its assets or properties.
2.12 LITIGATION. There is no action, suit, proceeding or
investigation pending or currently threatened against the Company that questions
the validity of this Agreement, the Rights Agreement or the Co-Sale Agreement or
the right of the Company to enter into such agreements, or to consummate the
transactions contemplated hereby or thereby, or that might result, either
individually or in the aggregate, in any material adverse change in the assets,
business properties, prospects or financial condition of the Company, or in any
material change in the current equity ownership of the Company. The foregoing
includes, without limitation, any action, suit, proceeding or investigation
pending or currently threatened 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, their obligations under any agreements with prior employers, or
negotiations by the Company with potential backers of, or investors in, the
Company or its proposed business. The Company is not a party to, or to the best
of its knowledge, named in any order, writ, injunction, judgment or decree of
any court or government agency or instrumentality. There is no action, suit or
proceeding by the Company currently pending or that the Company currently
intends to initiate.
2.13 DISCLOSURE. The Company has provided the Investor with all the
information reasonably available to it without undue expense that the Investors
have requested for deciding whether to purchase the Series C Preferred Stock and
all information which the Company believes is reasonably necessary to enable
each Investor to make such decision. To the best of the Company's knowledge
after reasonable investigation, neither this Agreement nor any other written
statements or certificates made or delivered in connection herewith 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.
2.14 OFFERING. Subject in part to the truth and accuracy of each
Investor's representations set forth in this Agreement, the offer, sale and
issuance of the Preferred Stock as contemplated by this Agreement are exempt
from the registration requirements of the Securities Act, and neither the
Company nor any authorized agent acting on its behalf will take any action
hereafter that would cause the loss of such exemption.
2.15 TITLE TO PROPERTY AND ASSETS; LEASES. Except (i) for liens for
current taxes not yet delinquent, (ii) for liens imposed by law and incurred in
the ordinary course of business for obligations not past due to carriers,
warehousemen, laborers, materialmen and the like, (iii) for liens in respect of
pledges or deposits under workers' compensation laws or similar legislation, or
(iv) for minor defects in title, none of which, individually or in the aggregate
materially interferes with the use of such property, the Company owns its
tangible property and tangible assets free and clear of all mortgages, liens,
claims and encumbrances. With respect to the property and assets it leases, the
Company is in compliance with such leases and, to the best of its knowledge,
holds a valid leasehold interest free of any liens, claims or encumbrances,
subject to clauses (i)-(iv) above.
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2.16 FINANCIAL STATEMENTS. The Company has delivered to each
Investor or its special counsel its audited financial statements (balance sheet
and profit and loss statement, statement of shareholders' equity and statement
of changes in financial position including notes thereto) at December 31, 1996
and for the fiscal year then ended and its unaudited financial statements
(balance sheet and profit and loss statement including notes thereto) as at and
for the five-month period ended May 31, 1997 (the "Financial Statements"). The
Financial Statements have been prepared in accordance with general accepted
accounting principles applied on a consistent basis throughout the periods
indicated and with each other, except that unaudited Financial Statements may
not contain all footnotes required by generally accepted accounting principles.
The Financial Statements fairly present the financial condition and operating
results of the Company as of the dates, and for the periods, indicated therein,
subject in the case of unaudited Financial Statements to normal year-end audit
adjustments. 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 May 31, 1997 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 on 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.
2.17 CHANGES. To the best of the Company's knowledge, since May 31,
1997, there has not been any event or condition of any type that has materially
and adversely affected the business, properties, prospects or financial
condition of the Company.
2.18 PATENTS AND TRADEMARKS. To its knowledge, the Company owns or
possesses sufficient legal rights to all patents, trademarks, servicemarks,
trade names, copyrights, trade secrets, licenses, information, proprietary
rights and processes necessary for its business as now conducted and as proposed
to be conducted without any conflict with or infringement of the rights of
others. Except as set forth on the Schedule of Exceptions, there are no
outstanding options, licenses or agreements of any kind relating to the
foregoing, nor is the Company bound by or a party to any options, licenses or
agreements of any kind with respect to the patents, trademarks, service marks,
trade names, copyrights, trade secrets, licenses, information, proprietary
rights and processes of any other person or entity. The Company has not received
any communications alleging that the Company has violated or, by conducting its
business as proposed, would violate any of the patents, trademarks, service
marks, trade names, copyrights, trade secrets or other proprietary rights of any
other person or entity. The Company is not aware that any of its employees is
obligated under any contract (including licenses, covenants or commitments 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 such
employee's 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, the Rights Agreement or the Co-Sale
Agreement, nor the carrying on of the Company's business by the employees of the
Company, nor the
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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 material default under, any contract, covenant or instrument
under which any of such employees is now obligated.
2.19 PROPRIETARY INFORMATION AND INVENTIONS AGREEMENTS. Each
employee and officer of the Company has executed a Proprietary Information and
Inventions Agreement substantially in the form or forms that have been delivered
to special counsel for the Investors.
2.20 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 paid all taxes and other
assessments due, except those contested by it in good faith. The Company has not
elected pursuant to the Internal Revenue Code of 1986, as amended ("Code"), to
be treated as an S corporation or a collapsible corporation pursuant to Section
341(f) of 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 business, properties, prospects or financial condition of the Company.
2.21 SECTION 83(B) ELECTIONS. To the best of the Company's
knowledge, all individuals who have purchased shares of the Company's Common
Stock have timely filed elections under Section 83(b) of the Internal Revenue
Code and any analogous provisions of applicable state tax laws.
2.22 MINUTE BOOKS. The copy of the minute books of the Company
contain minutes of all meetings of directors and shareholders and all actions by
written consent without a meeting by the directors and shareholders since the
time of incorporation and reflect all actions by the directors (and any
committee of directors) and shareholders with respect to all transactions
referred to in such minutes accurately in all material respects.
2.23 REAL PROPERTY HOLDING CORPORATION. The Company is not a
real property holding corporation within the meaning of Internal Revenue Code
Section 897(c)(2) and any regulations promulgated thereunder.
3. REPRESENTATIONS AND WARRANTIES OF INVESTORS. Each Investor
hereby represents and warrants, with respect to himself or itself, that:
3.1 AUTHORIZATION. Such Investor has full power and authority to
enter into this Agreement and that this Agreement constitutes a valid and
legally binding obligation of such Investor.
3.2 PURCHASE ENTIRELY FOR OWN ACCOUNT. This Agreement is made with
each Investor in reliance upon such Investor's representation to the Company,
which by such Investor's execution of this Agreement such Investor hereby
confirms, that the Series C Preferred Stock to be purchased by such Investor and
the Common Stock issuable upon
7
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conversion thereof (collectively, the "Securities") will be acquired for
investment for such 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 such
Investor has no present intention of selling, granting any participation in or
otherwise distributing the same. By executing this Agreement, each Investor
further represents that such Investor does not have any contract, undertaking,
agreement or arrangement with any person to sell, transfer or grant
participations to such person or to any third person, with respect to any of the
Securities.
3.3 RELIANCE UPON INVESTORS' REPRESENTATIONS. Each Investor
understands that the Series C Preferred Stock is not, and any Common Stock
acquired on conversion thereof at the time of issuance may not be, registered
under the Securities Act on the ground that the sale provided for in this
Agreement and the issuance of securities hereunder is exempt from registration
under the Securities Act pursuant to Section 4(2) thereof, and that the
Company's reliance on such exemption is predicated on such Investor's
representations set forth herein. Each Investor realizes that the basis for the
exemption may not be present if, notwithstanding such representations, such
Investor has in mind merely acquiring the Securities for a fixed or determinable
period in the future, or for a market rise, or for sale if the market does not
rise. Each Investor has no such intention.
3.4 RECEIPT OF INFORMATION. Each Investor believes it has received
all the information it considers necessary or appropriate for deciding whether
to purchase the Series C Preferred Stock. Each 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
Stock and the business, properties, prospects and financial condition of the
Company and to obtain additional information (to the extent the Company
possessed such information or could acquire it without unreasonable effort or
expense) necessary to verify the accuracy of any information furnished to it or
to which it had access. The foregoing, however, does not limit or modify the
representations and warranties of the Company in Section 2 of this Agreement or
the right of each Investor to rely thereon.
3.5 INVESTMENT EXPERIENCE. Each Investor represents that it is
experienced in evaluating and investing in securities of companies in the
development stage and acknowledges that it is able to fend for itself, can 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 Stock. Each Investor also
represents it has not been organized for the purpose of acquiring the Series C
Preferred Stock.
3.6 ACCREDITED INVESTOR.
(a) Each Investor represents to the Company that it, or to the
extent that the representation is being made by a trustee of a trust, such trust
is an Accredited Investor. The term "Accredited Investor" as used herein refers
to a person or entity who:
(1) is a director or executive officer of the
Company; or
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(2) Any bank as defined in section 3(a)(2) of the
Securities Act, or any savings and loan association or other institution
as defined in section 3(a)(5)(A) of the Securities Act whether acting in
its individual or fiduciary capacity; any broker or dealer registered
pursuant to section 15 of the Securities Exchange Act of 1934; an
insurance company as defined in section 2(13) of the Securities Act; an
investment company registered under the Investment Company Act of 1940 or
a business development company as defined in section 2(a)(48) of that act;
a Small Business Investment Company licensed by the United States Small
Business Administration under section 301(c) or (d) of the Small Business
Investment Act of 1958; or an employee benefit plan, including an
individual retirement account, which is subject to the provisions of the
Employee Retirement Income Security Act of 1974, if the investment
decision is made by a plan fiduciary, as defined in section 3(21) of such
act, which is either a bank, insurance company or registered investment
adviser, or if the employee benefit plan has total assets in excess of
$5,000,000 or, if a self-- directed plan, with investment decisions made
solely by persons that are accredited investors;
(3) Any private business development company as
defined in section 202(a)(22) of the Investment Advisers Act of 1940;
(4) Any organization described in section 501(c)(3) of
the Internal Revenue Code, corporation, Massachusetts or similar business
trust, or partnership, not formed for the specific purpose of acquiring
the securities offered, with total assets in excess of $5,000,000;
(5) Any natural person whose individual net worth, or
joint net worth with that person's spouse, at the time of his purchase
exceeds $1,000,000;
(6) Any natural person who had an individual income in
excess of $200,000 in each of the two most recent years or joint income
with that person's spouse in excess of $300,000 in each of those years and
has a reasonable expectation of reaching the same income level in the
current year;
(7) Any trust, with total assets in excess of
$5,000,000, not formed for the specific purpose of acquiring the
securities offered, whose purchase is directed by a person who has such
knowledge and experience in financial and business matters that he is
capable of evaluating the merits and risks of the prospective investment;
or
(8) Any entity in which all of the equity owners
are accredited investors.
(b) Each Investor further represents to the Company that the capital
contribution of such Investor does not exceed 10% of such Investor's net worth.
9
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3.7 RESTRICTED SECURITIES. Each Investor understands that the
Securities may not be sold, transferred, or otherwise disposed of without
registration under the Securities Act or an exemption therefrom, and that in the
absence of an effective registration statement covering the Securities or an
available exemption from registration under the Securities Act, the Securities
must be held indefinitely. In particular, each Investor is aware that the
Securities may not be sold pursuant to Rule 144 promulgated under the Securities
Act unless all of the conditions of such Rule are met. Among the conditions for
use of Rule 144 is the availability of current information to the public about
the Company. Such information is not now available and the Company has no
present plans to make such information available.
3.8 LEGENDS. To the extent applicable, each certificate or other
document evidencing any of the Securities shall be endorsed with the legends set
forth below, and Investor covenants that, except to the extent such restrictions
are waived by the Company, Investor shall not transfer the shares represented by
any such certificate without complying with the restrictions on transfer
described in the legends endorsed on such certificate:
(a) "THE SHARES REPRESENTED HEREBY HAVE NOT
BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT
OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED,
ASSIGNED, PLEDGED, OR HYPOTHECATED ABSENT AN EFFECTIVE
REGISTRATION THEREOF UNDER SUCH ACT OR COMPLIANCE WITH
RULE 144 PROMULGATED UNDER SUCH ACT, OR UNLESS THE
COMPANY HAS RECEIVED AN OPINION OF COUNSEL, SATISFACTORY
TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION
IS NOT REQUIRED."
(b) Any legend required by the laws of the State of
California, including any legend required by the California Department of
Corporations and Sections 417 and 418 of the California Corporations Code.
3.9 PUBLIC SALE. Each Investor agrees not to make, without the prior
written consent of the Company, any public offering or sale of the Securities,
or any Common Stock issued upon the conversion thereof, although permitted to do
so pursuant to Rule 144(k) promulgated under the Securities Act, until the
earlier of (i) the date on which the Company effects its initial registered
public offering pursuant to the Securities Act or (ii) the date on which it
becomes a registered company pursuant to Section 12(g) of the Securities
Exchange Act of 1934, as amended, or (iii) five years after the Closing of the
sale of such Stock to such Investor by the Company.
3.10 NON U.S. PERSONS. If any Investor is not a U.S. Person, such
Investor hereby represents that it has satisfied itself as to the full
observance of the laws of its jurisdiction in connection with any invitation to
subscribe for the Securities or any use of this Agreement, including (i) the
legal requirements within its jurisdiction for the purchase of the shares of
Series C Preferred Stock, (ii) any foreign exchange restrictions applicable to
such
10
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purchase, (iii) any governmental or other consents which may need to be
obtained and (iv) the income tax and other tax consequences, if any, which may
be relevant to the purchase, holding, redemption, sale or transfer of the
Securities. Each Investor's subscription and payment for, and its continued
beneficial ownership of the Securities will not violate any applicable
securities or other laws of its jurisdiction.
4. CONDITIONS OF INVESTOR'S OBLIGATIONS AT THE CLOSING. The obligations of
each Investor under subparagraph 1.1(b) of this Agreement are subject to the
fulfillment of each of the following conditions on or before the Closing with
respect to such Investor's purchase of Series C Preferred Stock, the waiver of
which shall not be effective against any Investor who does not consent in
writing thereto:
4.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company contained in Section 2 shall be true on and as of the
Closing with the same effect as though such representations and warranties had
been made on and as of the date of such Closing.
4.2 PERFORMANCE. The Company shall have performed and complied with
all agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by it on or before the Closing.
4.3 COMPLIANCE CERTIFICATE. The President of the Company shall
deliver to each Investor at the Closing a certificate certifying that the
conditions specified in paragraphs 4.1, 4.2, 4.4, 4.7 and 4.8 have been
fulfilled.
4.4 QUALIFICATIONS. All authorizations, approvals or permits, if
any, of any governmental authority or regulatory body of the United States or of
any state that are required in connection with the lawful issuance and sale of
the Securities pursuant to this Agreement shall be duly obtained and effective
as of the Closing.
4.5 PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings
in connection with the transactions contemplated at the Closing and all
documents incident thereto shall be reasonably satisfactory in form and
substance to the Investors' special counsel, which shall have received all such
counterpart original and certified or other copies of such documents as it may
reasonably request.
4.6 DUE DILIGENCE. Each Investor shall have completed its due
diligence of the Company, to its reasonable satisfaction.
4.7 OPINION OF COMPANY COUNSEL. Each Investor shall have received
from Brobeck, Phleger & Harrison LLP, counsel for the Company, an opinion, dated
the date as of the Closing, in form and substance satisfactory to special
counsel to the Investors.
4.8 RIGHTS AGREEMENT; CO-SALE AGREEMENT. The Company and each
Investor shall have entered into the Rights Agreement and the Co-Sale
Agreement.
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5. CONDITIONS OF THE COMPANY'S OBLIGATIONS AT THE CLOSING. The obligations
of the Company to each Investor under this Agreement are subject to the
fulfillment of each of the following conditions on or before the Closing with
respect to such Investor's purchase of Series C Preferred Stock by that
Investor:
5.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Investors contained in Section 3 shall be true on and as of
the Closing with the same effect as though such representations and warranties
had been made on and as of such Closing.
5.2 PAYMENT OF PURCHASE PRICE. Each Investor shall have
delivered the purchase price specified in Section 1.2.
5.3 QUALIFICATIONS. All authorizations, approvals or permits, if
any, of any governmental authority or regulatory body of the United States or of
any state that are required in connection with the lawful issuance and sale of
the Stock pursuant to this Agreement shall be duly obtained and effective as of
the Closing.
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6. MISCELLANEOUS.
6.1 ENTIRE AGREEMENT. This Agreement and the documents referred to
herein constitute the entire agreement among the parties and no party shall be
liable or bound to any other party in any manner by any warranties,
representations or covenants except as specifically set forth herein or therein.
6.2 SURVIVAL OF WARRANTIES. The warranties, representations and
covenants of the Company and the Investors contained in or made pursuant to this
Agreement shall survive the execution and delivery of this Agreement and the
Closing.
6.3 SUCCESSORS AND ASSIGNS. Except as otherwise provided herein, 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 (including
permitted transferees of any Securities). 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.
6.4 GOVERNING LAW. This Agreement shall be governed by and construed
under the laws of the State of California as applied to agreements among
California residents entered into and to be performed entirely within
California.
6.5 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.
6.6 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.
6.7 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 by hand or
professional courier service or five days after deposit with the United States
Post Office, by registered or certified mail, postage prepaid and addressed to
the party to be notified at the address indicated for such party on the
signature page hereof, or at such other address as such party may designate by
ten (10) days' advance written notice to the other parties.
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6.8 FINDER'S FEES. Each party represents that it neither is
nor will be obligated for any finder's fee or commission in connection with
this transaction.
Each Investor agrees to indemnify and to hold harmless the
Company from any liability for any commission or compensation in the nature of a
finders' fee (and the costs and expenses of defending against such liability or
asserted liability) for which such Investor or any of its officers, partners,
employees or representatives is responsible.
The Company agrees to indemnify and hold harmless each
Investor from any liability for any commission or compensation in the nature of
a finder's fee (and the costs and expenses of defending against such liability
or asserted liability) for which the Company or any of its officers, employees
or representatives is responsible.
6.9 EXPENSES. Irrespective of whether the Closing is effected, each
party shall pay all costs and expenses that it incurs with respect to the
negotiation, execution, delivery and performance of this Agreement.
6.10 ATTORNEYS' FEES. If any action at law or in equity is necessary
to enforce or interpret the terms of this Agreement, the Rights Agreement, the
Co-Sale Agreement or the Restated Articles, the prevailing party shall be
entitled to reasonable attorneys' fees, costs and necessary disbursements in
addition to any other relief to which such party may be entitled.
6.11 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 holders of
more than 50% of the Common Stock (that has not been sold to the public) issued
or issuable upon conversion of the Series C Preferred Stock. Any amendment or
waiver effected in accordance with this paragraph shall be binding upon each
holder of any securities purchased under this Agreement at the time outstanding
(including securities into which such securities have been converted), each
future holder of all such securities and the Company.
6.12 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.
6.13 CORPORATE SECURITIES LAW. THE SALE OF THE SECURITIES WHICH ARE
THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER OF
CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF SUCH SECURITIES OR
THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION FOR SUCH SECURITIES
PRIOR TO SUCH QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT
FROM QUALIFICATION BY SECTION 25100, 25102 OR 25105 OF THE CALIFORNIA
CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE
14
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EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS
SO EXEMPT.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
15
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
COLLATERAL THERAPEUTICS, INC.
By: /s/ Jack Reich, Ph.D.
-------------------------------------
Jack Reich, President
Address: 9360 Towne Center Drive, Suite 110
San Diego, California 92121
THE INVESTORS:
Subject to ATTACHMENT A hereto, THE WELLCOME
TRUST LIMITED, AS TRUSTEE OF THE
WELLCOME TRUST
By: /s/ Roger Gibbs
-------------------------------------
Sir Roger Gibbs, Chairman
Address: 183 EUSTON ROAD
LONDON NW1 2BE
/s/ Jerry C. Benjamin
-------------------------------------
Jerry C. Benjamin
Address: 2 WALNUT DRIVE
KINGSWOOD, SURBY KT206QX
SCHERING BERLIN VENTURE CORP.
By: /s/ Illegible
-------------------------------------
Its: TREASURER
Address: 110 East Hanover Avenue
Cedar Knolls, New Jersey 07929
[SIGNATURE PAGE TO SERIES C
PREFERRED STOCK PURCHASE AGREEMENT]
16
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EXHIBIT A
AMENDED AND RESTATED ARTICLES OF INCORPORATION
A-1
<PAGE>
AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF COLLATERAL THERAPEUTICS, INC.,
a California Corporation
The undersigned Jack Reich and Christopher J. Reinhard hereby certify
that:
ONE: They are the duly elected and acting President and Secretary,
respectively, of said corporation.
TWO: The Amended and Restated Articles of Incorporation of said
corporation shall be amended and restated to read in full as follows:
ARTICLE I
The name of this corporation is Collateral Therapeutics, Inc.
ARTICLE II
The purpose of this corporation is to engage in any lawful act or activity
for which a corporation may be organized under the General Corporation Law of
California other than the banking business, the trust company business or the
practice of a profession permitted to be incorporated by the California
Corporations Code.
ARTICLE III
A. CLASSES OF STOCK. This corporation is authorized to issue two classes
of stock to be designated, respectively, "Common Stock" and "Preferred Stock."
The total number of shares which the corporation is authorized to issue is
Eleven Million Two Hundred Twenty- One Thousand Five Hundred Forty (11,221,540)
shares. Ten Million (10,000,000) shares shall be Common Stock and One Million
Two Hundred Twenty-One Thousand Five Hundred Forty (1,221,540) shares shall be
Preferred Stock. The Preferred Stock authorized by these Amended and Restated
Articles of Incorporation shall be issued by series as set forth herein. The
first series of Preferred Stock shall be designated "Series A Preferred Stock"
and shall consist of Three Hundred Seventy-Four Thousand Five Hundred Thirty-Two
(374,532) shares. The second series of Preferred Stock shall be designated
"Series B Preferred Stock" and shall consist of Three Hundred Seventy-Four
Thousand Five Hundred Thirty-Two (374,532) shares. The third series of Preferred
Stock shall be designated "Series C Preferred Stock" and shall consist of Four
Hundred Seventy-Two Thousand Four Hundred Seventy-Six (472,476) shares. Except
to the extent otherwise provided herein, the Series A Preferred Stock, Series B
Preferred Stock and Series C Preferred Stock shall be treated as a single class
referred to herein collectively as the "Preferred Stock."
<PAGE>
B. RIGHTS, PREFERENCES AND RESTRICTIONS OF PREFERRED STOCK. The
rights, preferences, privileges and restrictions granted to and imposed on
the Preferred Stock are as set forth below in this Article III(B).
1. DIVIDEND PROVISIONS. Subject to the rights of series of Preferred
Stock which may from time to time come into existence, the holders of shares of
Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock
shall be entitled to receive dividends, out of any assets legally available
therefor, pro-rata and prior and in preference to any declaration or payment of
any dividend (payable other than in Common Stock or other securities and rights
convertible into or entitling the holder thereof to receive, directly or
indirectly, additional shares of Common Stock of this corporation) on the Common
Stock of this corporation, (i) with respect to the Series A Preferred Stock and
Series B Preferred Stock, at the rate of $0.334 per share per annum and (ii)
with respect to the Series C Preferred Stock, at the rate of $0.40 per share per
annum, when, as and if declared by the Board of Directors. Such dividends shall
not be cumulative.
2. LIQUIDATION PREFERENCE.
(a) In the event of any liquidation, dissolution or winding up
of this corporation, either voluntary or involuntary, subject to the rights of
series of Preferred Stock that may from time to time come into existence, the
holders of Series A Preferred Stock, Series B Preferred Stock and Series C
Preferred Stock shall be entitled to receive, pro-rata and prior and in
preference to any distribution of any of the assets of this corporation to the
holders of Common Stock by reason of their ownership thereof, (i) with respect
to the Series A Preferred Stock, an amount per share equal to the sum of (A)
$6.675 for each outstanding share of Series A Preferred Stock (the "Original
Series A Issue Price") and (B) an amount equal to the sum of (I) five percent
(5%) return on the Original Series A Issue Price, compounded annually from the
Series A Purchase Date (as defined herein) through the date of liquidation,
dissolution or winding up of this corporation and (II) declared but unpaid
dividends on each share, (ii) with respect to the Series B Preferred Stock, an
amount per share equal to the sum of (A) $6.675 for each outstanding share of
Series B Preferred Stock (the "Original Series B Issue Price") and (B) an amount
equal to the sum of (I) five percent (5%) return on the Original Series B Issue
Price, compounded annually from the Series B Purchase Date (as defined herein)
through the date of liquidation, dissolution or winding up of this corporation
and (II) declared but unpaid dividends on each share and (iii) with respect to
the Series C Preferred Stock, an amount per share equal to the sum of (A) $8.00
for each outstanding share of Series C Preferred Stock (the "Original Series C
Issue Price") and (B) an amount equal to the sum of (I) five percent (5%) return
on the Original Series C Issue Price, compounded annually from the Series C
Purchase Date (as defined herein) through the date of liquidation, dissolution
or winding up of this corporation and (II) declared but unpaid dividends on each
share. If upon the occurrence of such event, the assets and funds thus
distributed among the holders of the Series A Preferred Stock, Series B
Preferred Stock and Series C Preferred Stock shall be insufficient to permit the
payment to such holders of the full aforesaid preferential amounts, then,
subject to the rights of series of Preferred Stock that may from time to time
come into existence, the entire assets and funds of the corporation legally
available for distribution shall be distributed ratably among the holders of the
Series A
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Preferred Stock, Series B Preferred Stock and Series C Preferred Stock in
proportion to the amount of such stock owned by each such holder.
(b) After the distributions described in subsection (a) above
have been paid, subject to the rights of series of Preferred Stock which may
from time to time come into existence, the remaining funds and assets of the
corporation available for distribution to shareholders shall be distributed
among the holders of Common Stock pro-rata based on the number of shares of
Common Stock held by each.
(c) (i) For purposes of this Section 2, a liquidation,
dissolution or winding up of this corporation shall be deemed to be occasioned
by, or to include, (A) the acquisition of the corporation by another entity by
means of any transaction or series of related transactions (including, without
limitation, any reorganization, merger or consolidation, but excluding any
merger effected exclusively for the purpose of changing the domicile of the
corporation); or (B) a sale of all or substantially all of the assets of the
corporation; UNLESS the corporation's shareholders of record as constituted
immediately prior to such acquisition or sale will, immediately after such
acquisition or sale (by virtue of securities issued as consideration for the
corporation's acquisition or sale or otherwise) hold at least 50% of the voting
power of the surviving or acquiring entity.
(ii) In any of such events, if the consideration received by
the corporation is other than cash, its value will be deemed its fair market
value. Any securities shall be valued as follows:
(A) Securities not subject to investment letter or
other similar restrictions on free marketability covered by (B) below:
(1) If traded on a securities exchange or
through Nasdaq National Market, the value shall be deemed to be the average of
the closing prices of the securities on such exchange over the thirty-day period
ending three (3) days prior to the closing;
(2) If actively traded over-the-counter, the
value shall be deemed to be the average of the closing bid or sale prices
(whichever is applicable) over the thirty-day period ending three (3) days prior
to the closing; and
(3) If there is no active public market, the
value shall be the fair market value thereof, as mutually determined by the
corporation and the holders of at least a majority of the voting power of all
then outstanding shares of Preferred Stock.
(B) The method of valuation of securities subject
to investment letter or other restrictions on free marketability (other than
restrictions arising solely by virtue of a shareholder's status as an affiliate
or former affiliate) shall be to make an appropriate discount from the market
value determined as above in (A) (1), (2) or (3) to reflect the approximate fair
market value thereof, as mutually determined by the corporation
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and the holders of at least a majority of the voting power of all then
outstanding shares of such Preferred Stock.
(iii) In the event the requirements of this subsection 2(c)
are not complied with, this corporation shall forthwith either:
(A) cause such closing to be postponed until such
time as the requirements of this Section 2 have been complied with; or
(B) cancel such transaction, in which event the
rights, preferences and privileges of the holders of the Preferred Stock shall
revert to and be the same as such rights, preferences and privileges existing
immediately prior to the date of the first notice referred to in subsection
2(c)(iv) hereof.
(iv) The corporation shall give each holder of record of
Preferred Stock written notice of such impending transaction not later than
twenty (20) days prior to the shareholders' meeting called to approve such
transaction, or twenty (20) days prior to the closing of such transaction,
whichever is earlier, and shall also notify such holders in writing of the final
approval of such transaction. The first of such notices shall describe the
material terms and conditions of the impending transaction and the provisions of
this Section 2, and the corporation shall thereafter give such holders prompt
notice of any material changes. The transaction shall in no event take place
sooner than twenty (20) days after the corporation has given the first notice
provided for herein or sooner than ten (10) days after the corporation has given
notice of any material changes provided for herein; provided, however, that such
periods may be shortened upon the written consent of the holders of Preferred
Stock that are entitled to such notice rights or similar notice rights and that
represent at least a majority of the voting power of all then outstanding shares
of such Preferred Stock.
3. CONVERSION. The holders of the 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 this corporation or any transfer agent
for such stock, into such number of fully paid and nonassessable shares of
Common Stock as is determined, (i) with respect to the Series A Preferred Stock,
by dividing the Original Series A Issue Price by the Conversion Price applicable
to such share, determined as hereafter provided, in effect on the date the
certificate is surrendered for conversion, (ii) with respect to the Series B
Preferred Stock, by dividing the Original Series B Issue Price by the Conversion
Price applicable to such share, determined as hereafter provided, in effect on
the date the certificate is surrendered for conversion and (iii) with respect to
the Series C Preferred Stock, by dividing the Original Series C Issue Price by
the Conversion Price applicable to such share, determined as hereafter provided,
in effect on the date the certificate is surrendered for conversion. The initial
Conversion Price per share for shares of Series A Preferred Stock shall be the
Original Series A Issue Price; provided, however, that the Conversion Price for
the Series A Preferred Stock shall be subject to adjustment as set forth in
subsection 3(d). The initial Conversion
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<PAGE>
Price per share for shares of Series B Preferred Stock shall be the Original
Series B Issue Price; provided, however, that the Conversion Price for the
Series B Preferred Stock shall be subject to further adjustment as set forth in
subsequent subsections of subsection 3(d). The initial Conversion Price per
share for shares of Series C Preferred Stock shall be the Original Series C
Issue Price; provided, however, that the Conversion Price for the Series C
Preferred Stock shall be subject to adjustment as set forth in subsection 3(d).
(b) AUTOMATIC CONVERSION. Each share of Preferred Stock shall
automatically be converted into shares of Common Stock at the Conversion Price
at the time in effect for such series of Preferred Stock immediately upon the
earlier of (i) except as provided below in subsection 3(c), the corporation's
sale of its Common Stock in a firm commitment underwritten public offering
pursuant to a registration statement under the Securities Act of 1933, as
amended, the aggregate net proceeds to the corporation of which were not less
than $10,000,000 (provided the corporation has a fully-diluted valuation prior
to such offering of at least $25,000,000) or (ii) the date specified by written
consent or agreement of the holders of at least a majority of the
then-outstanding shares of Preferred Stock, voting as a single class.
(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 this corporation or of any transfer agent for the Preferred Stock, and
shall give written notice to this corporation at its principal corporate office,
of the election to convert the same and shall state therein the name or names in
which the certificate or certificates for shares of Common Stock are to be
issued. This corporation shall, as soon as practicable thereafter, issue and
deliver at such office to such holder of Preferred Stock, or to the nominee or
nominees of such holder, a certificate or certificates for the number of shares
of Common Stock to which such holder 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 as of such date. If the
conversion is in connection with an underwritten offering of securities
registered pursuant to the Securities Act of 1933, as amended, the conversion
may, at the option of any holder tendering Preferred Stock for conversion, be
conditioned upon the closing with the underwriters of the sale of securities
pursuant to such offering, in which event the person(s) entitled to receive the
Common Stock upon conversion of the Preferred Stock shall not be deemed to have
converted such Preferred Stock until immediately prior to the closing of such
sale of securities.
(d) CONVERSION PRICE ADJUSTMENTS OF PREFERRED STOCK FOR
CERTAIN DILUTIVE ISSUANCES, SPLITS AND COMBINATIONS. The Conversion Price of the
Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock
shall be subject to adjustment from time to time as follows:
(A) If the corporation shall issue, after the
date upon which any shares of Series A Preferred Stock were first issued (the
"Series A Purchase Date")
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<PAGE>
(with respect to the Series A Preferred Stock), after the date upon which any
shares of Series B Preferred Stock were first issued (the "Series B Purchase
Date") (with respect to the Series B Preferred Stock) or after the date upon
which any shares of Series C Preferred Stock were first issued (the "Series C
Purchase Date") (with respect to the Series C Preferred Stock), any Additional
Stock (as defined below) without consideration or for a consideration per share
less than the Conversion Price for such series in effect immediately prior to
the issuance of such Additional Stock, the Conversion Price for such series in
effect immediately prior to each such issuance shall forthwith (except as
otherwise provided in this subsection 3(d)) be adjusted to a price determined by
multiplying such Conversion Price by a fraction, the numerator of which shall be
the number of shares of Common Stock outstanding immediately prior to such
issuance plus the number of shares of Common Stock that the aggregate
consideration received by the corporation for such issuance would purchase at
such Conversion Price; and the denominator of which shall be the number of
shares of Common Stock outstanding immediately prior to such issuance plus the
number of shares of such Additional Stock.
(B) No adjustment of the Conversion Price for
the Preferred Stock shall be made in an amount less than one cent per share,
provided that any adjustments which are not required to be made by reason of
this sentence shall be carried forward and shall be either taken into account in
any subsequent adjustment made prior to three (3) years from the date of the
event giving rise to the adjustment being carried forward, or shall be made at
the end of three (3) years from the date of the event giving rise to the
adjustment being carried forward. Except to the limited extent provided for in
subsections 3(d)(E)(3) and (E)(4), no adjustment of such Conversion Price
pursuant to this subsection 3(d) shall have the effect of increasing the
Conversion Price above the Conversion Price in effect immediately prior to such
adjustment.
(C) In the case of the issuance of Common
Stock for cash, the consideration shall be deemed to be the amount of cash paid
therefor before deducting any reasonable discounts, commissions or other
expenses allowed, paid or incurred by this corporation for any underwriting or
otherwise in connection with the issuance and sale thereof.
(D) In the case of the issuance of the Common
Stock for a consideration in whole or in part other than cash, the consideration
other than cash shall be deemed to be the fair value thereof as determined by
the Board of Directors irrespective of any accounting treatment.
(E) In the case of the issuance (whether
before, on or after the applicable Purchase Date) of options to purchase or
rights to subscribe for Common Stock, securities by their terms convertible into
or exchangeable for Common Stock or options to purchase or rights to subscribe
for such convertible or exchangeable securities, the following provisions shall
apply for all purposes of this subsection 3(d):
(1) The aggregate maximum number of
shares of Common Stock deliverable upon exercise of such options to
purchase or
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<PAGE>
rights to subscribe for Common Stock shall be deemed to have been
issued at the time such options or rights were issued and for a
consideration equal to the consideration (determined in the manner
provided in subsections 3(d)(D) and (d)(E)), if any, received by the
corporation upon the issuance of such options or rights plus the
minimum exercise price provided in such options or rights (without
taking into account potential antidilution adjustments) for the
Common Stock covered thereby.
(2) The aggregate maximum number of
shares of Common Stock deliverable upon conversion of or in exchange
for any such convertible or exchangeable securities or upon the
exercise of options to purchase or rights to subscribe for such
convertible or exchangeable securities and subsequent conversion or
exchange thereof shall be deemed to have been issued at the time
such securities were issued or such options or rights were issued
and for a consideration equal to the consideration, if any, received
by the corporation for any such securities and related options or
rights (excluding any cash received on account of accrued interest
or accrued dividends), plus the minimum additional consideration, if
any, to be received by the corporation upon the conversion or
exchange of such securities or the exercise of any related options
or rights (the consideration in each case to be determined in the
manner provided in subsections 3(d)(D) and (d)(E)).
(3) In the event of any change in the
number of shares of Common Stock deliverable or in the consideration
payable to this corporation upon exercise of such options or rights
or upon conversion of or in exchange for such convertible or
exchangeable securities, including, but not limited to, a change
resulting from the antidilution provisions thereof, the Conversion
Price of the Series A Preferred Stock, Series B Preferred Stock or
Series C Preferred Stock, to the extent in any way affected by or
computed using such options, rights or securities, shall be
recomputed to reflect such change, but no further adjustment shall
be made for the actual issuance of Common Stock or any payment of
such consideration upon the exercise of any such options or rights
or the conversion or exchange of such securities.
(4) Upon the expiration of any such
options or rights, the termination of any such rights to convert or
exchange or the expiration of any options or rights related to such
convertible or exchangeable securities, the Conversion Price of the
Series A Preferred Stock, Series B Preferred Stock or Series C
Preferred Stock, to the extent in any way affected by or computed
using such options, rights or securities or options or rights
related to such securities, shall be recomputed to reflect the
issuance of only the number of shares of Common Stock (and
convertible or exchangeable securities which remain in effect)
actually issued upon the exercise of such options or rights, upon
the conversion or exchange of such securities or upon the exercise
of the options or rights related to such securities.
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<PAGE>
(5) The number of shares of Common
Stock deemed issued and the consideration deemed paid therefor
pursuant to subsections 3(d)(E)(1) and (2) shall be appropriately
adjusted to reflect any change, termination or expiration of the
type described in either subsection 3(d)(E)(3) or (4).
(F) "Additional Stock" shall mean any shares
of Common Stock issued (or deemed to have been issued pursuant to subsection
3(d)(E)) by this corporation after the Series C Purchase Date other than:
(1) Common Stock issued pursuant to a
transaction described in subsection 3(d)(G) hereof: or
(2) shares of Common Stock issuable or
issued to employees, consultants, directors or vendors (if in
transactions with primarily non-financing purposes) of this
corporation directly or pursuant to a stock option plan or
restricted stock plan approved by the Board of Directors of this
corporation at any time when the total number of shares of Common
Stock so issuable or issued (and not repurchased at cost by the
corporation in connection with the termination of employment) does
not exceed 708,859 or
(3) shares of Common Stock issued or
issuable (I) in a public offering before or in connection with which
all outstanding shares of Preferred Stock will be converted to
Common Stock or (II) upon exercise of warrants or rights granted to
underwriters in connection with such a public offering; or
(4) securities issued pursuant to the
acquisition of another business entity or business segment of any
such entity by this corporation by merger, purchase of substantially
all the assets or organization whereby the corporation will own not
less than fifty-one (51%) percent of the voting power of such a
business entity or business segment of any such entity; or
(5) securities issued (I) to vendors or
customers or to other persons in similar commercial situations with
the corporation or (II) in connection with obtaining lease
financing, whether issued to a lessor, guarantor or other person.
(G) In the event the corporation should at
any time or from time to time after the Series C Purchase Date fix a record date
for the effectuation of a split or subdivision of the outstanding shares of
Common Stock or the determination of holders of Common Stock entitled to receive
a dividend or other distribution payable in additional shares of Common Stock or
other securities or rights convertible into, or entitling the holder thereof to
receive directly or indirectly, additional shares of Common Stock (hereinafter
referred to as "Common Stock Equivalents") without payment of any
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<PAGE>
consideration by such holder for the additional shares of Common Stock or the
Common Stock Equivalents (including the additional shares of Common Stock
issuable upon conversion or exercise thereof), then, as of such record date (or
the date of such dividend distribution, split or subdivision if no record date
is fixed), the Conversion Price of the Series A Preferred Stock, Series B
Preferred Stock or Series C Preferred Stock shall be appropriately decreased so
that the number of shares of Common Stock issuable on conversion of each share
of such series shall be increased in proportion to such increase of the
aggregate number of shares of Common Stock outstanding and those issuable with
respect to such Common Stock Equivalents with the number of shares issuable with
respect to Common Stock Equivalents determined from time to time in the manner
provided for deemed issuances in subsection 3(d)(E).
(H) If the number of shares of Common Stock
outstanding at any time after the Series C Purchase Date is decreased by a
combination of the outstanding shares of Common Stock, then, following the
record date of such combination, the Conversion Price for the Series A Preferred
Stock, Series B Preferred Stock or Series C Preferred Stock shall be
appropriately increased so that the number of shares of Common Stock issuable on
conversion of each share of such series shall be decreased in proportion to such
decrease in outstanding shares.
(e) OTHER DISTRIBUTIONS. In the event this corporation shall
declare a distribution payable in securities of other persons, evidences of
indebtedness issued by this corporation or other persons, assets (excluding cash
dividends) or options or rights not referred to in subsection 3(d)(G), then, in
each such case for the purpose of this subsection 3(e), the holders of the
Preferred Stock shall be entitled to a proportionate share of any such
distribution as though they were the holders of the number of shares of Common
Stock of the corporation into which their shares of Preferred Stock are
convertible as of the record date fixed for the determination of the holders of
Common Stock of the corporation entitled to receive such distribution.
(f) RECAPITALIZATIONS. If at any time or from time to time
there shall be a recapitalization of the Common Stock (other than a subdivision,
combination or merger or sale of assets transaction provided for elsewhere in
this Section 3 or Section 2) provision shall be made so that the holders of the
Preferred Stock shall thereafter be entitled to receive upon conversion of the
Preferred Stock the number of shares of stock or other securities or property of
the Company or otherwise, to which a holder of Common Stock deliverable upon
conversion would have been entitled on such recapitalization. In any such case,
appropriate adjustment shall be made in the application of the provisions of
this Section 3 with respect to the rights of the holders of the Preferred Stock
after the recapitalization to the end that the provisions of this Section 3
(including adjustment of the Conversion Price then in effect and the number of
shares purchasable upon conversion of the Preferred Stock) shall be applicable
after that event as nearly equivalent as may be practicable.
(g) NO IMPAIRMENT. This corporation will not, by amendment of
its Articles of Incorporation or through any reorganization, recapitalization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action,
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avoid or seek to avoid the observance or performance of any of the terms to be
observed or performed hereunder by this corporation, but will at all times in
good faith assist in the carrying out of all the provisions of this Section 3
and in the taking of all such action as may be necessary or appropriate in order
to protect the Conversion Rights of the holders of the Preferred Stock against
impairment.
(h) NO FRACTIONAL SHARES AND CERTIFICATE AS TO
ADJUSTMENTS.
(i) No fractional shares shall be issued upon
the conversion of any share or shares of the Preferred Stock, and the number of
shares of Common Stock to be issued shall be rounded to the nearest whole share.
Whether or not fractional shares are issuable upon such conversion shall be
determined on the basis of the total number of shares of Preferred Stock the
holder is at the time converting into Common Stock and the number of shares of
Common Stock issuable upon such aggregate conversion.
(ii) Upon the occurrence of each adjustment or
readjustment of the Conversion Price of Series A Preferred Stock, Series B
Preferred Stock or Series C Preferred Stock pursuant to this Section 3, this
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 such series 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. This corporation shall, upon the written
request at any time of any holder of such series of Preferred Stock, furnish or
cause to be furnished to such holder a like certificate setting forth (A) such
adjustment and readjustment, (B) the Conversion Price for such series of
Preferred Stock at the time in effect and (C) the number of shares of Common
Stock and the amount, if any, of other property which at the time would be
received upon the conversion of a share of such series of Preferred Stock.
(i) NOTICES OF RECORD DATE. In the event of any taking by this
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, any right to
subscribe for, purchase or otherwise acquire any shares of stock of any class or
any other securities or property, or to receive any other right, this
corporation shall mail to each holder of Preferred Stock, at least 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, distribution or right,
and the amount and character of such dividend, distribution or right.
(j) RESERVATION OF STOCK ISSUABLE UPON CONVERSION. This
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 the 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 the 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 the Preferred Stock, in
addition to such other remedies as shall be available to the holder of such
Preferred Stock,
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this 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 purposes,
including, without limitation, engaging in best efforts to obtain the requisite
shareholder approval of any necessary amendment to these articles.
(k) NOTICES. Any notice required by the provisions of this
Section 3 to be given to the holders 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 this
corporation.
4. VOTING RIGHTS.
(a) GENERAL VOTING RIGHTS. In addition to the voting rights
described in Section 5 of this Article III, the holder of each share of
Preferred Stock shall have the right to one vote for each share of Common Stock
into which such Preferred Stock could then be converted, and with respect to
such vote, such holder shall have full voting rights and powers equal to the
voting rights and powers of the holders of Common Stock, and shall be entitled,
notwithstanding any provision hereof, to notice of any shareholders' meeting in
accordance with the bylaws of this corporation, and shall be entitled to vote,
together with holders of Common Stock, with respect to any question upon which
holders of Common Stock have the right to vote. Fractional votes shall not,
however, be permitted and any fractional voting rights available on an
as-converted basis (after aggregating all shares into which shares of Preferred
Stock held by each holder could be converted) shall be rounded to the nearest
whole number (with one-half being rounded upward).
(b) ELECTION OF DIRECTORS. With respect to the election of
directors, the holders of Series A Preferred Stock and Series B Preferred Stock,
voting separately as a class, shall have the right to elect one (1) director,
and the holders of Common Stock shall have the right to elect all other
directors.
5. PROTECTIVE PROVISIONS. Subject to the rights of series of
Preferred Stock which may from time to time come into existence, this
corporation shall not:
(a) sell, convey or otherwise dispose of or encumber all or
substantially all of its property or business or merge into or consolidate with
any other corporation (other than a wholly-owned subsidiary corporation) or
effect any transaction or series of related transactions in which more than
fifty percent (50%) of the voting power of the corporation is disposed of
without first obtaining the approval (by vote or written consent, as provided by
law) (i) for a period of two years following May 7, 1996 (the "Protective
Period"), by (A) the holders of at least a majority of the then outstanding
shares of Series A Preferred Stock and Series B Preferred Stock and (B) if the
effective price per share to be received by a shareholder (whether or not
payable in installments) is less than $8.00 per share, by the holders of at
least a majority of the then outstanding shares of Series C Preferred Stock, and
(ii) following the Protective Period, by the holders of at least a majority of
the then outstanding shares of Preferred Stock, voting together as a single
class;
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(b) authorize, create or issue, or obligate itself to issue
(including by reclassification of any outstanding shares), any other equity
security, including any other security convertible into or exercisable for any
equity security having a preference on parity with or superior to any series of
currently-outstanding Preferred Stock with respect to dividends or upon
liquidation without first obtaining the approval (by vote or written consent, as
provided by law) of the holders of at least a majority of the then outstanding
shares of Preferred Stock, voting together as a single class; or
(c) alter or change the rights, preferences, privileges or
powers of, or the restrictions provided for the benefit of, the shares of Series
A Preferred Stock, Series B Preferred Stock or Series C Preferred Stock so as to
affect adversely such shares without first obtaining the approval (by vote or
written consent, as provided by law) of the holders of at least a majority of
the then outstanding shares of the Series of Preferred Stock so adversely
affected.
6. STATUS OF CONVERTED STOCK. In the event any shares of Preferred
Stock shall be converted pursuant to Section 3 hereof, the shares so converted
shall be cancelled and shall not be issuable by the corporation. The Articles of
Incorporation of this corporation shall be appropriately amended to effect the
corresponding reduction in the corporation's authorized capital stock.
7. REPURCHASE OF SHARES. In connection with repurchases by this
Corporation of its Common Stock pursuant to its agreements with certain of the
holders thereof, Sections 502 and 503 of the California General Corporation Law
shall not apply in whole or in part with respect to such repurchases.
C. COMMON STOCK.
1. DIVIDEND RIGHTS. Subject to the prior rights of holders of all
classes of stock at the time outstanding having prior rights as to dividends,
the holders of the Common Stock shall be entitled to receive, when and as
declared by the Board of Directors, out of any assets of the corporation legally
available therefor, such dividends as may be declared from time to time by the
Board of Directors.
2. LIQUIDATION RIGHTS. Upon the liquidation, dissolution or
winding up of the corporation, the assets of the corporation shall be
distributed as provided in Section 2 of Division (B) of this Article III
hereof.
3. REDEMPTION. The Common Stock is not redeemable.
4. VOTING RIGHTS. The holder of each share of Common Stock shall
have the right to one vote, and shall be entitled to notice of any shareholders'
meeting in accordance with the bylaws of this corporation, and shall be entitled
to vote upon such matters and in such manner as may be provided by law.
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ARTICLE IV
A. The liability of the directors of this corporation for monetary
damages shall be eliminated to the fullest extent permissible under
California law.
B. This corporation is authorized to provide indemnification of agents (as
defined in Section 317 of the California Corporations Code) through bylaw
provisions, agreements with the agents, vote of shareholders or disinterested
directors, or otherwise in excess of the indemnification otherwise permitted by
Section 317 of the California Corporations Code, subject only to applicable
limits set forth in Section 204 of the California Corporations Code with respect
to actions for breach of duty to the corporation and its shareholders.
* * *
THREE: The foregoing amendment has been approved by the Board of
Directors of said corporation.
FOUR: The foregoing amendment was approved by the holders of the requisite
number of shares of said corporation in accordance with Sections 902 and 903 of
the California General Corporation Law; the total number of outstanding shares
of each class entitled to vote with respect to the foregoing amendment was
3,103,500 shares of Common Stock, 374,532 shares of Series A Preferred Stock and
374,532 shares of Series B Preferred Stock. The number of shares voting in favor
of the foregoing amendment equaled or exceeded the vote required. The percentage
vote required was (i) more than 50% of the Common Stock, Series A Preferred
Stock and Series B Preferred Stock voting together as a single class, (ii) more
than 50% of the Common Stock voting as a separate class, (iii) more than 50% of
the Series A Preferred Stock voting as a separate class and (iv) more than 50%
of the Series B Preferred Stock voting as a separate class.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the undersigned have executed this certificate on June
23, 1997.
/s/ Jack Reich, Ph.D.
-----------------------------------------
Jack Reich, President
/s/ Christopher J. Reinhard
-----------------------------------------
Christopher J. Reinhard, Secretary
The undersigned certify under penalty of perjury that they have read
the foregoing Amended and Restated Articles of Incorporation and know the
contents thereof, and that the statements therein are true.
Executed at San Diego, California, on June 23, 1997.
/s/ Jack Reich
-----------------------------------------
Jack Reich, President
/s/ Christopher J. Reinhard
-----------------------------------------
Christopher J. Reinhard, Secretary
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SCHEDULE A
SCHEDULE OF INVESTORS
<TABLE>
<CAPTION>
NUMBER OF SHARES OF AGGREGATE
PURCHASER SERIES C PREFERRED STOCK PURCHASE PRICE
--------- ------------------------ --------------
<S> <C> <C>
The Wellcome Trust 375,000 $3,000,000
Jerry C. Benjamin 12,500 $100,000
Schering Berlin Venture Corp. 84,976 $679,808
-------- -----------
Total 472,476 $3,779,808
</TABLE>
Schedule A-1
<PAGE>
The Wellcome Trust Limited
as trustee of
the Wellcome Trust
ATTACHMENT A
TO
COLLATERAL THERAPEUTICS, INC.
SERIES C PREFERRED STOCK PURCHASE AGREEMENT
With respect to its signatory capacity and liability, as trustee of the Trust,
the Trustee enters into and delivers this Series C Preferred Stock Purchase
Agreement (the "Agreement") in its capacity as the trustee for the time being of
The Wellcome Trust but not otherwise and it is hereby agreed and declared that
notwithstanding anything to the contrary contained or implied in this Agreement
or any related agreement:
(a) the obligations incurred by the Trustee under or in consequence of this
Agreement or any related agreement shall be enforceable against it or the
other trustees of The Wellcome Trust from time to time; and
(b) the liabilities of the Trustee (or such other trustees as are referred to
in paragraph (a) above) in respect of such obligations shall be limited to
such liabilities as can, and may lawfully and properly, be met out of the
assets of The Wellcome Trust for the time being in the hands or under the
control of the Trustee or such other trustees.
Attachment A
<PAGE>
COLLATERAL THERAPEUTICS, INC.
SCHEDULE OF EXCEPTIONS, DATED JUNE 30, 1997
SERIES C PREFERRED STOCK PURCHASE AGREEMENT
THE FOLLOWING MATTERS ARE EXCEPTIONS TO THE REPRESENTATIONS AND WARRANTIES
OF COLLATERAL THERAPEUTICS, INC., A CALIFORNIA CORPORATION (THE "COMPANY"), AS
SET FORTH IN THE SERIES C PREFERRED STOCK PURCHASE AGREEMENT, DATED AS OF JUNE
30, 1997 (THE "AGREEMENT"). THE SECTION NUMBERS IN THIS SCHEDULE OF EXCEPTIONS
CORRESPOND TO THE SECTION NUMBERS IN THE AGREEMENT; HOWEVER, ANY INFORMATION
DISCLOSED HEREIN UNDER ANY SECTION NUMBER SHALL BE DEEMED TO BE DISCLOSED AND
INCORPORATED INTO ANY OTHER SECTION NUMBER UNDER THE AGREEMENT WHERE SUCH
DISCLOSURE WOULD OTHERWISE BE APPROPRIATE. WHERE THE TERMS OF A CONTRACT OR
OTHER DISCLOSURE ITEM HAVE BEEN SUMMARIZED OR DESCRIBED IN THIS SCHEDULE OF
EXCEPTIONS, SUCH SUMMARY OR DESCRIPTION DOES NOT PURPORT TO BE A COMPLETE
STATEMENT OF THE MATERIAL TERMS OF SUCH CONTRACT OR OTHER ITEM. ANY TERMS
DEFINED IN THE AGREEMENT SHALL HAVE THE SAME MEANING WHEN USED IN THIS SCHEDULE
OF EXCEPTIONS AS WHEN USED IN THE AGREEMENT UNLESS THE CONTEXT OTHERWISE
REQUIRES.
NOTHING HEREIN CONSTITUTES AN ADMISSION OF ANY LIABILITY OR OBLIGATION ON
THE PART OF THE COMPANY NOR AN ADMISSION AGAINST THE COMPANY'S INTEREST. THE
INCLUSION OF ANY SCHEDULE HEREIN OR ANY EXHIBIT HERETO SHOULD NOT BE INTERPRETED
AS INDICATING THAT THE COMPANY HAS DETERMINED THAT SUCH AN AGREEMENT OR OTHER
MATTER IS NECESSARILY MATERIAL TO THE COMPANY. THE INVESTORS ACKNOWLEDGE THAT
CERTAIN INFORMATION CONTAINED IN THESE SCHEDULES MAY CONSTITUTE MATERIAL
CONFIDENTIAL INFORMATION RELATING TO THE COMPANY WHICH MAY NOT BE USED FOR ANY
PURPOSE OTHER THAN THAT CONTEMPLATED IN THE AGREEMENT.
SECTION 2.5. CAPITALIZATION AND VOTING RIGHTS. As of June 30, 1997 there were
3,103,500 shares of Common Stock issued and outstanding and 374,532 shares of
Series A Preferred Stock issued and outstanding. In addition, as of June 30,
1997 stock options to purchase up to 312,500 shares of Common Stock were
outstanding, and the weighted average purchase price of such stock options was
$0.3407 per share. Since the inception of the Company, stock options covering
the purchase of up to 562,500 shares of Common Stock have been issued, of which
stock options to purchase up to 497,500 shares of Common Stock have been issued
pursuant to the Company's 1995 Stock Option/Stock Issuance Plan (hereafter the
"Stock Plan"). As of June 30, 1997, the Company's Board of Directors has
authorized the issuance of up to 708,859 shares of Common Stock pursuant to the
Stock Plan. As of June 30, 1997, 211,359 shares of Common Stock were available
for future award under the Stock Plan. A list of shareholders of the Company's
Common Stock is included herein as "Exhibit 2.5A."
<PAGE>
COLLATERAL THERAPEUTICS, INC.
SCHEDULE OF EXCEPTIONS
PAGE 2 OF 9
SECTION 2.7. CONTRACTS AND OTHER COMMITMENTS. Set forth below is a summary
of all contracts and commitments of the Company, which as of the date hereof,
in aggregate are greater than $50,000:
COLLABORATION, LICENSE AND ROYALTY AGREEMENT WITH SCHERING AG - GENE
THERAPY TO PROMOTE ANGIOGENESIS. On May 6, 1996, the Company entered into
a strategic alliance with Schering AG pursuant to the Collaboration,
License and Royalty Agreement covering the development and
commercialization of gene therapy products to promote angiogenesis.
UNIVERSITY OF CALIFORNIA LICENSE AGREEMENT - ANGIOGENESIS GENE Therapy. On
September 27, 1995, the Company entered into a worldwide exclusive license
agreement with the Regents of the University of California for certain
technology relating to a patent application filed by the University of
California relating to angiogenesis gene therapy, based on scientific
discovery research conducted at the laboratory of *** at the *** and the
Department of Medicine of the University of California, San Diego. This
agreement provides the Company with exclusive rights to develop and
commercialize technology covered by patent applications that have been
filed in the United States and in foreign countries. Pursuant to such
agreement, the Company has agreed to pay the University of California a
license fee totalling *** payable In *** installments over a *** and to
pay the University of California an annual royalty fee of *** based on
net sales of products covered by such patents. Under the terms of this
agreement, the Company is required to satisfy certain due diligence
provisions with respect to the timely development and commercialization
of products covered by the patent application thereunder, and pay certain
minimum annual royalty payments following successful commercial
development of a product. As of June 30, 1997, the Company has paid a
total of $150,000 pursuant to the terms of this agreement.
UNIVERSITY OF CALIFORNIA LICENSE AGREEMENT - GENE THERAPY FOR CONGESTIVE
HEART FAILURE. On January 22, 1997, the Company entered into an exclusive
worldwide license agreement with the Regents of the University of
California for certain technology relating to a patent application filed
by the University of California relating to a gene therapy approach for
congestive heart failure based on myocardial adrenergic responsiveness,
which resulted from scientific discovery research conducted at the
laboratory of *** *** at the *** and the Department of Medicine of the
University of California, San Diego. This agreement provides the Company
with
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
<PAGE>
COLLATERAL THERAPEUTICS, INC.
SCHEDULE OF EXCEPTIONS
PAGE 3 OF 9
exclusive rights to develop and commercialize technology covered by patent
applications that have been filed in the United States and in foreign
countries. Pursuant to such agreement, the Company has agreed to pay the
University of California a license fee totalling *** payable in ***
installments over a *** and to pay the University of California an annual
royalty fee of *** based on net sales of products covered by such
patents. Under the terms of this agreement, the Company is required to
satisfy certain due diligence provisions with respect to the timely
development and commercialization of products covered by patent
applications thereunder, and pay certain minimum annual royalty payments
following successful commercial development of a product.
As of June 30, 1997, the Company has paid a total of $100,000 pursuant to
the terms of this agreement.
UNIVERSITY OF CALIFORNIA LICENSE AGREEMENT - ANGIOGENIC GENE THERAPY FOR
CONGESTIVE HEART FAILURE. The Company entered into a letter agreement with
The Regents of the University of California to exclusively negotiate an
exclusive worldwide license to develop and commercialize certain technology
relating to gene angiogenic gene therapy for heart failure, based on
scientific discovery research conducted at the laboratory of *** at the ***
*** and the Department of Medicine of the University of California, San
Diego. Based on the terms and conditions of the proposed agreement, the
Company will have exclusive rights to develop and commercialize technology
covered by patent applications that have been filed in the United States and
in foreign countries. Pursuant to such proposed agreement, the Company has
agreed to pay the University of California a license fee totalling ***
payable in *** installments over a *** and to pay the University of
California an annual royalty fee of *** based on net sales of products
covered by such patents. Under the terms of this agreement, the Company is
required to satisfy certain due diligence provisions with respect to the
timely development and commercialization of products covered by patent
applications thereunder, and pay certain minimum annual royalty payments
following successful commercial development of a product. Final draft
agreements have been circulated between the parties and the Company believes
that this agreement will be finalized within the next sixty (60) days.
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
<PAGE>
COLLATERAL THERAPEUTICS, INC.
SCHEDULE OF EXCEPTIONS
PAGE 4 OF 9
NEW YORK UNIVERSITY LICENSE AGREEMENT - USE OF FIBROBLAST GROWTH FACTOR 4 FOR
GENE THERAPY FOR CORONARY ARTERY DISEASE, CONGESTIVE HEART FAILURE AND
PERIPHERAL VASCULAR DISEASE. On March 24, 1997, the Company has entered into an
exclusive worldwide license agreement with New York University for the use of
certain technology relating to issued patents and patent applications owned by
New York University covering the Company's use of Fibroblast Growth Factor 4
(hereafter "FGF-4") for gene therapy products developed and commercialized by
the Company, or its licensees, for the treatment of coronary artery disease,
congestive heart failure and peripheral vascular disease. This agreement
provides the Company with exclusive rights to develop and commercialize
technology covered by patents that have been filed in the United States and in
foreign countries. Pursuant to such agreement, the Company has agreed to pay New
York University (i) an initial license fee of *** ; (ii) an annual license fee
of *** until first commercial sale of a product pursuant to the Agreement; (iii)
milestone payments of *** payable in *** installments based on the Company's
successful achievement of certain *** benchmarks, for each product developed
thereunder; (iv) *** research funding totalling *** payable in *** installments
to support Company directed research activities focused on the development of
the Company's core technology; and (v) an annual royalty fee of *** based on ***
*** . Under the terms of this agreement, the Company is required to satisfy
certain due diligence provisions with respect to the timely development and
commercialization of products covered by patents thereunder, and pay certain
minimum annual royalty payments following successful commercial development of a
product. As of June 30, 1997, the Company has paid license fees totaling
$100,000 and research funding totalling $100,000 pursuant to the terms of this
agreement.
AMRAD OPERATIONS PTY LTD. AND LUDWIG INSTITUTE FOR CANCER RESEARCH LICENSE
AGREEMENT - USE OF VASCULAR ENDOTHELIAL GROWTH FACTOR B GENES FOR GENE
THERAPY FOR CORONARY ARTERY DISEASE, CONGESTIVE HEART FAILURE AND PERIPHERAL
VASCULAR DISEASE. On March 25, 1997, the Company has entered into an
exclusive worldwide license agreement with AMRAD Operations Pty Ltd and the
Ludwig Institute for Cancer Research (hereafter "AMRAD/Ludwig") covering the
use of certain technology relating to patent applications filed by
AMRAD/Ludwig covering the Company's use of Vascular Endothelial Growth Factor
B (hereafter "VEGF-B") for gene therapy products developed and commercialized
by the Company, or its licensees, for the treatment of coronary artery
disease, congestive heart failure and peripheral vascular disease. This
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
<PAGE>
COLLATERAL THERAPEUTICS, INC.
SCHEDULE OF EXCEPTIONS
PAGE 5 OF 9
agreement provides the Company with exclusive rights to develop and
commercialize technology covered by patents that have been filed in the United
States and in foreign countries. Pursuant to such agreement, the Company has
agreed to pay AMRAD/Ludwig (i) license fees totalling *** payable in ***
installments during the period from *** ; (ii) a *** license fee upon the
*** *** *** ; (iii) milestone
payments totalling up to *** based on the Company's successful achievement of
certain product development benchmarks; (iv) an additional *** payment for
each product developed beyond the initial product for a medical indication;
and (v) an annual royalty fee *** on net sales of products covered by such
patents issued thereunder. Pursuant to the terms of this agreement, the
Company is required to satisfy certain due diligence provisions with respect
to the timely development and commercialization of products covered by
patents thereunder, and pay certain minimum annual royalty payments following
successful commercial development of a product. As of June 30, 1997, the
Company has paid a total of $1,000,000 pursuant to the terms of this
agreement.
DIMOTECH LTD. AND TECHNION RESEARCH & DEVELOPMENT FOUNDATION LICENSE
AGREEMENT -USE OF VASCULAR ENDOTHELIAL GROWTH FACTOR GENE FOR GENE THERAPY
CARDIOVASCULAR DISEASE. On October 17, 1996, the Company entered into an
exclusive worldwide license agreement with Dimotech Ltd. and the Technion
Research and Development Foundation located at the Gurtwith Science Based
Industrial Center in Haifa, Israel (hereafter "Technion") relating to a
patent application filed by Technion covering the Company's use of a novel
vascular endothelial growth factor (hereafter "VEGF/CTI01") for gene therapy
products developed and commercialized by the Company, or its licensees, for
the treatment of cardiovascular disease. This agreement provides the Company
with exclusive rights to develop and commercialize technology covered by
patents that have been filed in the United States and in foreign countries.
Pursuant to such agreement, the Company has agreed to pay Technion (i)
license fees totalling *** payable in *** installments based an the Company's
successful achievement of certain *** benchmarks; and (ii) an annual royalty
fee of *** based on net sales of products covered by patents. Under the terms
of this agreement, the Company is required to satisfy certain due diligence
provisions with respect to
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
<PAGE>
COLLATERAL THERAPEUTICS, INC.
SCHEDULE OF EXCEPTIONS
PAGE 6 OF 9
the timely development and commercialization of products covered by patents
thereunder, and pay certain minimum annual royalty payments following successful
commercial development of a product. As of June 10, 1997, the Company has paid a
total of $16,000 pursuant to the terms of this agreement.
VETERANS' MEDICAL RESEARCH FOUNDATION. On November 13, 1996, the Company entered
into an agreement with the Veterans' Medical Research Foundation (the "Medical
Research Foundation") which operates at the Veterans' Affairs Medical Center
covering certain research studies directed at the Company's core technology.
Under the terms and conditions of this agreement, Dr. H. Kirk Hammond, a
shareholder and executive officer of the Company, serves as the investigator for
such studies. The agreement covers a one year term; however, this term may be
extended by mutual consent of both parties. In consideration for such services,
the Company has agreed to pay the Medical Research Foundation a primary monthly
fee of $20,000, payable in monthly installments (including certain
administrative overhead charges), plus a supplemental payment, payable monthly,
for additional amounts expanded by the Medical Research Foundation for
Company-directed research activities (including certain administrative overhead
charges).
UNIVERSITY OF WASHINGTON DISCOVERY RESEARCH AGREEMENT - MUSCLE DIFFERENTIATION
DURING REPAIR OF MYOCARDIAL NECROSIS THROUGH GENE THERAPY WITH THE MYOD GENE.
*** the Company has entered Into an agreement with the University of Washington,
Seattle, School of Medicine, Department of Pathology, for the University of
Washington to conduct Company- directed discovery research into the study of
muscle differentiation during repair of myocardial necrosis, resulting from a
myocardial infarction, through gene therapy using the MyoD gene, under the
direction of Dr. Charles Murry, M.D., Ph.D. Pursuant to the terms of this
agreement, the Company has agreed to provide the University of Washington with
research funding totalling up to *** . Under this agreement, the Company has a
right of first negotiation for the Company to enter an agreement with the
University of Washington to exclusively license all technology that may result
from such research. As of June 30, 1997, the Company has paid *** pursuant to
such agreement.
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
<PAGE>
COLLATERAL THERAPEUTICS, INC.
SCHEDULE OF EXCEPTIONS
PAGE 7 OF 9
***
***
***
***
***
***
***
***
CORPORATE OFFICE REAL ESTATE LEASE. On July 17, 1995, the Company entered into a
real estate sublease agreement with Gensia, Inc. covering office space located
at 9360 Towne Centre Drive, San Diego, California, which currently serves as the
Company's corporate office. The sublease covered by this agreement will expire
on December 31, 1997. The Company has an option to extend the term of such
sublease for an additional year to expire as of December 31, 1998. Rent payable
to Gensia, Inc. for the remainder of the lease covering the current lease period
(June 1, 1997 to December 31, 1997) totals $52,836.
RESEARCH LABORATORY REAL ESTATE LEASE. On June 23, 1997, the Company submitted a
term sheet covering a proposal to lease an 11,200 square foot research facility
located at 11045 Roselle Street, San Diego, California. The major terms and
conditions of such lease as proposed by the Company to the landlord are as
follows: (i) annual base rent: $235,200, with an up to 4% annual rent
escalation; (ii) annual operating charges: $30,360; (iii) tenant improvement
allowance: $250,000: (iv) lease term five (5) years. There can be no assurance
that the Company will agree on final terms and enter into a lease agreement
covering such research facility. The Company awaits approval of such proposal or
counter-proposal covering such lease. If this facility is leased, the Company
estimates that it will invest up to $1,500,000 for leasehold improvements,
equipment and other related start-up expenses to develop this lease space as a
fully-operational research facility.
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
<PAGE>
COLLATERAL THERAPEUTICS, INC.
SCHEDULE OF EXCEPTIONS
PAGE 8 OF 9
CONTRACT RESEARCH SERVICES. On March 17, 1997, the Company entered into an
agreement with HTI Bio-Services, Inc. (hereafter "HTI") for HTI to conduct
certain contract research services. For such services the Company agreed
to pay HTI $99,400. As of June 10, 1997, the unpaid balance payable to HTI
by the Company for such services totalled $19,880.
CONSULTING AGREEMENT . The Company has entered into consulting agreements
with five (5) individuals who have been appointed as members of the
Company's Scientific Advisory Board and with twelve (12) other
individuals, as set forth in the schedule attached hereto.
NOTES PAYABLE AND SECURITY AGREEMENT. In 1995, the Company entered Into
two Promissory Notes with Schering Berlin Venture Corporation ('Payor')
totalling $500,000 to fund operations. The Notes were each amended and
restated as of May 16, 1996. Since there has been an Acceptance of a
Qualified Gene, the Notes are due on Payor's demand on or after June 30,
1999 and bear Interest at 1% below the prime rate. These Notes are secured
by all of the assets of the Company pursuant to a Security Agreement dated
August 16, 1995.
SECTION 2.8 RELATED PARTY TRANSACTIONS. Mr. Craig Andrews, a member of Brobeck,
Phleger & Harrison LLP (hereinafter "Brobeck") is a member of the Company's
Board of Directors and a holder of 142,687 shares of Common Stock. During 1996,
the Company paid Brobeck $148,974 and $19,272 for legal services for 1996 and
1997, respectively. In addition, Mr. David Hale, a member of the Company's Board
Directors and a holder of 139,887 shares of Common Stock is Chief Executive
Officer of Gensia, Inc., which is the landlord of the Company's executive
office. During 1996, the Company paid Gensia, Inc. rent of $98,496 and $46,586
for 1996 and 1997, respectively.
On June 10, 1997, pursuant to the terms of the Collaboration, License and
Royalty Agreement between Schering AG and the Company, Schering AG purchased
374,532 shares of Series B Preferred Stock at a purchase price $2,500,000. As of
June 10, 1997, Schering AG owned 374,532 shares of the Company Series A
Preferred Stock and 374,532 shares of the Series B Preferred Stock, representing
100% of each class of Preferred Stock and 17.98% of the Company's capital stock,
on a fully-diluted basis.
<PAGE>
COLLATERAL THERAPEUTICS, INC.
SCHEDULE OF EXCEPTIONS
PAGE 9 OF 9
SECTION 2.16 FINANCIAL STATEMENTS. The Company has delivered to the Investor
audited financial statements (balance sheet, profit and loss statement,
statement of shareholders' equity and statement of changes of financial
position, including notes thereto) at December 31, 1997, as prepared by Ernst &
Young, the Company's independent public accountants. In addition, the Company
has provided the Investor with unaudited financial statements, (balance sheet,
profit and loss statement, statement of shareholders' equity and statement of
changes of financial position) for the period from January 1, 1997 to May 30,
1997. Reference is made to Section 2.7 disclosure under the caption "Notes
Payable and Security" above.
<PAGE>
EXHIBIT 2.5A
COLLATERAL THERAPEUTICS, INC.
COMMON STOCK CAPITALIZATION TABLE
<TABLE>
<CAPTION>
Number
Shareholder of Shares Percent
- -------------------------- --------------- -----------------
<S> <C> <C>
H. Kirk Hammond, M.D. 941,688 30.3%
Jack W. Reich, Ph.D. 706,688 22.8%
Robert L. Engler, M.D. 456,688 14.7%
Mathew Lawrence Engler 25,000 0.8%
Eric Hershel Engler 25,000 0.8%
Christopher J. Reinhard 277,688 8.9%
Craig Andrews 142,687 4.6%
David Hale 139,887 4.5%
Bradford Duft 110,887 3.6%
David Robinson 110,887 3.6%
Ruth Wikberg - Leonardi 60,000 1.9%
Kathy Rooney 50,000 1.6%
Dr. PeiPei Ping 45,000 1.4%
Mathew Spellman 4,000 0.1%
Dan Mokiman 2,000 0.1%
Sara Alaimo 1,400 0.0%
April Estes 1,500 0.0%
Grai Andreason 2,500 0.1%
--------------- -------------
Total Common 3,103,500 100.0%
=============== =============
</TABLE>
***Company Confidential***
<PAGE>
EXHIBIT 10.11
Exclusive License Agreement
between
The Regents of the University of California
and
Collateral Therapeutics
for
Angiogenesis Gene Therapy
***
----------------------
U.C. AGREEMENT
CONTROL NUMBER
***
----------------------
<PAGE>
Table of Contents
Article No. Title Page
Recitals..........................................................1
1 Definitions.......................................................4
2. Grant.............................................................7
3. License Issue Fee.................................................9
4. Royalties.........................................................9
5. Due Diligence....................................................13
6. Progress and Royalty Reports.....................................15
7. Books and Records................................................17
8. Life of the Agreement............................................18
9. Termination by The Regents.......................................19
10. Termination by Licensee..........................................20
11. Disposition of Patent Products on Hand Upon Termination..........20
12. Use of Names and Trademarks......................................21
13. Limited Warranty.................................................22
14. Patent Prosecution and Maintenance...............................23
15. Patent Marking...................................................27
16. Patent Infringement..............................................27
17. Indemnification..................................................29
18. Notices..........................................................31
19. Assignability....................................................32
20. Late Payments....................................................32
21. Waiver...........................................................33
22. Failure to Perform...............................................33
23. Governing Laws...................................................33
24. Government Approval or Registration..............................34
25. Export Control Laws..............................................34
26. Force Majeure....................................................34
27. Confidentiality..................................................35
28. Miscellaneous....................................................37
<PAGE>
***
Revised: 7/13/95 (SH)
Draft date: September 25, 1995
Exclusive License Agreement
for
Angiogenesis Gene Therapy
This license agreement ("Agreement") is effective this 27th day of
September, 1995, by and between The Regents of the University of California
("The Regents"), a California corporation, having its statewide administrative
offices at 300 Lakeside Drive, 22nd Floor, Oakland, California 94612-3550 and
Collateral Therapeutics ("Licensee"), a California corporation, having a
principal place of business at 9360 Towne Centre Drive, San Diego, California
92121.
Recitals
Whereas, certain inventions, relating to "Angiogenesis Gene Therapy"
("Invention"), useful for angiogenesis, were made at the University of
California, San Diego ("UCSD") and are described and claimed in certain patent
applications, naming ***
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
----------------------
U.C. AGREEMENT
CONTROL NUMBER
***
----------------------
<PAGE>
*** as co-inventors, identified in the below defined Patent Rights;
Whereas, Licensee entered into a Letter of Intent ('Letter of
Intent"), having U.C. Agreement Control No. *** effective *** that provided the
Licensee with a time-limited exclusive right to negotiate for a license to the
Patent Rights;
Whereas, under 35 USC 200-212, The Regents may elect to retain title
to any invention (including the Invention) made by it, in whole or in part,
under U.S. Government funding;
Whereas, if The Regents elects to retain title to the Invention,
then the law requires that The Regents grant to the U.S. Government a
nontransferable, paid-up, nonexclusive irrevocable license to use the Invention
by or on behalf of the U.S. Government throughout the world;
Whereas, The Regents elected on September 19, 1995, to retain title
to the Invention and granted the required licenses to the U.S. Government;
Whereas, *** is an employee of the *** *** ;
Whereas, 37 CFR 501.6(a)(2) allows the *** to release the
Invention to *** under certain conditions;
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
- 2 -
<PAGE>
Whereas, *** also an employee of The Regents, is under obligation to
assign to The Regents the rights in the Invention that were released to him by
the ***;
Whereas, Licensee is a "small entity" as defined in 37 CFR Section
1.9 and a "small-business concern" defined at 15 U.S.C. ss. 632;
Whereas, both parties recognize that royalties due under this
Agreement will be paid on issued patents and pending patent applications that
are being prosecuted diligently and in good faith;
Whereas, Licensee requested an exclusive license to the Patent
Rights from The Regents; and
Whereas, The Regents wish to grant an exclusive license to the
Patent Rights to Licensee so that products and other benefits derived from the
Invention can be enjoyed by the general public.
- - oo O oo - -
The parties agree as follows:
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
- 3 -
<PAGE>
1. Definitions
As used in this Agreement, the following terms will have the meaning set
forth below:
1.1 "Patent Rights" means all U.S. patents and patent applications and
foreign patents and patent applications assigned to The Regents, and in the case
of foreign patents and patent applications those requested under Paragraph 14.4
herein, including any reissues, extensions, substitutions, continuations,
divisions, and continuations-in-part applications (only to the extent, however,
that claims in the continuations-in-part applications are entitled to the
priority filing date of the parent patent application) based on and including
the following:
1.1.1 any subject matter claimed in or described according to the
requirements of 35 USC Section 112 in U.S. Patent Application
Serial Number *** entitled *** *** filed *** *** by *** and
assigned to The Regents; and
1.1.2 any subject matter claimed in or described according to the
requirements of 35 USC Section 112 in U.S. Patent Application
Serial Number *** entitled *** *** filed *** *** by *** and
assigned to The Regents.
1.2 "Patent Products" means:
1.2.1 any kit, composition of matter, material, or product;
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
- 4 -
<PAGE>
1.2.2 any kit, composition of matter, material, or product to be
used in a manner requiring the performance of the Patent
Method; or
1.2.3 any kit, composition of matter, material, or product produced
by the Patent Method;
to the extent that the manufacture, use, or sale of such kit, composition of
matter, material, or product, in a particular country, would fall within the
scope of (1) an unexpired claim of a patent under Patent Rights in that country
or (2) a pending claim of a pending patent application that is being prosecuted
diligently and in good faith in that country, were it issued as a claim in a
patent under Patent Rights in that country in which such application is pending.
This definition of Patent Products also includes a service either used by
Licensee or provided by Licensee to its customers when such service requires the
practice of the Patent Method.
1.3 "Patent Method" means any process or method, the use or practice of
which in a country would fall within the scope of (1) an unexpired claim of a
patent under Patent Rights in that country or (2) a pending claim of a pending
application that is being prosecuted diligently and in good faith in that
country, were it issued as a claim in a patent under Patent Rights in that
country in which such application is pending.
1.4 "Net Sales" means the gross invoice prices from the sale of Patent
Products by Licensee, an Affiliate, a Joint Venture, or a sublicensee
- 5 -
<PAGE>
to independent third parties for cash or other forms of consideration in
accordance with Generally Accepted Accounting Principles limited to the
following deductions (if not already deducted from the gross invoice price and
at rates customary within the industry): (a) allowances (actually paid and
limited to rejections, returns, and prompt payment and volume discounts granted
to customers of Patent Products, whether in cash or Patent Products in lieu of
cash); (b) freight, transport packing, insurance charges associated with
transportation; and (c) taxes, tariff, or import/export duties based on sales
when included in gross sales, but not value-added taxes or taxes assessed on
income derived from such sales.
1.5 "Affiliate(s)" of Licensee means any entity which, directly or
indirectly, controls Licensee, is controlled by Licensee, or is under common
control with Licensee ("control" for these purposes being defined as the actual,
present capacity to elect a majority of the directors of such affiliate, or if
not, the capacity to elect the members that control fifty percent (50%) of the
outstanding stock or other voting rights entitled to elect directors) provided,
however, that in any country where the local law will not permit foreign equity
participation of a majority, then an "Affiliate" will include any company in
which Licensee will own or control, directly or indirectly, the maximum
percentage of such outstanding stock or voting rights permitted by
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local law. Each reference to Licensee herein will be meant to include its
Affiliates.
1.6 "Joint Venture" means any separate entity established pursuant to an
agreement between a third party and Licensee to constitute a vehicle for
commercializing patent products, in which the separate entity manufactures,
uses, purchases, sells, or acquires Patent Products from Licensee. Each
reference to Licensee herein will be meant to include its Joint Venture(s).
2. Grant
2.1 Subject to the terms of this Agreement, subject to the licenses
granted to the U.S. Government as set forth in the Recitals above, and subject
to the obligations of Section 2.5 below, The Regents hereby grants to Licensee
exclusive licenses under Patent Rights to make, use, sell, offer for sale, and
import Patent Products and to practice the Patent Method where Patent Rights
exist.
2.2 The Regents also grants to Licensee the exclusive right to issue
sublicenses to third parties to make, use, sell, offer for sale, and import
Patent Products and to practice the Patent Method, provided Licensee retains
current exclusive rights thereto under this Agreement. To the extent applicable,
such sublicenses will include all of the rights of and obligations
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due to The Regents (and, if applicable, the U.S. Government, including 35 USC
Sections 200-212 and the implementing regulations), including the payment of
royalties in Article 4. (Royalties) that are contained in this Agreement.
2.3 Licensee will notify The Regents of each sublicense granted hereunder
and provide The Regents with a copy of each sublicense. Licensee will collect
and pay all royalties due The Regents as set forth in Paragraph 4.1 below (and
guarantee all such payments due from sublicensees). Licensee will require
sublicensees to provide it with progress and royalty reports in accordance with
the provisions herein, and Licensee will collect and deliver to The Regents all
such reports due from sublicensees.
2.4 Upon termination of this Agreement for any reason, The Regents, at its
sole discretion, will determine whether any or all sublicenses will be canceled
or assigned to The Regents.
2.5 Nothing in this Agreement will be deemed to limit the right of The
Regents to publish any and all technical data resulting from any research
performed by The Regents relating to the Invention and to make and use Patent
Product(s), Patent Method(s), and associated technology solely for educational
and noncommercial research purposes.
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3. License Issue Fee
3.1 As partial consideration for all the rights and licenses granted to
Licensee, Licensee will pay to The Regents a license issue fee of ***
*** according to the following schedule:
3.1.1 Seventy-Five Thousand Dollars ($75,000) within thirty (30)
days after the execution of this Agreement by both parties;
3.1.2 Seventy-Five Thousand Dollars ($75,000) on or before June 30,
1997;
3.1.3 *** on or before *** ;
3.1.4 *** on or before *** ; and
3.1.5 *** on or before *** .
3.2 The fees set forth in Paragraph 3.1 above are non-refundable,
non-creditable, and not an advance against royalties.
4. Royalties
4.1 As further consideration for all the rights and licenses granted to
Licensee, Licensee also will pay to The Regents an earned royalty at the rate of
*** based on the Net Sales of Patent Products.
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
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4.2 Paragraphs 1.1, 1.2, and 1.3 define Patent Rights, Patent Product, and
Patent Method so that royalties will be payable only on Patent Products covered
by either a pending patent application that is being prosecuted diligently and
in good faith in a relevant country or by an issued patent in a relevant
country. Earned royalties will accrue in each country for the duration of any
issued patent within Patent Rights in that country and will be payable to The
Regents when Patent Products are invoiced, or if not invoiced, when delivered to
a third party for the purpose of patient administration for purposes other than
clinical trials. Licensee, its Affiliates, Joint Ventures, and sublicensees will
not use Patent Products or Patent Methods for administration to patients in any
business of the Licensee, or of its Affiliates, Joint Ventures, and sublicensees
without payment of applicable royalty on Net Sales to be calculated on retail
sales prices as if the sales transaction had occurred at arm's-length to an
unrelated third party.
4.3 Royalties accruing to The Regents will be paid to The Regents
quarterly on or before the following dates of each calendar year:
February 28 for the calendar quarter ending December 31
May 31 for the calendar quarter ending March 31
August 31 for the calendar quarter ending June 30
November 30 for the calendar quarter ending September 30
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Each such payment will be for royalties which accrued up to the most recently
completed calendar quarter of Licensee.
4.4 Beginning in the *** Licensee will pay to The Regents a minimum annual
royalty in the amounts and at the times set forth below:
<TABLE>
<CAPTION>
<S> <C> <C>
*** - $ ***
*** - $ ***
*** - $ ***
*** - $ ***
*** - $ ***
</TABLE>
In each succeeding calendar year after the year ***, Licensee will pay a *** of
*** . for the life of this Agreement. Each minimum annual royalty payment must
be paid to The Regents by February 28 of each year following the calendar year
in which royalties accrued. Royalties paid during the prior calendar year will
be credited against the minimal annual royalty payment due and owing for the
prior calendar year.
4.5 All monies due The Regents will be payable in United States funds
collectible at par in San Francisco, California. When Patent Products are sold
for monies other than United States dollars, the earned royalties will first be
determined in the foreign currency of the country in which such Patent Products
were sold and then converted into equivalent United States
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
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funds. The exchange rate will be that rate quoted in the Wall Street Journal on
the last business day of the reporting period.
4.6 Earned royalties on sales of Patent Products occurring in any country
outside the United States will not be reduced by any taxes, fees, or other
charges imposed by the government of such country except those taxes, fees, and
charges allowed under the provisions of Paragraph 1.4 (Net Sales). Licensee will
be responsible for all bank transfer charges.
4.7 Notwithstanding the provisions of Article 26. (Force Majeure), if at
any time legal restrictions prevent prompt remittance of part or all royalties
owed to The Regents by Licensee with respect to any country where a Patent
Product is sold or distributed, Licensee will convert the amount owed to The
Regents into United States funds and will pay The Regents directly from another
source of funds for the amount impounded.
4.8 In the event that any patent or any claim thereof included within the
Patent Rights is held invalid or unenforceable in a final decision by a court of
competent jurisdiction and last resort and from which no appeal has or can be
taken, all obligation to pay royalties based on such patent or claim or any
claim patentably indistinct therefrom will cease as of the date of such final
decision. Licensee will not, however, be relieved from paying any royalties that
accrued before such decision or that are based on another patent or claim that
has not expired or that is not involved in such decision.
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<PAGE>
4.9 No royalties will be collected or paid hereunder to The Regents on
Patent Products sold to the account of the U.S. Government. Licensee and its
sublicensee will reduce the amount charged for Patent Products distributed to
the United States Government by an amount equal to the royalty for such Patent
Products otherwise due The Regents as provided herein.
5. Due Diligence
5.1 Licensee, upon execution of this Agreement, will diligently proceed
with the development, manufacture and sale of Patent Products. In this regard,
The Regents acknowledges that the technology covered by this Agreement has only
recently been invented and that substantial additional effort, expense and time,
as well as regulatory approval, will be required before manufacture and sales of
any Patent Products will be possible. Meeting the requirements of Section 5.3
below shall be deemed to satisfy the due diligence requirements of this Article
5.
5.2 Licensee will be entitled to exercise prudent and reasonable business
judgment in the manner in which it meets its due diligence obligations
hereunder, including under Section 5.3 below. In no case, however, will Licensee
be wholly relieved of its obligations to meet each of the due diligence
provisions of Paragraph 5.3 below.
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<PAGE>
5.3 If Licensee is unable to perform any of the following:
5.3.1 begin Phase I Clinical Trials in the United States for Patent
Products on or before *** ; and
5.3.2 enter pivotal clinical trials (a combination of Phase II and
Phase III Clinical Trials) in the United States for said
Patent Products on or before *** ***; and
5.3.3 file for marketing approval in the United States for said
Patent Product on or before *** ; and
5.3.4 market Patent Products in the United States within *** after
receiving marketing approval of such Patent Products from the
U.S. Food and Drug Administration; and
5.3.5 diligently and earnestly fill the market demand for Patent
Products following commencement of marketing at any time
during the exclusive period of this Agreement;
then The Regents will have the right and option to terminate this Agreement or
reduce the exclusive licenses granted to Licensee to non-exclusive licenses in
accordance with Paragraph 5.4 hereof. The exercise of this right and option by
The Regents supersedes the rights granted in Article 2. (Grant).
5.4 To exercise either the right to terminate this Agreement or reduce the
exclusive licenses granted to Licensee to non-exclusive licenses for lack of
diligence required in this Article 5. (Due Diligence), The Regents will give
Licensee written notice of the deficiency. Licensee thereafter has
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
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<PAGE>
*** to cure the deficiency. Licensee shall be entitled to a one-time extension
of each of the dates set forth in Subparagraphs 5.3.1 through 5.3.4 (which have
not been met) by *** to cure the deficiency upon payment of *** to The Regents,
provided that such payment is received by The Regents within *** of receipt of
written notice by The Regents of Licensee's deficiency. The *** payment has the
effect of extending the subject date and all subsequent dates by *** . If The
Regents has not received the *** , payment by the end of the *** , or written
tangible evidence satisfactory to The Regents that the deficiency has been
cured by the end of the *** , then The Regents may, at its option, terminate
this Agreement or reduce the exclusive licenses granted to Licensee to
non-exclusive licenses by giving written notice to Licensee. These notices
will be subject to Article 18. (Notices).
6. Progress and Royalty Reports
6.1 Beginning February 28, 1996, and semi-annually thereafter, Licensee
will submit to The Regents a progress report covering activities by Licensee
related to the development, including clinical trials and testing, of all Patent
Products and the obtaining of the governmental approvals necessary
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
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<PAGE>
for marketing. These progress reports will be provided to The Regents to cover
the progress of the research and development of the Patent Products until their
first commercial sale in the United States.
6.2 The progress reports submitted under Paragraph 6.1 will include, but
not be limited to, the following topics so that The Regents may be able to
determine the progress of the development of Patent Products:
o summary of work completed;
o summary of work in progress;
o current schedule of anticipated events or milestones specified
in Paragraph 5.3 and the dates when said milestones have been
met or will be met, as of the time of the report;
o market introduction date of Patent Products; and
o activities of sublicensees, if any.
6.3 Licensee will also report to The Regents in its immediately subsequent
progress and royalty report the date of first commercial sale of a Patent
Product(s) in each country where the Licensee has sought marketing approval.
6.4 After the first commercial sale of a Patent Product, Licensee will
provide The Regents with quarterly royalty reports to The Regents on or before
each February 28, May 31, August 31, and November 30 of each year. Each such
royalty report will cover the most recently completed
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<PAGE>
calendar quarter of Licensee (October through December, January through March,
April through June, and July through September) and will show:
6.4.1 the gross sales and Net Sales of Patent Products sold by
Licensee and reported to Licensee as sold by its sublicensees
during the most recently completed calendar quarter;
6.4.2 the number of Patent Products sold or distributed by Licensee
and reported to Licensee as sold or distributed by its
sublicensees;
6.4.3 the royalties, in U.S. dollars, payable hereunder with respect
to Net Sales; and
6.4.4 the exchange rates used, if any.
6.5 If no sales of Patent Products have been made during any reporting
period after the first commercial sale of a Patent Product, then a statement to
this effect is required.
7. Books and Records
7.1 Licensee will keep books and records accurately showing all Patent
Products manufactured, used, and/or sold under the terms of this Agreement. Such
books and records will be preserved for at least four (4) years after the date
of the royalty payment to which they pertain and will be open to inspection by
representatives or agents of The Regents at reasonable times to determine the
accuracy of the books and records and to determine compliance by Licensee with
the terms of this Agreement.
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<PAGE>
7.2 The fees and expenses of representatives of The Regents performing
such an examination will be borne by The Regents. However, if an error in
royalties of more than five percent (5%) of the total royalties due for any year
is discovered, then the fees and expenses of these representatives will be borne
by Licensee.
8. Life of the Agreement
8.1 Unless otherwise terminated by operation of law or by acts of the
parties in accordance with the terms of this Agreement, this Agreement will be
in force from the effective date recited on page one and will remain in effect
for the life of the last-to-expire patent licensed under this Agreement or until
the last patent application licensed under this Agreement is abandoned.
8.2 Any termination of this Agreement will not affect the rights and
obligations set forth in the following Articles:
<TABLE>
<CAPTION>
<S> <C> <C>
Article 3 License Issue Fee
Article 7 Books and Records
Article 11 Disposition of Patent Products on Hand Upon
Termination
Article 12 Use of Names and Trademarks
Paragraph 14.6 Patent Prosecution and Maintenance
</TABLE>
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<PAGE>
Article 17 Indemnification
Article 22 Failure to Perform
Article 27 Confidentiality
9. Termination by The Regents
9.1 If Licensee should violate or fail to perform any material term or
covenant of this Agreement, then The Regents may give written notice of such
default ("Notice of Default") to Licensee. If Licensee should fail to repair
such default within sixty (60) days after the date of such notice takes effect,
The Regents will have the right to terminate this Agreement and the licenses
herein by a second written notice ("Notice of Termination") to Licensee. If a
Notice of Termination is sent to Licensee, this Agreement will automatically
terminate on the date such notice takes effect. Such termination will not
relieve Licensee of its obligation to pay any royalty or license fees owing at
the time of such termination and will not impair any accrued right of The
Regents. These notices will be subject to Article 18. (Notices).
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<PAGE>
10. Termination by Licensee
10.1 Licensee will have the right at any time to terminate this Agreement
in whole or as to any portion of Patent Rights by giving notice in writing to
The Regents. Such Notice of Termination will be subject to Article 18. (Notices)
and termination of this Agreement will be effective sixty (60) days after the
effective date thereof.
10.2 Any termination pursuant to the above paragraph will not relieve The
Regents or Licensee of any obligation or liability accrued hereunder prior to
such termination or rescind anything done by The Regents or Licensee or any
payments made to The Regents hereunder prior to the time such termination
becomes effective, and such termination will not affect in any manner any rights
of The Regents or Licensee arising under this Agreement prior to such
termination.
11. Disposition of Patent Products on Hand Upon Termination
11.1 Upon termination of this Agreement, Licensee will have the privilege
of disposing of all previously made or partially made Patent Products, but no
more, within a period of one hundred twenty (120) days, provided, however, that
the sale of such Patent Products will be subject to the terms of this Agreement
including, but not limited to the payment of fees and reimbursement for patent
costs and the payment of royalties based on
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<PAGE>
the Net Sales of Patent Products at the rates and at the times provided herein
and the rendering of reports in connection therewith.
12. Use of Names and Trademarks
12.1 Nothing contained in this Agreement will be construed as conferring
any right to use in advertising, publicity, or other promotional activities any
name, trade name, trademark, or other designation of either party hereto by the
other (including contraction, abbreviation or simulation of any of the
foregoing). Unless required by law, the use by Licensee of the name "The Regents
of the University of California" or the name of any campus of the University of
California for use in advertising, publicity, or other promotional activities is
expressly prohibited.
12.2 It is understood that The Regents will be free to release to the
inventors and senior administrative officials employed by The Regents the terms
of this Agreement upon their request. If such release is made, The Regents will
request that such terms will be kept in confidence in accordance with the
provisions of Article 27. (Confidentiality) and not be disclosed to others. It
is further understood that should a third party inquire whether a license to
Patent Rights is available, The Regents may disclose the existence of this
Agreement and the Extent of the grant in Article 2. (Grant) to such third party,
but will not disclose the name of Licensee, except where The
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Regents is required to release such information under either the California
Public Records Act or other applicable law.
13. Limited Warranty
13.1 The Regents warrants to Licensee that it has the lawful right to
grant this license, and that it has not granted any rights or licenses to Patent
Rights, other than to the U.S. Government, in derogation of this Agreement.
13.2 This license and the associated Invention are provided WITHOUT
WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR ANY OTHER
WARRANTY, EXPRESSED OR IMPLIED. THE REGENTS MAKES NO REPRESENTATION OR WARRANTY
THAT THE INVENTION, PATENT PRODUCTS, OR PATENT METHOD WILL NOT INFRINGE ANY
PATENT OR OTHER PROPRIETARY RIGHT.
13.3 IN NO EVENT WILL THE REGENTS BE LIABLE FOR ANY INCIDENTAL, SPECIAL OR
CONSEQUENTIAL DAMAGES RESULTING FROM EXERCISE OF THIS LICENSE OR THE USE OF THE
INVENTION, PATENT METHOD, OR PATENT PRODUCTS.
13.4 Nothing in this Agreement will be construed as:
13.4.1 a warranty or representation by The Regents as to the
validity, enforceability, or scope of any Patent Rights;
or
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13.4.2 a warranty or representation that anything made, used, sold
or otherwise disposed of under any license granted in this
Agreement is or will be free from infringement of patents of
third parties; or
13.4.3 an obligation to bring or prosecute actions or suits against
third parties for patent infringement except as provided in
Article 16. (Patent Infringement); or
13.4.4 conferring by implication, estoppel, or otherwise any license
or rights under any patents of The Regents other than Patent
Rights as defined herein, regardless of whether such patents
are dominant or subordinate to Patent Rights; or
13.4.5 an obligation to furnish any know-how not provided in Patent
Rights.
14. Patent Prosecution and Maintenance
14.1 The Regents will diligently prosecute and maintain the United States
and foreign patents comprising Patent Rights using counsel of its choice. The
Regents will promptly provide Licensee with copies of all relevant documentation
so that Licensee may be currently and promptly informed and apprised of the
continuing prosecution, and may comment upon such documentation sufficiently in
advance of any initial deadline for filing a response, provided, however, that
if Licensee has not commented upon such documentation prior to the initial
deadline for filing a response with the relevant government patent office or The
Regents must act to preserve Patent Rights, The Regents will be free to respond
appropriately
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<PAGE>
without consideration of comments by Licensee, if any. Both parties hereto will
keep this documentation in confidence in accordance with the provisions of
Article 27. (Confidentiality) herein. The Regents' counsel will take
instructions only from The Regents.
14.2 The Regents will use all reasonable efforts to amend any patent
application to include claims requested by Licensee and required to protect the
Patent Products contemplated to be sold or Patent Method to be practiced under
this Agreement.
14.3 The Regents and Licensee will cooperate in applying for an extension
of the term of any patent included within Patent Rights, if appropriate, under
the Drug Price Competition and Patent Term Restoration Act of 1984. Licensee
will prepare all such documents, and The Regents will execute such documents and
will take such additional action as Licensee may reasonably request in
connection therewith.
14.4 The Regents will, at the request of Licensee, file, prosecute, and
maintain patent applications and patents covered by Patent Rights in foreign
countries if available. Licensee must notify The Regents within nine (9) months
of the filing of the corresponding United States application of its decision to
request The Regents to file foreign counterpart patent applications. This notice
concerning foreign filing must be in writing and must identify the countries
desired. The absence of such a notice from
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<PAGE>
Licensee to The Regents within the nine (9)-month period will be an election by
Licensee not to request The Regents to secure foreign patent rights on behalf of
Licensee. The Regents will have the right to file patent applications at its own
expense in any country Licensee has not included in its list of desired
countries, and such applications and resultant patents, if any, will not be
included in the licenses granted under this Agreement unless Licensee agrees in
writing to pay all costs associated with any such patent application(s) and
provided the rights of said patent application(s) are available at the time
Licensee agrees to pay the associated costs.
14.5 All past, present and future costs of preparing, filing, prosecuting
and maintaining all United States and foreign patent applications and all costs
and fees relating to the preparation and filing of patents covered by Patent
Rights in Paragraph 1.1 will be borne by Licensee. This includes all patent
preparation and prosecution costs incurred by The Regents prior to the execution
of this Agreement. Such costs will be due upon execution of this Agreement and
will be payable at the time that the license issue fee is payable. The costs of
all interferences and oppositions will be considered prosecution expenses and
also will be borne by Licensee. Licensee will reimburse The Regents for all
costs and charges within thirty (30) days following receipt of an itemized
invoice from The Regents for same.
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<PAGE>
14.6 The obligation of Licensee to underwrite and to pay patent
preparation, filing, prosecution, maintenance, and related costs will continue
for such costs as may be incurred during the three (3)-month period after
receipt by either party of a Notice of Termination for all non-cancelable
obligations made prior to the receipt of said Notice of Termination. Licensee
will reimburse The Regents for all patent costs incurred during the term of the
Agreement and for three (3) months thereafter whether or not invoices for such
costs are received during the three (3)-month period after receipt of a Notice
of Termination. Licensee may with respect to any particular patent application
or patent terminate its obligations with the patent application or patent in any
or all designated countries upon three months written notice to The Regents. The
Regents may continue prosecution and/or maintenance of such application(s) or
patent(s) at its sole discretion and expense, provided, however, that Licensee
will have no further right or licenses thereunder.
14.7 Licensee will have a continuing responsibility to keep The Regents
informed of its large/small entity status (as defined by the United States
Patent and Trademark Office) of itself and its sublicensees.
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15. Patent Marking
15.1 Licensee will mark all Patent Products made, used or sold under the
terms of this Agreement, or their containers, in accordance with the applicable
patent marking laws.
16. Patent Infringement
16.1 In the event that Licensee learns of the substantial infringement of
any patent licensed under this Agreement, Licensee will call the attention of
The Regents thereto in writing and will provide The Regents with reasonable
evidence of such infringement. Both parties to this Agreement acknowledge that
during the period and in a jurisdiction where Licensee has exclusive rights
under this Agreement, neither will notify a third party of the infringement of
any of Patent Rights without first obtaining consent of the other party, which
consent will not be unreasonably withheld. Both parties will use their best
efforts in cooperation with each other to terminate such infringement without
litigation.
16.2 Licensee may request that The Regents take legal action against the
infringement of Patent Rights. Such request must be made in writing and must
include reasonable evidence of such infringement and damages to Licensee. If the
infringing activity has not been abated within ninety (90)
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days following the effective date of such request, The Regents will have the
right to elect to:
16.2.1 commence suit on its own account; or
16.2.2 refuse to participate in such suit
and The Regents will give notice of its election in writing to Licensee by the
end of the one hundredth (100th) day after receiving notice of such request from
Licensee. Licensee may thereafter bring suit for patent infringement if and only
if The Regents elects not to commence suit and if the infringement occurred
during the period and in a jurisdiction where Licensee had exclusive rights
under this Agreement. However, in the event Licensee elects to bring suit in
accordance with this paragraph, The Regents may thereafter join such suit at its
own expense, but the Licensee will control the lawsuit.
16.3 Such legal action as is decided upon will be at the expense of the
party on account of whom suit is brought and all recoveries recovered thereby
will belong to such party, provided, however, that legal action brought jointly
by The Regents and Licensee and participated in by both will be at the joint
expense of the parties and all recoveries will be allocated in the following
order: a) to each party reimbursement in equal amounts of the attorneys costs,
fees, and other related expenses to the extent each party paid for such costs,
fees, and expenses until all such costs, fees, and
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<PAGE>
expenses are consumed for each party; and b) any remaining amount shared
jointly by them in proportion to the share of expenses paid by each party.
16.4 Each party will cooperate with the other in litigation proceedings
instituted hereunder but at the expense of the party on account of whom suit is
brought. Such litigation will be controlled by the party bringing the suit,
provided, however, that The Regents may be represented by counsel of its choice
in any suit brought by Licensee.
17. Indemnification
17.1 Licensee will (and will require its sublicensees to) indemnify, hold
harmless, and defend The Regents, its officers, employees, and agents; the
sponsors of the research that led to the Invention; the inventors of any
invention covered by Patent Rights (including the Patent Products and Patent
Method contemplated thereunder) and their employers against any and all claims,
suits, losses, damage, costs, fees, and expenses resulting from or arising out
of exercise of this license or any sublicense. This indemnification will
include, but will not be limited to, any product liability.
17.2 Licensee, at its sole cost and expense, will insure its activities in
connection with the work under this Agreement and obtain, keep in force, and
maintain insurance as follows: (or an equivalent program of self insurance)
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<PAGE>
At the initiation of clinical trials, Comprehensive or Commercial Form
General Liability Insurance (contractual liability included) with limits as
follows up to and until Licensee enters Phase III Clinical Trials:
<TABLE>
<CAPTION>
<S> <C>
(a) Each Occurrence.............................................$3,000,000
(b) Products/Completed Operations Aggregate.....................$3,000,000
(c) Personal and Advertising Injury.............................$3,000,000
(d) General Aggregate (commercial form only)....................$3,000,000
</TABLE>
Comprehensive or Commercial Form General Liability Insurance (contractual
liability included) with limits as follows after Licensee enters
Phase III Clinical Trials:
<TABLE>
<CAPTION>
<S> <C>
(a) Each Occurrence.............................................$5,000,000
(b) Products/Completed Operations Aggregate.....................$5,000,000
(c) Personal and Advertising Injury.............................$5,000,000
(d) General Aggregate (commercial form only)....................$5,000,000
</TABLE>
It should be expressly understood, however, that the coverages and limits
referred to under the above will not in any way limit the liability of Licensee.
Licensee will furnish The Regents with certificates of insurance evidencing
compliance with all requirements. Such certificates will:
(a) Provide for thirty (30)-day advance written notice to The
Regents of any modification;
(b) Indicate that The Regents has been endorsed as an additional
Insured under the coverages referred to under the above; and
(c) Include a provision that the coverages will be primary and
will not participate with nor will be excess over any valid
and collectable insurance or program of self-insurance carried
or maintained by The Regents.
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<PAGE>
17.3 The Regents will immediately notify Licensee in writing of any claim or
suit brought against The Regents in respect of which The Regents intends to
invoke the provisions of this Article 17. (Indemnification). Licensee will keep
The Regents informed as appropriate and necessary on a current basis of its
defense of any claims pursuant to this Article 17. (Indemnification).
18. Notices
18.1 Any notice or payment required to be given to either party will be
deemed to have been properly given and to be effective (a) on the date of
delivery if delivered in person or (b) five days after mailing if mailed by
first class certified mail, postage paid, to the respective addresses given
below, or to another address as it may designate by written notice given to the
other party.
In the case of Licensee: COLLATERAL THERAPEUTICS
9360 Towne Centre Drive
San Diego, CA 92121
Tel: (619) 622-4100
Fax: (619) 587-3518
Attention: Jack Reich, Ph.D.
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<PAGE>
In the case of The Regents: THE REGENTS OF THE UNIVERSITY
OF CALIFORNIA
1320 Harbor Bay Parkway, Suite 150
Alameda, California 94502
Tel: (510) 748-6600
Fax: (510) 748-6639
Attention: Terence A. Feuerborn
Executive Director
Research Administration and
Technology Transfer
Referring to: ***
19. Assignability
19.1 This Agreement is binding upon and will inure to the benefit of The
Regents, its successors and assigns, but will be personal to Licensee and
assignable by Licensee only with the written consent of The Regents, which
consent shall not be unreasonably withheld.
20. Late Payments
20.1 In the event royalty payments or fees or patent prosecution costs are
not received by The Regents when due, Licensee will pay to The Regents interest
charges at a rate of ten percent (10%) simple interest per annum. Such interest
will be calculated from the date payment was due until actually received by The
Regents. Acceptance by The Regents of any late payment interest from Licensee
under this Paragraph 20 will in no way affect the provision of Article 21.
(Waiver) herein.
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
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<PAGE>
21. Waiver
21.1 It is agreed that no waiver by either party hereto of any breach or
default of any of the covenants or agreements herein set forth will be deemed a
waiver as to any subsequent and/or similar breach or default.
22. Failure to Perform
22.1 In the event of a failure of performance due under the terms of this
Agreement and if it becomes necessary for either party to undertake legal action
against the other on account thereof, then the prevailing party will be entitled
to reasonable attorney's fees in addition to costs and necessary disbursements.
23. Governing Laws
23.1 THIS AGREEMENT WILL BE INTERPRETED AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF CALIFORNIA, excluding any choice of law rules that
would direct the application of the laws of another jurisdiction, but the scope
and validity of any patent or patent application will be governed by the
applicable laws of the country of such patent or patent application.
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<PAGE>
24. Government Approval for Registration
24.1 If this Agreement or any associated transaction is required by the
law of any nation to be either approved or registered with any governmental
agency, Licensee will assume all legal obligations to do so. Licensee will
notify The Regents if it becomes aware that this Agreement is subject to a
United States or foreign government reporting or approval requirement. Licensee
will make all necessary filings and pay all costs including fees, penalties, and
all other out-of-pocket costs associated with such reporting or approval
process.
25. Export Control Laws
25.1 Licensee will observe all applicable United States and foreign laws
with respect to the transfer of Patent Products and related technical data to
foreign countries, including, without limitation, the International Traffic in
Arms Regulations (ITAR) and the Export Administration Regulations.
26. Force Majeure
26.1 The parties to this Agreement will be excused from any performance
required hereunder if such performance is rendered impossible or unfeasible due
to any acts of God, catastrophes, or other major events
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<PAGE>
beyond their reasonable control, including, without limitation, war, riot, and
insurrection; laws, proclamations, edicts, ordinances, or regulations; strikes,
lock-outs, or other serious labor disputes; and floods, fires, explosions, or
other natural disasters. However, any party to this Agreement will have the
right to terminate this Agreement upon thirty (30) days' prior written notice if
either party is unable to fulfill its obligations under this Agreement due to
any of the causes mentioned above and such inability continues for a period of
one year. Notices will be subject to Article 18. (Notices).
27. Confidentiality
27.1 Licensee and The Regents respectively will treat and maintain the
proprietary business, patent prosecution, software, engineering drawings,
process and technical information, and other proprietary information of the
other party ("Proprietary Information") in confidence using at least the same
degree of care as that party uses to protect its own proprietary information of
a like nature for a period from the date of disclosure until five (5) years
after the date of termination of this Agreement.
27.2 Proprietary Information will be labeled or marked confidential or as
otherwise similarly appropriate by the disclosing party, or if the Proprietary
Information is orally disclosed, it will be reduced to writing or some other
physically tangible form, marked and labeled as set forth above
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<PAGE>
by the disclosing party and delivered to the receiving party within thirty (30)
days after the oral disclosure as a record of the disclosure and the
confidential nature thereof. Notwithstanding the foregoing, Licensee and The
Regents may use and disclose Proprietary Information to its employees, agents,
consultants, and contractors having a need to know the Proprietary Information
and, in the case of Licensee, its sublicensees, provided that any such parties
are bound by a like duty of confidentiality.
27.3 Nothing contained herein will in any way restrict or impair the right
of Licensee or The Regents to use, disclose, or otherwise deal with any
Proprietary Information:
27.3.1 that recipient can demonstrate by written records was
previously known to it;
27.3.2 that is now, or becomes in the future, public knowledge
other than through acts or omissions of recipient;
27.3.3 that is lawfully obtained without restrictions by
recipient from sources independent of the disclosing
party;
27.3.4 that is required to be disclosed to a governmental entity
or agency in connection with seeking any governmental or
regulatory approval, or pursuant to the lawful requirement
or request of a governmental entity or agency;
27.3.5 that is furnished to a third party by the recipient with a
need to know and with similar confidentiality restrictions
imposed on such third party, as evidenced in writing, or
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<PAGE>
27.3.6 that The Regents is required to disclose pursuant to the
California Public Records Act or other applicable law.
27.4 Upon termination of this Agreement, Licensee and The Regents will
destroy or return to the disclosing party proprietary information received from
the other in its possession within fifteen (15) days following the effective
date of termination. Licensee and The Regents will provide each other, within
thirty (30) days following termination, with a written notice that Proprietary
Information has been returned or destroyed. Each party may, however, retain one
copy of Proprietary Information for archival purposes in nonworking files.
28. Miscellaneous
28.1 The headings of the several sections are inserted for convenience of
reference only and are not intended to be a part of or to affect the meaning or
interpretation of this Agreement.
28.2 The licenses and any sublicenses granted hereunder will be subject to
any legal obligations to the U.S. Government including those set forth in 35
U.S.C. 200-212 and applicable governmental implementing regulations. Because
this Agreement grants the exclusive right to use or sell the Patent Products in
the United States, Licensee acknowledges that
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<PAGE>
Patent Products will be manufactured substantially in the United States as
required under 35 USC Section 204.
28.3 The manufacture of Patent Products will be in accordance with any
applicable government importation laws and regulations of a particular country
on Patent Products made outside the particular country in which such Patent
Products are to be used or sold.
28.4 Licensee will obtain all necessary governmental approvals in each
country where it intends to sell or manufacture and use Patent Products or
permit others to manufacture, use, or sell Patent Products.
28.5 This Agreement will not be binding upon the parties until it has been
signed below on behalf of each party, in which event, it will be effective as of
the date recited on page one.
28.6 No amendment or modification hereof will be valid or binding upon the
parties unless made in writing and signed on behalf of each party.
28.7 This Agreement embodies the entire understanding of the parties and
will supersede all previous communications, representations or understandings,
either oral or written, between the parties relating to the subject matter
hereof. The Letter of Intent specified in the Recitals in this Agreement is
hereby terminated.
28.8 In case any of the provisions contained in this Agreement are held to
be invalid, illegal, or unenforceable in any respect, such invalidity,
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<PAGE>
illegality, or unenforceability will not affect any other provisions hereof, but
this Agreement will be construed as if such invalid or illegal or unenforceable
provisions had never been contained herein.
The Regents and Licensee execute this Agreement in duplicate originals by
their respective, authorized officers on the date indicated.
Collateral Therapeutics: The Regents of the University
of California:
By /s/ Jack W. Reich, Ph.D. By /s/ Terence A. Fuerborn
------------------------ -------------------------
Name Jack W. Reich, Ph.D. Name Terence A. Feuerborn
---------------------- -----------------------
(Please Print)
Title President and C.E.O. Title Executive Director
--------------------- Research Administration and
Technology Transfer
Date Sept. 27, 1995 Date 9-28-95
---------------------- ------------------------
Approval as to legal form: /s/ P. Martha Simpson 9/26/95
------------------------ ----------
P. Martha Simpson, President Counsel Date
Office of Technology Transfer
University of California
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<PAGE>
1st Amendment
to the Exclusive License Agreement
between
The Regents of the University of California
and
Collateral Therapeutics, Inc.
for
"Angiogenesis Gene Therapy"
***
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
----------------------
U.C. AGREEMENT
CONTROL NUMBER
***
----------------------
<PAGE>
1st Amendment to the Exclusive License Agreement
for "Angiogenesis Gene Therapy"
This Amendment is made and is effective this 19th day of Sept., 1996, by
and between The Regents of the University of California ("The Regents"), a
California corporation, having its statewide administrative offices at 300
Lakeside Drive, 22nd Floor, Oakland, California 94612-3550, and Collateral
Therapeutics, Inc. ("Licensee"), a California corporation, have a principal
place of business at 9360 Towne Centre Drive, San Diego, California 92121.
RECITALS
WHEREAS, Licensee and The Regents entered into a license agreement
entitled "Exclusive License Agreement for Angiogenesis Gene Therapy," effective
on September 27, 1995, having U.C. Agreement Control Number *** ("License
Agreement"), and covering licensure to Licensee by The Regents of rights in
certain inventions developed by *** ("Inventor") at the University of
California, San Diego ("UCSD") and claimed in U.S. Patent Application Serial
Nos. *** and *** ;
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
----------------------
U.C. AGREEMENT
CONTROL NUMBER
***
----------------------
- 1 -
<PAGE>
Whereas, in accordance with Paragraph 2.3 of the License Agreement,
Licensee has notified The Regents of its intent to enter into a sublicense
agreement with *** ;
Whereas, *** will use its resources to further develop the Patent Products
so that the technology licensed under the sublicense agreement may be developed,
utilized, and marketed and the products therefrom and other benefits may be
enjoyed by the general public;
Whereas, Licensee desires to amend the License Agreement to reflect that,
upon termination of the License Agreement, any sublicenses to *** will be
assigned to The Regents;
Whereas, Licensee and The Regents desire to amend the License Agreement to
redefine Patent Rights to exclude two continuing patent applications entitled
*** filed in the names of *** and any continuing patent applications thereof;
Whereas, Licensee and The Regents desire to amend the License Agreement to
reflect the above changes;
Now, Therefore, in consideration of the foregoing and the mutual promises
and covenants contained herein, the parties hereto agree as follows:
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
- 2 -
<PAGE>
ooOoo
1. Paragraph 1.1 (Definitions) of the License Agreement shall be replaced
in its entirety with the following Paragraphs 1.1a and 1.1b:
1.1a "Patent Rights" means all U.S. patents and patent applications
and foreign patents and patent applications assigned to The Regents, and
in the case of foreign patents and patent applications those requested
under Paragraph 14.4 herein, including any reissues, extensions,
substitutions, continuations, divisions, and continuations-in-part
applications (only to the extent, however, that claims in the
continuations-in-part applications are entitled to the priority filing
date of the parent patent application) based on and including the
following:
1.1.1. any subject matter claimed in or described according to the
requirements of 35 USC Section 112 in U.S. Patent Application
Serial Number *** entitled *** filed *** by *** and assigned
to The Regents; and
1.1.2. any subject matter claimed in or described according to the
requirements of 35 USC Section 112 in U.S. Patent Application
Serial Number *** entitled *** filed *** by ***
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
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<PAGE>
*** and assigned to The Regents.
1.1b The subject matter relating to the use of heat-shock proteins
described and claimed in U.S. Patent Application Serial Number *** entitled ***
filed *** by *** and U.S. Patent Application Serial Number *** entitled ***
filed *** by *** and any continuing applications thereof are expressly excluded
from this Agreement. The excluded patent applications specified in this
Paragraph 1.1b do not and will not claim any angiogenesis gene therapy or gene
therapy delivery subject matter that is described and/or claimed in any of the
patent applications referred to in Paragraph 1.1a above.
2. Paragraph 2.4 (Grant) of the License Agreement shall be replaced in its
entirety with the following:
2.4 Except as provided below, upon termination of this Agreement for
any reason, The Regents, at its sole discretion, will determine whether
any or all sublicenses will be canceled or assigned to The Regents.
Notwithstanding the foregoing, any sublicenses to
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
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<PAGE>
Schering AG will be assigned to The Regents. The Regents will not be
bound by any duties or obligations contained in any sublicense that
extend beyond the duties and obligations of The Regents in this
Agreement.
In Witness Whereof, both The Regents and Licensee have executed this
Amendments, in duplicate originals, by their respective officers hereunto duly
authorized, on the day and year hereinafter written.
COLLATERAL THERAPEUTICS, INC. THE REGENTS OF THE UNIVERSITY
OF CALIFORNIA
By /s/ Jack W. Reich, Ph.D. By /s/ Candace L. Voelker
------------------------- -------------------------
(Signature)
Name Jack W. Reich, Ph.D. Name Candace L. Voelker
------------------------ ----------------------
Title President & C.E.O. Title Associate Director
---------------------- Office of Technology Transfer
Date Sept. 19, 1996 Date 9/19/96
---------------------- -----------------------
Approval as to legal form: /s/ illegible 9/19/96
----------------------- ----------
illegible Date
Assistant President Counsel
Office of Technology Transfer
University of California
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<PAGE>
2nd Amendment to the Exclusive License Agreement
between
The Regents of the University of California
and
Collateral Therapeutics, Inc.
for
"Angiogenesis Gene Therapy"
***
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
----------------------
U.C. AGREEMENT
CONTROL NUMBER
***
----------------------
<PAGE>
2nd Amendment to the Exclusive License Agreement
for "Angiogenesis Gene Therapy"
This Amendment is made and is effective this 30th day of June, 1996, by
between The Regents of the University of California ("The Regents"), a
California corporation, having its statewide administrative offices at 300
Lakeside Drive, 22nd Floor, Oakland, California 94612-3550, and Collateral
Therapeutics, Inc. ("Licensee"), a California corporation, having a principal
place of business at 9360 Towne Centre Drive, San Diego, California 92121.
RECITALS
WHEREAS, Licensee and The Regents entered into a license agreement
entitled "Exclusive License Agreement for Angiogenesis Gene Therapy," effective
on September 29, 1995, having U.C. Agreement Control Number *** ("License
Agreement"), and covering licensure to Licensee by The Regents of rights in
certain inventions developed by *** ("Inventor") at the University of
California, San Diego ("UCSD") and claimed in Patent Rights (as defined in the
License Agreement);
Whereas, Licensee and The Regents amended the License Agreement on
September 19, 1996, to redefine Patent Rights and to grant Licensee rights to
enter into a sublicense agreement **** ;
Whereas, Licensee has experienced unforeseen difficulties in obtaining
rights in materials desired for the development of the invention;
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
----------------------
U.C. AGREEMENT
CONTROL NUMBER
***
----------------------
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<PAGE>
Whereas, Licensee desires to amend the License Agreement to extend the
diligence provisions provided in Paragraph 5.3 in order to accommodate the
above- cited unforeseen difficulties so that it can continue development of the
invention; and
Whereas, The Regents desires that the invention be developed, utilized,
and marketed to the fullest extent so that the products therefrom may be enjoyed
by the general public and, therefore, is willing to amend the Agreement;
Now, Therefore, in consideration of the foregoing and the mutual promises
and covenants contained herein, the parties hereto agree as follows:
ooOoo
1. Paragraph 5.3 (Due Diligence) of the License Agreement shall be
replaced in its entirety with the following:
"5.3 If Licensee is unable to perform any of the following:
5.3.1 begin Phase I Clinical Trials in the United States for
Patent Products on or before *** ; and
5.3.2 enter pivotal clinical trials (a combination of Phase II
and Phase III Clinical Trials) in the United States for
said Patent Products on or before *** ; and
5.3.3 file for marketing approval in the United States for
said Patent Product on or before *** ; and
5.3.4 market Patent Products in the United States within ***
after receiving marketing approval of such Patent
Products from the U.S. Food and Drug, Administration;
and
5.3.5 diligently and earnestly fill the market demand for
Patent Products following commencement of marketing
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
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<PAGE>
at any time during, the exclusive period of this
Agreement;
then The Regents will have the right and option to terminate this Agreement or
reduce the exclusive licenses granted to Licensee to non-exclusive licenses in
accordance with Paragraph 5.4 hereof. The exercise of this right and option by
The Regents supersedes the rights granted in Article 2. (Grant)."
This Amendment is not intended to, and it is agreed that it does not,
expressly or by implication, affect in any way, any other provisions of the
Exclusive License Agreement for Angiogenesis Gene Therapy, dated September 29,
1995, which are intended to remain in full force and effect.
In Witness Whereof, both The Regents and Licensee have executed this
Amendments, in duplicate originals, by their respective officers hereunto duly
authorized, on the day and year hereinafter written.
COLLATERAL THERAPEUTICS, INC. THE REGENTS OF THE UNIVERSITY
OF CALIFORNIA
By /s/ Jack W. Reich, Ph.D. By /s/ Candace L. Voelker
-------------------------- ------------------------
(Signature) (Signature)
Name Jack W. Reich, Ph.D. Name Candace L. Voelker
------------------------ -----------------------
Title President & CEO Title Associate Director
----------------------- Office of Technology Transfer
Date 6-24-97 Date 6/30/97
---------- --------
Approved as to legal form: /s/ illegible illegible
----------------- ------------
illegible Date
Office of Technology Transfer
University of California
- 3 -
<PAGE>
EXHIBIT 10.12
COLLABORATION LICENSE AND ROYALTY AGREEMENT
Between
SCHERING AG
AND
COLLATERAL THERAPEUTICS, INC.
MAY 6, 1996
<PAGE>
TABLE OF CONTENTS
Page No.
Section I DEFINITIONS.......................................................2
Section II RESEARCH; COMMERCIALIZATION; OWNERSHIP OF REGULATORY
APPLICATION(S); CONTINUED ACCESS TO INVENTIONS IN THE FIELD.......6
Section III MANAGEMENT; RESEARCH AND DEVELOPMENT PLAN AND
BUDGET............................................................6
Section IV OWNERSHIP OF INVENTIONS; LICENSES; RIGHTS TO
PRODUCTS AND GENE PRESENTATION....................................9
Section V PAYMENT FOR RESEARCH AND DEVELOPMENT OF
PRODUCTS.........................................................11
Section VI MILESTONE PAYMENTS; DILIGENCE....................................13
Section VII INVENTORY OF DEVELOPED TECHNOLOGY; NEW
PRODUCTS; PRODUCTS OUTSIDE THE FIELD; RIGHT OF
FIRST REFUSAL; RIGHT OF FIRST OFFER..............................15
Section VIII ROYALTY PAYMENTS; NEW PRODUCTS AND PRODUCTS......................17
Section IX REPORTS, BOOKS AND TAX MATTERS...................................20
Section X PATENTS..........................................................21
Section XI CONFIDENTIALITY..................................................24
Section XII REPRESENTATIONS, WARRANTIES AND COVENANTS OF COLLATERAL..........27
Section XIII REPRESENTATIONS, WARRANTIES AND COVENANTS OF SCHERING............29
Section XIV DISCLAIMERS; SURVIVAL AND INDEMNIFICATION........................30
Section XV TERM, TERMINATION, AND EXPIRATION................................32
Section XVI MISCELLANEOUS....................................................36
<PAGE>
COLLABORATION, LICENSE AND ROYALTY AGREEMENT
This Collaboration, License and Royalty Agreement (the "Agreement") is
made and entered into as of May 3, 1996 (hereinafter "Effective Date") by and
between Schering AG, a German corporation ("Schering") and Collateral
Therapeutics, Inc., a California corporation ("Collateral"). Each of Schering on
one hand and Collateral on the other hand, is referred to as a "Party" and
collectively as the "Parties".
WHEREAS, Collateral is the exclusive licensee to technology relating to
the use of growth factor genes for gene therapy to promote angiogenesis from The
Regents of the University of California and it is seeking any required
proprietary rights to a growth factor gene from a Third Party;
WHEREAS, Collateral has the capability to conduct research and wishes to
further research and develop such angiogenesis technology with Schering for
therapy and diagnosis in humans;
WHEREAS, Schering has the capability to research, develop, manufacture and
market pharmaceuticals/biologics;
WHEREAS, Schering, in its discretion, will cooperate with Collateral in an
effort to secure a growth factor gene;
WHEREAS, Schering and Collateral wish to collaborate in the further
research and development of pharmaceuticals/biologics to promote angiogenesis;
WHEREAS, Schering loaned Collateral Five Hundred Thousand ($500,000.00)
Dollars pursuant to two Promissory Notes dated August 6, 1995 and October 12,
1995;
WHEREAS, Collateral by this Agreement has granted Schering certain
licenses including a sublicense to the UC License;
WHEREAS, The Regents of the University of California consented in writing
to accept Schering as a sublicensee and allow Schering to cure Collateral's
defaults, if any, under the UC License (Attached as Exhibit A); and
WHEREAS, Collateral and Schering have entered into a letter agreement
(Attached as Exhibit B) whereby Collateral agrees to seek additional assurances
from the Regents of the University of California regarding the non-cancellation
of the sublicense to Schering;
WHEREAS, Schering Berlin Venture Corporation, a Delaware corporation, an
Affiliate of Schering, is entering into a Series A Stock Purchase Agreement and
Investors' Rights Agreement ("the Stock Agreement") with Collateral as of the
Effective Date hereof.
In consideration of the mutual covenants and conditions hereinafter set
forth in this Agreement, the Parties hereby agree as follows:
1
<PAGE>
I
DEFINITION
1.1 Defined Terms. The following terms when used herein shall have the following
meanings:
"Acceptance of a Qualified Gene" is defined in Section 4.8.
"Affiliate means any company controlled by, controlling, or under common
control with Schering or Collateral and shall include any company fifty percent
(50%) or more of whose voting stock or participating profit interest is owned or
controlled, directly or indirectly by Schering or Collateral, and any company
which owns or controls, directly or indirectly fifty percent (50%) or more of
the voting stock of Schering or Collateral, and any company which Schering or
Collateral or a company owned or controlled by or owning or controlling Schering
or Collateral at the maximum control or ownership right permitted in the country
where the company exists.
"Budget" means the annual budget forming part of the Research and
Development Plan. The initial version is as attached as Exhibit C hereto.
"CABG" means coronary artery by-pass graft surgery.
"COGS" means Schering's costs of supplying Product(s) calculated in
accordance with Schering's accounting methods consistently applied which
methodology shall be calculated in, compliance with applicable accounting
principles for U.S. Affiliates. Expenses include but are not limited to
Schering's manufacturing costs are listed in Exhibit D. COGS includes idle
capacity to the extent that the portion of facility and equipment which is idle
is completed and received Regulatory Approval for such Product. Such accounting
method must be reasonable in the context of the international pharmaceutical
industry.
"Collateral Base Technology" means all technology and know-how, including,
but not limited to, patents, patent applications, continuations and
continuations-in-part, divisional and provisional patent applications, trade
secrets, methods, processes, techniques, materials, compositions, information,
data, results of tests or studies and expertise which are used or useful for the
research, development, manufacture, use or sale of products in the Field or in
conducting research and development pursuant to this Agreement which: (a) is
under the Control of Collateral at the Effective Date, including but not limited
to the technology disclosed in the patent applications serial number ***
entitled *** filed *** by *** , and assigned to *** and serial number ***
entitled *** filed *** and the continuation in part related thereto filed on ***
by *** and assigned to *** technology licensed under the *** , and any
adenovirus drug delivery technology and continuations, continuations in part,
divisionals or any patent issuing from any technology Controlled by Collateral
and any foreign counterparts, and/or; (b) is invented, developed, acquired or
otherwise comes within the Control of Collateral
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
2
<PAGE>
after the Effective such as a gene licensed solely by Collateral and which
Collateral can demonstrate does not constitute Developed Technology.
"Competing Product" is defined in Section 4.10.
"Contribution" is defined in Section 5.2.
"Control" or "Controlled" shall refer to possession of the ability to
grant a license or sublicense of patent rights, know-how or other intangible
rights as provided for herein without
"Developed Technology" means all technology and know-how, including, but
not limited to, patents, patent applications, continuations and
continuations-in-part, divisional and provisional patent applications, trade
secrets, methods, processes, techniques, materials, compositions, information,
data, results of tests or studies and expertise which are used or useful for the
research, development, manufacture, use or sale of products in the Field which
is conceived of during the Term either (i) solely by Collateral, by a Third
Party on Collateral's behalf, jointly by Collateral and a Third Party as
permitted by this Agreement, or jointly by Schering and Collateral or (ii)
solely by Schering if conceived solely in connection with the performance of the
Research and Development Plan.
"Drug Approval Application" means an application for Regulatory Approval
required to be approved before marketing and commercial sale of a Product in
humans as a biologic or a drug in a regulatory jurisdiction.
"Field" means gene therapy to promote angiogenesis.
"First Commercial Sale" means the date Schering or Affiliate or a
Sublicensee of Schering first sells commercially, pursuant to Regulatory
Approval, Products in the United States, Japan or any country of the EU,
provided that where such a First Commercial Sale has occurred in a country for
which pricing or reimbursement approval is necessary for widespread sale, then
such sale shall not be deemed a First Commercial Sale until such pricing or
reimbursement approval has been obtained.
"Force Majeure" is defined in Section 16.10.
"Fundamental Change" means a change to any existing Product, including the
Initial Product which meets all of the following criteria: (i) in respect of
which the governing regulatory authority would require new Pivotal Clinical
Trials before granting Regulatory Approval, and (ii) which is for a deferent
label indication than such Product, and (iii) which targets a different organ
than such Product.
"Gene Presentation Period" means the later of (i) October 1, 1997, or (ii)
any extensions of such date pursuant to this Agreement or, if earlier than those
dates, the Acceptance of a Qualified Gene.
3
<PAGE>
"Gene Presentation Procedure" is defined in Section 4.7.
"IND" means the document filed by Schering pursuant to 21 CFR 312, as such
regulations may be amended with the United States Federal Food and Drug
Administration to test the Products in humans.
"Initial Product" means the Product described in the initial Research and
Development Plan with the initial indication to prevent, ameliorate, mitigate or
cure of (i) ischemic heart disease alone or in conjunction with CABG surgery,
angioplasty or medical therapy and/or (ii) peripheral arterial occlusive disease
such as limb-salvage, rest pain (Stage IV), healing of ischemic ulcers (Stage
III) and claudication and improvement of exercise tolerance (Stage II), and any
change to such Product which does not constitute a Fundamental Change.
"Information" is defined in Section 11.1 (a).
"Laboratory Notebooks" is defined in Section 3.8.
"Milestone Payments" are defined in Sections 6.1.
"Net Sales" shall be defined as amounts invoiced by Schering, or its
Affiliates from worldwide sales of each Product(s) to end users, less deductions
for: (i) transportation charges, charges, including insurance relating thereto;
(ii) sales and excise taxes or customs duties paid by selling party and any
other governmental charges imposed upon the sale of the Product(s); (iii)
distributors fees, rebates or allowances actually granted, allow or incurred;
(iv) quantity discounts, cash discounts or chargebacks actually granted, allowed
or incurred in the ordinary course of business in connection with the sale of
the Product(s); (v) allowances or credits to customers, not in excess of the
selling price of the Product(s), on account of governmental requirements,
rejection, outdating, recalls or return of the Product(s); and (vi) less actual
amounts for uncollectable accounts. Sales of the Product(s) between Schering and
its Affiliates solely for the research or clinical testing purposes in
connection with the Research and Development Plan shall be excluded from the
computation of Net Sales. In the event that Schering enters into a sublicense
covering sale of the Product(s) without the consent of Collateral, Net Sales
shall be computed based on unit or volume sales multiplied by Schering's average
selling price(s) of the Product(s) by country. In the event that Schering enters
into a sublicense covering sale of the Product(s) with the consent of
Collateral, Net Sales and royalties payable thereunder shall be as agreed by the
Parties.
"New Product" is any Product other than the Initial Product. A Fundamental
Change to a Product is a New Product so long as the result is in the Field.
"Pivotal Clinical Trials" means clinical trials which when completed will
have demonstrated that the Product(s) (i) is safe and efficacious, (ii) has an
established dose, (iii) has an established route of administration and (iv) has
a treatment schedule in the target population, all sufficient for the purpose of
supporting a Drug Approval Application.
"Product(s)" means any pharmaceutical/biologic in the Field.
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"Promissory Notes" means the promissory notes signed by Collateral dated
August 16, 1995 and on October 12, 1995.
"Qualified Gene" means a gene that Collateral presents to Schering
pursuant to Section 4.7, under which Schering has the sole discretion to accept
or reject such gene.
"Regulatory Approval" means any approvals, product and/or establishment
licenses, registrations or authorizations of any federal, state or local
regulatory agency, department, bureau or other governmental entity, necessary
for the manufacture, use, storage, importation, export, transport, or sale of
Product(s) in a regulatory jurisdiction.
"Research and Development Plan" means a written plan agreed to by Schering
and Collateral which includes the Budget and outlines the joint effort of the
Parties in conducting research and development of Product(s).
"Returned Product" is defined in Section 4.10.
"Royalty Term" is defined in Section 8.1 (a).
"Steering Committee" is defined in Section 3.3.
"Sublicensees" means, with respect to Products, a Third Party to whom
Schering has granted a sublicense under this Agreement to make, have made, use
or sell, import or offer to import such Products.
"Term" is defined in Section 15.1.
"Third Party" means an entity other than Schering, Collateral or any of
their respective Affiliates.
"UC License" means that certain exclusive license agreement effective as
of September 27, 1995, entered into by and between Collateral and The Regents of
the University of California concerning certain patent applications within the
Collateral Base Technology.
*** means that certain exclusive license agreement effective as of ***
entered into by and between Collateral and *** concerning technology in the
Field.
"Winddown Payment" is defined in Section 15.2(g).
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
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II
RESEARCH; COMMERCIALIZATION; OWNERSHIP OF REGULATORY APPLICATION(S);
CONTINUED ACCESS TO INVENTIONS IN THE FIELD
2.1 Research and Development. The Parties hereto agree to diligently conduct
and perform their respective obligations in respect of research and
development hereunder pursuant to the Research and Development Plan and
Budget. Research and development shall include all activities relating to
obtaining Regulatory Approval of Product(s) and all activities relating to
the development of the ability to manufacture the same.
2.2 Exclusive Research. During the Term, Collateral will conduct research and
development in the Field solely with Schering.
2.3 Commercialization. Schering is solely responsible for the preparation and
filing of ail Drug Approval Applications and all activities relating to
the manufacture, marketing and sale of the Products. Such Drug Approval
Applications will be filed in the name of Schering. Collateral shall be
provided copies with all final drafts of such Drug Approval Application
for comments which Schering, in its sole discretion, may or may not
incorporate in such Drug Approval Applications. With respect to such
activities, Schering will conduct itself according to international
pharmaceutical industry standards using commercially reasonable efforts in
an attempt to commercialize Products.
2.4 Ownership of IND and Drug Approval Applications. Schering owns the
regulatory submissions including all IND's and Drug Approval Applications
for all Products Collateral will have the right to cross-reference such
Schering submissions for Collateral's own IND and drug approval
applications filed solely for New Products that Collateral files pursuant
to Section 7.2. During the Term, at Collateral's reasonable requests and
at Collateral's sole expense, Schering shall provide Collateral with
copies of all regulatory submissions and material correspondence with
respect to Products.
2.5 Continuing Access to Future Inventions in the Field by *** . Collateral
will use its commercially reasonable efforts to (i) continue *** as a
consultant exclusive in the Field during the Term with exclusive rights to
any of his inventions in the Field, and (ii) obtain access to any
inventions made by *** during the Term in the Field outside of his
consulting relationship with Collateral.
III
MANAGEMENT; RESEARCH AND DEVELOPMENT PLAN AND BUDGET
3.1 Research and Development Plan and Budget. The Research and Development
Plan and Budget shall detail the research and development activities to be
undertaken by the Parties, shall set forth the personnel commitments of
Collateral and shall account
*** Portions of this page have been omitted pursuant to a request for
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for how the payments made by Schering pursuant to Section V shall be
spent. The initial Research and Development Plan and Budget for the
Initial Product attached as Exhibits C and F is adopted by the Parties.
3.2 Chances to the Research and Development Plan. Changes to any Research and
Development Plan may only be made with the express written consent of both
Parties. Such Research and Development Plan will be reviewed in the ninth
(9th) month of each calendar year and signed by both Parties at least
annually.
3.3 Establishment of Steering Committee. The Steering Committee ("Steering
Committee") shall be Dr. William Dole, Dr. Eirik Nestaas, Leonard
Slootmaker and Marvin Tancer for Schering and Dr. Kirk Hammond, Dr. Robert
Engler, Ruth Leonardi and Kathy Rooney for Collateral. The Steering
Committee shall exist during the Term. Members of the Steering Committee
shall serve on such terms and conditions as shall be determined by the
Party selecting such persons for membership on the Steering Committee.
Alternative members designated by a Party may serve in the absence of or
be substituted for a permanent member designated by such Party. The Chief
Executive Officer of Collateral and the President of Berlex Biosciences, a
division of Berlex Laboratories, Inc., an Affiliate of Schering ("Berlex
Biosciences") or their respective designees may attend the meetings of the
Steering Committee as observers.
3.4 Meetings of the Steering Committee. The Steering Committee:
(a) shall hold meetings at such times and places as shall be determined
by majority approval of the Steering Committee members, but in no
event shall such meetings be held less frequently than once every
month;
(b) may conduct meetings in person or by telephone conference, provided
that any decision made during a telephone conference meeting is
evidenced in a confirmed writing signed by one of the members of
such Steering Committee from each of the Parties;
(c) shall keep minutes reflecting actions taken at meetings;
(d) may act without a meeting if prior unanimous written consent thereto
is signed by all members of the Committee; and
(e) may amend or expand upon the foregoing procedures for its internal
operation by unanimous written consent.
3.5 Functions and Powers of the Steering Committee. The activities of the
Parties under the Research and Development Plan and Budget shall be
managed by the Steering Committee only to the extent set forth herein. The
Steering Committee shall perform the following functions:
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(a) prepare for and coordinate research and manpower commitments
pursuant to the Research and Development Plan and Budget including
approval of the use of Third Parties for research and development of
Products;
(b) subject to Section V, review and approve Budgets;
(c) engage in exchanges of information and joint planning activities;
(d) provide quarterly written research and development reports to the
Parties;
(e) notify the Parties of inventions (patentable or not) arising out of
research and development conducted pursuant to the Research and
Development Plan and for Collateral any other inventions or
discoveries whatsoever (whether patentable or not) in the Field,
including, but without limitation, any potential new applications of
the Initial Product, any potential Fundamental Changes to existing
Products and any New Products; and
(f) develop criteria for selection of development candidates and back up
candidates.
3.6 Steering Committee Actions.
(a) Limitations of Powers of the Steering Committee. The Steering
Committee shall have only such powers as are specifically delegated
to it hereunder. The Steering Committee is not a substitute for the
rights of He Parties and is intended for coordination of the
research and development of Product(s) during the Term.
(b) Decisions. All decisions to be made and actions to be taken by the
Steering Committee pursuant to the terms of this Agreement shall
require majority approval of the Steering Committee members, and, if
the Steering Committee cannot reach a majority decision on any
matter, the matter shall be referred to (i) the Vice President, Head
of Cardiovascular Research for Beltex Biosciences and Chief
Scientific Officer of Collateral to attempt to reach an agreement,
and if they cannot agree, (ii) then to the President of Berlex
Biosciences, and President of Collateral (iii) then in writing by
the President of Berlex Biosciences or the President of Collateral
to the Chairman of Berlex Laboratories, Inc., (hereinafter "Beltex")
and the Chairman of Collateral. If the two Chairman cannot resolve
the matter within ten (10) days of the written referral, either
Party may terminate this Agreement pursuant to Section 15.2(f).
3.7 Visit to Facilities; Records. Representatives of each Party may, upon
reasonable notice and at times reasonably acceptable to the other Party,
(i) visit the facilities including research laboratories and clinics where
the activities under the Research and Development Plan are being
conducted, and (ii) consult informally, during such visits and by
telephone, with personnel of the Parties. Each Party shall maintain
records in sufficient detail and in good scientific manner appropriate for
patent and Regulatory
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Approval purposes and so as to properly reflect all work done and results
achieved in the performance of this Agreement. Such records shall include
books, records, reports, research notes, charts, graphs, comments,
computations, analyses, recordings, photographs, computer programs and
documentation thereof, samples of materials and other graphic or written
data generated in connection with the Research and Development Plan,
including any data required to be maintained pursuant to applicable
governmental regulations. During the Term each Party shall respond to
reasonable requests from the other for information based on such records.
Each Party shall cause appropriate individuals working on the Research and
Development Plan to be available for meetings at the facilities where such
individuals are employed at times reasonably convenient to the Party
responding to such request.
3.8 Laboratory Notebooks. Collateral and Schering will each maintain
laboratory notebooks designed specifically for the research conducted
pursuant to the Research and Development Plan (hereinafter "Laboratory
Notebooks"), and, upon the reasonable request of a Party will give copies
of entries of such Laboratory Notebooks to the requesting Party.
IV
OWNERSHIP OF INVENTIONS; LICENSES; RIGHTS TO PRODUCTS
AND GENE PRESENTATION
4.1 Ownership. Each Party shall solely own any inventions made solely by that
Party's employees or consultants in the course of performing work under
this Agreement. Inventions made jointly by employees or consultants of
both Collateral and Schering with or without Third Parties in the course
of performing work under this Agreement, shall be jointly owned by
Collateral and Schering, and each Party shall retain full joint ownership
under any patents resulting from such inventions.
4.2 Non-Exclusive Sublicense to Schering. Collateral hereby grants Schering a
worldwide, perpetual (except under the sole circumstance of automatic
termination pursuant to Section 4.4), nonexclusive license or a
sublicense, as the case may be, with the right to sublicense, under all of
its rights in Collateral Base Technology, to make, have made, use, sell,
offer to sell or import any product in the Field.
4.3 Non-Exclusive License to Schering. Collateral hereby grants Schering a
worldwide, perpetual, nonexclusive license, with the right to sublicense,
under all of its rights in Developed Technology to make, have made, use,
sell, offer to sell or import any product.
4.4 Acceptance of Qualified Gene. Upon the Acceptance of a Qualified Gene, the
licenses to Schering under Section 4.2 and 4.3 shall automatically
terminate, and Schering shall automatically have in its place the license
in Section 4.5.
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4.5 Exclusive License to Schering. Upon Acceptance of a Qualified Gene,
Collateral automatically grants to Schering a worldwide, exclusive license
or exclusive sublicense, as the case may be, to all its rights in (i)
Collateral Base Technology, and (ii) Developed Technology in each case, to
make, have made, use, sell, import and offer to import any Product.
Schering has the right to sublicense to its Affiliates without the consent
of Collateral and the right to sublicense to Third Parties with the
consent of Collateral which shall not be unreasonably withheld. Collateral
retains its right to Collateral Base Technology and Developed Technology
for the purposes of research and development pursuant to the Research and
Development Plan and, subject to Section VII, with respect to Collateral
Base Technology and, Collateral solely invented Developed Technology and
Developed Technology jointly invented by Collateral and Schering to make,
have made, use, sell, offer to sell or import products outside the Field.
Schering hereby grants Collateral a nonexclusive license in the United
States, without the right to sublicense, to use Schering solely invented
Developed Technology solely for the purposes of research and development
pursuant to the Research and Development Plan.
4.6 Restriction on Licensing. (a) For the period from the Effective Date,
through the Gene Presentation Period, Schering shall exercise the rights
granted to it pursuant to Section 4.2 only for the purpose of conducting
research and development pursuant to this Agreement. (b) For the period
from the Effective Date, through the Gene Presentation Period, Collateral
shall not grant to any Third Party any other licenses or sublicenses, as
the case may be, to the Collateral Base Technology, or Developed
Technology. Before and after the license granted pursuant to Section 4.5
takes effect, Collateral may only grant licenses to its rights in
Collateral Base Technology, or Developed Technology consistent with
Section 4.5.
4.7 Gene Presentation Procedure; Collateral Presentation. At any time, but no
later than October 1, 1997, Collateral must present written evidence to
Schering that it believes it has secured rights to a gene which would be
acceptable by Schering or, in any case, Collateral must present by October
1, 1997 a summary of its good faith efforts to secure a gene and a full,
detailed report of the result of those efforts. During the Gene
Presentation Period, Collateral may make as many gene presentations as it
wishes ("Gene Presentation(s)"). The Gene Presentations may include all
the elements of scientific criteria listed in Exhibit E and evidence of
Collateral's belief that the gene is capable of being patented and used
without infringement of rights of Third Parties.
4.8 Gene Presentation Procedure; Schering Response. Schering shall have sixty
(60) days from each written Gene Presentation to review the evidence
presented concerning whether Collateral has a gene or secured rights to a
gene acceptable to Schering. If Schering rejects such presented gene or
gene license, it shall give Collateral written reasons for such rejection;
provided however, if Collateral makes any Gene Presentations after August
1, 1997, Schering is not required to give Collateral written or oral
reasons for such rejection. Schering has the right, in its sole
discretion, to accept or reject the presented gene with or without (i) a
reason, or (ii) cause, and without the regard for the legitimacy for the
rejection or the reasonableness of the rejection. The decision to accept
or reject the presented gene is completely free of
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any legal challenge. Schering may terminate this Agreement pursuant to
Section 15.2(e) due to the failure of Collateral to present Schering an
acceptable gene by the end of the Gene Presentation Period; provided
however, to allow for Collateral to present a gene that is acceptable to
Schering, and provided the Parties agree on a mutually acceptable Budget
for an extension of the Gene Presentation Period, Schering has the sole
right and, in its sole discretion, to extend the Gene Presentation Period
for an additional period of not shorter than three (3) months and no
longer than six (6) months. Notwithstanding anything to the contrary in
this Agreement, including any informal discussions between Schering and
Collateral concerning a presented gene or Schering responding to
Collateral's Gene Presentations with written reasons for rejection,
Schering does not waive its rights to accept such gene in its sole,
absolute discretion and Schering shall not be restricted in any manner
from exercising its sole discretion to accept or reject the presented
gene. If Schering accepts the gene, such acceptance shall be in writing
and is defined as the "Acceptance of a Qualified Gene."
4.9 Schering License Grants with Respect to New Products. If Collateral and
Schering cannot agree to the funding of research and development of a
particular New Product according to the procedure set forth in Section
7.2, except as provided in Section 7.3, at the time stated in Section
7.2(c), Schering will automatically grant Collateral a worldwide,
exclusive sublicense, without the right to sublicense, to the licenses
granted to Schering pursuant to Section 4.5, solely for the purpose of
making, having made, using, selling, offering to sell or importing the
particular New Product presented in the New Product Opportunity Report.
Schering shall retain all rights with respect to Section 4.5 for all other
purposes, Products, New Products and applications except such New Product.
4.10 Restriction on Schering Concerning Competing Products. If during the
Royalty Term, Schering first sells commercially in the U.S., Japan, or any
country of the EU, a product in the Field (herein "Competing Product"),
with the same label indication as a Product then being sold commercially
in the same country pursuant to this Agreement, then Schering will (i)
grant Collateral a sublicense to its licenses granted pursuant to Section
4.5 to make, have made, use, sell, offer to sell or import such Product
(herein "Returned Product") into such of only U.S., Japan, or any country
of the EU where such Competing Product is being sold commercially, and
(ii) stop selling such Returned Product into such of only the U.S., Japan
or any country of the EU where such Competing Product is being sold.
Collateral will pay Schering the same range of royalties for the full time
period set forth in Section VIII on Net Sales of any such Returned
Products. Schering agrees to manufacture such Returned Product for
Collateral for a period of at least twelve (12) months after this license
grant takes effect for a manufacturing transfer price to be negotiated.
V
PAYMENT FOR RESEARCH AND DEVELOPMENT OF PRODUCTS
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5.1 Phase One. Until the end of the Gene Presentation Period, Schering will
pay Collateral the amounts provided in this Section for the activities it
under takes pursuant to the critical studies plan and budget for each of
three (3) six (6) month periods (collectively, the "Phase One Plan and
Budgets"). The first Phase One Plan and Budget is attached as Exhibit 5.1.
At any time during the Gene Presentation Period, the Parties may meet to
prepare the second and third Phase One Plan and Budget to be attached as
successive Exhibits pursuant to this Section. The second and third Phase
One Plan and Budget shall be negotiated in good faith between the parties;
provided, that the second Phase One Budget shall be a minimum of
$1,000,000. Schering, in its sole discretion, subject to good faith
negotiation, will decide how much cash, if any, it will provide to
Collateral for the third Phase One Plan and Budget. Within three (3) days
of the Effective Date, Schering will wire transfer $625,000 Dollars to
Collateral's account number 0600795375 at Silicon Valley Bank (ABA No.
121140399) for the account of Collateral.
5.2 Schering's Cash and Services Contribution. Subject to continued technical
and regulatory success as defined by the Steering Committee, and pursuant
to the Research and Development Plan and Budget, for the period beginning
after the Acceptance of a Qualified Gene, for the remainder of the Term,
Schering shall contribute up to a maximum of Five Million ($5,000,000.00)
Dollars per year to the research and development of the Initial Product
("Contribution"). Such Contribution shall be advanced as follows:
(a) Cash Contribution:
(i) Up to *** for the *** after the Acceptance of a Qualified Gene
*** ("Case Contribution"), to Collateral pursuant to a
mutually agreed Research and Development Plan and Budget
administered by the Steering Committee may be spent on
research and development of the Initial Product which includes
up to *** for Collateral's general and administrative
expenses.
(ii) Collateral may spend up to *** of the Cash Contribution for
New Product research or for additional indications for the
Initial Product or Product(s) pursuant to a separate research
and development plan agreed to and signed by the Parties.
Collateral shall not receive such *** until such research and
development plan is signed by both Parties and attached as
successive Exhibits 5.2(a)(ii) to this Agreement.
(b) Carryover of Cash Contribution.
Any portion of the Cash Contribution not spent each year will be
carried over to subsequent years ("Carryovers") and may be spent
pursuant to Section 5.2(c).
*** Portions of this page have been omitted pursuant to a request for
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(c) Additional Funding.
Up to an additional *** per year plus the Carryover payable in any
combination to: (i) Collateral for research pursuant to the Research
and Development Plan, (ii) Berlex for services for the research and
development pursuant to the Research and Development Plan and (iii)
the contracting Party to be paid to Third Parties for services
pursuant to the Research and Development Plan, may be spent as
administered by the Steering Committee.
(d) Any Contribution not spent pursuant to 5.2(c) will be retained by
Schering and spent according to Schering's sole discretion.
5.3 Cash Payments to Collateral. After Acceptance of a Qualified Gene and
provided Collateral is not in breach of this Agreement, and depending on
the reconciliation stated below, on the first day of each three (3) month
period for the Term, Schering shall pay Collateral up to *** by wire
transfer to Collateral's account number *** at Silicon Valley Bank *** for
the account of Collateral. During the Term, the Parties shall reconcile
Collateral's costs and expenses each three (3) month period to determine
the actual amount of the Schering payments per quarter toward the Cash
Contribution and the amount of Carryover. Such reconciliation shall begin
six (6) months from the Effective Date, at which time Collateral will
provide Schering within, thirty (30) days from the end of each quarter a
reconciliation of actual expenses incurred during the preceding quarter
reported consistently with the detail specified in Exhibit C.
5.4 Audit Rights of Parties. During the Term, each Party shall have the right,
at it's sole expense, through a certified public accountant reasonably
acceptable to the other Party, and following reasonable notice, to examine
financial records (including COGS) of the other Party of or relating to
the other Party's performance of it obligations and duties pursuant to
this Agreement during regular business hours during the Term, subject to
the confidentiality obligation contained in Section 11.1 (b).
VI
MILESTONE PAYMENTS; DILIGENCE
6.1 Milestone Payments on Products. Subject to this Agreement, Schering shall
make the payments to Collateral stated below once for the Initial Product
and once for each New Product ("Milestone Payments").
6.2 Milestone Payment Paid Once Per Product. Each milestone may be met in any
of the United States, Japan or any country of the EU. Each Milestone
Payment will be paid
*** Portions of this page have been omitted pursuant to a request for
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*** *** . Such Milestone Payments shall be made within forty-five
(45) days of Schering reaching the particular Milestone.
6.3 Milestones
6.3.1 *** . Two Million ($2,000,000.00) Dollars upon the earlier of (i)
submission of an IND or (ii) equivalent filing in Japan or any
country of the EU, to conduct clinical trials for each Product;
6.3.2 *** . *** upon the initiation of Pivotal Clinical Trials for each
Product, of which, *** of the first such *** Milestone will be paid
by Schering in the form of forgiveness of the Promissory Notes if
such Promissory Notes are outstanding.
6.3.3 *** . *** upon the submission of a Drug Approval Application for
each Product.
6.3.4 *** . *** upon the First Commercial Sale of each Product;
6.3.5 *** . *** spread out as follows:
a. *** upon Schering achieving a cumulative total of *** of each
Product; and
b. *** upon Schering achieving a cumulative total of *** in ***
of each Product; and
c. *** upon Schering achieving a cumulative total of *** in ***
of each Product.
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
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VII
INVENTORY OF DEVELOPED TECHNOLOGY; NEW PRODUCTS; PRODUCTS OUTSIDE
THE FIELD; RIGHT OF FIRST REFUSAL; RIGHT OF FIRST OFFER
7.1 Inventory of Developed Technology. At least six (6) months prior to the
end of the Term, the Parties shall create a written inventory of the
Developed Technology. Such written inventory shall include, but not be
limited to patents, patent applications, invention disclosures,
description of know how and all tangible materials.
7.2 Milestone Payments and Royalties. The Milestone Payments and Royalties
stated in this Agreement apply separately to the Initial Product and each
New Product. The Parties may negotiate in good faith different research
and development funding for each New Product than that provided for in
Section V for the Initial Product according to the procedure stated below.
7.3 Procedure For New Products Within Seven Years of the Effective Date.
(a) For seven (7) years from the Effective Date, Collateral shall keep
Schering informed of all research concerning New Products that arise
out of Collateral Base Technology and/or Developed Technology
Controlled or created during the Term. For every such potential New
Product which is the subject of research in the Field by Collateral
and has reached the stage of proof of concept as demonstrated by in
vivo animal data, Collateral shall first and exclusively present as
a New Product opportunity to Schering, in writing, and, good faith,
giving as much detail and as complete as possible, a report on the
New Product which includes, but is not limited to a description of
technology, test data, animal test results, proof of concept,
preliminary product description, proposed indication and market
data, and patent and license analysis ("New Product Opportunity
Report");
(b) Schering has thirty (30) days from receipt of the New Product
Opportunity Report to respond in writing to Collateral whether it
wishes to proceed with a good faith negotiation of funding support
for the research and development of such New Product;
(c) If Schering notifies Collateral that it does not wish to proceed to
negotiate the funding of the research and development of such New
Product, or, If the Parties cannot agree on the amount of funding
amounts for research and development for the New Product within
three (3) months of receipt of the New Product Opportunity Report by
Schering, then Collateral may proceed as follows:
(i) if Collateral researches, develops, commercializes and sells
such New Product, alone without any Third Party, and is not an
Affiliate of any Third Party, Collateral shall pay Schering
the range of Royalties on Net Sales of such New Product as
Schering is paying or could pay pursuant to Section VIII;
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(ii) ***
***
***
***
***
***
***
***
***
***
***
***
***
(iii) if Schering and Collateral cannot agree on the terms and
conditions of an agreement with respect to Section 7.3(c)(ii)
and Collateral commercializes such New Product, Collateral and
such Third Party shall pay Schering the range of Royalties on
Net Sales of such New Product as Schering is paying or could
pay pursuant to Section VIII.
7.4 Procedure For Products Outside the Field *** of the Effective Date.
For *** from the Effective Date, Collateral shall keep Schering informed
in writing of all research, technology and know how with respect to
potential products outside the Field for which Developed Technology was
used or useful. For such *** Collateral grants Schering a right of first
negotiation in good faith to exclusively license all technology that arose
out of Developed Technology or for which Developed Technology was used and
is Controlled by Collateral to make, have made, use, sell, offer to sell
or import any product outside the Field. Collateral may not disclose
and/or negotiate with any Third Party during the three (3) month period
stated in this Section 7.5. Each right of first negotiation is initiated
by a written offer from Collateral describing the product outside the
Field and the terms of an agreement suggested by Collateral. If after ***
of good faith negotiations, the Parties cannot agree, Collateral shall not
offer, sell, license or enter into any collaboration concerning such
technology, that was described in the written offer, on better terms than
were offered to Schering for *** from the end of the each *** for each
written offer.
7.5 Procedure for New Products and Products Outside the Field For the Period
Beginning After *** After the Effective Date Through the *** Anniversary
of the Effective Date.
For the period beginning after *** after the Effective Date through the
*** of the Effective Date, Collateral grants Schering the ***
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to any potential New Product, product outside the Field, technology, or
know how that arose out of Developed Technology or for which Developed
Technology was used and is Controlled by Collateral.
VIII
ROYALTY PAYMENTS; NEW PRODUCTS AND PRODUCTS
8.1 Royalty Term.
(a) Royalty Term; Products. Schering or Collateral as provided in this
Agreement, shall pay the other Party royalties on the Net Sales of
each Product on a *** from the first commercial sale, until the
later of *** *** or until the expiration of the last to expire
patent within
Collateral Base Technology or Developed Technology which has valid
claims covering such Product in such country ("Royalty Term"). A
patent will be deemed to be expired when all the claims covering a
Product has been held invalid or unenforceable by a final,
unappealable decision of a court of competent jurisdiction.
(b) Paid-Up: License. At the end of the period for which any royalties
on each Product are due pursuant to this Agreement, Schering or
Collateral as provided in this Agreement, shall have a fully paid
license granted pursuant to this Agreement.
8.2 Royalties on Annual Net Sales of Each Product. During the Royalty Term,
Schering or Collateral shall pay the other Party a *** on annual Net Sales
of each Product of *** plus:
(a) *** if:
(i) Annual Net Sales are greater than *** , but less than *** and
COGS is less than or equal to ***;
(ii) Annual Net Sales are greater than *** , but less than *** and
COGS is greater than *** and less than or equal to ***;
(b) *** if:
(i) Annual Net Sales are greater than *** and less than *** and
COGS is greater than *** and less than or equal to ***;
(ii) Annual Net Sales are greater than *** and COGS is greater than
*** and less than or equal to ***;
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
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(c) *** if:
(i) Annual Net Sales are greater than *** but less than or equal
to *** and COGS is less than or equal to ***.
(ii) Annual Net Sales are greater than *** and COGS is greater than
*** and less than or equal to ***;
(d) *** if:
(i) Annual Net Sales are greater than *** and COGS is less than or
equal to ***.
Each Product shall meet its own Net Sales threshold for purposes of
calculating the royalties due under this Section 8.2
8.3 Payment of Royalties.
(a) Royalty Report. Each Party shall provide the other Party a royalty
report based on the *** and, if applicable, a royalty payment to the
other Party on a quarterly calendar basis. The report relating to
Net Sales within the U.S. shall be provided within thirty (30) days
after the end of the calendar quarter to which such report and
payment apply and the report relating to Net Sales for countries
other than the U.S. shall be provided within one hundred and twenty
(120) days after the end of the calendar quarter to which such
report and payment apply. Within sixty (60) days at the end of each
calendar year for the U.S. and within ninety (90) days for the
remainder of the world, the paying Party shall provide an annual
royalty report and payments, if any, relating to the annual Net
Sales and any additional amounts due, pursuant to Section 8.2.
(b) Records Retention. Each Party shall keep, and require any
Sublicensee and Affiliate to keep, for a period of not less than ***
, complete and accurate records of all Net Sales of Products. Each
Party shall have the right, at such Party's sole expense, through a
certified public accountant reasonably acceptable to the other
Party, and following reasonable notice, to examine such royalty
records during regular business hours during the life of the other
Party's obligation to pay royalties on Products; provided however,
that such examination shall not (i) be of records for more than the
prior three (3) years, (ii) take place more often than once a year,
and (iii) shall not cover any records which date prior to the date
of the last examination, and provided further that, such accountants
shall report to the auditing Party only as to the accuracy of the
royalty statements and payments and the amount of any underpayment;
provided further if there is a greater than ten (10%) percent under
reporting between the amount of Net Sales reported by the Party
obligated to pay
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
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royalties and that reported in such audit such Party shall pay the
costs of the audit plus any discrepancy in the amount of royalty
due.
(c) Tax on Royalties. Any tax paid or required to be withheld by
Schering or Collateral for the benefit of the other Party on account
of royalties payable to the other Party under this Agreement shall
be deducted from the amount of royalties otherwise due. Each Party
shall secure and send to the other Party proof of any such taxes
withheld and paid by Schering or Collateral for the benefit of the
other Party and shall, at the other Party's request, provide
reasonable assistance to the other Party in recovering said taxes,
if possible.
(d) Form of Payment. All payments due to Schering or Collateral
hereunder shall be made in United States dollars, for the other
Party's account, by wire to a bank in the United States designated
in writing by such Party; provided, that where payments in respect
of Net Sales are based on Net Sales in non-U.S. currencies, the
amount of Net Sales and any deductions used to calculate Net Sales,
if any, shall be converted monthly to United States dollars at the
average of the average daily "bid" and "asked" exchange rates as
provided by Reuters for the applicable month.
8.4 Royalty Payments to Third Parties. Except as provided in Section 10.6,
Collateral will pay all royalties and/or lump sum payments, if any, due to
Third Parties with respect to the Products and, if Collateral has failed
to make such payments in a timely manner, Schering may pay such royalties
to such Third Parties and credit such payments against any royalties due
Collateral pursuant to this Agreement.
8.5 Net Sales Exclusions. In the event that Schering or its Sublicensees
distributes Products to any entity for research or clinical testing
purposes, or indigent or other public support programs, and determines
that such distributions shall be excluded from the computation of Net
Sales, then Schering shall exclude such distributions from Net Sales and
provide Collateral such information with the royalty report provided for
in Section 8.3(a) describing such distribution of all such Products, the
purpose for which such Products were distributed, and the quantities of
Products and so distributed in the preceding calendar year.
8.6 Cross Royalties for products in the Field. In the event Schering
terminates this Agreement pursuant to Section 15.2(e), Schering shall pay
Collateral a royalty of *** on *** that are claimed by one or more issued
patents in *** and Collateral shall pay Schering a royalty of *** on ***
are claimed in one or more issued patents in *** . In both circumstances,
Collateral shall pay all royalties due pursuant to the UC License. The Net
Sales definition of this Agreement applies to such product net sales. For
purposes of this Section 8.6, Sections 8.3, 8.4 and 8.5 shall apply.
Royalties will be paid on the Net Sales of each product for a period from
the date of the first commercial sale on a country by country basis until
the last to expire patent within Collateral Base Technology or Developed
Technology.
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
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8.7 Schering Right to Negotiate Reductions in Royalties and Milestones.
The Parties agree that Collateral is solely responsible for all payments
and royalties to Third Parties with respect to Collateral gaining access
to a gene that may be acceptable to Schering. The Parties agree that the
Royalties and Milestones negotiated in this Agreement, and the basis for
Schering proceeding with this Agreement is the assumption that Collateral
will obtain exclusive rights to a gene in the Field and Collateral will
not grant any rights in the Field to Third Parties.
(a) If Collateral obtains less than exclusive rights to a gene in the
Field from a Third Party and, if Schering, in its sole discretion,
decides to permit and proceed with such an arrangement Schering and
Collateral will discuss reductions in the Milestone Payments and
Royalties and other aspects of this Agreement.
(b) If Collateral obtains less than exclusive rights to a gene in the
Field from a Third Party, and, if Schering, in its sole discretion,
decides to permit and proceed with such an arrangement, and if such
Third Party sells a product in the Field, Schering and Collateral
will in good faith negotiate reductions in the Milestone Payments
and Royalties and other aspects of this Agreement to take into
account such Third Party selling products in the Field.
(c) If Collateral obtains less than exclusive rights to a gene in the
Field from a Third Party and, if Schering, in its sole discretion,
decides to permit and proceed with such an arrangements and/or such
Third Party requires access to Collateral Base Technology, Developed
Technology or Products, Schering and Collateral will in good faith
negotiate reductions in Milestone Payments and Royalties and other
aspects of this Agreement to take into account such Third Party
participating in the business opportunity that is the subject matter
of this Agreement.
IX
REPORTS, BOOKS AND TAX MATTERS
9.1 Examination of Books. Each of the Parties shall keep and maintain complete
and accurate books in respect of its activities under this Agreement.
Unless otherwise provided, each Party shall provide the other the right to
inspect such records, and shall provide copies of all requested records,
to the extent reasonably related to the performance of the other's
obligations under this Agreement. The Parties shall retain such records
for so long as the Parties shall mutually determine.
9.2 Tax Matters. Collateral agrees that Schering is entitled to all tax
benefits, including in particular, tax credits and/or tax deductions
attributable to amounts Schering has funded hereunder excepting amounts
funded and paid by Collateral. Collateral shall file its federal, state,
and local tax returns on a basis consistent with this Agreement, and shall
not take any action inconsistent with Schering's entitlement to such tax
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benefits. In the event that either Party, in its reasonable judgment,
determines that it must obtain information and verification regarding the
use or application of such expenditures in order to prepare its tax
returns or to respond to an inquiry during a tax audit or any other
inquiry relating to such treatment of its tax return, or to defend its tax
position in any proceeding including litigation, each Party shall
reasonably cooperate with the other Party and furnish it with such
information as it may reasonably require at such Party's request and sole
expense.
X
PATENTS
10.1 Disclosure by Employees, Agents or Independent Contractors. Schering and
Collateral agree that as to any employees, agents, or independent
contractors of Schering and Collateral presently in their employ or who
are hired or retained by Schering or Collateral to perform, manage
performance of, or participate in the research done pursuant to this
Agreement, Schering and Collateral will ensure that such employees,
agents, or independent contractors will promptly disclose and assign to
the party engaging them any and all rights to inventions, developments, or
improvements, (whether patentable or not) conceived and/or reduced to
practice during the course of their duties. Each Party will notify the
other Party promptly of the subject matter of any inventions within the
Developed Technology or Collateral Base Technology.
10.2 Patent Prosecution and Related Activities.
(a) Collateral Base Technology and Collateral Solely Invented Developed
Technology. Collateral shall be responsible, at its sole expense,
for preparing, filing, prosecuting and maintaining in at least
United States and Canada, Europe, Japan and Australia ("Countries
and Territories"), and conducting any interferences,
re-examinations, reissues and oppositions, relating to patent
applications and patents all relating to Collateral Base Technology
and Collateral solely invented Developed Technology ("Collateral
Inventions") in the Countries and Territories. If Schering wishes to
fife and prosecute patent applications disclosing Collateral
Inventions in countries and territories other than where Collateral
has or will file, then Schering has the right to do so at Schering's
expense using attorneys designated by Schering and reasonably
acceptable to Collateral.
(b) Jointly Invented Developed Technology and Schering Solely Invented
Developed Technology. Schering shall be responsible, at its sole
expense, for preparing, filing, prosecuting and maintaining in at
least the Countries and Territories, and conducting any
interferences, re-examinations, reissues and oppositions relating to
patent applications and patents all relating to Developed Technology
solely invented by Schering and jointly invented by Schering and
Collateral with or without Third Parties ("Schering Inventions") in
such Countries and Territories. If Collateral wishes to file and
prosecute patent applications
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disclosing Schering Inventions in countries and territories other
than where Schering has or will file, then Collateral has the right
to do so at Collateral's expense using attorneys designated by
Collateral reasonably acceptable to Schering.
(c) Comments on Patent Applications and Patent Prosecution. Each Party
has the right of prior review and comment on the other Party's
patent applications and patent prosecutions filed and/or prosecuted
pursuant to Sections 10.2 (a) and (b).
(d) Election Not to Prosecute. With ninety (90) days prior notice to the
other Party, either Party may elect, not to file and/or to
discontinue the prosecution of any proceeding of or relating to any
patent applications filed in any country pursuant to Section 10.2
above. In the event Schering or Collateral respectively decline to
file or having filed fail to further prosecute or maintain any
patent applications or patents subject to this Agreement, or conduct
any interferences, re- examinations, reissues, oppositions with
respect thereto, the other Party shall have the right to prepare,
file, prosecute and maintain such patent applications and patents,
in such countries worldwide as it deems appropriate, and conduct any
interferences, re-examinations, reissues or oppositions at its sole
expense.
10.3 Cooperation. Each of Schering and Collateral shall keep the other fully
informed as to the status of patent matters described in this Section X
including, without limitation, by providing the other Party the
opportunity to fully review and comment on any documents which will be
flied in any patent office as far in advance of filing dates as feasible,
and providing the other copies of any documents that such party receives
from such patent offices promptly after receipt, including office actions,
notices of all interferences, reissues, re-examinations, oppositions or
requests for patent term extensions. Schering and Collateral shall each
reasonably cooperate with and assist the other at its own expense in
connection with such activities, at the other party's request.
10.4 Permitted Disclosures. Following a written notice from the other Party
hereto, the Parties shall in good faith grant each other permission, not
to be unreasonably withheld, to disclose in the specification of a patent
application filed by the other Party pursuant to this Agreement, any
Collateral Base Technology, or Developed Technology necessary to support
and enable claims in such patent applications.
10.5 Third Party Infringement.
(a) Schering Rights. Subject to the rights of Collateral's licensors,
Schering, at its sole discretion and sole expense, shall have the
sole right to initiate and control any legal action to enforce any
patent rights it Controls pursuant to this Agreement, with respect
to any infringing Third Party product that in Schering's opinion
competes with any Product(s) or defend any declaratory judgment
action relating thereto ("Product Infringement Offenses").
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(b) Collateral Rights. Subject to the rights of Collateral's licensors,
Collateral may initiate and control any legal action that is not a
Product Infringement Offense to enforce any of its patent rights it
Controls against any Third Party; provided however if an adverse
ruling in such legal action could adversely affect Schering's
research, development, manufacture or sale of Product(s), Collateral
may not initiate such legal actions without the prior written
permission of Schering which will not be unreasonably withheld.
(c) Recoveries. (a) Any recovery received in connection with a suit
brought by Schering pursuant to Section 10.5(a) shall be paid first
to reimburse Schering for its expenses including attorneys fees,
second to reimburse Collateral for its expenses including attorneys
fees with the remainder being paid eighty-five (85%) percent to
Schering and fifteen (15%) percent to Collateral. (b) Any recovery
received in connection with a suit brought by Collateral pursuant to
Section 10.5(b) shall be paid first to reimburse Collateral for its
expenses including attorneys' fees, second to reimburse Schering for
its expenses including attorneys' fees, with the remainder being
paid Collateral.
(d) No Settlement without Consent. Neither Party shall enter into any
settlement of any claim, suit or proceeding under Section 10.5 which
admits or concedes that any aspect of the Collateral Base
Technology, or Developed Technology is invalid or unenforceable
without the prior written consent of the other Party which shall not
be unreasonably withheld.
(e) Cooperation. Unless both Parties are sued or are joined in such
lawsuit, each Party shall keep the other reasonably informed of the
progress of any claim, suit or proceeding subject to this Section
10.5 and cooperate reasonably in connection with such activities at
the request of the Party involved in such claim, suit or proceeding.
Each Party may be represented by counsel of its choice.
10.6 Infringement Claims by Third Parties.
(a) Schering Control. If the manufacture, sale, offer for sale, use or
import of any Product(s) pursuant to this Agreement results in any
claim, suit or proceeding alleging patent infringement against
Schering (or its Sublicensees) by reason of its use or sale of a
Product ("Defense Proceeding"), Schering shall promptly notify
Collateral in writing setting forth the facts of such claim in
reasonable detail. Schering shall have the first right to defend and
control the defense and settlement of any such Defense Proceeding.
(b) Schering Control; Sharing of Costs and Damages. In the event
Schering so notified Collateral of its decision to control the
defense, Schering shall be entitled to select counsel of its choice
and direct and instruct such counsel and control the defense. All
costs of defense and any amounts paid by way of judgment or
settlement shall be borne fifty (50%) percent by Collateral and
fifty (50%) by Schering according to Section 10.6 (d). Provided,
however, in the event any judgment is entered (which becomes final
with all rights of appeal
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exhausted) which specifically awards damages for willful
infringement, Schering shall be solely responsible to pay the amount
of such willful damages in excess of actual damages.
(c) Collateral Control; and Damages. if Schering decides not to control
such Defense Proceeding, it shall give Collateral reasonable notice
of such decision, and Collateral shall control such Defense
Proceeding and Collateral shall bear all costs, damages, including
damages for willful infringement.
(d) Reserve. In the event that Schering establishes, according to its
normal and customary accounting practices, a reserve for the Defense
Proceeding it defends pursuant to (a) and (b) above, at the time of
the establishment of the reserve, the Parties shall agree upon a
payment schedule for Collateral whereby Schering may reduce the
amount of royalties due pursuant to Section VIII by the amounts to
be paid by Collateral pursuant to this Section. If no royalty is
being paid to Collateral, then such amounts will be paid by Schering
with the right to credit against future royalties. Provided however,
Schering's deduction from royalties due for Collateral's payments to
such reserve in any one calendar year cannot be greater than
one-half of the result of (a) the total royalty due Collateral under
Section 8.2 less (b) the royalty due pursuant to the UC License.
(e) No Settlement without Consent. Neither Party shall enter into any
settlement of any claim, suit or proceeding under this Section 10.6
which admits or concedes that any aspect of the Collateral Base
Technology, or Developed Technology is invalid or unenforceable
without the prior written consent of the other Party which shall not
be unreasonably withheld.
(f) Cooperation. Unless both Parties are sued or are joined in such
lawsuit, each Party shall keep the other reasonably informed of the
progress of any claim, suit or proceeding subject to this Section
10.6 and cooperate reasonably in connection with such activities at
the request of the Party involved in such claim, suit or proceeding.
Each Party may be represented by counsel of its choice.
XI
CONFIDENTIALITY
11.1 Confidentiality.
(a) Information. As used in this Section 11.1, the term "Information"
means the non-public, proprietary or otherwise confidential
information, specifications, know-how, materials, data and other
communications, oral or written, disclosed or provided to either
Party (the "Recipient") by or on behalf of the other Party (the
"Disclosing Party") pursuant hereto or in connection herewith,
together with
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all portions of analyses, studies and other documents prepared by or
for the benefit of the Recipient which contain or otherwise reflect
any of the foregoing.
(b) Term of Confidentiality. The Recipient will keep all Information
provided by the disclosing party confidential for the Term and ten
(10) years thereafter and shall use such Information solely for the
purposes of this Agreement. Without the prior written consent of the
Disclosing Party, the Recipient will not disclose any Information to
any Third Party, except to the officers, employees, agents, or
representatives of the Recipient or the Recipient's Affiliates
(collectively "Representatives"), who, in each case, need to know
any such Information for purposes of the implementation and
performance by the Recipient of this Agreement, and will use the
Information provided by the disclosing party only for such limited
purposes.
(c) Warranty of Obligation. Each Party warrants that each of its
Representatives to whom any Information provided by the disclosing
party is revealed shall previously have been informed of the
confidential nature of the Information and shall have agreed to be
bound by the terms and conditions of this Agreement applicable to
the Recipient. The Recipient shall use commercially reasonable
efforts ensure that the Information provided by the Disclosing Party
is not used or disclosed by such Representatives except as permitted
by this Agreement and shall be responsible for any breach of this
Agreement.
(d) Ownership of Information. All Information shall remain the property
of the Disclosing Party; provided however, each Party may keep a
copy of such information for archival purposes. Upon the written
request of the Disclosing Party (i) all tangible Information
provided by the Disclosing Party (including all copies thereof and
all unused samples) except for Information consisting of analyses,
studies and other documents prepared by or for the benefit of the
Recipient, shall be promptly returned to the Disclosing Party, and
(ii) ail portions of such analyses, studies and other documents
prepared by or for the benefit of the Recipient (including all
copies thereof) which are within the definition of Information shall
be destroyed, with such destruction certified in writing to the
Disclosing Party by the Recipient; provided however, the Recipient
may keep one archival copy of such Information.
(e) Obligation of Confidentiality. The obligations of confidentiality
and non-use set forth in this Agreement shall not apply to any
portion of the Information which:
(i) is or becomes public or available to the general public
otherwise than through the act or default of the Recipient or
its Representatives; or
(ii) is obtained by the Recipient from a Third Party who is
lawfully in possession of such Information and is not subject
to an obligation of confidentiality or non-use owed to the
Disclosing Party or others; or
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(iii) is previously known to the Recipient prior to disclosure to
the Recipient by the Disclosing Party under this Agreement, as
shown by written evidence, and is not obtained or derived
directly or indirectly from the Disclosing Party; or
(iv) is disclosed by the Recipient pursuant to the requirement of
law, provided that the Recipient has complied the provisions
set forth in this Section 11.1; or
(v) is independently developed by Recipient without the use of or
reliance on any Information provided by the Disclosing Party
hereunder, as shown by contemporaneous written evidence.
(f) Legal Disclosure. If the Recipient becomes legally required to
disclose any Information provided by the disclosing party, the
Recipient will give the Disclosing Party prompt notice of such fact
so that the Disclosing Party may obtain a protective order or other
appropriate remedy concerning any such disclosure and/or waive
compliance with the non-disclosure provision of this Agreement.
Recipient will reasonably cooperate with the Disclosing Party in
connection with the Disclosing Party's efforts to obtain any such
order or other remedy. If any such order or other remedy does not
fully preclude disclosure or the Disclosing Party waives such
compliance, Recipient will make such disclosure only to the extent
that such disclosure is legally required and will use its reasonable
efforts to have confidential treatment accorded to the disclosed
Information.
(g) No Warranty As To Reliability. Each of the parties acknowledges that
neither party makes any representation or warranty as to the
reliability, accuracy or completeness of any of the Information,
except for any specific representation or warranty made in other
sections of this Agreement. Recipient agrees that neither the
Disclosing Party nor any of the Disclosing Party's Representatives
shall have any liability to Recipient arising from the Information
provided by the Disclosing Party except as otherwise provided
herein.
(h) No Implied License. Except as otherwise set forth in this Agreement,
nothing herein shall be construed as giving Recipient any right,
title, interest in or ownership of the Information provided by the
Disclosing Party, and with respect to any portion thereof which is
or becomes public information and is now or hereafter becomes
covered by any patent, Recipient's rights with respect thereto shall
be subject to all rights of the patent owner and/or licenses.
(i) Public Domain. For the purpose of this Agreement, specific
information disclosed as part of Information shall not be deemed to
be in the public domain or in the prior possession of Recipient
merely because it is embraced by more general information in the
public domain or by more general information in the prior possession
of Recipient.
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(j) Prior Confidentiality Agreements. To the extent the duties and
obligations undertaken pursuant to Section XI conflict with the
Confidential Disclosure Agreements between the Parties dated June 6,
1995 the duties and obligations undertaken pursuant to Section XI
shall control.
11.2 Publications. The Steering Committee will discuss and review proposed
publications describing the scientific results of the Research and
Development Plan. Subject to the rights of Collateral's licensers, either
Party may, in its sole discretion, decide not to permit publication of
confidential Information by the other Party of any scientific results of
the Research and Development Plan.
XII
REPRESENTATIONS, WARRANTIES AND COVENANTS OF COLLATERAL
12.1 Collateral represents and warrants and covenants to Schering as follows:
(a) Organization. It is a corporation duly organized, validly existing
and in good standing under the laws of the State of California.
(b) Authority. It has full corporate power and authority to execute and
deliver this Agreement and the other agreements and instruments to
be executed and delivered by Collateral pursuant hereto and to
consummate the transactions contemplated hereby and thereby. All
corporate acts and other proceedings required to be taken to
authorize such execution, delivery, and consummation have been duly
and properly taken and obtained.
(c) Enforceability. This Agreement has been duly executed and delivered
by Collateral and constitutes, and such other agreements and
instruments when duly executed and delivered by Collateral will
constitute, legal, valid, and binding obligations of Collateral
enforceable against Collateral in accordance with their respective
forms.
(d) Approvals, Consents. Etc. No approval, authorization, consent, or
other order or action of or filing with any court, administrative
agency or other governmental authority is required for the execution
and delivery by Collateral of this Agreement and the execution and
delivery by Collateral of such other agreements and instruments or
the consummation of the transactions contemplated hereby or thereby.
(e) No Conflicts. None of the execution, delivery, or performance of
this Agreement or the other agreements and instruments to be
executed and delivered by Collateral (i) conflicts with or results
in a breach under the charter documents or any material contractual
undertaking of Collateral, including but not limited to the UC
License and the *** or (ii) conflicts with or results in a violation
of any of the laws of the jurisdiction of incorporation of
Collateral.
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*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
<PAGE>
Collateral has not entered and will not and enter into any written
or oral agreement before or after the Effective Date that is or
would be inconsistent with its obligations under this Agreement.
(f) Title. As of the Effective Date, it has good title to or valid
leases or licenses for all its properties, rights, and assets
necessary for the fulfillment of its obligations and
responsibilities under this Agreement.
(g) Patent Infringement. As of the Effective Date, it is not aware of a
Third Party patent that would be infringed by the research and
development contemplated under the Research and Development Plan.
(h) Sufficient Rights. (i) Except as contemplated herein, as of the
Effective Date it owns or possesses adequate licenses or other
rights to use all patents, patent rights, inventions, know-how,
including technology in the Field licensed pursuant to the UC
License and the *** to conduct research and development, to grant
rights and licenses to Schering, and to fulfill its other duties and
obligations pursuant to this Agreement. As of the Effective Date,
the rights and licenses granted to Schering hereunder do not violate
the rights of any Third Party to which Collateral has granted a
license. Collateral has not and will not during the Term of this
Agreement enter into any contract, agreement, or other arrangement
with a Third Party pertaining to the Field inconsistent with this
Agreement, and (ii) as of the Effective Date and as long as Kirk
Hammond is an employee of The Regents of the University of
California all his inventions in the Field conceived during the Term
(except for the inventions he conceives as a consultant of
Collateral) will be at the *** governed by the *** .
(i) License. It is not in material breach of, and this Agreement will
not result in any material breach of the UC License and/or the *** .
(j) No Prior Grant or Patents. As of the Effective Date and through the
end of the Royalty Term, Collateral has not and will not grant any
assignments, licenses or sublicenses or otherwise transfer to Third
Parties, Collateral Base Technology, Developed Technology or the UC
License in a manner inconsistent with this Agreement.
(k) No Sublicense Royalties Under Collateral Base Technology. As of the
Effective Date and through the end of the Royalty Term, there are no
and will not be any licenses between Collateral and Third Parties to
the Collateral Base Technology that would require Schering to pay a
Third Party a royalty to make, have made, use, sell, offer to sell
or import Product(s).
(l) Use of Contribution. As of the Effective Date and through the end of
the Royalty Term, except for that portion of the Cash Contribution
made pursuant to Section 5.2(a)(ii) which Collateral covenants will
only be used pursuant to such Section, Collateral will use the
Contribution and the payments made pursuant to
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
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Section 5.2 solely for the research and development of Product(s)
pursuant to the Research and Development Plan and this Agreement and
permitted overhead allocations.
XIII
REPRESENTATIONS, WARRANTIES AND COVENANTS OF SCHERING
13.1 Schering represents and warrants to Collateral as follows:
(a) Organization. It is a corporation duly organized, validly existing
and in good standing under the laws of Germany.
(b) Authority. It has full corporate power and authority to execute and
deliver this Agreement and the other agreements and instruments to
be executed and delivered by Schering pursuant hereto and to
consummate the transactions contemplated hereby and thereby. All
corporate acts and other proceedings required to be taken to
authorize such execution, delivery, and consummation have been duly
and properly taken and obtained.
(c) Enforceability. This Agreement has been duly executed and delivered
by Schering and constitutes, and such other agreements and
instruments when duly executed and delivered by Schering will
constitute, legal, valid, and binding obligations of Schering
enforceable against Schering in accordance with their respective
terms.
(d) Approvals Consents. Etc. No approval, authorization, consent, or
other order or action of or filing with any court, administrative
agency or other governmental authority is required for the execution
and delivery by Schering of this Agreement and the execution and
delivery by Schering of such other agreements and instruments or the
consummation by Schering of the transactions contemplated hereby or
thereby (other than contemplated Products Regulatory Approvals).
(e) No Conflicts. None of the execution, delivery, or performance of
this Agreement or the other agreements and instruments to be
executed and delivered by Schering, (i) conflict with (or will
conflict with) or results in a breach under (or will result in a
breach under) the charter documents or any material contractual
undertaking of Schering or its Affiliates or (ii) conflicts with (or
will conflict with) or results in a violation of (or will result in
a violation of) any of the laws of the jurisdiction of incorporation
of Schering.
(f) Title. As of the Effective Date, it has good title to or valid
leases or licenses for all its properties, rights, and assets
necessary for the fulfillment of its obligations and
responsibilities under this Agreement.
29
<PAGE>
XIV
DISCLAIMERS; SURVIVAL INDEMNIFICATION
14.1 Disclaimer. Schering and Collateral specifically disclaim any guarantee
that the research will be successful, in whole or in part. The failure of
the Parties to successfully develop Products will not constitute a breach
of any representation or warranty or other obligation under this
Agreement. Neither Schering nor Collateral makes any representation or
warranty or guaranty that the Research and Development Plan will be
sufficient for the successful completion of the research. EXCEPT AS
OTHERWISE EXPRESSLY SET FORTH IN THIS AGREEMENT, COLLATERAL AND SCHERING
MAKE NO REPRESENTATIONS AND EXTEND NO WARRANTIES OR CONDITIONS OF ANY
KIND, EITHER EXPRESS OR IMPLIED, WITH RESPECT TO THE COLLATERAL BASE
TECHNOLOGY AND DEVELOPED TECHNOLOGY, PRODUCTS, INCLUDING, BUT NOT LIMITED
TO, WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE,
VALIDITY OF COLLATERAL BASE TECHNOLOGY OR DEVELOPED TECHNOLOGY, PATENTED
OR UNPATENTED, OR NON-INFRINGEMENT OF THE INTELLECTUAL PROPERTY RIGHTS OF
THIRD PARTIES.
14.2 Survival of Representations Warranties, Covenants, and Agreements. The
representations, warranties, covenants, and agreements contained in this
Agreement, and in other agreements and instruments to be executed and
delivered by the Parties pursuant to this Agreement, shall survive the
Term and the completion of the other actions set forth herein and shall
remain in full force and effort. Except as expressly provided herein, the
representations, warranties, covenants, and agreements contained herein,
and in the other agreements and instruments to be executed and delivered
by the Parties hereto the Parties confirm that they have not relied upon
any and other representations, warranties, covenants. and agreements as an
inducement to enter into this Agreement or the other agreements and
instruments to be executed and delivered by the Parties pursuant to this
Agreement.
14.3 Indemnification By Collateral. Collateral hereby agrees to indemnify and
hold Schering, its Affiliates and their respective officers, directors,
stockholders, employees, agents. and representatives (collectively, the
"Schering Indemnitees") harmless on an after-tax basis from and against
any and all claims, liabilities, losses damages, costs and expenses in
respect of claims against the Schering Indemnitees by parties other than
the Schering Indemnitees, including reasonable fees and disbursements of
counsel and expenses of reasonable investigation (collectively, "Schering
Losses"), arising out of, based upon or caused by: (i) the inaccuracy of
any material representation or the material breach of any warranty,
covenant or agreement of Collateral contained in this Agreement or in any
other agreement or instrument delivered by Collateral pursuant to this
Agreement; (ii) the material breach by Collateral of this Agreement or of
any other agreement or instrument delivered by Collateral pursuant to this
Agreement; (iii) any material failure by Collateral, its Affiliates or
designee to conduct the research pursuant
30
<PAGE>
to the Research and Development Plan in a diligent and professional manner
and/or in accordance with applicable U.S. laws and regulations; (iv) any
gross negligence or intentional wrongdoing in the research conducted by
Collateral, its Affiliates or designees (except in each case to the extent
that any Schering Loss is due to the negligence or willful misconduct of
Schering Indemnitees.)
14.4 Indemnification By Schering. Schering hereby agrees to indemnify and hold
Collateral, its Affiliates, subcontractors and their respective officers,
directors, shareholders. employees, agents, and representatives
(collectively, the "Collateral Indemnitees") harmless on an after-tax
basis from and against any and all claims, liabilities, losses, damages,
costs and expenses in respect of claims against the Collateral Indemnitees
by parties other than the Collateral Indemnitees, including reasonable
fees and disbursements of counsel and expenses of reasonable investigation
(collectively, "Collateral Losses"), arising out of, based upon or caused
by: (i) the material inaccuracy of any representation or the material
breach of any warranty, covenant or agreement of Schering contained in
this Agreement or in any other agreement or instrument delivered by
Schering pursuant to this Agreement; (ii) any material failure by
Schering, its Affiliates or designee to conduct the research pursuant to
the Research and Development Plan in a diligent and professional manner
and in accordance with applicable laws and regulations; (iii) any gross
negligence or intentional wrongdoing in the research conducted by
Schering, its Affiliates or designees; or (iv) except for Third Party
patents, the development, pre-clinical and clinical testing, manufacture,
distribution, sale and/or use (including but not limited to Products
liability claims) of any Products made, used or distributed by Schering or
its licensees (except in each case to the extent that any Collateral Loss
is due to the negligence or willful misconduct of Collateral indemnitees).
14.5 Notices, Etc. Each indemnified party agrees to give the indemnifying party
prompt written notice of any action, claim, demand, discovery of fact,
proceeding or suit (collectively, "Claims") for which such indemnified
party intends to assert a right to indemnification under this Agreement;
provided however, that failure to give such notification shall not affect
the indemnified party's entitlement to indemnification hereunder except to
the extent that the indemnifying party shall have been prejudiced as a
result of such failure. The indemnifying party shall have the initial
right (but not the obligation) to defend, settle or otherwise dispose of
any Claim for which the indemnified party intends to assert a right to
indemnification under this Agreement as contemplated in the preceding
sentence if and so long as the indemnifying party has recognized in a
written notice to the indemnified party provided within thirty (30) days
of such written notice its obligation to indemnify the indemnified party
for any Collateral Losses or Schering Losses (as the case may be) relating
to such Claim, provided however that the indemnifying party shall obtain
the written consent of the indemnified party prior to ceasing to defend,
settling or otherwise disposing of any Claim. If the indemnifying party
fails to state in a written notice during such thirty (30) day period its
willingness to assure the defense of such a Claim, the Collateral or
Schering Indemnitee, as the case may be, shall have the right to defend,
settle or otherwise dispose of such claim, subject to the applicable
provisions of 14.3 and 14.4 above.
31
<PAGE>
14.6 Agreement Not to Sue. Notwithstanding anything to the contrary in this
Agreement or any other agreement or instrument delivered by Collateral or
Schering pursuant to this Agreement, Schering and Schering, on behalf of
themselves, their Affiliates and designees, agrees not to sue or initiate
legal action on any legal theory against any of Collateral's or Schering's
past, current or future shareholders, officers, or directors.
XV
TERM, TERMINATION, AND EXPIRATION
15.1 Term. Unless earner terminated, the Term of this Agreement is five (5)
years from the Effective Date. The licenses granted herein shall be
effective as of the Effective Date and shall continue in full force and
effect on a country-by-country basis until Schering and its Sublicensees
have no remaining royalty obligations in a country, at which time Schering
shall have a fully paid up license in such country and the surviving terms
of this Agreement shall terminate in such country.
15.2 Termination.
(a) Breach. If either Party materially breaches, or materially defaults
in the performance of, or fails to be in compliance with, any
material warranty, representation, agreement or covenant of this
Agreement, including any payment obligations, and such default or
noncompliance shall not have been substantially remedied, or steps
initiated to substantially remedy the same to the other Party's
reasonable satisfaction, within sixty (60) days after receipt by the
defaulting Party of a written notice thereof and demand to cure such
default from the other Party; provided however, the defaulting Party
has just one opportunity to initiate the steps to cure such default
or noncompliance, the Party not in default or breach may terminate
this Agreement. In such instance the terminating Party may maintain
the licenses and, subject to damages for such breach, obligations
pursuant to this Agreement.
(b) Bankruptcy. Either Party may terminate this Agreement or the
licenses granted by such Party, if, at any time, the other Party
shall file in any court pursuant to any statute, a petition in
bankruptcy or insolvency or for reorganization in bankruptcy or for
an arrangement or for the appointment of a receiver or trustee of
such Party or of its assets, or if such Party proposes a written
agreement of composition or extension of its debts, or if such Party
shall be served with an involuntary petition against it, filed in
any insolvency proceeding, and such petition shall not be dismissed
within sixty (60) days after the filing thereof, or if such Party
shall propose or be a party to any dissolution, or if such Party
shall make an assignment for the benefit of creditors.
(c) Change in Control During the Term. During the Term, if any Third
Party shall purchase substantially all the assets of Collateral or
if there is a change of control of Collateral, the other Party may
terminate this Agreement upon ninety
32
<PAGE>
(90) days written notice. As used herein, change of control shall
mean the acquisition by a Third Party which is a competitor of
Schering or Collateral, respectively, of forty-nine (49%) percent or
more of the voting stock of Collateral, respectively.
(d) Lack of Technical Feasibility. If the Steering Committee issues a
written report that research and development of a Product(s) is no
longer technically feasible, Schering may terminate this Agreement,
upon sixty (60) days written notice.
(e) No Acceptance of a Qualified Gene. If there has not been an
Acceptance of a Qualified Gene, Schering may in its sole discretion
terminate the Agreement upon five (5) days prior written notice to
Collateral. If Collateral fails to make the Gene Presentation(s) by
October 1, 1997, Schering, in its sole discretion, may terminate
this Agreement.
(f) Unresolved Chairman Dispute. In the event any dispute submitted to
the Chairmen of Berlex and Collateral pursuant to Section 3.6(b)
cannot be resolved, either Party may terminate this Agreement on
sixty (60) days notice to the other Party; provided however,
Collateral may not terminate this Agreement pursuant to this Section
1 5.2(f) during the Gene Presentation Period.
(g) Schering Unilateral Right to Terminate. Schering shall have a
unilateral right to terminate this Agreement by providing
sixty (60) days prior written notice to Collateral *** . Upon such
termination notice, Schering shall (i) pay Collateral *** as a *** ,
and (ii) provide Collateral with copies of and the right to
reference any IND's anchor Drug Approval Applications. If
Collateral commercializes a Product or a product outside the Field
after such termination it shall reimburse Schering in the amount of
the *** within *** of the first commercial sale of such Product or
product outside the Field.
(h) Rights in Law or Equity. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED
HEREIN, TERMINATION BY EITHER PARTY PURSUANT TO THIS SECTION 15
SHALL NOT PREJUDICE ANY OTHER REMEDY THAT A PARTY MIGHT HAVE IN LAW
OR EQUITY, EXCEPT THAT NEITHER PARTY MAY CLAIM COMPENSATION FOR LOST
OPPORTUNITY OR LIKE CONSEQUENTIAL DAMAGES ARISING OUT OF THE FACT OF
SUCH TERMINATION.
15.3 Effect of Termination.
(a) 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.
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
33
<PAGE>
(b) Return of Materials. Upon any termination of this Agreement and upon
written request from the other Party, Schering or Collateral shall
promptly return to Me other Party all confidential Information,
including any biological materials, received from the other Party
(except one copy of which may be retained for archival purposes).
(c) Licenses.
(i) Termination by Schering.
(a) Termination Pursuant to Section 15.2 (a). In the event
of termination by Schering under Section 15.2 (a) above,
the licenses granted hereunder to Collateral shall
terminate; provided however, if the breach or material
breach relates only to a specific Product(s) or
product(s) for which there has been a material breach or
determination of a material breach then just the
licenses granted hereunder to Collateral for such
specific Product or product shall terminate and any
licenses granted by Collateral hereunder shall remain in
effect, subject to the terms and conditions of this
Agreement.
(b) Termination Pursuant to Section 15.2 (b) or (c). In the
event of termination by Schering pursuant to Section
15.2 (b) or (c) above, any licenses granted by Schering
to Collateral shall terminate and any licenses granted
by Collateral hereunder shall remain in effect, subject
to the terms and conditions of this Agreement.
(c) Termination Pursuant to Section 15.2 (d). In the event
of termination by Schering pursuant to Section 15.2 (d)
above, any licenses granted by Schering to Collateral
and by Collateral to Schering shall terminate
concurrently.
(d) Termination Pursuant to Section 15.2(e). In the event of
termination by Schering pursuant to Section 15.2(e)
above, the licenses granted by Collateral to Schering
pursuant to Sections 4.2 and 4.3 are in effect; provided
however, the Schering license to Collateral Base
Technology shall not include any gene Controlled solely
by Collateral. Collateral shall pay Schering royalties
pursuant to Section 8.6.
(e) Termination Pursuant to Section 15.2(f). In the event of
termination by Schering pursuant to Section 15.2(f)
above, any licenses, or sublicenses, as the case may be,
granted by Collateral to Schering shall terminate at the
end of the sixty (60) day notice.
34
<PAGE>
(f) Termination Pursuant to Section 15.2(g). In the event of
termination by Schering pursuant to Section 15.2(g)
above, any licenses or sublicenses, as the case may be,
granted by Collateral to Schering shall terminate at the
end of the sixty (60) day notice and the following
licenses shall be in effect: (i) Collateral grants
Schering a paid-up, irrevocable, royalty-free,
nonexclusive, worldwide license, with the right to
sublicense, to Collateral's rights in Developed
Technology, and (ii) Schering grants Collateral a
paid-up, irrevocable, royalty-free, nonexclusive,
worldwide license, with the right to sublicense, to
Schering's rights in Developed Technology, both to make,
have made, use, sell, offer to sell or import any
products.
(ii) Termination by Collateral.
(a) Termination Pursuant to Sections 15.2 (a). In the event
of termination by Collateral under Section 15.2 (a)
above, the licenses granted hereunder to Schering shall
terminate; provided however, if the breach or material
breach relates only to a specific Product(s) or
product(s) for which there has been a material breach or
determination of a material breach then just the
licenses granted hereunder to Schering for such specific
Product or product shall terminate and any licenses
granted by Schering hereunder shall remain in effect,
subject to the terms and conditions of this Agreement.
(b) Termination Pursuant to Sections 15.2 (b). In the event
of any termination by Collateral pursuant to Section
15.2 (b) above, any licenses granted by Collateral to
Schering shall terminate and any licenses granted by
Schering hereunder shall remain in effect, subject to
the terms and conditions of this Agreement.
(c) Termination Pursuant to Section 15.2(f). In the event of
termination by Collateral pursuant to Section 15.2(f),
the licenses granted by Collateral to Schering pursuant
to Section 4.5 shall automatically become the licenses
granted by Collateral to Schering pursuant to Sections
4.2 and 4.3 and Schering shall pay Collateral royalties
pursuant to Section 8.6.
15.4 Surviving Rights. The rights and obligations set forth in this Agreement
shall extend beyond the Term or termination of this Agreement only to the
extent expressly provided for herein, or to the extent that the survival
of such rights or obligations are necessary to permit their complete
fulfillment or discharge without limiting the foregoing, the Parties have
identified various rights and obligations which are understood to survive
as follows: Sections IV, VIII, IX, X, XI, XII, XIII, XV.
35
<PAGE>
XVI
MISCELLANEOUS
16.1 Notices. Any notice or other communication required or permitted to be
given by either Party under this Agreement shall be effective when
delivered, if delivered by hand or by electronic facsimile with receipt
verified or five days after mailing if mailed by registered or certified
mail, postage prepaid and return receipt requested, and shall be addressed
to each Party at the following addresses or such other address as may be
designated by notice pursuant to this Section:
If to Collateral: If to Schering:
Jack Reich, President Angela Staunton
9360 Towne Centre Drive Schering Legal Department
San Diego, CA 92121 Schering AG
Fax: 619-587-3518 13342 Berlin, Germany
Fax: 011-49-30-4684086
Vice President
Office of Corporate Development
Berlex Laboratories, Inc.
110 E. Hanover Avenue
Cedar Knolls, NJ 07927-2095
Fax: 201-305-4405
with copies to: with copies to:
Craig S. Andrews Leonard Slootmaker
Brobeck, Phleger & General Counsel
Harrison Berlex Biosciences
550 West C St., Ste. 1200 15049 San Pablo Avenue
San Diego, CA 92101 Richmond, CA 94804-0099
Fax: 619-234-3848 Fax: 510-262-7095
16.2 Amendments. No amendment, modification or addition hereto shall be
effective or binding on either Party unless set forth in writing and
executed by duly authorized representatives of both parties.
16.3 Waiver. No waiver of any rights under this Agreement shall be deemed
effective unless contained in writing signed by the Party charged with
such waiver, and no waiver of any breach or failure to perform shall be
deemed a waiver of any future breach or failure to perform or any other
right arising under this Agreement.
36
<PAGE>
16.4 Headings. The section headings contained in this Agreement are included
for convenience only and form no part of the agreement between the
Parties.
16.5 Applicable Law. This Agreement shall be governed by, subject to and
construed in accordance with the laws of the State of California.
16.6 Severability. If any provision of this Agreement is held to be invalid,
void or unenforceable for any reason, it shall be adjusted, if possible,
rather than voided in order to achieve the intent of the Parties to the
maximal extent possible. In any event, all other provisions of this
Agreement shall be deemed valid and enforceable to the fullest extent
possible.
16.7 Assignment; Binding Effect. Neither this Agreement, nor any rights granted
hereunder, shall be assignable by any Party hereto without the prior
written consent of the other Party; provided however, that either Party
may assign this Agreement without the consent of the other Party to its
Affiliates, if the assigning Party guarantees the full performance of its
Affiliates' obligations hereunder, or in connection with the sale or
transfer of all or substantially all of its assets relating to this
Agreement, whether by merger, sale of stock, operation of law or
otherwise. Any purported assignment in contravention of this Section
shall, at the option of the non-assigning Party, be null and void and of
no effect.
16.8 No Implied licenses. Only the licenses granted expressly herein shall be
of legal force and effect. No license rights shall be created hereunder by
implication, estoppel or otherwise.
16.9 Further Assurances. Each Party agrees to execute, acknowledge and deliver
such further instruments, and to do all such other acts as may be
necessary or appropriate in order to carry out the purposes and intent of
this Agreement.
16.10 Force Majeure. Except for royalty payments due to each other, no Party
shall be liable for any failure or delay in performance under this
Agreement to the extent such failure or delay arises from Force Majeure. A
Force Majeure is fire, explosion, earthquake, storm, flood, strike, labor
difficulties, war, insurrection, riot, act of God or the public enemy, or
any law, act, order, export or import control regulations, proclamation,
decree, regulation, ordinance, or instructions of local, state, federal or
foreign governmental or other public authorities, or judgment or decree of
a court of competent jurisdiction (but excluding a court injunction
against a Party's performance) and not otherwise arising out of breach by
such Party of this Agreement. In the event of the occurrence of such an
event, the Party so affected shall give prompt written notice to the other
Party, stating the period of time the occurrence is expected to continue
and shall use best efforts to end the failure or delay and ensure that the
effects of such Force Majeure are minimized.
37
<PAGE>
16.11 Negation of Agency. Nothing herein contained shall be deemed to create an
agency, joint venture, amalgamation, partnership, or similar relationship
between Schering and Collateral. The relationship between the Parties
established by this Agreement is that of independent contractors.
16.12 Publicity. No public announcement concerning the existence or the terms of
this Agreement shall be made, either directly or indirectly, by Collateral
or Schering, except as may be legally required by applicable laws,
regulations, or judicial order, without first obtaining the approval of
the other Party and agreement upon the nature, text, and timing of such
announcement, which approval and agreement shall not be unreasonably
withheld; provided however, it shall not be unreasonable for Schering to
withhold permission to use the name "Schering." The Party desiring to make
any such public announcement shall provide the other Party with a written
copy of the proposed announcement in sufficient time prior to public
release to allow such other Party to comment upon such announcement, prior
to public release. Neither Party shall issue any press release or make any
public announcement which includes or otherwise uses the name of the other
Party in any public statement or document except with the prior written
consent of such Party.
16.13 Registration and Filing of the Agreement. To the extent, if any, that a
Party concludes in good faith that it is required to file or register this
Agreement or a notification thereof with any governmental authority,
including without limitation the U.S. Securities and Exchange Commission
and the Competition Directorate of the Commission of the European
Communities, in accordance with applicable laws and regulations, such
Party may do so, and the other Party shall cooperate in such filing or
notification and shall execute all documents reasonably required in
connection therewith at the expense of the requesting party. The Parties
shall promptly inform each other as to the activities or inquiries of any
such governmental authority relating to this Agreement, and shall
cooperate to respond to an request for further information therefrom at
the expense of the requesting party.
16.14 Entire Agreement. This Agreement together with all Exhibits and the Stock
Agreement of even date herewith contains the entire agreement between the
Parties with respect to the subject matter hereof. Except for the
Nondisclosure Agreement previously entered into between the Parties, any
prior agreement, arrangement or undertaking, whether oral or in writing is
hereby superseded.
16.15 Beneficiaries. No person, other than Schering or Collateral and their
permitted assignees hereunder, shall be deemed an intended beneficiary
hereunder or have any right to enforce any obligation of this Agreement.
16.16 Affiliates of Parties. Each Party may perform its obligations hereunder
personally or through one or more Affiliates and shall be responsible for
the performance of such obligations, and any liabilities resulting
therefrom. Neither Party shall permit any of its Affiliates to commit any
act (including any act of omission) which such Party is prohibited
hereunder from committing directly.
38
<PAGE>
16.17 Compliance with Laws. In exercising their rights under this Agreement, the
parties shall fully comply with the requirements of any and all applicable
laws, regulations, rules and orders of any governmental body having
jurisdiction over the exercise of rights under this Agreement.
16.18 Patent Marking. Schering agrees to mark and have its Affiliates and
Sublicensees mark all Products sold pursuant to this Agreement in
accordance with the applicable statute or regulations relating to patent
marking in the country or countries of manufacture and sale thereof.
16.19 Ambiguities. Ambiguities, if any, in this Agreement shall not be construed
against any Party, irrespective of which Party may be deemed to have
authored the ambiguous provision.
THE REMAINDER OF THIS PAGE INTENTIONAL LEFT BLANK
39
<PAGE>
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by
their duly authorized representatives as of the Effective Date.
SCHERING AKTIENGESELLSCHAFT COLLATERAL THERAPEUTICS,
INC.
By: /s/ illegible By: /s/ Jack W. Reich
------------------------- ----------------------------
Dr. Jack W. Reich,
Its: Member of Executive Board of Directors President
--------------------------------------
By: /s/ illegible By: /s/ Christopher J. Reinhard
------------------------ ----------------------------
Christopher J. Reinhard,
Its: Vice Chairman Secretary
------------------------
[SIGNATURE PAGE TO COLLABORATION LICENSE
AND ROYALTY AGREEMENT]
<PAGE>
EXHIBIT A
<PAGE>
[LETTERHEAD OF UNIVERSITY OF CALIFORNIA]
March 19, 1996
Schering AG
c/o Berlex Biosciences
15049 San Pablo Avenue
Richmond, CA 94804-0099
Re:
UC Case No.
Ladies and Gentlemen:
This letter will serve to confirm our agreement that, recognizing the
sublicense being granted by Collateral Therapeutics, Inc. ("Collateral") to
Schering AG ("Schering") under the Exclusive License Agreement dated September
27, 1995 (the "License Agreement"), the undersigned (1) will send Schering a
copy of any Notice of Default (as defined in Section 9.1 of the License
Agreement) sent to Collateral and (2) will permit Schering to cure any such
default under the License Agreement on behalf of Collateral which is capable of
being cured.
THE REGENTS OF THE UNIVERSITY OF
CALIFORNIA
By: /s/ illegible
-----------------------------------
(Authorized Signatory)
Title: Licensing Manager
--------------------------------
Approval as to legal form /s/ Mary Simpson 3/20/96
-------------------------------------- -------
P. Mary Simpson, President Counsel Date
Office of Technology Transfer
University of California
<PAGE>
EXHIBIT B
<PAGE>
[LETTERHEAD OF COLLATERAL THERAPEUTICS, INC.]
May 6, 1996
HAND DELIVERED
Schering AG
c/o Berlex Biosciences
15049 San Pablo Avenue
Richmond, CA 94804-0099
Re: U.C. Agreement Control Number 96-04-0203
Ladies and Gentlemen:
This letter will confirm our agreement that Collateral Therapeutics will
use its commercially reasonable efforts to obtain the agreement of The Regents
of the University of California under the Exclusive License Agreement dated
September 27, 1995, that upon termination of such Agreement for any reason, the
sublicenses granted to Schering AG under the Collaboration, License and Royalty
Agreement dated May 6, 1996, will not be cancelled but will be assigned to The
Regents.
If the Regents of the University of California do not agree to such a
request within ninety (90) days of the Effective Date of this Agreement,
Collateral hereby consents to Schering approaching The Regents of the University
of California directly to attempt to obtain such assurance.
Very truly yours,
/s/ Jack W. Reich, Ph.D.
------------------------------
Dr. Jack Reich, President
<PAGE>
EXHIBIT C
COLLATERAL THERAPEUTICS INC.
Budget Review - Annualized
<TABLE>
<CAPTION>
Research Admin. Total
-------- ------ -----
<S> <C> <C> <C>
Executive, Administrative
Regulatory, Research &
Development Salaries and
Related Employment Benefits *** *** ***
-------- -------- -------
Professional Fees & Services:
Legal Counsel *** *** ***
Patent Counsel *** *** ***
Public Accountants *** *** ***
Scientific Advisory Board $15,000 *** *** ***
Licensing Fees & Expenses *** *** ***
-------- -------- -------
Total *** *** ***
-------- -------- -------
Support Services:
Office Rent *** *** ***
Travel Expenses *** *** ***
Other, Supplies *** *** ***
Equipment Leases *** *** ***
-------- -------- -------
Total *** *** ***
-------- -------- -------
Research & Development *** *** *** ***
--- -------- -------- -------
Total *** *** ***
-------- -------- -------
-Percent *** *** ***
Research & Development: *** *** *** ***
--- -------- -------- -------
Grand Total *** *** ***
-------- -------- -------
-------- -------- -------
-Percent *** *** ***
</TABLE>
/s/ Jack W. Reich, Ph.D.
- ------------------------------ --------------------------------
By Schering AG By Collateral Therapeutics, Inc.
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
<PAGE>
Exhibit 5.1
CTI8879A COLLATERAL THERAPEUTICS, INC.
Phase One First 6 Month Budget
<TABLE>
<CAPTION>
Research Admin. Total
-------- ------ -----
<S> <C> <C> <C>
Executive, Administrative,
Regulatory, Research &
Development Salaries
and Related Benefits *** *** ***
-------- -------- -------
Research & Development*
*** *** *** ***
*** *** *** ***
*** *** *** ***
*** *** *** ***
*** *** *** ***
-------- -------- -------
Total *** *** ***
-------- -------- -------
Professional Fees & Services:
Legal Counsel *** *** ***
Patent Counsel *** *** ***
Public Accountants *** *** ***
Scientific Advisory Board *** *** ***
Licensing Fees & Expenses *** *** ***
-------- -------- -------
Total *** *** ***
-------- -------- -------
Support Services:
Office Rent *** *** ***
Travel Expenses *** *** ***
Supplies Utilities Etc *** *** ***
Other Misc. *** *** ***
Equipment Leasing *** *** ***
-------- -------- -------
Total *** *** ***
-------- -------- -------
Total 1996 Budget *** *** ***
-------- -------- -------
-Percent *** *** ***
Less: Collateral Funding ***
-------
Shering AG Funding (Net) ***
-------
-------
</TABLE>
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
<PAGE>
CTI8879A COLLATERAL THERAPEUTICS INC. -- 6 Mos. 1996
Exhibit 5.1
<TABLE>
<CAPTION>
Research Admin. Total
-------- ------ -----
<S> <C> <C> <C>
President & CEO *** *** ***
Vice President COO & CFO *** *** ***
Vice President - Reg. *** *** ***
Vice President - Admin/R&D Svs. *** *** ***
Vice President - R & D *** *** ***
Vice President - Medical *** *** ***
Director - Regulatory *** *** ***
Director - Accounting *** *** ***
Director - R & D *** *** ***
Administration - Regulatory *** *** ***
Administration - Clinical *** *** ***
Administration - Executive *** *** ***
Administration - General *** *** ***
Administration - Accounting *** *** ***
Administration - Reception *** *** ***
Accured & Deferred Salaries *** *** ***
Employment Benefits *** *** ***
-------- -------- -------
Total *** *** ***
-------- -------- -------
Research & Development
*** *** *** ***
*** *** *** ***
*** *** *** ***
*** *** *** ***
*** *** *** ***
-------- -------- -------
Total *** *** ***
-------- -------- -------
Professional Fees & Services:
Legal Counsel *** *** ***
Patent Counsel *** *** ***
Public Accountants *** *** ***
Scientific Advisory Board *** *** ***
Licensing Fees & Expenses *** *** ***
-------- -------- -------
Total *** *** ***
-------- -------- -------
Support Services:
Office Rent *** *** ***
Travel Expenses *** *** ***
Supplies Utilities Etc *** *** ***
Other Misc. *** *** ***
Equipment Leasing *** *** ***
-------- -------- -------
Total *** *** ***
-------- -------- -------
Total 1996 Budget *** *** ***
-------- -------- -------
-------- -------- -------
-Percent *** *** ***
</TABLE>
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
<PAGE>
CTI8893 COLLATERAL THERAPEUTICS INC.
Budget Review - Annualized
<TABLE>
<CAPTION>
Research Admin. Total
-------- ------ -----
<S> <C> <C> <C>
Executive, Administrative,
Regulatory, Research &
Development Salaries and
Related Employment Benefits *** *** ***
-------- -------- -------
Professional Fees & Services:
Legal Counsel *** *** ***
Patent Counsel *** *** ***
Public Accountants *** *** ***
Scientific Advisory Board *** *** ***
Licensing Fees & Expenses *** *** ***
-------- -------- -------
Total *** *** ***
-------- -------- -------
Support Services:
Office Rent *** *** ***
Travel Expenses *** *** ***
Other, Supplies Utilities Etc *** *** ***
Equipment Leases *** *** ***
-------- -------- -------
Total *** *** ***
-------- -------- -------
Research & Development *** *** ***
-------- -------- -------
Total *** *** ***
-------- -------- -------
-Percent *** *** ***
Research & Development: *** *** ***
-------- -------- -------
Grand Total *** *** ***
-------- -------- -------
-------- -------- -------
-Percent *** *** ***
</TABLE>
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
<PAGE>
CTI8893 COLLATERAL THERAPEUTICS INC.
Budget Review - Annualized
<TABLE>
<CAPTION>
Research Admin. Total
-------- ------ -----
<S> <C> <C> <C>
President & CEO *** *** ***
Vice President COO & CFO *** *** ***
Vice President - Reg. *** *** ***
Vice President - Admin. *** *** ***
Vice President - R & D *** *** ***
Vice President - Medical *** *** ***
Director - Regulatory *** *** ***
Director - Accounting *** *** ***
Director - R & D *** *** ***
Administration - Regulatory *** *** ***
Administration - Clinical *** *** ***
Administration - Executive *** *** ***
Administration - General *** *** ***
Administration - Accounting *** *** ***
Administration - Reception *** *** ***
Employment Benefits *** *** ***
-------- -------- -------
Total *** *** ***
-------- -------- -------
Professional Fees & Services:
Legal Counsel *** *** ***
Patent Counsel *** *** ***
Public Accountants *** *** ***
Scientific Advisory Board *** *** ***
Licensing Fees & Expenses *** *** ***
-------- -------- -------
Total *** *** ***
-------- -------- -------
Support Services:
Office Rent *** *** ***
Travel Expenses *** *** ***
Other, Supplies Utilities Etc *** *** ***
Equipment Leases *** *** ***
-------- -------- -------
Total *** *** ***
-------- -------- -------
Other Research & Development *** *** ***
-------- -------- -------
Total *** *** ***
-------- -------- -------
-Percent *** *** ***
Research & Development - Berlex *** *** ***
-------- -------- -------
Grand Total *** *** ***
-------- -------- -------
-------- -------- -------
-Percent *** *** ***
</TABLE>
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
<PAGE>
Exhibit D
Expenses for COGS
Expenses included in, but not limited to, the *** manufacturing cost:
1. Direct materials
2. Salaries, wages and benefits of personnel directly engaged in
manufacturing the product.
3. Overhead associated with direct production, including, but not limited to:
a. Depreciation, leasehold improvements and equipment leases
b. Repair and maintenance
c. Manufacturing supplies
4. Reasonable allocable General manufacturing overhead,
a. Manufacturing Administration
b. Materials Management
c. Validation and Calibration
d. Documentation and Compliance
e. Quality Assurance/Quality Control
f. Technical Services
g. Regulatory Compliance
5. Reasonable allocable General facilities overhead, including, but not
limited to:
a. Rent, utilities, property tax, insurance and other assigned general
facilities' costs
b. Purchasing
c. Environmental Health and Safety
d. Management Information Systems
e. Engineering
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
<PAGE>
6. Royalties paid to Third Parties for the manufacturing process of the
Initial Product or Products.
<PAGE>
Exhibit E
Qualified Gene Criteria
(1) Efficacy in the pig chronic myocardial ischemia model
o Documented transgene expression in the heart (2 weeks)
o Significant improvement in function (systolic wall thickening
assessed by transthoracic echocardiography) and perfusion (contrast
echocardiography) 2 weeks following gene transfer
o Functional data should be sufficiently similar to results obtained
with FGF-5 to warrant further preclinical development
(2) Acceptable safety profile
o No evidence for presence of extracardiac transgene expression in
specific target organs from technically acceptable experiments
o No evidence of inflammation using histologic and immunocytochemical
criteria
(3) Proprietary position
o Ownership of or license for pending or issued patent
<PAGE>
Exhibit F
RESEARCH AND DEVELOPMENT PLAN
Research Plan: Major Milestone Years 1 - 5
Year 1
o ***
o ***
Year 2
o ***
o ***
o ***
o ***
Year 3
o ***
o ***
o ***
o ***
Year 4
o ***
o ***
o ***
o ***
***
***
o ***
o ***
Year 5
o ***
o ***
o ***
o ***
***
o ***
o ***
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
<PAGE>
Exhibit 5.1
First Phase One Plan and Budget
Specific Studies to be Performed
***
***
***
***
***
o ***
***
o ***
***
***
***
***
***
***
***
***
***
***
***
***
***
***
***
***
***
***
***
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
<PAGE>
***
***
o ***
***
o ***
***
o ***
***
***
***
***
***
***
***
***
***
***
***
***
***
***
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
<PAGE>
SUMMARY
Critical Studies for First Six (6) Months and Budget
STUDY BUDGET*
----- -------
*** ***
*** ***
*** ***
*** ***
*** ***
*** ***
------
Total ***
* ***
+ Funding to be determined following review of study proposal. Not included
in total.
/s/ Jack W. Reid, Ph.D.
- ---------------------------- ----------------------------------
By Schering AG By Collateral Therapeutics, Inc.
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
<PAGE>
EXHIBIT 10.13
LICENSE AGREEMENT
This License Agreement (the "Agreement") effective as of the 17th day of
October, 1996 ("Effective Date") is made by and between Dimotech Ltd., a
corporation organized under the laws of the country of Israel, located at the
Gurtwith Science Based Industrial Center, Technion City, Haifa 32000 Israel
("Licensor"), Gera Neufeld, whose domicile is 23 Shoham Street, Haifa 34679
("Inventor") and Collateral Therapeutics, Inc. a corporation organized under the
laws of the state of California, located at 9360 Towne Center Drive, San Diego,
California 92121 ("Licensee").
Background
WHEREAS, Licensor is a wholly owned subsidiary of the Technion R & D
Foundation (the "Technion") and has the exclusive right to license and
commercialize any inventions developed by researchers or faculty members of the
Technion, and inventions developed at the Technion or developed using the
facilities or property of the Technion, and
WHEREAS, Inventor, a member of the faculty of the Technion, isolated and
genetically characterized a vascular endothelial growth factor comprising 145
amino acids ("VEGF-l45"), and identified for the first time biological
properties of VEGF-145 which may render it useful in the treatment of
cardiovascular disease including peripheral vascular disease, and
WHEREAS, Licensee is a company which focuses on developing gene therapies
for treating heart disease and desires to use a polynucleotide encoding VEGF-145
to develop potential therapies for heart disease.
NOW THEREFORE, in consideration of the mutual covenants herein contained,
Licensor, Licensee and Inventor agree as follows:
1
<PAGE>
I. DEFINITIONS
"Licensed Field" means, and is limited to, the treatment of cardiovascular
disease, defined as the treatment of any and all diseases or disorders, whether
congenital or acquired, which affect the function or structure of the heart or
blood vessels or both, including but not limited to myocardial ischemia,
congestive heart failure, atherosoler resterosis, vascular or remodeling, and
peripheral vascular disease.
"Patent Rights" means any patents or patent applications assigned or
required to be assigned to the Technion or subsidiaries of the Technion
including Licensor, now or in the future, which claim VEGF-145, a vector
comprising VEGF-145, or the use of VEGF-145 in the Licensed Field. As used
herein, patents and patent applications shall include U.S. applications, U.S.
provisional applications, foreign patent applications, PCT international
applications, continuations, continuations-in-part, extensions, divisions,
provisionals, substitutions or additions to such applications and all patents
which are re-issues, re-validations and registrations based thereon. As used
herein, VEGA-145 shall include Analogues of VEGF-145.
"Analogues of VEGF-145" means peptides which have a structural homology to
VEGF-145 and which exert biological activity similar to that exerted by
VEGF-145.
"Technical Information" means information from Inventor, the Tectonic, its
faculty, staff, researchers, or students, including trade secrets, developments,
discoveries, data, drawings, techniques, documents, models and know-how, whether
or not patented or patentable, which relates in whole or in part to the Licensed
Field.
"Biological Material" means cell lines, nucleic acid, vectors, or other
biological materials, including the progeny and clones thereof, developed or
supplied by Inventor and/or the Technion, its faculty, staff, researchers, or
students, which relates in whole or in part to the Licensed Field.
"Proprietary Rights" shall mean the Patent Rights Technical Information,
and Biological Material.
"Licensed Process" means any process(es) which, in the absence of this
Agreement, infringe one or more claims of the patents set forth in the Patents
Rights that have not been held
2
<PAGE>
invalid or unenforceable by an unappealed or unappealable judgment of a court of
competent jurisdiction.
"Licensed Products" means any products or tangible materials which, in the
absence of this Agreement, infringe one or more claims of the patents set forth
in the Patents Rights that have not been held invalid or unenforceable by an
unappealed or unappealable judgment of a court of competent jurisdiction.
"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, whether invoiced or not, less deductions for
(i) transportation charges, including insurance relating thereto; (ii) sales and
excise taxes or customs duties paid by selling party and any other governmental
charges imposed upon the sale of the Licensed Product(s); (iii) distributors
fees rebates or allowances actually granted, allowed or incurred; (iv) quantity
discounts, cash discounts or chargebacks actually granted, allowed, or incurred
in the ordinary course of business in connection with the sale of the Licensed
Product(s); and (v) allowances, or credits to customers, not in excess of the
selling price of the Licensed Product(s), on account of governmental
requirements, rejection, outdating, recalls or return of the Licensed
Product(s).
II. GRANT OF LICENSE
2.01 Licensor hereby grants to Licensee, under the Patent Rights and within only
the Licensed Field, the exclusive worldwide right and license to make, have
made, use, sell, have sold and import Licensed Products and Licensed Processes,
and the exclusive right to sublicense others to do the same provided the
sublicensee agrees to be bound by all terms set forth herein, except if modified
by prior agreement with Licensor.
III. BIOLOGICAL MATERIALS TRANSFER
Upon the execution of this Agreement, and as may be necessary or desirable
thereafter, Inventor and/or Licensor shall supply Licensee with Biological
Materials in Licensor's
3
<PAGE>
possession as reasonably required by Licensee and as reasonably available from
Licensor so as to assist Licensee in developing Licensed Product; and Licensed
Processes and shall make available to Licensee the Technical Information
relating thereto. Licensee acknowledges that it will hold the Biological
Materials which are delivered in confidence and as the sole property of the
Licensor. The Biological Materials provided will be for the sole purpose of the
Licensed Field and shall not be used for any other purpose by the Licensors
without the express written permission of Licensor. All supplies of Biological
Materials held by Licensee and its Sub-licensees shall, at Licensor's option, be
returned to Licensor or destroyed by Licensee upon the termination of this
Agreement.
IV RENUMERATION
4.01 License Fee. Within ten (10) days of execution of this Agreement, Licensee
shall pay to Licensor a non-refundable fee of sixteen thousand dollars
($16,000). This license fee shall be in addition to the royalties payable
pursuant to this License and, therefore, shall not be available for credit
against future royalties.
4.02 Minimum Annual Royalties. On or before the *** of each calendar year
beginning in the later of ***
***
*** Licensee shall pay to Licensor a *** minimum annual royalty as
follows:
<TABLE>
<CAPTION>
Year Payment
---- -------
<S> <C> <C>
*** ***
*** ***
*** ***
*** ***
*** ***
*** ***
</TABLE>
4.03 Running Royalties. In addition to the License Fee of paragraph 4.01,
Licensee, on a quarterly basis, shall pay to Licensor a *** based on Net Sales
of all
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
4
<PAGE>
Licensed Products and Licensed Process. The running royalty to be paid shall be
offset against the minimum provided under paragraph 4.02.
4.04 Milestone Payments. In addition to the fees enumerated in paragraphs 4.01,
4.02 and 4.03, Licensee shall pay to Licensor, upon reaching the following
developmental / regulatory milestones with respect to a Licensed Product or
Licensed Process, the following non-refundable payments.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Milestone Target Date Payment to
Licensor
- --------------------------------------------------------------------------------
<S> <C> <C>
*** August 1, 1997 $25,000
***
***
- --------------------------------------------------------------------------------
*** *** , 1998 $100,000
***
***
- --------------------------------------------------------------------------------
*** *** ***
- --------------------------------------------------------------------------------
*** *** ***
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
4.05 Due Diligence. As an incentive for Licensee to reach the Milestones set
forth above in a timely manner, for any Milestone not reached within *** of the
Target Date, Licensee shall, within *** *** pay to Licensor a *** *** whereupon
the Target Dates for all unreached Milestones will advance by one year.
4.06 Sub-licensee Royalties. Licensor acknowledges that Licensee shall have the
right to grant sub-licenses in the Licensed Field, provided that Licensee shall
be responsible for payment of royalties to Licensor on Net Sales of such
sub-licenses as if such Net Sales were made by Licensee directly and pursuant to
the terms and conditions of this License Agreement.
4.07 Payments. Royalties on Licensed Products and Licensed Process shall accrue
at the time payment is received by Licensee. Royalties which have accrued in any
calendar quarter shall be
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
5
<PAGE>
payable within *** after the end of such calendar quarter. Any royalties not
paid to Licensor when due hereunder shall bear interest *** . *** is in effect
from time to time from the date such royalties were due to the date such
royalties are paid. Royalties shall be payable in U.S. dollars, at Licensor's
option, by a check payable to the order of "Dimotech" and drawn on a U.S. bank
or by wire transfer to a bank account designated by Licensor. Where it is
necessary to convert the amount of royalties due from another currency into U.S.
dollars, conversion shall be made at the spot rate or the mean of the buy and
sell spot rates, if no single rate is published, for the last business day of
the calendar quarter in which such royalties have accrued as published by West
Coast edition of The Wall Street Journal or if no rate(s) is (are) therein
published as prevailing at the close of business on such day at Chase Manhattan
Bank New York, New York.
4.08 Royalty Reports; Inspection. License 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 Licensor. Upon *** prior notice to Licensee and during normal business
hours, but not more frequently than once per calendar year, an independent
auditor paid for and selected by Licensor (which selection shall be with the
reasonable consent of the Licensee) may inspect such books and records of
Licensee, its Affiliates and Sub-licensees at their respective facilities for
the *** immediately preceding the date of inspection, to verify the correctness
of the reports given to Licensor under, this Section 4.07. If an inspection
shows an underreporting or underpayment *** then Licensee shall reimburse
Licensor for the cost of the inspection.
V. PATENT PROSECUTION & MAINTENANCE PUBLICATIONS
5.01 Prosecution and Maintenance. The preparation, filing, prosecution, and
maintenance of all patent applications-- domestic, international, and foreign--
covering the Licensed Product and Licensed Process shall be made on behalf of
Licensor by attorneys representing Licensor. Licensee shall reimburse Licensor
for all reasonable and approved costs associated therewith Licensee and its
designated attorneys shall have the power to review and inspect all patents
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
6
<PAGE>
applications and amendments and other Patent Office submissions before the
filing thereof and shall receive copies of all Patent Office and International
Bureau notices and actions promptly after receipt by Licensor. Licensor and
License agree to cooperate in good faith in formulating and implementing patent
strategies agreeable to both parties.
5.02 Marking. Licensee shall comply with all United States and foreign
jurisdiction laws in respect of patent marking, if any.
5.03 Ownership. All Patents Rights, Technical Information, and Biological
Materials shall be the sole property of Licenser except as provided herein.
5.04 Infringement by Third Parties. Licensor shall promptly notify Licensee in
writing of any alleged or threatened infringement of any patent included within
Patent Rights, of which they become aware. Licensee shall have the sole right to
bring and control any action or proceeding with respect to such infringement at
its own expense and by counsel of its own choice. In the event Licensee brings
an infringement action, Licensor shall cooperate fully, including if required to
bring such action, the furnishing of a power of attorney or agreeing to be
joined as a party, the reasonable costs of which shall be at Licensee expense.
Any recovery realized as a result of such litigation after reimbursement of any
and all litigation expenses of Licensee, shall be treated as Net Sales for
purposes of the royalty provisions of this Agreement.
5.05 Infringement of Third Party Rights. Each parry shall promptly notify the
others in writing of any known infringement by Licensee or asserted infringement
by licensee of any third party's intellectual property (collectively, "Alleged
Third Parry Rights") by reason of the manufacture, import, use, sale or offer
for sale of any Licensed Product or Licensed Process. Licensee shall have the
right to control any defense of any claim of infringement of Alleged Third Party
Rights at its own expense and any counsel of its choice, and Licensor shall have
the right, at its own expense, to be represented in any such action by counsel
of its choice. In the event of any infringement or asserted infringement of
Alleged Third Party Rights, Licensor shall cooperate in good faith with Licensee
on a mutual and reasonable basis to negotiate and settle any dispute with any
such third party concerning the Alleged Third Party Rights. Licensor has
conducted no search to determine whether the Licensed Product or Licensed
Process infringes Alleged Third Party Rights.
7
<PAGE>
5.06 Cooperation in Connection with Infringement Disputes. In any suit or
dispute involving infringement or asserted infringement by a third party of a
patent included within the Patent Rights or infringement or asserted
infringement by Licensee of Alleged Third Party Rights, the parties shall
cooperate fully, and upon the request of and at the expense of Licensee,
Licensor shall make available to Licensee at reasonable times and under
appropriate conditions all relevant personnel, records, papers information,
samples, specimens and the like which are in its possession or control.
5.07 Publication. Each party to this Agreement recognizes that the publication
of papers regarding the subject matter of this Agreement, for example, subject
matter within Patent Rights, including oral presentations and abstracts, may be
beneficial to the parties provided such publications are subject to reasonable
controls to protect proprietary information and Patent Rights. In particular, it
will be the goal of the parties to maintain the confidentiality of any
proprietary information until a patent application covering said information has
been filed. Accordingly, Licensee shall have the right to review any paper
proposed for publication by Inventor, including oral presentations and
abstracts, which relates to the subject matter of this Agreement. Before any
such paper is submitted for publication, Inventor will deliver a complete copy
to Licensee at least 45 days prior to submitting the paper to a publisher.
Licensee shall review any such paper and give its comments to Licensor within
fifteen (15) days of the delivery of such paper to the receiving party. With
respect to oral presentation materials and abstracts, the parties shall make
reasonable efforts to expedite review of such materials and abstracts, and shall
return such items a soon as practicable to the publishing party with appropriate
comments, if any, but in no event later than ten (10) days from the date of
delivery to the receiving party. At Licensee's request, Inventor will delay (but
not prevent) a publication which relates to the subject matter of this Agreement
in order to allow a patent application to be prepared and filed. Under no
circumstances may one party publish data or information of the other without
permission of the other.
8
<PAGE>
VI. SCIENTIFIC CONSULTANTS
Licensee may contract directly with Inventor or other faculty members of
the Technion to utilize their services as scientific consultants. Licensor shall
be informed of such arrangement and receive copies of any agreement in a timely
manner. During the term of such consulting agreement the consultant shall have
the obligation to assign rights to any invention for which he/she is an inventor
(sole or joint) to Licensor. Licensee shall have a right of first refusal to
acquire an exclusive license for such inventions which result directly and
solely from the consulting arrangement under terms to be negotiated between the
parties in good faith.
VII. LIMITATION OF LIABILITY, INDEMNIFICATION, NEGATION OF WARRANTIES
7.01 Limitation of Liability. Licenser shall not be liable to Licensee, its
successors, assigns, affiliates or sub-licensees for any loss of profits, loss
of business, interruption of business, nor for indirect, special or
consequential damages of any kind whether under this Agreement or otherwise,
even if Licensor has been advised of the possibility of such loss.
7.02 Licensor's Patent Rights. Licensor hereby represents and warrants that, to
the best of its knowledge, it holds the exclusive right to license the Patent
Rights, free and clear of any and all liens, claims and encumbrances. Licensor
represents and warrants that it knows of no reason why any patents within Patent
Rights would be barred, unpatentable, invalid or unenforceable, that they are
not aware of any asserted or unassented claim or demand of any right in or to
any of the Patent Rights, including a claim or demand of inventorship by an
inventor that has not or will not transfer its rights to Licenser in due course,
and that they have disclosed all relevant information known to them regarding
the Patent Rights to Licensee.
7.03 No warranties. Except as set forth above, Licensor makes no representations
or warranties, expressly or impliedly, with respect to the Licensed Products,
Licensed Process, or Proprietary Rights. By way of example, but not of
limitation, Licensor makes no representations or warranties as to the safety,
medical efficacy, commercial utility, non-infringement, patentability or
validity of the Licensed Products, Licensed Process or Patent Rights. Licensor
9
<PAGE>
shall not be held to any liability with respect to any claim by a third party on
account of, or arising from, the use of the Licensed Products or Licensed
Process.
7.04 Indemnification. Licensee will defend, indemnify and hold Licensor and the
Technion, its subsidiaries, faculty, scientists, students, managers, directors
officers, employees and agents (collectively the "Indemnified Parties") harmless
against any and all liability, loss, damage, claim or expense (including
attorney's fees) (collectively the "'Indemnified Losses") arising out of or in
connection with any use, sale or other disposition by Licensee, its Affiliates,
sub-licensees, vendors, customers or other third parties of the Licensed
Products, Licensed Process, or Biological Materials. As examples, and in no way
limiting the generality of the foregoing, Licensee will indemnify, hold
harmless, and defend the Indemnified Parties against any and all of the
following claims (i) claims by or on behalf of a human subject of any clinical
trial or study, (ii) claims arising from failure to comply with all governmental
regulations or failure to obtain any required license, clearance or other
approval necessary to use, market or sell the Licensed Products or Licensed
Process, (iii) product liability claims of any nature, and (iv) claims by a
third party that Licensee's, its Affiliate's or its Sub-licensee's manufacture,
use, sale or other disposition of the Licensed Products, Licensed Processes, or
Biological Material violates any patent, copyright, trademark, other proprietary
or property rights of such third party. This indemnity shall survive termination
or expiration of this Agreement.
7.05 Insurance. Licensee shall maintain insurance in type and amount considered
to be reasonable and prudent given the types of risks involved in the
development, pre-commercialization and commercialization of the Licensed
Products and Licensed Process. The liability limits on such insurance shall be
reasonable for the risks involved.
VIII. CONFIDENTIALITY
8.01 Confidentiality. The Recipient (as defined below) shall keep confidential
and shall use only as set forth herein during the term of this Agreement and
thereafter all Technical Information, Biological Material, and any other
information supplied by or on behalf of a party (the "Disclosing party") with
the exception of (a) information and materials in the public domain through no
act of Recipient, (b) information known to Recipient at the time of receipt
thereof
10
<PAGE>
from Licensor, and (c) information disclosed to Recipient by a third party with
no obligation of confidentiality to the Disclosing party. In addition,
disclosure may be made (i) to governmental agencies to the extent required or
desirable to secure governmental approval for the marketing of Licensed Products
and Licensed Process or otherwise required by law, (ii) to pre-clinical and
clinical investigators where necessary or desirable for their information to the
extent normal and usual in the custom of the trade, and (iii) to Sub-licensees
to the extent necessary and under a secrecy agreement with essentially the same
confidentiality provisions contained herein.
8.02 Publicity. No public announcement concerning the existence or the terms of
this Agreement shall be made, either directly or indirectly, by either party,
except as may be legally required by applicable laws, regulations, or judicial
order, without first obtaining the approval of other party and agreement upon
the nature, text, and timing of such announcement, which approval and agreement
shall not be unreasonable withheld, provided however, it shall not be
unreasonable for License to withhold permission to use the name of the Licensee
or its sublicensees. The party desiring to make any such public announcement
shall provide the other party with a written copy of the proposed announcement
in sufficient time prior to public release to allow such other party to comment
upon such announcement, prior to public release. Neither parry shall issue any
press release or make any public announcement which included or otherwise uses
the name of the party in any public statement or document except with the prior
written consent of such party.
IX. TERMINATION
9.01 Term. The term of this Agreement and the rights and licenses granted
hereunder shall commence an October 17, 1996 and shall continue until expiration
of the last to expire of the patents within the Patent Rights, unless this
Agreement shall be earlier terminated
9.02 Failure to Pay. If Licensee shall at any time default in the payment of any
royalty or other payment obligation or shall commit any material breach of any
covenant or agreement herein contained or shall make any false report and shall
fail to remedy any such default or material breach within sixty (60) days after
receipt by Licensee of written notice thereof by Licensor, Licensor may, at its
option, cancel this agreement and revoke the rights and licenses
11
<PAGE>
herein granted, by notice in writing to such effect, but such act shall not
prejudice the right of Licensor to recover any royalty or other sums due prior
to the time of such cancellation, it being understood, however, that if within
sixty (60) days after receipt of any such notice Licensee shall have rectified
its default, then the rights and licenses herein granted shall remain in force
as if no breach or default had occurred on the part of Licensee.
9.03 Insolvency. If Licensee becomes insolvent or bankrupt, makes any assignment
for the benefit of creditors, fails generally to pay its debts as they become
due, is adjudged bankrupt, or if a receiver, custodian, or trustee of Licensee's
property or a mayor part of Licensee's property is appointed, or if any other
proceeding for relief under any bankruptcy law or similar law for the relief of
debtors is instituted by or against Licensee and, if instituted against
Licensee, is consented to or not dismissed within sixty (60) days after such
institution, then this Agreement and the licenses herein granted shall thereupon
automatically terminate.
9.04 Termination by Licensee. Licensee shall have a unilateral right to
terminate this Agreement by providing sixty (60) days prior written notice
to Licensor, but such act shall not prejudice the right of Licensor to
recover any royalty or other sums which accrued prior to the date of
termination, including reimbursement for the authorized parent costs set forth
in paragraph 5.01. Within *** of notifying Licensor of said termination,
Licensee will pay to Licensor a termination fee of *** .
9.05 No Waiver. The right of either party to terminate this Agreement as
hereinabove provided shall not be affected in any way by its waiver of, or
failure to take action with respect to, any previous failure to perform
hereunder.
9.06 Rights Upon Termination. Upon termination of this Agreement, Licensee and
its Affiliates shall have the right, *** following such date of termination, to
dispose of Licensed Products completed or substantially completed on the date of
termination and to complete orders, outstanding on such date of termination, for
Licensed Products. Royalties shall be paid to Licensor with respect to such
permitted sales of Licensed Products following such date of termination as
though such termination had not occurred. Any sublicenses granted by Licensee
shall provide for the termination of the sublicense, or the conversion to a
license.
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
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directly between such sublicensees and Licensor, at the option of the
sublicensee, upon termination this Agreement as provided herein.
X. NOTICE
10.1 All reports, communications, requests or notices required or permitted by
this Agreement to be given to a party shall be in writing and shall be deemed to
be duly given is mailed by certified or registered mail, or delivered by Post
Office Express Mail, Federal Express, DHL, or other express mail carrier, to the
party concerned at its address as set forth on page 1 hereof with a copy to be
mailed as follows:
Notice to Licensor (copy to): Notice of Licensee (copy to):
----------------------------- -----------------------------
Jonathan M. Cohen Bradford J. Duft
Wigman, Cohere, Leitner & Myers. P.C. Lyon & Lyon
The Farragut Building, 10th Floor 4250 Executive Square, Ste. 600
900 17th Street, N.W., Suite 1000 La Jolla, CA 92037
Washington, D.C. 20006
10.2 Severability. If any provision of this Agreement is deemed illegal or
unenforceable, the remainder of the provisions of the agreement shall not be
affected thereby.
10.3 No Partnership, Joint Venture or Agency. Nothing herein contained shall be
construed to constitute the parties hereto as partners or as joint venturers, or
as agent of the other and Licensee shall have no power to obligate or bind
Licensor in any manner whatsoever in its relationships with Licensee's
suppliers, contractors, customers, employees, agents, or otherwise. Licensor is
a corporation formed under the laws of the State of Israel and Licensor shall
have no liability for any action, inaction, agreement of Licensee.
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XI. MISCELLANEOUS
11.01 Adjudication and Governing Law. Any suit and/or proceeding relating to the
construction, performance, or effect of this Agreement (other than patent
infringement or validity disputes) will be brought and prosecuted only in the
county of the party against whom that suit and/or proceeding is instituted. This
Agreement shall be governed in all respects in accordance with the laws of the
State of California USA (other than for patent infringement or validity
disputes). Patent infringement or validity disputes shall be adjudicated in a
court having competent jurisdiction in the country in which the disputed patent
issued.
11.02 No Waiver. A waiver by either party of a breach or violation of any
provision of this Agreement will not constitute or be construed as a waiver of
any other breach or violation of this Agreement.
11.03 Entire Agreement. This Agreement embodies the entire understanding of the
parties relating to the subject matter hereof and supersedes all prior
understandings and agreements. No modification or amendment of this Agreement
shall be valid or binding except if in writing signed by each of the parties.
11.04 No Assignment. Neither this Agreement nor any rights granted hereunder,
shall be assignable by any party hereto without prior written consent of the
other party; provided however, that Licensee may assign this Agreement without
the consent of the Licensor (i) to its Affiliates, if Licensee guarantees the
full performance of its Affiliates' obligations hereunder, (ii) to *** or (iii)
in connection with the sale or transfer of all or substantially all of its
assets, whether by merger, sale of stock, operations of law or otherwise. Any
purported assignment in contravention of this section shall, at the option of
the non-assigning party, be null and void and of no effect.
11.05 Headings. Any headings and captions used in this Agreement are for
convenience and reference only and are not a part of this Agreement.
11.06 Construction. The parties acknowledge that this Agreement has been the
subject of full opportunity for negotiation and amendment and that the party who
has taken the role of drafter shall not suffer any adverse construction of any
terms or language of this Agreement because of such role.
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
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11.07 Multiple Products. A dispute as to whether a product made, used or sold by
Licensee is a Licensed Product will not cause termination of this Agreement with
respect to a different product made, used, or sold by Licensee if both parties
agree that said different product is a Licensed Product.
11.08 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, and such
counterparts together shall constitute one agreement.
11.09 Initial patentability analysis. It is the sole responsibility of the
Licensee, within *** of the Effective Date, to determine to its satisfaction the
patentability and scope of Patent Rights, and Licensee may terminate this
agreement within *** of the Effective Date if it not satisfied with said
patentability and scope with no obligation to pay the termination fee set forth
in section 9.04 and without any claims or demands for any of the parties.
IN WITNESS WHEREOF, the parties hereto have duly executed this License
Agreement as of the date written.
Dimotech. Ltd.
By: /s/ Ami Lowenstein
--------------------------------
Ami Lowenstein
Title: Managing Director
Date: Oct 18 96
Inventor
By: /s/Gera Neufeld
--------------------------------
Gera Neufeld
Date: Nov 1, 1996
Collateral Therapeutics, Inc.
By: /s/ Jack W. Reich, Ph.D.
--------------------------------
Jack Reich
Title: President and CEO
Date: Oct. 28, 1996
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
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Exhibit 10.14
Exclusive License Agreement
between
The Regents of the University of California
and
Collateral Therapeutics, Inc.
for
Gene Therapy for Congestive Heart Failure
***
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
--------------
U.C. AGREEMENT
CONTROL NUMBER
***
--------------
<PAGE>
Table of Contents
Recitals.................................................................... 1
1. Definitions........................................................... 4
2. Grant................................................................. 7
3. License Issue Fee..................................................... 9
4. Royalties............................................................. 10
5. Due Diligence......................................................... 14
6. Progress and Royalty Reports.......................................... 16
7. Books and Records..................................................... 18
8. Life of the Agreement................................................. 19
9. Termination by The Regents............................................ 20
10. Termination by Licensee............................................... 21
11. Disposition of Patent Products on Hand Upon Termination............... 21
12. Use of Names and Trademarks........................................... 22
13. Limited Warranty...................................................... 23
14. Patent Prosecution and Maintenance.................................... 24
15. Patent Marking........................................................ 28
16. Patent Infringement................................................... 28
17. Indemnification....................................................... 30
18. Notices............................................................... 32
19. Assignability......................................................... 33
20. Late Payments......................................................... 34
21. Waiver................................................................ 34
22. Failure to Perform.................................................... 34
23. Governing Laws........................................................ 35
24. Government approval or Registration................................... 35
25. Export Control Laws................................................... 36
26. Force Majeure......................................................... 36
27. Confidentiality....................................................... 37
28. Miscellaneous......................................................... 39
<PAGE>
***
Revised: 7/13/95 (SH)
Draft date: January 14, 1997
Exclusive License Agreement
for
Gene Therapy for Congestive Heart Failure
This license agreement ("Agreement") is effective this 22nd day of Jan.,
1997, by and between The Regents of the University of California ("The
Regents"), a California corporation, having its statewide administrative offices
at 300 Lakeside Drive, 22nd Floor, Oakland, California 94612-3550 and Collateral
Therapeutics, Inc., ("Licensee"), a California corporation, having a principal
place of business at 9360 Towne Centre Drive, San Diego, California 92121.
Recitals
Whereas, certain inventions, relating to "Gene Therapy for Congestive
Heart Failure" ("Invention"), useful for enhancing myocardial B-adrenergic
responsiveness in mammalian hearts using gene therapy, were made at the
University of California, San Diego ("UCSD"), are described and claimed in a
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
--------------
U.C. AGREEMENT
CONTROL NUMBER
***
--------------
<PAGE>
U.S. Patent Application Serial No. *** naming *** *** and *** as co-inventors,
and are identified in the below defined Patent Rights;
Whereas, it is the intention of the Licensee to investigate the use of the
gene therapy method claimed in U.S. Patent Application Serial No. *** and
previously licensed to Licensee in the agreement entitled "Angiogenesis Gene
Therapy," executed on September 29, 1995, in the development of Patent Products
licensed herein;
Whereas, Licensee entered into a Letter of Intent ("Letter of Intent"),
having U.C. Agreement Control No. *** effective *** that provided the Licensee
with a time-limited exclusive right to negotiate for a license to the Patent
Rights;
Whereas, under 35 USC 200-212, The Regents may elect to retain title to
any invention (including the Invention) made by it, in whole or in part, under
U.S. Government funding;
Whereas, if The Regents elects to retain title to the Invention, then the
law requires that The Regents grant to the U.S. Government a nontransferable,
paid-up, nonexclusive, irrevocable license to use the Invention by or on behalf
of the U.S. Government throughout the world;
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
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Whereas, any patent application claiming an invention made by *** is
subject to assignment to the *** absent a release to *** from the ***;
Whereas, 37 CFR ss.501.6(a)(2) allows the *** to release the Invention to
Dr. Hammond, under certain conditions;
Whereas, *** an employee of The Regents, is under obligation to assign to
The Regents the rights in the Invention that were released to him by the ***;
Whereas, *** assigned to The Regents title to the Invention, which was
released to him from the *** and granted the required licenses to the U.S.
Government;
Whereas, Licensee is a "small entity" as defined in 37 CFR Section 1.9 and
a "small-business concern" defined at 15 U.S.C. ss.632;
Whereas, both parties recognize that royalties due under this Agreement
will be paid on issued patents and pending patent applications that are being
prosecuted diligently and in good faith;
Whereas, Licensee requested an exclusive license to the Patent Rights from
The Regents; and
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
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<PAGE>
Whereas, The Regents wish to grant an exclusive license to the Patent
Rights to Licensee so that products and other benefits derived from the
Invention can be enjoyed by the general public.
- - oo O oo - -
The parties agree as follows:
1. Definitions
As used in this Agreement, the following terms will have the meaning set
forth below:
1.1 "Patent Rights" means all U.S. patents and patent applications and
foreign patents and patent applications assigned to The Regents, and in the case
of foreign patents and patent applications those requested under Paragraph 14.4
herein, including any reissues, extensions, substitutions, continuations,
divisions, and continuations-in-part applications (only to the extent, however,
that claims in the continuations-in-part applications are entitled to the
priority filing date of the parent patent application) based on and including
any subject matter claimed in or described according to the requirements of 35
USC Section 112 in U.S. Patent Application Serial
4
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Number *** entitled *** filed *** by *** and assigned to The Regents.
1.2 "Patent Products" means:
1.2.1 any kit, composition of matter, material, or product;
1.2.2 any kit, composition of matter, material, or product to be
used in a manner requiring the performance of the Patent
Method; or
1.2.3 any kit, composition of matter, material, or product produced
by the Patent Method;
to the extent that the manufacture, use, or sale of such kit, composition of
matter, material, or product, in a particular country, would fall within the
scope of (1 ) an unexpired claim of a patent under Patent Rights in that country
or (2) a pending claim of a pending patent application that is being prosecuted
diligently and in good faith in that country, were it issued as a application is
pending. This definition of Patent Products also includes a service either used
by Licensee or provided by Licensee to its customers when such service requires
the practice of the Patent Method.
1.3 "Patent Method" means any process or method, the use or practice of
which in a country would fall within the scope of (1) an unexpired
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<PAGE>
claim of a patent under Patent Rights in that country or (2) a pending claim of
a pending application that is being prosecuted diligently and in good faith in
that country, were it issued as a claim in a patent under Patent Rights in that
country in which such application is pending.
1.4 "Net Sales" means the gross invoice prices from the sale of Patent
Products by Licensee, an Affiliate, a Joint Venture, or a sublicensee to
independent third parties for cash or other forms of consideration in accordance
with generally accepted accounting principles limited to the following
deductions (if not already deducted from the gross invoice price and at rates
customary within the industry): (a) allowances (actually paid and limited to
rejections, returns, and prompt payment and volume discounts granted to
customers of Patent Products, whether in cash or Patent Products in lieu of
cash); (b) freight, transport packing, insurance charges associated with
transportation; and (c) taxes, tariff, or import/export duties based on sales
when included in gross sales, but not value-added taxes or taxes assessed on
income derived from such sales.
1.5 "Affiliate(s)" of Licensee means any entity which, directly or
indirectly, controls Licensee, is controlled by Licensee, or is under common
control with Licensee ("control" for these purposes being defined as the actual,
present capacity to elect a majority of the directors of such affiliate,
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or if not, the capacity to elect the members that control fifty percent (50%) of
the outstanding stock or other voting rights entitled to elect directors)
provided, however, that in any country where the local law will not permit
foreign equity participation of a majority, then an "Affiliate" will include any
company in which Licensee will own or control, directly or indirectly, the
maximum percentage of such outstanding stock or voting rights permitted by local
law. Each reference to Licensee herein will be meant to include its Affiliates.
1.6 "Joint Venture" means any separate entity established pursuant to an
agreement between a third party and Licensee to constitute a vehicle for
commercializing Patent Products, in which the separate entity manufactures,
uses, purchases, sells, or acquires Patent Products from Licensee. Each
reference to Licensee herein will be meant to include its Joint Venture(s).
2. Grant
2.1 Subject to the terms of this Agreement, subject to the licenses
granted to the U.S. Government as set forth in the Recitals above, and subject
to the provisions of Section 2.5 below, The Regents hereby grants to Licensee
exclusive licenses under Patent Rights to make, use, sell, offer for
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<PAGE>
sale, and import Patent Products and to practice the Patent Method where Patent
Rights exist.
2.2 The Regents also grants to Licensee the exclusive right to issue
sublicenses to third parties to make, use, sell, offer for sale, and import
Patent Products and to practice the Patent Method, provided Licensee retains
current exclusive rights thereto under this Agreement. To the extent applicable,
such sublicenses will include all of the rights of and obligations due to The
Regents (and, if applicable, the U.S. Government, including 35 USC Sections
200-212 and the implementing regulations), including the payment of royalties in
Article 4. (Royalties) that are contained in this Agreement.
2.3 Licensee will notify The Regents of each sublicense granted hereunder
and provide The Regents with a copy of each sublicense. Licensee will collect
and pay all royalties due The Regents as set forth in Paragraph 4.1 below (and
guarantee all such payments due from sublicensees). Licensee will require
sublicensees to provide it with progress and royalty reports in accordance with
the provisions herein, and Licensee will collect and deliver to The Regents all
such reports due from sublicensees.
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2.4 If this Agreement is terminated for any reason or the exclusive
licenses are reduced to nonexclusive licenses in accordance with Paragraph 5.4,
then any or all sublicenses will be assigned to The Regents, provided that The
Regents will not be bound by any duties or obligations contained in any
sublicense that extend beyond the duties and obligations of The Regents in this
Agreement.
2.5 Nothing in this Agreement will be deemed to limit the right of The
Regents to publish any and all technical data resulting from any research
performed by The Regents relating to the Invention and to make and use Patent
Product(s), Patent Method(s), and associated technology solely for educational
and noncommercial research purposes.
3. License Issue Fee
3.1 As partial consideration for all the rights and licenses granted to
Licensee, Licensee will pay to The Regents a license issue fee of ***
*** according to the following schedule:
3.1.1 One Hundred Thousand Dollars ($100,000) within thirty (30)
days after the execution of this Agreement by both parties;
3.1.2 *** on or before *** ;
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3.1.3 *** on or before *** ;
3.1.4 *** on or before *** ; and
3.1.5 *** on or before ***.
3.2 The fees set forth in Paragraph 3.1 above are non-refundable,
non-creditable, and not an advance against royalties.
4. Royalties
4.1 As further consideration for all the rights and licenses granted to
Licensee, Licensee also will pay to The Regents an earned royalty at the rate of
*** based on the Net Sales of Patent Products. In the event Patent Products also
employ the invention claimed in U.S. Patent Application Serial No. *** the
Licensee will pay to The Regents the royalty rate specified in the agreement
executed on September 29, 1995 covering such U.S. Patent Application Serial
No. *** in addition to the royalty rate specified herein.
4.2 Paragraphs 1.1, 1.2, and 1.3 define Patent Rights, Patent Product, and
Patent Method so that royalties will be payable only on Patent Products covered
by either a pending patent application that is being prosecuted diligently and
in good faith in a relevant country or by an issued
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
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patent in a relevant country. Earned royalties will accrue in each country for
the duration of any issued patent within Patent Rights in that country and will
be payable to The Regents when Patent Products are invoiced, or if not invoiced,
when delivered to a third party for the purpose of patient administration or for
purposes other than clinical trials. Licensee, its Affiliates, Joint Ventures,
and sublicensees will not use Patent Products or Patent Methods for
administration to patients in any business of the Licensee, or of its
Affiliates, Joint Ventures, and sublicensees without payment of applicable
royalty on Net Sales to be calculated on retail sales prices as if the sales
transaction had occurred at arm's-length to an unrelated third party.
4.3 Royalties accruing to The Regents will be paid to The Regents
quarterly on or before the following dates of each calendar year:
February 28 for the calendar quarter ending December 31
May 31 for the calendar quarter ending March 31
August 31 for the calendar quarter ending June 30
November 30 for the calendar quarter ending September 30
Each such payment will be for royalties which accrued up to the most recently
completed calendar quarter of Licensee.
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4.4 Beginning in the *** , Licensee will pay to The Regents a minimum
annual royalty in the amounts and at the times set forth below:
<TABLE>
<CAPTION>
<S> <C> <C>
*** - $ ***
*** - $ ***
*** - $ ***
*** - $ ***
*** - $ ***
</TABLE>
In each succeeding calendar year after the *** Licensee will pay a *** of ***
for the life of this Agreement. Each minimum annual royalty payment must be paid
to The Regents by February 28 of each year following the calendar year in which
royalties accrued. Royalties paid during the prior calendar year will be
credited against the minimum annual royalty payment due and owing for the prior
calendar year.
4.5 All monies due The Regents will be payable in United States funds
collectible at par in San Francisco, California. When Patent Products are sold
for monies other than United States dollars, the earned royalties will first be
determined in the foreign currency of the country in which such Patent Products
were sold and then converted into equivalent United States
*** Portions of this page have been omitted pursuant to a request for
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funds. The exchange rate will be that rate quoted in the Wall Street Journal on
the last business day of the reporting period.
4.6 Earned royalties on sales of Patent Products occurring in any country
outside the United States will not be reduced by any taxes, fees, or other
charges imposed by the government of such country except those taxes, fees, and
charges allowed under the provisions of Paragraph 1.4 (Net Sales). Licensee will
be responsible for all bank transfer charges.
4.7 Notwithstanding the provisions of Article 26. (Force Majeure), if at
any time legal restrictions prevent prompt remittance of part or all royalties
owed to The Regents by Licensee with respect to any country where a Patent
Product is sold or distributed, Licensee will convert the amount owed to The
Regents into United States funds and will pay The Regents directly from another
source of funds for the amount impounded.
4.8 In the event that any patent or any claim thereof included within the
Patent Rights is held invalid or unenforceable in a final decision by a court of
competent jurisdiction and last resort and from which no appeal has or can be
taken, all obligation to pay royalties based on such patent of claim or any
claim patentably indistinct therefrom will cease as of the date of such final
decision. Licensee will not, however, be relieved from paying any
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<PAGE>
royalties that accrued before such decision or that are based on another patent
or claim that has not expired or that is not involved in such decision.
4.9 No royalties will be collected or paid hereunder to The Regents on
Patent Products sold to the account of the U.S. Government. Licensee and its
sublicensee will reduce the amount charged for Patent Products distributed to
the United States Government by an amount equal to the royalty for such Patent
Products otherwise due The Regents as provided herein.
5. Due Diligence
5.1 Licensee, upon execution of this Agreement, will diligently proceed
with the development, manufacture and sale of Patent Products. In this regard,
The Regents acknowledges that the technology covered by this Agreement has only
recently been invented and that substantial additional effort, expense and time,
as well as regulatory approval, will be required before manufacture and sales of
any Patent Products will be possible. Meeting the requirements of Section 5.3
below shall be deemed to satisfy the due diligence requirements of this Article
5.
5.2 Licensee will be entitled to exercise prudent and reasonable business
judgment in the manner in which it meets its due diligence
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obligations hereunder, including under Section 5.3 below. In no case, however,
will Licensee be relieved of its obligations to meet each of the due diligence
provisions of Paragraph 5.3 below.
5.3 If Licensee is unable to perform any of the following:
5.3.1 file an Investigational New Drug application with the U.S.
Food and Drug Administration on or before *** *** ;
5.3.2 begin Phase I Clinical Trials in the United States for Patent
Products on or before *** ;
5.3.3 enter Pivotal Trials (a combination of Phase II and Phase III
Clinical Trials) in the United States for said Patent Products
on or before *** ;
5.3.4 file for marketing approval in the United States for said
Patent Products on or before *** ;
5.3.5 market Patent Products in the United States within *** after
receiving marketing approval of such Patent Products from the
U.S. Food and Drug Administration; and
5.3.6 diligently and earnestly fill the market demand for Patent
Products following commencement of marketing at any time
during the exclusive period of this Agreement;
then The Regents will have the right and option to terminate this Agreement or
reduce the exclusive licenses granted to Licensee to non-exclusive licenses in
accordance with Paragraph 5.4 hereof. The exercise of this right
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
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and option by The Regents supersedes the rights granted in Article 2. (Grant).
5.4 To exercise either the right to terminate this Agreement or reduce the
exclusive licenses granted to Licensee to non-exclusive licenses for lack of any
diligence requirement specified in this Article 5. (Due Diligence), The Regents
will give Licensee written notice of the deficiency. Licensee thereafter has ***
to cure the deficiency. Licensee shall be entitled to a one-time extension of
each of the dates set forth in Subparagraphs 5.3.1 through 5.3.4 (which have not
been met) by *** to cure the deficiency upon payment of *** to The Regents,
provided that such payment is received by The Regents within *** of receipt of
written notice by The Regents of Licensee's deficiency. The *** payment has the
effect of extending the subject date and all subsequent dates by *** . If The
Regents has not received the *** payment by the end of the *** or written
tangible evidence satisfactory to The Regents that the deficiency has been cured
by the end of the *** then The Regents may, at its option, terminate this
Agreement or reduce the exclusive
*** Portions of this page have been omitted pursuant to a request for
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licenses granted to Licensee to non-exclusive licenses by giving written notice
to Licensee in accordance with Article 18. (Notices).
6. Progress and Royalty Reports
6.1 Beginning August 31, 1997, and semi-annually thereafter, Licensee will
submit to The Regents a progress report covering activities by Licensee related
to the development, including clinical trials and testing, of all Patent
Products and the obtaining of the governmental approvals necessary for
marketing. These progress reports will be provided to The Regents to cover the
progress of the research and development of the Patent Products until their
first commercial sale in the United States.
6.2 The progress reports submitted under Paragraph 6.1 will include, but
not be limited to, the following topics so that The Regents may be able to
determine the progress of the development of Patent Products:
o summary of work completed;
o summary of work in progress;
o current schedule of anticipated events or milestones specified
in Paragraph 5.3 and the dates when said milestones have been
met or will be met, as of the time of the report;
o market introduction date of Patent Products; and
o activities of sublicensees, if any.
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6.3 Licensee will also report to The Regents in its immediately subsequent
progress and royalty report the date of first commercial sale of a Patent
Product(s) in each country where the Licensee has sought marketing approval.
6.4 After the first commercial sale of a Patent Product, Licensee will
provide The Regents with quarterly royalty reports to The Regents on or before
each February 28, May 31, August 31, and November 30 of each year. Each such
royalty report will cover the most recently completed calendar quarter of
Licensee (October through December, January through March, April through June,
and July through September) and will show:
6.4.1 the gross sales and Net Sales of Patent Products sold by
Licensee and reported to Licensee as sold by its sublicensees
during the most recently completed calendar quarter;
6.4.2 the number of Patent Products sold or distributed by Licensee
and reported to Licensee as sold or distributed by its
sublicensees;
6.4.3 the royalties, in U.S. dollars, payable hereunder with respect
to Net Sales; and
6.4.4 the exchange rates used, if any.
6.5 If no sales of Patent Products have been made during any reporting
period after the first commercial sale of a Patent Product, then a statement to
this effect is required.
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7. Books and Records
7.1 Licensee will keep books and records accurately showing all Patent
Products manufactured, used, and/or sold under the terms of this Agreement. Such
books and records will be preserved for at least four (4) years after the date
of the royalty payment to which they pertain and will be open to inspection by
representatives or agents of The Regents at reasonable times to determine the
accuracy of the books and records and to determine compliance by Licensee with
the terms of this Agreement.
7.2 The fees and expenses of representatives of The Regents performing
such an examination will be borne by The Regents. However, if an error in
royalties of more than five percent (5%) of the total royalties due for any year
is discovered, then the fees and expenses of these representatives will be borne
by Licensee.
8. Life of the Agreement
8.1 Unless otherwise terminated by operation of law or by acts of the
parties in accordance with the terms of this Agreement, this Agreement will be
in force from the effective date recited on page one and will remain in effect
for the life of the last-to-expire patent licensed under this Agreement,
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<PAGE>
or until the last patent application licensed under this Agreement is abandoned.
8.2 Any termination of this Agreement will not affect the rights and
obligations set forth in the following Articles:
Article 3 License Issue Fee
Article 7 Books and Records
Article 11 Disposition of Patent Products on Hand Upon Termination
Article 12 Use of Names and Trademarks
Paragraph 14.6 Patent Prosecution and Maintenance
Article 17 Indemnification
Article 22 Failure to Perform
Article 27 Confidentiality
9. Termination by The Regents
9.1 If Licensee should violate or fail to perform any material term or
covenant of this Agreement, then The Regents may give written notice of such
default ("Notice of Default") to Licensee. If Licensee should fail to repair
such default within sixty (60) days after the date of such notice takes effect,
The Regents will have the right to terminate this Agreement and the licenses
herein by a second written notice ("Notice of Termination") to
20
<PAGE>
Licensee. If a Notice of Termination is sent to Licensee, this Agreement will
automatically terminate on the date such notice takes effect. Such termination
will not relieve Licensee of its obligation to pay any royalty or license fees
owing at the time of such termination and will not impair any accrued right of
The Regents. These notices will be subject to Article 18. (Notices).
10. Termination by Licensee
10.1 Licensee will have the right at any time to terminate this Agreement
in whole or as to any portion of Patent Rights by giving notice in writing to
The Regents. Such Notice of Termination will be subject to Article 18. (Notices)
and termination of this Agreement will be effective sixty (60) days after the
effective date thereof.
10.2 Any termination pursuant to the above paragraph will not relieve The
Regents or Licensee of any obligation or liability accrued hereunder prior to
such termination or rescind anything done by The Regents or Licensee or any
payments made to The Regents hereunder prior to the time such termination
becomes effective, and such termination will not affect in any manner any rights
of The Regents or Licensee arising under this Agreement prior to such
termination.
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<PAGE>
11. Disposition of Patent Products on Hand Upon Termination
11.1 Upon termination of this Agreement, Licensee will have the privilege
of disposing of all previously made or partially made Patent Products, but no
more, within a period of one hundred twenty (120) days, provided, however, that
the sale of such Patent Products will be subject to the terms of this Agreement
including, but not limited to the payment of fees and reimbursement for patent
costs and the payment of royalties based on the Net Sales of Patent Products at
the rates and at the times provided herein and the rendering of reports in
connection therewith.
12. Use of Names and Trademarks
12.1 Nothing contained in this Agreement will be construed as conferring
any right to use in advertising, publicity, or other promotional activities any
name, trade name, trademark, or other designation of either party hereto by the
other (including contraction, abbreviation or simulation of any of the
foregoing). Unless required by law, the use by Licensee of the name "The Regents
of the University of California" or the name of any campus of the University of
California for use in advertising, publicity, or other promotional activities is
expressly prohibited.
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<PAGE>
12.2 It is understood that The Regents will be free to release to the
inventors and senior administrative officials employed by The Regents the terms
of this Agreement upon their request. If such release is made, The Regents will
request that such terms will be kept in confidence in accordance with the
provisions of Article 27. (Confidentiality) and not be disclosed to others. It
is further understood that should a third party inquire whether a license to
Patent Rights is available, The Regents may disclose the existence of this
Agreement and the extent of the grant in Article 2. (Grant) to such third party,
but will not disclose the name of Licensee, except where The Regents is required
to release such information under either the California Public Records Act or
other applicable law.
13. Limited Warranty
13.1 The Regents warrants to Licensee that it has the lawful right to
grant this license, and that it has not granted any rights or licenses to Patent
Rights, other than to the U.S. Government, in derogation of this Agreement.
13.2 This license and the associated Invention, Patent Rights, Patent
Products, and Patent Methods are provided WITHOUT WARRANTY OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE OR ANY OTHER WARRANTY, EXPRESSED OR IMPLIED.
THE REGENTS MAKES NO
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<PAGE>
REPRESENTATION OR WARRANTY THAT THE INVENTION, PATENT PRODUCTS, OR PATENT METHOD
WILL NOT INFRINGE ANY PATENT OR OTHER PROPRIETARY RIGHT.
13.3 IN NO EVENT WILL THE REGENTS BE LIABLE FOR ANY INCIDENTAL, SPECIAL OR
CONSEQUENTIAL DAMAGES RESULTING FROM EXERCISE OF THIS LICENSE OR THE USE OF THE
INVENTION, PATENT METHOD, OR PATENT PRODUCTS.
13.4 Nothing in this Agreement will be construed as:
13.4.1 a warranty or representation by The Regents as to the
validity, enforceability, or scope of any Patent Rights;
or
13.4.2 a warranty or representation that anything made, used,
sold or otherwise disposed of under any license granted
in this Agreement is or will be free from infringement
of patents of third parties; or
13.4.3 an obligation to bring or prosecute actions or suits
against third parties for patent infringement except as
provided in Article 16. (Patent Infringement); or
13.4.4 conferring by implication, estoppel, or otherwise any
license or rights under any patents of The Regents other
than Patent Rights as defined herein, regardless of
whether such patents are dominant or subordinate to
Patent Rights; or
13.4.5 an obligation to furnish any know-how not provided in
Patent Rights.
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<PAGE>
14. Patent Prosecution and Maintenance
14.1 The Regents will diligently prosecute and maintain the United States
and foreign patents comprising Patent Rights using counsel of its choice. The
Regents will promptly provide Licensee with copies of all relevant documentation
so that Licensee may be currently and promptly informed and apprised of the
continuing prosecution and may comment upon such documentation sufficiently in
advance of any initial deadline for filing a response, provided, however, that
if Licensee has not commented upon such documentation prior to the initial
deadline for filing a response with the relevant government patent office, or
The Regents must act to preserve Patent Rights, The Regents will be free to
respond appropriately without consideration of comments by Licensee, if any.
Both parties hereto will keep this documentation in confidence in accordance
with the provisions of Article 27. (Confidentiality) herein. The Regents'
counsel will take instructions only from The Regents.
14.2 The Regents will use all reasonable efforts to amend any patent
application to include claims requested by Licensee and required to protect the
Patent Products contemplated to be sold or Patent Method to be practiced under
this Agreement.
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<PAGE>
14.3 The Regents and Licensee will cooperate in applying for an extension
of the term of any patent included within Patent Rights, if appropriate, under
the Drug Price Competition and Patent Term Restoration Act of 1984. Licensee
will prepare all such documents, and The Regents will execute such documents and
will take such additional action as Licensee may reasonably request in
connection therewith.
14.4 The Regents will, at the request of Licensee, file, prosecute, and
maintain patent applications and patents covered by Patent Rights in foreign
countries if available. Licensee must notify The Regents within nine (9) months
of the filing of the corresponding United States application of its decision to
request The Regents to file foreign counterpart patent applications. This notice
concerning foreign filing must be in writing and must identify the countries
desired. The absence of such a notice from Licensee to The Regents within the
nine (9)-month period will be considered an election by Licensee not to request
The Regents to secure foreign patent rights on behalf of Licensee. The Regents
will have the right to file patent applications at its own expense in any
country Licensee has not included in its list of desired countries, and such
applications and resultant patents, if any, will not be included in the licenses
granted under this Agreement unless Licensee agrees in writing to pay all costs
associated with any such patent
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<PAGE>
application(s) and provided the rights of said patent application(s) are
available at the time Licensee agrees to pay the associated costs.
14.5 All past, present and future costs of preparing, filing, prosecuting
and maintaining all United States and foreign patent applications and all costs
and fees relating to the preparation and filing of patents covered by Patent
Rights in Paragraph 1.1 will be borne by Licensee. This includes all patent
preparation and prosecution costs incurred by The Regents prior to the execution
of this Agreement. Such costs will be due upon execution of this Agreement and
will be payable at the time that the license issue fee is payable. The costs of
all interferences and oppositions will be considered prosecution expenses and
also will be borne by Licensee. Licensee will reimburse The Regents for all
costs and charges within thirty (30) days following receipt of an itemized
invoice from The Regents for same.
14.6 The obligation of Licensee to underwrite and to pay patent
preparation, filing, prosecution, maintenance, and related costs will continue
for such costs as may be incurred during the three (3)-month period after
receipt by either party of a Notice of Termination for all non-cancelable
obligations made prior to the receipt of said Notice of Termination. Licensee
will reimburse The Regents for all patent costs incurred during the term of the
Agreement and for three (3) months thereafter whether or not invoices
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<PAGE>
for such costs are received during the three (3)-month period after receipt of a
Notice of Termination. Licensee may with respect to any particular patent
application or patent terminate its obligations to the patent application or
patent in any or all designated countries upon three months written notice to
The Regents. The Regents may continue prosecution and/or maintenance of such
application(s) or patent(s) at its sole discretion and expense, provided,
however, that Licensee will have no further right or licenses thereunder.
14.7 Licensee will have a continuing responsibility to keep The Regents
informed of its large/small entity status (as defined by the United States
Patent and Trademark Office) of itself and its sublicensees.
15. Patent Marking
15.1 Licensee will mark all Patent Products made, used or sold under the
terms of this Agreement, or their containers, in accordance with the applicable
patent marking laws.
16. Patent Infringement
16.1 In the event that Licensee learns of the substantial infringement of
any patent licensed under this Agreement, Licensee will call the attention of
The Regents thereto in writing and will provide The Regents with
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<PAGE>
reasonable evidence of such infringement. Both parties to this Agreement
acknowledge that during the period and in a jurisdiction where Licensee has
exclusive rights under this Agreement, neither will notify a third party of the
infringement of any of Patent Rights without first obtaining consent of the
other party, which consent will not be unreasonably withheld. Both parties will
use their best efforts in cooperation with each other to terminate such
infringement without litigation.
16.2 Licensee may request that The Regents take legal action against the
infringement of Patent Rights. Such request must be made in writing and must
include reasonable evidence of such infringement and damages to Licensee. If the
infringing activity has not been abated within ninety (90) days following the
effective date of such request, The Regents will have the right to elect to:
16.2.1 commence suit on its own account; or
16.2.2 refuse to participate in such suit
and The Regents will give notice of its election in writing to Licensee by the
end of the one hundredth (100th) day after receiving notice of such request from
Licensee. Licensee may thereafter bring suit for patent infringement if and only
if The Regents elects not to commence suit and if the infringement occurred
during the period and in a jurisdiction where Licensee had exclusive
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<PAGE>
rights under this Agreement. However, in the event Licensee elects to bring suit
in accordance with this Paragraph, The Regents may thereafter join such suit at
its own expense, but the Licensee will control the lawsuit.
16.3 Such legal action as is decided upon will be at the expense of the
party on account of whom suit is brought and all recovered thereby will belong
to such party, provided, however, that legal action brought jointly by The
Regents and Licensee and participated in by both will be at the joint expense of
the parties and all recoveries will be allocated in the following order: a) to
each party reimbursement in equal amounts of the attorney's costs, fees, and
other related expenses to the extent each party paid for such costs, fees, and
expenses until all such costs, fees, and expenses are consumed for each party;
and b) any remaining amount shared jointly by them in proportion to the share of
expenses paid by each party.
16.4 Each party will cooperate with the other in litigation proceedings
instituted hereunder but at the expense of the party on account of whom suit is
brought. Such litigation will be controlled by the party bringing the suit,
provided, however, that The Regents may be represented by counsel of its choice
in any suit brought by Licensee.
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<PAGE>
17. Indemnification
17.1 Licensee will (and will require its sublicensees to) indemnify, hold
harmless, and defend The Regents, its officers, employees, and agents; the
sponsors of the research that led to the Invention; the inventors of any
invention covered by Patent Rights (including the Patent Products and Patent
Method contemplated thereunder) and their employers against any and all claims,
suits, losses, damage, costs, fees, and expenses resulting from or arising out
of exercise of this license or any sublicense. This indemnification will
include, but will not be limited to, any product liability.
17.2 Licensee, at its sole cost and expense, will insure its activities in
connection with the work under this Agreement and obtain, keep in force, and
maintain insurance as follows: (or an equivalent program of self insurance)
At the initiation of clinical trials, Comprehensive or Commercial Form
General Liability Insurance (contractual liability included) with limits as
follows up to and until Licensee enters Phase III Clinical Trials:
<TABLE>
<CAPTION>
<S> <C>
(a) Each Occurrence.................................... $3,000,000
(b) Products/Completed Operations Aggregate............ $3,000,000
(c) Personal and Advertising Injury.................... $3,000,000
(d) General Aggregate (commercial form only)........... $3,000,000
</TABLE>
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<PAGE>
Comprehensive or Commercial Form General Liability Insurance (contractual
liability included) with limits as follows after Licensee enters Phase III
Clinical Trials:
<TABLE>
<CAPTION>
<S> <C>
(a) Each Occurrence.................................... $5,000,000
(b) Products/Completed Operations Aggregate............ $5,000,000
(c) Personal and Advertising Injury.................... $5,000,000
(d) General Aggregate (commercial form only)........... $5,000,000
</TABLE>
It should be expressly understood, however, that the coverages and limits
referred to under the above will not in any way limit the liability of Licensee.
Licensee will furnish The Regents with certificates of insurance evidencing
compliance with all requirements. Such certificates will:
(a) Provide for thirty (30)-day advance written notice to The
Regents of any modification;
(b) Indicate that The Regents has been endorsed as an additional
Insured under the coverages referred to under the above; and
(c) Include a provision that the coverages will be primary and
will not participate with nor will be excess over any valid
and collectable insurance or program of self-insurance carried
or maintained by The Regents.
17.3 The Regents will immediately notify Licensee in writing of any claim
or suit brought against The Regents in respect of which The Regents intends to
invoke the provisions of this Article 17. (Indemnification). Licensee will keep
The Regents informed as appropriate and necessary on a
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<PAGE>
current basis of its defense of any claims pursuant to this Article 17.
(Indemnification).
18. Notices
18.1 Any notice or payment required to be given to either party will be
deemed to have been properly given and to be effective (a) on the date of
delivery if delivered in person or (b) five days after mailing if mailed by
first-- class certified mail, postage paid, to the respective addresses given
below, or to another address as it may designate by written notice given to the
other party.
In the case of Licensee: COLLATERAL THERAPEUTICS, INC.
9360 Towne Centre Drive
San Diego, CA 92121
Tel: (619) 622-4100
Fax: (619) 587-3518
Attention: Jack Reich, Ph.D.
In the case of The Regents: THE REGENTS OF THE UNIVERSITY
OF CALIFORNIA
1320 Harbor Bay Parkway, Suite 150
Alameda, California 94502
Tel: (510) 748-6600
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<PAGE>
Fax: (510) 748-6639
Attention: Terence A. Feuerborn
Executive Director
Research Administration and
Technology Transfer
Referring to: ***
19. Assignability
19.1 This Agreement is binding upon and will inure to the benefit of The
Regents, its successors and assigns, but will be personal to Licensee and
assignable by Licensee only with the written consent of The Regents, which
consent shall not be unreasonably withheld.
20. Late Payments
20.1 In the event royalty payments or fees or patent prosecution costs are
not received by The Regents when due, Licensee will pay to The Regents interest
charges at a rate of *** simple interest per annum. Such interest will be
calculated from the date payment was due until actually received by The Regents.
Acceptance by The Regents of any late payment interest from Licensee under this
Paragraph 20 will in no way affect the provision of Article 21. (Waiver) herein.
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
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<PAGE>
21. Waiver
21.1 It is agreed that no waiver by either party hereto of any breach or
default of any of the covenants or agreements herein set forth will be deemed a
waiver as to any subsequent and/or similar breach or default.
22. Failure to Perform
22.1 In the event of a failure of performance due under the terms of this
Agreement and if it becomes necessary for either party to undertake legal action
against the other on account thereof, then the prevailing party will be entitled
to reasonable attorney's fees in addition to costs and necessary disbursements.
23. Governing Laws
23.1 THIS AGREEMENT WILL BE INTERPRETED AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF CALIFORNIA, excluding any choice of law rules that
would direct the application of the laws of another jurisdiction, but the scope
and validity of any patent or patent application will be governed by the
applicable laws of the country of such patent or patent application.
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<PAGE>
24. Government Approval or Registration
24.1 If this Agreement or any associated transaction is required by the
law of any nation to be either approved or registered with any governmental
agency, Licensee will assume all legal obligations to do so. Licensee will
notify The Regents if it becomes aware that this Agreement is subject to a
United States or foreign government reporting or approval requirement. Licensee
will make all necessary filings and pay all costs including fees, penalties, and
all other out-of-pocket costs associated with such reporting or approval
process.
25. Export Control Laws
25.1 Licensee will observe all applicable United States and foreign laws
with respect to the transfer of Patent Products and related technical data to
foreign countries, including, without limitation, the International Traffic in
Arms Regulations (ITAR) and the Export Administration Regulations.
26. Force Majeure
26.1 The parties to this Agreement will be excused from any performance
required hereunder if such performance is rendered impossible
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<PAGE>
or unfeasible due to any acts of God, catastrophes, or other major events beyond
their reasonable control, including, without limitation, war, riot, and
insurrection; laws, proclamations, edicts, ordinances, or regulations; strikes,
lock-outs, or other serious labor disputes; and floods, fires, explosions, or
other natural disasters. However, any party to this Agreement will have the
right to terminate this Agreement upon thirty (30) days' prior written notice if
either party is unable to fulfill its obligations under this Agreement due to
any of the causes mentioned above and such inability continues for a period of
one year. Notices will be subject to Article 18. (Notices).
27. Confidentiality
27.1 Licensee and The Regents respectively will treat and maintain the
proprietary business, patent prosecution, software, engineering drawings,
process and technical information, and other proprietary information of the
other party ("Proprietary Information") in confidence using at least the same
degree of care as that party uses to protect its own proprietary information of
a like nature for a period from the date of disclosure until five (5) years
after the date of termination of this Agreement.
27.2 Proprietary Information will be labeled or marked confidential or as
otherwise similarly appropriate by the disclosing party, or if the
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<PAGE>
Proprietary Information is orally disclosed, it will be reduced to writing or
some other physically tangible form, marked and labeled as set forth above by
the disclosing party and delivered to the receiving party within thirty (30)
days after the oral disclosure as a record of the disclosure and the
confidential nature thereof. Notwithstanding the foregoing, Licensee and The
Regents may use and disclose Proprietary Information to its employees, agents,
consultants, and contractors having a need to know the Proprietary Information
and, in the case of Licensee, its sublicensees, provided that any such parties
are bound by a like duty of confidentiality.
27.3 Nothing contained herein will in any way restrict or impair the right
of Licensee or The Regents to use, disclose, or otherwise deal with any
Proprietary Information:
27.3.1 that recipient can demonstrate by written records was
previously known to it;
27.3.2 that is now, or becomes in the future, public knowledge
other than through acts or omissions of recipient;
27.3.3 that is lawfully obtained without restrictions by
recipient from sources independent of the disclosing
party;
27.3.4 that is required to be disclosed to a governmental
entity or agency in connection with seeking any
governmental or regulatory approval, or pursuant to the
lawful requirement or request of a governmental entity
or agency;
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<PAGE>
27.3.5 that is furnished to a third party by the recipient with
a need to know and with similar confidentiality
restrictions imposed on such third party, as evidenced
in writing, or
27.3.6 that The Regents is required to disclose pursuant to the
California Public Records Act or other applicable law.
27.4 Upon termination of this Agreement, Licensee and The Regents will
destroy or return to the disclosing party proprietary information received from
the other in its possession within fifteen (15) days following the effective
date of termination. Licensee and The Regents will provide each other, within
thirty (30) days following termination, with a written notice that Proprietary
Information has been returned or destroyed. Each party may, however, retain one
copy of Proprietary Information for archival purposes in nonworking files.
28. Miscellaneous
28.1 The headings of the several sections are inserted for convenience of
reference only and are not intended to be a part of or to affect the meaning or
interpretation of this Agreement.
28.2 The licenses and any sublicenses granted hereunder will be subject to
any legal obligations to the U.S. Government including those set forth in 35 U.
S. C. 200-212 and applicable governmental implementing
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<PAGE>
regulations. Because this Agreement grants the exclusive right to use or sell
the Patent Products in the United States, Licensee acknowledges that Patent
Products will be manufactured substantially in the United States as required
under 35 USC Section 204.
28.3 The manufacture of Patent Products will be in accordance with any
applicable government importation laws and regulations of a particular country
on Patent Products made outside the particular country in which such Patent
Products are to be used or sold.
28.4 Licensee will obtain all necessary governmental approvals in each
country where it intends to sell or manufacture and use Patent Products or
permit others to manufacture, use, or sell Patent Products.
28.5 This Agreement will not be binding upon the parties until it has been
signed below on behalf of each party, in which event, it will be effective as of
the date recited on page one.
28.6 No amendment or modification hereof will be valid or binding upon the
parties unless made in writing and signed on behalf of each party,
28.7 This Agreement embodies the entire understanding of the parties and
will supersede all previous communications, representations or understandings,
either oral or written, between the parties relating to the
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<PAGE>
subject matter hereof. The Letter of Intent specified in the Recitals in this
Agreement is hereby terminated.
28.8 In case any of the provisions contained in this Agreement are held to
be invalid, illegal, or unenforceable in any respect, such invalidity,
illegality, or unenforceability will not affect any other provisions hereof, but
this Agreement will be construed as if such invalid or illegal or unenforceable
provisions had never been contained herein.
The Regents and Licensee execute this Agreement in duplicate originals by
their respective, authorized officers on the date indicated.
Collateral Therapeutics, Inc. The Regents of the University of
California
By /s/ Jack W. Reich, Ph.D. By /s/ Terence A. Feuerborn
------------------------------- --------------------------------
(Signature) (Signature)
Name Jack W. Reich, Ph.D. Name Terence A. Feuerborn
-----------------------------
(Please Print)
Title President and C.E.O. Title Executive Director
---------------------------- Research Administration and
Technology Transfer
Date January 20, 1997 Date January 22, 1997
------------------------------ ------------------------------
Approved as to legal form:
By /s/ Edwin H. Baker 1/14/97
------------------------------- ------------------------------
(Date)
Edwin H. Baker, Associate President Counsel
Office of Technology Transfer
University of California
41
<PAGE>
EXHIBIT 10.15
AGREEMENT
Between
NEW YORK UNIVERSITY
and
COLLATERAL THERAPEUTICS, INC.
<PAGE>
NYU/COLLATERAL THERAPEUTICS
Research & License Agreement
INDEX
Section l Definitions page 1
Section 2 Effective Date page 4
Section 3 Performance of the NYU Research Project page 4
Section 4 Funding of the NYU Research Project page 5
Section 5 Title page 5
Section 6 Patents and Patent Applications page 6
Section 7 Grant of License page 8
Section 8 Payments for License page 9
Section 9 Method of Payment page 12
Section 10 Development and Commercialization page 13
Section 11 Confidential Information page 15
Section 12 Publication page 15
Section 13 Liability and Indemnification page 16
Section 14 Security for Indemnification page 17
Section 15 Expiry and Termination page 18
Section 16 Representations and Warranties by CORPORATION page 19
Section 17 Representations and Warranties by NYU page 20
Section 18 No Assignment page 21
Section 19 Use of Narne page 21
Section 20 Miscellaneous page 22
Appendix I Pre Existing Inventions
Appendix II Research Program
Appendix III Development Plan
<PAGE>
RESEARCH AND LICENSE AGREEMENT
This Agreement, effective as of March 24, 1997 (the "Effective Date"), is
by and between NEW YORK UNIVERSITY (herein-after "NYU"), a corporation organized
and existing under the laws of the State of New York and having a place of
business at 70 Washington Square South, New York, New York 10012 and COLLATERAL
THERAPEUTICS, INC. (hereinafter "CORPORATION"), a corporation organized and
existing under the laws of the State of California, having its principal office
at 9360 Towne Centre Drive, San Diego, California 92121.
RECITALS
WHEREAS, Dr Claudia Basilico of NYU (hereinafter "the NYU Scientist"),
together with other co-inventors, has made certain inventions all as more
particularly described in an issued U S. patent and U. S patent applications and
foreign patent applications owned by NYU, in each case identified in annexed
Appendix I and forming an integral part hereof (hereinafter "the PreExisting
Inventions");
WHEREAS, NYU is willing to perform the NYU Research Project (as
hereinafter defined);
WHEREAS, CORPORATION is prepared to sponsor the NYU Research Project;
WHEREAS, subject to the terms and conditions hereinafter set forth, NYU is
willing to grant to CORPORATION and CORPORATION is willing to accept from NYU
the License (as hereinafter defined);
NOW, THEREFORE, in consideration of the mutual promises and agreements
contained herein, the parties hereto hereby agree as follows:
1. Definitions.
(a) "Calendar Year" shall mean any consecutive period of twelve months
commencing on the first day of January of any year.
(b) "Corporation Entity" it shall mean any company or other legal entity
which controls, or is controlled by, or is under common control
with, CORPORATION; control means the holding of fifty percent (50%)
or more of (i) the capital and/or (ii) the voting rights and/or
(iii) the right to elect or appoint directors.
<PAGE>
2
(c) "Date of First Commercial Sale" shall have the meaning set forth in
Section 7(b) hereof.
(d) "FGF-4" shall mean Fibroblast Growth Factor 4 the amino acid
sequence of which is provided in Figure 1 in the article by P. Delli
Bovi, A.M. Curatola, F. G. Kern, A. Greco, M. Ittmann, and C.
Basilico published in Cell, Volume 50, pages 729-737, August 28,
1987.
(e) "Field" shall mean gene therapy for coronary artery disease,
congestive heart failure, and peripheral vascular disease.
(f) ***
***
***
***
***
***
(g) "License" shall mean the exclusive worldwide license to practice the
Research Technology (as hereinafter defined) for the development,
manufacture, use and sale of the Licensed Products (as hereinafter
defined) in the Field and the exclusive worldwide right to
sublicense such rights in accordance with Section 7(c).
(h) "Licensed Products" shall mean products comprising a nucleic acid
sequence encoding FGF-4 or fragments or analogs thereof, in each
case which are covered by a claim of any unexpired patent within the
NYU Patents (as hereinafter defined) which has not been disclaimed
or held invalid by a court of competent jurisdiction from which no
appeal can be taken or of any active patent application within the
NYU Patents, or which utilize all or any portion of NYU Know-How.
(i) "Net Sales" shall mean the total amount invoiced in connection with
sales of Licensed Products by CORPORATION, any Corporation Entity or
any sublicensee of CORPORATION, any Corporation Entity or a
sublicensee in accordance with Section 7(c)(iii), in each case to
end users; provided that Net Sales shall (i) not include any amounts
invoiced in connection with sales of Licensed Products for (A)
transportation charges, including insurance relating thereto, or (B)
sales and excise taxes, value-added taxes or customs duties paid by
the
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
<PAGE>
3
person selling or distributing any Licensed Product or any other
governmental charges imposed upon the sale or distribution of any
Licensed Product; and (ii) be adjusted to reflect any deductions to
amounts invoiced to take account of (X) distributors' fees, rebates,
allowances or sales commissions actually granted, allowed or
incurred and credits for returns or (Y) quantity or case discounts,
cash discounts or chargebacks actually granted, allowed or incurred
in the ordinary course of business in connection with the sale or
distribution of any Licensed Product; provided, further, that Net
Sales shall not include amounts invoiced by CORPORATION to any
person or entity that is a Corporation Entity or a sublicensee of
CORPORATION or a Corporation Entity under the License.
(j) "NYU Know-How" shall mean the Pre-Existing Inventions, any
proprietary information or proprietary materials including, but not
limited to, pharmaceutical, chemical, biological and biochemical
products, information and trade secrets, know-how, technical and
nontechnical data, materials, methods and processes and any
drawings, plans, diagrams, specifications and/or other documents
containing such information, discovered, developed or acquired by,
or on behalf of students or employees of NYU during the term and in
the course of the NYU Research Project.
(k) "NYU Patents" shall mean all United States and foreign patents and
patent applications, and any divisions, continuations, in whole or
in part, reissues, re-examinations, renewals and extensions thereof,
and pending applications therefor:
(1) which claim Pre-Existing Inventions and which are identified
on annexed Appendix I; or
(2) which claim inventions that are made, in whole or in part, by
students or employees of NYU during the term and in the course
of the NYU Research Project.
(l) "Research Period" shall mean the three-year period commencing on the
Effective Date hereof and any extension thereof as to which NYU and
CORPORATION shall mutually agree in writing.
(m) "NYU Research Project" shall mean the investigations at NYU during
the Research Period into the Field under the supervision of the NYU
Scientist in
<PAGE>
4
accordance with the research program, described in annexed Appendix
II, which forms an integral part hereof.
(n) "Research Technology" shall mean all NYU Patents and NYU Know-How.
(o) "Total Net Sales" shall mean the aggregate Net Sales of CORPORATION,
any Corporation Entity and any sublicensee of CORPORATION or any
Corporation Entity to end users of Licensed Products.
2. Effective Date.
This Agreement shall be effective as of the date first written above and
shall remain in full force and effect until it expires or is terminated in
accordance with Section 16 hereof.
3. Performance of the NYU Research Project.
(a) In consideration of the sums to be paid to NYU as set forth in
Section 4 below, NYU undertakes to perform the NYU Research
Project under the supervision of the NYU Scientist during the
Research Period, as such Project may be amended in accordance
with Section 20(f). If, during the Research Period the NYU
Scientist shall cease to supervise the NYU Research Project,
then NYU shall promptly so notify CORPORATION and shall
endeavor to find among the scientists of NYU a Scientist
acceptable to CORPORATION to continue the supervision of the
NYU Research Project. If NYU is unable to find such a
Scientist acceptable to CORPORATION within three months after
such notice to CORPORATION, CORPORATION shall have the option
to terminate its funding of the NYU Research Project.
CORPORATION shall promptly advise NYU in writing if
CORPORATION so elects. Such termination of funding pursuant to
this Section 3(a) shall not terminate this Agreement or the
License granted herein. Nothing herein contained shall be
deemed to impose an obligation on NYU to find a replacement
for the NYU Scientist.
(b) Nothing contained in this Agreement shall be construed as a
warranty on the part of NYU that any results or inventions
will be achieved by the NYU Research Project, or that the
Research Technology and/or any other results or inventions
achieved by the NYU Research Project, if any, are or will be
commercially exploitable and furthermore, NYU makes
<PAGE>
5
no warranties whatsoever as to the commercial or scientific
value of the Research Technology and/or as to any results
which may be achieved in the NYU Research Project.
(c) NYU will have full authority and responsibility for the NYU
Research Project. All students and employees of NYU who work
on the NYU Research Project will do so as employees or
students of NYU, and not as employees of CORPORATION.
(d) NYU shall provide to CORPORATION a report on the NYU Research
Project within ninety (90) days following the end of each
twelve-month period occurring during the Research Period.
4. Funding of the NYU Research Project.
(a) As compensation to NYU for work to be performed on the NYU
Research Project during the Research Period, subject to any
earlier termination of the Research Project pursuant to
Section 3(a) hereof, CORPORATION will pay NYU the total sum of
*** *** ***.
(b) Nothing in this Agreement shall be interpreted to prohibit NYU
(or the NYU Scientist) from obtaining additional financing or
research grants for the NYU Research Project from government
agencies, which grants or financing may render all or part of
the NYU Research Project and the results thereof subject to
the patent rights of the U.S. Government and its agencies, as
set forth in Title 35 U.S.C.ss.200 et seq.
5. Title.
(a) Subject to the License granted to CORPORATION hereunder, it is
hereby agreed that all right, title and interest, in and to
the Research Technology, and in and to any drawings, plans,
diagrams, specifications, and other documents containing any
of the Research Technology shall vest solely in NYU. At the
request of NYU, CORPORATION shall take all steps as may be
necessary to give full effect to said right, title and
interest of NYU including, but not limited to, the execution
of any documents that may be required to record such right,
title and interest with the appropriate agency or government
office.
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
<PAGE>
6
(b) Subject to the License granted to CORPORATION hereunder, for
so long as the NYU Scientist is employed by NYU, any and all
inventions made by such NYU Scientist and relating to the
Field shall be owned solely by NYU.
6. Patents and Patent Applications.
(a) NYU will promptly disclose to CORPORATION in writing any
inventions which constitute potential NYU Patents developed in
the course of the NYU Research Project.
(b) At the initiative of CORPORATION or NYU, the parties shall
consult with each other regarding the prosecution of all
patent applications within NYU Patents (excluding any
Pre-Existing Invention). Such patent applications shall be
filed, prosecuted and maintained by the law fire of Darby &
Darby or by other patent counsel jointly selected by NYU and
CORPORATION. Copies of all such patent applications and patent
office actions shall be forwarded to each of NYU and
CORPORATION.
NYU and CORPORATION shall each also have the right to have
such patent applications and patent office actions
independently reviewed by other patent counsel separately
retained by NYU or CORPORATION, upon prior notice to and
consent of the other party, which consent shall not
unreasonably be withheld.
(c) All applications and proceedings with respect to NYU Patents
(other than those relating to any Pre-Existing Invention)
shall be filed, prosecuted and maintained by NYU at the
expense of CORPORATION. Against the submission or invoices,
CORPORATION shall reimburse NYU for all costs and fees
incurred by NYU during the term of this Agreement, in
connection with the filing, maintenance, prosecution,
protection and the like of such patents.
(d) NYU and CORPORATION shall assist, and cause their respective
employees and consultants to assist each other, in assembling
inventorship information and data for the filing and
prosecution of patent applications on inventions pertaining to
the Research Technology.
<PAGE>
7
(e) If at any time during the term of this Agreement CORPORATION
decides that it is undesirable, as to one or more countries,
to prosecute or maintain any patents or patent applications
within the NYU Patents (other than those relating to any
Pre-Existing Invention), it shall give prompt written notice
thereof to NYU, and upon receipt of such notice CORPORATION
shall be released from its obligations to bear all of the
expenses to be incurred thereafter as to such countries in
conjunction with such patent(s) or patent application(s) and
such patent(s) or application(s) shall be deleted from the
Research Technology and NYU shall be free to grant rights in
and to the Research Technology in such countries to third
parties, without further notice or obligation to CORPORATION,
and the CORPORATION shall have no rights whatsoever to exploit
the Research Technology in such countries.
(f) Under the *** provisions exist to determine the circumstances
under which patent, protection will be obtained by NYU with
respect to any Pre-Existing Invention. For patent applications
with respect to Pre-Existing Inventions, copies of such
applications and office actions shall be forwarded to
CORPORATION who may consult with NYU with regard thereto.
CORPORATION agrees, upon presentation of supporting
documentation, to reimburse NYU for *** of the expenses
incurred by NYU as of the Effective Date in connection with
obtaining such patent protection. In the event that such
separate provisions result in a situation where patent
protection in any country is not pursued by NYU because of a
lack of funding pursuant to such provisions, then NYU shall
notify CORPORATION thereof and CORPORATION shall have the
option to pay NYU to pursue such patent protection.
(g) Nothing herein contained shall be deemed to be a warranty by
NYU that
(i) NYU can or will be able to obtain any patent or patents
on any patent application or applications in the NYU
Patents or any portion thereof, or that any of the NYU
Patents will afford adequate or commercially worthwhile
protection, or
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
<PAGE>
8
(ii) that the manufacture, use, or sale of any element of the
Research Technology or any Licensed Product will not
infringe any patent(s) of a third party.
7. Grant of License.
(a) Subject to the terms and conditions hereinafter set forth, and
subject to any rights of the U.S. Government pursuant to Title
35 of the United States Code ss.200 et seq., NYU hereby grants
to CORPORATION and CORPORATION hereby accepts from NYU the
License.
(b) The License granted to CORPORATION in Section 7(a) hereto
shall commence upon the Effective Date and shall remain in
force on a country-by-country basis, if not previously
terminated under the terms of this Agreement, for fifteen (15)
years from the Date of First Commercial Sale in such country
or until the expiration date of the last patent within the NYU
Patents in any such country to expire, whichever shall be
later CORPORATION shall inform NYU in writing of the Date of
First Commercial Sale with respect to each Licensed Product in
each country as soon as practicable after the making of each
such first commercial sale.
(c) CORPORATION shall be entitled to grant sublicenses under the
License on terms and conditions in compliance and not
inconsistent with the terms and conditions of this Agreement
(except that the rate of royalty may be at higher rates than
those set forth in this Agreement) (i) to a Corporation Entity
or (ii) to other third parties for consideration and in an
arms-length transaction. All sublicenses shall only be granted
by CORPORATION under a written agreement, a copy of which
shall be provided by CORPORATION to NYU as soon as practicable
after the signing thereof. Each sublicense granted by
CORPORATION hereunder shall be subject and subordinate to the
terms and conditions of this License Agreement and shall
contain (inter-alia) the following provisions:
(1) the sublicense shall expire automatically on the
termination of the License;
(2) the sublicense shall not be assignable, in whole or in
part;
<PAGE>
9
(3) the sublicensee shall not grant further sublicenses,
except that a sublicensee may grant a further sublicense
solely for purposes of effecting distribution of
Licensed Products to end users on the same terms
required for sublicenses under this Section 7(c);
(4) both during the term of the sublicense and thereafter
the sublicensee shall agree to a confidentiality
obligation similar to that imposed on CORPORATION in
Section 11 below, and that the sublicensee shall impose
on its employees, both during the terms of their
employment and thereafter, a similar undertaking of
confidentiality; and
(5) the sublicense agreement shall include the text of
Sections 13 and 14 of this Agreement and shall state
that NYU is an intended third party beneficiary of such
sublicense agreement for the purpose of enforcing such
indemnification and insurance provisions.
8. Payments for License.
(a) In consideration for the grant and during the term of the
License with respect to each Licensed Product, CORPORATION
shall pay to NYU:
(1) On the Effective Date, a non-refundable, noncreditable
license issue fee of one hundred thousand dollars
($100,000);
(2) On the *** of the *** *** and *** ***, a *** license ***
of *** *** ; provided that such fee *** on the *** ***
following the completion by CORPORATION of *** *** of
*** in accordance with the terms of this Agreement;
(3) Upon the achievement of the following technical
milestones with respect to any Licensed Product, the
payments as indicated below:
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
<PAGE>
10
Milestone Payments
- --------- --------
Upon the filing of an initial Investigational New Drug Application (or foreign
equivalent thereof) for each new Licensed Product
<TABLE>
<CAPTION>
<S> <C>
$250,000
***
***
***
***
***
***
***
***
***
***
***.
</TABLE>
(4) With respect to sales of Licensed Products a *** of Total Net
Sales during each calendar year.
(b) For the purpose of computing the royalties due to NYU hereunder, the
year shall be divided into two parts ending on June 30 and December
31. Not later than one hundred thirty (130) days after each December
and June in each Calendar Year during the term of the License,
CORPORATION shall submit to NYU a full and detailed report of
royalties or payments due NYU under the terms of this Agreement for
the preceding half year (hereinafter "the Half-Year Report"),
setting forth the Total Net Sales and Net Sales of each of
CORPORATION, each Corporation Entity and each sublicensee of
CORPORATION, any Corporation Entity or sublicensee permitted under
Section 7(c)(iii) and/or lump sum payments and all other payments or
consideration from sublicensees upon which such royalties are
computed and including at least:
(i) the quantity of Licensed Products used, sold, transferred or
otherwise disposed of on a country-by-country basis;
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
<PAGE>
11
(ii) the selling price of each Licensed Product;
(iii) the deductions permitted under subsection 1(i) hereof to
arrive at Net Sales; and
(iv) the royalty computations and subject of payment.
If no royalties or other payments are due, a statement shall be sent
to NYU stating such fact. Payment of the full amount of any
royalties or other payments due to NYU for the preceding half year
shall accompany each Half-Year Report on royalties and payments.
CORPORATION shall keep for a period of at least *** after the date
of entry, full, accurate and compete books and records consistent
with sound business and accounting practices and in such form and in
such detail as to enable the determination of the amounts due to NYU
from CORPORATION pursuant to the teems of this Agreement.
(c) Within ninety (90) days after the end of each Calendar Year,
commencing on the Date of First Commercial Sale CORPORATION
shall furnish NYU with a report (hereinafter the "Annual
Report"), certified by an independent certified public
accountant, relating to the royalties and other payments due
to NYU pursuant to this Agreement in respect of the Calendar
Year covered by such Annual Report and containing the same
details as those specified in Section 8(b) above in respect of
the Half-Year Report.
(d) On reasonable notice and during regular business hours, NYU or
the authorized representative of NYU shall each have the right
to inspect the books of accounts, records and other relevant
documentation of CORPORATION or of Corporation Entity and the
sublicensees of CORPORATION, Corporation Entity and any
sublicensee insofar as they relate to the production,
marketing and sale of the Licensed Products, in order to
ascertain or verify the amount of royalties and other payments
due to NYU hereunder, and the accuracy of the information
provided to NYU in the aforementioned reports. NYU shall also
have the right, not more than once each calendar year, to
audit CORPORATION's books and financial records for the
purpose of verifying full
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
<PAGE>
12
payment by CORPORATION of its royalty obligations hereunder.
Such audits shall be conducted during normal business hours
and shall not interfere with CORPORATION's conduct of its
business. Each such audit shall be at NYU's expense, unless a
particular audit reveals an underpayment of *** or more of the
amount that should have been paid to NYU for the period
audited, in which case CORPORATION shall bear the expense of
such audit. In the event of any underpayment of royalties,
CORPORATION shall promptly remit to NYU all amounts due.
(e) Beginning in the year in which CORPORATION completes one full
year of sales of Licensed Products and continuing thereafter
until this Agreement shall terminate or expire, CORPORATION
agrees that if the total royalties paid to NYU under
subsection 8(a)(4) hereof do not amount to *** in each
Calendar Year, CORPORATION will pay to NYU within one hundred
thirty (130) days after the end of each such Calendar Year,
*** *** the *** *** *** *** failing which NYU shall have the
right solely at its election, upon written notice to
CORPORATION, to either terminate this Agreement for cause or
to declare the License granted herein to CORPORATION to be
non-exclusive.
(f) CORPORATION shall, and shall cause each Corporation Entity and
sublicensee of CORPORATION, Corporation Entity or a
sublicensee, to effect sales of Licensed Products to third
parties on commercially reasonable, arm's length terms.
9. Method of Payment.
(a) Royalties and other payments due to NYU hereunder shall be
paid to NYU in United States dollars. Any such royalties on or
other payments relating to transactions in a foreign currency
shall be converted into United States dollars based on the
closing buying rate of the Morgan Guaranty Trust Company of
New York applicable to transactions under exchange regulations
for the particular currency on the last business day of the
accounting period for which such royalty or other payment is
due.
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
<PAGE>
13
(b) CORPORATION shall be responsible for payment to NYU of all
royalties due on sale, transfer or disposition of Licensed
Products by Corporation Entity or by the sublicensees of
CORPORATION, Corporation Entity or a sublicensee.
10. Development and Commercialization.
(a) It shall be within the judgment of CORPORATION
in what manner to proceed with the development
of Licensed Products for commercialization;
provided that CORPORATION shall use efforts,
consistent with its sound and reasonable
business practices and technical judgment, to
effect introduction of Licensed Products into
the commercial market. CORPORATION shall be
deemed to satisfy the due diligence requirements
of this Section 10(a) by: ***
***
***
***
***
***
***
***
***
***
***
*** .
Corporation's Development Plan is annexed hereto as Appendix III.
(b) Provided that applicable laws, rules and regulations require that
the performance of the tests, trials, studies and other activities
required by subsection (a) above shall be carried out in accordance
with FDA current Good Laboratory Practices, current Good
Manufacturing Practices and current Good Clinical Practices and in a
manner acceptable to the relevant health authorities, CORPORATION
shall carry out such tests, trials, studies and other activities in
accordance with such Practices and in a manner acceptable to the
relevant health authorities. Furthermore, the Licensed Products
shall be produced in accordance with FDA current Good Manufacturing
Practice procedures in a facility which has been licensed by the FDA
to manufacture such Licensed Products, provided that applicable
laws, rules and regulations so require.
(c) CORPORATION undertakes to begin the regular commercial production,
use, and sale of the Licensed
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
<PAGE>
14
Products in each counted in which approve has been received (as
described in Section 10(a)) and to continue diligently thereafter to
commercialize the Licensed Products in each such country in a manner
consistent with sound and reasonable business practices.
(d) CORPORATION shall provide NYU with written reports on all activities
and actions undertaken by CORPORATION to develop and commercialize
the Licensed Products; such reports shall be made within sixty (60)
days after each six (6) months of the duration of this Agreement,
commencing six months after the Effective Date.
(e) If CORPORATION shall not satisfy the requirements set forth in
Section 10(a) (unless such delay or failure is necessitated by FDA
or other regulatory agencies or unless NYU and CORPORATION have
mutually agreed to amend the Development Plan because of
unforeseen circumstances) NYU shall notify CORPORATION in writing
of CORPORATION's failure and shall allow CORPORATION *** to cure
such failure Upon receiving such notice, CORPORATION may elect to
extend such diligence period and all subsequent diligence periods
relating to such Licensed Product for *** upon written certification
to NYU that CORPORATION is continuing product development work with
respect to a Licensed Product and payment to NYU of a *** *** .
After the expiration of any such *** CORPORATION may elect to
further extend its diligence obligations under Section 10(a) with
respect to such Licensed Product for successive *** upon (i) written
notice to NYU, (ii) certification by CORPORATION that it is
continuing to diligently develop such Licensed Product and, together
with its sublicensee(s), will spend no less than *** *** in each
Calendar Year on development of such Product and (iii) payment to
NYU prior to the beginning of such year of an amount equal to ***
representing *** *** . CORPORATION's failure to cure a delay in the
diligence requirements to NYU's reasonable satisfaction or elect and
satisfy the requirements of one of the options set forth above
within such *** shall be a material breach of this Agreement.
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
<PAGE>
15
11. Confidential Information.
(a) Except as otherwise provided in Section 11(b) and 11(c) below
CORPORATION shall maintain any and all of the Research
Technology in confidence and shall not release or disclose any
tangible or intangible component thereof to any third party
without first receiving the prior written consent of NYU to
said release or disclosure; provided that CORPORATION may,
without NYU's consent, disclose Research Technology to
sublicensees pursuant to Section 7, CORPORATION Entities and
consultants engaged by CORPORATION, in each case pursuant to a
confidentiality agreement requiring such party to maintain any
and all of the Research Technology in confidence and not
release or disclose any tangible or intangible component
thereof to any third party without first receiving the prior
written consent of NYU to said release or disclosure.
(b) The obligations of confidentiality set forth in Section 11(a)
shall not apply to any component of the Research Technology
which was part of the public domain prior to the Effective
Date of this Agreement or which becomes a part of the public
domain not due to some unauthorized act by or omission of
CORPORATION after the effective date of this Agreement or
which is disclosed to CORPORATION by a third party who has the
right to make such disclosure.
(c) The provisions of Section 11(a) notwithstanding, CORPORATION
may disclose the Research Technology to third parties who need
to know the same in order to secure regulatory approval for
the sale of Licensed Products.
12. Publication.
(a) Prior to submission for publication of a manuscript describing
the results of any aspect of the NYU Research Project, NYU
shall send CORPORATION a copy of the manuscript to be
submitted by overnight mail or facsimile transmission, and
shall allow CORPORATION *** from the date of such mailing to
determine whether the manuscript contains such subject
matter for which patent protection should be sought prior to
publication of such manuscript, for the purpose of protecting
an invention made by the NYU Scientist during the course and
within the term of the NYU Research Project.
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
<PAGE>
16
Should CORPORATION believe the subject matter of the
manuscript contains a patentable invention, then, prior to the
expiration of such *** from the mailing date of such
manuscript to CORPORATION by NYU, CORPORATION shall give
written notification to NYU of:
(i) its determination that such manuscript contains
patentable subject matter for which patent protection
should be sought; and
(ii) the countries in which such patent protection should be
sought.
(b) After the expiration of such *** from the date of mailing such
manuscript to CORPORATION, unless NYU has received the written
notice specified above from CORPORATION, NYU Shall be free to
submit such manuscript for publication to publish the
disclosed research results in any manner consistent with
academic standards.
(c) Upon receipt of such written notice from CORPORATiON, NYU will
thereafter delay submission of the manuscript for an
additional period of up to *** to permit the preparation and
filing in accordance with Section 6 hereof of a U.S. patent
application by NYU on the subject matter to be disclosed in
such manuscript. After expiration of such *** or the filing of
a patent application on each such invention, whichever shall
occur first, NYU shall be free to submit the manuscript and
to publish the disclosed results.
13. Liability and Indemnification.
(a) CORPORATION shall indemnify, defend and hold harmless NYU
and its trustees, officers, medical and professional staff,
employees, students and agents and their respective
successors, heirs and assigns (the "Indemnitees"), against any
liability, damage, loss or expense (including reasonable
attorneys' fees and expenses of litigation) incurred by or
imposed upon the Indemnitees or any one of them in connection
with any claims, suits, actions, demands or judgments (i)
arising out of the design, production, manufacture, sale,
use in commerce or in human clinical trials, lease, or
promotion by CORPORATION, a Corporation Entity or an agent of
CORPORATION, or by a sublicensee of CORPORATION, a
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
<PAGE>
17
Corporation Entity or a sublicensee, of any Licensed Product,
process or service relating to, or developed pursuant to, this
Agreement or (ii) arising out of any other activities to be
carried out pursuant to this Agreement.
(b) With respect to an Indemnitee, CORPORATION's indemnification
under subsection (a)(i) of this Section 13 shall apply to any
liability, damage, loss or expense whether or not it is
attributable to the negligent activities of such Indemnitee.
CORPORATION's indemnification obligation under subsection
(a)(ii) of this Section 13 shall not apply to any liability,
damage, loss or expense to the extent that it is attributable
to the negligent activities of any such Indemnitee.
(c) CORPORATION agrees, at its own expense, to provide attorneys
reasonably acceptable to NYU to defend against any actions
brought or filed against any Indemnitee with respect to the
subject indemnity to which such Indemnitee is entitled
hereunder, whether or not such actions are rightfully brought.
14. Security for Indemnification.
(a) At such time as any Licensed Product, process or service
relating to, or developed pursuant to, this Agreement is being
commercially distributed or sold (other than for the purpose
of obtaining regulatory approvals) by CORPORATION or by a
sublicensee, Corporation Entity or agent of CORPORATION,
CORPORATION shall at its sole cost and expense procure and
maintain, or cause a sublicensee, Corporation Entity or agent
of CORPORATION to procure and maintain, policies of
comprehensive general liability insurance in amounts not
less than *** per incident and *** annual aggregate and naming
the Indemnitees as additional insureds. Such comprehensive
general liability insurance shall provide (i) product
liability coverage and (ii) broad form contractual liability
coverage for CORPORATION's indemnification under Section 13 of
this Agreement. If CORPORATION elects to self-insure all or
part of the limits described above (including deductibles or
retentions which are in excess of *** annual aggregate) such
self-insurance program must be acceptable to NYU.
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
<PAGE>
18
The minimum amounts of insurance coverage required under this
Section 14 shall not be construed to create a limit of
CORPORATION's liability with respect to its indemnification
under Section 13 of this Agreement.
(b) CORPORATION shall provide NYU with written evidence of such
insurance upon request of NYU. CORPORATION shall provide NYU
with written noticed at least *** prior to the cancellation,
nonrenewal or material change in such insurance; if
CORPORATION does not obtain replacement insurance providing
comparable coverage within such *** *** NYU shall have the
right to terminate this Agreement effective at the end of
such *** without notice or any additional waiting periods
(c) CORPORATION shall maintain such comprehensive general
liability insurance beyond the expiration or termination of
this Agreement during (i) the period that any product, process
or service, relating to, or developed pursuant to, this
Agreement is being commercially distributed or sold (other
than for the purpose of obtaining regulatory approvals) by
CORPORATION or by a sublicensee, Corporation Entity or agent
of CORPORATION and (ii) a reasonable period after the period
referred to in (c)(i) above which in no event shall be less
than *** *** .
15. Expiry and Termination.
(a) Unless earlier terminated pursuant to this Section 15 or
Section 8(e), hereof, this Agreement shall expire upon the
expiration of the period of the License in all countries as
set forth in Section 7(b) above.
(b) At any time prior to expiration of this Agreement, either
party may terminate this Agreement forthwith for cause, as
"cause" is described below, by giving written notice to the
other party. Cause for termination by one party of this
Agreement shall be deemed to exist if the other party
materially breaches or defaults in the performance or
observance of any of the provisions of this Agreement and such
breach or default is not cured within sixty (60) days or, in
the case of failure to pay
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
<PAGE>
19
any amounts due hereunder, *** (unless otherwise specified
herein) after the giving of notice by the other party
specifying such breach or default, or if either NYU or
CORPORATION discontinues its business or becomes insolvent or
bankrupt.
(c) In the event that CORPORATION determines, at any time
following the end of the Research Period, to cease all
development or commercialization of all Licensed Products
covered by this Agreement, CORPORATION may terminate this
Agreement by notifying NYU in writing thereof no less than ***
*** prior to the date of termination.
(d) Any amount payable hereunder by one of the parties to the
other, which has not been paid by the date on which such
payment is due, shall earn interest from such date until the
date on which such payment is made, at the rate of *** *** ***
during the period of arrears and such amount and the interest
thereon may be set of against any amount due, whether in terms
of this Agreement or otherwise, to the party in default by any
non-defaulting party.
(e) Upon termination of this Agreement for any reason and prior to
expiration as set forth in Section 15(a) hereof, all rights in
and to the Research Technology shall revert to NYU, and
CORPORATION shall not be entitled to make any further use
whatsoever of the Research Technology.
(f) Termination of this Agreement shall not relieve either party
of any obligation to the other party incurred prior to such
termination.
(g) Sections 5, 11, 13, 14, 15 and 19 hereof shall survive and
remain in full force and effect after any termination,
cancellation or expiration of this Agreement.
16. Representations and Warranties by CORPORATION.
CORPORATION hereby represents and warrants to NYU as follows:
(1) CORPORATION is a corporation duly organized, validly existing
and in good standing under the laws of the State of
California. CORPORATION has been granted all requisite power
and authority to carry
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
<PAGE>
20
on its business and to own and operate its properties and
assets. The execution, delivery and performance of this
Agreement have been duly authorized by the Board of
Directors of CORPORATION;
(2) There is no pending or, to CORPORATION's kowledge, threatened
litigation involving CORPORATION which would have any effect
on this Agreement or on CORPORATION's ability to perform its
obligations hereunder;
(3) There is no indenture, contract, or agreement to which
CORPORATION is a party or by which CORPORATION is bound
which prohibits or would prohibit the execution and delivery
by CORPORATION of this Agreement or the performance or
observance by CORPORATION of any term or condition of this
Agreement; and
(4) CORPORATION has received and reviewed copies of the *** (with
the exception of those sections of the February 6, 1989
Agreement following section 4.1) and understands and accepts
the terms thereof that it has received and reviewed.
17. Representations and Warranties by NYU.
NYU hereby represents and warrants to CORPORATION as follows:
(1) NYU is a corporation duly organized, validly existing and in
good standing under the laws of the State of New York. NYU has
been granted all requisite power and authority to carry on
its business and to own and operate its properties and assets.
The execution, delivery and performance of this Agreement have
been duly authorized by the Board of Trustees of NYU.
(2) There is no pending or, to NYU's knowledge, threatened
litigation involving NYU which would have any effect on this
Agreement or on NYU's ability to perform its obligations
hereunder; and
(3) There is no indenture, contract, or agreement to which NYU is
a party or by which NYU is bound which prohibits or would
prohibit the execution and delivery by NYU of this Agreement
or the performance or observance by NYU of any term or
condition of this Agreement.
*** Portions of this page have been omitted pursuant to a request for
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<PAGE>
21
(4) As of the Effective Date, NYU is not aware of any prior art
that would invalidate any patent or patent claim, or that
would prevent from issuing any patent application covered by
the NYU Patents.
18. No Assignment.
Neither CORPORATION nor NYU shall have the right to assign, delegate
or transfer at any time to any party, in whole or in part, any or
all of the rights, duties and interest herein granted without first
obtaining the written consent of the other to such assignment, which
consent shall not be unreasonably withheld; provided that (i)
CORPORATION may, without the prior consent of NYU, assign all of its
rights and obligations under this Agreement to a third party in
connection with a merger or corporate restructuring of CORPORATION
or a sale of all or substantially all of its assets, following
written notice thereof and execution by the third party with NYU of
an agreement to be bound by the terms of this Agreement and (ii) NYU
may assign its interest in this Agreement in whole or in part
without the consent of CORPORATION if such assignee (A) is a parent,
subsidiary, affiliate or related entity to NYU or (B) is a entity
that acquires substantially all of the ownership interests or assets
of NYU or New York University Medical Center (or any successor to
the foregoing) or (C) is an entity formed by NYU or New York
University Medical Center (or any successor to the foregoing) and
other institutions, one of the purposes of which is to perform the
activities for which NYU is obligated pursuant to this Agreement.
19 Use of Name.
Without the prior written consent of the other party, neither
CORPORATION nor NYU shall use the name of the other party or any
adaptation thereof or of any staff member, employee or student of
the other party:
(i) in any product labeling, advertising, promotional or
sales literature;
(ii) in connection with any public or private offering or in
conjunction with any application for regulatory
approval, unless disclosure is otherwise required by
law, in which case either party may make factual
statements concerning the Agreement or file copies of
the Agreement after providing the other party with an
oppor-
<PAGE>
22
tunity to comment and reasonable time within which to do
so on such statement in draft.
Except as provided herein, neither NYU nor CORPORATION will issue
public announcements about this Agreement or the status or existence
of the NYU Research Project without prior written approval of the
other party.
20. Miscellaneous.
(a) In carrying out this Agreement the parties shall comply with
all local, state and federal laws and regulations including
but not limited to, the provisions of Title 35 United States
Code ss.200 et seq. and 15 CFR ss.368 et seq.
(b) If any provision of this Agreement is determined to be invalid
or void, the remaining provisions shall remain in effect.
(c) This Agreement shall be deemed to have been made in the State
of New York and shall be governed and interpreted in all
respects under the laws of the State of New York.
(d) Any dispute arising under this Agreement shall be resolved in
an action in the courts of New York State or the federal
courts located in New York State, and the parties hereby
consent to personal jurisdiction of such courts in any action.
(e) All payments or notices required or permitted to be given
under this Agreement shall be given in writing and shall be
effective when either personally delivered or deposited,
postage prepaid, in the United States registered or certified
mail, addressed as follows:
To NYU: New York University Medical Center
550 First Avenue
New York, NY 10016
Attention: Isaac T. Kohlberg
Vice President for
Industrial Liaison
and
<PAGE>
23
Office of Legal Counsel
New York University
Bobst Library
70 Washington Square South
New York, NY 10012
Attention: Kathy L. Schulz
Associate General Counsel
TO CORPORATION:
Collateral Therapeutics, Inc.
9360 Towne Centre Drive
San Diego, California 92121
Attention: Jack W. Reich, PhD
President and Chief
Executive Officer
or such other address or addresses as either parry may
hereafter specify by written notice to the other. Such notices
and communications shall be deemed effective on the date of
delivery or fourteen (14) days after having been sent by
registered or certified mail, whichever is earlier.
(f) This Agreement (and the annexed Appendices) constitute the
entire Agreement between the parties and no variation,
modification or waiver of any of the terms or conditions
hereof shall be deemed valid unless made in writing and signed
by both parties hereto. This Agreement supersedes any and all
prior agreements or understandings, whether oral or written,
between CORPORATION and NYU.
(g) No waiver by either party of any non-performance or violation
by the other party of any of the covenants, obligations or
agreements of such other party hereunder shall be deemed to be
a waiver of any subsequent violation or non-performance of the
same or any other covenant, agreement or obligation, nor
shall forbearance by any party be deemed to be a waiver by
such party of its rights or remedies with respect to such
violation or nonperformance.
(h) The descriptive headings contained in this Agreement are
included for convenience and reference only and shall not be
held to expand, modify or aid
<PAGE>
24
in the interpretation, construction or meaning of this
Agreement.
(i) It is not the intent of the parties to create a partnership or
joint venture or to assume partnership responsibility or
liability. The obligations of the parties shall be limited to
those set out herein and such obligations shall be several and
not joint.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the date and year first above written.
NEW YORK UNIVERSITY
By: /s/ Isaac T. Kohlberg
-------------------------------------------
Isaac T. Kohlberg
Title: Vice President for Industrial Liaison
----------------------------------------
Date: 3/24/87
-----------------------------------------
Collateral Therapeutics, Inc.
By: /s/ Christopher J. Reinhard
-------------------------------------------
Christopher J. Reinhard
Title: Chief Operating Officer
----------------------------------------
Date: 3-21-97
-----------------------------------------
<PAGE>
Appendix I
Pre-existing NYU Patent and Patent Applications:
*** entitled *** *** and US patent applications *** filed *** filed *** ***
filed *** Rule 60 continuing patent application filed *** and US divisional
patent application filed *** .
PCT filing *** filed ***
***
***
***
***
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
<PAGE>
APPENDIX I
PRE-EXISTING NYU PATENTS AND PATENT APPLICATIONS
<TABLE>
<CAPTION>
U.S. APPLICATIONS Serial No. Filing Date Status
<S> <C> <C> <C>
*** *** 6/16/87 ABANDONED
*** *** 4/4/88 ABANDONED
***
*** *** 12/6/91 ABANDONED
***
*** *** 6/22/92 ABANDONED
***
*** *** 5/3/93 Allowed - Issue
*** Fee Paid 1/1/97
*** *** 1/25/94 Issued -
*** U.S. Patent No.
*** ***
*** *** 6/7/95 Pending
***
*** *** 6/7/95 Pending
***
*** Not yet assigned 12/31/96 Pending
***
*** Not yet assigned 2/13/97 Pending
***
</TABLE>
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Confidential Treatment and filed separately with the Commission.
<PAGE>
APPENDIX I (Contd.)
FOREIGN APPLICATIONS
The following patents and patent applications are based upon International
Application No. *** filed November 15, 1990 and all are entitled *** .
<TABLE>
<CAPTION>
Country Application No. Filing Date Status
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
*** *** 11/15/90 ***
***
*** *** 11/15/90 pending
*** *** 11/15/90 Pending
*** *** 11/15/90 Pending
</TABLE>
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Confidential Treatment and filed separately with the Commission.
<PAGE>
APPENDIX II
***
***
BACKGROUND
***
***
***
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Confidential Treatment and filed separately with the Commission.
<PAGE>
2
***
***
***
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Confidential Treatment and filed separately with the Commission.
<PAGE>
3
***
***
***
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
<PAGE>
4
***
***
***
SPECIFIC AIMS OF THE RESEARCH PROGRAM
***
***
***
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Confidential Treatment and filed separately with the Commission.
<PAGE>
5
***
***
***
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
<PAGE>
6
***
***
***
REFERENCES
***
***
***
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
<PAGE>
7
***
***
***
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
<PAGE>
8
***
***
***
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
<PAGE>
APPENDIX III. Collateral Therapeutics Development Plan
***
***
***
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
<PAGE>
APPENDIX III. (cont'd) Collateral Therapeutics Development Plan
***
***
***
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
<PAGE>
EXHIBIT 10.16
- --------------------------------------------------------------------------------
LICENSE AGREEMENT
- --------------------------------------------------------------------------------
THIS AGREEMENT is made on 25th March 1997 between:
1. AMRAD DEVELOPMENTS PTY LTD (ACN 006 923 904) incorporated in Victoria of
17-27 Cotham Road, Kew, Victoria, Australia (AMRAD); and
2. LUDWIG INSTITUTE FOR CANCER RESEARCH incorporated in New York, United
States of America, having an office at 1345 Avenue of the Americas, New
York, New York, 1015: (LUDWIG); and
3. COLLATERAL THERAPEUTICS INC incorporated in California, United States of
America, having an office at 9360 Towne Center Drive, San Diego,
California, 92121 (COLLATERAL).
RECITALS
A. Each of AMRAD Operations Pty Ltd and LUDWIG is the legal and beneficial
owner of certain intellectual property relating to the Technology and
Patent Rights (as defined in Clause 1.1. herein).
B. Pursuant to a Collaboration Agreement dated 6 December 1996 (Collaboration
Agreement); AMRAD and LUDWIG have agreed to collaborate in the
commercialization of the Technology and the Patent Rights in the manner
set out therein. AMRAD Operations Pty Ltd has subsequently licenced, with
the consent of LUDWIG, its rights under that Agreement and in respect of
the Patent Rights and Technology to AMRAD.
C. Pursuant to the Collaboration Agreement, AMRAD and LUDWIG may grant
licences to third parties to use and exploit the Technology and the Patent
Rights.
D. COLLATERAL is the exclusive licensee of a PCT patent application filed in
the name of The Regents of the University of California on 27 February
1996 under *** *** (which the University of California has internally
designated patent application *** *** ) covering an angiogenic
gene-containing adenovirus delivery system for use in in-vivo gene therapy
for cardiovascular disorders. COLLATERAL has conducted studies which in
its opinion support the possible therapeutic use of an angiogenic
gene-containing adenovirus for the treatment and prevention of
cardiovascular disorders.
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
<PAGE>
Page 2
E. COLLATERAL has entered into an agreement with *** to develop gene therapy
products using the technology referred to in Recital D above, pursuant to
which agreement COLLATERAL shall receive milestone payments and royalties.
F. During the course of negotiations with AMRAD in relation to this
Agreement, COLLATERAL has represented to AMRAD that COLLATERAL shall
receive approximately *** of the milestone payments payable to COLLATERAL
pursuant to the *** during the product development phase of the *** , and
that the remaining payments are to be paid to COLLATERAL following ***.
Further, during the course of those negotiations, COLLATERAL has
represented to AMRAD that COLLATERAL shall use the majority of the total
milestone payments it receives pursuant to the *** to fund ongoing
research and development of Licensed Products or, depending on the results
of that research, an alternative gene product.
G. COLLATERAL wishes to receive an exclusive licence to use and exploit the
Technology and Patent Rights to develop cardiovascular gene therapy
products using at first instance the technology referred to in Recital D
above. Each of AMRAD and LUDWIG is willing to grant COLLATERAL such a
licence on the terms and conditions contained in this Agreement.
IT IS AGREED as follows.
1. DEFINITIONS AND INTERPRETATION
1.1 Definitions
The following definitions apply unless the context requires otherwise.
Affiliate with respect to a corporation, means a corporation which owns,
is owned by or is under common ownership with the first-named corporation.
For the purposes of this definition, the term "owns" as used with respect
to any person means ownership (directly or indirectly) of at least
fifty-one per cent (51%) of the outstanding voting securities of a
corporation or a comparable equity interest in a corporation (or such
lesser percentage, being the maximum percentage of ownership allowed by
law in a particular jurisdiction).
Agreement means this Licence Agreement.
AMRAD Patent Application means the patent application described in
Schedule l.
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
<PAGE>
Page 3
Benchmark means the benchmarks referred to in Clause 5.3 and/or described
in Schedule 3.
Collaboration Agreement means the Collaboration Agreement between AMRAD
Operations Pty Ltd and LUDWIG dated 6 December 1996.
Effective Date means the date of execution of this Agreement.
Field means gene therapy for the treatment and prevention of
cardiovascular disease but excludes the use of any product or technology
described or claimed within the Patent Rights for any purpose relating to
the treatment and prevention of malignant diseases or acute wounds or
other diseases (except as described above) and also excludes any product
or technology within the Patent Rights for the manufacture of recombinant
proteins (other than proteins produced in the human body as a result of
gene therapy) for any purpose and also excludes, for the avoidance of
doubt, any other use of the Patent Rights or Technology.
IND means investigational new drug, and a reference to the filing thereof
is a reference to the filing of an application with the United States of
America Food and Drug Administration to initiate clinical trials thereof.
Indication means any indications to be treated using Licensed Products as
described in the definition of Field including coronary artery disease,
congestive heart failure and peripheral vascular disease.
Licence Fee means any amount payable by COLLATERAL to AMRAD or LUDWIG
pursuant to this Agreement.
Licensed Product means any product including a nucleic acid sequence
encoding VRF/VEGF-B gene for use solely in the Field, the manufacture, use
or sale of which falls within the scope of one or more subsisting and
unexpired claims within the Patent Rights which has not been permanently
revoked, held unenforceable or invalid by a decision of a court or other
governmental agency of competent jurisdiction, unappealable or unappealed
within the time allowed for appeal, and which has not been admitted to be
invalid or unenforceable through reissue or disclaimer or otherwise. For
the avoidance of doubt, Licenced Products excludes any protein, peptide or
receptors for VRF/VEGF-B.
LICENSOR means, collectively, AMRAD and LUDWIG.
LUDWIG Patent Applications means the patent applications described in
Schedule 2.
<PAGE>
Page 4
Net Revenue means royalty payments received by COLLATERAL on Net Sales
made by *** or other sub-licensees of COLLATERAL, less, if the Licensed
Products involve in any way whatsoever the technology claimed in *** if
payable to the Regents of the University of California pursuant to an
exclusive licence agreement between the said Regents and COLLATERAL
entitled *** dated 28 September 1995 as amended ***.
Net Sales means gross proceeds from sales of Licensed Products by a
sub-licensee or COLLATERAL less deductions for:
(a) transportation charges, including insurance relating thereto;
(b) sales and excise taxes or customs duties paid by the person selling
or distributing any Licensed Product or any other governmental
charges imposed upon the sale or distribution of any Licensed
Product;
(c) distributors' fees. rebates or allowances actually granted. allowed
or incurred:
(d) quantity discounts, cash discounts or chargebacks actually granted,
allowed or incurred in the ordinary course of business in connection
with the sale or distribution of any Licensed Product;
(e) allowances or credits to customers, not in excess of the selling
price of any Licensed Product, on account of governmental
requirements, rejection, outdating, recalls or returns of such
Licensed Product.
Patent Rights means the AMRAD Patent Applications and the LUDWIG Patent
Applications and any patent subsequently issued thereon in any country
(including any additions, divisions, continuations, continuations-in-part,
reissues, registrations or extensions of the said patents or patent
applications and any special protection certificates issued in connection
with any of the said patents or patent applications).
Phase 3 Clinical Trials has the same meaning as that term has in the
United States of America Government's Food and Drug Code of Federal
Regulations (edition of 1 April 1993), 21CFR CH.1S 312.21.
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
<PAGE>
Page 5
Pig Studies means, for the purposes of this Agreement, in vivo studies
conducted in pigs to determine the efficacy of the use of the VRF/VEGF-B
gene (delivered by an adenoviral vector) in the establishment and
development of collateral circulation in the ameroid pig model of
myocardial ischaemia for the treatment and prevention of coronary artery
disease.
PLA means a product licence application to a regulatory authority
incorporating data and information for the purpose of obtaining
authorization to market the said product.
*** ***.
Technology means any and all technical data, information, materials and
know-how related, directly or indirectly to the Patent Rights, which is
needed in the practice of the Patent Rights in the Field and includes the
Biological Materials described in Clause 4 hereof which have been provided
on a confidential basis.
Territory means the entire world.
Third Party means any person other than AMRAD, LUDWIG or COLLATERAL.
VRF/VEGF-B gene means nucleic acid sequences described and claimed in the
Patent Rights, but for the avoidance of doubt does not include recombinant
proteins manufactured by the expression of those nucleic acid sequences in
a host cell (other than proteins produced in the human body as a result of
gene therapy) and also excludes any protein, peptide or receptors for
VRF/VEGF-B.
1.2 Interpretation
Headings are for convenience only and do not affect interpretation. The
following rules apply unless the context requires otherwise.
(a) The singular includes the plural and conversely.
(b) A gender includes all genders.
(c) If a word or phrase is defined, its other grammatical forms have a
corresponding meaning.
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
<PAGE>
Page 6
(d) A reference to a person, corporation trust, partnership,
unincorporated body or other entity includes any of them.
(e) A reference to a Clause or Schedule is a reference to a clause of or
a schedule to this Agreement.
(f) A reference to an agreement or document (including, without
limitation, a reference to this Agreement) is to the agreement or
document as amended, varied, supplemented, novated or replaced,
except to the extent prohibited by this Agreement or that other
agreement or document.
(g) A reference to a party to this Agreement or another agreement or
document includes the party's successors, permitted substitutes and
permitted assigns and, where applicable, the party's legal personal
representatives.
(h) A reference to legislation or to a provision of legislation includes
a modification or reenactment of it, a legislative provision
substituted for it and a regulation or statutory instrument issued
under it.
(i) A reference to conduct includes, without limitation, an omission,
statement or undertaking, whether or not in writing.
(j) A reference to an agreement includes any undertaking, deed,
agreement and legally enforceable arrangement, whether or not in
writing, and a reference to a document includes an agreement (as so
defined) in writing and any certificate, notice, instrument and
document of any kind.
(k) A reference to dollars and $ is to the currency of the United States
of America.
(l) A reference to a right or obligation of any two or more persons
confers that right, or imposes that obligation, as the case may be.
jointly and severally.
1.3 Consents or Approvals
If the doing of any act, matter or thing under this Agreement is dependent
on the consent or approval of a party or is within the discretion of a
party, the consent or approval may be given or the discretion may be
exercised conditionally or unconditionally or withheld by the party in its
absolute discretion unless express provision to the contrary has been
made.
<PAGE>
Page 7
2. REPRESENTATIONS AND WARRANTIES
2.1 Authorisation
Each party to this Agreement warrants and represents to the others that it
has the legal rights and power to extend the rights and licences granted
in this Agreement, that each has the full right to enter into this
Agreement and to perform its obligations hereunder, and that it has not
made nor will make any commitments to others in conflict with or in
derogation of its rights and obligations under this Agreement. Each party
to this Agreement further represents to the other parties to this
Agreement that it is not aware of any legal obstacles, including patent
rights of others, which could prevent it from carrying out the provisions
of this Agreement.
2.2 Patent Validity
(a) Nothing in this Agreement shall be construed as a warranty or
representation by the LICENSOR as to the validity or scope of any
Patent Rights or that the exercise of any rights granted under this
Agreement will not infringe any Third Party rights.
(b) Subject to Clause 2.2(a), as at the Effective Date:
(i) AMRAD is not aware that the exercise of any rights granted
under this Agreement in respect of the AMRAD Patent
Applications will infringe any Third Party rights; and
(ii) LUDWIG is not aware that the exercise of any rights granted
under this Agreement in respect of the LUDWIG Patent
Applications will infringe any Third Party rights.
2.3 Warranties
(a) LUDWIG hereby warrants to COLLATERAL that the statements contained
in Recitals A, B and C to this Agreement are true and correct in
every particular.
(b) AMRAD hereby warrants to COLLATERAL that the statements contained in
Recitals A, B and C to this Agreement are true and correct in every
particular.
<PAGE>
Page 8
(c) COLLATERAL hereby warrants to the LICENSOR that the statements
contained in Recitals D, E, F G, and H to this Agreement are true
and correct in every particular and that the representations
referred to in said Recital G are true and correct in every
particular.
3. LICENCE
3.1 Grant of Licence
(a) The LICENSOR hereby grants to COLLATERAL an exclusive licence under
the Patent Rights and the Technology to manufacture, have
manufactured, import, use, sell and offer for sale Licensed Product
for use in the Field throughout the Territory for the term of this
Agreement.
(b) COLLATERAL acknowledges that LICENSOR has represented that all of
the Patent Rights and the Technology are owned or controlled by the
LICENSOR or third parties who have granted licences to the LICENSOR
and that COLLATERAL's rights to the Technology are pursuant to this
Agreement and as a licensee only.
3.2 Acknowledgement by the Parties
The parties acknowledge that COLLATERAL is not seeking, and the
LICENSOR is not making, any warranties or representations as to the
merchantability or suitability for any particular purpose of the
Technology, the capacity of any of the Patent Rights to infringe any
Third Party Rights or the validity of any of the Patent Rights.
3.3 Right to Sub-license
(a) COLLATERAL may sub-license the rights granted under Clause 3.1 to
Schering AG or an Affiliate of Schering AG provided that COLLATERAL
procures that Schering AG or any Affiliate of Schering AG to whom
a sub-license is granted pursuant to this Clause 3.3(a) shall enter
into an agreement with COLLATERAL on terms which are consistent with
the terms of this Agreement.
(b) COLLATERAL may sub-license the rights granted under Clause 3.1 to a
Third Party other than Schering AG or an Affiliate of Schering AG
provided that:
<PAGE>
Page 9
(i) COLLATERAL and the LICENSOR shall first negotiate and agree on
a fee to be paid by COLLATERAL to the LICENSOR upon the grant
of such sublicence:
(ii) COLLATERAL obtains the LICENSOR's prior written consent to any
such sub-licence;
(iii) COLLATERAL shall procure that any person to whom a sub-licence
is granted pursuant to this Clause 3.3 shall enter into an
agreement with COLLATERAL on terms which are consistent with
the terms of this Agreement;
(iv) any sub-licence granted to a person pursuant to this Clause
3.3 shall expressly prohibit any right to further sub-license
or to transfer or assign the sub-licence; and
(v) upon termination of this Agreements, all rights granted to any
person pursuant to this Clause 3.3 shall immediately cease.
(c) Notwithstanding the provisions of Clause 3.3(b) (i) the parties
agree that *** shall be payable by COLLATERAL to the LICENSOR with
respect to COLLATERAL's exercising its rights to grant a sub-licence
under Clause 3.3(b) to an Affiliate of COLLATERAL or to a Third
Party which has purchased all of the assets or capital stock of
COLLATERAL.
(d) For the avoidance of doubt, COLLATERAL shall procure that any person
to whom a sub-licence is granted pursuant to this Clause 3.3 shall
be bound by the terms and conditions of this Agreement.
***
***
***
***.
(e) Except as expressly permitted by this Clause 3.3, COLLATERAL shall
not sub-license any, or any part of, the rights under Clause 3.1 of
this Agreement.
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<PAGE>
Page 10
4. MATERIALS
The parties acknowledge that, pursuant to an Agreement to Provide
Biological Materials between AMRAD and COLLATERAL, effective on 7 October
1996, AMRAD has sent to COLLATERAL, and COLLATERAL has received, the
Biological Materials (as defined in that agreement) on the terms and
conditions stated in that agreement. Any further Biological Materials or
Technology to be supplied to COLLATERAL shall be supplied on terms and
conditions as shall be agreed between the parties from time to time.
5. PAYMENTS BY COLLATERAL
5.1 Method of Payment
All payments due by COLLATERAL to the LICENSOR pursuant to this Agreement
shall be:
(a) net payments and no deductions shall be made in respect of
withholding tax or other charges except in accordance with Clause
5.10;
(b) made by bank draft or telegraphic transfer and shall be paid as to
*** to AMRAD and as to *** to LUDWIG;
(c) non-refundable; and
(d) payable in the currency of the United States of America and paid
into such accounts as AMRAD and LUDWIG may direct.
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
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5.2 Licence Fees
COLLATERAL has agreed to pay licence fees as follows:
(a) Within five (5) working days of the Effective Date, COLLATERAL shall
pay to the LICENSOR the licence fee of $250,000; and
(b) On June 15, 1997 COLLATERAL shall pay to the LICENSOR a further
licence fee of $750,000
(c) On 30 October 1997, COLLATERAL shall pay to the LICENSOR a further
licence fee of $150,000
5.3 Licence Fee - Milestone Payments
(a) Within *** of the date of the completion of *** *** *** or the
expiration of *** from the Effective Date, whichever is the first to
occur, COLLATERAL shall forthwith pay to the LICENSOR a further
licence fee of ***. In the event that COLLATERAL fails to pay to
LICENSOR such fee within *** *** from when such fee is due and
payable this Agreement shall, subject to any agreement between the
parties to allow this Agreement to continue in full force and
effect, be deemed to have terminated with immediate effect.
(b) Within *** of achievement of any of the following Benchmarks in
relation to any Indication, COLLATERAL shall pay to the LICENSOR a
*** as follows:
***
***
***
***
***
***
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
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***
***
***
***
it being understood however, that except as provided in Clause 5.4
with respect to an additional *** *** once a *** has been paid for
any Licensed Product, COLLATERAL's obligation to pay that *** shall
be extinguished, such that each of the above *** shall be due and
payable by COLLATERAL to the LICENSOR only once, irrespective of how
many Licensed Products may reach a *** has already been paid.
5.4 Licence Fee - Additional Indications
Within *** other than for *** in respect of which COLLATERAL has paid the
LICENSOR a Benchmark fee under Clause 5.3(b)(iv), COLLATERAL shall pay to
the LICENSOR a *** licence fee of *** for each such ***.
5.5 Licence Fee - Annual Licence Fee
On *** and upon *** of the Effective Date thereafter, COLLATERAL shall pay
to the LICENSOR a licence fee of *** such licence fees to be off-set
against any amounts received by the LICENSOR pursuant to Clause 5.6.
5.6 Licence Fee - Royalty
(a) In addition to the payments set out in Clauses 5.2 to 5..5,
COLLATERAL shall pay to the LICENSOR a royalty equal to ***
(b) The payments due by COLLATERAL to the LICENSOR pursuant to Clause
5.6(a) shall be made to the LICENSOR within *** of the end of each
calendar quarter, and each such payment shall be accompanied by a
written report signed by an officer of COLLATERAL and in a form
satisfactory to the LICENSOR containing the calculation of the
payment due to the LICENSOR for the said calendar quarter.
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
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(c) If COLLATERAL or any of its sub-licensees receives any cash or
non-cash benefit or otherwise derives any other cash or non-cash
benefit in connection with the exploitation of the Technology or
Licensed Products other than pursuant to an arm's length licence
agreement with a Third Party, for the purposes of calculating the
amount payable to the LICENSOR pursuant to this Clause 5.6,
COLLATERAL or its sub-licensees (as the case may be) shall be taken
to have received a royalty payment that would have been received on
an arm's length licence agreement.
(d) Without limiting Clause 5.6(c), if COLLATERAL sells any Licensed
Product to any Third Party then COLLATERAL shall pay the LICENSOR a
royalty on that sale, being an amount equal to the amount COLLATERAL
would have received from *** pursuant to the *** had *** sold such
Licensed Product and paid royalties to COLLATERAL in accordance with
the terms and conditions of the ***.
5.7 CPI Adjustment
The Licence Fees set out in Clauses 5.3 and 5.4 shall be annually adjusted
in accordance with the increase in the United States of America Consumer
Price Index in the period from the first anniversary of the Effective Date
to the date on which the payment is made. For the purposes of this
Agreement, the Index at a particular time shall be the Index most recently
published by the United States Bureau of Economics and Statistics at that
time.
5.8 Records
COLLATERAL shall keep, and shall cause any person to whom it was granted a
sub-licence pursuant to Clause 3.3 to keep for a minimum of *** complete
records of all matters which are relevant for determining the Licence Fees
which are to be paid to the LICENSOR pursuant to this Agreement and shall
allow the authorised representatives of the LICENSOR reasonable access no
more than twice per year to examine and make copies of such records.
5.9 Default Interest
If COLLATERAL fails to make any payment due pursuant to this Agreement by
the due date, then it shall pay the LICENSOR interest on the amount due
from the date payment fell due until the amount is paid at the rate of:
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
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(a) *** per month for *** from the date payment fell due; and
(b) *** per month thereafter.
5.10 Withholding Taxes
Notwithstanding anything else contained in this Agreement if COLLATERAL is
required to pay withholding tax on any payments to be made hereunder it
shall forthwith provide the LICENSOR with documentary evidence that such
tax has been paid to an appropriate authority to enable the LICENSOR to
obtain the credit for such tax payment in its country of incorporation.
5.11 Prior Termination
Unless LICENSOR advises COLLATERAL in writing *** of the due date
otherwise in the event that any of the payments described in this clause 5
are not made by the due date this Agreement will terminate with immediate
effect on *** following such due date PROVIDED THAT such termination will
not effect the LICENSOR's right to receive the payments then owing
pursuant to this clause.
6. INTELLECTUAL PROPERTY
6.1 Infringement by Third Parties
(a) A party shall promptly notify the other parties in writing of any
alleged or threatened infringement within the Field of any patent
included within the Patent Rights of which such party becomes aware.
COLLATERAL shall have the right to bring and control any action or
proceeding with respect to such alleged or threatened infringement
within the Field (Proceeding) at its own expense and represented by
legal advisers of its own choice.
(b) In the event COLLATERAL brings a Proceeding, the LICENSOR shall
co-operate fully with COLLATERAL including, if required, undertaking
any action or agreeing to be joined as a party to such Proceeding,
the reasonable costs of which shall be at COLLATERAL's expense,
provided that:
(i) the LICENSOR shall retain the right to be represented by legal
advisers of its own choice at its expense;
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
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(ii) COLLATERAL shall keep the LICENSOR fully informed of the
status of such Proceeding on a regular basis or, as reasonably
requested by the LICENSOR, from time to time; and
(iii) the LICENSOR shall retain the right to become involved in any
negotiations, including without limitation any settlement
negotiations, in which the parties to such Proceeding may be
engaged from time to time.
(c) In the event COLLATERAL commences a Proceeding, any recovery
realised as a result of such Proceeding, after reimbursement of any
and all litigation expenses and reasonable costs of COLLATERAL,
shall be treated as Net Revenue under this Agreement.
(d) In the event the LICENSOR notifies COLLATERAL in writing of any
infringement referred to in Clause 6.1(a) and COLLATERAL fails to
commence a Proceeding within a reasonable time of being so notified
by the LICENSOR, provided that such time shall not, in any event,
exceed ninety (90) days, the LICENSOR may commence a Proceeding at
its own expense and may be represented by legal advisers of its own
choice. In the event the LICENSOR brings a Proceeding, COLLATERAL
shall provide all reasonable assistance to the LICENSOR in relation
to such Proceeding and on the terms as set out in Clause 6.1 (b) as
if COLLATERAL were the LICENSOR and the LICENSOR were COLLATERAL
(e) In the event the LICENSOR brings a Proceeding pursuant to Clause
6.1(d), the LICENSOR shall be entitled to any recovery realised as a
result of such Proceeding.
6.2 Infringement of Third Party Rights
Each party shall promptly notify the other parties in writing in the event
that any allegation of infringement of any Third Party patent is raised by
reason of the exercise by COLLATERAL or any of its sub-licencees of any
rights pursuant to Clause 3.1 or 3.3 (Alleged Third Party Patent Rights)
In the event that such an action is brought by a Third Party COLLATERAL,
or any sub-licensee of COLLATERAL, as may be determined by COLLATERAL,
shall have the right to control any defence of any such action at its own
expense and represented by legal advisers of its own choice and the
LICENSOR shall have the right, at its own expense, to be represented in
any such action by legal advisers of its own choice. In the event of any
infringement or alleged infringement of any Alleged Third Party Patent
Rights, the LICENSOR shall co-operate in good faith with
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COLLATERAL or any sub-licensee of COLLATERAL (as the case may be) on a
reasonable basis to negotiate and settle any dispute with a Third Party in
relation to such infringement or alleged infringement of any Alleged Third
Party Patent Rights and otherwise resolve any such infringement or alleged
infringement and secure COLLATERAL's continued rights to the Alleged Third
Party Patent Rights, if necessary or desirable.
6.3 Co-operation in Connection with Infringement Disputes
In any suit or dispute involving infringement or alleged infringement
within the Field by a Third Party of a patent included within the Patent
Rights, or infringement or alleged infringement by COLLATERAL of any
Alleged Third Party Patent Rights, the parties shall co-operate fully and,
upon the request and at the reasonable expense of COLLATERAL, the LICENSOR
shall make available to COLLATERAL or its sub-licensees at reasonable
times and under appropriate conditions all relevant personnel, records,
papers, information, samples, specimens and the like which are in its
possession or control provided however that the LICENSOR shall not be
obliged to provide such assistance if to do so would materially disrupt
its normal business activities.
6.4 Prosecution and Maintenance of Patent Rights
The LICENSOR shall make determinations with respect to, shall be solely
responsible for, and shall bear all of its reasonably incurred expenses
from and after the Effective Date in connection with prosecuting to
issuance patent applications, for filing and prosecuting all patent
re-issues and re-examinations, for applying for and obtaining any patent
term extensions, and for paying all maintenance fees on all patents.
relating to the Patent Rights; provided however that the LICENSOR shall
file and prosecute to issuance applications claiming the subject matter of
those applications described in Schedule 1 and Schedule 2 in the United
States of America, Australia, Canada, the European Patent Office and
Japan. The LICENSOR shall keep COLLATERAL reasonably informed of the
status of all such applications and patents.
7. OBLIGATIONS OF THE PARTIES
7.1 Best Endeavours
COLLATERAL and its sub-licensees shall use its commercially reasonable
efforts consistent with its best business and scientific judgement and
conduct itself according to international pharmaceutical industry
standards in attempting to develop and commercialise Licensed Products.
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7.2 Achievement of Benchmarks
(a) COLLATERAL shall achieve the Benchmarks described in Schedule 3 as
follows:
(i) in relation to completion of Pig Studies by October 30, 1997;
(ii) in relation to *** Provided That COLLATERAL shall be entitled
to extend the time to complete this Benchmark for no more than
two (2) periods of three (3) months by the payment of *** per
each *** period.
Within *** of achieving a Benchmark, COLLATERAL shall notify the
LICENSOR that the said Benchmark has been achieved.
(b) If COLLATERAL fails to achieve a Benchmark within the time
stipulated in Clause 7.2(a)(i) and/or (ii) then this Agreement
shall, subject to any agreement between the parties to allow this
Agreement to continue in full force and effect, be deemed to have
terminated with effect from the day following the time stipulated in
Clause 7.2(a). Time is of the essence with respect to COLLATERAL's
compliance with the requirements stated in Clause 7.2(a).
7.3 Pig Studies
(a) The parties to this Agreement acknowledge that the Pig Studies are
being conducted to support a clinical development program for the
use of Licensed Products in the Field for the treatment and
prevention of coronary artery disease and COLLATERAL agrees that it
shall conduct the Pig Studies in accordance with this aim.
(b) COLLATERAL shall notify the LICENSOR of the completion of the Pig
Studies in accordance with Clause 7.2(a) and with such notification
shall provide a report containing the data and results of the Pig
Studies to the LICENSOR for its review.
(c) In the event that the Pig Studies have achieved all of the criteria
established under Schedule 4 and provided that COLLATERAL notify the
LICENSOR of their intention to continue with the development of the
Licensed Products this licence shall, subject to the terms and
conditions set out herein remain in full force and effect.
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
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(d) In the event that the Pig Studies fail to meet some or all of the
criteria established under Schedule 4, within *** of receiving the
report described in Clause 7.3 (b) and after consultation with
COLLATERAL, LICENSOR may elect at its total discretion to allow
further development of the Technology and/or Licenced Products as
provided for in Clause 7.3(e). In the event that the LICENSOR does
not exercise its discretion under this Clause 7.3(d) this Agreement
will be deemed to have terminated effective as of 30 October 1997.
(e) If the LICENSOR exercises its discretion pursuant to Clause 7.3(d)
then COLLATERAL shall be entitled to conduct further Pig Studies in
myocardial ischaemia or peripheral vascular disease and/or
congestive heart failure aimed at supporting a clinical development
program for the use of Licensed Products on the same terms and
conditions as contained in this Agreement provided that, prior to
COLLATERAL being entitled to conduct such studies, the LICENSOR and
COLLATERAL shall discuss and agree upon new benchmarks and dates for
the achievement of such benchmarks for the use of the VRF/VEGF-B
gene in these further studies.
(f) If the LICENSOR and COLLATERAL do not agree in relation to the
benchmarks under Clause 7.3(e), within thirty (30) days of the end
of the period commencing 30 October 1997, this Agreement shall,
subject to any agreement between the parties to allow this Agreement
to continue in full force and effect, be deemed to have terminated
with effect from 30 October 1997.
7.4 Reporting
Within *** of the conclusion of the period of *** after the Effective
Date, COLLATERAL shall submit a written report to the LICENSOR, which
report shall include reasonable details of such matters as the LICENSOR
may from time to time reasonably request including, but not limited to:
(a) current status of research and development conducted in relation to
the Technology, Patent Rights and Licensed Products;
(b) current status of exploitation of the Technology, Patent Rights and
Licensed Products;
(c) current status of any applications for regulatory approval in
relation to the Technology, Patent Rights and Licensed Products;
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
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(d) current status of any manufacturing being conducted by or on behalf
of COLLATERAL or by or on behalf of and of its sub-licensees in
relation to any exploitation of the Technology, Patent Rights and
Licensed Products;
(e) any sub-licences granted by COLLATERAL pursuant to Clause 3.3;
(f) marketing and sales in relation to any exploitation of the
Technology, Patent Rights and Licensed Products conducted during the
said period of six (6) calendar months;
(g) any manufacturing, marketing, sales plans or projections in relation
to any exploitation of the Technology, Patent Rights and Licensed
Products; to be conducted for the subsequent period of six (6)
calendar months and the remainder of the applicable calendar year;
and
Thereafter, COLLATERAL shall submit a written report to the LICENSOR,
which report shall include the above details, within ten (10) days of the
conclusion of each successive period of six (6) calendar months for the
remainder of the term of this Agreement and provide such other comments
and advice to the LICENSOR as reasonably requested by the LICENSOR from
time to time upon reasonable notice to COLLATERAL.
7.5 Assistance
If AMRAD agrees to assist COLLATERAL in relation to the planning and
review of development programs relating to the exploitation of the
Technology it shall do so on terms and conditions as shall be agreed
between the parties from time to time.
8. CONFIDENTIALITY
8.1 Obligations
Except as otherwise provided in this Clause 8, during the term of this
Agreement. and thereafter until the date of expiration of the last of any
patent within the Patent Rights both the LICENSOR and COLLATERAL shall
maintain in confidence and use only for the purposes of this Agreement
information and data resulting from or related to the use or development
of the Technology in the Field pursuant to this Agreement, or supplied by
the LICENSOR pursuant to this Agreement (Information).
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8.2 Permitted Disclosures
To the extent it is reasonably necessary to fulfil its obligations or
exercise its rights pursuant to this Agreement, COLLATERAL may disclose
Information it is otherwise obligated pursuant to this Clause 8 not to
disclose to an Affiliate, a permitted sub-licensee or a potential
sub-licensee of the Technology on a need-to-know basis on condition that
such person or persons (as the case may be) agree to keep the Information
confidential for the same time periods and to the same extent as
COLLATERAL is required to keep the Information confidential. COLLATERAL
may also disclose such information to government or other regulatory
authorities to the extent that such disclosure is reasonably necessary to
obtain a patent or authorization to conduct a clinical trial with or to
commercially market any product arising out of the Technology. The
obligation not to disclose Information shall not apply to any part of such
Information that:
(a) is or becomes patented, published or otherwise part of the public
domain other than by acts of the person obligated not to disclose
such Information in the contravention of this Agreement;
(b) is disclosed to the receiving party by a Third Party, provided such
Information was not obtained from such Third Party directly or
indirectly from the LICENSOR or COLLATERAL (as the case may be);
(c) prior to disclosure pursuant to this Agreement, was already in the
possession of the receiving party, provided such Information was not
obtained directly or indirectly from the LICENSOR or COLLATERAL (as
the case may be);
(d) is developed independently of the Information obtained from the
LICENSOR or COLLATERAL (as the case may be), as demonstrated by
written evidence; or
(e) is disclosed by either the LICENSOR or COLLATERAL with the prior
written consent of the other.
8.3 Terms of this Agreement
The LICENSOR and COLLATERAL agree not to disclose any financial terms or
conditions of this Agreement to any Third Party without the prior written
consent of the other, except as required by applicable law or to persons
with whom the LICENSOR or COLLATERAL (as the case may be) has entered into
or proposes to enter into a business relationship provided that Third
Party is bound by confidentiality obligations. Notwithstanding the
foregoing:
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(a) COLLATERAL shall be permitted to disclose the material financial
terms of this Agreement to any potential acquirer, merger partner or
other bona fide potential strategic partner of COLLATERAL provided
that any such potential acquirer, merger, partner or other bona fide
strategic partner is bound by confidentiality obligations consistent
with this Agreement and further provided that the LICENSOR is
advised of the existence but not the identity of such potential
acquirer, merger partner or other bona fide strategic partner and
the nature of the disclosure to be made by COLLATERAL prior to such
disclosure being made; and
(b) the LICENSOR and COLLATERAL shall be permitted to disclose the terms
or conditions of this Agreement in accordance with the requirements
of the rules of any stock exchange or securities body without the
prior written consent of the other but only to the extent required
by such rules.
8.4 Public Comment
Notwithstanding anything contained in this Clause 8, COLLATERAL shall not
make any public comment either verbally or in writing concerning or
arising from this Agreement without first providing the other parties with
*** to review, and provide their approval for such announcement. The other
parties shall have the right to not unreasonably withhold approval of such
announcement provided that if no comments are provided to COLLATERAL
within *** the announcement will be deemed to be approved.
8.5 Survival of Obligations
This Clause 8 survives the termination of this Agreement.
9. LIMITATION OF LIABILITY AND INDEMNITY
(a) To the extent permitted by law, *** and any of their respective
servants, agents, sub-contractors or nominees are not liable for any
liabilities, losses, damages, charges, claims, actions, costs and
expenses suffered or incurred by *** ***.
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
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(b) Without limiting Clause 9(a), *** and any of their respective
servants. agents, sub-contractors or nominees are not liable for any
form of special, indirect, incidental or consequential loss or
damage (including loss of profits and loss or damage that was, or
may reasonably be supposed to have been, in the contemplation of the
parties as at the date of this Agreement as a probable result of any
such act or omission) *** ***.
(c) *** hereby indemnifies and shall keep indemnified and agrees to
defend *** and *** and any of their respective servants, agents,
sub-contractors or nominees against all liabilities, losses,
damages, charges, claims, actions, costs and expenses (including
without limitation legal fees calculated on a solicitor/client
basis) of any kind whatsoever suffered or incurred by any of them as
a result of or in connection with *** ***.
10. INSURANCE
(a) COLLATERAL shall maintain public and product liability insurance
with respect to the use and exploitation of the Patent Rights and
the production and distribution of any Licensed Products in such
amount as is customarily maintained in accordance with good practice
for the pharmaceutical industry. COLLATERAL shall maintain such
insurance for so long as it continues to use and exploit any of the
Patent Rights or produce or distribute any Licensed Products, and
thereafter for so long as COLLATERAL maintains insurance for itself
covering supply of such product.
(b) COLLATERAL shall, upon the request of the LICENSOR:
(i) produce evidence of the currency of such insurance; and
(ii) note the interest of the LICENSOR in the manner directed by
the LICENSOR on the policy in respect of such insurance.
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
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11. TERM AND EARLY TERMINATION
11.1 Term
Unless terminated earlier pursuant to Clauses 5.11, 7.2 or 7.3, or l1.3
this Agreement shall continue until the date of expiration of the last to
expire of any patent within the Patent Rights.
11.2 Effect of Termination
Upon termination of this Agreement for any reason whatsoever by either
party:
(a) all licences granted pursuant to this Agreement shall immediately
cease and COLLATERAL shall cease to make any use of the Technology
and the Patent Rights; and
(b) COLLATERAL shall immediately:
(i) return to the LICENSOR any materials provided to COLLATERAL
pursuant to Clause 4;
(ii) supply to the LICENSOR all documents, reports, notes,
memoranda, computer media or other materials which record,
contain or relate in any way to the Patent Rights or the
Technology and which were provided to or obtained by
COLLATERAL or prepared or made by or for or on behalf of
COLLATERAL except certain notes, documents and other materials
that are considered to be privileged or confidential or that
must be maintained to comply with regulatory requirements;
(iii) despite anything else in this Agreement, cease to make use of
anything subject to the confidentiality obligations in Clause
8,
and shall confirm in writing to the LICENSOR promptly when it has
complied with these obligations.
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(c) LICENSOR acknowledges that in respect of materials supplied in
clause 11.2 (b) arising from human clinical trials of Licensed
Products that it shall not be entitled to utilise such materials for
regulatory submissions seeking marketing approval of Licensed
Products in the Field, without the consent of COLLATERAL where such
consent is not to be unreasonably withheld. For the avoidance of
doubt the parties acknowledge that the LICENSOR can utilise any
other material supplied pursuant to clause 11.2(b) for regulatory
submission purposes.
11.3 Early Termination
(a) In addition to any rights it may have hereunder the LICENSOR may
terminate this Agreement with immediate effect upon the occurrence
of any of the following:
(i) upon or after the bankruptcy, insolvency, dissolution or
winding up of COLLATERAL (other than dissolution or winding up
for the purposes of a solvent reconstruction or amalgamation);
or
(ii) upon or after the breach of any material provision of this
Agreement by COLLATERAL, if COLLATERAL has not remedied the
breach within thirty (30) days after written notice thereof by
the LICENSOR.
(b) COLLATERAL may terminate this Agreement at any time on thirty (30)
days' notice to the LICENSOR provided that COLLATERAL shall not
terminate this Agreement for any reason whatsoever prior to the
completion of the Pig Studies or 30 October 1997, whichever is the
latter.
11.4 Survival of Accrued Obligations
Expiration or termination of this Agreement shall not relieve the parties
of any obligation accruing prior to such expiration or termination.
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12. RESOLUTION OF DISPUTES
12.1 Disputes Committee
If any dispute or difference shall arise between the LICENSOR and
COLLATERAL pursuant to this Agreement then, prior to either party taking
any further action as by referring the matter to arbitration or commencing
legal proceedings, the matter in dispute shall be referred to a disputes
committee which shall consist of the respective chief executives of AMRAD,
LUDWIG and COLLATERAL (Disputes Committee). The chief executives shall
confer together in an endeavour to settle the dispute on some fair and
equitable commercial basis with regard to the basic legal rights of AMRAD,
LUDWIG and COLLATERAL. Any discussions or proceedings of the Disputes
Committee shall be on a without prejudice basis.
12.2 Use of Expert
Subject to agreement of all members of the Disputes Committee, the
Disputes Committee may, at its option, refer any dispute or difference to
an independent Third Park to act as an expert and not as an arbitrator in
settling the same, on terms that the decision of such independent Third
Party shall be binding on AMRAD, LUDWIG and COLLATERAL.
13. NOTICES
Any notice, demand, consent or other communication (Notice) given or made
under this Agreement:
(a) must be in writing and signed by a person duly authorised by the
sender;
(b) must either be delivered to the intended recipient by prepaid post
(if posted to an address in another country, by airmail) or by hand
or fax to the address or fax number below or the address or fax
number last notified by the intended recipient to the sender:
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(i) to LUDWIG institute
of Cancer Research: 1345 Avenue of the Americas
New York, New York,
United States of America 1015
Attention: President
Fax No: (212) 765 6720
with a copy to its London Office:
Fax No: (171) 828 5427
(ii) to Collateral
Therapeutics Inc: 9360 Towne Center Drive
San Diego, California
United States of America 92121
Attention: President
Fax No: (619) 587 3518
(iii) to AMRAD Development
Pty Ltd: 576 Swan Street
Burnley, Victoria, 3121
Attention: Managing Director
Fax No: (613) 92084089
(c) will be taken to be duly given or made:
(i) in the case of delivery in person, when delivered:
(ii) in the case of delivery by post, five business days after the
date of posting (if posted to an address in the same country)
or fourteen business days after the date of posting (if posted
to an address in another country); and
(iii) in the case of fax, on receipt by the sender of a transmission
control report from the despatching machine showing the
relevant number of pages and the correct destination fax
machine number or name of recipient and indicating that the
transmission has been made without error,
but if the result is that a Notice would be taken to be given or
made on a day that is not a business day in the place to which the
Notice is sent or is later than 4:00pm (local time) it will be taken
to have been duly given or made at the commencement of business on
the next business day in that place.
14. ENTIRE AGREEMENT
This Agreement contains the entire agreement between the parties with
respect to its subject matter and supersedes all prior agreements and
understandings between the parties in connection with it.
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15. AMENDMENT
No amendment or variation of this Agreement is valid or binding on a party
unless made in writing executed by all parties.
16. ASSIGNMENT
16.1 No Assignment Without Consent
Neither party may assign or otherwise transfer this Agreement or any of
its rights or obligation herein without the prior written consent of the
other party, which consent shall not be unreasonably withheld.
16.2 Permitted Assignments
(a) Notwithstanding Clause 16.1, COLLATERAL may assign this Agreement:
(i) subject to Clause 16.3, to *** on written notice to the LICENSOR but
without the prior written consent of the LICENSOR provided that ***
undertakes in writing to the LICENSOR to be bound by all of the
terms and conditions of this Agreement prior to any such assignment
and LICENSOR is notified within five (5) days of such assignment
taking place;
(ii) without the prior written consent of the LICENSOR in connection with
the sale of all or substantially all of the assets of COLLATERAL to
an Affiliate of COLLATERAL in connection with a corporate
reorganisation, provided that such Affiliate undertakes in writing
to be bound by all the terms and conditions in this Agreement and
LICENSOR is notified within five (5) days of such assignment taking
place; and
(b) Notwithstanding Clause 16.1 AMRAD or LUDWIG may assign this
Agreement to an Affiliate provided that such Affiliate undertakes to
be bound by the terms and conditions of this Agreement.
16.3 ***
In the event that COLLATERAL assigns this Agreement to *** pursuant to
Clause 16.2(a), the following amendments to this Agreement shall be made:
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
<PAGE>
Page 28
(a) in Clause 1.1, substitute for the definition of Net Revenue:
"Net Revenue means the prescribed percentage (as defined in
Clause 5.6(d)) of Net Sales made by *** or royalty payments
received by *** on Net Sales made by any permitted
sub-licensees less, in the event the exclusive licence
agreement between the *** and COLLATERAL entitled *** dated 28
September 1995 as amended *** *** has been assigned to *** and
the Licensed Products involve in any way whatsoever the
technology claimed in *** *** if payable to the said Regents
pursuant to the said exclusive licence agreement";
(b) in Clause 1.1, substitute for the definition of Net Sales:
"Net Sales" means gross proceeds from sales of Licensed
Products by *** or by any permitted sub-licensees less
deductions for:
(a) transportation charges, including insurance relating
thereto;
(b) sales and excise taxes or customs duties paid by the
person selling or distributing any Licensed Product or
any other governmental charges imposed upon the sale or
distribution of any Licensed Product;
(c) distributors' fees, rebates or allowances actually
granted, allowed or incurred;
(d) quantity discounts, cash discounts or chargebacks
actually granted, allowed or incurred in the ordinary
course of business in connection with the sale or
distribution of any Licensed Product;
(e) allowances or credits to customers not in excess of the
selling price of any Licensed Product, on account of
governmental requirements, rejection, outdating, recalls
or returns of such Licensed Product.";
(c) substitute for Clause 5.6(c):
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
<PAGE>
Page 29
"If *** or any of its sub-licensees receives any non-cash
benefit or otherwise derives any non-cash commercial benefit
in connection with the exploitation of the Technology other
than pursuant to an arm's length sale agreement with a Third
Party, for the purposes of calculating the amount payable to
*** pursuant to this Clause 5.7, *** or its sublicensees (as
the case may be) shall be taken to have received revenue that
would have been received on an arm's length sale agreement.";
and
(d) substitute for Clause 5.6(d):
"For the purposes of the definition of Net Revenue in Clause
1.1, the prescribed percentage referred to therein shall be
the percentage royalty on Net Sales which COLLATERAL had paid
to LICENSOR prior to the assignment of this Agreement to ***.
Upon assignment of this Agreement to *** shall notify the
LICENSOR of the prescribed percentage."
17. NO WAIVER
No failure to exercise nor any delay in exercising any right, power or
remedy by a party operates as a continuing waiver. A single or partial
exercise of any right, power or remedy does not preclude any other or
further exercise of that or any other right, power or remedy. A waiver is
not valid or binding on the party granting that waiver unless made in
writing.
18. FURTHER ASSURANCES
Each party agrees to do all things and execute all deeds, instruments,
transfers or other documents as may be necessary or desirable to give full
effect to the provisions of this Agreement and the transactions
contemplated by it.
19. RELATIONSHIP OF THE PARTIES
This Agreement does not set up or create an employer/employee
relationship, partnership of any kind, an association or trust between the
parties, each party being individually responsible only for its
obligations as set out in this Agreement and in addition the parties agree
that their relationship is one of independent contractors. COLLATERAL is
not authorised or empowered to act as agent on behalf of AMRAD or LUDWIG
and COLLATERAL shall not on behalf of AMRAD or LUDWIG
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
<PAGE>
Page 30
enter into any contract, warranty or representation as to any matter.
AMRAD or LUDWIG shall not be bound by the acts or conduct of COLLATERAL.
None of AMRAD, or LUDWIG are authorised or empowered separately or
together, to act as agent on behalf of COLLATERAL and none of AMRAD or
LUDWIG, separately or together, may enter any contract, warranty or
representations as to any matter on behalf of COLLATERAL. COLLATERAL shall
not be bound by the acts or conduct of any of AMRAD or LUDWIG, whether
acting alone or together.
20. COSTS AND STAMP DUTY
Each party shall bear its own costs arising out of the negotiation,
preparation and execution of this Agreement.
21. GOVERNING LAW AND JURISDICTION
This Agreement is governed by the laws ***. Subject to Clause 13, each
party submits to the non-exclusive jurisdiction of courts exercising
jurisdiction there in connection with matters concerning this Agreement.
22. COUNTERPARTS
This Agreement may be executed in any number of counterparts. All
counterparts together will be taken to constitute one instrument.
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
<PAGE>
Page 31
- -------------------------------------------------------------------------------
SCHEDULE 1
- -------------------------------------------------------------------------------
AMRAD Patent Applications
Patent Applications filed by AMRAD
***
Inventors: Haywood, N.;
Weber, G;
Grimmond, S.;
Nordenskjold, M;
Larsson, C.
Claiming priority from:
***
***
***
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
<PAGE>
Page 32
- -------------------------------------------------------------------------------
SCHEDULE 2
- -------------------------------------------------------------------------------
LUDWIG Patent Applications
US Patent Applications filed by LUDWIG
*** ***
Inventors: Ulf Eriksson and Birgitta Olofsson (Stockholm Branch, LICR).
*** ***
Inventors: Ulf Eriksson and Birgitta Olofsson of the Stockholm Branch,
LICR and Katri Pajusola and Kari Alitalo (University of
Helsinki).
*** ***
Inventors: Ulf Eriksson and Birgitta Olofsson of the Stockholm Branch,
LICR and Katri Pajusolo and Kari Alitalo (University of
Helsinki).
*** ***
***
Inventors: Ulf Eriksson and Birgitta Olofsson of the Stockholm Branch,
LICR and Katri Pajusola and Kari Alitalo (University of
Helsinki).
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
<PAGE>
Page 33
- -------------------------------------------------------------------------------
SCHEDULE 3
- -------------------------------------------------------------------------------
Benchmarks
Completion of Pig Studies in the ameroid pig model of
myocardial ischaemia 30 October 1997
*** ***
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
<PAGE>
Page 34
- -------------------------------------------------------------------------------
SCHEDULE 4
- -------------------------------------------------------------------------------
CRITERIA FOR GENE EFFICACY IN PIG MYOCARDIAL ISCHEMIA MODEL
(1) Efficacy in the pig chronic myocardial ischemia model
o Documented selective transgene expression in the heart at 2 weeks
after gene transfer: Method and Criteria: PCR ( ~ ) for gene in
cardiac tissue.
o Statistically significant (p lesser than 0.05) improvement in
Function (systolic wall thickening assessed by transthoracic
echocardiography) and Perfusion (contrast echocardiography)
2 weeks following gene transfer:
Criteria:
(1) Improvement in both Perfusion and Function during pacing
induced stress compared to stress prior to gene transfer in
the same animal.
Improved Function and Performance will be:
(1) statistically significant (p lesser than 0 05), and
(2) improved from pre-gene-transfer stress by at least
50(degree)'~ relative to the baseline stress. Data will be the
mean of between 5 and ~ pigs instrumented and injected
essentially as described in Nature Medicine, 2: 534-534, 1996.
(2) Acceptable safety profile
No evidence of significant inflammation using histologic and
immunocytochemical criteria in the heart and in other tissues.
<PAGE>
Page 35
EXECUTED as an agreement.
THE COMMON SEAL of AMRAD )
DEVELOPMENT PTY LTD was duly affixed in ) [SEAL]
the presence of: )
/s/ John Grace /s/ Robert J. Klupais
- ----------------------------------- ----------------------------------
Director Secretary
John Grace Robert Klupais
- ----------------------------------- ----------------------------------
Print Name Print Name
SIGNED SEALED AND DELIVERED by )
)
a duly authorised officer of LUDWIG )
INSTITUTE OF CANCER RESEARCH in the )
presence of: )
/s/ Linda Anne Lenthau /s/ RDJ Walker
- ----------------------------------- /s/ Edward A. McDermott Jr
Witness ----------------------------------
Duly Authorised Officer
Linda Anne Lenthau Edward A. McDermott Jr.
- ----------------------------------- Richard DJ Walker
Print Name ----------------------------------
Print Name
SIGNED SEALED AND DELIVERED by )
)
a duly authorised officer of COLLATERAL )
THERAPEUTICS INC in the presence of: )
)
/s/ H Kirk Hammond MD /s/ Jack W. Reich, Ph.D.
- ----------------------------------- ----------------------------------
Witness Duly Authorised Officer
H. Kirk Hammond, MD Jack W. Reich, Ph.D.
- ----------------------------------- ----------------------------------
Print Name Print Name
<PAGE>
[LOGO]
EXHIBIT 10.17
RESEARCH AGREEMENT BETWEEN UNIVERSITY OF WASHINGTON &
COLLATERAL THERAPEUTICS, INC.
This Agreement is by and between the University of Washington, a public
institution of higher education with offices at Seattle, Washington 98195,
hereinafter referred to as University, and Collateral Therapeutics, Inc. a for
profit firm with offices at 9360 Towne Centre Drive, Suite 110, San Diego, CA
92121, hereinafter referred to as Sponsor:
Whereas, University has an active research program concerning *** ;
Whereas, Sponsor is also interested in that research and wishes to encourage and
assist in supporting certain aspects of the research;
Whereas, University and Sponsor wish to combine their mutual interest in this
research;
Therefore, University and Sponsor hereby agree to the terms stated below.
1. Scope of Work
The Scope of Work shall be as described in the research proposal entitled ***
***, hereinafter referred to as Proposal, by ***. The Proposal is incorporated
by reference into this Agreement.
2. Best Efforts
As an independent agent, University will apply its best efforts to complete the
research described in the Scope of Work statement. Commonly accepted
professional standards of workmanship will be followed.
3. Key Personnel
The project director will be *** who may select and supervise other project
staff as needed. No other person will be substituted for the project director
except with Sponsor's approval. Sponsor may exercise Termination provision of
this Agreement (see 17) if a satisfactory substitute is not identified.
4. Control of Research
Control of the research will rest entirely with University. However, it is
agreed that University, through its project director, will maintain continuing
communication with a designated liaison for the Sponsor. The frequency and
nature of these communications will be mutually defined by University's project
director and Sponsor's liaison person.
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
<PAGE>
[LOGO]
5. Funding and Payment
Sponsor will provide funding in the amount of *** ***. Payment of *** ***. The
*** of *** ***. Checks should be made payable to the University of Washington
and sent to the Director, Grant and Contract Accounting, ND-22, University of
Washington, Seattle, Washington 98195.
6. Project Period
The Agreement will be effective for twelve (12) months beginning May 1, 1997
and ending April 30, 1998. This period may be amended by mutual written
agreement by authorized representatives of University and Sponsor.
7. Invention Rights
Title to any invention, whether or not patentable, derived from research under
this Agreement will vest in University. Sponsor is hereby granted a royalty free
license to use all such inventions within Sponsor's own organization, including
subsidiaries if 50% or more owned. In the event that marketing such inventions
is of interest to Sponsor, Sponsor is guaranteed a first right to negotiate for
an exclusive commercial license based on financial terms and conditions to be
negotiated. Consistent with University policy, its rights in such inventions may
be assigned to the Washington Research Foundation or other agent for negotiation
of an appropriate License Agreement.
8. Publication
University will be free to publish the results of research conducted under this
Agreement within a reasonable time. Prior to submission for publication of a
manuscript or outline/notes for a symposium, the University agrees to send the
Sponsor a copy of the manuscript/outline to be submitted, and shall allow the
Company forty-five (45) days from receipt to determine whether the
manuscript/outline contains subject matter for which patent protection should be
sought prior to publication or public disclosure. Should the Sponsor believe the
subject matter of the manuscript contains a patentable invention to which it may
have rights under this Agreement, the Sponsor shall have until the end of such
45-day period to notify the University that it wishes to either seek to obtain
patent protection or that it wishes to keep the information non-public, and
University agrees to provide reasonable cooperation to the Sponsor and to take
no action inconsistent with the Sponsor's decision (including withholding
publication for a reasonable period of time upon request in order to file for
patent protection). In order to fully protect the rights of University and
Sponsor, any contemplated publication containing details of an invention,
whether or not patentable, will be withheld until a patent application is filed
or other appropriate steps to protect commercial value have been completed.
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
<PAGE>
[LOGO]
9. Hold Harmless
University and Sponsor each agree to indemnify and to hold harmless the other
party from damage to persons or property resulting from any act or omission on
the part of itself, its employees, its agents, or its officers.
10. Use of Names
University and Sponsor each agree that they will not use the name, trademark, or
other identifier of the other for any advertising, promotion, or other
commercially related purpose except with advance written approval.
11. Assignment
The sponsor shall have the right to assign or transfer any rights or obligations
arising from this Agreement with the prior written notice to the University.
12. Disclaimer of Warranties
All information received from or technology developed with the University is
experimental in nature and the University makes no express or implied warranties
or representations with respect to its utility, safety, merchantability, or
fitness for a particular purpose. All warranties, express or implied arising out
of or in connection with the furnishing, performance, or use of any University
technology are hereby disclaimed.
13. Applicable Law and Venue
This Agreement shall be governed by and enforced according to the laws of the
State of Washington without giving effect to the conflict of laws provisions
thereof. Exclusive jurisdiction and venue of any dispute under this Agreement
shall lie with the United States District Court for the Western District of
Washington (Seattle division) or the Superior Court of Washington for King or
Thurston County.
14. Nonperformance
Nonperformance by the University shall not operate as a breach of the terms of
this Agreement if due to strikes or other labor disputes or to prevention or
prohibition by law, the loss or injury to products in transit, an Act of God, or
war or other cause beyond the control of the University.
15. Severability
If any of the provisions of this Agreement shall be determined to be illegal or
unenforceable by a court of competent jurisdiction, the other provision shall
remain in full force and effect.
<PAGE>
[LOGO]
16. Notices
Unless otherwise indicated elsewhere in this Agreement, all notices and
communications in connection with this Agreement will be addressed to
University/Sponsor officials who sign this Agreement.
17. Termination
Either University or Sponsor may terminate this Agreement by giving thirty (30)
days written notice to the other. In the event of such termination. University
will cease further obligation of project funds and will take all reasonable
steps to cancel or otherwise reduce outstanding obligations. Sponsor will be
obligated to pay actual costs and firm obligations as reduced by diligent
efforts of University. In the event of a termination by the University, the
Sponsor shall have the right to technology pursuant to Section 7 resulting from
the research as defined in Section 1.
18. Amendments
Any amendment to this Agreement must be in writing and signed by authorized
representatives of University and Sponsor. No waiver ot this Agreement shall be
valid and enforceable unless in writing and signed bv the authorized
representative for the party granting the waiver. The waiver by any party of a
breach of any of the provisions of this Agreement shall not operate or be
construed as a waiver of any subsequent breach by any party or a breach of the
entire Agreement. The authorized representative for the University is the
Director, Grant and Contract Services. Faculty members and other research
personnel are not authorized to bind the University.
19. Entire Agreement
This Agreement expresses the entire agreement between the parties. All prior
negotiations, understandings, promises and agreements, oral or written, are
superseded hereby.
Agreement of University and Sponsor in the terms stated above is indicated by
signatures affixed below.
For University: For Sponsor:
/s/ Donald W. Allen /s/ Jack W. Reich
- -------------------------- ----------------------------
Signature Signature
Donald W. Allen, Director Jack W. Reich, Ph.D.
Grant and Contract Services President & CEO
Apr 21 1997 April 15, 1997
- -------------------------- ----------------------------
Date Date
<PAGE>
[LOGO]
RESEARCH BUDGET FOR UNIVERSITY OF WASHINGTON
( *** ) AND COLLATERAL
THERAPEUTICS, INC.
Research Grant
Personnel
*** ***
*** ***
----
***
Services
*** ***
*** ***
----
***
Supplies
*** ***
*** ***
----
***
*** ***
*** ***
----
Research Grant Total ***
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
<PAGE>
RESEARCH PROPOSAL TO COLLATERAL THERAPEUTICS
March 10, 1997
***
*** , Principal Investigator
Rationale
***
***
***
***
***
***
***
Specific Aims
***
***
***
***
***
***
***
Specific Aim 2. To determine the effects of *** into *** .
***
***
***
***
***
***
Specific Aim 3. To develop promoter constructs that prevent *** in *** .
***
***
***
Time Table
***
***
***
***
***
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
<PAGE>
[LOGO]
FELLOWSHIP SUPPORT AGREEMENT
This agreement is between the University of Washington, a public institution of
higher education, with an office in Seattle, Washington 98195, hereafter
referred to as university, and Collateral Therapeutics, Inc., a for profit firm
with offices at 9360 Towne Centre Drive, San Diego, CA 92121.
Collateral Therapeutics, Inc. is interested in supporting a research fellow in
the laboratory of *** to further his work in the area of *** ***. The funds
provided for in the attached budget are solely for the purpose of fellowship
support in *** laboratory, under his direct supervision, for research in the
general area of gene transfer and myocyte differentiation. There are no other
specific restrictions on these funds.
Collateral Therapeutics, Inc. will provide funding in the amount of *** support
of the research fellowship. A payment of $17,105 will be made upon initiation of
this agreement on May 1, 1997 and a similar payment of *** will be due upon
receipt of invoices from the University of Washington six months after
initiation of this agreement.
The individual employed in this fellowship will be an employee of the University
of Washington and will bear no responsibility to Collateral Therapeutics.
Agreement of University and Sponsor in the terms stated above is indicated by
signatures affixed below.
For University: For Sponsor:
/s/ Donald W. Allen /s/ Jack W. Reich
- ---------------------------- ---------------------------
Signature Signature
Donald W. Allen, Director Jack W. Reich, Ph.D.
Grant and Contract Services President & CEO
Apr 30 1997 April 17, 1997
- ---------------------------- ---------------------------
Date Date
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
<PAGE>
RESEARCH FELLOWSHIP FOR THE LAB OF
*** AT UNIVERSITY OF WASHINGTON
Personnel
*** ***
*** ***
----
***
Supplies ***
*** ***
*** ***
----
Fellowship Total ***
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
<PAGE>
EXHIBIT 10.18
EXCLUSIVE LICENSE AGREEMENT
between
The Regents of the University of California
and
Collateral Therapeutics, Inc.
for
Angiogenic Gene Therapy for Congestive Heart Failure
***
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
----------------------
U.C. AGREEMENT
CONTROL NUMBER
***
----------------------
<PAGE>
Table of Contents
<TABLE>
<CAPTION>
<S> <C>
Recitals...................................................................1
1. Definitions..........................................................4
2. Grant................................................................8
3. License Issue Fee...................................................10
4. Royalties...........................................................11
5. Due Diligence.......................................................15
6. Progress and Royalty Reports........................................18
7. Books and Records...................................................20
8. Life of the Agreement...............................................21
9. Termination by The Regents..........................................22
10. Termination by Licensee.............................................22
11. Disposition of Patent Products on Hand Upon Termination.............23
12. Use of Names and Trademarks.........................................24
13. Limited Warranty....................................................25
14. Patent Prosecution and Maintenance..................................26
15. Patent Marking......................................................30
16. Patent Infringement.................................................30
17. Indemnification.....................................................32
18. Notices.............................................................34
19. Assignability.......................................................35
20. Late Payments.......................................................35
21. Waiver..............................................................36
22. Failure to Perform..................................................36
23. Governing Laws......................................................36
24. Government Approval or Registration.................................37
25. Export Control Laws.................................................37
26. Force Majeure.......................................................37
27. Confidentiality.....................................................38
28. Miscellaneous.......................................................40
</TABLE>
<PAGE>
***
Revised: 7/13/95 (SH)
Draft date: June 3, 1997
Exclusive License Agreement
for
Angiogenic Gene Therapy for Congestive Heart Failure
This license agreement ("Agreement") is effective this 18th day of June,
1997, by and between The Regents of the University of California ("The
Regents"), a California corporation, having its statewide administrative offices
at 300 Lakeside Drive, 22nd Floor, Oakland, California 94612-3550 and Collateral
Therapeutics, Inc., ("Licensee"), a California corporation, having a principal
place of business at 9360 Towne Centre Drive, San Diego, California 92121.
Recitals
Whereas, certain inventions, relating to "Angiogenic Gene Therapy for
Congestive Heart Failure" ("Invention"), useful for the treatment of congestive
heart failure through the use of gene therapy, were made at the
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
----------------------
U.C. AGREEMENT
CONTROL NUMBER
***
----------------------
<PAGE>
University of California, San Diego ("UCSD"), and are described and claimed in
U.S. Patent Application Serial No._____________ naming *** an inventor employed
by *** and *** an inventor not affiliated with *** and are identified in Patent
Rights defined below;
Whereas, *** has entered into an agreement with Licensee that provides for
assignment of her undivided interest in Patent Rights to Licensee;
Whereas, it is the intention of the Licensee to investigate the use of the
gene therapy method claimed in U.S. Patent Application Serial No. *** and
previously licensed to Licensee in the agreement entitled "Angiogenesis Gene
Therapy," executed on September 29, 1995, in the development of Patent Products
licensed herein;
Whereas, this Agreement will be executed in conjunction with an amendment
to the above referenced license granted to Licensee, dated September 29, 1995,
which amendment will provide Licensee with an additional year to meet the
requirements of Subparagraphs 5.3.1 through 5.3.4 of said license agreement;
Whereas, Licensee entered into a Letter of Intent ("Letter of Intent"),
having U.C. Agreement Control No. *** effective ***
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
2
<PAGE>
that provided the Licensee with a time-limited exclusive right to negotiate for
a license to the Patent Rights;
Whereas, under 35 U.S.C. ss.ss. 200-212, The Regents may elect to retain
title to any invention (including the Invention) made by it, in whole or in
part, under U.S. Government funding;
Whereas, if The Regents elects to retain title to the Invention, then the
law requires that The Regents grant to the U.S. Government a nontransferable,
paid-up, nonexclusive, irrevocable license to use the Invention by or on behalf
of the U.S. Government throughout the World;
Whereas, any patent application claiming an invention made by *** *** is
subject to assignment to the *** absent a release to *** from the ***;
Whereas, 37 C.F.R. ss. 501.6(a)(2) allows the *** to release the Invention
to *** under certain conditions;
Whereas, *** an employee of The Regents, is under an obligation to assign
to The Regents the rights in the Invention that were released to him by the ***;
Whereas, *** assigned to The Regents title to the Invention, which was
released to him from the *** and granted the required licenses to the U.S.
Government;
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
3
<PAGE>
Whereas, Licensee is a "small entity" as defined in 37 C.F.R. ss. 1.9 and
a "small-business concern" defined at 1 5 U.S.C. ss. 632;
Whereas, both parties recognize that royalties due under this Agreement
will be paid on issued patents and pending patent applications that are being
prosecuted diligently and in good faith;
Whereas, Licensee requested an exclusive license to the Patent Rights from
The Regents; and
Whereas, The Regents wishes to grant to Licensee an exclusive license to
the entire interest owned by The Regents in Patent Rights so that products and
other benefits derived from the Invention can be enjoyed by the general public.
-- oo O oo --
The parties agree as follows:
1. Definitions
As used in this Agreement, the following terms will have the meaning set
forth below:
4
<PAGE>
1.1 "Patent Rights" means all U.S. patents and patent applications and
foreign patents and patent applications assigned in whole or in part to The
Regents, and in the case of foreign patents and patent applications those
requested under Paragraph 14.4 herein, including any reissues, extensions,
substitutions, continuations, divisions, and continuations-in-part applications
(only to the extent, however, that claims in the continuations-in-part
applications are entitled to the priority filing date of the parent patent
application) based on and including any subject matter claimed in or described
according to the requirements of 35 U.S.C. ss. 112 in U.S. Patent Application
Serial Number __________________ entitled *** *** filed *** by ***
*** and now assigned, in part, to *** .
1.2 "Patent Products" means:
1.2.1 any kit, composition of matter, material, or product;
1.2.2 any kit, composition of matter, material, or product to be used in a
manner requiring the performance of the Patent Method; or
1.2.3 any kit, composition of matter, material, or product produced by the
Patent Method;
to the extent that the manufacture, use, or sale of such kit, composition of
matter, material, or product, in a particular country, would fall within the
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
5
<PAGE>
scope of (1) an unexpired claim of a patent under Patent Rights in that country
or (2) a pending claim of a pending patent application that is being prosecuted
diligently and in good faith in that country were it issued as a claim in a
patent under Patent Rights in that country in which such application is pending.
This definition of Patent Products also includes a service either used by
Licensee or provided by Licensee to its customers when such service requires the
practice of the Patent Method.
1.3 "Patent Method" means any process or method, the use or practice of
which in a country would fall within the scope of (1) an unexpired claim of a
patent under Patent Rights in that country or (2) a pending claim of a pending
application that is being prosecuted diligently and in good faith in that
country were it issued as a claim in a patent under Patent Rights in that
country in which such application is pending.
1.4 "Net Sales" means the gross invoice prices from the sale of Patent
Products by Licensee, an Affiliate, a Joint Venture, or a sublicensee to
independent third parties for cash or other forms of consideration in accordance
with generally accepted accounting principles limited to the, following
deductions (if not already deducted from the gross invoice price and at rates
customary within the industry): (a) allowances (actually paid and limited to
rejections, returns, and prompt payment and volume discounts
6
<PAGE>
granted to customers of Patent Products, whether in cash or Patent Products in
lieu of cash); (b) freight, transport packing, insurance charges associated with
transportation; and (c) taxes, tariff, or import/export duties based on sales
when included in gross sales, but not value-added taxes or taxes assessed on
income derived from such sales.
1.5 "Affiliate" of Licensee means any entity which, directly or
indirectly, controls Licensee, is controlled by Licensee, or is under common
control with Licensee ("control" for these purposes being defined as the actual,
present capacity to elect a majority of the directors of such affiliate, or if
not, the capacity to elect the members that control fifty percent (50%) of the
outstanding stock or other voting rights entitled to elect directors) provided,
however, that in any country where the local law will not permit foreign equity
participation of a majority, then an "Affiliate" will include any company in
which Licensee will own or control, directly or indirectly, the maximum
percentage of such outstanding stock or voting rights permitted by local law.
Each reference to Licensee herein will be meant to include its Affiliates.
1.6 "Joint Venture" means any separate entity established pursuant to an
agreement between a third party and Licensee to constitute a vehicle for
commercializing Patent Products, in which the separate entity
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manufactures, uses, purchases, sells, or acquires Patent Products from Licensee.
Each reference to Licensee herein will be meant to include its Joint Ventures.
2. Grant
2.1 Subject to the terms of this Agreement, subject to the licenses
granted to the U.S. Government as set forth in the Recitals above, and subject
to the provisions of Paragraph 2.5 below, The Regents hereby grants to Licensee
exclusive licenses in the entire interest owned by The Regents in Patent Rights
to make, use, sell, offer for sale, and import Patent Products and to practice
the Patent Method where Patent Rights exist.
2.2 The Regents also grants to Licensee the exclusive right in the entire
interest owned by The Regents in Patent Rights to issue sublicenses to third
parties to make, use, sell, offer for sale, and import Patent Products and to
practice the Patent Method, provided Licensee retains the current exclusive
rights in the entire interest owned by The Regents in Patent Rights thereto
granted under Paragraph 2.1 of this Agreement. To the extent applicable, such
sublicenses will include all of the rights of and obligations due to The Regents
(and, if applicable, the U.S. Government, including 35
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U.S.C. ss.ss. 200-212 and the implementing regulations), including the payment
of royalties in Article 4. (Royalties) that are contained in this Agreement.
2.3 Licensee will notify The Regents of each sublicense granted hereunder
and provide The Regents with a copy of each sublicense. Licensee will collect
and pay all royalties due The Regents as set forth in Paragraph 4.1 below (and
guarantee all such payments due from sublicensees). Licensee will require
sublicensees to provide it with progress and royalty reports in accordance with
the provisions herein, and Licensee will collect and deliver to The Regents all
such reports due from sublicensees.
2.4 If this Agreement is terminated for any reason or the exclusive
licenses in the entire interest owned by The Regents in Patent Rights are
reduced to nonexclusive licenses in accordance with Paragraph 5.4, then any or
all sublicenses will be assigned to The Regents, provided that The Regents will
not be bound by any duties or obligations contained in any sublicense that
extend beyond the duties and obligations of The Regents in this Agreement.
2.5 Nothing in this Agreement will be deemed to limit the right of The
Regents to publish any and all technical data resulting from any research
performed by The Regents relating to the Invention and to make and use
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Patent Product(s), Patent Method(s), and associated technology solely for
educational and noncommercial research purposes.
3. License Issue Fee
3.1 As partial consideration for all the rights and licenses granted to
Licensee, Licensee will pay to The Regents a license issue fee of *** ***
according to the following schedule:
3.1.1 *** within *** after the execution of this Agreement by both
parties;
3.1.2 *** on or before *** ;
3.1.3 *** on or before *** ;
3.1.4 *** on or before *** ; and
3.1.5 *** on or before *** .
3.2 The fees set forth in Paragraph 3.1 above are non-refundable,
non-creditable, and not an advance against royalties.
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
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4. Royalties
4.1 As further consideration for all the rights and licenses granted to
Licensee, Licensee also will pay to The Regents an earned royalty at the rate
of *** based on the Net Sales of Patent Products. In the event Patent
Products also employ the invention claimed in U.S. Patent Application Serial
No. *** the Licensee will pay to The Regents the royalty rate based on Net
Sales of Patent Products specified in the agreement executed on September 29,
1995 covering such U.S. Patent Application Serial No. *** in addition to the
royalty rate based on Net Sales of Patent Products specified herein.
4.2 Paragraphs 1.1, 1.2, and 1.3 define Patent Rights, Patent Products,
and Patent Methods so that royalties will be payable only on Patent Products and
Patent Methods covered by either a pending patent application that is being
prosecuted diligently and in good faith in a relevant country or by an issued
patent in a relevant country. Earned royalties will accrue in each country for
the duration of any issued patent within Patent Rights in that country and will
be payable to The Regents when Patent Products are invoiced, or if not invoiced,
when delivered to a third party for the purpose of patient administration or for
purposes other than clinical trials. Licensee, its Affiliates, Joint Ventures,
and sublicensees will not use
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
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Patent Products or Patent Methods for administration to patients in any business
of the Licensee, or of its Affiliates, Joint Ventures, and sublicensees without
payment of applicable royalty on Net Sales to be calculated on retail sales
prices as if the sales transaction had occurred at arm's-length to an unrelated
third party.
4.3 Royalties accruing to The Regents will be paid to The Regents
quarterly on or before the following dates of each calendar year:
February 28 for the calendar quarter ending December 31;
May 31 for the calendar quarter ending March 31;
August 31 for the calendar quarter ending June 30; and
November 30 for the calendar quarter ending September 30. Each
such payment will be for royalties which accrued up to the most recently
completed calendar quarter of Licensee.
4.4 Beginning in the year *** Licensee will pay to The Regents a minimum
annual royalty in the amounts and at the times set forth below:
*** - $ ***
*** - $ ***
*** - $ ***
*** - $ ***
*** - $ ***
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
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In each succeeding calendar year after the *** Licensee will pay a *** of ***
for the life of this Agreement. Each minimum annual royalty payment must be paid
to The Regents by February 28 of each year following the calendar year in which
royalties accrued. Royalties paid during the prior calendar year will be
credited against the minimum annual royalty payment due and owing for the prior
calendar year.
4.5 In the event that the market for Patent Products will not support the
minimum annual royalty payments specified in Paragraph 4.4 above, then The
Regents and Licensee shall enter into good-faith negotiations to appropriately
reduce the minimum annual royalties, provided that Licensee can show sufficient
written evidence satisfactory to The Regents of the reduced market for Patent
Products. Such reduction of minimum annual royalties shall be based on *** of
the anticipated annual earned royalties due The Regents from sales of Patent
Products in light of the new market projections.
4.6 All monies due The Regents will be payable in United States funds
collectible at par in San Francisco, California. When Patent Products are sold
for monies other than United States dollars, the earned royalties will first be
determined in the foreign currency of the country in which such
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
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Patent Products were sold and then converted Into equivalent United States
funds. The exchange rate will be that rate quoted in the Wail Street Journal on
the last business day of the reporting period.
4.7 Earned royalties on sales of Patent Products occurring in any country
outside the United States will not be reduced by any taxes, fees, or other
charges imposed by the government of such country except those taxes, fees, and
charges allowed under the provisions of Paragraph 1.4 (Net Sales). Licensee will
be responsible for all bank transfer charges.
4.8 Notwithstanding the provisions of Article 26. (Force Majeure), if at
any time legal restrictions prevent prompt remittance of part or all royalties
owed to The Regents by Licensee with respect to any country where a Patent
Product is sold or distributed, Licensee will convert the amount owed to The
Regents into United States funds and will pay The Regents directly from another
source of funds for the amount impounded.
4.9 In the event that any patent or any claim thereof included within the
Patent Rights is held invalid or unenforceable in a final decision by a court of
competent jurisdiction and last resort and from which no appeal has or can be
taken, all obligation to pay royalties based on such patent or claim or any
claim patentably indistinct therefrom will cease as of the date of such final
decision. Licensee will not, however, be relieved from paying any
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royalties that accrued before such decision or that are based on another patent
or claim that has not expired or that is not involved in such decision.
4.10 No royalties will be collected or paid hereunder to The Regents on
Patent Products sold to the account of the U.S. Government. Licensee and its
sublicensee will reduce the amount charged for Patent Products distributed to
the United States Government by an amount equal to the royalty for such Patent
Products otherwise due The Regents as provided herein.
5. Due Diligence
5.1 Licensee, upon execution of this Agreement, will diligently proceed
with the development, manufacture and sale of Patent Products. In this regard,
The Regents acknowledges that the technology covered by this Agreement has only
recently been invented and that substantial additional effort, expense and time,
as well as regulatory approval, will be required before manufacture and sales of
any Patent Products will be possible. Meeting the requirements of Paragraph 5.3
below shall be deemed to satisfy the due diligence requirements of this Article
5.
5.2 Licensee will be entitled to exercise prudent and reasonable business
judgment in the manner in which it meets its due diligence
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obligations hereunder, including under Paragraph 5.3 below. In no case, however,
will Licensee be relieved of its obligations to meet each of the due diligence
provisions of Paragraph 5.3 below.
5.3 If Licensee is unable to perform any of the following:
5.3.1 file an Investigational New Drug application with the U.S.
Food and Drug Administration on or before *** ;
5.3.2 begin Phase I Clinical Trials in the United States for Patent
Products on or before *** ;
5.3.3 enter Pivotal Trials (a combination of Phase II and Phase III
Clinical Trials) in the United States for said Patent Products
on or before *** ;
5.3.4 file for marketing approval in the United States for said
Patent Products on or before *** ;
5.3.5 market Patent Products in the United States within *** after
receiving marketing approval of such Patent Products from the
U.S. Food and Drug Administration; and
5.3.6 diligently and earnestly fill the market demand for Patent
Products following commencement of marketing at any time
during the exclusive period of this Agreement;
then The Regents will have the right and option to terminate this Agreement or
reduce the exclusive licenses in the entire interest owned by The Regents in
Patent Rights granted to Licensee to non-exclusive licenses in accordance
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
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with Paragraph 5.4 hereof. The exercise of this right and option by The
Regents supersedes the rights granted in Article 2. (Grant).
5.4 To exercise either the right to terminate this Agreement or reduce
the exclusive licenses in the entire interest owned by The Regents in Patent
Rights granted to Licensee to non-exclusive licenses for lack of any
diligence requirement specified in this Article 5. (Due Diligence), The
Regents will give Licensee written notice of the deficiency. Licensee
thereafter has *** to cure the deficiency. Licensee shall be entitled to a
one-time extension of each of the dates set forth in Subparagraphs 5.3.1
through 5.3.4 (which have not been met) by *** to cure the deficiency upon
payment of *** to The Regents, provided that such payment is received by The
Regents within *** of receipt of written notice by The Regents of Licensee's
deficiency. The *** payment has the effect of extending the subject date and
all subsequent dates by ***. If The Regents has not received the *** payment
by the end of the *** or written tangible evidence satisfactory to The
Regents that the deficiency has been cured by the end of the *** then The
Regents may, at its option, terminate this Agreement or reduce the exclusive
licenses to the
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
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entire interest owned by The Regents in Patent Rights granted to Licensee to
non-exclusive licenses by giving written notice to Licensee in accordance with
Article 18. (Notices).
6. Progress and Royalty Reports
6.1 Beginning February 28, 1998, and semi-annually thereafter, Licensee
will submit to The Regents a progress report covering activities by Licensee
related to the development, including clinical trials and testing, of all Patent
Products and the obtaining of the governmental approvals necessary for
marketing. These progress reports will be provided to The Regents to cover the
progress of the research and development of the Patent Products until their
first commercial sale in the United States.
6.2 The progress reports submitted under Paragraph 6.1 will include, but
not be limited to, the following topics so that The Regents may be able to
determine the progress of the development of Patent Products:
o summary of work completed;
o summary of work in progress;
o current schedule of anticipated events or milestones specified
in Paragraph 5.3 and the dates when said milestones have been
met or will be met, as of the time of the report;
o market introduction date of Patent Products; and
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o activities of sublicensees, if any.
6.3 Licensee will also report to The Regents in its immediately subsequent
progress and royalty report the date of first commercial sale of a Patent
Product(s) in each country where the Licensee has sought marketing approval.
6.4 After the first commercial sale of a Patent Product, Licensee will
provide The Regents with quarterly royalty reports to The Regents on or before
each February 28, May 31, August 31, and November 30 of each year. Each such
royalty report will cover the most recently completed calendar quarter of
Licensee (October through December, January through March, April through June,
and July through September) and will show:
6.4.1 the gross sales and Net Sales of Patent Products sold by
Licensee and reported to Licensee as sold by its sublicensees
during the most recently completed calendar quarter;
6.4.2 the number of Patent Products sold or distributed by Licensee
and reported to Licensee as sold or distributed by its
sublicensees;
6.4.3 the royalties, in U.S. dollars, payable hereunder with respect
to Net Sales; and
6.4.4 the exchange rates used, if any.
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6.5 If no sales of Patent Products have been made during any reporting
period after the first commercial sale of a Patent Product, then a statement to
this effect is required.
7. Books and Records
7.1 Licensee will keep books and records accurately showing all Patent
Products manufactured, used, and/or sold under the terms of this Agreement. Such
books and records will be preserved for at least four (4) years after the date
of the royalty payment to which they pertain and will be open to inspection by
representatives or agents of The Regents at reasonable times to determine the
accuracy of the books and records and to determine compliance by Licensee with
the terms of this Agreement.
7.2 The fees and expenses of representatives of The Regents performing
such an examination will be borne by The Regents. However, if an error in
royalties of more than five percent (5%) of the total royalties due for any year
is discovered, then the fees and expenses of these representatives will be borne
by Licensee.
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8. Life of the Agreement
8.1 Unless otherwise terminated by operation of law or by acts of the
parties in accordance with the terms of this Agreement, this Agreement will be
in force from the effective date recited on page one and will remain in effect
for the life of the last-to-expire patent licensed under this Agreement, or
until the last patent application licensed under this Agreement is abandoned.
8.2 Any termination of this Agreement will not affect the rights and
obligations set forth in the following Articles:
Article 3 License Issue Fee
Article 7 Books and Records
Article 11 Disposition of Patent Products on Hand Upon
Termination
Article 12 Use of Names and Trademarks
Paragraph 14.6 Patent Prosecution and Maintenance
Article 17 Indemnification
Article 22 Failure to Perform
Article 27 Confidentiality
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9. Termination by The Regents
9.1 If Licensee should violate or fail to perform any material term or
covenant of this Agreement, then The Regents may give written notice of such
default ("Notice of Default") to Licensee. If Licensee should fail to repair
such default within sixty (60) days after the date such notice takes effect, The
Regents will have the right to terminate this Agreement and the licenses herein
by a second written notice ("Notice of Termination") to Licensee. If a Notice of
Termination is sent to Licensee, this Agreement will automatically terminate on
the date such notice takes effect. Such termination will not relieve Licensee of
its obligation to pay any royalty or license fees owing at the time of such
termination and will not impair any accrued right of The- Regents. These notices
will be subject to Article 18. (Notices).
10. Termination by Licensee
10.1 Licensee will have the right at any time to terminate this Agreement
in whole or as to any portion of Patent Rights by giving notice in writing to
The Regents. Such Notice of Termination will be subject to Article 18 (Notices)
and termination of this Agreement will be effective sixty (60) days after the
effective date thereof.
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10.2 Any termination pursuant to the above paragraph will not relieve The
Regents or Licensee of any obligation or liability accrued hereunder prior to
such termination or rescind anything done by The Regents or Licensee or any
payments made to The Regents hereunder prior to the time such termination
becomes effective, and such termination will not affect in any manner any rights
of The Regents or Licensee arising under this Agreement prior to such
termination.
11. Disposition of Patent Products on Hand Upon Termination
11.1 Upon termination of this Agreement, Licensee will have the privilege
of disposing of all previously made or partially made Patent Products, but no
more, within a period of one hundred twenty (120) days, provided, however, that
the sale of such Patent Products will be subject to the terms of this Agreement
including, but not limited to the payment of fees and reimbursement for patent
costs and the payment of royalties based on the Net Sales of Patent Products at
the rates and at the times provided herein and the rendering of reports in
connection therewith.
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12. Use of Names and Trademarks
12.1 Nothing contained in this Agreement will be construed as conferring
any right to use in advertising, publicity, or other promotional activities any
name, trade name, trademark, or other designation of either party hereto by the
other (including contraction, abbreviation or simulation of any of the
foregoing). Unless required by law, the use by Licensee of the name "The Regents
of the University of California" or the name of any campus of the University of
California for use in advertising, publicity, or other promotional activities is
expressly prohibited.
12.2 It is understood that The Regents will be free to release to the
inventors and senior administrative officials employed by The Regents the terms
of this Agreement upon their request. If such release is made, The Regents will
request that such terms will be kept in confidence in accordance with the
provisions of Article 27. (Confidentiality) and not be disclosed to others. It
is further understood that should a third party inquire whether a license to
Patent Rights is available, The Regents may disclose the existence of this
Agreement and the extent of the grant in Article 2. (Grant) to such third party,
but will not disclose the name of Licensee, except where The Regents is required
to release such information under either the California Public Records Act or
other applicable law.
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13. Limited Warranty
13.1 The Regents warrants to Licensee that it has the lawful right to
grant this license, and that it has not granted any rights or licenses to Patent
Rights, other than to the U.S. Government, in derogation of this Agreement.
13.2 This license and the associated Invention, Patent Rights, Patent
Products, and Patent Methods are provided WITHOUT WARRANTY OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE OR ANY OTHER WARRANTY, EXPRESS OR IMPLIED. THE
REGENTS MAKES NO REPRESENTATION OR WARRANTY THAT THE INVENTION, PATENT PRODUCTS,
OR PATENT METHODS WILL NOT INFRINGE ANY PATENT OR OTHER PROPRIETARY RIGHT.
13.3 IN NO EVENT WILL THE REGENTS BE LIABLE FOR ANY INCIDENTAL, SPECIAL OR
CONSEQUENTIAL DAMAGES RESULTING FROM THE EXERCISE OF THIS LICENSE OR THE USE OF
THE INVENTION, PATENT PRODUCTS, OR PATENT METHODS.
13.4 Nothing in this Agreement will be construed as:
13.4.1 a warranty or representation by The Regents as to the
validity, enforceability, or scope of any Patent Rights; or
13.4.2 a warranty or representation that anything made, used, sold
or otherwise disposed of under any license granted in this
Agreement is or will be free from infringement of patents of
third parties; or
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13.4.3 an obligation to bring or prosecute actions or suits against
third parties for patent infringement except as provided in
Article 16 (Patent Infringement); or
13.4.4 conferring by implication, estoppel, or otherwise any license
or rights under any patents of The Regents other than Patent
Rights as defined herein, regardless of whether such patents
are dominant or subordinate to Patent Rights; or
13.4.5 an obligation to furnish any know-how not provided in Patent
Rights.
14. Patent Prosecution and Maintenance
14.1 The Regents will diligently prosecute and maintain the United States
and foreign patents comprising Patent Rights using counsel of its choice. The
Regents will promptly provide Licensee with copies of all relevant documentation
so that Licensee may be currently and promptly informed and apprised of the
continuing prosecution and may comment upon such documentation sufficiently in
advance of any initial deadline for filing a response, provided, however, that
if Licensee has not commented upon such documentation prior to the initial
deadline for filing a response with the relevant government patent office, or
The Regents must act to preserve Patent Rights, The Regents will be free to
respond appropriately without consideration of comments by Licensee, if any.
Both parties hereto will keep this documentation in confidence in accordance
with the provisions of Article
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27. (Confidentiality) herein. The Regents' counsel will take instructions only
from The Regents.
14.2 The Regents will use all reasonable efforts to amend any patent
application to include claims requested by Licensee and required to protect the
Patent Products contemplated to be sold or Patent Method to be practiced under
this Agreement.
14.3 The Regents and Licensee will cooperate in applying for an extension
of the term of any patent included within Patent Rights, if appropriate, under
the Drug Price Competition and Patent Term Restoration Act of 1984. Licensee
will prepare all such documents, and The Regents will execute such documents and
will take such additional action as Licensee may reasonably request in
connection therewith.
14.4 The Regents will, at the request of Licensee, file, prosecute, and
maintain patent applications and patents covered by Patent Rights in foreign
countries if available. Licensee must notify The Regents within nine (9) months
of the filing of the corresponding United States application of its decision to
request The Regents to file foreign counterpart patent applications. This notice
concerning foreign filing must be in writing and must identify the countries
desired. The absence of such a notice from Licensee to The Regents within the
nine (9)-month period will be considered
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an election by Licensee not to request The Regents to secure foreign patent
rights on behalf of Licensee. The Regents will have the right to file patent
applications at its own expense in any country Licensee has not included in its
list of desired countries, and such applications and resultant patents, if any,
will not be included in the licenses granted under this Agreement unless
Licensee agrees in writing to pay all costs associated with any such patent
applications and provided the rights of said patent applications are available
at the time Licensee agrees to pay the associated costs.
14.5 All past, present and future costs of preparing, filing, prosecuting
and maintaining all United States and foreign patent applications and all costs
and fees relating to the preparation and filing of patents covered by Patent
Rights in Paragraph 1.1 will be borne by Licensee. This includes all patent
preparation and prosecution costs incurred by The Regents prior to the execution
of this Agreement. Such costs will be due upon execution of this Agreement and
will be payable at the time that the license issue fee is payable. The costs of
all interferences and oppositions will be considered prosecution expenses and
also will be borne by Licensee. Licensee will reimburse The Regents for all
costs and charges within thirty (30) days following receipt of an itemized
invoice from The Regents for same.
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14.6 The obligation of Licensee to underwrite and to pay patent
preparation, filing, prosecution, maintenance, and related costs will continue
for such costs as may be incurred during the three (3)-month period after
receipt by either party of a Notice of Termination for all non-cancelable
obligations made prior to the receipt of said Notice of Termination. Licensee
will reimburse The Regents for all patent costs incurred during the term of the
Agreement and for three (3) months thereafter whether or not invoices for such
costs are received during the three (3)-month period after receipt of a Notice
of Termination. Licensee may with respect to any particular patent application
or patent terminate its obligations to the patent application or patent in any
or all designated countries upon three months written notice to The Regents. The
Regents may continue prosecution and/or maintenance of such applications) or
patent(s) at its sole discretion and expense, provided, however, that Licensee
will have no further right or licenses thereunder.
14.7 Licensee will have a continuing responsibility to keep The Regents
informed of its large/small entity status (as defined by the United States
Patent and Trademark Office) of itself and its sublicensees.
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15. Patent Marking
15.1 Licensee will mark all Patent Products made, used or sold under the
terms of this Agreement, or their containers, in accordance with the applicable
patent marking laws.
16. Patent Infringement
16.1 In the event that Licensee learns of the substantial infringement of
any patent licensed under this Agreement, Licensee will call the attention of
The Regents thereto in writing and will provide The Regents with reasonable
evidence of such infringement. Both parties to this Agreement acknowledge that
during the period and in a jurisdiction where Licensee has exclusive rights
under this Agreement, neither will notify a third party of the infringement of
any of Patent Rights without first obtaining consent of the other party, which
consent will not be unreasonably withheld. Both parties will use their best
efforts in cooperation with each other to terminate such infringement without
litigation.
16.2 Licensee may request that The Regents take legal action against the
infringement of Patent Rights. Such request must be made in writing and must
include reasonable evidence of such infringement and damages to Licensee. If the
infringing activity has not been abated within ninety (90)
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days following the effective date of such request, The Regents will have the
right to elect to:
16.2.1 commence suit on its own account; or
16.2.2 refuse to participate in such suit
and The Regents will give notice of its election in writing to Licensee by the
end of the one hundredth (100th) day after receiving notice of such request from
Licensee. Licensee may thereafter bring suit for patent infringement if and only
if The Regents elects not to commence suit and if the infringement occurred
during the period and in a jurisdiction where Licensee had exclusive rights
under this Agreement. However, in the event Licensee elects to bring suit in
accordance with this Paragraph 16.2, The Regents may thereafter join such suit
at its own expense, but the Licensee will control the lawsuit.
16.3 Such legal action as is decided upon will be at the expense of the
party on account of whom suit is brought and all recoveries recovered thereby
will belong to such party, provided, however, that legal action brought jointly
by The Regents and Licensee and participated in by both will be at the joint
expense of the parties and all recoveries will be allocated in the following
order: a) to each party reimbursement in equal amounts of the attorney's costs,
fees, and other related expenses to the extent each party paid for such costs,
fees, and expenses until all such costs, fees, and
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expenses are consumed for each party; and b) any remaining amount shared jointly
by them in proportion to the share of expenses paid by each party.
16.4 Each party will cooperate with the other in litigation proceedings
instituted hereunder but at the expense of the party on account of whom suit is
brought. Such litigation will be controlled by the party bringing the suit,
provided, however, that The Regents may be represented by counsel of its choice
in any suit brought by Licensee.
17. Indemnification
17.1 Licensee will (and will require its sublicensees to) indemnify, hold
harmless, and defend The Regents, its officers, employees, and agents; sponsors
of the research that led to the Invention; the inventors of any invention
covered by Patent Rights (including the Patent Products and Patent Method
contemplated thereunder) and their employers against any and all claims, suits,
losses, damage, costs, fees, and expenses resulting from or arising out of
exercise of this license or any sublicense. This indemnification will include,
but will not be limited to, any product liability.
17.2 Licensee, at its sole cost and expense, will insure its activities in
connection with the work under this Agreement and obtain, keep in force,
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and maintain insurance as follows (or an equivalent program of self insurance):
At the initiation of clinical trials, Comprehensive or Commercial Form
General Liability Insurance (contractual liability included) with limits as
follows up to and until Licensee enters Phase III Clinical Trials:
(a) Each Occurrence.........................................$3,000,000
(b) Products/Completed Operations Aggregate.................$3,000,000
(c) Personal and Advertising Injury.........................$3,000,000
(d) General Aggregate (commercial form only)................$3,000,000
Comprehensive or Commercial Form General Liability Insurance (contractual
liability included) with limits as follows after Licensee enters Phase III
Clinical Trials:
(a) Each Occurrence.........................................$5,000,000
(b) Products/Completed Operations Aggregate.................$5,000,000
(c) Personal and Advertising Injury.........................$5,000,000
(d) General Aggregate (commercial form only)................$5,000,000
It should be expressly understood, however, that the coverages and limits
referred to under the above will not in any way limit the liability of Licensee.
Licensee will furnish The Regents with certificates of insurance evidencing
compliance with all requirements. Such certificates will:
(a) Provide for thirty (30)-day advance written notice to The Regents of
any modification;
(b) Indicate that The Regents has been endorsed as an additional Insured
under the coverages referred to under the above; and
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(c) Include a provision that the coverages will be primary and will not
participate with nor will be excess over any valid and collectable
insurance or program of self-insurance carried or maintained by The
Regents.
17.3 The Regents will immediately notify Licensee in writing of any claim
or suit brought against The Regents in respect of which The Regents intends to
invoke the provisions of this Article 17 (Indemnification). Licensee will keep
The Regents informed as appropriate and necessary on a current basis of its
defense of any claims pursuant to this Article 17 (Indemnification).
18. Notices
18.1 Any notice or payment required to be given to either party will be
deemed to have been properly given and to be effective (a) on the date of
delivery if delivered in person or (b) five days after mailing if mailed by
first-class certified mail, postage paid, to the respective addresses given
below, or to another address as it may designate by written notice given to the
other party.
In the case of Licensee: COLLATERAL THERAPEUTICS, INC.
9360 Towne Centre Drive
San Diego, CA 92121
Tel: (619) 622-4100
Fax: (619) 587-3518
Attention: Jack Reich, Ph.D.
34
<PAGE>
In the case of The Regents: THE REGENTS OF THE UNIVERSITY
OF CALIFORNIA
1320 Harbor Bay Parkway, Suite 150
Alameda, CA 94502
Tel: (510) 748-6600
Fax: (510) 748-6639
Attention: Terence A. Feuerborn
Executive Director
Research Administration and
Office of Technology Transfer
Referring to: ***
19. Assignability
19.1 This Agreement is binding upon and will inure to the benefit of The
Regents, its successors and assigns, but will be personal to Licensee and
assignable by Licensee only with the written consent of The Regents, which
consent shall not be unreasonably withheld.
20. Late Payments
20.1 In the event royalty payments or fees or patent prosecution costs are
not received by The Regents when due, Licensee will pay to The Regents interest
charges at a rate of *** simple interest per annum. Such interest will be
calculated from the date payment was due until actually received by The Regents.
Acceptance by The Regents of any late payment interest from Licensee under this
Paragraph 20.1 will in no way affect the provision of Article 21. (Waiver)
herein.
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
35
<PAGE>
21. Waiver
21.1 It is agreed that no waiver by either party hereto of any breach or
default of any of the covenants or agreements herein set forth will be deemed a
waiver as to any subsequent and/or similar breach or default.
22. Failure to Perform
22.1 In the event of a failure of performance due under the terms of this
Agreement and if it becomes necessary for either party to undertake legal action
against the other on account thereof, then the prevailing party will be entitled
to reasonable attorney's fees in addition to costs and necessary disbursements.
23. Governing Laws
23.1 THIS AGREEMENT WILL BE INTERPRETED AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF CALIFORNIA, excluding any choice of law rules that
would direct the application of the laws of another jurisdiction, but the scope
and validity of any patent or patent application will be governed by the
applicable laws of the country of such patent or patent application.
36
<PAGE>
24. Government Approval or Registration
24.1 If this Agreement or any associated transaction is required by the
law of any nation to be either approved or registered with any governmental
agency, Licensee will assume all legal obligations to do so. Licensee will
notify The Regents if it becomes aware that this Agreement is subject to a
United States or foreign government reporting or approval requirement. Licensee
will make all necessary filings and pay all costs including fees, penalties, and
all other out-of-pocket costs associated with such reporting or approval
process.
25. Export Control Laws
25.1 Licensee will observe all applicable United States and foreign laws
with respect to the transfer of Patent Products and related technical data to
foreign countries, including, without limitation, the International Traffic in
Arms Regulations (ITAR) and the Export Administration Regulations.
26. Force Majeure
26.1 The parties to this Agreement will be excused from any performance
required hereunder if such performance is rendered impossible
37
<PAGE>
or unfeasible due to any acts of God, catastrophes, or other major events beyond
their reasonable control, including, without limitation, war, riot, and
insurrection; laws, proclamations, edicts, ordinances, or regulations; strikes,
lock-outs, or other serious labor disputes; and floods, fires, explosions, or
other natural disasters. However, any party to this Agreement will have the
right to terminate this Agreement upon thirty (30) days' prior written notice if
either party is unable to fulfill its obligations under this Agreement due to
any of the causes mentioned above and such inability continues for a period of
one year. Notices will be subject to Article 18. (Notices).
27. Confidentiality
27.1 Licensee and The Regents respectively will treat and maintain the
proprietary business, patent prosecution, software, engineering drawings,
process and technical information, and other proprietary information of the
other party ("Proprietary Information") in confidence using at least the same
degree of care as that party uses to protect its own proprietary information of
a like nature for a period from the date of disclosure until five (5) years
after the date of termination of this Agreement.
27.2 Proprietary Information will be labeled or marked confidential or as
otherwise similarly appropriate by the disclosing party, or if the
38
<PAGE>
Proprietary Information is orally disclosed, it will be reduced to writing or
some other physically tangible form, marked and labeled as set forth above by
the disclosing party and delivered to the receiving party within thirty (30)
days after the oral disclosure as a record of the disclosure and the
confidential nature thereof. Notwithstanding the foregoing, Licensee and The
Regents may use and disclose Proprietary Information to its employees, agents,
consultants, and contractors having a need to know the Proprietary Information
and, in the case of Licensee, its sublicensees, provided that any such parties
are bound by a like duty of confidentiality.
27.3 Nothing contained herein will in any way restrict or impair the right
of Licensee or The Regents to use, disclose, or otherwise deal with any
Proprietary Information:
27.3.1 that recipient can demonstrate by written records was
previously known to it;
27.3.2 that is now, or becomes in the future, public knowledge
other than through acts or omissions of recipient;
27.3.3 that is lawfully obtained without restrictions by
recipient from sources independent of the disclosing
party;
27.3.4 that is required to be disclosed to a governmental
entity or agency in connection with seeking any
governmental or regulatory approval, or pursuant to the
lawful requirement or request of a governmental entity
or agency;
39
<PAGE>
27.3.5 that is furnished to a third party by the recipient with
a need to know and with similar confidentiality
restrictions imposed on such third party, as evidenced
in writing, or
27.3.6 that The Regents is required to disclose pursuant to the
California Public Records Act or other applicable law.
27.4 Upon termination of this Agreement, Licensee and The Regents will
destroy or return to the disclosing party proprietary information received from
the other in its possession within fifteen (15) days following the effective
date of termination. Licensee and The Regents will provide each other, within
thirty (30) days following termination, with a written notice that Proprietary
Information has been returned or destroyed. Each party may, however, retain one
copy of Proprietary Information for archival purposes in nonworking files.
28. Miscellaneous
28.1 The headings of the several sections are inserted for convenience of
reference only and are not intended to be a part of or to affect the meaning or
interpretation of this Agreement.
28.2 The licenses and any sublicenses granted hereunder will be subject to
any legal obligations to the U.S. Government including those set forth in 35
U.S.C. ss.ss. 200-212 and applicable governmental implementing
40
<PAGE>
regulations. Because this Agreement grants the exclusive right to use or sell
the Patent Products in the United States, Licensee acknowledges that Patent
Products will be manufactured substantially in the United States as required
under 35 U.S.C. ss. 204.
28.3 The manufacture of Patent Products will be in accordance with any
applicable government importation laws and regulations of a particular country
on Patent Products made outside the particular country in which such Patent
Products are to be used or sold.
28.4 Licensee will obtain all necessary governmental approvals in each
country where it intends to sell or manufacture and use Patent Products or
permit others to manufacture, use, or sell Patent Products.
28.5 This Agreement will not be binding upon the parties until it has been
signed below on behalf of each party, in which event, it will be effective as of
the date recited on page one.
28.6 No amendment or modification hereof will be valid or binding upon the
parties unless made in writing and signed on behalf of each party.
28.7 This Agreement embodies the entire understanding of the parties and
will supersede all previous communications, representations or understandings,
either oral or written, between the parties relating to the
41
<PAGE>
subject matter hereof. The Letter of Intent specified in the Recitals in this
Agreement is hereby terminated.
28.8 In case any of the provisions contained in this Agreement are held to
be invalid, illegal, or unenforceable in any respect, such invalidity,
illegality, or unenforceability will not affect any other provisions hereof, but
this Agreement will be construed as if such invalid or illegal or unenforceable
provisions had never been contained herein.
The Regents and Licensee execute this Agreement in duplicate originals by
their respective, authorized officers on the date indicated.
Collateral Therapeutics, Inc. The Regents of the
University of California
By /s/ Jack W. Reich, Ph.D. /s/ Terence A. Feverborn
- ------------------------------- ---------------------------
(Signature) (Signature)
Name Jack W. Reich, Ph.D. Name Terence A. Feuerborn
- -------------------------------
(Please Print)
Title President & CEO Title Executive Director
Research Administration and
Office of Technology Transfer
Date June 16, 1997 Date 6-18-97
- ------------------------------- ---------------------
Approved as to legal form: /s/ Edward H. Baker 6/9/97
----------------------------- ------
Edwin H. Baker President Counsel Date
Office of Technology Transfer
University of California
42
<PAGE>
EXHIBIT 10.19
[LOGO] COLLATERAL
THERAPEUTICS
One Town Center Drive
San Diego, CA 92121
Tel: 619-622-4100
Fax: 619-587-3518
CONFIDENTIAL
August 13, 1997
Ms. Sandra Woodruff
Executive Director
Veterans Medical Research Foundation
VA Medical Center (151A)
3350 La Jolla Village Drive
San Diego, CA 92161
Dear Sandra:
Collateral Therapeutics, Inc. (hereinafter "CTI") had held confidential
discussions with Dr. Patrick D. Lyden regarding the attached research
proposal and budget (hereinafter, the "Studies"). CTI proposes that this
letter be the written agreement which sets forth the understanding and
obligations of the parties regarding the Studies.
1. Patrick D. Lyden, M.D. (hereinafter "Investigator") and the
Veterans Medical Research Foundation (Hereinafter "VMRF"
or the "Foundation") agree to utilize their best efforts to
conduct the Studies. Further details concerning the Studies
to be performed will be discussed in confidence by the
Investigator with CTI representatives.
2. The Investigator agrees to comply with the federal regulations
relating to the Animal Welfare Act (7. U.S.C. 2131, et seq.) and the
United States Department of Agriculture regulations as set forth in
9 CFR parts 1, 2, and 3.
3. The Investigator will render periodic confidential reports as may be
requested to CTI.
4. In preparation for and during the course of these Studies, it may be
necessary for CTI to disclose to the Investigator or to VMRF certain
technical and business information, all such information, as well as
the results of the research, subject to the restriction in paragraph
#5 of this agreement, is considered to be highly confidential by
CTI. It is understood that VMRF may disclose the amount of this
research funding in any routine disclosure as
<PAGE>
[LOGO]
required by VMRF policy, but shall not use or disclose the subject
matter of the research. The Investigator and the Foundation agree to
take all reasonable precautions to prevent disclosure of this and
other confidential information to others and to not use confidential
information without the prior express written consent of CTI. These
restrictions upon disclosure of said information shall extend beyond
the term of this contract for a period of ten (10) years, but shall
cease to apply as to any specific portion of the information which
is or becomes available to the public other than by the Investigator
or the Foundation's fault.
5. The text of any oral or written disclosure of the results of the
Studies shall be submitted to CTI at least sixty (60) days prior to
any and all such disclosures. The Investigator and the Foundation
shall consider any suggestions from CTI concerning said disclosure,
but are not bound to incorporate such suggestions in any oral or
written publications. CTI may request addition of a sponsor's
representative to authorship on documents submitted for publication.
The investigator and the Foundation agree to delay any such
disclosure of up to six (6) months between notification of CTI and
publication at CTI's request, to allow for competition of
development and filing of patent applications.
6. The Investigator and VMRF agree to disclose promptly and fully to an
authorized representative of CTI all ideas, developments and
inventions, whether or not patentable, conceived or reduced to
practice by the investigator and/or VMRF as a result of the Studies
provided for herein. All of such ideas, developments and inventions
shall be the property of CTI. Accordingly, the Investigator and VMRF
agree to assign outright to CTI the entire right, title and
interest, both in the United States and abroad, to such ideas,
developments and inventions, without payment other than the fees
provided for herein. The Investigator and VMRF further agree to
execute any and all documents which CTI determines are necessary or
convenient to fully implement its proprietary rights in such ideas,
developments and inventions, such as, but not limited to obtaining
patents, and to fully cooperate in the prosecution of such property
rights, but at no expense to them. CTI will have the above-mentioned
documents drafted, prosecuted and maintained at its own expense. The
Investigator and VMRF warrant that it has appropriate ownership
rights in such ideas, developments and inventions to carry out its
obligations under this paragraph. Both parties acknowledge that in
so far as Federal space or resources are utilized in this work, the
U.S. Government may have rights as defined by U S. law, and may
choose to exercise these rights, for example, through a
non-exclusive license.
<PAGE>
[LOGO]
7. Both parties also acknowledge that the Department of Veterans
Affairs has informed the VMRF that VMRF has waived all patent rights
that may develop in connection with this agreement.
8. CTI shall have the right to use the results and data of the Studies
in any manner deemed appropriate to CTI's business interests. Such
uses may include but are not limited to, disclosure as may be useful
to meet legal and business obligations, such as to support patent
applications, both foreign and domestic, or satisfy the requirements
of any government agency. In the event that work resulting from the
Studies is published in the scientific literature by CTI,
acknowledgement will be made to the Investigator and the Department
of Veterans Affairs in the accepted style, as appropriate. CTI will
not use the name of the Investigator and VMRF for advertising, other
commercial purposes, in publications or otherwise without
appropriate written permission, unless required by law or government
regulations. CTI agrees that the investigator shall have priority
publication rights over data generated from these studies subject to
paragraph #5.
9. In consideration for the Studies, during the term of this agreement
CTI agrees to pay VMRF an amount totaling $119,060 which includes
$88,850 to cover direct expenses, as set forth in the research
proposal, attached hereto, and $30,210 to cover indirect overhead,
based on a 34% indirect overhead factor. This amount will be paid in
two installments as follows (i) $59,530 on the effective date of
this agreement and (ii) $59,530 on the six month anniversary of the
effective date of this agreement.
CTI shall have the right to review any and all financial records of
VMRF relating solely to these Studies on a quarterly basis. Annually
VMRF shall provide CTI with a financial statement and account
reconciliation covering all amounts expended by VMRF for the Studies
during the term of this agreement.
10. This contract will become effective on the date of acceptance by the
Investigator, VMRF and CTI, and will terminate one year from that
date unless otherwise extended by mutual consent of CTI and the
Foundation, evidenced by written agreement.
11. The parties agree to take all other action necessary to effect the
rights of the parties herein.
12. The parties acknowledge that Dr. Robert L. Engler may have a
conflict of interest regarding this agreement and Dr. J. Parthemore
shall serve in his place for VMRF on all matters relating to this
agreement.
<PAGE>
[LOGO]
If the terms of this agreement meet with the approval of the Veterans Medical
Research Foundation, please sign and date two copies and return one to CTI at
your earliest convenience.
Most sincerely,
COLLATERAL THERAPEUTICS, INC.
/s/ Christopher J. Reinhard
Christopher J. Reinhard
Chief Operating and Financial Officer
ACCEPTED AND AGREED TO:
VETERANS MEDICAL SEARCH FOUNDATION DATE:
/s/ Sandra Woodruff 8/12/97
- -------------------------------- ------------------
Sandra Woodruff
PRINCIPLE INVESTIGATOR DATE:
/s/ Patrick D. Lyden 9/1/97
- -------------------------------- ------------------
Patrick D. Lyden, M.D.
<PAGE>
UCSD STROKE CENTER MEMORANDUM
- --------------------------------------------------------------------------------
Date: 08/07/97 5:24 PM
To: Robert Engler, MD
From: Patrick D. Lyden, M.D.
Subject: Proposal for research
Revised 8/5/97
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2) ***
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3) ***
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*** Portions of this page have been omitted pursuant to a request for
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<PAGE>
AUGUST 7, 1997 UCSD STROKE CENTER MEMORANDUM 2
- --------------------------------------------------------------------------------
***
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4) ***
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<PAGE>
Sheet 1
<TABLE>
<CAPTION>
<S> <C>
- --------------------------------------------------------------------------------
Salary Support
- --------------------------------------------------------------------------------
*** ***
- --------------------------------------------------------------------------------
*** ***
- --------------------------------------------------------------------------------
*** ***
- --------------------------------------------------------------------------------
Supplies
- --------------------------------------------------------------------------------
*** ***
- --------------------------------------------------------------------------------
*** ***
- --------------------------------------------------------------------------------
*** ***
- --------------------------------------------------------------------------------
*** ***
- --------------------------------------------------------------------------------
*** ***
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Equipment
- --------------------------------------------------------------------------------
*** ***
- --------------------------------------------------------------------------------
*** ***
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Animals
- --------------------------------------------------------------------------------
*** ***
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*** ***
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*** ***
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TOTAL ***
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OVERHEAD (to be computed by VMRF)
- --------------------------------------------------------------------------------
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GRAND TOTAL ***
- --------------------------------------------------------------------------------
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</TABLE>
- --------------------------------------------------------------------------------
Footnotes:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1: Pl will perform experimental design, communicate among all parties, collect
and analyze all data, present interim results, supervise refinement of all
protocols and perform quantitative microscopy.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
2: Consultant will advise company and Pl on all aspects of experimental design
data collection, interpretation and advisability of continuing at each step.
================================================================================
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Confidential Treatment and filed separately with the Commission.
<PAGE>
EXHIBIT 10.20
SPONSORED RESEARCH CONTRACT
THE CURATORS OF THE UNIVERSITY OF MISSOURI
This Contract by and between The Curators of the University of Missouri on
behalf of the University of Missouri-Columbia with its principal offices at 310
Jesse Hall, Office of Sponsored Program Administration, Columbia, Missouri 65211
(hereafter referred to as the University) and Collateral Therapeutics with its
principal offices at San Diego, California 92121, (hereafter referred to as
Sponsor), is made under the following terms:
ARTICLE 01. STATEMENT OF WORK
The University will undertake the sponsored research project entitled *** under
the direction of *** *** of the College of Veterinary Medicine, Veterinary
Biomedical Sciences Department, at the University of Missouri - Columbia
substantially in accordance with the proposed program and toward the goals set
forth in the research proposal dated *** (attached hereto as Attachment A and
made a part of this contract). Any change in the scope of work must be approved
in writing by both the University and Sponsor.
ARTICLE 02. PERIOD OF PERFORMANCE
This Contract shall be for the period beginning October 15, 1997 through July
15, 1998 unless otherwise amended or extended by mutual written agreement of
the parties.
ARTICLE 03. PROJECT COSTS/AWARD
It is agreed that the total project costs to the Sponsor for this Contract shall
not exceed *** *** unless changed by written amendment to this Contract. The
University's budget is set forth in Attachment A.
ARTICLE 04. INVOICE SUBMISSION AND PAYMENTS
Upon acceptance of this Contract by both parties, the University will invoice
Sponsor in accordance with the following schedule and for the stated amounts:
$ 45,650 Sixty percent (60%) of the award amount upon the start date of the
designated project or upon full execution of this Contract,
whichever is later.
*** ***
*** ***
Within *** of the end of the Contract period, the University will provide
Sponsor with a final statement of expenditures. Any balance of funds unexpended,
if applicable, at the conclusion of the Contract period must be returned to
Sponsor.
All invoices and the final statement of expenditures pertaining to this Contract
will be sent to:
Kathy Rooney
Vice President, Administration
Collateral Therapeutics
9360 Towne Center Drive
San Diego. California 92121
Telephone: 619/824-6503/FAX:619/587-3518
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
<PAGE>
All payments for effort under this Contract will be made payable to The Curators
of the University of Missouri. Checks will be sent to:
Ms. Deborah Caselman
Associate Director/Fiscal Affairs
Office of Sponsored Program Administration
University of Missouri - Columbia
310 Jesse Hall
Columbia, Missouri 65211
Telephone: 314/882-0174/FAX: 314/884-4078
ARTICLE 05. TITLE TO EQUIPMENT
Title to all equipment, materials and supplies purchased under this Contract
shall vest in the University at the time of acquisition of the items.
ARTICLE 06. DELIVERABLES/REPORTS
The University shall provide such reports as required by Sponsor and a final
report due within *** after completion or termination of the Contract, whichever
occurs first.
ARTICLE 07. RECORDS
The University shall maintain such records and accounts necessary to assure a
proper accounting of all project funds. These records shall be available to
Sponsor or any of its authorized representatives during the period of this
Contract, and for three (3) years after completion or termination of the
project, whichever is later. In the event of audit or dispute, records will be
retained until resolution thereof.
ARTICLE 08. TERMINATION
This Contract may be terminated, with or without cause, by either party upon
written notice to the other thirty (30) days prior to the official date of
termination. Upon receipt of notice of termination, the University shall make
every effort to reduce or cancel outstanding commitments and shall incur no
additional expenses. Sponsor shall reimburse the University for outstanding
expenses incurred up to the date of termination, including uncancellable
obligations and reasonable termination costs, but in no event will such costs
exceed the total funds presently allocated to this Contract.
ARTICLE 09. PUBLICATION
The University reserves the right to publish the results of this research
project. At least ninety (90) days before publishing, the University shall
notify Sponsor of its intention to publish, and shall, upon request, submit the
manuscript to Sponsor for review and comment. Any comments shall be in writing
and shall be submitted to the University within ninety (90) days of receipt of
the manuscript by Sponsor. The comments shall be given due consideration by the
University.
ARTICLE 10. PATENTS AND COPYRIGHTS
It is expressly agreed that neither Sponsor nor the University transfers by
operation under this Contract to the other party any patent rights, copyrights,
or other proprietary rights either party owns as of the commencement date of
this Contract, except as specifically set forth herein.
The University retains all ownership to any patents, copyrights, processes,
inventions and other proprietary intellectual property of any nature developed
as a result of the research or investigation conducted under this Contract. The
University hereby grants Sponsor a six (6) month option from the date of notice
to Sponsor by University for an exclusive commercial license based on financial
terms and conditions to be negotiated.
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
2
<PAGE>
ARTICLE 11. CONFIDENTIAL INFORMATION
During the term of this Contract and for a period of five (5) years thereafter,
the University and Sponsor shall use their best efforts to protect the
confidentiality of proprietary information provided it by the other party and
identified in writing as confidential and proprietary. This obligation of
confidentiality shall not apply to information which (a) is or becomes known
publicly through no fault of the other party; (b) is obtained or learned by the
receiving party from a third party entitled to disclose it; (c) is already known
to the receiving party at the time of disclosure, as shown by the receiving
party's prior written records; or (d) is developed by the receiving party
independent of any disclosure made hereunder. This obligation of confidentiality
does not apply when such disclosure of information is required by law.
ARTICLE 12. PUBLICITY/USE OF UNIVERSITY NAME
Sponsor will not use directly or by implication the name of the University or
the name of any member of the University's technical staff working on this
research project or any information or data relating to the research project for
any product promotion or commercial publicity or advertising purposes, nor in
any way the aims, policies, programs, products, or opinions of the Sponsor
without the prior written approval of the University.
ARTICLE 13. NOTICES
All notices required by this Contract shall be made in writing and sent prepaid
by certified mail. For purposes of this Contract, the addresses of the parties
are as follows:
University: (Technical) ***
College of Veterinary Medicine
Department of Veterinary Biomedical Sciences
University of Missouri - Columbia
E102 Veterinary Medicine Building
Columbia, Missouri 65211
Telephone: 573/882-7011
(Business) Ms. Joyce M. Pfaff, Assistant Director
Office of Sponsored Program Administration
University of Missouri - Columbia
310 Jesse Hall
Columbia, Missouri 65211
Telephone 314/882-9592 / FAX: 314/994-4078
Sponsor: Kathy Rooney
Vice President, Administration
Collateral Therapeutics
9360 Towne Center Drive
San Diego, California 92121
Telephone: 619/824-6503/FAX: 619/587-3518
ARTICLE 14. RELATIONSHIP OF PARTIES
The relationship of the University to Sponsor shall be that of an independent
contractor and nothing contained in this Contract shall be construed to create
the appearance of an employer/employee relationship. The University shall have
no authority to represent itself as an agent of Sponsor or to bind Sponsor for
any obligation or expense not specifically stated in this Contract.
ARTICLE 15. ASSIGNMENT
This Contract shall not be assigned by either party without the prior written
approval of the other party.
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
3
<PAGE>
ARTICLE 16. CONTRACT MODIFICATION
Any agreement to change the terms of this Contract in any way shall be valid
only if the change is made in writing and approved by mutual agreement of the
authorized representatives of the parties hereto.
ARTICLE 17. INDEMNIFICATION
Sponsor shall indemnify, defend and hold harmless the University, its employees,
officers and agents from any and all liability, loss, damage and expenses
(including attorney fees) they may suffer as a result of claims, demands, costs
or judgments which may be made or instituted against them or any of them by
reason of personal injury (including death) to any person or damage to property
arising out of or connected with the performance of the activities to be carried
out under the statement of work provided. Any such liability, loss or damage
resulting from negligence or willful malfeasance by the University, its
employees, officers and agents is excluded from this agreement to indemnify,
defend and hold harmless.
ARTICLE 18. APPLICABLE LAW
This Contract shall be governed by the laws of the State of Missouri.
ARTICLE 19. USE OF PURCHASE ORDER
Sponsor hereby agrees that, should Sponsor use a purchase order to fund this
Contract. any terms and conditions contained in the purchase order shall be
considered deleted and not applicable for purposes of this Contract.
ARTICLE 20. ENTIRE CONTRACT
This Contract and attachments hereto contain the entire agreement between the
two parties. All modifications must be in writing and signed by the duly
authorized officials of both parties. No oral agreements or conversation with
any officer or employee of either party shall affect or modify any of the terms
and conditions of this Contract.
FOR THE CURATORS OF THE FOR Collateral Therapeutics
UNIVERSITY OF MISSOURI
/s/ Joyce M. Pfaff /s/ Christopher J. Reinhard
- ------------------ ---------------------------
By: Joyce M. Pfaff By: Christopher J. Reinhard
Title: Assistant Director Title: CFO/COO
Date: 10/13/97 Date: 10-22-97
Proposal No. 9810444-1
4
<PAGE>
ATTACHMENT A
STATEMENT OF WORK/BUDGET
<PAGE>
***
***
Principal Investigator: ***
Department of Veterinary Biomedical Sciences
E 102 Vet Med Bld
University of Missouri
Columbia, Missouri U.S.A. 65211
Phone: (573) 882-2635
FAIR: (573) 884-6890
E-mail: *** showme.missouri.edu
PURPOSE:
***
***
***
RATIONALE:
***
***
***
EXPERIMENTAL DESIGN:
***
***
***
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Confidential Treatment and filed separately with the Commission.
Page 1
<PAGE>
Experimental Groups. ***
***
***
*** Transfer. ***
***
***
METHODS: ***
***
***
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
Page 2
<PAGE>
***
***
REFERENCES:
***
***
***
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Confidential Treatment and filed separately with the Commission.
Page 3
<PAGE>
Budget:
***
***
Principal Investigator: ***
Department of Veterinary Biomedical Sciences
E 102 Vet Med Bld
University of Missouri
Columbia, Missouri U.S.A. 65211
Phone: (573) 882-2635
FAX: (573) 884-6890
E-mail: *** showme.missouri.edu
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
Personnel:
Costs
Research Associate *** ***
Technician *** ***
Animal Exer/Caretaker *** ***
Fringe Benefits *** ***
Sub-total ***
Supplies:
*** ***
*** ***
*** ***
*** ***
*** ***
*** ***
Sub-total ***
Services:
*** *** ***
- --------------------------------------------------------------------------------
*** ***
University of Missouri *** Cost: ***
- --------------------------------------------------------------------------------
Total Costs ***
</TABLE>
Contingency: If the experiment requires significant expansion to do more
animals beyond that described in the Experimental Design
(e.g., increased evaluation in Phase I to determine the
definitive experimental protocol for Phase II) the cost will
be determined, proportional to the above budget, and billed
per approval of *** .
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
Page 4
<PAGE>
UNIVERSITY OF MISSOURI - COLUMBIA
FUNDING SOURCE FORM
RE: Agency: Collateral Therapeutics
Award Document:
Project Title: ***
Project Director: *** College of Beterinary Medicine,
Department of Veterinary Biomedical Sciences
University of Missouri-Columbia Proposal No. ***
Is the source of funds provided by this program services contract Federal
pass-through? |_| Yes |x| No If yes, please specifically identify the Federal
Agency by name and the CFDA#:
/s/Kathy Rooney 10-21-97
- ------------------------------------------
Signature Date
Please return to Paula J. Teel, Grants and Contracts Administrator, Office of
Sponsored Program Administration, University of Missouri - Columbia, 310 Jesse
Hall, Columbia, Missouri 65211, or by facsimile to (573) 884-4078.
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
<PAGE>
EXHIBIT 10.21
Biological Materials Agreement
This Agreement dated Jan 26, 1998 ("Effective Date") by and between Targeted
Genetics Corporation, 1100 Olive Way, Suite 100, Seattle, WA 98101 ("Targeted
Genetics") and Collateral Therapeutics, 9360 Towne Centre Drive, San Diego, CA
92121 ("Collateral") relates to certain biological materials transferred to
Collateral. Targeted Genetics is willing to provide Collateral with samples of
such biological materials upon the following terms:
1. Definitions. "Biological Materials" means recombinant adeno-associated
vector (rAAV) beta-ga1 virus stock transferred by Targeted Genetics to
Collateral, including but not limited to plasmids, cells and viruses, and any
derivatives, variants or progeny thereof.
2. Title to Biological Materials. Targeted Genetics has and shall retain all
title and interest in and to the Biological Materials. Nothing in this Agreement
confers to Collateral any license, right, or property interest in the Biological
Materials, Targeted Genetics patents or patent rights.
3. Use of Biological Materials. Targeted Genetics grants Collateral the right to
use the Biological Materials only for proposed use, as set forth in the work
plan attached to this Agreement as Appendix A ("Work Plan"). Collateral shall
not transfer the Biological Materials to third parties. The Biological Materials
shall not be used in humans, and shall be used in compliance with applicable
federal, state and local laws and regulations. The Biological Materials shall
not be used in research that is subject to consulting or licensing obligations
to a corporation, unless prior written permission is obtained from Targeted
Genetics.
4. Proprietary Rights. Collateral shall not grant or attempt to grant any right
in or to the Biological Materials without the prior written consent of Targeted
Genetics. Any inventions made by Collateral in the course of Collateral's
research relating to the Biological Materials shall be jointly owned by the
parties. Matters of inventorship of such inventions shall be determined in good
faith by the parties. Any data generated from research using the Biological
Materials shall be made available to Targeted Genetics for support of its patent
application relating to Biological Materials.
5. Warrant Disclaimers; Indemnification Disclaimer. The Biological Materials are
provided to Collateral without any warranty of merchantability or fitness for a
particular purpose or any other warranty, express or implied. In no event shall
Targeted Genetics be liable for any use of the Biological Materials by
Collateral nor for any loss, claim, damage, or liability, of whatsoever kind or
nature, which may arise from or in connection with this Agreement or the use,
handling or storage of the Biological Materials. 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 it incurs as a result of its activity under this Agreement.
<PAGE>
6. Assignability. Collateral may not assign its rights or obligations under this
Agreement without the prior written consent of Targeted Genetics.
7. Publicity. Except as otherwise provided herein, Collateral, including its
employees and agents, shall not use the name of Targeted Genetics or any of its
employees or agents, and Targeted Genetics, including its employees and agents,
shall not use the name of Collateral or any of its employees or agents, in any
advertising, publicity, news release, promotional materials or any public
disclosure, whatsoever, either written or oral, related to the existence of this
Agreement or any actions or work undertaken pursuant to terms of this Agreement
without the prior written consent of the other party. Neither party will publish
or otherwise disclose the results of its research hereunder without the prior
written consent of the other party. Notwithstanding the foregoing each parts
hereby consents to references to it in any reports or documents which are filed
by the other party pursuant to any requirements of applicable law or
governmental regulations.
9. Term and Termination. This Agreement and the obligations of the parties
hereunder shall terminate *** from the Effective Date of this Agreement, unless
terminated earlier upon thirty (30) days prior written notice by one party to
the other. At Targeted Genetics' sole option, upon termination of this
Agreement, all Biological Materials in the possession of Collateral shall be
returned to Targeted Genetics within *** of the termination of this Agreement.
10. Future Collaboration. Upon completion of the research described in the Work
Plan, the parties may agree to enter into a collaboration to develop and
evaluate an AAV-ACvi vector for the treatment of congestive heart failure (the
"Collaboration") whereby Targeted Genetics would be responsible for constructing
and manufacturing an AAV-ACvi vector and Collateral would be responsible for,
among other things, funding Targeted's costs for the Collaboration, which are
estimated to be approximately *** . In the event that the parties do not enter
into a Collaboration, Collateral shall return all unused Biological Materials
pursuant to Paragraph 9, and the parties shall have no further obligations to
each other.
Targeted Genetics Corporation
By /s/ H. Stewart Parker
-----------------------------
Name: H. Stewart Parker
-----------------------------
Title: Pres. & CEO
-----------------------------
Collateral Therapeutics, Inc.
By: /s/ Christopher J. Reinhard
-----------------------------
Name: Christopher J. Reinhard
-----------------------------
Title: COO & CFO
-----------------------------
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Confidential Treatment and filed separately with the Commission.
<PAGE>
APPENDIX A
WORK PLAN
We would like to explore the possibility of *** .
<TABLE>
<CAPTION>
<S> <C>
1. Cell culture studies: ***
***
***
***
***
***
***
2. In vivo gene transfer: ***
***
***
***
***
***
***
***
***
***
***
3. Ex Vivo gene transfer. ***
***
***
***
***
***
***
***
***
***
***
***
***
***
***
</TABLE>
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<PAGE>
EXHIBIT 10.22
RESEARCH AGREEMENT
This Agreement is made by and between Collateral Therapeutics ("Sponsor") with
offices at 9360 Towne Center Drive, San Diego, CA 92121, and The Regents of the
University of California, a California Corporation having its La Jolla office at
9500 Gilman Drive, La Jolla CA 92093-0934, on behalf of the University of
California, San Diego campus ("University").
WHEREAS, it is in the mutual interest of Sponsor and University that research
be conducted on a project entitled "Angiogenesis in the Failing Heart"
(Project);
WHEREAS, Sponsor desires to financially support said research at University;
NOW, THEREFORE, the parties agree as follows:
1. SCHEDULE - The Project shall be conducted in accordance with the statement
of work attached hereto as Exhibit "A" and incorporated into this Agreement
by this reference solely for the purpose of describing the scope of work to
be performed under this Agreement. The term of this Agreement shall be
February 1, 1998 through June 30, 1998 unless sooner terminated as herein
provided.
<PAGE>
2. BUDGET - Sponsor shall support the Project by a grant of *** *** . The grant
amount shall cover all direct and indirect costs of the Project, as set forth in
the Budget attached hereto as Exhibit "B" and incorporated into this Agreement.
If at any time University has reason to believe that the cost of the Project
will be greater than the amount budgeted, University shall notify Sponsor in
writing to that effect, giving a revised budget of the cost of completion of the
Project. Sponsor shall not be obligated to reimburse University for the costs
incurred in excess of the Budget unless and until Sponsor has notified
University in writing that the revised budget is accepted. Upon expenditure of
the accepted budget amount, University's obligation to continue performance of
the Project shall cease. University will use best efforts to meet objectives of
the Project. If the Project period is more than one year, the balance of any
funds remaining at the end of any Project year may be carried over to subsequent
years during the period of the Agreement to support the Project.
3. PAYMENT - Upon execution of this agreement, Sponsor will provide payment in
the amount of $32,386.00.
Payment shall be made to "The Regents of the University of California" and
sent to the following:
The Regents of the University of California
c/o Emma Reyes
Manager, Extramural Funds Accounting
University of California, San Diego
9500 Gilman Drive
La Jolla, CA 92093-0954
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
2
<PAGE>
On April 1, 1998, Sponsor shall provide payment in the amount of $32,386.00. On
*** Sponsor shall provide a *** . Upon request by Sponsor, the University will
provide to Sponsor a report of expenditures shown by major cost categories for
the prior annual accounting period.
4. PRINCIPAL INVESTIGATOR - The research is to be conducted by University under
the direction of *** ("Principal Investigator") who will be responsible for the
direction of the Project, including all budgeting and revisions to the Budget,
in accordance with applicable University policies. If during the term of this
Agreement, the Principal Investigator shall cease to direct the Project, then
University shall promptly so notify Sponsor and shall endeavor to find among the
scientists of University a Principal Investigator acceptable to Sponsor to
continue responsibility for direction of the Project. If University is unable to
find such a Principal Investigator within two (2) months after such notice to
Sponsor, Sponsor shall have the option to terminate its funding of the Project
in accordance with Section 14 of this Agreement. Sponsor shall promptly advise
University in writing if Sponsor so elects. Nothing herein contained shall be
deemed to impose an obligation on University to find a replacement for Principal
Investigator.
5. CONFIDENTIALITY - Subject to Paragraph 9 of this Agreement, it is the intent
of the parties that neither party shall furnish any
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
3
<PAGE>
information considered confidential and/or proprietary by it and/or one or more
third parties to the other party in connection with this Agreement.
Should Sponsor deem it necessary to disclose information considered
confidential and/or proprietary by it to University, it will be clearly marked
by Sponsor, in writing, as "Confidential Information". University will use its
best efforts not to disclose Confidential Information for a period of seven (7)
years from the end of this Agreement. This obligation does not apply to
information that was known to University prior to its receipt from Sponsor, that
is independently developed by the University, that becomes known at any time to
third parties through no fault of University or that is required to be disclosed
under applicable law or regulation.
6. RIGHTS IN DATA - Subject to Paragraph 5 of this Agreement, University shall
have the right to copyright, publish, disclose, disseminate and use, in whole
and in part, any data and information received or developed under the Project.
Subject to Paragraphs 8 and 9 of this Agreement, Sponsor shall have the right to
disclose, publish and use the technical reports, data and information delivered
under the Project to Sponsor by University.
7. USE OF NAME/PUBLICITY - It is agreed by each party that it will not under any
circumstance use the name of the other party or its employees in any
advertisement, press release or publicity with reference to this Agreement,
without prior written approval of the other party.
4
<PAGE>
8. PUBLICATION - University shall have the right to publish the results of the
work contemplated by this Agreement and shall, upon request, provide Sponsor the
opportunity to review any proposed manuscripts describing said work forty-five
(45) days prior to their submission for publication. However, if such submission
would cause the loss of significant foreign patent rights, University will, at
its option, either delete the enabling portion of the proposed publication, or
withhold publication for sixty (60) days until U.S. patent filings are
completed, but only to the extent that Sponsor agrees to reimburse University
for costs associated with such patent applications and subsequent prosecutions.
9. DISCLOSURE AND INVENTION RIGHTS - University shall promptly disclose to
Sponsor any inventions or discoveries arising under the Project. Sponsor shall
hold such disclosure on a confidential basis and will not disclose the
information to any third party without consent of the University. Sponsor may
disclose such confidential information to Sponsor's sub-licensees or
collaborators to the extent Sponsor obtains an agreement containing
confidentiality provisions from such sub-licensees or collaborators reasonably
satisfactory to University in form and substance. All rights to inventions or
discoveries, including software, arising from research conducted under the
Project shall be owned by the University. To the extent the University has the
legal right to do so and to the extent that the Sponsor pays all direct and
indirect costs of the Project, Sponsor, shall be given the first right to
5
<PAGE>
negotiate an exclusive, royalty-bearing license to make, use, and sell any
patentable inventions arising under the Project ("Inventions").
Sponsor shall advise University in writing within sixty (60) days of
disclosure of any Invention to Sponsor whether or not it wishes to secure a
commercial license. If Sponsor elects to secure a license, Sponsor shall
reimburse University all costs associated with filing, prosecuting and
maintaining patent protection for such Inventions, whether or not Letters Patent
ultimately issue. Sponsor shall have ninety (90) days from the date of election
to conclude a license or option agreement with University. Such license shall
contain reasonable terms and shall require diligent performance by Sponsor for
the timely commercial development and early marketing of such Invention. If
Sponsor elects not to secure such license(s), or such license has not been
concluded within the ninety (90) day period described above, rights to the
Invention(s) disclosed hereunder shall be disposed of in accordance with
University policies, with no further obligation to Sponsor.
10. INDEMNIFICATION - Sponsor agrees to defend, indemnify and hold University
harmless from and against any and all liability, loss, expense, reasonable
attorneys' fees, or claims for injury or damages arising out of the performance
of this Agreement, but only in proportion to and to the extent such liability,
loss, expense, attorneys' fees, or claims for injury or damages are caused by or
result from the negligent or intentional acts or omissions of Sponsor, its
officers, agents or employees.
6
<PAGE>
University agrees to defend, indemnify and hold Sponsor harmless from any
claim, liability, loss, expense, reasonable attorneys' fees, or claims for
injury or damages arising out of the performance of this Agreement, but only in
proportion to and to the extent such liability, loss, expense, attorneys' fees,
or claims for injury or damages are caused by or result from the negligent or
intentional acts or omissions of University, its officers, agents, or employees.
11. SUPPLIES AND EQUIPMENT - In the event that University purchases equipment
hereunder, title to such equipment shall vest in University.
12. EXCUSABLE DELAYS - In the event of a delay caused by inclement weather,
fire, flood, strike or other labor dispute, act of God, act of governmental
officials or agencies, or any other cause beyond the control of University,
University shall be excused from performance hereunder for the period of time
attributable to such delay, which may extend beyond the time lost due to one or
more of the causes mentioned above. In the event of any such delay, this
Agreement may be revised by changing the Budget, performance period and other
provisions, as appropriate, by mutual agreement of the parties.
13. NOTICE - Whenever any notice is to be given hereunder, it shall be in
writing and sent to the following address:
University: L.E. Dale
Contract and Grant Director
Office of Contract and Grant Administration
University of California, San Diego
La Jolla, CA 92093-0934
7
<PAGE>
(for express mail:
UCSD Contracts and Grants
10300 N. Torrey Pines Road, 2nd Floor
La Jolla, CA 92037)
Sponsor: Kathy Rooney
Vice-President of Administration
Collateral Therapeutics
San Diego, CA 92121
14. TERMINATION - This Agreement may be terminated by Sponsor for any reason, or
by University for non-payment at any time upon the giving of thirty(30) days
prior written notice to the other party. Written notice shall be directed to the
appropriate individual named in Article 13 ("NOTICE") of this Agreement. Upon
the giving of notice of termination by either party, the University shall exert
its best efforts to limit or terminate any outstanding commitments. Sponsor
shall reimburse University for all costs incurred by it for all work performed
through the effective termination date, and for all outstanding obligations
which cannot be canceled. Such obligations may include salary and fringe
benefits (including vacation accrual) of personnel engaged on the project during
their severance period; purchase orders and other agreements with outside
vendors which cannot be canceled; inventory storage and disposition costs for
items produced under this Agreement; and indirect costs associated with these
obligations. In addition, in the event of termination by Sponsor, University
shall also be reimbursed for additional costs which may be incurred as a result
of termination, including reasonable clerical and accounting costs. University
shall furnish, within ninety (90)
8
<PAGE>
days of the effective date of termination, a final invoice for settlement of all
costs to be reimbursed.
THE REGENTS OF THE COLLATERAL Therapeutics
UNIVERSITY OF CALIFORNIA
By: /s/ Linda E. Dale By: /s/ Kathy Rooney
- --------------------------- -------------------------
(signature) (signature)
Name: Linda E. Dale Name: Kathy Rooney
Title: Contract & Grant Director Title: Vice President, Admin.
Date: 2/18/98 Date: 2-23-98
- --------------------------- -------------------------
9
<PAGE>
STATEMENT OF WORK
***
EXHIBIT "A"
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
<PAGE>
Angiogenesis in
the Failing Heart
Proposed budget (02/01/98-06/30/98)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Budget:
Supplies:
*** ***
*** ***
*** ***
*** ***
----
TOTAL ***
Salaries:
*** Salary ***
*** Benefits ***
*** Salary ***
*** Benefits ***
*** Salary ***
*** Benefits ***
----
TOTAL ***
Total Direct Costs ***
Total Indirect Costs (***) ***
----
Total Contract Costs ***
====
</TABLE>
EXHIBIT "B"
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
<PAGE>
EXHIBIT 10.23
[LOGO] COLLATERAL
THERAPEUTICS
One Town Center Drive
San Diego, CA 92121
Tel: 619-622-4100
Fax: 619-587-3518
CONFIDENTIAL
March 20, 1998
Ms. Sandra Woodruff
Executive Director
Veterans Medical Research Foundation
VA Medical Center (151A)
3350 La Jolla Village Drive
San Diego, CA 92161
Dear Sandra:
Collateral Therapeutics, Inc. (hereinafter "CTI") proposes that this letter
be the written agreement which sets forth the understanding and obligations
of the parties regarding the research conducted by Dr. Kirk Hammond in the
field of cardiovascular disease (hereinafter, the "Studies").
1. Kirk Hammond, M.D. (hereinafter "Investigator") and the Veterans
Medical Research Foundation (hereinafter "VMRF" or the
"Foundation") agree to utilize their best efforts to conduct the
Studies. Further details concerning the Studies to be performed
will be discussed in confidence by the Investigator with CTI
representatives.
2. The Investigator agrees to comply with the federal regulations
relating to the Animal Welfare Act (7. U.S.C. 2131, et seq) and the
United States Department of Agriculture regulations as set forth in
9 CFR parts 1, 2, and 3.
3. The Investigator will render periodic confidential reports as may be
requested to CTI.
4. In preparation for and during the course of these Studies, it may be
necessary for CTI to disclose to the Investigator or to VMRF certain
technical and business information; all such information, as well as
the results of the research, subject to the restriction in paragraph
#5 of this agreement, is considered to be highly confidential by
CTI. It is understood that VMRF may disclose the amount of this
research funding in any routine disclosure as required by VMRF
policy, but shall not use or disclose the subject matter
<PAGE>
[LOGO]
of the research. The Investigator and the Foundation agree to take
all reasonable precautions to prevent disclosure of this and other
confidential information to others and to not use confidential
information without the prior express written consent of CTI. These
restrictions upon disclosure of said information shall extend beyond
the term of this contract for a period of ten (10) years, but shall
cease to apply as to any specific portion of the information which
is or becomes available to the public other than by the Investigator
or the Foundation's fault.
5. The text of any oral or written disclosure of the results of the
Studies shall be submitted to CTI at least sixty (60) days prior to
any and all such disclosures. The Investigator and the Foundation
shall consider any suggestions from CTI concerning said disclosure,
but are not bound to incorporate such suggestions in any oral or
written publications. CTI may request addition of a sponsor's
representative to authorship on documents submitted for publication.
The Investigator and the Foundation agree to delay any such
disclosure of up to six (6) months between notification of CTI and
publication at CTI's request to allow for completion of development
and filing of patent applications.
6. The Investigator and VMRF agree to disclose promptly and fully to an
authorized representative of CTI all ideas, developments and
inventions, whether or not patentable, conceived or reduced to
practice by the Investigator and/or VMRF as a result of the Studies
provided for herein. All of such ideas, developments and inventions
shall be the property of CTI. Accordingly, the Investigator and VMRF
agree to assign outright to CTI the entire right, title and
interest, both in the United States and abroad, to such ideas,
developments and inventions, without payment other than the fees
provided for herein. The Investigator and VMRF further agree to
execute any and all documents which CTI determines are necessary or
convenient to fully implement its proprietary rights in such ideas,
developments and inventions, such as, but not limited to obtaining
patents, and to fully cooperate in the prosecution of such property
rights, but at no expense to them. CTI will have the above-mentioned
documents drafted, prosecuted and maintained at its own expense. The
Investigator and VMRF warrant that it has appropriate ownership
rights in such ideas, developments and inventions to carry out its
obligations under this paragraph. Both parties acknowledge that in
so far as Federal space or resources are utilized in this world, the
U.S. Government may have rights as defined by U.S. law, and may
choose to exercise these rights, for example, through a
non-exclusive license.
7. Both parties also acknowledge that the Department of Veterans
Affairs has informed the VMRF that VMRF has waived all patent rights
that may develop in connection with this agreement.
8. CTI shall have the right to use the results and data of the Studies
in any manner deemed appropriate to CTI's business interests. Such
uses may include but are not
<PAGE>
[LOGO]
limited to, disclosure as may be useful to meet legal and business
obligations, such as to support patent applications, both foreign
and domestic, or satisfy the requirements of any government agency.
In the event that work resulting from the Studies is published in
the scientific literature by CTI, acknowledgement will be made to
the Investigator and the Department of Veterans Affairs in the
accepted style, as appropriate. CTI will not use the name of the
Investigator and VMRF for advertising, other commercial purposes, in
publications or otherwise without appropriate written permission,
unless required by law or government regulations. CTI agrees that
the investigator shall have priority publication rights over data
generated from these studies subject to paragraph #5.
9. In consideration for the Studies, during the term of this agreement
CTI agrees to pay *** made by VMRF in connection with the Studies as
directed by the Investigator, and pay *** *** . In this regard, CTI
agrees to pay VMRF the following: (i) a *** *** (hereafter the ***);
(ii) a *** (hereafter the *** ) *** *** *** ; and (iii) a *** ***
*** *** . The amount of the *** will be computed based on *** ***
*** . VMRF shall agree to provide CTI with sufficient information
for it to compute the *** . Following the term of the agreement,
VMRF shall agree to promptly return any amounts advanced to VMRF by
CTI for which there is not any corresponding expenditure in
connection with the Studies.
CTI shall have the right to review any and all financial records of
VMRF relating solely to these Studies on a quarterly basis, to
determine the sufficiency of the Supplemental Payment. Annually VMRF
shall provide CTI with a financial statement and account
reconciliation covering all amounts expended by VMRF for the Studies
during the term of this agreement.
10. This contract will become effective on the date of acceptance by the
Investigator, VMRF and CTI, and will terminate one year from that
date unless otherwise extended by mutual consent of CTI and the
Foundation, evidenced by written agreement
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
<PAGE>
[LOGO]
11. The parties agree to take all other action necessary to effect the
rights of the parties herein.
12. The parties acknowledge that *** may have a conflict of interest
regarding this agreement and *** shall serve in his place for VMRF
on all matters relating to this agreement.
If the terms of this agreement meet with the approval of the Veterans Medical
Research Foundation, please sign and date two copies and return one to CTI at
your earliest convenience.
Most sincerely,
COLLATERAL THERAPEUTICS, INC.
By:/s/ Christopher J. Reinhard
---------------------------------------------
Christopher J. Reinhard
Chief Financial and Operating Officer
CR/st
Enclosure
ACCEPTED AND AGREED TO:
VETERANS MEDICAL RESEARCH FOUNDATION DATE:
/s/ Sandra Woodruff 3/31/98
- ------------------------------------------------- --------------------
Sandra Woodruff
PRINCIPLE INVESTIGATOR DATE:
/s/ H. Kirk Hammond 3/24/98
- ------------------------------------------------- --------------------
Dr. H. Kirk Hammond
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
<PAGE>
EXHIBIT 10.34
COLLATERAL THERAPEUTICS, INC.
RESTRICTED STOCK ISSUANCE AGREEMENT
AGREEMENT made as of this day of , 199__, by and among Collateral
Therapeutics, Inc., a California corporation (the "Corporation"), , a
participant ("Participant") in the Corporation's 1995 Stock Option/Stock
Issuance Plan (the "Plan") and , the Participant's spouse.
I. PURCHASE OF SHARES
1.1 Purchase. The Participant hereby purchases, and the Corporation
hereby sells to Participant, __________ shares (the "Shares") of the
Corporation's common stock ("Common Stock") at a purchase price of $_________
per share (the "Purchase Price") pursuant to the provisions of the Plan, with a
vesting start date of __________________ ___, 199__ (the "Vesting Start Date").
1.2 Payment. Concurrently with the execution of this Agreement, the
Participant shall deliver to the Corporate Secretary of the Corporation (i) the
aggregate Purchase Price payable for the Shares in cash or cash equivalent and
(ii) a duly-executed blank Assignment Separate from Certificate (in the form
attached hereto as Exhibit A).
1.3 Delivery of Certificates. The certificates representing the
Shares hereunder shall be held in escrow by the Secretary of the Corporation as
provided in Article VII hereof.
1.4 Shareholder Rights. Until such time as the Corporation actually
exercises its repurchase right, rights of first refusal or special purchase
right under this Agreement, Participant (or any successor in interest) shall
have all the rights of a shareholder (including voting and dividend rights) with
respect to the Shares, including the Shares held in escrow under Article VII,
subject, however, to the transfer restrictions of Article IV.
II. SECURITIES LAW COMPLIANCE
2.1 Purchase Entirely for Own Account. This Agreement is made with
Participant in reliance upon Participant's representation to the Corporation,
which by Participant's execution of this Agreement Participant hereby confirms,
that the Shares are being acquired for investment for Participant'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 Participant has no present intention of selling,
granting any participation in, or otherwise distributing the same. By executing
this Agreement, Participant further represents that Participant does not have
any
<PAGE>
contract, undertaking, agreement or arrangement with any person to sell,
transfer or grant participations to such person or to any third person, with
respect to any of the Shares. Participant represents that he has full power and
authority to enter into this Agreement.
2.2 Exemption from Registration. The Shares have not been registered
under the Securities Act of 1933, as amended (the "1933 Act"), and are
accordingly being issued to Participant in reliance upon the exemption from such
registration provided by Rule 701 of the Securities and Exchange Commission for
stock issuances under compensatory benefit plans such as the Plan. Participant
hereby acknowledges receipt of a copy of the documentation for such Plan in the
form of Exhibit B attached hereto.
2.3 Restricted Securities.
A. Participant hereby confirms that Participant has been informed
that the Shares are restricted securities under the 1933 Act and may not be
resold or transferred unless the Shares are first registered under the Federal
securities laws or unless an exemption from such registration is available.
Accordingly, Participant hereby acknowledges that Participant is prepared to
hold the Shares for an indefinite period and that Participant is aware that Rule
144 of the Securities and Exchange Commission issued under the 1933 Act is not
presently available to exempt the sale of the Shares from the registration
requirements of the 1933 Act.
B. Upon the expiration of the ninety (90)-day period immediately
following the date on which the Corporation first becomes subject to the
reporting requirements of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), the Shares, to the extent vested under Article V, may be sold
(without registration) pursuant to the applicable requirements of Rule 144. If
Participant is at the time of such sale an affiliate of the Corporation for
purposes of Rule 144 or was such an affiliate during the preceding three (3)
months, then the sale must comply with all the requirements of Rule 144
(including the volume limitation on the number of shares sold, the
broker/market-maker sale requirement and the requisite notice to the Securities
and Exchange Commission); however, the two-year holding period requirement of
the Rule will not be applicable. If Participant is not at the time of the sale
an affiliate of the Corporation nor was such an affiliate during the preceding
three (3) months, then none of the requirements of Rule 144 (other than the
broker/market-maker sale requirement for Shares held for less than three (3)
years following payment in cash of the Purchase Price therefor) will be
applicable to the sale.
C. Should the Corporation not become subject to the reporting
requirements of the Exchange Act, then Participant may, provided he/she is not
at the time an affiliate of the Corporation (nor was such an affiliate during
the preceding three (3) months), sell the Shares (without registration) pursuant
to paragraph (k) of Rule 144 after the Shares have been held for a period of
three (3) years following the payment in cash of the Purchase Price for such
shares.
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2.4 Disposition of Shares. Participant hereby agrees that
Participant shall make no disposition of the Shares (other than a permitted
transfer under paragraph 4.1) unless and until there is compliance with all of
the following requirements:
(a) Participant shall have notified the Corporation of the
proposed disposition and provided a written summary of the terms and
conditions of the proposed disposition.
(b) Participant shall have complied with all requirements of
this Agreement applicable to the disposition of the Shares.
(c) Participant shall have provided the Corporation with
written assurances, in form and substance satisfactory to the Corporation,
that (i) the proposed disposition does not require registration of the
Shares under the 1933 Act or (ii) all appropriate action necessary for
compliance with the registration requirements of the 1933 Act or of any
exemption from registration available under the 1933 Act (including Rule
144) has been taken.
(d) Participant shall have provided the Corporation with
written assurances, in form and substance satisfactory to the Corporation,
that the proposed disposition will not result in the contravention of any
transfer restrictions applicable to the Shares pursuant to the provisions
of the Commissioner Rules identified in paragraph 2.5.
The Corporation shall not be required (i) to transfer on its books
any Shares which have been sold or transferred in violation of the provisions of
this Article II nor (ii) to treat as the owner of the Shares, or otherwise to
accord voting or dividend rights to, any transferee to whom the Shares have been
transferred in contravention of this Agreement.
2.5 Restrictive Legends. In order to reflect the restrictions on
disposition of the Shares, the stock certificates for the Shares will be
endorsed with restrictive legends, including one or more of the following
legends:
(a) "The shares represented by this certificate have not been
registered under the Securities Act of 1933. The shares may not be sold or
offered for sale in the absence of (i) an effective registration statement
for the shares under such Act, (ii) a 'no action' letter of the Securities
and Exchange Commission with respect to such sale or offer, or (iii)
satisfactory assurances to the Corporation that registration under such
Act is not required with respect to such sale or offer."
(b) "The shares represented by this certificate are unvested
and accordingly may not be sold, assigned, transferred, encumbered,
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or in any manner disposed of except in conformity with the terms of a
written agreement dated _____________, 19__, between the Corporation and
the registered holder of the shares (or the predecessor in interest to the
shares). Such agreement grants certain repurchase rights and rights of
first refusal to the Corporation (or its assignees) upon the sale,
assignment, transfer, encumbrance or other disposition of the
Corporation's shares or upon termination of service with the Corporation.
The Corporation will upon written request furnish a copy of such agreement
to the holder hereof without charge."
III. SPECIAL TAX PROVISIONS
3.1 Section 83(b) Election. The Participant understands that under
Section 83 of the Code, the excess of the fair market value of the Shares on the
date any forfeiture restrictions applicable to such shares lapse over the
Purchase Price for such Shares will be reportable as ordinary income on such
lapse date. For this purpose, the term "forfeiture restrictions" includes the
right of the Corporation to repurchase the Shares pursuant to the Repurchase
Right provided under Article V of this Agreement. Participant understands that
he/she may elect under Section 83(b) of the Internal Revenue Code of 1986, as
amended (the "Code") to be taxed at the time the Shares are acquired hereunder,
rather than when and as such Shares cease to be subject to such forfeiture
restrictions. Such election must be filed with the Internal Revenue Service
within thirty (30) days after the date of this Agreement. Even if the fair
market value of the Shares on the date of this Agreement equals the Purchase
Price paid (and thus no tax is payable), the election must be made to avoid
adverse tax consequences in the future. The form for making this election is
attached as Exhibit C hereto. Participant understands that failure to make this
filing within the thirty (30)-day period will result in the recognition of
ordinary income by the Participant as the forfeiture restrictions lapse.
3.2 PARTICIPANT ACKNOWLEDGES THAT IT IS PARTICIPANT'S SOLE
RESPONSIBILITY, AND NOT THE CORPORATION'S, TO FILE A TIMELY ELECTION UNDER
SECTION 83(b), EVEN IF PARTICIPANT REQUESTS THE CORPORATION OR ITS
REPRESENTATIVES TO MAKE THIS FILING ON HIS/HER BEHALF. This filing should be
made by registered or certified mail, return receipt requested, and Participant
must retain two (2) copies of the completed form for filing with his/her State
and Federal tax returns for the current tax year and an additional copy for
his/her personal records.
IV. TRANSFER RESTRICTIONS
4.1 Restriction on Transfer. Participant shall not transfer, assign,
encumber or otherwise dispose of any of the Shares which are subject to the
Corporation's Repurchase Right under Article V. In addition, Shares which are
released from the Repurchase Right shall not be transferred, assigned,
encumbered or otherwise made the
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subject of disposition in contravention of the Corporation's First Refusal Right
under Article VI. Such restrictions on transfer, however, shall not be
applicable to (i) a gratuitous transfer of the Shares made to the Participant's
spouse or issue, including adopted children, or to a trust for the exclusive
benefit of the Participant or the Participant's spouse or issue, provided and
only if the Participant obtains the Corporation's prior written consent to such
transfer, (ii) a transfer of title to the Shares effected pursuant to the
Participant's will or the laws of intestate succession or (iii) a transfer to
the Corporation in pledge as security for any purchase-money indebtedness
incurred by the Participant in connection with the acquisition of the Shares.
4.2 Transferee Obligations. Each person (other than the Corporation)
to whom the Shares are transferred by means of one of the permitted transfers
specified in paragraph 4.1 must, as a condition precedent to the validity of
such transfer, acknowledge in writing to the Corporation that such person is
bound by the provisions of this Agreement and that the transferred shares are
subject to (i) both the Corporation's Repurchase Right and the Corporation's
First Refusal Right granted hereunder and (ii) the market stand-off provisions
of paragraph 4.4, to the same extent such Shares would be so subject if retained
by the Participant.
4.3 Definition of Owner. For purposes of Articles IV, V, VI and VII
of this Agreement, the term "Owner" shall include the Participant and all
subsequent holders of the Shares who derive their chain of ownership through a
permitted transfer from the Participant in accordance with paragraph 4.1.
4.4 Market Stand-Off Provisions.
A. In connection with any underwritten public offering by the
Corporation of its equity securities pursuant to an effective registration
statement filed under the 1933 Act, including the Corporation's initial public
offering, Owner shall not sell, make any short sale of, loan, hypothecate,
pledge, grant any option for the purchase of, or otherwise dispose or transfer
for value or otherwise agree to engage in any of the foregoing transactions with
respect to, any Shares without the prior written consent of the Corporation or
its underwriters. Such limitations shall be in effect for such period of time
from and after the effective date of such registration statement as may be
requested by the Corporation or such underwriters; provided, however, that in no
event shall such period exceed one hundred-eighty (180) days. The limitations of
this paragraph 4.4 shall remain in effect for the two-year period immediately
following the effective date of the Corporation's initial public offering and
shall thereafter terminate and cease to have any force or effect.
B. Owner shall be subject to the market stand-off provisions of this
paragraph 4.4 provided and only if the officers and directors of the Corporation
are also subject to similar arrangements.
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C. In the event of any stock dividend, stock split, recapitalization
or other change affecting the Corporation's outstanding Common Stock effected
without receipt of consideration, then any new, substituted or additional
securities distributed with respect to the Shares shall be immediately subject
to the provisions of this paragraph 4.4, to the same extent the Shares are at
such time covered by such provisions.
D. In order to enforce the limitations of this paragraph 4.4, the
Corporation may impose stop-transfer instructions with respect to the Shares
until the end of the applicable market stand-off period.
V. REPURCHASE RIGHT
5.1 Grant. The Corporation is hereby granted the right (the
"Repurchase Right"), exercisable at any time during the sixty (60)-day period
following the date the Participant ceases for any reason to remain in Service or
(if later) during the sixty (60)-day period following the execution date of this
Agreement, to repurchase at the Purchase Price all or (at the discretion of the
Corporation and with the consent of the Participant) any portion of the Shares
in which the Participant has not acquired a vested interest in accordance with
the vesting provisions of paragraph 5.3 below (such shares to be hereinafter
called the "Unvested Shares"). For purposes of this Agreement, the Participant
shall be deemed to remain in Service for so long as the Participant continues to
render periodic services to the Corporation or any parent or subsidiary
corporation, whether as an employee, a non-employee member of the board of
directors, or an independent contractor or consultant.
5.2 Exercise of the Repurchase Right. The Repurchase Right shall be
exercisable by written notice delivered to the Owner of the Unvested Shares
prior to the expiration of the applicable sixty (60)-day period specified in
paragraph 5.1. The notice shall indicate the number of Unvested Shares to be
repurchased and the date on which the repurchase is to be effected, such date to
be not more than thirty (30) days after the date of notice. To the extent one or
more certificates representing Unvested Shares may have been previously
delivered out of escrow to the Owner, then Owner shall, prior to the close of
business on the date specified for the repurchase, deliver to the Secretary of
the Corporation the certificates representing the Unvested Shares to be
repurchased, each certificate to be properly endorsed for transfer. The
Corporation shall, concurrently with the receipt of such stock certificates
(either from escrow in accordance with paragraph 7.3 or from Owner as herein
provided), pay to Owner in cash or cash equivalents (including the cancellation
of any purchase-money indebtedness), an amount equal to the Purchase Price
previously paid for the Unvested Shares which are to be repurchased.
5.3 Termination of the Repurchase Right. The Repurchase Right shall
terminate with respect to any Unvested Shares for which it is not timely
exercised under paragraph 5.2. In addition, the Repurchase Right shall
terminate, and cease to be exercisable, with respect to any and all Shares in
which the Participant vests in accordance with the
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schedule below. Accordingly, as the Participant continues in Service, the
Participant shall acquire a vested interest in, and the Repurchase Right shall
lapse with respect to, the Shares in installments in accordance with the
following provisions:
(a) The Participant shall not acquire any vested interest in,
nor shall the Repurchase Right lapse with respect to, any Shares unless
and until the Participant has completed twelve (12) months of Service
measured from the Vesting Start Date.
(b) Upon the completion of the twelve (12) month Service
period specified in subparagraph (a) above, the Participant shall acquire
a vested interest in, and the Repurchase Right shall lapse with respect
to, 25% of the Shares.
(c) The Participant shall acquire a vested interest in, and
the Repurchase Right shall lapse with respect to, the remaining Shares in
a series of successive equal monthly installments over each of the next
thirty-six (36) months of Service completed by the Participant after the
initial vesting date under subparagraph (b) above.
All Shares as to which the Repurchase Right lapses shall, however,
continue to be subject to (i) the First Refusal Right and (ii) the market
stand-off provisions of paragraph 4.4.
5.4 Fractional Shares. No fractional shares shall be repurchased by
the Corporation. Accordingly should the Repurchase Right extend to a fractional
share (in accordance with the vesting computation provisions of paragraph 5.3)
at the time the Participant ceases Service, then such fractional share shall be
added to any fractional share in which the Participant is at such time vested in
order to make one whole vested share no longer subject to the Repurchase Right.
5.5 Additional Shares or Substituted Securities. In the event of any
stock dividend, stock split, recapitalization or other change affecting the
Corporation's outstanding Common Stock as a class effected without receipt of
consideration, then any new, substituted or additional securities or other
property (including money paid other than as a regular cash dividend) which is
by reason of any such transaction distributed with respect to the Shares shall
be immediately subject to the Repurchase Right, but only to the extent the
Shares are at the time covered by such right. Appropriate adjustments to reflect
the distribution of such securities or property shall be made to the number of
Shares at the time subject to the Repurchase Right hereunder and to the price
per share to be paid upon the exercise of the Repurchase Right in order to
reflect the effect of any such transaction upon the Corporation's capital
structure; provided, however, that the aggregate Purchase Price shall remain the
same.
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5.6 Corporate Transaction.
A. Immediately prior to the consummation of any of the following
shareholder-approved transactions (a "Corporate Transaction"):
(i) a merger or consolidation in which the Corporation is not
the surviving entity,
(ii) the sale, transfer or other disposition of all or
substantially all of the Corporation's assets, or
(iii) any transaction (other than an issuance of shares by the
Corporation for cash) in or by means of which one or more persons acting
in concert acquire, in the aggregate, more than 50% of the outstanding
shares of the stock of the Corporation,
the Corporation may exercise the Repurchase Right with respect to the then
Unvested Shares. The Repurchase Right shall automatically lapse with respect to
all Unvested Shares not repurchased hereunder, except to the extent the
Repurchase Right is to be assigned to the successor corporation (or its parent
company) in connection with such Corporate Transaction.
B. To the extent the Repurchase Right remains in effect following
such Corporate Transaction, it shall apply to the new capital stock or other
property (including cash) received in exchange for the Shares in consummation of
the Corporate Transaction, but only to the extent the Shares are at the time
covered by such right. Appropriate adjustments shall be made to the price per
share payable upon exercise of the Repurchase Right to reflect the effect of the
Corporate Transaction upon the Corporation's capital structure; provided,
however, that the aggregate Purchase Price shall remain the same.
VI. RIGHT OF FIRST REFUSAL
6.1 Grant. The Corporation is hereby granted rights of first refusal
(the "First Refusal Right"), exercisable in connection with any proposed
transfer of the Purchased Shares in which the Optionee has vested in accordance
with the vesting provisions of Article V. For purposes of this Article VI, the
term "transfer" shall include any sale, assignment, pledge, encumbrance or other
disposition for value of the Purchased Shares intended to be made by the Owner,
but shall not include any of the permitted transfers under paragraph 4.1.
6.2 Notice of Intended Disposition. In the event the Owner desires
to accept a bona fide third-party offer for the transfer of any or all of the
Purchased Shares (the shares subject to such offer to be hereinafter called the
"Target Shares"), Owner shall
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promptly (i) deliver to the Corporate Secretary of the Corporation written
notice (the "Disposition Notice") of the terms and conditions of the offer,
including the purchase price and the identity of the third-party offeror, and
(ii) provide satisfactory proof that the disposition of the Target Shares to
such third-party offeror would not be in contravention of the provisions set
forth in Articles II and IV of this Agreement.
6.3 Exercise of Right. The Corporation shall, for a period of
forty-five (45) days following receipt of the Disposition Notice, have the right
to repurchase any or all of the Target Shares specified in the Disposition
Notice upon the same terms and conditions specified therein or upon terms and
conditions which do not materially vary from those specified therein. Such right
shall be exercisable by delivery of written notice (the "Exercise Notice") to
Owner prior to the expiration of the forty-five (45)-day exercise period. If
such right is exercised with respect to all the Target Shares specified in the
Disposition Notice, then the Corporation (or its assignees) shall effect the
repurchase of the Target Shares, including payment of the purchase price, not
more than ten (10) business days after delivery of the Exercise Notice; and at
such time Owner shall deliver to the Corporation the certificates representing
the Target Shares to be repurchased, each certificate to be properly endorsed
for transfer. To the extent any of the Target Shares are at the time held in
escrow under Article VII, the certificates for such shares shall automatically
be released from escrow and delivered to the Corporation for purchase. Should
the purchase price specified in the Disposition Notice be payable in property
other than cash or evidences of indebtedness, the Corporation (or its assignees)
shall have the right to pay the purchase price in the form of cash equal in
amount to the value of such property. If the Owner and the Corporation (or its
assignees) cannot agree on such cash value within ten (10) days after the
Corporation's receipt of the Disposition Notice, the valuation shall be made by
an appraiser of recognized standing selected by the Owner and the Corporation
(or its assignees) or, if they cannot agree on an appraiser within twenty (20)
days after the Corporation's receipt of the Disposition Notice, each shall
select an appraiser of recognized standing and the two appraisers shall
designate a third appraiser of recognized standing, whose appraisal shall be
determinative of such value. The cost of such appraisal shall be shared equally
by the Owner and the Corporation. The closing shall then be held on the later of
(i) the tenth business day following delivery of the Exercise Notice or (ii) the
tenth business day after such cash valuation shall have been made.
6.4 Non-Exercise of Right. In the event the Exercise Notice is not
given to Owner within forty-five (45) days following the date of the
Corporation's receipt of the Disposition Notice, Owner shall have a period of
thirty (30) days thereafter in which to sell or otherwise dispose of the Target
Shares to the third-party offeror identified in the Disposition Notice upon
terms and conditions (including the purchase price) no more favorable to such
third-party offeror than those specified in the Disposition Notice; provided,
however, that any such sale or disposition must not be effected in contravention
of the provisions of Article II of this Agreement. To the extent any of the
Target Shares are at the time held in escrow under Article VII, the certificates
for such shares shall automatically be released from escrow and surrendered to
the Owner. The third-party offeror shall acquire the Target Shares free and
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clear of the Corporation's Repurchase Right under Article V and the
Corporation's First Refusal Right hereunder, but the acquired shares shall
remain subject to (i) the securities law restrictions of subparagraph 2.3A. and
(ii) the market stand-off provisions of paragraph 4.4. In the event Owner does
not effect such sale or disposition of the Target Shares within the specified
thirty (30)-day period, the Corporation's First Refusal Right shall continue to
be applicable to any subsequent disposition of the Target Shares by Owner until
such right lapses in accordance with paragraph 6.7.
6.5 Partial Exercise of Right. In the event the Corporation (or its
assignees) makes a timely exercise of the First Refusal Right with respect to a
portion, but not all, of the Target Shares specified in the Disposition Notice,
Owner shall have the option, exercisable by written notice to the Corporation
delivered within thirty (30) days after the date of the Disposition Notice, to
effect the sale of the Target Shares pursuant to one of the following
alternatives:
(a) sale or other disposition of all the Target Shares to the
third-party offeror identified in the Disposition Notice, but in full
compliance with the requirements of paragraph 6.4, as if the Corporation
did not exercise the First Refusal Right hereunder; or
(b) sale to the Corporation (or its assignees) of the portion
of the Target Shares which the Corporation (or its assignees) has elected
to purchase, such sale to be effected in substantial conformity with the
provisions of paragraph 6.3.
Failure of Owner to deliver timely notification to the Corporation
under this paragraph 6.5 shall be deemed to be an election by Owner to sell the
Target Shares pursuant to alternative (a) above.
6.6 Recapitalization/Merger.
A. In the event of any stock dividend, stock split, recapitalization
or other transaction affecting the Corporation's outstanding Common Stock as a
class effected without receipt of consideration, then any new, substituted or
additional securities or other property which is by reason of such transaction
distributed with respect to the Purchased Shares shall be immediately subject to
the Corporation's First Refusal Right hereunder, but only to the extent the
Purchased Shares are at the time covered by such right.
B. In the event of any of the following transactions:
(i) a merger or consolidation in which the Corporation is not
the surviving entity,
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(ii) a sale, transfer or other disposition of all or
substantially all of the Corporation's assets,
(iii) a reverse merger in which the Corporation is the
surviving entity but in which the Corporation's outstanding voting
securities are transferred in whole or in part to person or persons other
than those who held such securities immediately prior to the merger, or
(iv) any transaction effected primarily to change the State in
which the Corporation is incorporated, or to create a holding company
structure,
the Corporation's First Refusal Right shall remain in full force and effect and
shall apply to the new capital stock or other property received in exchange for
the Purchased Shares in consummation of the transaction but only to the extent
the Purchased Shares are at the time covered by such right.
6.7 Lapse. The First Refusal Right under this Article VI shall lapse
and cease to have effect upon the earliest to occur of (i) the first date on
which shares of the Corporation's Common Stock are held of record by more than
five hundred (500) persons, (ii) a determination is made by the Corporation's
Board of Directors that a public market exists for the outstanding shares of the
Corporation's Common Stock, or (iii) a firm commitment underwritten public
offering pursuant to an effective registration statement under the 1933 Act,
covering the offer and sale of the Corporation's Common Stock in the aggregate
amount of at least $5,000,000. However, the market stand-off provisions of
paragraph 4.4 shall continue to remain in full force and effect following the
lapse of the First Refusal Right hereunder.
VII. ESCROW
7.1 Deposit. Upon issuance, the certificates for any Unvested Shares
purchased hereunder shall be deposited in escrow with the Corporation to be held
in accordance with the provisions of this Article VII. Each deposited
certificate shall be accompanied by a duly executed Assignment Separate from
Certificate in the form of Exhibit A. The deposited certificates, together with
any other assets or securities from time to time deposited with the Corporation
pursuant to the requirements of this Agreement, shall remain in escrow until
such time or times as the certificates (or other assets and securities) are to
be released or otherwise surrendered for cancellation in accordance with
paragraph 7.3. Upon delivery of the certificates (or other assets and
securities) to the Corporation, the Owner shall be issued an instrument of
deposit acknowledging the number of Unvested Shares (or other assets and
securities) delivered in escrow to the Corporation.
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7.2 Recapitalization. All regular cash dividends on the Unvested
Shares (or other securities at the time held in escrow) shall be paid directly
to the Owner and shall not be held in escrow. However, in the event of any stock
dividend, stock split, recapitalization or other change affecting the
Corporation's outstanding Common Stock as a class effected without receipt of
consideration or in the event of a Corporate Transaction, any new, substituted
or additional securities or other property which is by reason of such
transaction distributed with respect to the Unvested Shares shall be immediately
delivered to the Corporation to be held in escrow under this Article VII, but
only to the extent the Unvested Shares are at the time subject to the escrow
requirements of paragraph 7.1.
7.3 Release/Surrender. The Unvested Shares, together with any other
assets or securities held in escrow hereunder, shall be subject to the following
terms and conditions relating to their release from escrow or their surrender to
the Corporation for repurchase and cancellation:
(a) Should the Corporation (or its assignees) elect to exercise the
Repurchase Right under Article V with respect to any Unvested Shares, then the
escrowed certificates for such Unvested Shares (together with any other assets
or securities issued with respect thereto) shall be delivered to the
Corporation, concurrently with payment to the Owner, in cash or cash equivalent
(including the cancellation of any purchase-money indebtedness), of an amount
equal to the aggregate Purchase Price for such Unvested Shares, and the Owner
shall cease to have any further rights or claims with respect to such Unvested
Shares (or other assets or securities attributable to such Unvested Shares).
(b) Should the Corporation (or its assignees) elect to exercise its
First Refusal Right under Article VI with respect to any vested Target Shares
held at the time in escrow hereunder, then the escrowed certificates for such
Target Shares (together with any other assets or securities attributable
thereto) shall, concurrently with the payment of the paragraph 6.3 purchase
price for such Target Shares to the Owner, be surrendered to the Corporation,
and the Owner shall cease to have any further rights or claims with respect to
such Target Shares (or other assets or securities).
(c) Should the Corporation (or its assignees) elect not to exercise
its First Refusal Right under Article VI with respect to any Target Shares held
at the time in escrow hereunder, then the escrowed certificates for such Target
Shares (together with any other assets or securities attributable thereto) shall
be surrendered to the Owner for disposition in accordance with the provisions of
paragraph 6.4.
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(d) As the interest of the Participant in the Unvested Shares (or
any other assets or securities attributable thereto) vests in accordance with
the provisions of Article V, the certificates for such vested shares (as well as
all other vested assets and securities) shall be released from escrow and
delivered to the Owner in accordance with the following schedule:
(i) The initial release of vested shares (or other vested assets
and securities) from escrow shall be effected within thirty (30) days
following the expiration of the initial twelve (12)-month period measured
from the initial vesting date under paragraph 5.3.
(ii) Subsequent releases of vested shares (or other vested assets
and securities) from escrow shall be effected at semi-annual intervals
thereafter, with the first such semi-annual release to occur six (6)
months after the initial paragraph 5.3 vesting date.
(iii) Upon the Participant's cessation of Service, any escrowed
Shares (or other assets or securities) in which the Participant is at the
time vested shall be promptly released from escrow.
(iv) Upon any earlier termination of the Corporation's Repurchase
Right in accordance with the applicable provisions of Article V, the
Shares (or other assets or securities) at the time held in escrow
hereunder shall promptly be released to the Owner as fully-vested shares
or other property.
(e) All Shares (or other assets or securities) released from escrow
in accordance with the provisions of subparagraph (d) above shall nevertheless
remain subject to (I) the Corporation's First Refusal Right under Article VI
until such right lapses pursuant to paragraph 6.7, (II) the market stand-off
provisions of paragraph 4.4 until such provisions terminate in accordance
therewith and (III) the Special Purchase Right under Article VIII.
VIII. MARITAL DISSOLUTION OR LEGAL SEPARATION
8.1 Grant. In connection with the dissolution of the Participant's
marriage or the legal separation of the Participant and the Participant's
spouse, the Corporation shall have the right (the "Special Purchase Right"),
exercisable at any time during the thirty (30)- day period following the
Corporation's receipt of the required Dissolution Notice under paragraph 8.2, to
purchase from the Participant's spouse, in accordance with the provisions of
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paragraph 8.3, all or any portion of the Shares which would otherwise be awarded
to such spouse in settlement of any community property or other marital property
rights such spouse may have in such shares.
8.2 Notice of Decree or Agreement. The Participant shall promptly
provide the Secretary of the Corporation with written notice (the "Dissolution
Notice") of (i) the entry of any judicial decree or order resolving the property
rights of the Participant and the Participant's spouse in connection with their
marital dissolution or legal separation or (ii) the execution of any contract or
agreement relating to the distribution or division of such property rights. The
Dissolution Notice shall be accompanied by a copy of the actual decree of
dissolution or settlement agreement between the Participant and the
Participant's spouse which provides for the award to the spouse of one or more
Shares in settlement of any community property or other marital property rights
such spouse may have in such shares.
8.3 Exercise of Special Purchase Right. The Special Purchase Right
shall be exercisable by delivery of the Purchase Notice to the Participant and
the Participant's spouse within thirty (30) days after the Corporation's receipt
of the Dissolution Notice. The Purchase Notice shall indicate the number of
shares to be purchased by the Corporation, the date such purchase is to be
effected (such date to be not less than five (5) business days, nor more than
ten (10) business days, after the date of the Purchase Notice), and the fair
market value to be paid for such Shares. The Participant (or the Participant's
spouse, to the extent such spouse has physical possession of the Shares) shall,
prior to the close of business on the date specified for the purchase, deliver
to the Corporate Secretary of the Corporation the certificates representing the
shares to be purchased, each certificate to be properly endorsed for transfer.
To the extent any of the shares to be purchased by the Corporation are at the
time held in escrow under Article VII, the certificates for such shares shall be
promptly delivered out of escrow to the Corporation. The Corporation shall,
concurrently with the receipt of the stock certificates, pay to the
Participant's spouse (in cash or cash equivalents) an amount equal to the fair
market value specified for such shares in the Purchase Notice.
If the Participant's spouse does not agree with the fair market
value specified for the shares in the Purchase Notice, then the spouse shall
promptly notify the Corporation in writing of such disagreement and the fair
market value of such shares shall thereupon be determined by an appraiser of
recognized standing selected by the Corporation and the spouse. If they cannot
agree on an appraiser within twenty (20) days after the date of the Purchase
Notice, each shall select an appraiser of recognized standing, and the two
appraisers shall designate a third appraiser of recognized standing whose
appraisal shall be determinative of such value. The cost of the appraisal shall
be shared equally by the Corporation and the Participant's spouse. The closing
shall then be held on the fifth business day following the completion of such
appraisal; provided, however, that if the appraised value is more than fifteen
percent (15%) greater than the fair market value specified for the shares in the
Purchase Notice, the Corporation shall have the right, exercisable prior to the
expiration of
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<PAGE>
such five (5) business-day period, to rescind the exercise of the Special
Purchase Right and thereby revoke its election to purchase the shares awarded to
the spouse.
8.4 Lapse. The Special Purchase Right under this Article VIII shall
lapse and cease to have effect upon the earlier to occur of (i) the first date
on which the First Refusal Right under Article VI lapses or (ii) the expiration
of the thirty (30)-day exercise period specified in paragraph 8.3, to the extent
the Special Purchase Right is not timely exercised in accordance with such
paragraph.
IX. GENERAL PROVISIONS
9.1 Assignment. The Corporation may assign its Repurchase Right
under Article V, its First Refusal Right under Article VI and/or its Special
Purchase Right under Article VIII to any person or entity selected by the
Corporation's Board of Directors, including (without limitation) one or more
shareholders of the Corporation.
If the assignee of the Repurchase Right is other than a one hundred
percent (100%) owned subsidiary corporation of the Corporation or the parent
corporation owning one hundred percent (100%) of the Corporation, then such
assignee must make a cash payment to the Corporation, upon the assignment of the
Repurchase Right, in an amount equal to the excess (if any) of (i) the fair
market value of the Unvested Shares at the time subject to the assigned
Repurchase Right over (ii) the aggregate repurchase price payable for Unvested
Shares thereunder.
9.2 Definitions.
(a) Except as otherwise provided herein, capitalized terms
shall have the meanings assigned to them in the Plan.
(b) For purposes of this Agreement, the following provisions
shall be applicable in determining the parent and subsidiary corporations
of the Corporation:
(i) Any corporation (other than the Corporation) in an
unbroken chain of corporations ending with the Corporation
shall be considered to be a parent corporation of the
Corporation, provided each such corporation in the unbroken
chain (other than the Corporation) owns, at the time of the
determination, stock possessing fifty percent (50%) or more of
the total combined voting power of all classes of stock in one
of the other corporations in such chain.
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<PAGE>
(ii) Each corporation (other than the Corporation) in an
unbroken chain of corporations beginning with the Corporation
shall be considered to be a subsidiary of the Corporation,
provided each such corporation (other than the last
corporation) in the unbroken chain owns, at the time of the
determination, stock possessing fifty percent (50%) or more of
the total combined voting power of all classes of stock in one
of the other corporations in such chain.
9.3 No Employment or Service Contract. Nothing in this Agreement or
in the Plan shall confer upon the Participant any right to continue in the
Service of the Corporation (or any parent or subsidiary corporation employing or
retaining Participant) for any period of specific duration or interfere with or
otherwise restrict in any way the rights of the Corporation (or any parent or
subsidiary corporation employing or retaining Participant) or the Participant,
which rights are hereby expressly reserved by each, to terminate the
Participant's Service at any time for any reason whatsoever, with or without
cause.
9.4 Notices. Any notice required in connection with (i) the
Repurchase Right, the Special Purchase Right or the First Refusal Right or (ii)
the disposition of any Shares covered thereby shall be given in writing and
shall be deemed effective upon personal delivery or upon deposit in the United
States mail, registered or certified, postage prepaid and addressed to the party
entitled to such notice at the address indicated below such party's signature
line on this Agreement or at such other address as such party may designate by
ten (10) days advance written notice under this paragraph 9.4 to all other
parties to this Agreement.
9.5 No Waiver. The failure of the Corporation (or its assignees) in
any instance to exercise the Repurchase Right granted under Article V, or the
failure of the Corporation (or its assignees) in any instance to exercise the
First Refusal Right granted under Article VI, or the failure of the Corporation
(or its assignees) in any instance to exercise the Special Purchase Right
granted under Article VIII shall not constitute a waiver of any other repurchase
rights and/or rights of first refusal that may subsequently arise under the
provisions of this Agreement or any other agreement between the Corporation and
the Participant or the Participant's spouse. No waiver of any breach or
condition of this Agreement shall be deemed to be a waiver of any other or
subsequent breach or condition, whether of like or different nature.
9.6 Cancellation of Shares. If the Corporation (or its assignees)
shall make available, at the time and place and in the amount and form provided
in this Agreement, the consideration for the Shares to be repurchased in
accordance with the provisions of this Agreement, then from and after such time,
the person from whom such shares are to be repurchased shall no longer have any
rights as a holder of such shares (other than the right to receive payment of
such consideration in accordance with this Agreement), and such shares
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<PAGE>
shall be deemed purchased in accordance with the applicable provisions hereof
and the Corporation (or its assignees) shall be deemed the owner and holder of
such shares, whether or not the certificates therefor have been delivered as
required by this Agreement.
X. MISCELLANEOUS PROVISIONS
10.1 Participant Undertaking. Participant hereby agrees to take
whatever additional action and execute whatever additional documents the
Corporation may in its judgment deem necessary or advisable in order to carry
out or effect one or more of the obligations or restrictions imposed on either
the Participant or the Shares pursuant to the express provisions of this
Agreement.
10.2 Agreement is Entire Contract. This Agreement constitutes the
entire contract between the parties hereto with regard to the subject matter
hereof. This Agreement is made pursuant to the provisions of the Plan and shall
in all respects be construed in conformity with the express terms and provisions
of the Plan.
10.3 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of California, as such laws
are applied to contracts entered into and performed in such State without resort
to that State's conflict of laws rules.
10.4 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.
10.5 Successors and Assigns. The provisions of this Agreement shall
inure to the benefit of, and be binding upon, the Corporation and its successors
and assigns and the Participant and the Participant's legal representatives,
heirs, legatees, distributees, assigns and transferees by operation of law,
whether or not any such person shall have become a party to this Agreement and
have agreed in writing to join herein and be bound by the terms and conditions
hereof.
10.6 Power of Attorney. Participant's spouse hereby appoints
Participant his or her true and lawful attorney in fact, for him or her and in
his or her name, place and stead, and for his or her use and benefit, to agree
to any amendment or modification of this Agreement and to execute such further
instruments and take such further actions as may reasonably be necessary to
carry out the intent of this Agreement. Participant's spouse further gives and
grants unto Participant as his or her attorney in fact full power and authority
to do and perform every act necessary and proper to be done in the exercise of
any of the foregoing powers as fully as he or she might or could do if
personally present, with full power of substitution and revocation, hereby
ratifying and confirming all that Participant shall lawfully do and cause to be
done by virtue of this power of attorney.
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<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement on the
day and year first indicated above.
Collateral Therapeutics, Inc.
By:
--------------------------------
Title:
--------------------------------
Address:
--------------------------------
--------------------------------
--------------------------------
Participant(1)
Address:
--------------------------------
--------------------------------
The undersigned spouse of Participant has read and hereby approves
the foregoing Restricted Stock Purchase Agreement. In consideration of the
Corporation's granting the Participant the right to acquire the Shares in
accordance with the terms of such Agreement, the undersigned hereby agrees to be
irrevocably bound by all the terms and provisions of such Agreement, including,
(specifically) the right of the Corporation (or its assignees) to purchase any
and all interest or right the undersigned may otherwise have in such shares
pursuant to community property laws or other marital property rights.
Participant's Spouse
--------------------------------
- ----------
(1) I have executed the Section 83(b) election that was attached hereto as
Exhibit C. As set forth in Article III, I understand that I, and not the
Corporation, will be responsible for completing the form and filing the election
with the appropriate offices of the federal and state tax authorities and that
if such filing is not completed within thirty (30) days after the date of this
Agreement, I will not be entitled to the tax benefits provided by Section 83(b).
<PAGE>
EXHIBIT A
ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED, __________ hereby sell(s), assign(s) and
transfer(s) unto Collateral Therapeutics, Inc. (the "Corporation")
_______________ (________) shares of the Common Stock of the Corporation
standing in his\her name on the books of the Corporation represented by
Certificate No.__________ and does hereby irrevocably constitute and appoint
____________ as attorney to transfer the said stock on the books of the
Corporation with full power of substitution in the premises.
Dated:
----------------
Signature
-------------------------------
Instruction: Please do not fill in any blanks other than the signature line. The
purpose of this assignment is to enable the Corporation to exercise the
Repurchase Right set forth in the Agreement without requiring additional
signatures on the part of the Participant.
A-1
<PAGE>
EXHIBIT B
1995 STOCK OPTION/STOCK ISSUANCE PLAN
B-1
<PAGE>
AS AMENDED MAY 16, 1997
COLLATERAL THERAPEUTICS, INC.
1995 STOCK OPTION/STOCK ISSUANCE PLAN
ARTICLE I
GENERAL PROVISIONS
1. PURPOSE
This 1995 Stock Option/Stock Issuance Plan ("Plan") is intended to
promote the interests of Collateral Therapeutics, Inc., a California corporation
(the "Corporation"), by providing individuals who render valuable services to
the Corporation (or any Parent or Subsidiary) with the opportunity to acquire
ownership interests in the Corporation so as to encourage them to continue to
render services to the Corporation (or any Parent or Subsidiary).
2. STRUCTURE OF THE PLAN; TERMINOLOGY
This Plan has two separate components: the Option Grant Program set
forth in Article II and the Stock Issuance Program set forth in Article III. For
the purposes of this Plan, any capitalized term shall have the meaning assigned
under Article IV, Section 8 hereof.
3. ADMINISTRATION OF THE PLAN
A. This Plan shall be administered by either the Board or a
committee of two (2) or more Board members appointed by the Board to which the
Board has delegated administrative functions under the Plan (the "Plan
Administrator"). Members of any committee to which the Board has delegated any
administrative functions shall serve for such terms as the Board shall determine
and subject to the Board's right of removal. All delegations of authority to any
committee shall be and remain revocable by the Board.
B. The Plan Administrator shall have full power and authority to
implement, interpret and administer the Plan, to establish all such rules and
regulations as it deems appropriate, and to make such determinations under the
Plan and any outstanding option grants or share issuances as it deems necessary
or advisable. Decisions of the Plan Administrator shall be final and binding on
all parties who have an interest in the Plan or any outstanding option or share
issuance.
<PAGE>
4. SELECTION OF OPTIONEES AND PARTICIPANTS
A. The persons eligible to receive share issuances under the Stock
Issuance Program and/or option grants pursuant to the Option Grant Program are
limited to Employees; non-employee members of the Board of the Corporation (or
of any Parent or Subsidiary); and consultants and other independent contractors
who provide valuable services to the Corporation (or to any Parent or
Subsidiary).
B. The Plan Administrator shall have the absolute discretion and
authority to determine, subject to the provisions of this Plan, the terms of any
option grant or share issuance. In addition to any other matters over which the
Plan Administrator has discretion hereunder, the Plan Administrator shall
determine which, if any, eligible individuals will be granted options in
accordance with Article II of the Plan and which will be issued shares in
accordance with Article III of the Plan. With respect to option grants made
under the Plan, the Plan Administrator will determine the number of shares to be
covered by each such grant, the status of the granted option as either an
Incentive Option or a Non-Statutory Option, the time or times at which each
granted option is to become exercisable, the vesting schedule (if any)
applicable to shares issued pursuant to the granted options, and the maximum
term for which the option may remain outstanding. With respect to share
issuances under the Stock Issuance Program, in addition to other matters over
which the Plan Administrator has discretion hereunder, the Plan Administrator
will determine the number of shares to be issued to each issuee, the vesting
schedule (if any) applicable to the issued shares, and the consideration to be
paid by the individual for such shares.
C. Common Stock issuable under the Plan, whether under the Option
Grant Program or the Stock Issuance Program, may be subject to such restrictions
on transfer, repurchase rights or other restrictions as may be imposed by the
Plan Administrator and set forth in the documents governing such option or
issuance.
5. STOCK SUBJECT TO THE PLAN
A. Common Stock of the Corporation ("Common Stock") will be issued
under the Plan. The maximum number of shares of Common Stock which may be issued
over the term of the Plan shall not exceed 562,359 shares, subject to adjustment
from time to time in accordance with the provisions of this Section 5 of Article
I.
B. Shares reserved for issuance under granted options but not in
fact issued pursuant to options granted under the Plan due to the expiration or
termination of the option or the cancellation of the option in accordance with
Section 3 of Article II, will again become available for issuance under the
Plan. Shares actually issued under the Plan, whether pursuant
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<PAGE>
to the exercise of an option under the Option Grant Program or a stock issuance
pursuant to the Stock Issuance Program, which are subsequently repurchased by
the Corporation will not become available for future issuance.
C. In the event any change is made to the Common Stock issuable
under the Plan by reason of any stock dividend, stock split, combination of
shares, exchange of shares or other change affecting the outstanding Common
Stock as a class without receipt of consideration, then appropriate adjustments
shall be made to (i) the aggregate number and/or class of shares issuable under
the Plan and (ii) the aggregate number and/or class of shares and the option
price per share in effect under each outstanding option in order to prevent the
dilution or enlargement of benefits thereunder. The adjustments determined by
the Plan Administrator shall be final, binding and conclusive.
6. AMENDMENT OF THE PLAN AND AWARDS
A. The Board shall have complete and exclusive power and authority
to amend or modify the Plan in any or all respects whatsoever. However, no such
amendment or modification shall adversely affect the rights and obligations of
an optionee with respect to options at the time outstanding under the Plan, nor
adversely affect the rights of any issuee with respect to Common Stock issued
under the Plan prior to such action unless such optionee or issuee consents to
such amendment. In addition, the Board shall not, without the approval of the
Corporation's shareholders, amend the Plan so as to (i) increase the maximum
number of shares issuable under the Plan (except for adjustments required under
Article I, subsection 5. C.), (ii) materially increase the benefits accruing to
individuals who participate in the Plan, or (iii) materially modify the
eligibility requirements for participation in the Plan.
B. Options to purchase shares of Common Stock may be granted under
the Option Grant Program and shares of Common Stock may be issued under the
Stock Issuance Program, which are in excess of the number of shares then
available for issuance under the Plan, provided any excess shares actually
issued under the Option Grant Program or the Stock Issuance Program are held in
escrow until shareholder approval of an amendment sufficiently increasing the
number of shares of Common Stock available for issuance under the Plan is
obtained. If such approval is not obtained within twelve (12) months after the
date the initial excess issuances are made, then (i) any unexercised options
representing such excess shall terminate and cease to be exercisable and (ii)
the Corporation shall promptly refund to the optionees and issuees the option or
purchase price paid for any excess shares issued under the Plan and held in
escrow, together with interest (at the applicable short term federal rate) for
the period the shares were held in escrow, and such shares shall thereupon be
automatically cancelled and cease to be outstanding.
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<PAGE>
7. EFFECTIVE DATE AND TERM OF PLAN
A. The Plan shall become effective when adopted by the Board.
Options to purchase shares of Common Stock may be granted under the Option Grant
Program and shares of Common Stock may be issued under the Stock Issuance
Program from and after the effective date, provided any shares actually issued
under the Plan are held in escrow until shareholder approval of the Plan is
obtained. If such approval is not obtained within twelve (12) months after the
effective date, then (i) all options shall terminate and cease to be
exercisable, (ii) the Corporation shall promptly refund to the optionees and
issuees the option or purchase price paid for any shares issued under the Plan,
together with interest (at the applicable short term federal rate) for the
period the shares were held in escrow, and such shares shall thereupon be
automatically cancelled and cease to be outstanding, and (iii) this Plan shall
terminate in its entirety.
B. Unless sooner terminated by reason of subsection 7. A. of this
Article I, the Plan shall terminate upon the earlier of (i) November 14, 2005,
or (ii) the date on which all shares available for issuance under the Plan have
been issued pursuant to the exercise of options granted under Article II or the
issuance of shares under Article III. The termination of the Plan shall have no
effect on any outstanding options under or shares issued and outstanding under
the Plan, and such securities shall thereafter continue to have force and effect
in accordance with the provisions of the agreements evidencing such options and
issuances.
8. NO EMPLOYMENT OR SERVICE RIGHTS
Nothing in the Plan shall confer upon any person any right to
continue in Service for any period of specific duration or interfere with or
otherwise restrict in any way the rights of the Corporation (or any Parent or
Subsidiary) or of the optionee or the issuee, which rights are hereby expressly
reserved by each, to terminate Service of the optionee or issuee at any time for
any reason whatsoever, with or without cause or to engage in any Corporate
Transaction.
ARTICLE II
OPTION GRANT PROGRAM
1. TERMS AND CONDITIONS OF OPTIONS
Options granted pursuant to the Plan shall be authorized by action
of the Plan Administrator and may, at the Plan Administrator's discretion, be
either Incentive Options or Non-Statutory Options except that individuals who
are not Employees may only be granted Non-Statutory Options. Each granted option
shall be evidenced by one or more instruments in the form approved by the Plan
Administrator; provided, however, that each such instrument shall comply with
the terms and conditions of Sections 1 and 3 of this Article II and each
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<PAGE>
instrument evidencing an Incentive Option shall, in addition, comply with the
provisions of Section 2 of this Article II.
A. Option Price.
(i) The option price per share shall be fixed by the Plan
Administrator. In no event, however, shall the option price per share be less
than eighty-five percent (85%) of the Fair Market Value of a share of Common
Stock on the date of the option grant.
(ii) The option price per share shall become immediately due
upon exercise of the option and shall, subject to the provisions of Article IV,
Section 1 and the agreement evidencing such grant, be payable in cash or check
drawn to the Corporation's order. Notwithstanding the above, should the
Corporation's outstanding Common Stock be registered under Section 12(g) of the
Securities Exchange Act of 1934, as amended (the "1934 Act"), at the time the
option is exercised, then the option price may also be paid as follows:
- in shares of Common Stock held by the optionee for the
requisite period necessary to avoid a charge to the Corporation's earnings
for financial reporting purposes and valued at Fair Market Value; or
- through a special sale and remittance procedure
pursuant to which the optionee provides irrevocable written instructions
(a) to a designated brokerage firm to effect the immediate sale of the
purchased shares and remit to the Corporation, out of the sale proceeds
available on the settlement date, an amount sufficient to cover the
aggregate option price payable for the purchased shares plus all
applicable Federal and State income and employment taxes required to be
withheld by the Corporation by reason of such purchase and (b) to the
Corporation to deliver the certificates for the purchased shares directly
to such brokerage firm in order to effect the sale transaction.
Except to the extent such sale and remittance procedure is utilized, payment of
the option price must occur at the time the option is exercised.
B. Term and Exercise of Options. Each option granted under the Plan
shall be exercisable at such time or times, during such period, and for such
number of shares as shall be determined by the Plan Administrator and set forth
in the stock option agreement evidencing such option. However, no option granted
under the Plan shall have a term in excess of ten (10) years from the grant
date.
C. No Assignment. During the lifetime of the optionee, the option
shall be exercisable only by the optionee and shall not be assignable or
transferable by the optionee
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<PAGE>
otherwise than by will or by the laws of descent and distribution following the
optionee's death.
D. Termination of Service. The following provisions shall govern the
exercise period applicable to any options held by the optionee at the time of
cessation of Service or death:
(i) Should the optionee cease to remain in Service for any
reason other than death or Permanent Disability, then the period during which
each outstanding option held by such optionee is to remain exercisable shall be
limited to the three (3)-month period following the date of such cessation of
Service.
(ii) Should such Service terminate by reason of Permanent
Disability or should the optionee die while holding one or more outstanding
options, then the period during which each such option is to remain exercisable
shall be limited to the twelve (12)- month period following the date of the
optionee's cessation of Service or death. During the limited exercise period
following the optionee's death, the option may be exercised by the personal
representative of the optionee's estate or by the person or persons to whom the
option is transferred pursuant to the optionee's will or in accordance with the
laws of descent and distribution.
(iii) The Plan Administrator shall have full power and
authority to extend (either at the time the option is granted or at any time
while the option remains outstanding) the period of time for which the option is
to remain exercisable following the optionee's cessation of Service, from the
limited period otherwise applicable under subsection 1. C. of this Article II,
to such greater period of time as the Plan Administrator may deem appropriate
under the circumstances.
(iv) Notwithstanding the above, no option shall be exercisable
after the specified expiration date of the option term.
(v) Each such option shall, during the applicable limited
exercise period, be exercisable only with respect to the shares for which the
option was exercisable on the date of the optionee's cessation of Service.
E. Shareholder Rights. An optionee shall not have rights as a
shareholder with respect to any shares subject to an option until such optionee
shall have exercised the option and paid the option price.
2. INCENTIVE OPTIONS
All provisions of the Plan shall be applicable to Incentive Options
granted hereunder and, in addition, the terms and conditions specified in this
Section 2 shall be
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applicable to Incentive Options granted under the Plan. Options which are
specifically designated as Non-Statutory Options when issued under the Plan
shall not be subject to such terms and conditions set forth herein.
A. Option Price.
(i) The option price per share of the Common Stock subject to
an Incentive Option shall in no event be less than one hundred percent (100%) of
the Fair Market Value of a share of Common Stock on the grant date.
(ii) If the individual to whom the option is granted is a 10%
Shareholder, then the option price per share shall not be less than one hundred
ten percent (110%) of the Fair Market Value of the Common Stock on the date of
the option grant.
B. Dollar Limitation. The aggregate Fair Market Value (determined as
of the date or dates of grant) of Common Stock which first becomes exercisable
during any one calendar year under Incentive Options granted to any Employee
under any option plan of the Corporation (or any parent or subsidiary
corporation) shall not exceed the sum of One Hundred Thousand Dollars
($100,000). To the extent the Employee holds options which become exercisable in
the same calendar year, the foregoing limitation on such options shall be
applied on the basis of the order in which such options are granted. Any options
in excess of such limitation shall automatically be treated as Non-Statutory
Options.
C. Term of Option for 10% Shareholders. No option granted to a 10%
Shareholder shall have a term in excess of five (5) years from the grant date.
3. CANCELLATION AND NEW GRANT OF OPTIONS
The Plan Administrator shall have the authority to effect, at any
time and from time to time, with the consent of the affected optionees, the
cancellation of any or all outstanding options under the Plan and the grant in
substitution therefor of new options under the Plan covering the same or a
different number of shares of Common Stock but having an option price per share
established at the time of such cancellation and regrant in accordance with the
provisions of this Plan.
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<PAGE>
ARTICLE III
STOCK ISSUANCE PROGRAM
1. STOCK ISSUANCES
Shares of Common Stock shall be issuable under the Stock Issuance
Program through direct and immediate issuances without any intervening stock
option grants. Each such stock issuance shall be evidenced by a Stock Issuance
Agreement ("Issuance Agreement") in a form acceptable to the Plan Administrator,
which form shall be in compliance with the provisions of the Plan.
2. ISSUE PRICE
The purchase price per share shall be fixed by the Plan
Administrator, but in no event shall it be less than eighty-five percent (85%)
of the Fair Market Value of a share of Common Stock at the time of issuance.
3. PAYMENT OF ISSUE PRICE
Except as provided in Article IV, Section 1, shares shall be issued
only in exchange for cash, a check payable to the Corporation, for services
previously rendered to the Corporation (or any Parent or Subsidiary) or such
other lawful consideration as may be acceptable to the Plan Administrator.
ARTICLE IV
MISCELLANEOUS
1. LOANS
A. The Plan Administrator may assist any optionee or issuee (other
than a non-employee director) in the exercise of one or more options granted to
such optionee under the Option Grant Program or the purchase of one or more
shares to be issued to such issuee under the Stock Issuance Program, including
the satisfaction of any Federal and State income and employment tax obligations
arising therefrom, by (i) authorizing the extension of a loan from the
Corporation to such optionee or issuee, or (ii) permitting the optionee or
issuee to pay the option price or purchase price for the purchased Common Stock
in installments over a period of years.
B. The terms of any loan or installment method of payment (including
the interest rate and terms of repayment) shall be established by the Plan
Administrator in its sole discretion. Loans or installment payments may be
authorized with or without security or collateral. However, any loan made to a
consultant or other non-employee advisor must be secured by property other than
the purchased shares of Common Stock. In all events the
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<PAGE>
maximum credit available to each optionee or issuee may not exceed the sum of
(i) the aggregate option price or purchase price payable for the purchased
shares plus (ii) any Federal and State income and employment tax liability
incurred by the optionee or issuee in connection with such exercise or purchase.
C. The Plan Administrator may, in its absolute discretion, determine
that one or more loans extended under the financial assistance program shall be
subject to forgiveness by the Corporation in whole or in part upon such terms
and conditions as the Board in its discretion deems appropriate.
2. VESTING OF SHARES AND REPURCHASE RIGHTS
A. The Plan Administrator, in its absolute discretion, may issue
fully and immediately vested shares of Common Stock, or the Plan Administrator
may impose such vesting requirements as it deems appropriate with the
Corporation retaining a right to repurchase any unvested shares. The terms of
the vesting schedule and of the Corporation's repurchase rights shall be as
determined by the Plan Administrator and set forth in the agreement governing
such issuance.
B. Any new, additional or different shares of stock or other
property (including money paid other than as a regular cash dividend) which the
holder of unvested Common Stock may have the right to receive by reason of a
stock dividend, stock split, reclassification or other change affecting the
outstanding Common Stock as a class without the Corporation's receipt of
consideration shall be issued subject to (i) the same vesting and repurchase
limitations applicable to the unvested Common Stock with respect to which it was
paid or arose, and (ii) such escrow arrangements as the Plan Administrator shall
deem appropriate.
C. No person to whom shares of Common Stock have been issued
pursuant to the Plan may transfer any such shares which have not vested.
Notwithstanding the above, the issuee shall have the right to make a gift of
unvested shares acquired under the Plan to his spouse, parents or issue or to a
trust established for such spouse, parents or issue, provided the transferee of
such shares delivers to the Corporation a written agreement to be bound by all
the provisions of the Plan and the Issuance Agreement or Stock Purchase
Agreement executed by the issuee at the time of his acquisition of the gifted
shares.
3. MARKET STAND-OFF AGREEMENTS
The Plan Administrator may require each person to whom any shares
are issued under this Plan to enter into an agreement which restricts or
prohibits the sale of any stock of the Corporation by such person for a
reasonable period of time following a public offering of any shares of stock by
the Corporation.
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<PAGE>
4. RIGHT OF FIRST REFUSAL
Until such time as the Corporation's outstanding shares of Common
Stock are first registered under Section 12(g) of the 1934 Act, the Plan
Administrator may subject any shares issued pursuant to the Plan to a right of
first refusal with respect to any proposed disposition of such shares other than
a transfer permitted by Section 2. C. of this Article IV. Such right of first
refusal shall be exercisable by the Corporation (or its assignees) in accordance
with the terms and conditions specified in the instrument governing the issuance
of such shares.
5. SECURITIES LAWS; LEGENDS
A. No shares of Common Stock or other assets shall be issued or
delivered under this Plan unless and until the Corporation shall have determined
that there has been full and adequate compliance with all applicable
requirements of the Federal and state securities laws and all other applicable
legal and regulatory requirements.
B. Shares issued under the Plan shall bear such legends as the Plan
Administrator deems necessary or appropriate, including such restrictive legends
as the Plan Administrator shall require to reflect the terms of any agreement
between the issuee and the Corporation.
6. SHAREHOLDER RIGHTS
Subject to the rights of the Corporation set forth herein or in any
other agreement entered into between the Corporation and an issuee of shares
under the Plan, each person to whom shares of Common Stock have been issued
under the Plan shall have all the rights of a shareholder with respect to those
shares whether or not his interest in such shares is vested. Accordingly, the
issuee shall have the right to vote such shares and to receive any cash
dividends or other distributions paid or made with respect to such shares.
7. ACCELERATION
The Plan Administrator may, in its discretion, provide for the
automatic acceleration upon a change of control and/or Corporate Transaction of
the time at which any option will become exercisable or for the lapse of any
repurchase right tied to vesting by including a provision to such effect in the
documents evidencing the rights of the optionee or issuee.
8. DEFINITIONS
The following definitions shall be in effect under this Plan:
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<PAGE>
A. Board shall mean the Board of Directors of the Corporation.
B. Common Stock shall mean the common stock of the Corporation.
C. Corporate Transaction shall mean either of the following
shareholder-approved transactions to which the Corporation is a party:
(i) any transaction or series of related transactions
(including, without limitation, any reorganization, merger or
consolidation) in which more than fifty percent (50%) of the Corporation's
outstanding voting stock is transferred to a person or persons different
from those who held the stock immediately prior to such transaction, or
(ii) the sale, transfer or other disposition of all or
substantially all of the Corporation's assets in complete liquidation or
dissolution of the Corporation.
D. Employee shall mean an individual who is in the employ of the
Corporation or any Parent or Subsidiary, subject to the control and direction of
the employer entity as to both the work to be performed and the manner and
method of performance.
E. Fair Market Value per share of Common Stock on any relevant date
under the Plan shall be the value determined in accordance with the following
provisions:
(i) If the Common Stock is not at the time listed or admitted to
trading on any Stock Exchange but is traded on the Nasdaq National Market,
the Fair Market Value shall be the closing selling price per share of
Common Stock on the date in question, as the price is reported by the
National Association of Securities Dealers through the Nasdaq National
Market or any successor system. If there is no closing selling price for
the Common Stock on the date in question, then the Fair Market Value shall
be the closing selling price on the last preceding date for which such
quotation exists.
(ii) If the Common Stock is at the time listed or admitted to
trading on any Stock Exchange, then the Fair Market Value shall be the
closing selling price per share of Common Stock on the date in question on
the Stock Exchange determined by the Plan Administrator to be the primary
market for the Common Stock, as such price is officially quoted in the
composite tape of transactions on such exchange. If there is no closing
selling price for the Common Stock on the date in question, then the Fair
Market Value shall be the closing selling price on the last preceding date
for which such quotation exists.
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<PAGE>
(iii) If the Common Stock is at the time neither listed nor
admitted to trading on any Stock Exchange nor traded on the Nasdaq
National Market, then such Fair Market Value shall be determined by the
Plan Administrator after taking into account such factors as the Plan
Administrator shall deem appropriate.
F. Incentive Option shall mean a stock option which satisfies the
requirements of the Internal Revenue Code of 1986, as amended (the "Code")
Section 422.
G. Non-Statutory Option shall mean a stock option not intended to
meet the requirements of Code Section 422.
H. Parent shall mean any corporation (other than the Corporation) in
an unbroken chain of corporations ending with the Corporation, provided each
corporation in the unbroken chain (other than the Corporation) owns, at the time
of the determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.
I. Permanent Disability shall have the meaning assigned to such term
in Code Section 22(e)(3).
J. Service shall mean the provision of services to the Corporation
or any Parent or Subsidiary by an individual in the capacity of an Employee, a
non-employee member of the Board or a consultant or independent contractor.
K. Subsidiary shall mean each corporation (other than the
Corporation) in an unbroken chain of corporations beginning with the
Corporation, provided each such corporation (other than the last corporation) in
the unbroken chain owns, at the time of the determination, stock possessing
fifty percent (50%) or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.
L. 10% Shareholder shall mean the owner of stock (as determined
under Code Section 424(d)) possessing ten percent (10%) or more of the total
combined voting power of all classes of stock of the Corporation.
9. USE OF PROCEEDS
Any cash proceeds received by the Corporation from the issuance of
shares of Common Stock under the Plan shall be used for general corporate
purposes.
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<PAGE>
10. WITHHOLDING
The Corporation's obligation to deliver shares upon the exercise of
any options granted under Article II or the purchase of any shares issued under
Article III shall be subject to the satisfaction of all applicable Federal,
state and local income and employment tax withholding requirements.
11. REGULATORY APPROVALS
The implementation of the Plan, the granting of any options under
the Option Grant Program, the issuance of any shares under the Stock Issuance
Program, and the issuance of Common Stock upon the exercise of the option grants
made hereunder shall be subject to the Corporation's procurement of all
approvals and permits required by regulatory authorities having jurisdiction
over the Plan, the options granted under it, and the Common Stock issued
pursuant to it.
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<PAGE>
EXHIBIT C
SECTION 83(b) TAX ELECTION
This statement is being made under Section 83(b) of the Internal Revenue Code,
pursuant to Treas. Reg. Section 1.83-2.
(1) The taxpayer who performed the services is:
Name:
Address:
Taxpayer Ident. No.:
(2) The property with respect to which the election is being made
is _____________ shares of the common stock of Collateral Therapeutics,
Inc.
(3) The property was issued on ____________, 19__.
(4) The taxable year in which the election is being made is the calendar year
19__.
(5) The property is subject to a repurchase right pursuant to which the issuer
has the right to acquire the property at the original purchase price if
for any reason taxpayer's employment with the issuer is terminated. The
issuer's repurchase right lapses in a series of annual and monthly
installments over a four (4) year period ending on _______________.
(6) 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) is $_______ per share.
(7) The amount paid for such property is $________ per share.
(8) A copy of this statement was furnished to Collateral Therapeutics, Inc.
for whom taxpayer rendered the service underlying the transfer of
property.
(9) This statement is executed as of: __________________, 19__.
- ----------------------------- --------------------------
Spouse (if any) Taxpayer
This form must be filed with the Internal Revenue Service Center with which
taxpayer files his/her Federal income tax returns. The filing must be made
within 30 days after the execution date of the Restricted Stock Issuance
Agreement.
C-1
<PAGE>
EXHIBIT 10.35
COLLATERAL THERAPEUTICS, INC.
1998 STOCK INCENTIVE PLAN
ARTICLE ONE
GENERAL PROVISIONS
I. PURPOSE OF THE PLAN
This 1998 Stock Incentive Plan is intended to promote the interests
of Collateral Therapeutics, Inc., a California corporation, by providing
eligible persons with the opportunity to acquire a proprietary interest, or
otherwise increase their proprietary interest, in the Corporation as an
incentive for them to remain in the service of the Corporation.
Capitalized terms shall have the meanings assigned to such terms in
the attached Appendix.
II. STRUCTURE OF THE PLAN
A. The Plan shall be divided into five separate equity programs:
- the Discretionary Option Grant Program under which eligible
persons may, at the discretion of the Plan Administrator, be granted options to
purchase shares of Common Stock,
- the Salary Investment Option Grant Program under which
eligible employees may elect to have a portion of their base salary invested
each year in special option grants,
- the Stock Issuance Program under which eligible persons may,
at the discretion of the Plan Administrator, be issued shares of Common Stock
directly, either through the immediate purchase of such shares or as a bonus for
services rendered the Corporation (or any Parent or Subsidiary),
- the Automatic Option Grant Program under which eligible
non-employee Board members shall automatically receive option grants at periodic
intervals to purchase shares of Common Stock, and
- the Director Fee Option Grant Program under which
non-employee Board members may elect to have all or any portion of their annual
retainer fee otherwise payable in cash applied to a special option grant.
<PAGE>
B. The provisions of Articles One and Seven shall apply to all
equity programs under the Plan and shall govern the interests of all persons
under the Plan.
III. ADMINISTRATION OF THE PLAN
A. Prior to the Section 12 Registration Date, the Discretionary
Option Grant and Stock Issuance Programs shall be administered by the Board.
Beginning with the Section 12 Registration Date, the Primary Committee shall
have sole and exclusive authority to administer the Discretionary Option Grant
and Stock Issuance Programs with respect to Section 16 Insiders.
B. Administration of the Discretionary Option Grant and Stock
Issuance Programs with respect to all other persons eligible to participate in
those programs may, at the Board's discretion, be vested in the Primary
Committee or a Secondary Committee, or the Board may retain the power to
administer those programs with respect to all such persons.
C. Members of the Primary Committee or any Secondary Committee shall
serve for such period of time as the Board may determine and may be removed by
the Board at any time. The Board may also at any time terminate the functions of
any Secondary Committee and reassume all powers and authority previously
delegated to such committee.
D. Each Plan Administrator shall, within the scope of its
administrative functions under the Plan, have full power and authority (subject
to the provisions of the Plan) to establish such rules and regulations as it may
deem appropriate for proper administration of the Discretionary Option Grant and
Stock Issuance Programs and to make such determinations under, and issue such
interpretations of, the provisions of such programs and any outstanding options
or stock issuances thereunder as it may deem necessary or advisable. Decisions
of the Plan Administrator within the scope of its administrative functions under
the Plan shall be final and binding on all parties who have an interest in the
Discretionary Option Grant and Stock Issuance Programs under its jurisdiction or
any stock option or stock issuance thereunder.
E. The Primary Committee shall have the sole and exclusive authority
to determine which Section 16 Insiders and other highly compensated Employees
shall be eligible for participation in the Salary Investment Option Grant
Program for one or more calendar years. However, all option grants under the
Salary Investment Option Grant Program shall be made in accordance with the
express terms of that program, and the Primary Committee shall not exercise any
discretionary functions with respect to the option grants made under that
program.
F. Service on the Primary Committee or the Secondary Committee shall
constitute service as a Board member, and members of each such committee shall
accordingly be entitled to full indemnification and reimbursement as Board
members for their service on such committee. No member of the Primary Committee
or the Secondary Committee shall be liable for any act or omission made in good
faith with respect to the Plan or any option grants or stock issuances under the
Plan.
2.
<PAGE>
G. Administration of the Automatic Option Grant and Director Fee
Option Grant Programs shall be self-executing in accordance with the terms of
those programs, and no Plan Administrator shall exercise any discretionary
functions with respect to any option grants or stock issuances made under those
programs.
IV. ELIGIBILITY
A. The persons eligible to participate in the Discretionary Option
Grant and Stock Issuance Programs are as follows:
(i) Employees,
(ii) non-employee members of the Board or the board of
directors of any Parent or Subsidiary, and
(iii) consultants and other independent advisors who provide
services to the Corporation (or any Parent or Subsidiary).
B. Only Employees who are Section 16 Insiders or other highly
compensated individuals shall be eligible to participate in the Salary
Investment Option Grant Program.
C. Each Plan Administrator shall, within the scope of its
administrative jurisdiction under the Plan, have full authority to determine,
(i) with respect to the option grants under the Discretionary Option Grant
Program, which eligible persons are to receive option grants, the time or times
when such option grants are to be made, the number of shares to be covered by
each such grant, the status of the granted option as either an Incentive Option
or a Non-Statutory Option, the time or times when each option is to become
exercisable, the vesting schedule (if any) applicable to the option shares and
the maximum term for which the option is to remain outstanding and (ii) with
respect to stock issuances under the Stock Issuance Program, which eligible
persons are to receive stock issuances, the time or times when such issuances
are to be made, the number of shares to be issued to each Participant, the
vesting schedule (if any) applicable to the issued shares and the consideration
for such shares.
D. The Plan Administrator shall have the absolute discretion either
to grant options in accordance with the Discretionary Option Grant Program or to
effect stock issuances in accordance with the Stock Issuance Program.
E. The individuals who shall be eligible to participate in the
Automatic Option Grant Program shall be limited to (i) those individuals who
first become non-employee Board members after the Underwriting Date, whether
through appointment by the Board or election by the Corporation's stockholders,
and (ii) those individuals who continue to serve as non-employee Board members
at one or more Annual Stockholders Meetings held after the Underwriting Date,
including individuals serving as non-employee Board members on the Underwriting
Date. A non-employee Board member who has previously been in the employ of the
Corporation (or any
3.
<PAGE>
Parent or Subsidiary) shall not be eligible to receive an option grant under the
Automatic Option Grant Program at the time he or she first becomes a
non-employee Board member, but shall be eligible to receive periodic option
grants under the Automatic Option Grant Program while he or she continues to
serve as a non-employee Board member.
F. All non-employee Board members shall be eligible to participate
in the Director Fee Option Grant Program.
V. STOCK SUBJECT TO THE PLAN
A. The stock issuable under the Plan shall be shares of authorized
but unissued or reacquired Common Stock, including shares repurchased by the
Corporation on the open market. The maximum number of shares of Common Stock
initially reserved for issuance over the term of the Plan shall not exceed two
million two hundred ninety-six thousand eight hundred thirty-five (2,296,835)
shares, which shall consist of (i) the number of shares which are estimated to
remain available for issuance, as of the Section 12 Registration Date, under the
Predecessor Plan as last approved by the Corporation's stockholders, including
the shares subject to outstanding options under that Predecessor Plan, and (ii)
an additional increase of approximately one million five hundred thousand
(1,500,000) shares authorized by the Board and the stockholders prior to the
Section 12 Registration Date. To the extent any unvested shares of Common Stock
issued under the Predecessor Plan are repurchased by the Corporation after the
Section 12 Registration Date, at the option exercise price paid per share, in
connection with the holder's termination of service, those repurchased shares
shall be added to the reserve of Common Stock available for issuance under the
Plan, but in no event shall more than 437,100 shares be added to the reserve
from such repurchases.
B. No one person participating in the Plan may receive options,
separately exercisable stock appreciation rights and direct stock issuances for
more than two hundred fifty thousand (250,000) shares of Common Stock in the
aggregate per calendar year, beginning with the 1998 calendar year.
C. Shares of Common Stock subject to outstanding options (including
options incorporated into this Plan from the Predecessor Plan) shall be
available for subsequent issuance under the Plan to the extent (i) those options
expire or terminate for any reason prior to exercise in full or (ii) the options
are cancelled in accordance with the cancellation-regrant provisions of Article
Two. Unvested shares issued under the Plan and subsequently cancelled or
repurchased by the Corporation (including unvested shares issued under the
Predecessor Plan and repurchased by the Corporation on or after the Plan
Effective Date) at the original issue price paid per share, pursuant to the
Corporation's repurchase rights under the Plan shall be added back to the number
of shares of Common Stock reserved for issuance under the Plan and shall
accordingly be available for reissuance through one or more subsequent option
grants or direct stock issuances under the Plan. However, should the exercise
price of an option under the Plan be paid with shares of Common Stock or should
shares of Common Stock otherwise issuable under the Plan be withheld by the
Corporation in satisfaction of the withholding taxes incurred in connection
4.
<PAGE>
with the exercise of an option or the vesting of a stock issuance under the
Plan, then the number of shares of Common Stock available for issuance under the
Plan shall be reduced by the gross number of shares for which the option is
exercised or which vest under the stock issuance, and not by the net number of
shares of Common Stock issued to the holder of such option or stock issuance.
Shares of Common Stock underlying one or more stock appreciation rights
exercised under Section V of Article Two of the Plan shall not be available for
subsequent issuance under the Plan.
D. If any change is made to the Common Stock by reason of any stock
split, stock dividend, recapitalization, combination of shares, exchange of
shares or other change affecting the outstanding Common Stock as a class without
the Corporation's receipt of consideration, appropriate adjustments shall be
made to (i) the maximum number and/or class of securities issuable under the
Plan, (ii) the number and/or class of securities for which any one person may be
granted stock options, separately exercisable stock appreciation rights and
direct stock issuances under the Plan per calendar year, (iii) the number and/or
class of securities for which grants are subsequently to be made under the
Automatic Option Grant Program to new and continuing non-employee Board members,
(iv) the number and/or class of securities and the exercise price per share in
effect under each outstanding option under the Plan and (v) the number and/or
class of securities and price per share in effect under each outstanding option
incorporated into this Plan from the Predecessor Plan. Such adjustments to the
outstanding options are to be effected in a manner which shall preclude the
enlargement or dilution of rights and benefits under such options. The
adjustments determined by the Plan Administrator shall be final, binding and
conclusive.
5.
<PAGE>
ARTICLE TWO
DISCRETIONARY OPTION GRANT PROGRAM
I. OPTION TERMS
Each option shall be evidenced by one or more documents in the form
approved by the Plan Administrator; provided, however, that each such document
shall comply with the terms specified below. Each document evidencing an
Incentive Option shall, in addition, be subject to the provisions of the Plan
applicable to such options.
A. Exercise Price.
1. The exercise price per share shall be fixed by the Plan
Administrator but shall not be less than one hundred percent (100%) of the Fair
Market Value per share of Common Stock on the option grant date.
2. The exercise price shall become immediately due upon
exercise of the option and shall, subject to the provisions of Section I of
Article Seven and the documents evidencing the option, be payable in cash or
check made payable to the Corporation. Should the Common Stock be registered
under Section 12 of the 1934 Act at the time the option is exercised, then the
exercise price may also be paid as follows:
(i) in shares of Common Stock held for the requisite
period necessary to avoid a charge to the Corporation's earnings for
financial reporting purposes and valued at Fair Market Value on the
Exercise Date, or
(ii) to the extent the option is exercised for vested
shares, through a special sale and remittance procedure pursuant to which
the Optionee shall concurrently provide irrevocable instructions (A) to a
Corporation-designated brokerage firm to effect the immediate sale of the
purchased shares and remit to the Corporation, out of the sale proceeds
available on the settlement date, sufficient funds to cover the aggregate
exercise price payable for the purchased shares plus all applicable
Federal, state and local income and employment taxes required to be
withheld by the Corporation by reason of such exercise and (B) to the
Corporation to deliver the certificates for the purchased shares directly
to such brokerage firm in order to complete the sale.
Except to the extent such sale and remittance procedure is utilized,
payment of the exercise price for the purchased shares must be made on the
Exercise Date.
B. Exercise and Term of Options. Each option shall be exercisable at
such time or times, during such period and for such number of shares as shall be
determined by the
6.
<PAGE>
Plan Administrator and set forth in the documents evidencing the option.
However, no option shall have a term in excess of ten (10) years measured from
the option grant date.
C. Effect of Termination of Service.
1. The following provisions shall govern the exercise of any
options held by the Optionee at the time of cessation of Service or death:
(i) Any option outstanding at the time of the Optionee's
cessation of Service for any reason shall remain exercisable for such
period of time thereafter as shall be determined by the Plan Administrator
and set forth in the documents evidencing the option, but no such option
shall be exercisable after the expiration of the option term.
(ii) Any option exercisable in whole or in part by the
Optionee at the time of death may be subsequently exercised by the
personal representative of the Optionee's estate or by the person or
persons to whom the option is transferred pursuant to the Optionee's will
or in accordance with the laws of descent and distribution.
(iii) Should the Optionee's Service be terminated for
Misconduct, then all outstanding options held by the Optionee shall
terminate immediately and cease to be outstanding.
(iv) During the applicable post-Service exercise period,
the option may not be exercised in the aggregate for more than the number
of vested shares for which the option is exercisable on the date of the
Optionee's cessation of Service. Upon the expiration of the applicable
exercise period or (if earlier) upon the expiration of the option term,
the option shall terminate and cease to be outstanding for any vested
shares for which the option has not been exercised. However, the option
shall, immediately upon the Optionee's cessation of Service, terminate and
cease to be outstanding to the extent the option is not otherwise at that
time exercisable for vested shares.
2. The Plan Administrator shall have complete discretion,
exercisable either at the time an option is granted or at any time while the
option remains outstanding, to:
(i) extend the period of time for which the option is to
remain exercisable following the Optionee's cessation of Service from the
limited exercise period otherwise in effect for that option to such
greater period of time as the Plan Administrator shall deem appropriate,
but in no event beyond the expiration of the option term, and/or
7.
<PAGE>
(ii) permit the option to be exercised, during the
applicable post-Service exercise period, not only with respect to the
number of vested shares of Common Stock for which such option is
exercisable at the time of the Optionee's cessation of Service but also
with respect to one or more additional installments in which the Optionee
would have vested had the Optionee continued in Service.
D. Stockholder Rights. The holder of an option shall have no
stockholder rights with respect to the shares subject to the option until such
person shall have exercised the option, paid the exercise price and become a
holder of record of the purchased shares.
E. Repurchase Rights. The Plan Administrator shall have the
discretion to grant options which are exercisable for unvested shares of Common
Stock. Should the Optionee cease Service while holding such unvested shares, the
Corporation shall have the right to repurchase, at the exercise price paid per
share, any or all of those unvested shares. The terms upon which such repurchase
right shall be exercisable (including the period and procedure for exercise and
the appropriate vesting schedule for the purchased shares) shall be established
by the Plan Administrator and set forth in the document evidencing such
repurchase right.
F. Limited Transferability of Options. During the lifetime of the
Optionee, Incentive Options shall be exercisable only by the Optionee and shall
not be assignable or transferable other than by will or by the laws of descent
and distribution following the Optionee's death. Non-Statutory Options shall be
subject to the same restrictions, except that a Non- Statutory Option may, in
connection with the Optionee's estate plan, be assigned in whole or in part
during the Optionee's lifetime to one or more members of the Optionee's
immediate family or to a trust established exclusively for the Optionee and/or
one or more such family members. The assigned portion may only be exercised by
the person or persons who acquire a proprietary interest in the option pursuant
to the assignment. The terms applicable to the assigned portion shall be the
same as those in effect for the option immediately prior to such assignment and
shall be set forth in such documents issued to the assignee as the Plan
Administrator may deem appropriate.
II. INCENTIVE OPTIONS
The terms specified below shall be applicable to all Incentive
Options. Except as modified by the provisions of this Section II, all the
provisions of Articles One, Two and Seven shall be applicable to Incentive
Options. Options which are specifically designated as Non- Statutory Options
when issued under the Plan shall not be subject to the terms of this Section II.
A. Eligibility. Incentive Options may only be granted to Employees.
B. Exercise Price. The exercise price per share shall not be less
than one hundred percent (100%) of the Fair Market Value per share of Common
Stock on the option grant date.
8.
<PAGE>
C. Dollar Limitation. The aggregate Fair Market Value of the shares
of Common Stock (determined as of the respective date or dates of grant) for
which one or more options granted to any Employee under the Plan (or any other
option plan of the Corporation or any Parent or Subsidiary) may for the first
time become exercisable as Incentive Options during any one calendar year shall
not exceed the sum of One Hundred Thousand Dollars ($100,000). To the extent the
Employee holds two (2) or more such options which become exercisable for the
first time in the same calendar year, the foregoing limitation on the
exercisability of such options as Incentive Options shall be applied on the
basis of the order in which such options are granted.
D. 10% Stockholder. If any Employee to whom an Incentive Option is
granted is a 10% Stockholder, then the exercise price per share shall not be
less than one hundred ten percent (110%) of the Fair Market Value per share of
Common Stock on the option grant date, and the option term shall not exceed five
(5) years measured from the option grant date.
III. CHANGE IN CONTROL
A. Each option outstanding at the time of a Change in Control but
not otherwise fully exercisable shall automatically accelerate so that each such
option shall, immediately prior to the effective date of the Change in Control,
become exercisable for all of the shares of Common Stock at the time subject to
that option and may be exercised for any or all of those shares as fully-vested
shares of Common Stock. However, an outstanding option shall not become
exercisable on such an accelerated basis if and to the extent: (i) such option
is, in connection with the Change in Control, to be assumed or otherwise
continued in full force or effect by the successor corporation (or parent
thereof) pursuant to the terms of the Change in Control transaction, (ii) such
option is to be replaced with a cash incentive program of the successor
corporation which preserves the spread existing at the time of the Change in
Control on the shares of Common Stock for which the option is not otherwise at
that time exercisable and provides for subsequent payout in accordance with the
same vesting schedule applicable to those option shares or (iii) the
acceleration of such option is subject to other limitations imposed by the Plan
Administrator at the time of the option grant.
B. All outstanding repurchase rights shall also terminate
automatically, and the shares of Common Stock subject to those terminated rights
shall immediately vest in full, in the event of any Change in Control, except to
the extent: (i) those repurchase rights are to be assigned to the successor
corporation (or parent thereof) or (ii) such accelerated vesting is precluded by
other limitations imposed by the Plan Administrator at the time the repurchase
right is issued.
C. Immediately following the consummation of the Change in Control,
all outstanding options shall terminate and cease to be outstanding, except to
the extent assumed by the successor corporation (or parent thereof) or otherwise
continued in full force and effect pursuant to the terms of the Change in
Control transaction.
9.
<PAGE>
D. Each option which is assumed in connection with a Change in
Control (or is otherwise to continue in effect) shall be appropriately adjusted,
immediately after such Change in Control, to apply to the number and class of
securities or other property which would have been issuable to the Optionee in
consummation of such Change in Control had the option been exercised immediately
prior to such Change in Control. Appropriate adjustments to reflect such Change
in Control shall also be made to (i) the exercise price payable per share under
each outstanding option, provided the aggregate exercise price payable for such
securities shall remain the same, (ii) the maximum number and/or class of
securities available for issuance over the remaining term of the Plan and (iii)
the maximum number and/or class of securities for which any one person may be
granted stock options and direct stock issuances under the Plan per calendar
year.
E. The Plan Administrator shall have full power and authority
exercisable, either at the time the option is granted or at any time while the
option remains outstanding, to provide for the accelerated vesting of one or
more outstanding options under the Discretionary Option Grant Program upon the
occurrence of a Change in Control, whether or not those options are to be
assumed or otherwise continued in full force and effect pursuant to the terms of
the Change in Control transaction. In addition, the Plan Administrator may
structure one or more of the Corporation's repurchase rights under the
Discretionary Option Grant Program so that those rights shall immediately
terminate, in whole or in part, at the time of a Change in Control and shall not
be assignable to the successor corporation (or parent thereof), and the shares
subject to those terminated repurchase rights shall accordingly vest in full at
the time of such Change in Control.
F. The Plan Administrator shall have full power and authority
exercisable, either at the time the option is granted or at any time while the
option remains outstanding, to provide for the accelerated vesting, in whole or
in part, of one or more outstanding options under the Discretionary Option Grant
Program upon the Involuntary Termination of the Optionee's Service within a
designated period (not to exceed eighteen (18) months) following the effective
date of any Change in Control in which those options do not otherwise
accelerate. In addition, the Plan Administrator may structure one or more of the
Corporation's repurchase rights under the Discretionary Option Grant Program so
that those rights will immediately terminate at the time of such Involuntary
Termination, and the shares subject to those terminated repurchase rights shall
accordingly vest in full at that time.
G. The portion of any Incentive Option accelerated in connection
with a Change in Control shall remain exercisable as an Incentive Option only to
the extent the applicable One Hundred Thousand Dollar ($100,000) limitation is
not exceeded. To the extent such dollar limitation is exceeded, the accelerated
portion of such option shall be exercisable as a Non-Statutory Option under the
Federal tax laws.
H. The outstanding options shall in no way affect the right of the
Corporation to adjust, reclassify, reorganize or otherwise change its capital or
business structure or to merge, consolidate, dissolve, liquidate or sell or
transfer all or any part of its business or assets.
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IV. CANCELLATION AND REGRANT OF OPTIONS
The Plan Administrator shall have the authority to effect, at any
time and from time to time, with the consent of the affected option holders, the
cancellation of any or all outstanding options under the Discretionary Option
Grant Program (including outstanding options incorporated from the Predecessor
Plan) and to grant in substitution new options covering the same or different
number of shares of Common Stock but with an exercise price per share based on
the Fair Market Value per share of Common Stock on the new grant date.
V. STOCK APPRECIATION RIGHTS
A. The Plan Administrator shall have full power and authority to
grant to selected Optionees tandem stock appreciation rights and/or limited
stock appreciation rights.
B. The following terms shall govern the grant and exercise of tandem
stock appreciation rights:
(i) One or more Optionees may be granted the right,
exercisable upon such terms as the Plan Administrator may establish, to
elect between the exercise of the underlying option for shares of Common
Stock and the surrender of that option in exchange for a distribution from
the Corporation in an amount equal to the excess of (a) the Fair Market
Value (on the option surrender date) of the number of shares in which the
Optionee is at the time vested under the surrendered option (or
surrendered portion thereof) over (b) the aggregate exercise price payable
for such shares.
(ii) No such option surrender shall be effective unless it
is approved by the Plan Administrator, either at the time of the actual
option surrender or at any earlier time. If the surrender is so approved,
then the distribution to which the Optionee shall be entitled may be made
in shares of Common Stock valued at Fair Market Value on the option
surrender date, in cash, or partly in shares and partly in cash, as the
Plan Administrator shall in its sole discretion deem appropriate.
(iii) If the surrender of an option is not approved by the
Plan Administrator, then the Optionee shall retain whatever rights the
Optionee had under the surrendered option (or surrendered portion thereof)
on the option surrender date and may exercise such rights at any time
prior to the later of (a) five (5) business days after the receipt of the
rejection notice or (b) the last day on which the option is otherwise
exercisable in accordance with the terms of the documents evidencing such
option, but in no event may such rights be exercised more than ten (10)
years after the option grant date.
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C. The following terms shall govern the grant and exercise of
limited stock appreciation rights:
(i) One or more Section 16 Insiders may be granted limited
stock appreciation rights with respect to their outstanding options.
(ii) Upon the occurrence of a Hostile Take-Over, each
individual holding one or more options with such a limited stock
appreciation right shall have the unconditional right (exercisable for a
thirty (30)-day period following such Hostile Take-Over) to surrender each
such option to the Corporation, to the extent the option is at the time
exercisable for vested shares of Common Stock. In return for the
surrendered option, the Optionee shall receive a cash distribution from
the Corporation in an amount equal to the excess of (A) the Take-Over
Price of the shares of Common Stock which are at the time vested under
each surrendered option (or surrendered portion thereof) over (B) the
aggregate exercise price payable for such shares. Such cash distribution
shall be paid within five (5) days following the option surrender date.
(iii) The Plan Administrator shall, at the time the option
with such limited stock appreciation right is granted under the
Discretionary Option Grant Program, pre-approve any subsequent exercise of
that right in accordance with the terms of this Paragraph C. Accordingly,
no further approval of the Plan Administrator or the Board shall be
required at the time of the actual option surrender and cash distribution.
(iv) The balance of the option (if any) shall remain
outstanding and exercisable in accordance with the documents evidencing
such option.
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ARTICLE THREE
SALARY INVESTMENT OPTION GRANT PROGRAM
I. OPTION GRANTS
The Primary Committee shall have the sole and exclusive authority to
determine the calendar year or years (if any) for which the Salary Investment
Option Grant Program is to be in effect and to select the Section 16 Insiders
and other highly compensated Employees eligible to participate in the Salary
Investment Option Grant Program for such calendar year or years. Each selected
individual who elects to participate in the Salary Investment Option Grant
Program must, prior to the start of each calendar year of participation, file
with the Plan Administrator (or its designate) an irrevocable authorization
directing the Corporation to reduce his or her base salary for that calendar
year by an amount not less than Ten Thousand Dollars ($10,000.00) nor more than
Fifty Thousand Dollars ($50,000.00). The Primary Committee shall have complete
discretion to determine whether to approve the filed authorization in whole or
in part. To the extent the Primary Committee approves the authorization, the
individual who filed that authorization shall automatically be granted an option
under the Salary Investment Option Grant Program on the first trading day in
January of the calendar year for which the salary reduction is to be in effect.
II. OPTION TERMS
Each option shall be a Non-Statutory Option evidenced by one or more
documents in the form approved by the Plan Administrator; provided, however,
that each such document shall comply with the terms specified below.
A. Exercise Price.
1. The exercise price per share shall be thirty-three and
one-third percent (33-1/3%) of the Fair Market Value per share of Common Stock
on the option grant date.
2. The exercise price shall become immediately due upon
exercise of the option and shall be payable in one or more of the alternative
forms authorized under the Discretionary Option Grant Program. Except to the
extent the sale and remittance procedure specified thereunder is utilized,
payment of the exercise price for the purchased shares must be made on the
Exercise Date.
B. Number of Option Shares. The number of shares of Common Stock
subject to the option shall be determined pursuant to the following formula
(rounded down to the nearest whole number):
X = A / (B x 66-2/3%), where
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X is the number of option shares,
A is the dollar amount of the approved reduction in the
Optionee's base salary for the calendar year, and
B is the Fair Market Value per share of Common Stock on the
option grant date.
C. Exercise and Term of Options. The option shall become exercisable
in a series of twelve (12) successive equal monthly installments upon the
Optionee's completion of each calendar month of Service in the calendar year for
which the salary reduction is in effect. Each option shall have a maximum term
of ten (10) years measured from the option grant date.
D. Effect of Termination of Service. Should the Optionee cease
Service for any reason while holding one or more options under this Article
Three, then each such option shall remain exercisable, for any or all of the
shares for which the option is exercisable at the time of such cessation of
Service, until the earlier of (i) the expiration of the ten (10)-year option
term or (ii) the expiration of the three (3)-year period measured from the date
of such cessation of Service. Should the Optionee die while holding one or more
options under this Article Three, then each such option may be exercised, for
any or all of the shares for which the option is exercisable at the time of the
Optionee's cessation of Service (less any shares subsequently purchased by
Optionee prior to death), by the personal representative of the Optionee's
estate or by the person or persons to whom the option is transferred pursuant to
the Optionee's will or in accordance with the laws of descent and distribution.
Such right of exercise shall lapse, and the option shall terminate, upon the
earlier of (i) the expiration of the ten (10)-year option term or (ii) the three
(3)-year period measured from the date of the Optionee's cessation of Service.
However, the option shall, immediately upon the Optionee's cessation of Service
for any reason, terminate and cease to remain outstanding with respect to any
and all shares of Common Stock for which the option is not otherwise at that
time exercisable.
III. CHANGE IN CONTROL/HOSTILE TAKE-OVER
A. In the event of any Change in Control while the Optionee remains
in Service, each outstanding option held by such Optionee under this Salary
Investment Option Grant Program shall automatically accelerate so that each such
option shall, immediately prior to the effective date of the Change in Control,
become fully exercisable with respect to the total number of shares of Common
Stock at the time subject to such option and may be exercised for any or all of
those shares as fully-vested shares of Common Stock. The successor corporation
(or parent thereof) in the Change in Control transaction shall assume each such
outstanding option so that each option under the Salary Investment Option Grant
Program shall remain exercisable for the fully-vested shares until the earliest
to occur of (i) the expiration of the ten (10)-year option term, (ii) the
expiration of the three (3)-year period measured from the date of the Optionee's
cessation of Service or (iii) the surrender of the option in connection with a
Hostile Take-Over.
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B. Upon the occurrence of a Hostile Take-Over, the Optionee shall
have a thirty (30)-day period in which to surrender to the Corporation each
outstanding option granted him or her under the Salary Investment Option Grant
Program. The Optionee shall in return be entitled to a cash distribution from
the Corporation in an amount equal to the excess of (i) the Take-Over Price of
the shares of Common Stock at the time subject to the surrendered option
(whether or not the Optionee is otherwise at the time vested in those shares)
over (ii) the aggregate exercise price payable for such shares. Such cash
distribution shall be paid within five (5) days following the surrender of the
option to the Corporation. The Primary Committee shall, at the time the option
with such limited stock appreciation right is granted under the Salary
Investment Option Grant Program, pre-approve any subsequent exercise of that
right in accordance with the terms of this Paragraph B. Accordingly, no further
approval of the Primary Committee or the Board shall be required at the time of
the actual option surrender and cash distribution.
C. The grant of options under the Salary Investment Option Grant
Program shall in no way affect the right of the Corporation to adjust,
reclassify, reorganize or otherwise change its capital or business structure or
to merge, consolidate, dissolve, liquidate or sell or transfer all or any part
of its business or assets.
IV. REMAINING TERMS
The remaining terms of each option granted under the Salary
Investment Option Grant Program shall be the same as the terms in effect for
option grants made under the Discretionary Option Grant Program.
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ARTICLE FOUR
STOCK ISSUANCE PROGRAM
I. STOCK ISSUANCE TERMS
Shares of Common Stock may be issued under the Stock Issuance
Program through direct and immediate issuances without any intervening option
grants. Each such stock issuance shall be evidenced by a Stock Issuance
Agreement which complies with the terms specified below. Shares of Common Stock
may also be issued under the Stock Issuance Program pursuant to share right
awards which entitle the recipients to receive those shares upon the attainment
of designated performance goals.
A. Purchase Price.
1. The purchase price per share shall be fixed by the Plan
Administrator, but shall not be less than one hundred percent (100%) of the Fair
Market Value per share of Common Stock on the issuance date.
2. Subject to the provisions of Section I of Article Seven,
shares of Common Stock may be issued under the Stock Issuance Program for any of
the following items of consideration which the Plan Administrator may deem
appropriate in each individual instance:
(i) cash or check made payable to the Corporation, or
(ii) past services rendered to the Corporation (or any
Parent or Subsidiary).
B. Vesting Provisions.
1. The Plan Administrator may issue shares of Common Stock
under the Stock Issuance Program which are fully and immediately vested upon
issuance or which are to vest in one or more installments over the Participant's
period of Service or upon attainment of specified performance objectives.
Alternatively, the Plan Administrator may issue share right awards under the
Stock Issuance Program which shall entitle the recipient to receive a specified
number of shares of Common Stock upon the attainment of one or more performance
goals established by the Plan Administrator. Upon the attainment of such
performance goals, fully- vested shares of Common Stock shall be issued in
satisfaction of those share right awards.
2. Any new, substituted or additional securities or other
property (including money paid other than as a regular cash dividend) which the
Participant may have the right to receive with respect to the Participant's
unvested shares of Common Stock by reason of any stock dividend, stock split,
recapitalization, combination of shares, exchange of shares or other change
affecting the outstanding Common Stock as a class without the Corporation's
receipt
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of consideration shall be issued subject to (i) the same vesting requirements
applicable to the Participant's unvested shares of Common Stock and (ii) such
escrow arrangements as the Plan Administrator shall deem appropriate.
3. The Participant shall have full stockholder rights with
respect to any shares of Common Stock issued to the Participant under the Stock
Issuance Program, whether or not the Participant's interest in those shares is
vested. Accordingly, the Participant shall have the right to vote such shares
and to receive any regular cash dividends paid on such shares.
4. Should the Participant cease to remain in Service while
holding one or more unvested shares of Common Stock issued under the Stock
Issuance Program or should the performance objectives not be attained with
respect to one or more such unvested shares of Common Stock, then those shares
shall be immediately surrendered to the Corporation for cancellation, and the
Participant shall have no further stockholder rights with respect to those
shares. To the extent the surrendered shares were previously issued to the
Participant for consideration paid in cash or cash equivalent (including the
Participant's purchase-money indebtedness), the Corporation shall repay to the
Participant the cash consideration paid for the surrendered shares and shall
cancel the unpaid principal balance of any outstanding purchase- money note of
the Participant attributable to the surrendered shares.
5. The Plan Administrator may in its discretion waive the
surrender and cancellation of one or more unvested shares of Common Stock which
would otherwise occur upon the cessation of the Participant's Service or the
non-attainment of the performance objectives applicable to those shares. Such
waiver shall result in the immediate vesting of the Participant's interest in
the shares of Common Stock as to which the waiver applies. Such waiver may be
effected at any time, whether before or after the Participant's cessation of
Service or the attainment or non-attainment of the applicable performance
objectives.
6. Outstanding share right awards under the Stock Issuance
Program shall automatically terminate, and no shares of Common Stock shall
actually be issued in satisfaction of those awards, if the performance goals
established for such awards are not attained. The Plan Administrator, however,
shall have the discretionary authority to issue shares of Common Stock in
satisfaction of one or more outstanding share right awards as to which the
designated performance goals are not attained.
II. CHANGE IN CONTROL
A. All of the Corporation's outstanding repurchase rights under the
Stock Issuance Program shall terminate automatically, and all the shares of
Common Stock subject to those terminated rights shall immediately vest in full,
in the event of any Change in Control, except to the extent (i) those repurchase
rights are to be assigned to the successor corporation (or parent thereof) in
connection with such Change in Control or are otherwise to continue in full
force and effect pursuant to the terms of the Change in Control transaction or
(ii) such accelerated vesting is precluded by other limitations imposed in the
Stock Issuance Agreement.
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B. The Plan Administrator shall have the discretionary authority,
exercisable either at the time the unvested shares are issued or any time while
the Corporation's repurchase rights remain outstanding under the Stock Issuance
Program, to provide that those rights shall automatically terminate upon the
occurrence of a Change in Control and shall not be assignable to the successor
corporation (or parent thereof), and the shares of Common Stock subject to those
terminated rights shall immediately vest at the time of such Change in Control.
C. The Plan Administrator shall have the discretionary authority,
exercisable either at the time the unvested shares are issued or any time while
the Corporation's repurchase rights remain outstanding under the Stock Issuance
Program, to provide that those rights shall automatically terminate in whole or
in part, and the shares of Common Stock subject to those terminated rights shall
immediately vest, in the event the Participant's Service should subsequently
terminate by reason of an Involuntary Termination within a designated period
(not to exceed eighteen (18) months) following the effective date of any Change
in Control transaction in which those repurchase rights are assigned to the
successor corporation (or parent thereof) or are otherwise continued in effect.
III. SHARE ESCROW/LEGENDS
Unvested shares may, in the Plan Administrator's discretion, be held
in escrow by the Corporation until the Participant's interest in such shares
vests or may be issued directly to the Participant with restrictive legends on
the certificates evidencing those unvested shares.
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ARTICLE FIVE
AUTOMATIC OPTION GRANT PROGRAM
I. OPTION TERMS
A. Grant Dates. Option grants under the Automatic Option Grant
Program shall be made on the dates specified below:
1. Each individual who is first elected or appointed as a
non-employee Board member at any time after the Underwriting Date shall
automatically be granted, on the date of such initial election or appointment, a
Non-Statutory Option to purchase fifteen thousand (15,000) shares of Common
Stock, provided that individual has not previously been in the employ of the
Corporation or any Parent or Subsidiary.
2. On the date of each Annual Stockholders Meeting held after
the Underwriting Date, each individual who is to continue to serve as an
Eligible Director (including individuals who joined the Board prior to the
Underwriting Date), whether or not that individual is standing for re-election
to the Board at that particular Annual Meeting, shall automatically be granted a
Non-Statutory Option to purchase five thousand (5,000) shares of Common Stock,
provided such individual has served as a non-employee Board member for at least
six (6) months. There shall be no limit on the number of such five thousand
(5,000)-share option grants any one Eligible Director may receive over his or
her period of Board service, and non-employee Board members who have previously
been in the employ of the Corporation (or any Parent or Subsidiary) or who have
otherwise received a stock option grant from the Corporation prior to the
Underwriting Date shall be eligible to receive one or more such annual option
grants over their period of continued Board service.
B. Exercise Price.
1. The exercise price per share shall be equal to one hundred
percent (100%) of the Fair Market Value per share of Common Stock on the option
grant date.
2. The exercise price shall be payable in one or more of the
alternative forms authorized under the Discretionary Option Grant Program.
Except to the extent the sale and remittance procedure specified thereunder is
utilized, payment of the exercise price for the purchased shares must be made on
the Exercise Date.
C. Option Term. Each option shall have a term of ten (10) years
measured from the option grant date.
D. Exercise and Vesting of Options. Each option shall be immediately
exercisable for any or all of the option shares. However, any shares purchased
under the option shall be subject to repurchase by the Corporation, at the
exercise price paid per share, upon the
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Optionee's cessation of Board service prior to vesting in those shares. The
shares subject to each initial fifteen thousand (15,000)-share automatic option
grant shall vest, and the Corporation's repurchase right shall lapse, in a
series of three (3) successive equal annual installments upon the Optionee's
completion of each year of Board service over the three (3)-year period measured
from the option grant date. The shares subject to each annual five thousand
(5,000)-share automatic option grant shall vest, and the Corporation's
repurchase right shall lapse, upon the Optionee's completion of one (1) year of
Board service measured from the option grant date.
E. Termination of Board Service. The following provisions shall
govern the exercise of any options held by the Optionee at the time the Optionee
ceases to serve as a Board member:
(i) The Optionee (or, in the event of Optionee's death,
the personal representative of the Optionee's estate or the person or
persons to whom the option is transferred pursuant to the Optionee's will
or in accordance with the laws of descent and distribution) shall have a
twelve (12)-month period following the date of such cessation of Board
service in which to exercise each such option.
(ii) During the twelve (12)-month exercise period, the
option may not be exercised in the aggregate for more than the number of
vested shares of Common Stock for which the option is exercisable at the
time of the Optionee's cessation of Board service.
(iii) Should the Optionee cease to serve as a Board member
by reason of death or Permanent Disability, then all shares at the time
subject to the option shall immediately vest so that such option may,
during the twelve (12)-month exercise period following such cessation of
Board service, be exercised for all or any portion of those shares as
fully-vested shares of Common Stock.
(iv) In no event shall the option remain exercisable after
the expiration of the option term. Upon the expiration of the twelve
(12)-month exercise period or (if earlier) upon the expiration of the
option term, the option shall terminate and cease to be outstanding for
any vested shares for which the option has not been exercised. However,
the option shall, immediately upon the Optionee's cessation of Board
service for any reason other than death or Permanent Disability, terminate
and cease to be outstanding to the extent the option is not otherwise at
that time exercisable for vested shares.
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II. CHANGE IN CONTROL/HOSTILE TAKE-OVER
A. The shares of Common Stock subject to each option outstanding at
the time of a Change in Control but not otherwise vested shall automatically
vest in full so that each such option shall, immediately prior to the effective
date of such Change in Control, become exercisable for all of those shares as
fully-vested shares of Common Stock and may be exercised for all or any portion
of those vested shares. Immediately following the consummation of the Change in
Control, each automatic option grant shall terminate and cease to be
outstanding, except to the extent assumed by the successor corporation (or
parent thereof) or otherwise continued in full force and effect pursuant to the
terms of the Change in Control transaction.
B. All outstanding repurchase rights shall automatically terminate,
and the shares of Common Stock subject to those terminated rights shall
immediately vest in full, in the event of any Change in Control.
C. Upon the occurrence of a Hostile Take-Over, the Optionee shall
have a thirty (30)-day period in which to surrender to the Corporation each of
his or her outstanding automatic option grants. The Optionee shall in return be
entitled to a cash distribution from the Corporation in an amount equal to the
excess of (i) the Take-Over Price of the shares of Common Stock at the time
subject to each surrendered option (whether or not the Optionee is otherwise at
the time vested in those shares) over (ii) the aggregate exercise price payable
for such shares. Such cash distribution shall be paid within five (5) days
following the surrender of the option to the Corporation. No approval or consent
of the Board or any Plan Administrator shall be required in connection with such
option surrender and cash distribution.
D. Each option which is assumed in connection with a Change in
Control (or otherwise continued in full and effect) shall be appropriately
adjusted, immediately after such Change in Control, to apply to the number and
class of securities or other property which would have been issuable to the
Optionee in consummation of such Change in Control had the option been exercised
immediately prior to such Change in Control. Appropriate adjustments shall also
be made to the exercise price payable per share under each outstanding option,
provided the aggregate exercise price payable for such securities shall remain
the same.
E. The grant of options under the Automatic Option Grant Program
shall in no way affect the right of the Corporation to adjust, reclassify,
reorganize or otherwise change its capital or business structure or to merge,
consolidate, dissolve, liquidate or sell or transfer all or any part of its
business or assets.
III. REMAINING TERMS
The remaining terms of each option granted under the Automatic
Option Grant Program shall be the same as the terms in effect for option grants
made under the Discretionary Option Grant Program.
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ARTICLE SIX
DIRECTOR FEE OPTION GRANT PROGRAM
I. OPTION GRANTS
The Plan Administrator shall have the sole and exclusive authority
to determine the calendar year or years (if any) the Director Fee Option Grant
Program is to be in effect. When the Director Fee Option Grant Program is in
effect, each non-employee Board member may elect to apply all or any portion of
the annual retainer fee otherwise payable in cash for his or her service on the
Board to the acquisition of a special option grant. Such election must be filed
with the Corporation's Chief Financial Officer prior to first day of the
calendar year for which the annual retainer fee which is the subject of that
election is otherwise payable. Each non-employee Board member who files such a
timely election shall automatically be granted an option under this Director Fee
Option Grant Program on the first trading day in January in the calendar year
for which the annual retainer fee which is the subject of that election would
otherwise be payable in cash.
II. OPTION TERMS
Each option shall be a Non-Statutory Option governed by the terms
and conditions specified below.
A. Exercise Price.
1. The exercise price per share shall be thirty-three and
one-third percent (33-1/3%) of the Fair Market Value per share of Common Stock
on the option grant date.
2. The exercise price shall become immediately due upon
exercise of the option and shall be payable in one or more of the alternative
forms authorized under the Discretionary Option Grant Program. Except to the
extent the sale and remittance procedure specified thereunder is utilized,
payment of the exercise price for the purchased shares must be made on the
Exercise Date.
B. Number of Option Shares. The number of shares of Common Stock
subject to the option shall be determined pursuant to the following formula
(rounded down to the nearest whole number):
X = A / (B x 66-2/3%), where
X is the number of option shares,
A is the portion of the annual retainer fee subject to the
non-employee Board member's election, and
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B is the Fair Market Value per share of Common Stock on the
option grant date.
C. Exercise and Term of Options. The option shall become exercisable
in a series of twelve (12) successive equal monthly installments upon the
Optionee's completion of each month of Board service over the twelve (12)-month
period measured from the grant date. Each option shall have a maximum term of
ten (10) years measured from the option grant date.
D. Termination of Board Service. Should the Optionee cease Board
service for any reason (other than death or Permanent Disability) while holding
one or more options under this Director Fee Option Grant Program, then each such
option shall remain exercisable, for any or all of the shares for which the
option is exercisable at the time of such cessation of Board service, until the
earlier of (i) the expiration of the ten (10)-year option term or (ii) the
expiration of the three (3)-year period measured from the date of such cessation
of Board service. However, each option held by the Optionee under this Director
Fee Option Grant Program at the time of his or her cessation of Board service
shall immediately terminate and cease to remain outstanding with respect to any
and all shares of Common Stock for which the option is not otherwise at that
time exercisable.
E. Death or Permanent Disability. Should the Optionee's service as a
Board member cease by reason of death or Permanent Disability, then each option
held by such Optionee under this Director Fee Option Grant Program shall
immediately become exercisable for all the shares of Common Stock at the time
subject to that option, and the option may be exercised for any or all of those
shares as fully-vested shares until the earlier of (i) the expiration of the ten
(10)-year option term or (ii) the expiration of the three (3)-year period
measured from the date of such cessation of Board service.
Should the Optionee die after cessation of Board service but while
holding one or more options under this Director Fee Option Grant Program, then
each such option may be exercised, for any or all of the shares for which the
option is exercisable at the time of the Optionee's cessation of Board service
(less any shares subsequently purchased by Optionee prior to death), by the
personal representative of the Optionee's estate or by the person or persons to
whom the option is transferred pursuant to the Optionee's will or in accordance
with the laws of descent and distribution. Such right of exercise shall lapse,
and the option shall terminate, upon the earlier of (i) the expiration of the
ten (10)-year option term or (ii) the three (3)-year period measured from the
date of the Optionee's cessation of Board service.
III. CHANGE IN CONTROL/HOSTILE TAKE-OVER
A. In the event of any Change in Control while the Optionee remains
a Board member, each outstanding option held by such Optionee under this
Director Fee Option Grant Program shall automatically accelerate so that each
such option shall, immediately prior to the effective date of the Change in
Control, become fully exercisable with respect to the total number of shares of
Common Stock at the time subject to such option and may be exercised for any or
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all of those shares as fully-vested shares of Common Stock. The successor
corporation (or parent thereof) in the Change in Control transaction shall
assume each such outstanding option so that each option under the Director Fee
Option Grant Program shall remain exercisable for the fully- vested shares until
the earliest to occur of (i) the expiration of the ten (10)-year option term,
(ii) the expiration of the three (3)-year period measured from the date of the
Optionee's cessation of Board service or (iii) the surrender of the option in
connection with a Hostile Take-Over.
B. Upon the occurrence of a Hostile Take-Over, the Optionee shall
have a thirty (30)-day period in which to surrender to the Corporation each
outstanding option granted him or her under the Director Fee Option Grant
Program. The Optionee shall in return be entitled to a cash distribution from
the Corporation in an amount equal to the excess of (i) the Take-Over Price of
the shares of Common Stock at the time subject to each surrendered option
(whether or not the Optionee is otherwise at the time vested in those shares)
over (ii) the aggregate exercise price payable for such shares. Such cash
distribution shall be paid within five (5) days following the surrender of the
option to the Corporation. No approval or consent of the Board or any Plan
Administrator shall be required in connection with such option surrender and
cash distribution.
C. The grant of options under the Director Fee Option Grant Program
shall in no way affect the right of the Corporation to adjust, reclassify,
reorganize or otherwise change its capital or business structure or to merge,
consolidate, dissolve, liquidate or sell or transfer all or any part of its
business or assets.
IV. REMAINING TERMS
The remaining terms of each option granted under this Director Fee
Option Grant Program shall be the same as the terms in effect for option grants
made under the Discretionary Option Grant Program.
24.
<PAGE>
ARTICLE SEVEN
MISCELLANEOUS
I. FINANCING
The Plan Administrator may permit any Optionee or Participant to pay
the option exercise price under the Discretionary Option Grant Program or the
purchase price of shares issued under the Stock Issuance Program by delivering a
full-recourse, interest bearing promissory note payable in one or more
installments. The terms of any such promissory note (including the interest rate
and the terms of repayment) shall be established by the Plan Administrator in
its sole discretion. In no event may the maximum credit available to the
Optionee or Participant exceed the sum of (i) the aggregate option exercise
price or purchase price payable for the purchased shares plus (ii) any Federal,
state and local income and employment tax liability incurred by the Optionee or
the Participant in connection with the option exercise or share purchase.
II. TAX WITHHOLDING
A. The Corporation's obligation to deliver shares of Common Stock
upon the exercise of options or the issuance or vesting of such shares under the
Plan shall be subject to the satisfaction of all applicable Federal, state and
local income and employment tax withholding requirements.
B. The Plan Administrator may, in its discretion, provide any or all
holders of Non-Statutory Options or unvested shares of Common Stock under the
Plan (other than the options granted or the shares issued under the Automatic
Option Grant or Director Fee Option Grant Program) with the right to use shares
of Common Stock in satisfaction of all or part of the Taxes incurred by such
holders in connection with the exercise of their options or the vesting of their
shares. Such right may be provided to any such holder in either or both of the
following formats:
Stock Withholding: The election to have the Corporation
withhold, from the shares of Common Stock otherwise issuable upon the exercise
of such Non-Statutory Option or the vesting of such shares, a portion of those
shares with an aggregate Fair Market Value equal to the percentage of the Taxes
(not to exceed one hundred percent (100%)) designated by the holder.
Stock Delivery: The election to deliver to the Corporation, at
the time the Non-Statutory Option is exercised or the shares vest, one or more
shares of Common Stock previously acquired by such holder (other than in
connection with the option exercise or share vesting triggering the Taxes) with
an aggregate Fair Market Value equal to the percentage of the Taxes (not to
exceed one hundred percent (100%)) designated by the holder.
25.
<PAGE>
III. EFFECTIVE DATE AND TERM OF THE PLAN
A. The Discretionary Option Grant and Stock Issuance Programs shall
become effective immediately on the Plan Effective Date, and the Automatic
Option Grant Program shall become effective on the Underwriting Date. However,
the Salary Investment Option Grant and Director Fee Option Grant Programs shall
not be implemented until such time as the Primary Committee may deem
appropriate. Options may be granted under the Discretionary Option Grant or
Automatic Option Grant Program at any time on or after the Plan Effective Date;
however, no options granted under the Plan may be exercised, and no shares shall
be issued under the Plan, until the Plan is approved by the Corporation's
stockholders. If such stockholder approval is not obtained within twelve (12)
months after the Plan Effective Date, then all options previously granted under
this Plan shall terminate and cease to be outstanding, and no further options
shall be granted and no shares shall be issued under the Plan.
B. The Plan shall serve as the successor to the Predecessor Plan,
and no further option grants or direct stock issuances shall be made under the
Predecessor Plan after the Section 12 Registration Date. All options outstanding
under the Predecessor Plan on the Section 12 Registration Date shall be
incorporated into the Plan at that time and shall be treated as outstanding
options under the Plan. However, each outstanding option so incorporated shall
continue to be governed solely by the terms of the documents evidencing such
option, and no provision of the Plan shall be deemed to affect or otherwise
modify the rights or obligations of the holders of such incorporated options
with respect to their acquisition of shares of Common Stock.
C. One or more provisions of the Plan, including (without
limitation) the option/vesting acceleration provisions of Article Two relating
to Changes in Control, may, in the Plan Administrator's discretion, be extended
to one or more options incorporated from the Predecessor Plan which do not
otherwise contain such provisions.
D. The Plan shall terminate upon the earliest to occur of (i) April
20, 2008, (ii) the date on which all shares available for issuance under the
Plan shall have been issued as fully-vested shares or (iii) the termination of
all outstanding options in connection with a Change in Control. Should the Plan
terminate on April 20, 2008, then all option grants and unvested stock issuances
outstanding at that time shall continue to have force and effect in accordance
with the provisions of the documents evidencing such grants or issuances.
IV. AMENDMENT OF THE PLAN
A. The Board shall have complete and exclusive power and authority
to amend or modify the Plan in any or all respects. However, no such amendment
or modification shall adversely affect the rights and obligations with respect
to stock options or unvested stock issuances at the time outstanding under the
Plan unless the Optionee or the Participant consents to such amendment or
modification. In addition, certain amendments may require stockholder approval
pursuant to applicable laws or regulations.
26.
<PAGE>
B. Options to purchase shares of Common Stock may be granted under
the Discretionary Option Grant and Salary Investment Option Grant Programs and
shares of Common Stock may be issued under the Stock Issuance Program that are
in each instance in excess of the number of shares then available for issuance
under the Plan, provided any excess shares actually issued under those programs
shall be held in escrow until there is obtained stockholder approval of an
amendment sufficiently increasing the number of shares of Common Stock available
for issuance under the Plan. If such stockholder approval is not obtained within
twelve (12) months after the date the first such excess issuances are made, then
(i) any unexercised options granted on the basis of such excess shares shall
terminate and cease to be outstanding and (ii) the Corporation shall promptly
refund to the Optionees and the Participants the exercise or purchase price paid
for any excess shares issued under the Plan and held in escrow, together with
interest (at the applicable Short Term Federal Rate) for the period the shares
were held in escrow, and such shares shall thereupon be automatically cancelled
and cease to be outstanding.
V. USE OF PROCEEDS
Any cash proceeds received by the Corporation from the sale of
shares of Common Stock under the Plan shall be used for general corporate
purposes.
VI. REGULATORY APPROVALS
A. The implementation of the Plan, the granting of any stock option
under the Plan and the issuance of any shares of Common Stock (i) upon the
exercise of any granted option or (ii) under the Stock Issuance Program shall be
subject to the Corporation's procurement of all approvals and permits required
by regulatory authorities having jurisdiction over the Plan, the stock options
granted under it and the shares of Common Stock issued pursuant to it.
B. No shares of Common Stock or other assets shall be issued or
delivered under the Plan unless and until there shall have been compliance with
all applicable requirements of Federal and state securities laws, including the
filing and effectiveness of the Form S-8 registration statement for the shares
of Common Stock issuable under the Plan, and all applicable listing requirements
of any stock exchange (or the Nasdaq National Market, if applicable) on which
Common Stock is then listed for trading.
VII. NO EMPLOYMENT/SERVICE RIGHTS
Nothing in the Plan shall confer upon the Optionee or the
Participant any right to continue in Service for any period of specific duration
or interfere with or otherwise restrict in any way the rights of the Corporation
(or any Parent or Subsidiary employing or retaining such person) or of the
Optionee or the Participant, which rights are hereby expressly reserved by each,
to terminate such person's Service at any time for any reason, with or without
cause.
27.
<PAGE>
APPENDIX
The following definitions shall be in effect under the Plan:
A. Automatic Option Grant Program shall mean the automatic option grant
program in effect under the Plan.
B. Board shall mean the Corporation's Board of Directors.
C. Change in Control shall mean a change in ownership or control of the
Corporation effected through any of the following transactions:
(i) a merger or consolidation in which securities possessing
more than fifty percent (50%) of the total combined voting power of the
Corporation's outstanding securities are transferred to a person or
persons different from the persons holding those securities immediately
prior to such transaction, or
(ii) the sale, transfer or other disposition of all or
substantially all of the Corporation's assets in complete liquidation or
dissolution of the Corporation, or
(iii) the acquisition, directly or indirectly, by any person or
related group of persons (other than the Corporation or a person that
directly or indirectly controls, is controlled by, or is under common
control with, the Corporation) of beneficial ownership (within the meaning
of Rule 13d-3 of the 1934 Act) of securities possessing more than fifty
percent (50%) of the total combined voting power of the Corporation's
outstanding securities pursuant to a tender or exchange offer made
directly to the Corporation's stockholders, or
(iv) a change in the composition of the Board over a period of
thirty-six (36) consecutive months or less such that a majority of the
Board members ceases, by reason of one or more contested elections for
Board membership, to be comprised of individuals who either (A) have been
Board members continuously since the beginning of such period or (B) have
been elected or nominated for election as Board members during such period
by at least a majority of the Board members described in clause (A) who
were still in office at the time the Board approved such election or
nomination.
D. Code shall mean the Internal Revenue Code of 1986, as amended.
E. Common Stock shall mean the Corporation's common stock.
A-1.
<PAGE>
F. Corporation shall mean Collateral Therapeutics, Inc., a California
corporation, and any corporate successor to all or substantially of the assets
or voting stock of Collateral Therapeutics, Inc. which shall by appropriate
action adopt the Plan.
G. Director Fee Option Grant Program shall mean the special stock option
grant in effect for non-employee Board members under Article Six of the Plan.
H. Discretionary Option Grant Program shall mean the discretionary option
grant program in effect under the Plan.
I. Eligible Director shall mean a non-employee Board member eligible to
participate in the Automatic Option Grant Program in accordance with the
eligibility provisions of Article One.
J. Employee shall mean an individual who is in the employ of the
Corporation (or any Parent or Subsidiary), subject to the control and direction
of the employer entity as to both the work to be performed and the manner and
method of performance.
K. Exercise Date shall mean the date on which the Corporation shall have
received written notice of the option exercise.
L. Fair Market Value per share of Common Stock on any relevant date shall
be determined in accordance with the following provisions:
(i) If the Common Stock is at the time traded on the Nasdaq
National Market, then the Fair Market Value shall be the closing selling
price per share of Common Stock on the date in question, as such price is
reported by the National Association of Securities Dealers on the Nasdaq
National Market. If there is no closing selling price for the Common Stock
on the date in question, then the Fair Market Value shall be the closing
selling price on the last preceding date for which such quotation exists.
(ii) If the Common Stock is at the time listed on any Stock
Exchange, then the Fair Market Value shall be the closing selling price
per share of Common Stock on the date in question on the Stock Exchange
determined by the Plan Administrator to be the primary market for the
Common Stock, as such price is officially quoted in the composite tape of
transactions on such exchange. If there is no closing selling price for
the Common Stock on the date in question, then the Fair Market Value shall
be the closing selling price on the last preceding date for which such
quotation exists.
(iii) For purposes of any option grants made on the Underwriting
Date, the Fair Market Value shall be deemed to be equal to the price per
share at
A-2.
<PAGE>
which the Common Stock is to be sold in the initial public offering
pursuant to the Underwriting Agreement.
(iv) For purposes of any option grants made prior to the
Underwriting Date, the Fair Market Value shall be determined by the Plan
Administrator, after taking into account such factors as it deems
appropriate.
M. Hostile Take-Over shall mean the acquisition, directly or indirectly,
by any person or related group of persons (other than the Corporation or a
person that directly or indirectly controls, is controlled by, or is under
common control with, the Corporation) of beneficial ownership (within the
meaning of Rule 13d-3 of the 1934 Act) of securities possessing more than fifty
percent (50%) of the total combined voting power of the Corporation's
outstanding securities pursuant to a tender or exchange offer made directly to
the Corporation's stockholders which the Board does not recommend such
stockholders to accept.
N. Incentive Option shall mean an option which satisfies the requirements
of Code Section 422.
O. Involuntary Termination shall mean the termination of the Service of
any individual which occurs by reason of:
(i) such individual's involuntary dismissal or discharge by the
Corporation for reasons other than Misconduct, or
(ii) such individual's voluntary resignation following (A) a
change in his or her position with the Corporation (or Parent or
Subsidiary employing the individual) which materially reduces his or her
duties and responsibilities or the level of management to which he or she
reports, (B) a reduction in his or her level of compensation (including
base salary, fringe benefits and target bonus under any
corporate-performance based bonus or incentive programs) by more than
fifteen percent (15%) or (C) a relocation of such individual's place of
employment by more than fifty (50) miles, provided and only if such
change, reduction or relocation is effected by the Corporation without the
individual's consent.
P. Misconduct shall mean the commission of any act of fraud, embezzlement
or dishonesty by the Optionee or Participant, any unauthorized use or disclosure
by such person of confidential information or trade secrets of the Corporation
(or any Parent or Subsidiary), or any other intentional misconduct by such
person adversely affecting the business or affairs of the Corporation (or any
Parent or Subsidiary) in a material manner. The foregoing definition shall not
be deemed to be inclusive of all the acts or omissions which the Corporation (or
any Parent or Subsidiary) may consider as grounds for the dismissal or discharge
of any Optionee, Participant or other person in the Service of the Corporation
(or any Parent or Subsidiary).
A-3.
<PAGE>
Q. 1934 Act shall mean the Securities Exchange Act of 1934, as amended.
R. Non-Statutory Option shall mean an option not intended to satisfy the
requirements of Code Section 422.
S. Optionee shall mean any person to whom an option is granted under the
Discretionary Option Grant, Salary Investment Option Grant, Automatic Option
Grant or Director Fee Option Grant Program.
T. Parent shall mean any corporation (other than the Corporation) in an
unbroken chain of corporations ending with the Corporation, provided each
corporation in the unbroken chain (other than the Corporation) owns, at the time
of the determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.
U. Participant shall mean any person who is issued shares of Common Stock
under the Stock Issuance Program.
V. Permanent Disability or Permanently Disabled shall mean the inability
of the Optionee or the Participant to engage in any substantial gainful activity
by reason of any medically determinable physical or mental impairment expected
to result in death or to be of continuous duration of twelve (12) months or
more. However, solely for purposes of the Automatic Option Grant and Director
Fee Option Grant Programs, Permanent Disability or Permanently Disabled shall
mean the inability of the non-employee Board member to perform his or her usual
duties as a Board member by reason of any medically determinable physical or
mental impairment expected to result in death or to be of continuous duration of
twelve (12) months or more.
W. Plan shall mean the Corporation's 1998 Stock Incentive Plan, as set
forth in this document.
X. Plan Administrator shall mean the particular entity, whether the
Primary Committee, the Board or the Secondary Committee, which is authorized to
administer the Discretionary Option Grant and Stock Issuance Programs with
respect to one or more classes of eligible persons, to the extent such entity is
carrying out its administrative functions under those programs with respect to
the persons under its jurisdiction.
Y. Plan Effective Date shall mean April 20, 1998, the date on which the
Plan was adopted by the Board.
Z. Predecessor Plan shall mean the Corporation's pre-existing Stock Option
Plan in effect immediately prior to the Section 12 Registration Date.
A-4.
<PAGE>
AA. Primary Committee shall mean the committee of two (2) or more
non-employee Board members appointed by the Board to administer the
Discretionary Option Grant and Stock Issuance Programs with respect to Section
16 Insiders and to administer the Salary Investment Option Grant Program solely
with respect to the selection of the eligible individuals who may participate in
such program.
AB. Salary Investment Option Grant Program shall mean the salary
investment option grant program in effect under the Plan.
AC. Secondary Committee shall mean a committee of one or more Board
members appointed by the Board to administer the Discretionary Option Grant and
Stock Issuance Programs with respect to eligible persons other than Section 16
Insiders.
AD. Section 12 Registration Date shall mean the date on which the Common
Stock is first registered under Section 12 of the 1934 Act.
AE. Section 16 Insider shall mean an officer or director of the
Corporation subject to the short-swing profit liabilities of Section 16 of the
1934 Act.
AF. Service shall mean the performance of services for the Corporation (or
any Parent or Subsidiary) by a person in the capacity of an Employee, a
non-employee member of the board of directors or a consultant or independent
advisor, except to the extent otherwise specifically provided in the documents
evidencing the option grant or stock issuance.
AG. Stock Exchange shall mean either the American Stock Exchange or the
New York Stock Exchange.
AH. Stock Issuance Agreement shall mean the agreement entered into by the
Corporation and the Participant at the time of issuance of shares of Common
Stock under the Stock Issuance Program.
AI. Stock Issuance Program shall mean the stock issuance program in effect
under the Plan.
AJ. Subsidiary shall mean any corporation (other than the Corporation) in
an unbroken chain of corporations beginning with the Corporation, provided each
corporation (other than the last corporation) in the unbroken chain owns, at the
time of the determination, stock possessing fifty percent (50%) or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.
AK. Take-Over Price shall mean the greater of (i) the Fair Market Value
per share of Common Stock on the date the option is surrendered to the
Corporation in connection with a Hostile Take-Over or (ii) the highest reported
price per share of Common Stock paid by the
A-5.
<PAGE>
tender offeror in effecting such Hostile Take-Over. However, if the surrendered
option is an Incentive Option, the Take-Over Price shall not exceed the clause
(i) price per share.
AL. Taxes shall mean the Federal, state and local income and employment
tax liabilities incurred by the holder of Non-Statutory Options or unvested
shares of Common Stock in connection with the exercise of those options or the
vesting of those shares.
AM. 10% Stockholder shall mean the owner of stock (as determined under
Code Section 424(d)) possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Corporation (or any Parent
or Subsidiary).
AN. Underwriting Agreement shall mean the agreement between the
Corporation and the underwriter or underwriters managing the initial public
offering of the Common Stock.
AO. Underwriting Date shall mean the date on which the Underwriting
Agreement is executed and priced in connection with an initial public offering
of the Common Stock.
A-6.
<PAGE>
EXHIBIT 10.36
COLLATERAL THERAPEUTICS, INC.
NOTICE OF GRANT OF STOCK OPTION
Notice is hereby given of the following option grant (the "Option")
to purchase shares of the Common Stock of Collateral Therapeutics, Inc. (the
"Corporation"):
Optionee: __________________________________________________________
Grant Date: ________________________________________________________
Vesting Commencement Date: _________________________________________
Exercise Price: $_________________________________________per share
Number of Option Shares: ____________________________________ shares
Expiration Date: ___________________________________________________
Type of Option: ____ Incentive Stock Option
____ Non-Statutory Stock Option
Exercise Schedule: The Option shall become exercisable for
twenty-five percent (25%) of the Option Shares upon Optionee's
completion of one (1) year of Service measured from the Vesting
Commencement Date and shall become exercisable for the balance of
the Option Shares in thirty-six (36) successive equal monthly
installments upon Optionee's completion of each additional month of
Service over the thirty-six (36) month period measured from the
first anniversary of the Vesting Commencement Date. In no event
shall the Option become exercisable for any additional Option Shares
after Optionee's cessation of Service.
Optionee understands and agrees that the Option is granted subject
to and in accordance with the terms of the Collateral Therapeutics, Inc. 1998
Stock Incentive Plan (the "Plan"). Optionee further agrees to be bound by the
terms of the Plan and the terms of the Option as set forth in the Stock Option
Agreement attached hereto as Exhibit A. Optionee hereby acknowledges receipt of
a copy of the official prospectus for the Plan in the form attached hereto as
Exhibit B. A copy of the Plan is available upon request made to the Corporate
Secretary at the Corporation's principal offices.
<PAGE>
No Employment or Service Contract. Nothing in this Notice or in the
attached Stock Option Agreement or in the Plan shall confer upon Optionee any
right to continue in Service for any period of specific duration or interfere
with or otherwise restrict in any way the rights of the Corporation (or any
Parent or Subsidiary employing or retaining Optionee) or of Optionee, which
rights are hereby expressly reserved by each, to terminate Optionee's Service at
any time for any reason, with or without cause.
Definitions. All capitalized terms in this Notice shall have the
meaning assigned to them in this Notice or in the attached Stock Option
Agreement.
DATED: ____________________________, 199__
COLLATERAL THERAPEUTICS, INC.
By: _______________________________
Title: ____________________________
___________________________________
OPTIONEE
Address: __________________________
___________________________________
ATTACHMENTS
Exhibit A - Stock Option Agreement
Exhibit B - Plan Summary and Prospectus
2.
<PAGE>
EXHIBIT A
STOCK OPTION AGREEMENT
<PAGE>
COLLATERAL THERAPEUTICS, INC.
STOCK OPTION AGREEMENT
RECITALS
A. The Board has adopted the Plan for the purpose of retaining the
services of selected Employees, non-employee members of the Board or of the
board of directors of any Parent or Subsidiary and consultants and other
independent advisors who provide services to the Corporation (or any Parent or
Subsidiary).
B. Optionee is to render valuable services to the Corporation (or a Parent
or Subsidiary), and this Agreement is executed pursuant to, and is intended to
carry out the purposes of, the Plan in connection with the Corporation's grant
of an option to Optionee.
C. All capitalized terms in this Agreement shall have the meaning assigned
to them in the attached Appendix.
NOW, THEREFORE, it is hereby agreed as follows:
1. Grant of Option. The Corporation hereby grants to Optionee, as of
the Grant Date, an option to purchase up to the number of Option Shares
specified in the Grant Notice. The Option Shares shall be purchasable from time
to time during the option term specified in Paragraph 2 at the Exercise Price.
2. Option Term. This option shall have a maximum term of ten (10)
years measured from the Grant Date and shall accordingly expire at the close of
business on the Expiration Date, unless sooner terminated in accordance with
Paragraph 5 or 6.
3. Limited Transferability. This option shall be neither
transferable nor assignable by Optionee other than by will or by the laws of
descent and distribution following Optionee's death and may be exercised, during
Optionee's lifetime, only by Optionee. However, if this option is designated a
Non-Statutory Option in the Grant Notice, then this option may, in connection
with the Optionee's estate plan, be assigned in whole or in part during
Optionee's lifetime to one or more members of the Optionee's immediate family or
to a trust established for the exclusive benefit of the Optionee and/or one or
more such family members. The assigned portion shall be exercisable only by the
person or persons who acquire a proprietary interest in the option pursuant to
such assignment. The terms applicable to the assigned portion shall be the same
as those in effect for this option immediately prior to such assignment.
<PAGE>
4. Dates of Exercise. This option shall become exercisable for the
Option Shares in one or more installments as specified in the Grant Notice. As
the option becomes exercisable for such installments, those installments shall
accumulate and the option shall remain exercisable for the accumulated
installments until the Expiration Date or sooner termination of the option term
under Paragraph 5 or 6.
5. Cessation of Service. The option term specified in Paragraph 2
shall terminate (and this option shall cease to be outstanding) prior to the
Expiration Date should any of the following provisions become applicable:
(a) Should Optionee cease to remain in Service
for any reason (other than death, Permanent Disability or Misconduct)
while this option is outstanding, then the period for exercising this
option shall be reduced to a three (3)-month period commencing with the
date of such cessation of Service, but in no event shall this option be
exercisable at any time after the Expiration Date.
(b) Should Optionee die while holding this option,
then the personal representative of Optionee's estate or the person or
persons to whom the option is transferred pursuant to Optionee's will or
in accordance with the laws of inheritance shall have the right to
exercise this option. Such right shall lapse, and this option shall cease
to be outstanding, upon the earlier of (i) the expiration of the twelve
(12)-month period measured from the date of Optionee's death or (ii) the
Expiration Date.
(c) Should Optionee cease Service by reason of
Permanent Disability while this option is outstanding, then the period for
exercising this option shall be reduced to a twelve (12)-month period
commencing with the date of such cessation of Service, but no event shall
this option be exercisable at any time after the Expiration Date.
(d) During the limited period of post-Service
exercisability, this option may not be exercised in the aggregate for more
than the number of vested Option Shares for which the option is
exercisable at the time of Optionee's cessation of Service. Upon the
expiration of such limited exercise period or (if earlier) upon the
Expiration Date, this option shall terminate and cease to be outstanding
for any otherwise exercisable Option Shares for which the option has not
been exercised. However, this option shall, immediately upon Optionee's
cessation of Service for any reason, terminate and cease to be outstanding
with respect to any Option Shares for which this option is not otherwise
at that time exercisable.
2.
<PAGE>
(e) Should Optionee's Service be terminated for
Misconduct, then this option shall terminate immediately and cease to
remain outstanding.
6. Special Acceleration of Option.
(a) This option to the extent outstanding at the time of a
Change in Control transaction but not otherwise fully exercisable, shall
automatically accelerate so that this option shall, immediately prior to the
effective date of such Change in Control, become exercisable for all of the
Option Shares at the time subject to this option and may be exercised for any or
all of those Option Shares as fully vested shares of Common Stock. However, this
option shall not become exercisable on such an accelerated basis if and to the
extent: (i) this option is, in connection with the Change in Control, to be
assumed by the successor corporation (or parent thereof) or otherwise continued
in full force and effect pursuant to the terms of the Change in Control
transaction or (ii) this option is to be replaced with a cash incentive program
of the successor corporation which preserves the spread existing at the time of
the Change in Control on the Option Shares for which this option is not
otherwise at that time exercisable (the excess of the Fair Market Value of those
Option Shares over the aggregate Exercise Price payable for such shares) and
provides for subsequent payout in accordance with the same option
exercise/vesting schedule set forth in the Grant Notice.
(b) Immediately following the Change in Control, this option
shall terminate and cease to be outstanding, except to the extent assumed by the
successor corporation (or parent thereof) or otherwise continued in full force
and effect pursuant to the terms of the Change in Control transaction.
(c) If this option is assumed in connection with a Change in
Control (or otherwise continued in full force and effect), then this option
shall be appropriately adjusted, immediately after such Change in Control, to
apply to the number and class of securities or other property which would have
been issuable to Optionee in consummation of such Change in Control had the
option been exercised immediately prior to such Change in Control, and
appropriate adjustments shall also be made to the Exercise Price, provided the
aggregate Exercise Price shall remain the same.
(d) This option may also be subject to acceleration in
accordance with the terms of any special Addendum attached to this Agreement.
(e) This Agreement shall not in any way affect the right of
the Corporation to adjust, reclassify, reorganize or otherwise change its
capital or business structure or to merge, consolidate, dissolve, liquidate or
sell or transfer all or any part of its business or assets.
3.
<PAGE>
7. Adjustment in Option Shares.
Should any change be made to the Common Stock by reason of any
stock split, stock dividend, recapitalization, combination of shares, exchange
of shares or other change affecting the outstanding Common Stock as a class
without the Corporation's receipt of consideration, appropriate adjustments
shall be made to (i) the total number and/or class of securities subject to this
option and (ii) the Exercise Price in order to reflect such change and thereby
preclude a dilution or enlargement of benefits hereunder.
8. Stockholder Rights. The holder of this option shall not have any
stockholder rights with respect to the Option Shares until such person shall
have exercised the option, paid the Exercise Price and become a holder of record
of the purchased shares.
9. Manner of Exercising Option.
(a) In order to exercise this option with respect to all or
any part of the Option Shares for which this option is at the time exercisable,
Optionee (or any other person or persons exercising the option) must take the
following actions:
(i) Execute and deliver to the Corporation a
Notice of Exercise for the Option Shares for which the option is
exercised.
(ii) Pay the aggregate Exercise Price for the
purchased shares in one or more of the following forms:
(A) cash or check made payable to the
Corporation; or
(B) a promissory note payable to the Corporation,
but only to the extent authorized by the Plan Administrator in
accordance with Paragraph 13.
(C) shares of Common Stock held by Optionee (or
any other person or persons exercising the option) for the requisite
period necessary to avoid a charge to the Corporation's earnings for
financial reporting purposes and valued at Fair Market Value on the
Exercise Date; or
(D) through a special sale and remittance
procedure pursuant to which Optionee (or any other person or persons
exercising the option) shall concurrently provide irrevocable
instructions (I) to a Corporation-designated brokerage firm to
effect the immediate sale of the purchased shares and remit to the
Corporation, out of the sale proceeds available on the settlement
date, sufficient funds to cover the
4.
<PAGE>
aggregate Exercise Price payable for the purchased shares plus all
applicable Federal, state and local income and employment taxes
required to be withheld by the Corporation by reason of such
exercise and (II) to the Corporation to deliver the certificates for
the purchased shares directly to such brokerage firm in order to
complete the sale.
Except to the extent the sale and remittance procedure is utilized
in connection with the option exercise, payment of the Exercise Price must
accompany the Notice of Exercise delivered to the Corporation in
connection with the option exercise.
(iii) Furnish to the Corporation appropriate
documentation that the person or persons exercising the option (if other
than Optionee) have the right to exercise this option.
(iv) Make appropriate arrangements with the
Corporation (or Parent or Subsidiary employing or retaining Optionee) for
the satisfaction of all Federal, state and local income and employment tax
withholding requirements applicable to the option exercise.
(b) As soon as practical after the Exercise Date, the
Corporation shall issue to or on behalf of Optionee (or any other person or
persons exercising this option) a certificate for the purchased Option Shares,
with the appropriate legends affixed thereto.
(c) In no event may this option be exercised for any
fractional shares.
10. Compliance with Laws and Regulations.
(a) The exercise of this option and the issuance of the Option
Shares upon such exercise shall be subject to compliance by the Corporation and
Optionee with all applicable requirements of law relating thereto and with all
applicable regulations of any stock exchange (or the Nasdaq National Market, if
applicable) on which the Common Stock may be listed for trading at the time of
such exercise and issuance.
(b) The inability of the Corporation to obtain approval from
any regulatory body having authority deemed by the Corporation to be necessary
to the lawful issuance and sale of any Common Stock pursuant to this option
shall relieve the Corporation of any liability with respect to the non-issuance
or sale of the Common Stock as to which such approval shall not have been
obtained. The Corporation, however, shall use its best efforts to obtain all
such approvals.
5.
<PAGE>
11. Successors and Assigns. Except to the extent otherwise provided
in Paragraphs 3 and 6, the provisions of this Agreement shall inure to the
benefit of, and be binding upon, the Corporation and its successors and assigns
and Optionee, Optionee's assigns and the legal representatives, heirs and
legatees of Optionee's estate.
12. Notices. Any notice required to be given or delivered to the
Corporation under the terms of this Agreement shall be in writing and addressed
to the Corporation at its principal corporate offices. Any notice required to be
given or delivered to Optionee shall be in writing and addressed to Optionee at
the address indicated below Optionee's signature line on the Grant Notice. All
notices shall be deemed effective upon personal delivery or upon deposit in the
U.S. mail, postage prepaid and properly addressed to the party to be notified.
13. Financing. The Plan Administrator may, in its absolute
discretion and without any obligation to do so, permit Optionee to pay the
Exercise Price for the purchased Option Shares by delivering a full-recourse
promissory note payable to the Corporation. The terms of any such promissory
note (including the interest rate, the requirements for collateral and the terms
of repayment) shall be established by the Plan Administrator in its sole
discretion.
14. Construction. This Agreement and the option evidenced hereby are
made and granted pursuant to the Plan and are in all respects limited by and
subject to the terms of the Plan. All decisions of the Plan Administrator with
respect to any question or issue arising under the Plan or this Agreement shall
be conclusive and binding on all persons having an interest in this option.
15. Governing Law. The interpretation, performance and enforcement
of this Agreement shall be governed by the laws of the State of California
without resort to that State's conflict-of-laws rules.
16. Excess Shares. If the Option Shares covered by this Agreement
exceed, as of the Grant Date, the number of shares of Common Stock which may
without stockholder approval be issued under the Plan, then this option shall be
void with respect to those excess shares, unless stockholder approval of an
amendment sufficiently increasing the number of shares of Common Stock issuable
under the Plan is obtained in accordance with the provisions of the Plan.
17. Additional Terms Applicable to an Incentive Option. In the event
this option is designated an Incentive Option in the Grant Notice, the following
terms and conditions shall also apply to the grant:
6.
<PAGE>
(a) This option shall cease to qualify for favorable
tax treatment as an Incentive Option if (and to the extent) this option is
exercised for one or more Option Shares: (A) more than three (3) months
after the date Optionee ceases to be an Employee for any reason other than
death or Permanent Disability or (B) more than twelve (12) months after
the date Optionee ceases to be an Employee by reason of Permanent
Disability.
(b) No installment under this option shall qualify
for favorable tax treatment as an Incentive Option if (and to the extent)
the aggregate Fair Market Value (determined at the Grant Date) of the
Common Stock for which such installment first becomes exercisable
hereunder would, when added to the aggregate value (determined as of the
respective date or dates of grant) of the Common Stock or other securities
for which this option or any other Incentive Options granted to Optionee
prior to the Grant Date (whether under the Plan or any other option plan
of the Corporation or any Parent or Subsidiary) first become exercisable
during the same calendar year, exceed One Hundred Thousand Dollars
($100,000) in the aggregate. Should such One Hundred Thousand Dollar
($100,000) limitation be exceeded in any calendar year, this option shall
nevertheless become exercisable for the excess shares in such calendar
year as a Non-Statutory Option.
(c) Should the exercisability of this option be
accelerated upon a Change in Control transaction, then this option shall
qualify for favorable tax treatment as an Incentive Option only to the
extent the aggregate Fair Market Value (determined at the Grant Date) of
the Common Stock for which this option first becomes exercisable in the
calendar year in which the Change in Control occurs does not, when added
to the aggregate value (determined as of the respective date or dates of
grant) of the Common Stock or other securities for which this option or
one or more other Incentive Options granted to Optionee prior to the Grant
Date (whether under the Plan or any other option plan of the Corporation
or any Parent or Subsidiary) first become exercisable during the same
calendar year, exceed One Hundred Thousand Dollars ($100,000) in the
aggregate. Should the applicable One Hundred Thousand Dollar ($100,000)
limitation be exceeded in the calendar year of such Change in Control, the
option may nevertheless be exercised for the excess shares in such
calendar year as a Non- Statutory Option.
(d) Should Optionee hold, in addition to this
option, one or more other options to purchase Common Stock which become
exercisable for the first time in the same calendar year as this option,
then the foregoing limitations on the exercisability of such options as
Incentive Options shall be applied on the basis of the order in which such
options are granted.
7.
<PAGE>
EXHIBIT I
NOTICE OF EXERCISE
I hereby notify Collateral Therapeutics, Inc. (the "Corporation")
that I elect to purchase ___________ shares of the Corporation's Common Stock
(the "Purchased Shares") at the option exercise price of $ per share (the
"Exercise Price") pursuant to that certain option (the "Option") granted to me
under the Corporation's 1998 Stock Incentive Plan on ________, 199_.
Concurrently with the delivery of this Exercise Notice to the
Corporation, I shall hereby pay to the Corporation the Exercise Price for the
Purchased Shares in accordance with the provisions of my agreement with the
Corporation (or other documents) evidencing the Option and shall deliver
whatever additional documents may be required by such agreement as a condition
for exercise. Alternatively, I may utilize the special broker-dealer sale and
remittance procedure specified in my agreement to effect payment of the Exercise
Price.
________________________, 199__
Date
___________________________________
Optionee
Address: __________________________
___________________________________
Print name in exact manner
it is to appear on the
stock certificate: ___________________________________
Address to which certificate
is to be sent, if different
from address above: ___________________________________
___________________________________
Social Security Number: ___________________________________
Employee Number: ___________________________________
<PAGE>
APPENDIX
The following definitions shall be in effect under the Agreement:
A. Agreement shall mean this Stock Option Agreement.
B. Board shall mean the Corporation's Board of Directors.
C. Change in Control shall mean a change in ownership or control of the
Corporation effected through any of the following transactions:
(i) a merger or consolidation in which securities possessing more than
fifty percent (50%) of the total combined voting power of the
Corporation's outstanding securities are transferred to a person or
persons different from the persons holding those securities immediately
prior to such transaction, or
(ii) the sale, transfer or other disposition of all or substantially
all of the Corporation's assets in complete liquidation or dissolution of
the Corporation, or
(iii) the acquisition, directly or indirectly, by any person or related
group of persons (other than the Corporation or a person that directly or
indirectly controls, is controlled by, or is under common control with,
the Corporation) of beneficial ownership (within the meaning of Rule 13d-3
of the 1934 Act) of securities possessing more than fifty percent (50%) of
the total combined voting power of the Corporation's outstanding
securities pursuant to a tender or exchange offer made directly to the
Corporation's stockholders, or
(iv) a change in the composition of the Board over a period of
thirty-six (36) consecutive months or less such that a majority of the
Board members ceases, by reason of one or more contested elections for
Board membership, to be comprised of individuals who either (A) have been
Board members continuously since the beginning of such period or (B) have
been elected or nominated for election as Board members during such period
by at least a majority of the Board members described in clause (A) who
were still in office at the time the Board approved such election or
nomination.
D. Code shall mean the Internal Revenue Code of 1986, as amended.
E. Common Stock shall mean shares of the Corporation's common stock.
F. Corporation shall mean Collateral Therapeutics, Inc., a Delaware
corporation.
A-1.
<PAGE>
G. Employee shall mean an individual who is in the employ of the
Corporation (or any Parent or Subsidiary), subject to the control and direction
of the employer entity as to both the work to be performed and the manner and
method of performance.
H. Exercise Date shall mean the date on which the option shall have been
exercised in accordance with Paragraph 9 of the Agreement.
I. Exercise Price shall mean the exercise price per Option Share as
specified in the Grant Notice.
J. Expiration Date shall mean the date on which the option expires as
specified in the Grant Notice.
K. Fair Market Value per share of Common Stock on any relevant date shall
be determined in accordance with the following provisions:
(i) If the Common Stock is at the time traded on the Nasdaq National
Market, then the Fair Market Value shall be deemed equal to the closing
selling price per share of Common Stock on the date in question, as the
price is reported by the National Association of Securities Dealers on the
Nasdaq National Market. If there is no closing selling price for the
Common Stock on the date in question, then the Fair Market Value shall be
the closing selling price on the last preceding date for which such
quotation exists.
(ii) If the Common Stock is at the time listed on any Stock Exchange,
then the Fair Market Value shall be deemed equal to the closing selling
price per share of Common Stock on the date in question on the Stock
Exchange determined by the Plan Administrator to be the primary market for
the Common Stock, as such price is officially quoted in the composite tape
of transactions on such exchange. If there is no closing selling price for
the Common Stock on the date in question, then the Fair Market Value shall
be the closing selling price on the last preceding date for which such
quotation exists.
L. Grant Date shall mean the date of grant of the option as specified in
the Grant Notice.
M. Grant Notice shall mean the Notice of Grant of Stock Option
accompanying the Agreement, pursuant to which Optionee has been informed of the
basic terms of the option evidenced hereby.
N. Incentive Option shall mean an option which satisfies the requirements
of Code Section 422.
A-2.
<PAGE>
O. Misconduct shall mean the commission of any act of fraud, embezzlement
or dishonesty by Optionee, any unauthorized use or disclosure by Optionee of
confidential information or trade secrets of the Corporation (or any Parent or
Subsidiary), or any other intentional misconduct by Optionee adversely affecting
the business or affairs of the Corporation (or any Parent or Subsidiary) in a
material manner. The foregoing definition shall not be deemed to be inclusive of
all the acts or omissions which the Corporation (or any Parent or Subsidiary)
may consider as grounds for the dismissal or discharge of Optionee or any other
individual in the Service of the Corporation (or any Parent or Subsidiary).
P. 1934 Act shall mean the Securities Exchange Act of 1934, as amended.
Q. Non-Statutory Option shall mean an option not intended to satisfy the
requirements of Code Section 422.
R. Notice of Exercise shall mean the notice of exercise in the form
attached hereto as Exhibit I.
S. Option Shares shall mean the number of shares of Common Stock subject
to the option as specified in the Grant Notice.
T. Optionee shall mean the person to whom the option is granted as
specified in the Grant Notice.
U. Parent shall mean any corporation (other than the Corporation) in an
unbroken chain of corporations ending with the Corporation, provided each
corporation in the unbroken chain (other than the Corporation) owns, at the time
of the determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.
V. Permanent Disability shall mean the inability of Optionee to engage in
any substantial gainful activity by reason of any medically determinable
physical or mental impairment which is expected to result in death or has lasted
or can be expected to last for a continuous period of twelve (12) months or
more.
W. Plan shall mean the Corporation's 1998 Stock Incentive Plan.
X. Plan Administrator shall mean either the Board or a committee of the
Board acting in its capacity as administrator of the Plan.
Y. Service shall mean the Optionee's performance of services for the
Corporation (or any Parent or Subsidiary) in the capacity of an Employee, a
non-employee member of the board of directors or a consultant or independent
advisor.
A-3.
<PAGE>
Z. Stock Exchange shall mean the American Stock Exchange or the New York
Stock Exchange.
AA. Subsidiary shall mean any corporation (other than the Corporation) in
an unbroken chain of corporations beginning with the Corporation, provided each
corporation (other than the last corporation) in the unbroken chain owns, at the
time of the determination, stock possessing fifty percent (50%) or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.
A-4.
<PAGE>
EXHIBIT B
PLAN SUMMARY AND PROSPECTUS
To be provided upon the issuance of options
A-5.
<PAGE>
EXHIBIT 10.37
COLLATERAL THERAPEUTICS, INC.
STOCK OPTION AGREEMENT
RECITALS
A. The Board has adopted the Plan for the purpose of retaining the
services of selected Employees, non-employee members of the Board or of the
board of directors of any Parent or Subsidiary and consultants and other
independent advisors who provide services to the Corporation (or any Parent or
Subsidiary).
B. Optionee is to render valuable services to the Corporation (or a Parent
or Subsidiary), and this Agreement is executed pursuant to, and is intended to
carry out the purposes of, the Plan in connection with the Corporation's grant
of an option to Optionee.
C. All capitalized terms in this Agreement shall have the meaning assigned
to them in the attached Appendix.
NOW, THEREFORE, it is hereby agreed as follows:
1. Grant of Option. The Corporation hereby grants to Optionee, as of
the Grant Date, an option to purchase up to the number of Option Shares
specified in the Grant Notice. The Option Shares shall be purchasable from time
to time during the option term specified in Paragraph 2 at the Exercise Price.
2. Option Term. This option shall have a maximum term of ten (10)
years measured from the Grant Date and shall accordingly expire at the close of
business on the Expiration Date, unless sooner terminated in accordance with
Paragraph 5 or 6.
3. Limited Transferability. This option shall be neither
transferable nor assignable by Optionee other than by will or by the laws of
descent and distribution following Optionee's death and may be exercised, during
Optionee's lifetime, only by Optionee. However, if this option is designated a
Non-Statutory Option in the Grant Notice, then this option may, in connection
with the Optionee's estate plan, be assigned in whole or in part during
Optionee's lifetime to one or more members of the Optionee's immediate family or
to a trust established for the exclusive benefit of the Optionee and/or one or
more such family members. The assigned portion shall be exercisable only by the
person or persons who acquire a proprietary interest in the option pursuant to
such assignment. The terms applicable to the assigned portion shall be the same
as those in effect for this option immediately prior to such assignment.
<PAGE>
4. Dates of Exercise. This option shall become exercisable for the
Option Shares in one or more installments as specified in the Grant Notice. As
the option becomes exercisable for such installments, those installments shall
accumulate and the option shall remain exercisable for the accumulated
installments until the Expiration Date or sooner termination of the option term
under Paragraph 5 or 6.
5. Cessation of Service. The option term specified in Paragraph 2
shall terminate (and this option shall cease to be outstanding) prior to the
Expiration Date should any of the following provisions become applicable:
(a) Should Optionee cease to remain in Service
for any reason (other than death, Permanent Disability or Misconduct)
while this option is outstanding, then the period for exercising this
option shall be reduced to a three (3)-month period commencing with the
date of such cessation of Service, but in no event shall this option be
exercisable at any time after the Expiration Date.
(b) Should Optionee die while holding this option,
then the personal representative of Optionee's estate or the person or
persons to whom the option is transferred pursuant to Optionee's will or
in accordance with the laws of inheritance shall have the right to
exercise this option. Such right shall lapse, and this option shall cease
to be outstanding, upon the earlier of (i) the expiration of the twelve
(12)-month period measured from the date of Optionee's death or (ii) the
Expiration Date.
(c) Should Optionee cease Service by reason of
Permanent Disability while this option is outstanding, then the period for
exercising this option shall be reduced to a twelve (12)-month period
commencing with the date of such cessation of Service, but no event shall
this option be exercisable at any time after the Expiration Date.
(d) During the limited period of post-Service
exercisability, this option may not be exercised in the aggregate for more
than the number of vested Option Shares for which the option is
exercisable at the time of Optionee's cessation of Service. Upon the
expiration of such limited exercise period or (if earlier) upon the
Expiration Date, this option shall terminate and cease to be outstanding
for any otherwise exercisable Option Shares for which the option has not
been exercised. However, this option shall, immediately upon Optionee's
cessation of Service for any reason, terminate and cease to be outstanding
with respect to any Option Shares for which this option is not otherwise
at that time exercisable.
2.
<PAGE>
(e) Should Optionee's Service be terminated for
Misconduct, then this option shall terminate immediately and cease to
remain outstanding.
6. Special Acceleration of Option.
(a) This option to the extent outstanding at the time of a
Change in Control transaction but not otherwise fully exercisable, shall
automatically accelerate so that this option shall, immediately prior to the
effective date of such Change in Control, become exercisable for all of the
Option Shares at the time subject to this option and may be exercised for any or
all of those Option Shares as fully vested shares of Common Stock. However, this
option shall not become exercisable on such an accelerated basis if and to the
extent: (i) this option is, in connection with the Change in Control, to be
assumed by the successor corporation (or parent thereof) or otherwise continued
in full force and effect pursuant to the terms of the Change in Control
transaction or (ii) this option is to be replaced with a cash incentive program
of the successor corporation which preserves the spread existing at the time of
the Change in Control on the Option Shares for which this option is not
otherwise at that time exercisable (the excess of the Fair Market Value of those
Option Shares over the aggregate Exercise Price payable for such shares) and
provides for subsequent payout in accordance with the same option
exercise/vesting schedule set forth in the Grant Notice.
(b) Immediately following the Change in Control, this option
shall terminate and cease to be outstanding, except to the extent assumed by the
successor corporation (or parent thereof) or otherwise continued in full force
and effect pursuant to the terms of the Change in Control transaction.
(c) If this option is assumed in connection with a Change in
Control (or otherwise continued in full force and effect), then this option
shall be appropriately adjusted, immediately after such Change in Control, to
apply to the number and class of securities or other property which would have
been issuable to Optionee in consummation of such Change in Control had the
option been exercised immediately prior to such Change in Control, and
appropriate adjustments shall also be made to the Exercise Price, provided the
aggregate Exercise Price shall remain the same.
(d) This option may also be subject to acceleration in
accordance with the terms of any special Addendum attached to this Agreement.
(e) This Agreement shall not in any way affect the right of
the Corporation to adjust, reclassify, reorganize or otherwise change its
capital or business structure or to merge, consolidate, dissolve, liquidate or
sell or transfer all or any part of its business or assets.
3.
<PAGE>
7. Adjustment in Option Shares.
Should any change be made to the Common Stock by reason of any
stock split, stock dividend, recapitalization, combination of shares, exchange
of shares or other change affecting the outstanding Common Stock as a class
without the Corporation's receipt of consideration, appropriate adjustments
shall be made to (i) the total number and/or class of securities subject to this
option and (ii) the Exercise Price in order to reflect such change and thereby
preclude a dilution or enlargement of benefits hereunder.
8. Stockholder Rights. The holder of this option shall not have any
stockholder rights with respect to the Option Shares until such person shall
have exercised the option, paid the Exercise Price and become a holder of record
of the purchased shares.
9. Manner of Exercising Option.
(a) In order to exercise this option with respect to all or
any part of the Option Shares for which this option is at the time exercisable,
Optionee (or any other person or persons exercising the option) must take the
following actions:
(i) Execute and deliver to the Corporation a
Notice of Exercise for the Option Shares for which the option is
exercised.
(ii) Pay the aggregate Exercise Price for the
purchased shares in one or more of the following forms:
(A) cash or check made payable to the
Corporation; or
(B) a promissory note payable to the Corporation,
but only to the extent authorized by the Plan Administrator in
accordance with Paragraph 13.
(C) shares of Common Stock held by Optionee (or
any other person or persons exercising the option) for the requisite
period necessary to avoid a charge to the Corporation's earnings for
financial reporting purposes and valued at Fair Market Value on the
Exercise Date; or
(D) through a special sale and remittance
procedure pursuant to which Optionee (or any other person or persons
exercising the option) shall concurrently provide irrevocable
instructions (I) to a Corporation-designated brokerage firm to
effect the immediate sale of the purchased shares and remit to the
Corporation, out of the sale proceeds available on the settlement
date, sufficient funds to cover the
4.
<PAGE>
aggregate Exercise Price payable for the purchased shares plus all
applicable Federal, state and local income and employment taxes
required to be withheld by the Corporation by reason of such
exercise and (II) to the Corporation to deliver the certificates for
the purchased shares directly to such brokerage firm in order to
complete the sale.
Except to the extent the sale and remittance procedure is utilized
in connection with the option exercise, payment of the Exercise Price must
accompany the Notice of Exercise delivered to the Corporation in
connection with the option exercise.
(iii) Furnish to the Corporation appropriate
documentation that the person or persons exercising the option (if other
than Optionee) have the right to exercise this option.
(iv) Make appropriate arrangements with the
Corporation (or Parent or Subsidiary employing or retaining Optionee) for
the satisfaction of all Federal, state and local income and employment tax
withholding requirements applicable to the option exercise.
(b) As soon as practical after the Exercise Date, the
Corporation shall issue to or on behalf of Optionee (or any other person or
persons exercising this option) a certificate for the purchased Option Shares,
with the appropriate legends affixed thereto.
(c) In no event may this option be exercised for any
fractional shares.
10. Compliance with Laws and Regulations.
(a) The exercise of this option and the issuance of the Option
Shares upon such exercise shall be subject to compliance by the Corporation and
Optionee with all applicable requirements of law relating thereto and with all
applicable regulations of any stock exchange (or the Nasdaq National Market, if
applicable) on which the Common Stock may be listed for trading at the time of
such exercise and issuance.
(b) The inability of the Corporation to obtain approval from
any regulatory body having authority deemed by the Corporation to be necessary
to the lawful issuance and sale of any Common Stock pursuant to this option
shall relieve the Corporation of any liability with respect to the non-issuance
or sale of the Common Stock as to which such approval shall not have been
obtained. The Corporation, however, shall use its best efforts to obtain all
such approvals.
5.
<PAGE>
11. Successors and Assigns. Except to the extent otherwise provided
in Paragraphs 3 and 6, the provisions of this Agreement shall inure to the
benefit of, and be binding upon, the Corporation and its successors and assigns
and Optionee, Optionee's assigns and the legal representatives, heirs and
legatees of Optionee's estate.
12. Notices. Any notice required to be given or delivered to the
Corporation under the terms of this Agreement shall be in writing and addressed
to the Corporation at its principal corporate offices. Any notice required to be
given or delivered to Optionee shall be in writing and addressed to Optionee at
the address indicated below Optionee's signature line on the Grant Notice. All
notices shall be deemed effective upon personal delivery or upon deposit in the
U.S. mail, postage prepaid and properly addressed to the party to be notified.
13. Financing. The Plan Administrator may, in its absolute
discretion and without any obligation to do so, permit Optionee to pay the
Exercise Price for the purchased Option Shares by delivering a full-recourse
promissory note payable to the Corporation. The terms of any such promissory
note (including the interest rate, the requirements for collateral and the terms
of repayment) shall be established by the Plan Administrator in its sole
discretion.
14. Construction. This Agreement and the option evidenced hereby are
made and granted pursuant to the Plan and are in all respects limited by and
subject to the terms of the Plan. All decisions of the Plan Administrator with
respect to any question or issue arising under the Plan or this Agreement shall
be conclusive and binding on all persons having an interest in this option.
15. Governing Law. The interpretation, performance and enforcement
of this Agreement shall be governed by the laws of the State of California
without resort to that State's conflict-of-laws rules.
16. Excess Shares. If the Option Shares covered by this Agreement
exceed, as of the Grant Date, the number of shares of Common Stock which may
without stockholder approval be issued under the Plan, then this option shall be
void with respect to those excess shares, unless stockholder approval of an
amendment sufficiently increasing the number of shares of Common Stock issuable
under the Plan is obtained in accordance with the provisions of the Plan.
17. Additional Terms Applicable to an Incentive Option. In the event
this option is designated an Incentive Option in the Grant Notice, the following
terms and conditions shall also apply to the grant:
6.
<PAGE>
(a) This option shall cease to qualify for favorable
tax treatment as an Incentive Option if (and to the extent) this option is
exercised for one or more Option Shares: (A) more than three (3) months
after the date Optionee ceases to be an Employee for any reason other than
death or Permanent Disability or (B) more than twelve (12) months after
the date Optionee ceases to be an Employee by reason of Permanent
Disability.
(b) No installment under this option shall qualify
for favorable tax treatment as an Incentive Option if (and to the extent)
the aggregate Fair Market Value (determined at the Grant Date) of the
Common Stock for which such installment first becomes exercisable
hereunder would, when added to the aggregate value (determined as of the
respective date or dates of grant) of the Common Stock or other securities
for which this option or any other Incentive Options granted to Optionee
prior to the Grant Date (whether under the Plan or any other option plan
of the Corporation or any Parent or Subsidiary) first become exercisable
during the same calendar year, exceed One Hundred Thousand Dollars
($100,000) in the aggregate. Should such One Hundred Thousand Dollar
($100,000) limitation be exceeded in any calendar year, this option shall
nevertheless become exercisable for the excess shares in such calendar
year as a Non-Statutory Option.
(c) Should the exercisability of this option be
accelerated upon a Change in Control transaction, then this option shall
qualify for favorable tax treatment as an Incentive Option only to the
extent the aggregate Fair Market Value (determined at the Grant Date) of
the Common Stock for which this option first becomes exercisable in the
calendar year in which the Change in Control occurs does not, when added
to the aggregate value (determined as of the respective date or dates of
grant) of the Common Stock or other securities for which this option or
one or more other Incentive Options granted to Optionee prior to the Grant
Date (whether under the Plan or any other option plan of the Corporation
or any Parent or Subsidiary) first become exercisable during the same
calendar year, exceed One Hundred Thousand Dollars ($100,000) in the
aggregate. Should the applicable One Hundred Thousand Dollar ($100,000)
limitation be exceeded in the calendar year of such Change in Control, the
option may nevertheless be exercised for the excess shares in such
calendar year as a Non- Statutory Option.
(d) Should Optionee hold, in addition to this
option, one or more other options to purchase Common Stock which become
exercisable for the first time in the same calendar year as this option,
then the foregoing limitations on the exercisability of such options as
Incentive Options shall be applied on the basis of the order in which such
options are granted.
7.
<PAGE>
EXHIBIT I
NOTICE OF EXERCISE
I hereby notify Collateral Therapeutics, Inc. (the "Corporation")
that I elect to purchase ___________ shares of the Corporation's Common Stock
(the "Purchased Shares") at the option exercise price of $_____________ per
share (the "Exercise Price") pursuant to that certain option (the "Option")
granted to me under the Corporation's 1998 Stock Incentive Plan on
______________________, 199__.
Concurrently with the delivery of this Exercise Notice to the
Corporation, I shall hereby pay to the Corporation the Exercise Price for the
Purchased Shares in accordance with the provisions of my agreement with the
Corporation (or other documents) evidencing the Option and shall deliver
whatever additional documents may be required by such agreement as a condition
for exercise. Alternatively, I may utilize the special broker-dealer sale and
remittance procedure specified in my agreement to effect payment of the Exercise
Price.
________________________, 199__
Date
______________________________________
Optionee
Address: _____________________________
______________________________________
Print name in exact manner
it is to appear on the
stock certificate: ______________________________________
Address to which certificate
is to be sent, if different
from address above: ______________________________________
______________________________________
Social Security Number: ______________________________________
Employee Number: ______________________________________
<PAGE>
APPENDIX
The following definitions shall be in effect under the Agreement:
A. Agreement shall mean this Stock Option Agreement.
B. Board shall mean the Corporation's Board of Directors.
C. Change in Control shall mean a change in ownership or control of the
Corporation effected through any of the following transactions:
(i) a merger or consolidation in which securities possessing more than
fifty percent (50%) of the total combined voting power of the
Corporation's outstanding securities are transferred to a person or
persons different from the persons holding those securities immediately
prior to such transaction, or
(ii) the sale, transfer or other disposition of all or substantially
all of the Corporation's assets in complete liquidation or dissolution of
the Corporation, or
(iii) the acquisition, directly or indirectly, by any person or related
group of persons (other than the Corporation or a person that directly or
indirectly controls, is controlled by, or is under common control with,
the Corporation) of beneficial ownership (within the meaning of Rule 13d-3
of the 1934 Act) of securities possessing more than fifty percent (50%) of
the total combined voting power of the Corporation's outstanding
securities pursuant to a tender or exchange offer made directly to the
Corporation's stockholders, or
(iv) a change in the composition of the Board over a period of
thirty-six (36) consecutive months or less such that a majority of the
Board members ceases, by reason of one or more contested elections for
Board membership, to be comprised of individuals who either (A) have been
Board members continuously since the beginning of such period or (B) have
been elected or nominated for election as Board members during such period
by at least a majority of the Board members described in clause (A) who
were still in office at the time the Board approved such election or
nomination.
D. Code shall mean the Internal Revenue Code of 1986, as amended.
E. Common Stock shall mean shares of the Corporation's common stock.
F. Corporation shall mean Collateral Therapeutics, Inc., a Delaware
corporation.
A-1.
<PAGE>
G. Employee shall mean an individual who is in the employ of the
Corporation (or any Parent or Subsidiary), subject to the control and direction
of the employer entity as to both the work to be performed and the manner and
method of performance.
H. Exercise Date shall mean the date on which the option shall have been
exercised in accordance with Paragraph 9 of the Agreement.
I. Exercise Price shall mean the exercise price per Option Share as
specified in the Grant Notice.
J. Expiration Date shall mean the date on which the option expires as
specified in the Grant Notice.
K. Fair Market Value per share of Common Stock on any relevant date shall
be determined in accordance with the following provisions:
(i) If the Common Stock is at the time traded on the Nasdaq National
Market, then the Fair Market Value shall be deemed equal to the closing
selling price per share of Common Stock on the date in question, as the
price is reported by the National Association of Securities Dealers on the
Nasdaq National Market. If there is no closing selling price for the
Common Stock on the date in question, then the Fair Market Value shall be
the closing selling price on the last preceding date for which such
quotation exists.
(ii) If the Common Stock is at the time listed on any Stock Exchange,
then the Fair Market Value shall be deemed equal to the closing selling
price per share of Common Stock on the date in question on the Stock
Exchange determined by the Plan Administrator to be the primary market for
the Common Stock, as such price is officially quoted in the composite tape
of transactions on such exchange. If there is no closing selling price for
the Common Stock on the date in question, then the Fair Market Value shall
be the closing selling price on the last preceding date for which such
quotation exists.
L. Grant Date shall mean the date of grant of the option as specified in
the Grant Notice.
M. Grant Notice shall mean the Notice of Grant of Stock Option
accompanying the Agreement, pursuant to which Optionee has been informed of the
basic terms of the option evidenced hereby.
N. Incentive Option shall mean an option which satisfies the requirements
of Code Section 422.
A-2.
<PAGE>
O. Misconduct shall mean the commission of any act of fraud, embezzlement
or dishonesty by Optionee, any unauthorized use or disclosure by Optionee of
confidential information or trade secrets of the Corporation (or any Parent or
Subsidiary), or any other intentional misconduct by Optionee adversely affecting
the business or affairs of the Corporation (or any Parent or Subsidiary) in a
material manner. The foregoing definition shall not be deemed to be inclusive of
all the acts or omissions which the Corporation (or any Parent or Subsidiary)
may consider as grounds for the dismissal or discharge of Optionee or any other
individual in the Service of the Corporation (or any Parent or Subsidiary).
P. 1934 Act shall mean the Securities Exchange Act of 1934, as amended.
Q. Non-Statutory Option shall mean an option not intended to satisfy the
requirements of Code Section 422.
R. Notice of Exercise shall mean the notice of exercise in the form
attached hereto as Exhibit I.
S. Option Shares shall mean the number of shares of Common Stock subject
to the option as specified in the Grant Notice.
T. Optionee shall mean the person to whom the option is granted as
specified in the Grant Notice.
U. Parent shall mean any corporation (other than the Corporation) in an
unbroken chain of corporations ending with the Corporation, provided each
corporation in the unbroken chain (other than the Corporation) owns, at the time
of the determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.
V. Permanent Disability shall mean the inability of Optionee to engage in
any substantial gainful activity by reason of any medically determinable
physical or mental impairment which is expected to result in death or has lasted
or can be expected to last for a continuous period of twelve (12) months or
more.
W. Plan shall mean the Corporation's 1998 Stock Incentive Plan.
X. Plan Administrator shall mean either the Board or a committee of the
Board acting in its capacity as administrator of the Plan.
Y. Service shall mean the Optionee's performance of services for the
Corporation (or any Parent or Subsidiary) in the capacity of an Employee, a
non-employee member of the board of directors or a consultant or independent
advisor.
A-3.
<PAGE>
Z. Stock Exchange shall mean the American Stock Exchange or the New York
Stock Exchange.
AA. Subsidiary shall mean any corporation (other than the Corporation) in
an unbroken chain of corporations beginning with the Corporation, provided each
corporation (other than the last corporation) in the unbroken chain owns, at the
time of the determination, stock possessing fifty percent (50%) or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.
A-4.
<PAGE>
ADDENDUM
TO
STOCK OPTION AGREEMENT
The following provisions are hereby incorporated into, and are
hereby made a part of, that certain Stock Option Agreement (the "Option
Agreement") by and between Collateral Therapeutics, Inc. (the "Corporation") and
_______________________ ("Optionee") evidencing the stock option (the "Option")
granted on this date to Optionee under the terms of the Corporation's 1998 Stock
Incentive Plan, and such provisions shall be effective immediately with such
grant date. All capitalized terms in this Addendum, to the extent not otherwise
defined herein, shall have the meanings assigned to them in the Option
Agreement.
INVOLUNTARY TERMINATION FOLLOWING
CHANGE IN CONTROL
1. To the extent the Option is, in connection with a Change in
Control transaction, to be assumed or otherwise continued in full force or
effect in accordance with Paragraph 6 of the Option Agreement, the Option shall
not accelerate upon the occurrence of that Change in Control, and the Option
shall accordingly continue, over Optionee's period of Service after the Change
in Control, to become exercisable for the Option Shares in one or more
installments in accordance with the provisions of the Option Agreement. However,
immediately upon an Involuntary Termination of Optionee's Service within
eighteen (18) months following such Change in Control, the Option, to the extent
outstanding at the time but not otherwise fully exercisable, shall automatically
accelerate so that the Option shall become immediately exercisable for all the
Option Shares at the time subject to the Option and may be exercised for any or
all of those Option Shares as fully vested shares.
2. The Option as accelerated under Paragraph 1 shall remain so
exercisable until the earlier of (i) the Expiration Date or (ii) the expiration
of the one (1)-year period measured from the date of the Optionee's Involuntary
Termination.
3. For purposes of this Addendum the following definition shall be
in effect:
(i) An Involuntary Termination shall mean the termination of
Optionee's Service by reason of:
(A) Optionee's involuntary dismissal or discharge by the
Corporation for reasons other than Misconduct, or
(B) Optionee's voluntary resignation following (A) a
change in Optionee's position with the Corporation (or Parent or
Subsidiary employing Optionee) which materially reduces Optionee's
duties and responsibilities or the level of management to which
Optionee reports, (B) a reduction in Optionee's level of
compensation (including base salary, fringe benefits and target
bonus under any corporate
<PAGE>
performance based bonus or incentive programs) by more than fifteen
percent (15%) or (C) a relocation of Optionee's place of employment
by more than fifty (50) miles, provided and only if such change,
reduction or relocation is effected by the Corporation without
Optionee's consent.
4. The provisions of Paragraph 1 of this Addendum shall govern the
period for which the Option is to remain exercisable following the Involuntary
Termination of Optionee's Service within eighteen (18) months after the Change
in Control and shall supersede any provisions to the contrary in Paragraph 5 of
the Option Agreement.
IN WITNESS WHEREOF, Collateral Therapeutics, Inc. has caused this
Addendum to be executed by its duly-authorized officer as of the Effective Date
specified below.
COLLATERAL THERAPEUTICS, INC.
By: ____________________________________
Title: _________________________________
EFFECTIVE DATE: __________________, 199__
2.
<PAGE>
ADDENDUM
TO
STOCK OPTION AGREEMENT
The following provisions are hereby incorporated into, and are
hereby made a part of, that certain Stock Option Agreement (the "Option
Agreement") by and between Collateral Therapeutics, Inc. (the "Corporation") and
________________ ("Optionee") evidencing the stock option (the "Option") granted
this date to Optionee under the terms of the Corporation's 1998 Stock Incentive
Plan, and such provisions shall be effective immediately with such grant date.
All capitalized terms in this Addendum, to the extent not otherwise defined
herein, shall have the meanings assigned to them in the Option Agreement.
LIMITED STOCK APPRECIATION RIGHT
1. Optionee is hereby granted a limited stock appreciation right
exercisable upon the following terms and conditions:
(i) Optionee shall have the unconditional right,
exercisable at any time during the thirty (30)-day period immediately
following a Hostile Take-Over, to surrender the Option to the Corporation,
to the extent the Option is at the time exercisable for one or more shares
of Common Stock. In return for the surrendered Option, Optionee shall
receive a cash distribution from the Corporation in an amount equal to the
excess of (A) the Take-Over Price of the shares of Common Stock for which
the surrendered option (or surrendered portion) is at the time exercisable
over (B) the aggregate Exercise Price payable for such shares.
(ii) To exercise this limited stock appreciation right,
Optionee must, during the applicable thirty (30)-day exercise period,
provide the Corporation with written notice of the option surrender in
which there is specified the number of Option Shares as to which the
Option is being surrendered. Such notice must be accompanied by the return
of Optionee's copy of the Option Agreement, together with any written
amendments to such Agreement. The cash distribution shall be paid to
Optionee within five (5) business days following such delivery date. The
exercise of the limited stock appreciation right in accordance with the
terms of this Addendum is hereby approved by the Plan Administrator, in
advance of such exercise, and no further approval of the Plan
Administrator or the Board shall be required at the time of the actual
option surrender and cash distribution. Upon receipt of such cash
distribution, the Option shall be cancelled with respect to the Option
Shares for which the Option has been surrendered, and Optionee shall cease
to have any further right to acquire those Option Shares
<PAGE>
under the Option Agreement. The Option shall, however, remain outstanding
and exercisable for the balance of the Option Shares (if any) in
accordance with the terms of the Option Agreement, and the Corporation
shall issue a replacement stock option agreement (substantially in the
same form of the surrendered Option Agreement) for those remaining Option
Shares.
(iii) In no event may this limited stock appreciation right
be exercised when there is not a positive spread between the Fair Market
Value of the Option Shares subject to the surrendered option and the
aggregate Exercise Price payable for such shares. This limited stock
appreciation right shall in all events terminate upon the expiration or
sooner termination of the Option term and may not be assigned or
transferred by Optionee, except to the extent the Option is transferable
in accordance with the provisions of the Option Agreement.
2. For purposes of this Addendum, the following definitions shall be
in effect:
(i) A Hostile Take-Over shall be deemed to occur upon the
acquisition, directly or indirectly, by any person or related group of
persons (other than the Corporation or a person that directly or
indirectly controls, is controlled by, or is under common control with,
the Corporation) of beneficial ownership (within the meaning of Rule 13d-3
of the 1934 Act) of securities possessing more than fifty percent (50%) of
the total combined voting power of the Corporation's outstanding
securities pursuant to a tender or exchange offer made directly to the
Corporation's stockholders which the Board does not recommend such
stockholders to accept.
(ii) The Take-Over Price per share shall be deemed to be
equal to the greater of (A) the Fair Market Value per Option Share on the
option surrender date or (B) the highest reported price per share of
Common Stock paid by the tender offeror in effecting the Hostile
Take-Over. However, if the surrendered Option is designated as an
Incentive Option in the Grant Notice, then the Take-Over Price shall not
exceed the clause (A) price per share.
2.
<PAGE>
IN WITNESS WHEREOF, Collateral Therapeutics, Inc. has caused this
Addendum to be executed by its duly-authorized officer as of the Effective Date
specified below.
COLLATERAL THERAPEUTICS, INC.
By: ____________________________________
Title: _________________________________
EFFECTIVE DATE: __________________, 199__
3.
<PAGE>
EXHIBIT 10.38
COLLATERAL THERAPEUTICS, INC.
STOCK ISSUANCE AGREEMENT
AGREEMENT made this _____ day of ___________________ 19____, by and
between Collateral Therapeutics, Inc., a Delaware corporation, and
____________________________________________, a Participant in the Corporation's
1998 Stock Incentive Plan.
All capitalized terms in this Agreement shall have the meaning
assigned to them in this Agreement or in the attached Appendix.
A. PURCHASE OF SHARES
1. Purchase. Participant hereby purchases _______ shares of Common
Stock (the "Purchased Shares") pursuant to the provisions of the Stock Issuance
Program at the purchase price of $______ per share (the "Purchase Price").
2. Payment. Concurrently with the delivery of this Agreement to the
Corporation, Participant shall pay the Purchase Price for the Purchased Shares
in cash or check payable to the Corporation and shall deliver a duly-executed
blank Assignment Separate from Certificate (in the form attached hereto as
Exhibit I) with respect to the Purchased Shares.
3. Stockholder Rights. Until such time as the Corporation exercises
the Repurchase Right, Participant (or any successor in interest) shall have all
the rights of a stockholder (including voting, dividend and liquidation rights)
with respect to the Purchased Shares, subject, however, to the transfer
restrictions of this Agreement.
4. Escrow. The Corporation shall have the right to hold the
Purchased Shares in escrow until those shares have vested in accordance with the
Vesting Schedule.
5. Compliance with Law. Under no circumstances shall shares of
Common Stock or other assets be issued or delivered to Participant pursuant to
the provisions of this Agreement unless, in the opinion of counsel for the
Corporation or its successors, there shall have been compliance with all
applicable requirements of Federal and state securities laws, all applicable
listing requirements of any stock exchange (or the Nasdaq National Market, if
applicable) on which the Common Stock is at the time listed for trading and all
other requirements of law or of any regulatory bodies having jurisdiction over
such issuance and delivery.
<PAGE>
B. TRANSFER RESTRICTIONS
1. Restriction on Transfer. Except for any Permitted Transfer,
Participant shall not transfer, assign, encumber or otherwise dispose of any of
the Purchased Shares which are subject to the Repurchase Right.
2. Restrictive Legend. The stock certificate for the Purchased
Shares shall be endorsed with the following restrictive legend:
"The shares represented by this certificate are unvested and
subject to certain repurchase rights granted to the Corporation and
accordingly may not be sold, assigned, transferred, encumbered, or in any
manner disposed of except in conformity with the terms of a written
agreement dated ____________, 199_ between the Corporation and the
registered holder of the shares (or the predecessor in interest to the
shares). A copy of such agreement is maintained at the Corporation's
principal corporate offices."
3. Transferee Obligations. Each person (other than the Corporation)
to whom the Purchased Shares are transferred by means of a Permitted Transfer
must, as a condition precedent to the validity of such transfer, acknowledge in
writing to the Corporation that such person is bound by the provisions of this
Agreement and that the transferred shares are subject to the Repurchase Right to
the same extent such shares would be so subject if retained by Participant.
C. REPURCHASE RIGHT
1. Grant. The Corporation is hereby granted the right (the
"Repurchase Right"), exercisable at any time during the ninety (90)-day period
following the date Participant ceases for any reason to remain in Service, to
repurchase at the Purchase Price all or any portion of the Purchased Shares in
which Participant is not, at the time of his or her cessation of Service, vested
in accordance with the Vesting Schedule or the special vesting acceleration
provisions of Paragraph C.5 of this Agreement (such shares to be hereinafter
referred to as the "Unvested Shares").
2. Exercise of the Repurchase Right. The Repurchase Right shall be
exercisable by written notice delivered to each Owner of the Unvested Shares
prior to the expiration of the ninety (90)-day exercise period. The notice shall
indicate the number of Unvested Shares to be repurchased and the date on which
the repurchase is to be effected, such date to be not more than thirty (30) days
after the date of such notice. The certificates representing the Unvested Shares
to be repurchased shall be delivered to the Corporation on or before the close
of business on the date specified for the repurchase. Concurrently with the
receipt of such stock certificates, the Corporation shall pay to Owner, in cash
or cash equivalent (including the cancellation of any purchase-money
indebtedness), an amount equal to the Purchase Price previously paid for the
Unvested Shares to be repurchased from Owner.
2.
<PAGE>
3. Termination of the Repurchase Right. The Repurchase Right shall
terminate with respect to any Unvested Shares for which it is not timely
exercised under Paragraph C.2. In addition, the Repurchase Right shall terminate
and cease to be exercisable with respect to any and all Purchased Shares in
which Participant vests in accordance with the following Vesting Schedule:
(i) Upon Participant's completion of one (1) year of Service
measured from ______________, 199__, Participant shall acquire a vested
interest in, and the Repurchase Right shall lapse with respect to,
twenty-five percent (25%) of the Purchased Shares.
(ii) Participant shall acquire a vested interest in, and the
Repurchase Right shall lapse with respect to, the remaining Purchased
Shares in a series of thirty six (36) successive equal monthly
installments upon Participant's completion of each additional month of
Service over the thirty-six (36)-month period measured from the initial
vesting date under subparagraph (i) above.
4. Recapitalization. Any new, substituted or additional securities
or other property (including cash paid other than as a regular cash dividend)
which is by reason of any Recapitalization distributed with respect to the
Purchased Shares shall be immediately subject to the Repurchase Right and any
escrow requirements hereunder, but only to the extent the Purchased Shares are
at the time covered by such right or escrow requirements. Appropriate
adjustments to reflect such distribution shall be made to the number and/or
class of securities subject to this Agreement and to the price per share to be
paid upon the exercise of the Repurchase Right in order to reflect the effect of
any such Recapitalization upon the Corporation's capital structure; provided,
however, that the aggregate purchase price shall remain the same.
5. Change in Control.
(a) Immediately prior to the consummation of any Change in
Control transaction, the Repurchase Right shall automatically lapse in its
entirety and the Purchased Shares shall vest in full, except to the extent the
Repurchase Right is to be assigned to the successor corporation (or parent
thereof) or is otherwise to continue in full force and effect pursuant to the
terms of the Change in Control transaction.
(b) To the extent the Repurchase Right remains in effect
following a Change in Control transaction, such right shall apply to the new
capital stock or other property (including any cash payments) received in
exchange for the Purchased Shares in consummation of the Change in Control, but
only to the extent the Purchased Shares are at the time covered by such right.
Appropriate adjustments shall be made to the price per share payable upon
exercise of the Repurchase Right to reflect the effect of the Change in Control
upon the Corporation's capital structure; provided, however, that the aggregate
purchase price shall remain the same.
3.
<PAGE>
The new securities or other property (including cash payments) issued or
distributed with respect to the Purchased Shares in consummation of the Change
in Control shall immediately be deposited in escrow with the Corporation (or the
successor entity) and shall not be released from escrow until Participant vests
in such securities or other property in accordance with the same Vesting
Schedule in effect for the Purchased Shares.
(c) The Repurchase Right may also be subject to termination in
whole or in part on an accelerated basis, and the Purchased Shares subject to
immediate vesting, in accordance with the terms of any special Addendum attached
to this Agreement.
D. SPECIAL TAX ELECTION
1. Section 83(b) Election . Under Code Section 83, the excess of the
fair market value of the Purchased Shares on the date any forfeiture
restrictions applicable to such shares lapse over the Purchase Price paid for
such shares will be reportable as ordinary income on the lapse date. For this
purpose, the term "forfeiture restrictions" includes the right of the
Corporation to repurchase the Purchased Shares pursuant to the Repurchase Right.
Participant may elect under Code Section 83(b) to be taxed at the time the
Purchased Shares are acquired, rather than when and as such Purchased Shares
cease to be subject to such forfeiture restrictions. Such election must be filed
with the Internal Revenue Service within thirty (30) days after the date of this
Agreement. Even if the fair market value of the Purchased Shares on the date of
this Agreement equals the Purchase Price paid (and thus no tax is payable), the
election must be made to avoid adverse tax consequences in the future. THE FORM
FOR MAKING THIS ELECTION IS ATTACHED AS EXHIBIT II HERETO. PARTICIPANT
UNDERSTANDS THAT FAILURE TO MAKE THIS FILING WITHIN THE APPLICABLE THIRTY (30)-
DAY PERIOD WILL RESULT IN THE RECOGNITION OF ORDINARY INCOME AS THE FORFEITURE
RESTRICTIONS LAPSE.
2. FILING RESPONSIBILITY. PARTICIPANT ACKNOWLEDGES THAT IT IS
PARTICIPANT'S SOLE RESPONSIBILITY, AND NOT THE CORPORATION'S, TO FILE A TIMELY
ELECTION UNDER CODE SECTION 83(b), EVEN IF PARTICIPANT REQUESTS THE CORPORATION
OR ITS REPRESENTATIVES TO MAKE THIS FILING ON HIS OR HER BEHALF.
E. GENERAL PROVISIONS
1. No Employment or Service Contract. Nothing in this Agreement or
in the Plan shall confer upon Participant any right to continue in Service for
any period of specific duration or interfere with or otherwise restrict in any
way the rights of the Corporation (or any Parent or Subsidiary employing or
retaining Participant) or of Participant, which rights are hereby expressly
reserved by each, to terminate Participant's Service at any time for any reason,
with or without cause.
4.
<PAGE>
2. Assignment. The Corporation may assign the Repurchase Right to
any person or entity selected by the Board, including (without limitation) one
or more stockholders of the Corporation.
3. Notices. Any notice required to be given under this Agreement
shall be in writing and shall be deemed effective upon personal delivery or upon
deposit in the U.S. mail, registered or certified, postage prepaid and properly
addressed to the party entitled to such notice at the address indicated below
such party's signature line on this Agreement or at such other address as such
party may designate by ten (10) days advance written notice under this paragraph
to all other parties to this Agreement.
4. No Waiver. The failure of the Corporation in any instance to
exercise the Repurchase Right shall not constitute a waiver of any other
repurchase rights that may subsequently arise under the provisions of this
Agreement or any other agreement between the Corporation and Participant. No
waiver of any breach or condition of this Agreement shall be deemed to be a
waiver of any other or subsequent breach or condition, whether of like or
different nature.
5. Cancellation of Shares. If the Corporation shall make available,
at the time and place and in the amount and form provided in this Agreement, the
consideration for the Purchased Shares to be repurchased in accordance with the
provisions of this Agreement, then from and after such time, the person from
whom such shares are to be repurchased shall no longer have any rights as a
holder of such shares (other than the right to receive payment of such
consideration in accordance with this Agreement). Such shares shall be deemed
purchased in accordance with the applicable provisions hereof, and the
Corporation shall be deemed the owner and holder of such shares, whether or not
the certificates therefor have been delivered as required by this Agreement.
6. Participant Undertaking. Participant hereby agrees to take
whatever additional action and execute whatever additional documents the
Corporation may deem necessary or advisable in order to carry out or effect one
or more of the obligations or restrictions imposed on either Participant or the
Purchased Shares pursuant to the provisions of this Agreement.
7. Agreement is Entire Contract. This Agreement constitutes the
entire contract between the parties hereto with regard to the subject matter
hereof. This Agreement is made pursuant to the provisions of the Plan and shall
in all respects be construed in conformity with the terms of the Plan.
8. Governing Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of California without resort to that
State's conflict-of-laws rules.
5.
<PAGE>
9. Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.
10. Successors and Assigns. The provisions of this Agreement shall
inure to the benefit of, and be binding upon, the Corporation and its successors
and assigns and upon Participant, Participant's assigns and the legal
representatives, heirs and legatees of Participant's estate, whether or not any
such person shall have become a party to this Agreement and have agreed in
writing to join herein and be bound by the terms hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
day and year first indicated above.
COLLATERAL THERAPEUTICS, INC.
By:
--------------------------------
Title:
-----------------------------
Address:
---------------------------
------------------------------------
PARTICIPANT
Address:
---------------------------
6.
<PAGE>
SPOUSAL ACKNOWLEDGMENT
The undersigned spouse of the Participant has read and hereby approves the
foregoing Stock Issuance Agreement. In consideration of the Corporation's
granting the Participant the right to acquire the Purchased Shares in accordance
with the terms of such Agreement, the undersigned hereby agrees to be
irrevocably bound by all the terms of such Agreement, including (without
limitation) the right of the Corporation (or its assigns) to purchase any
Purchased Shares in which the Participant is not vested at the time of his or
her termination of Service.
----------------------------------------
PARTICIPANT'S SPOUSE
Address:
-------------------------------
-------------------------------
7.
<PAGE>
EXHIBIT I
ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED _______________________ hereby sell(s), assign(s)
and transfer(s) unto Collateral Therapeutics, Inc. (the "Corporation"),
__________________ (_______) shares of the Common Stock of the Corporation
standing in his or her name on the books of the Corporation represented by
Certificate No. ___________________ herewith and do(es) hereby irrevocably
constitute and appoint _______________________________ Attorney to transfer the
said stock on the books of the Corporation with full power of substitution in
the premises.
Dated: _________________, 199__.
Signature
------------------------------------
Instruction: Please do not fill in any blanks other than the signature line.
Please sign exactly as you would like your name to appear on the issued stock
certificate. The purpose of this assignment is to enable the Corporation to
exercise the Repurchase Right without requiring additional signatures on the
part of Participant.
<PAGE>
EXHIBIT II
SECTION 83(b) TAX ELECTION
This statement is being made under Section 83(b) of the Internal Revenue Code,
pursuant to Treas. Reg. Section 1.83-2.
(1) The taxpayer who performed the services is:
Name:
Address:
Taxpayer Ident. No.:
(2) The property with respect to which the election is being made is
____________ shares of the common stock of Collateral Therapeutics, Inc.
(3) The property was issued on _____________, 199__.
(4) The taxable year in which the election is being made is the calendar year
199__.
(5) The property is subject to a repurchase right pursuant to which the issuer
has the right to acquire the property at the original purchase price if
for any reason taxpayer's service with the issuer terminates. The issuer's
repurchase right lapses in a series of annual and monthly installments
over a four (4)-year period ending on __________.
(6) 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) is $ _____________ per share.
(7) The amount paid for such property is $____________ per share.
(8) A copy of this statement was furnished to Collateral Therapeutics, Inc.
for whom taxpayer rendered the services underlying the transfer of
property.
(9) This statement is executed on ________________________, 199__.
- -------------------------------- --------------------------------------------
Spouse (if any) Taxpayer
This election must be filed with the Internal Revenue Service Center with which
taxpayer files his or her Federal income tax returns and must be made within
thirty (30) days after the execution date of the Stock Issuance Agreement. This
filing should be made by registered or certified mail, return receipt requested.
Participant must retain two (2) copies of the completed form for filing with his
or her Federal and state tax returns for the current tax year and an additional
copy for his or her records.
<PAGE>
APPENDIX
The following definitions shall be in effect under the Agreement:
A. Agreement shall mean this Stock Issuance Agreement.
B. Board shall mean the Corporation's Board of Directors.
C. Change in Control shall mean a change in ownership or control of the
Corporation effected through any of the following transactions:
(i) a merger or consolidation in which securities possessing
more than fifty percent (50%) of the total combined voting power of the
Corporation's outstanding securities are transferred to a person or
persons different from the persons holding those securities immediately
prior to such transaction, or
(ii) the sale, transfer or other disposition of all or
substantially all of the Corporation's assets in complete liquidation or
dissolution of the Corporation, or
(iii) the acquisition, directly or indirectly, by any person
or related group of persons (other than the Corporation or a person that
directly or indirectly controls, is controlled by, or is under common
control with, the Corporation) of beneficial ownership (within the meaning
of Rule 13d-3 of the 1934 Act) of securities possessing more than fifty
percent (50%) of the total combined voting power of the Corporation's
outstanding securities pursuant to a tender or exchange offer made
directly to the Corporation's stockholders, or
(iv) a change in the composition of the Board over a period of
thirty-six (36) consecutive months or less such that a majority of the
Board members ceases, by reason of one or more contested elections for
Board membership, to be comprised of individuals who either (A) have been
Board members continuously since the beginning of such period or (B) have
been elected or nominated for election as Board members during such period
by at least a majority of the Board members described in clause (A) who
were still in office at the time the Board approved such election or
nomination.
D. Code shall mean the Internal Revenue Code of 1986, as amended.
E. Common Stock shall mean shares of the Corporation's common stock.
A-1.
<PAGE>
F. Corporation shall mean Collateral Therapeutics, Inc., a Delaware
corporation.
G. Owner shall mean Participant and all subsequent holders of the
Purchased Shares who derive their chain of ownership through a Permitted
Transfer from Participant.
H. 1934 Act shall mean the Securities Exchange Act of 1934, as amended.
I. Parent shall mean any corporation (other than the Corporation) in an
unbroken chain of corporations ending with the Corporation, provided each
corporation in the unbroken chain (other than the Corporation) owns, at the time
of the determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.
J. Participant shall mean the person to whom the Purchased Shares are
issued under the Stock Issuance Program.
K. Permitted Transfer shall mean (i) a gratuitous transfer of the
Purchased Shares, provided and only if Participant obtains the Corporation's
prior written consent to such transfer, (ii) a transfer of title to the
Purchased Shares effected pursuant to Participant's will or the laws of
intestate succession following Participant's death or (iii) a transfer to the
Corporation in pledge as security for any purchase-money indebtedness incurred
by Participant in connection with the acquisition of the Purchased Shares.
L. Plan shall mean the Corporation's 1998 Stock Incentive Plan.
M. Plan Administrator shall mean either the Board or a committee of the
Board acting in its administrative capacity under the Plan.
N. Purchase Price shall have the meaning assigned to such term in
Paragraph A.1.
O. Purchased Shares shall have the meaning assigned to such term in
Paragraph A.1.
P. Recapitalization shall mean any stock split, stock dividend,
recapitalization, combination of shares, exchange of shares or other change
affecting the Corporation's outstanding Common Stock as a class without the
Corporation's receipt of consideration.
Q. Repurchase Right shall mean the right granted to the Corporation in
accordance with Article C.
R. Service shall mean the Participant's performance of services for the
Corporation (or any Parent or Subsidiary) in the capacity of an employee,
subject to the control and direction of the employer entity as to both the work
to be performed and the manner and method of performance, a non-employee member
of the board of directors or a consultant.
A-2.
<PAGE>
S. Stock Issuance Program shall mean the Stock Issuance Program under the
Plan.
T. Subsidiary shall mean any corporation (other than the Corporation) in
an unbroken chain of corporations beginning with the Corporation, provided each
corporation (other than the last corporation) in the unbroken chain owns, at the
time of the determination, stock possessing fifty percent (50%) or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.
U. Vesting Schedule shall mean the vesting schedule specified in Paragraph
C.3, subject to the special vesting acceleration provisions of Paragraph C.5.
V. Unvested Shares shall have the meaning assigned to such term in
Paragraph C.1.
A-3.
<PAGE>
ADDENDUM
TO
STOCK ISSUANCE AGREEMENT
The following provisions are hereby incorporated into, and are
hereby made a part of, that certain Stock Issuance Agreement (the "Issuance
Agreement") by and between Collateral Therapeutics, Inc. (the "Corporation") and
____________ ("Participant") evidencing the stock issuance made on this date to
Participant under the terms of the Corporation's 1998 Stock Incentive Plan, and
such provisions shall be effective immediately on such issue date. All
capitalized terms in this Addendum, to the extent not otherwise defined herein,
shall have the meanings assigned to such terms in the Issuance Agreement.
INVOLUNTARY TERMINATION FOLLOWING
CHANGE IN CONTROL
1. To the extent the Repurchase Right is assigned to the successor
corporation (or parent thereof) in a Change in Control or is otherwise continued
in full force and effect pursuant to the terms of the Change in Control
transaction, no accelerated vesting of the Purchased Shares shall occur upon
such Change of Control, and the Repurchase Right shall continue to remain in
full force and effect in accordance with the provisions of the Issuance
Agreement. The Participant shall, over Participant's period of Service following
the Change in Control, continue to vest in the Purchased Shares in one or more
installments in accordance with the provisions of the Issuance Agreement.
2. Immediately upon an Involuntary Termination of Participant's
Service within eighteen (18) months following the Change in Control, the
Repurchase Right shall terminate automatically, and all the Purchased Shares
shall vest in full at that time.
3. For purposes of this Addendum, the following definitions shall be
in effect:
An Involuntary Termination shall mean the termination of
Participant's Service by reason of:
(i) Participant's involuntary dismissal or discharge by
the Corporation for reasons other than Misconduct, or
(ii) Participant's voluntary resignation following (A) a
change in Participant's position with the Corporation (or Parent or
Subsidiary employing Participant) which materially reduces Participant's
duties and responsibilities or the level of management to which
Participant reports, (B) a reduction in Participant's level of
compensation (including base salary, fringe
<PAGE>
benefits and target bonus under any corporate performance based bonus or
incentive programs) by more than fifteen percent (15%) or (C) a relocation
of Participant's place of employment by more than fifty (50) miles,
provided and only if such change, reduction or relocation is effected by
the Corporation without Participant's consent.
Misconduct shall mean the commission of any act of fraud,
embezzlement or dishonesty by the Participant, any unauthorized use or
disclosure by the Participant of confidential information or trade secrets of
the Corporation (or any Parent or Subsidiary), or any other intentional
misconduct by the Participant adversely affecting the business or affairs of the
Corporation (or any Parent or Subsidiary) in a material manner. The foregoing
definition shall not be deemed to be inclusive of all the acts or omissions
which the Corporation (or any Parent or Subsidiary) may consider as grounds for
the dismissal or discharge of the Participant or other person in the Service of
the Corporation (or any Parent or Subsidiary).
IN WITNESS WHEREOF, Collateral Therapeutics, Inc. has caused this
Addendum to be executed by its duly-authorized officer as of the Effective Date
specified below.
COLLATERAL THERAPEUTICS, INC.
By:
-----------------------------------
Title:
--------------------------------
EFFECTIVE DATE: __________________, 199_
2.
<PAGE>
EXHIBIT 10.39
COLLATERAL THERAPEUTICS, INC.
1998 EMPLOYEE STOCK PURCHASE PLAN
I. PURPOSE OF THE PLAN
This Employee Stock Purchase Plan is intended to promote the
interests of Collateral Therapeutics, Inc., a California corporation, by
providing eligible employees with the opportunity to acquire a proprietary
interest in the Corporation through participation in a payroll- deduction based
employee stock purchase plan designed to qualify under Section 423 of the Code.
Capitalized terms herein shall have the meanings assigned to such
terms in the attached Appendix.
II. ADMINISTRATION OF THE PLAN
The Plan Administrator shall have full authority to interpret and
construe any provision of the Plan and to adopt such rules and regulations for
administering the Plan as it may deem necessary in order to comply with the
requirements of Code Section 423. Decisions of the Plan Administrator shall be
final and binding on all parties having an interest in the Plan.
III. STOCK SUBJECT TO PLAN
A. The stock purchasable under the Plan shall be shares of
authorized but unissued or reacquired Common Stock, including shares of Common
Stock purchased on the open market. The maximum number of shares of Common Stock
which may be issued over the term of the Plan shall not exceed Fifty Thousand
(50,000) shares.
B. Should any change be made to the Common Stock by reason of any
stock split, stock dividend, recapitalization, combination of shares, exchange
of shares or other change affecting the outstanding Common Stock as a class
without the Corporation's receipt of consideration, appropriate adjustments
shall be made to (i) the maximum number and class of securities issuable under
the Plan, (ii) the maximum number and class of securities purchasable per
Participant on any one Purchase Date and (iii) the number and class of
securities and the price per share in effect under each outstanding purchase
right in order to prevent the dilution or enlargement of benefits thereunder.
IV. OFFERING PERIODS
A. Shares of Common Stock shall be offered for purchase under the
Plan through a series of successive offering periods until such time as (i) the
maximum number of shares of Common Stock available for issuance under the Plan
shall have been purchased or (ii) the Plan shall have been sooner terminated.
<PAGE>
B. Each offering period shall be of such duration (not to exceed
twenty-four (24) months) as determined by the Plan Administrator prior to the
start date of such offering period. However, the initial offering period shall
commence at the Effective Time and terminate on the last business day in July
2000. The next offering period shall commence on the first business day in
August 2000, and subsequent offering periods shall commence as designated by the
Plan Administrator.
C. Each offering period shall be comprised of a series of one or
more successive Purchase Intervals. Purchase Intervals shall run from the first
business day in February each year to the last business day in July of the same
year and from the first business day in August each year to the last business
day in January of the following year. However, the first Purchase Interval in
effect under the initial offering period shall commence at the Effective Time
and terminate on the last business day in January 1999.
D. Should the Fair Market Value per share of Common Stock on any
Purchase Date within an offering period be less than the Fair Market Value per
share of Common Stock on the start date of that offering period, then that
offering period shall automatically terminate immediately after the purchase of
shares of Common Stock on such Purchase Date, and a new offering period shall
commence on the next business day following such Purchase Date. The new offering
period shall have a duration of twenty (24) months, unless a shorter duration is
established by the Plan Administrator within five (5) business days following
the start date of that offering period.
V. ELIGIBILITY
A. Each individual who is an Eligible Employee on the start date of
any offering period under the Plan may enter that offering period on such start
date or on any subsequent Semi-Annual Entry Date within that offering period,
provided he or she remains an Eligible Employee.
B. Each individual who first becomes an Eligible Employee after the
start date of an offering period may enter that offering period on any
subsequent Semi-Annual Entry Date within that offering period on which he or she
is an Eligible Employee.
C. The date an individual enters an offering period shall be
designated his or her Entry Date for purposes of that offering period.
D. To participate in the Plan for a particular offering period, the
Eligible Employee must complete the enrollment forms prescribed by the Plan
Administrator (including a stock purchase agreement and a payroll deduction
authorization) and file such forms with the Plan Administrator (or its
designate) on or before his or her scheduled Entry Date.
2.
<PAGE>
VI. PAYROLL DEDUCTIONS
A. The payroll deduction authorized by the Participant for purposes
of acquiring shares of Common Stock during an offering period may be any
multiple of one percent (1%) of the Base Salary paid to the Participant during
each Purchase Interval within that offering period, up to a maximum of ten
percent (10%). The deduction rate so authorized shall continue in effect
throughout the offering period, except to the extent such rate is changed in
accordance with the following guidelines:
(i) The Participant may, at any time during the offering
period, reduce his or her rate of payroll deduction to become effective as
soon as possible after filing the appropriate form with the Plan
Administrator. The Participant may not, however, effect more than one (1)
such reduction per Purchase Interval.
(ii) The Participant may, prior to the commencement of any
new Purchase Interval within the offering period, increase the rate of his
or her payroll deduction by filing the appropriate form with the Plan
Administrator. The new rate (which may not exceed the ten percent (10%)
maximum) shall become effective on the start date of the first Purchase
Interval following the filing of such form.
B. Payroll deductions shall begin on the first pay day following the
Participant's Entry Date into the offering period and shall (unless sooner
terminated by the Participant) continue through the pay day ending with or
immediately prior to the last day of that offering period. The amounts so
collected shall be credited to the Participant's book account under the Plan,
but no interest shall be paid on the balance from time to time outstanding in
such account. The amounts collected from the Participant shall not be required
to be held in any segregated account or trust fund and may be commingled with
the general assets of the Corporation and used for general corporate purposes.
C. Payroll deductions shall automatically cease upon the termination
of the Participant's purchase right in accordance with the provisions of the
Plan.
D. The Participant's acquisition of Common Stock under the Plan on
any Purchase Date shall neither limit nor require the Participant's acquisition
of Common Stock on any subsequent Purchase Date, whether within the same or a
different offering period.
3.
<PAGE>
VII. PURCHASE RIGHTS
A. Grant of Purchase Right. A Participant shall be granted a
separate purchase right for each offering period in which he or she
participates. The purchase right shall be granted on the Participant's Entry
Date into the offering period and shall provide the Participant with the right
to purchase shares of Common Stock, in a series of successive installments over
the remainder of such offering period, upon the terms set forth below. The
Participant shall execute a stock purchase agreement embodying such terms and
such other provisions (not inconsistent with the Plan) as the Plan Administrator
may deem advisable.
Under no circumstances shall purchase rights be granted under the
Plan to any Eligible Employee if such individual would, immediately after the
grant, own (within the meaning of Code Section 424(d)) or hold outstanding
options or other rights to purchase, stock possessing five percent (5%) or more
of the total combined voting power or value of all classes of stock of the
Corporation or any Corporate Affiliate.
B. Exercise of the Purchase Right. Each purchase right shall be
automatically exercised in installments on each successive Purchase Date within
the offering period, and shares of Common Stock shall accordingly be purchased
on behalf of each Participant (other than Participants whose payroll deductions
have previously been refunded pursuant to the Termination of Purchase Right
provisions below) on each such Purchase Date. The purchase shall be effected by
applying the Participant's payroll deductions for the Purchase Interval ending
on such Purchase Date to the purchase of whole shares of Common Stock at the
purchase price in effect for the Participant for that Purchase Date.
C. Purchase Price. The purchase price per share at which Common
Stock will be purchased on the Participant's behalf on each Purchase Date within
the offering period shall be equal to eighty-five percent (85%) of the lower of
(i) the Fair Market Value per share of Common Stock on the Participant's Entry
Date into that offering period or (ii) the Fair Market Value per share of Common
Stock on that Purchase Date.
D. Number of Purchasable Shares. The number of shares of Common
Stock purchasable by a Participant on each Purchase Date during the offering
period shall be the number of whole shares obtained by dividing the amount
collected from the Participant through payroll deductions during the Purchase
Interval ending with that Purchase Date by the purchase price in effect for the
Participant for that Purchase Date. However, the maximum number of shares of
Common Stock purchasable per Participant on any one Purchase Date shall not
exceed One Thousand (1,000) shares, subject to periodic adjustments in the event
of certain changes in the Corporation's capitalization. In addition, the maximum
aggregate number of shares of Common Stock purchasable by all Participants on
any one Purchase Date shall not exceed Twelve Thousand Five Hundred (12,500)
shares, subject to periodic adjustments in the event of certain changes in the
Corporation's capitalization.
4.
<PAGE>
E. Excess Payroll Deductions. Any payroll deductions not applied to
the purchase of shares of Common Stock on any Purchase Date because they are not
sufficient to purchase a whole share of Common Stock shall be held for the
purchase of Common Stock on the next Purchase Date. However, any payroll
deductions not applied to the purchase of Common Stock by reason of the
limitation on the maximum number of shares purchasable on the Purchase Date
shall be promptly refunded.
F. Termination of Purchase Right. The following provisions shall
govern the termination of outstanding purchase rights:
(i) A Participant may, at any time prior to the next
scheduled Purchase Date in the offering period, terminate his or her
outstanding purchase right by filing the appropriate form with the Plan
Administrator (or its designate), and no further payroll deductions shall
be collected from the Participant with respect to the terminated purchase
right. Any payroll deductions collected during the Purchase Interval in
which such termination occurs shall, at the Participant's election, be
immediately refunded or held for the purchase of shares on the next
Purchase Date. If no such election is made at the time such purchase right
is terminated, then the payroll deductions collected with respect to the
terminated right shall be refunded as soon as possible.
(ii) The termination of such purchase right shall be
irrevocable, and the Participant may not subsequently rejoin the offering
period for which the terminated purchase right was granted. In order to
resume participation in any subsequent offering period, such individual
must re-enroll in the Plan (by making a timely filing of the prescribed
enrollment forms) on or before his or her scheduled Entry Date into that
offering period.
(iii) Should the Participant cease to remain an Eligible
Employee for any reason (including death, disability or change in status)
while his or her purchase right remains outstanding, then that purchase
right shall immediately terminate, and all of the Participant's payroll
deductions for the Purchase Interval in which the purchase right so
terminates shall be immediately refunded. However, should the Participant
cease to remain in active service by reason of an approved unpaid leave of
absence, then the Participant shall have the right, exercisable up until
the last business day of the Purchase Interval in which such leave
commences, to (a) withdraw all the payroll deductions collected to date on
his or her behalf for that Purchase Interval or (b) have such funds held
for the purchase of shares on his or her behalf on the next scheduled
Purchase Date. In no event, however, shall any further payroll deductions
be collected on the Participant's behalf during such leave. Upon the
Participant's return to active service (i) within ninety (90) days
following the commencement of such leave or, (ii) prior to the expiration
of any longer period for which such Participant's right to reemployment
with the Corporation is guaranteed by either statute or contract,
5.
<PAGE>
his or her payroll deductions under the Plan shall automatically resume at
the rate in effect at the time the leave began. However, should the
Participant's leave of absence exceed ninety (90) days and his or her
re-employment rights not be guaranteed by either statute or contract, then
the Participant's status as an Eligible Employee will be deemed to
terminate on the ninety-first (91st) day of that leave, and such
Participant's purchase right for the offering period in which that leave
began shall thereupon terminate. An individual who returns to active
employment following such a leave shall be treated as a new Employee for
purposes of the Plan and must, in order to resume participation in the
Plan, re-enroll in the Plan (by making a timely filing of the prescribed
enrollment forms) on or before his or her scheduled Entry Date into the
offering period.
G. Corporate Transaction. Each outstanding purchase right shall
automatically be exercised, immediately prior to the effective date of any
Corporate Transaction, by applying the payroll deductions of each Participant
for the Purchase Interval in which such Corporate Transaction occurs to the
purchase of whole shares of Common Stock at a purchase price per share equal to
eighty-five percent (85%) of the lower of (i) the Fair Market Value per share of
Common Stock on the Participant's Entry Date into the offering period in which
such Corporate Transaction occurs or (ii) the Fair Market Value per share of
Common Stock immediately prior to the effective date of such Corporate
Transaction. However, the applicable limitations on the number of shares of
Common Stock purchasable per Participant and in the aggregate shall continue to
apply to any such purchase.
The Corporation shall use its best efforts to provide at least ten
(10)-days prior written notice of the occurrence of any Corporate Transaction,
and Participants shall, following the receipt of such notice, have the right to
terminate their outstanding purchase rights prior to the effective date of the
Corporate Transaction.
H. Proration of Purchase Rights. Should the total number of shares
of Common Stock to be purchased pursuant to outstanding purchase rights on any
particular date exceed the number of shares then available for issuance under
the Plan, the Plan Administrator shall make a pro-rata allocation of the
available shares on a uniform and nondiscriminatory basis, and the payroll
deductions of each Participant, to the extent in excess of the aggregate
purchase price payable for the Common Stock pro-rated to such individual, shall
be refunded.
I. Assignability. The purchase right shall be exercisable only by
the Participant and shall not be assignable or transferable by the Participant.
J. Stockholder Rights. A Participant shall have no stockholder
rights with respect to the shares subject to his or her outstanding purchase
right until the shares are purchased on the Participant's behalf in accordance
with the provisions of the Plan and the Participant has become a holder of
record of the purchased shares.
VIII. ACCRUAL LIMITATIONS
6.
<PAGE>
A. No Participant shall be entitled to accrue rights to acquire
Common Stock pursuant to any purchase right outstanding under this Plan if and
to the extent such accrual, when aggregated with (i) rights to purchase Common
Stock accrued under any other purchase right granted under this Plan and (ii)
similar rights accrued under other employee stock purchase plans (within the
meaning of Code Section 423) of the Corporation or any Corporate Affiliate,
would otherwise permit such Participant to purchase more than Twenty-Five
Thousand Dollars ($25,000) worth of stock of the Corporation or any Corporate
Affiliate (determined on the basis of the Fair Market Value per share on the
date or dates such rights are granted) for each calendar year such rights are at
any time outstanding.
B. For purposes of applying such accrual limitations to the purchase
rights granted under the Plan, the following provisions shall be in effect:
(i) The right to acquire Common Stock under each
outstanding purchase right shall accrue in a series of installments on
each successive Purchase Date during the offering period on which such
right remains outstanding.
(ii) No right to acquire Common Stock under any outstanding
purchase right shall accrue to the extent the Participant has already
accrued in the same calendar year the right to acquire Common Stock under
one (1) or more other purchase rights at a rate equal to Twenty-Five
Thousand Dollars ($25,000) worth of Common Stock (determined on the basis
of the Fair Market Value per share on the date or dates of grant) for each
calendar year such rights were at any time outstanding.
C. If by reason of such accrual limitations, any purchase right of a
Participant does not accrue for a particular Purchase Interval, then the payroll
deductions which the Participant made during that Purchase Interval with respect
to such purchase right shall be promptly refunded.
D. In the event there is any conflict between the provisions of this
Article and one or more provisions of the Plan or any instrument issued
thereunder, the provisions of this Article shall be controlling.
IX. EFFECTIVE DATE AND TERM OF THE PLAN
A. The Plan was adopted by the Board on April 20, 1998 and shall
become effective at the Effective Time, provided no purchase rights granted
under the Plan shall be exercised, and no shares of Common Stock shall be issued
hereunder, until (i) the Plan shall have been approved by the stockholders of
the Corporation and (ii) the Corporation shall have complied with all applicable
requirements of the 1933 Act (including the registration of the shares of Common
Stock issuable under the Plan on a Form S-8 registration statement filed with
the Securities and Exchange Commission), all applicable listing requirements of
any stock exchange
7.
<PAGE>
(or the Nasdaq National Market, if applicable) on which the Common Stock is
listed for trading and all other applicable requirements established by law or
regulation. In the event such stockholder approval is not obtained, or such
compliance is not effected, within twelve (12) months after the date on which
the Plan is adopted by the Board, the Plan shall terminate and have no further
force or effect, and all sums collected from Participants during the initial
offering period hereunder shall be refunded.
B. Unless sooner terminated by the Board, the Plan shall terminate
upon the earliest of (i) the last business day in July 2008, (ii) the date on
which all shares available for issuance under the Plan shall have been sold
pursuant to purchase rights exercised under the Plan or (iii) the date on which
all purchase rights are exercised in connection with a Corporate Transaction. No
further purchase rights shall be granted or exercised, and no further payroll
deductions shall be collected, under the Plan following such termination.
X. AMENDMENT/TERMINATION OF THE PLAN
A. The Board may alter, amend, suspend or terminate the Plan at any
time to become effective immediately following the close of any Purchase
Interval. However, the Plan may be amended or terminated immediately upon Board
action, if and to the extent necessary to assure that the Corporation will not
recognize, for financial reporting purposes, any compensation expense in
connection with the shares of Common Stock offered for purchase under the Plan,
should the financial accounting rules applicable to the Plan at the Effective
Time be subsequently revised so as to require the recognition of compensation
expense in the absence of such amendment or termination.
B. In no event may the Board effect any of the following amendments
or revisions to the Plan without the approval of the Corporation's stockholders:
(i) increase the number of shares of Common Stock issuable under the Plan or the
maximum number of shares purchasable per Participant on any one Purchase Date,
except for permissible adjustments in the event of certain changes in the
Corporation's capitalization, (ii) alter the purchase price formula so as to
reduce the purchase price payable for the shares of Common Stock purchasable
under the Plan or (iii) modify eligibility requirements for participation in the
Plan.
XI. GENERAL PROVISIONS
A. Nothing in the Plan shall confer upon the Participant any right
to continue in the employ of the Corporation or any Corporate Affiliate for any
period of specific duration or interfere with or otherwise restrict in any way
the rights of the Corporation (or any Corporate Affiliate employing such person)
or of the Participant, which rights are hereby expressly reserved by each, to
terminate such person's employment at any time for any reason, with or without
cause.
8.
<PAGE>
B. All costs and expenses incurred in the administration of the Plan
shall be paid by the Corporation; however, each Plan Participant shall bear all
costs and expenses incurred by such individual in the sale or other disposition
of any shares purchased under the Plan.
C. The provisions of the Plan shall be governed by the laws of the
State of California without resort to that State's conflict-of-laws rules.
9.
<PAGE>
Schedule A
Corporations Participating in
Employee Stock Purchase Plan
As of the Effective Time
Collateral Therapeutics, Inc.
<PAGE>
APPENDIX
The following definitions shall be in effect under the Plan:
A. Base Salary shall mean the regular base salary paid to a
Participant by one or more Participating Companies during such individual's
period of participation in one or more offering periods under the Plan,
calculated before deduction of (A) any income or employment tax withholdings or
(B) any pre-tax contributions made by the Participant to any Code Section 401(k)
salary deferral plan or any Code Section 125 cafeteria benefit program now or
hereafter established by the Corporation or any Corporate Affiliate. The
following items of compensation shall not be included in Base Salary: (i) all
overtime payments, bonuses, commissions (other than those functioning as base
salary equivalents), profit-sharing distributions and other incentive- type
payments and (ii) any and all contributions (other than Code Section 401(k) or
Code Section 125 contributions) made on the Participant's behalf by the
Corporation or any Corporate Affiliate under any employee benefit or welfare
plan now or hereafter established.
B. Board shall mean the Corporation's Board of Directors.
C. Code shall mean the Internal Revenue Code of 1986, as amended.
D. Common Stock shall mean the Corporation's common stock.
E. Corporate Affiliate shall mean any parent or subsidiary
corporation of the Corporation (as determined in accordance with Code Section
424), whether now existing or subsequently established.
F. Corporate Transaction shall mean either of the following
stockholder-approved transactions to which the Corporation is a party:
(i) a merger or consolidation in which securities possessing
more than fifty percent (50%) of the total combined voting power of the
Corporation's outstanding securities are transferred to a person or
persons different from the persons holding those securities immediately
prior to such transaction, or
(ii) the sale, transfer or other disposition of all or
substantially all of the assets of the Corporation in complete liquidation
or dissolution of the Corporation.
G. Corporation shall mean Collateral Therapeutics, Inc., a
California corporation, and any corporate successor to all or substantially all
of the assets or voting stock of Collateral Therapeutics, Inc. which shall by
appropriate action adopt the Plan.
A-1.
<PAGE>
H. Effective Time shall mean the time at which the Underwriting
Agreement is executed and finally priced. Any Corporate Affiliate which becomes
a Participating Corporation after such Effective Time shall designate a
subsequent Effective Time with respect to its employee-Participants.
I. Eligible Employee shall mean any person who is employed by a
Participating Corporation on a basis under which he or she is regularly expected
to render more than twenty (20) hours of service per week for more than five (5)
months per calendar year for earnings considered wages under Code Section
3401(a).
J. Entry Date shall mean the date an Eligible Employee first
commences participation in the offering period in effect under the Plan. The
earliest Entry Date under the Plan shall be the Effective Time.
K. Fair Market Value per share of Common Stock on any relevant date
shall be determined in accordance with the following provisions:
(i) If the Common Stock is at the time traded on the Nasdaq
National Market, then the Fair Market Value shall be the closing selling
price per share of Common Stock on the date in question, as such price is
reported by the National Association of Securities Dealers on the Nasdaq
National Market or any successor system. If there is no closing selling
price for the Common Stock on the date in question, then the Fair Market
Value shall be the closing selling price on the last preceding date for
which such quotation exists.
(ii) If the Common Stock is at the time listed on any Stock
Exchange, then the Fair Market Value shall be the closing selling price
per share of Common Stock on the date in question on the Stock Exchange
determined by the Plan Administrator to be the primary market for the
Common Stock, as such price is officially quoted in the composite tape of
transactions on such exchange. If there is no closing selling price for
the Common Stock on the date in question, then the Fair Market Value shall
be the closing selling price on the last preceding date for which such
quotation exists.
(iii) For purposes of the initial offering period which begins at
the Effective Time, the Fair Market Value shall be deemed to be equal to
the price per share at which the Common Stock is sold in the initial
public offering pursuant to the Underwriting Agreement.
L. 1933 Act shall mean the Securities Act of 1933, as amended.
M. Participant shall mean any Eligible Employee of a Participating
Corporation who is actively participating in the Plan.
A-2.
<PAGE>
N. Participating Corporation shall mean the Corporation and such
Corporate Affiliate or Affiliates as may be authorized from time to time by the
Board to extend the benefits of the Plan to their Eligible Employees. The
Participating Corporations in the Plan are listed in attached Schedule A.
O. Plan shall mean the Corporation's 1998 Employee Stock Purchase
Plan, as set forth in this document.
P. Plan Administrator shall mean the committee of two (2) or more
Board members appointed by the Board to administer the Plan.
Q. Purchase Date shall mean the last business day of each Purchase
Interval. The initial Purchase Date shall be January 29, 1999.
R. Purchase Interval shall mean each successive six (6)-month period
within the offering period at the end of which there shall be purchased shares
of Common Stock on behalf of each Participant.
S. Semi-Annual Entry Date shall mean the first business day in
February and August each year on which an Eligible Employee may first enter an
offering period.
T. Stock Exchange shall mean either the American Stock Exchange or
the New York Stock Exchange.
U. Underwriting Agreement shall mean the agreement between the
Corporation and the underwriter or underwriters managing the initial public
offering of the Common Stock.
A-3.
<PAGE>
INDEMNIFICATION AGREEMENT EXHIBIT 10.40
THIS AGREEMENT is made and entered into this ____ day of ___________, 1998
between Collateral Therapeutics, Inc., a Delaware corporation ("Corporation"),
and ________________________ ("Director").
RECITALS:
A. Director, a member of the Board of Directors of Corporation, performs a
valuable service in such capacity for Corporation; and
B. The stockholders of Corporation have adopted Bylaws (the "Bylaws")
providing for the indemnification of the officers, directors, agents and
employees of Corporation to the maximum extent authorized by Section 145 of the
Delaware General Corporation Law, as amended (the "Law"); and
C. The California General Corporation Law, as amended (the "Code"),
currently purports to be the controlling law governing the Corporation with
respect to certain aspects of corporate law, including indemnification of
directors and officers; and
D. At times in the future the Code foreseeably will not purport to be the
controlling law governing the Corporation with respect to such aspects, leaving
the Law as the controlling law governing the Corporation with respect to such
aspects; and
E. The Bylaws, the Code and the Law, by their non-exclusive nature, permit
contracts between Corporation and the members of its Board of Directors with
respect to indemnification of such directors; and
F. In accordance with the authorization as provided by the Code and the
Law, Corporation may from time to time purchase and maintain a policy or
policies of Directors and Officers Liability Insurance ("D & O Insurance"),
covering certain liabilities which may be incurred by its directors and officers
in the performance of services as directors and officers of Corporation; and
G. As a result of developments affecting the terms, scope and availability
of D & O Insurance there exists general uncertainty as to the extent and overall
desirability of protection afforded members of the Board of Directors by such D
& O Insurance, if any, and by statutory and bylaw indemnification provisions;
and
H. In order to induce Director to continue to serve as a member of the
Board of Directors of Corporation, Corporation has determined and agreed to
enter into this contract with Director,
<PAGE>
NOW, THEREFORE, in consideration of Director's continued service as a
director after the date hereof, the parties hereto agree as follows:
1. Indemnity of Director. Corporation hereby agrees to hold harmless and
indemnify Director to the fullest extent authorized or permitted by the
provisions of the Law and the Code, as each may be amended from time to time,
all so as to provide the greatest benefit to Director.
2. Additional Indemnity. Subject only to the exclusions set forth in
Section 3 hereof, Corporation hereby further agrees to hold harmless and
indemnify Director:
(a) against any and all expenses (including attorneys' fees),
witness fees, judgments, fines and amounts paid in settlement actually and
reasonably incurred by Director in connection with any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (including an action by or in the right of Corporation) to which
Director is, was or at any time becomes a party, or is threatened to be made a
party, by reason of the fact that Director is, was or at any time becomes a
director, officer, employee or agent of Corporation, or is or was serving or at
any time serves at the request of Corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise; and
(b) otherwise to the fullest extent as may be provided to Director
by Corporation under the non-exclusivity provisions of the Bylaws of
Corporation, the Code and the Law.
3. Limitations on Additional Indemnity. No indemnity pursuant to Section 2
hereof shall be paid by Corporation:
(a) except to the extent the aggregate of losses to be indemnified
thereunder exceeds the sum of such losses for which the Director is indemnified
pursuant to Section 1 hereof or reimbursed pursuant to any D & O Insurance
purchased and maintained by Corporation;
(b) in respect of remuneration paid to Director if it shall be
determined by a final judgment or other final adjudication that such
remuneration was in violation of law;
(c) on account of any action, suit or proceeding in which judgment
is rendered against Director for an accounting of profits made from the purchase
or sale by Director of securities of Corporation pursuant to the provisions of
Section 16(b) of the Securities Exchange Act of 1934, as amended, and amendments
thereto or similar provisions of any federal, state or local statutory law;
(d) on account of Director's conduct which is finally adjudged to
have been knowingly fraudulent or deliberately dishonest, or to constitute
willful misconduct;
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<PAGE>
(e) on account of Director's conduct which is the subject of an
action, suit or proceeding described in Section 7(c)(ii) hereof;
(f) on account of or arising in response to any action, suit or
proceeding (other than an action, suit or proceeding referred to in Section 8(b)
hereof) initiated by Director or any of Director's affiliates against
Corporation or any officer, director or stockholder of Corporation unless such
action, suit or proceeding was authorized in the specific case by action of the
Board of Directors of Corporation;
(g) on account of any action, suit or proceeding to the extent that
Director is a plaintiff, a counter-complainant or a cross-complainant therein
(other than an action, suit or proceeding permitted by Section 3(f) hereof); or
(h) if a final decision by a Court having jurisdiction in the matter
shall determine that such indemnification is not lawful (and, in this respect,
both Corporation and Director have been advised that the Securities and Exchange
Commission believes that indemnification for liabilities arising under the
federal securities laws is against public policy and is, therefore,
unenforceable and that claims for indemnification should be submitted to
appropriate courts for adjudication).
4. Contribution. If the indemnification provided in Sections 1 and 2 is
unavailable and may not be paid to Director for any reason other than those set
forth in paragraphs (b) through (g) of Section 3, then in respect of any
threatened, pending or completed action, suit or proceeding in which Corporation
is or is alleged to be jointly liable with Director (or would be if joined in
such action, suit or proceeding), Corporation shall contribute to the amount of
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred and paid or payable by Director in
such proportion as is appropriate to reflect (i) the relative benefits received
by Corporation on the one hand and Director on the other hand from the
transaction from which such action, suit or proceeding arose, and (ii) the
relative fault of Corporation on the one hand and of Director on the other hand
in connection with the events which resulted in such expenses, judgments, fines
or settlement amounts, as well as any other relevant equitable considerations.
The relative fault of Corporation on the one hand and of Director on the other
shall be determined by reference to, among other things, the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
the circumstances resulting in such expenses, judgments, fines or settlement
amounts. Corporation agrees that it would not be just and equitable if
contribution pursuant to this Section 4 were determined by pro rata allocation
or any other method of allocation which does not take account of the foregoing
equitable considerations.
5. Continuation of Obligations.
(a) All agreements and obligations of Corporation contained herein
shall continue during the period Director is a director, officer, employee or
agent of Corporation (or is or was serving at the request of Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust, employee benefit plan or other
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<PAGE>
enterprise) and shall continue thereafter so long as Director shall be subject
to any possible claim or threatened, pending or completed action, suit or
proceeding, whether civil, criminal or investigative, by reason of the fact that
Director was serving Corporation or such other entity in any capacity referred
to herein.
(b) For six years after the effective time of (i) the acquisition of
the Corporation by another entity by means of any transaction or series of
related transactions (including, without limitation, any reorganization, merger
or consolidation) or (ii) the sale of all or substantially all of the assets of
the Corporation by means of any transaction or series of related transactions,
the Corporation (to the extent the Corporation is not the continuing or
surviving person of such reorganization, merger, consolidation or sale) shall
cause the acquiring, continuing or surviving corporation to (x) indemnify and
hold harmless Director in accordance with Section 1 and 2 hereof and (y) use its
best efforts to provide directors' liability insurance on terms substantially
similar to the terms of the Corporation's then current directors' liability
insurance policy in effect on the dated thereof, or any other arrangement
reasonably satisfactory to Director, in respect of acts or omissions occurring
on or prior to the effective time of the reorganization, merger, consolidation
or sale.
6. Notification and Defense of Claim. Not later than thirty (30) days
after receipt by Director of notice of the commencement of any action, suit or
proceeding, Director will, if a claim in respect thereof is to be made against
Corporation under this Agreement, notify Corporation of the commencement
thereof; but the omission so to notify Corporation will not relieve it from any
liability which it may have to Director otherwise than under this Agreement.
With respect to any such action, suit or proceeding as to which Director
notifies Corporation of the commencement thereof:
(a) Corporation will be entitled to participate therein at its own
expense;
(b) except as otherwise provided below, to the extent that it may
wish, Corporation jointly with any other indemnifying party similarly notified
will be entitled to assume the defense thereof, with counsel reasonably
satisfactory to Director. After notice from Corporation to Director of its
election so as to assume the defense thereof, Corporation will not be liable to
Director under this Agreement for any legal or other expenses subsequently
incurred by Director in connection with the defense thereof other than
reasonable costs of investigation or as otherwise provided below. Director shall
have the right to employ his own counsel in such action, suit or proceeding but
the fees and expenses of such counsel incurred after notice from Corporation of
its assumption of the defense thereof shall be at the expense of Director unless
(i) the employment of counsel by Director has been authorized by Corporation,
(ii) Director shall have reasonably concluded that there may be a conflict of
interest between Corporation and Director in the conduct of the defense of such
action or (iii) Corporation shall not in fact have employed counsel to assume
the defense of such action, in each of which cases the fees and expenses of
Director's separate counsel shall be at the expense of Corporation. Corporation
shall not be entitled to assume the defense of any action, suit or proceeding
brought by or on behalf of Corporation or as to which Director shall have made
the conclusion provided for in (ii) above; and
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<PAGE>
(c) Corporation shall not be liable to indemnify Director under this
Agreement for any amounts paid in settlement of any action or claim effected
without its written consent. Corporation shall be permitted to settle any action
except that it shall not settle any action or claim in any manner which would
impose any penalty, out-of-pocket liability, or limitation on Director without
Director's written consent. Neither Corporation nor Director will unreasonably
withhold its or his consent to any proposed settlement.
7. Advancement and Repayment of Expenses.
(a) In the event that Director employs his own counsel pursuant to
Section 6(b)(i) through (iii) above, Corporation shall advance to Director,
prior to any final disposition of any threatened or pending action, suit or
proceeding, whether civil, criminal, administrative or investigative, any and
all reasonable expenses (including legal fees and expenses) incurred in
investigating or defending any such action, suit or proceeding within ten (10)
days after receiving copies of invoices presented to Director for such expenses.
(b) Director agrees that Director will reimburse Corporation for all
reasonable expenses paid by Corporation in defending any civil or criminal
action, suit or proceeding against Director in the event and only to the extent
it shall be ultimately determined by a final judicial decision (from which there
is no right of appeal) that Director is not entitled, under the provisions of
the Law, the Bylaws, this Agreement or otherwise, to be indemnified by
Corporation for such expenses.
(c) Notwithstanding the foregoing, Corporation shall not be required
to advance such expenses to Director if Director (i) commences any action, suit
or proceeding as a plaintiff unless such advance is specifically approved by a
majority of the Board of Directors or (ii) is a party to an action, suit or
proceeding brought by Corporation and approved by a majority of the Board which
alleges willful misappropriation of corporate assets by Director, disclosure of
confidential information in violation of Director's fiduciary or contractual
obligations to Corporation, or any other willful and deliberate breach in bad
faith of Director's duty to Corporation or its stockholders.
8. Enforcement.
(a) Corporation expressly confirms and agrees that it has entered
into this Agreement and assumed the obligations imposed on Corporation hereby in
order to induce Director to continue as a director of Corporation, and
acknowledges that Director is relying upon this Agreement in continuing in such
capacity.
(b) In the event Director is required to bring any action to enforce
rights or to collect moneys due under this Agreement and is successful in such
action, the Corporation shall reimburse Director for all Director's reasonable
fees and expenses in bringing and pursuing such action.
9. Subrogation. In the event of payment under this agreement, Corporation
shall be subrogated to the extent of such payment to all of the rights of
recovery of Director, who
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<PAGE>
shall execute all documents required and shall do all acts that may be necessary
to secure such rights and to enable Corporation effectively to bring suit to
enforce such rights.
10. Non-Exclusivity of Rights. The rights conferred on Director by this
Agreement shall not be exclusive of any other right which Director may have or
hereafter acquire under any statute, provision of Corporation's Certificate of
Incorporation or Bylaws, agreement, vote of stockholders or directors, or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding office.
11. Survival of Rights. The rights conferred on Director by this Agreement
shall continue after Director has ceased to be a director, officer, employee or
other agent of Corporation or such other entity and shall inure to the benefit
of Director's heirs, executors and administrators.
12. Separability. Each of the provisions of this Agreement is a separate
and distinct agreement and independent of the others, so that if any or all of
the provisions hereof shall be held to be invalid or unenforceable to any extent
for any reason, such invalidity or unenforceability shall not affect the
validity or enforceability of the other provisions hereof or the obligation of
the Corporation to indemnify the Director to the full extent provided by the
Bylaws and the Law and, if applicable, the Code, and the affected provision
shall be construed and enforced so as to effectuate the parties' intent to the
maximum extent possible.
13. Governing Law. This Agreement shall be interpreted and enforced in
accordance with the internal laws of the State of Delaware as applied to
contracts entered into and to be performed wholly within such State.
14. Inconsistency. In the event of any inconsistency between any of the
provisions of this Agreement, the controlling provision as to any particular
issue with regard to any particular matter shall be the one which authorizes for
the benefit of the Director the provision of the fullest, promptest, most
certain or otherwise most favorable indemnification and/or advancement.
15. Binding Effect. This Agreement shall be binding upon Director and upon
Corporation, its successors and assigns, and shall inure to the benefit of
Director, his heirs, personal representatives and assigns and to the benefit of
Corporation, its successors and assigns.
16. Amendment and Termination. No amendment, modification, termination or
cancellation of this Agreement shall be effective unless set forth in a writing
signed by both parties hereto.
17. Entire Agreement. This Agreement represents the entire agreement
between the parties hereto and there are no other agreements, contracts or
understandings between the parties hereto with respect to the subject matter of
this Agreement, except as specifically referred to herein. This Agreement
supersedes any and all agreements regarding indemnification heretofore entered
into by the parties.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on and
as of the day and year first above written.
CORPORATION: COLLATERAL THERAPEUTICS, INC.,
a Delaware corporation
By:
-------------------------------
(Signature)
-----------------------------------
Print Name and Title
DIRECTOR:
-----------------------------------
(Signature)
-----------------------------------
Print Name
[SIGNATURE PAGE TO INDEMNIFICATION AGREEMENT]
<PAGE>
INDEMNIFICATION AGREEMENT EXHIBIT 10.41
THIS AGREEMENT is made and entered into this _______ day of
____________________, 1998 between Collateral Therapeutics, Inc., a Delaware
corporation ("Corporation"), and ____________________ ("Officer").
RECITALS:
A. Officer, an officer (but not currently a member of the Board of
Directors) of Corporation, performs a valuable service in such capacity for
Corporation; and
B. The stockholders of Corporation have adopted Bylaws (the "Bylaws")
providing, for the indemnification of the officers, directors, agents and
employees of Corporation to the maximum extent authorized by Section 145 of the
Delaware General Corporation Law, as amended (the "Law"); and
C. The California General Corporation Law, as amended (the "Code"),
currently purports to be the controlling law governing the Corporation with
respect to certain aspects of corporate law, including indemnification of
directors and officers; and
D. At times in the future the Code foreseeably will not purport to be the
controlling law governing the Corporation with respect to such aspects, leaving
the Law as the controlling law governing the Corporation with respect to such
aspects; and
E. The Bylaws, the Code and the Law, by their non-exclusive nature, permit
contracts between Corporation and its officers with respect to indemnification
of officers; and
F. In accordance with the authorization as provided by the Code and the
Law, Corporation may from time to time purchase and maintain a policy or
policies of Directors and Officers Liability Insurance ("D & O Insurance"),
covering certain liabilities which may be incurred by its directors and officers
in the performance of services as directors and officers of Corporation; and
G. As a result of developments affecting the terms, scope and availability
of D & O Insurance there exists general uncertainty as to the extent and overall
desirability of protection afforded officers by such D & O Insurance, if any,
and by statutory and bylaw indemnification provisions; and
H. In order to induce Officer to continue to serve as an officer of
Corporation, Corporation has determined and agreed to enter into this contract
with Officer;
NOW, THEREFORE, in consideration of Officer's continued service as an
officer after the date hereof, the parties hereto agree as follows:
<PAGE>
1. Indemnity of Officer. Corporation hereby agrees to hold harmless and
indemnify Officer to the fullest extent authorized or permitted by the
provisions of the Code and the Law, as it may be amended from time to time, all
so as to provide the greatest possible benefit to Officer.
2. Additional Indemnity. Subject only to the exclusions set forth in
Section 3 hereof, Corporation hereby further agrees to hold harmless and
indemnify Officer:
(a) against any and all legal expenses (including attorneys' fees),
witness fees, judgments, fines and amounts paid in settlement actually and
reasonably incurred by Officer in connection with any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (including an action by or in the right of Corporation) to which
Officer is, was or at any time becomes a party, or is threatened to be made a
party, by reason of the fact that Officer is, was or at any time becomes a
director, officer, employee or agent of Corporation, or is or was serving or at
any time serves at the request of Corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise; and
(b) otherwise to the fullest extent as may be provided to Officer by
Corporation under the non-exclusivity provisions of the Bylaws of Corporation,
the Code and the Law.
3. Limitations on Additional Indemnity. No indemnity pursuant to Section 2
hereof shall be paid by Corporation:
(a) except to the extent the aggregate of losses to be indemnified
thereunder exceeds the sum of such losses for which Officer is indemnified
pursuant to Section 1 hereof or reimbursed pursuant to any D & O Insurance
purchased and maintained by Corporation;
(b) in respect of remuneration paid to Officer if it shall be
determined by a final judgment or other final adjudication that such
remuneration was in violation of law;
(c) on account of any action, suit or proceeding in which judgment
is rendered against Officer for an accounting of profits made from the purchase
or sale by Officer of securities of Corporation pursuant to the provisions of
Section 16(b) of the Securities Exchange Act of 1934, as amended, and amendments
thereto or similar provisions of any federal, state or local statutory law;
(d) on account of Officer's conduct which is finally adjudged to
have been knowingly fraudulent or deliberately dishonest, or to constitute
willful misconduct;
(e) on account of Officer's conduct which is the subject of an
action, suit or proceeding described in Section 7(c)(ii) hereof;
(f) on account of or arising in response to any action, suit or
proceeding (other than an action, suit or proceeding referred to in Section 8(b)
hereof) initiated by
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<PAGE>
Officer or any of Officer's affiliates against Corporation or any officer,
director or stockholder of Corporation unless such action, suit or proceeding
was authorized in the specific case by action of the Board of Directors of
Corporation;
(g) on account of any action, suit or proceeding to the extent that
Officer is a plaintiff, a counter-complainant or a cross-complainant therein
(other than an action, suit or proceeding permitted by Section 3(f) hereof); or
(h) if a final decision by a Court having jurisdiction in the matter
shall determine that such indemnification is not lawful (and, in this respect,
both Corporation and Officer have been advised that the Securities and Exchange
Commission believes that indemnification for liabilities arising under the
federal securities laws is against public policy and is, therefore,
unenforceable and that claims for indemnification should be submitted to
appropriate courts for adjudication).
4. Contribution. If the indemnification provided in Sections 1 and 2 is
unavailable and may not be paid to Officer for any reason other than those set
forth in paragraphs (b) through (g) of Section 3, then in respect of any
threatened, pending or completed action, suit or proceeding in which Corporation
is or is alleged to be jointly liable with Officer (or would be if joined in
such action, suit or proceeding), Corporation shall contribute to the amount of
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred and paid or payable by Officer in
such proportion as is appropriate to reflect (i) the relative benefits received
by Corporation on the one hand and Officer on the other hand from the
transaction from which such action, suit or proceeding arose, and (ii) the
relative fault of Corporation on the one hand and of Officer on the other hand
in connection with the events which resulted in such expenses, judgments, fines
or settlement amounts, as well as any other relevant equitable considerations.
The relative fault of Corporation on the one hand and of Officer on the other
hand shall be determined by reference to, among other things, the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent the circumstances resulting in such expenses, judgments, fines or
settlement amounts. Corporation agrees that it would not be just and equitable
if contribution pursuant to this Section 4 were determined by pro rata
allocation or any other method of allocation which does not take account of the
foregoing equitable considerations.
5. Continuation of Obligations.
(a) All agreements and obligations of Corporation contained herein
shall continue during the period Officer is a director, officer, employee or
agent of Corporation (or is or was serving at the request of Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise) and shall continue
thereafter so long as Officer shall be subject to any possible claim or
threatened, pending or completed action, suit or proceeding, whether civil,
criminal or investigative, by reason of the fact that Officer was serving
Corporation or such other entity in any capacity referred to herein.
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<PAGE>
(b) For six years after the effective time of (i) the acquisition of
the Corporation by another entity by means of any transaction or series of
related transactions (including, without limitation, any reorganization, merger
or consolidation) or (ii) the sale of all or substantially all of the assets of
the Corporation by means of any transaction or series of related transactions,
the Corporation (to the extent the Corporation is not the continuing or
surviving person of such reorganization, merger, consolidation or sale) shall
cause the acquiring, continuing or surviving corporation to (x) indemnify and
hold harmless Officer in accordance with Section 1 and 2 hereof and (y) use its
best efforts to provide officers' liability insurance on terms substantially
similar to the terms of the Corporation's then current officers' liability
insurance policy in effect on the date thereof, or any other arrangement
reasonably satisfactory to Officer, in respect of acts or omissions occurring on
or prior to the effective time of the reorganization, merger, consolidation or
sale.
6. Notification and Defense of Claim. Not later than thirty (30) days
after receipt by Officer of notice of the commencement of any action, suit or
proceeding, Officer will, if a claim in respect thereof is to be made against
Corporation under this Agreement, notify Corporation of the commencement
thereof; but the omission so to notify Corporation will not relieve it from any
liability which it may have to Officer otherwise than under this Agreement. With
respect to any such action, suit or proceeding as to which Officer notifies
Corporation of the commencement thereof:
(a) Corporation will be entitled to participate therein at its own
expense;
(b) except as otherwise provided below, to the extent that it may
wish, Corporation jointly with any other indemnifying party similarly notified
will be entitled to assume the defense thereof, with counsel reasonably
satisfactory to Officer. After notice from Corporation to Officer of its
election so as to assume the defense thereof, Corporation will not be liable to
Officer under this Agreement for any legal or other expenses subsequently
incurred by Officer in connection with the defense thereof other than reasonable
costs of investigation or as otherwise provided below. Officer shall have the
right to employ his or her own counsel in such action, suit or proceeding but
the fees and expenses of such counsel incurred after notice from Corporation of
its assumption of the defense thereof shall be at the expense of Officer unless
(i) the employment of counsel by Officer has been authorized by Corporation,
(ii) Officer shall have reasonably concluded that there may be a conflict of
interest between Corporation and Officer in the conduct of the defense of such
action or (iii) Corporation shall not in fact have employed counsel to assume
the defense of such action, in each of which cases the fees and expenses of
Officer's separate counsel shall be at the expense of Corporation. Corporation
shall not be entitled to assume the defense of any action, suit or proceeding
brought by or on behalf of Corporation or as to which Officer shall have made
the conclusion provided for in (ii) above; and
(c) Corporation shall not be liable to indemnify Officer under this
Agreement for any amounts paid in settlement of any action or claim effected
without its written consent. Corporation shall be permitted to settle any action
except that it shall not settle any action or claim in any manner which would
impose any penalty, out-of-pocket
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<PAGE>
liability, or limitation on Officer without Officer's written consent. Neither
Corporation nor Officer will unreasonably withhold its or his or her consent to
any proposed settlement.
7. Advancement and Repayment of Expenses.
(a) In the event that Officer employs his or her own counsel
pursuant to Section 6(b)(i) through (iii) above, Corporation shall advance to
Officer, prior to any final disposition of any threatened or pending action,
suit or proceeding, whether civil, criminal, administrative or investigative,
any and all reasonable expenses (including legal fees and expenses) incurred in
investigating or defending any such action, suit or proceeding within ten (10)
days after receiving copies of invoices presented to Officer for such expenses.
(b) Officer agrees that Officer will reimburse Corporation for all
reasonable expenses paid by Corporation in defending any civil or criminal
action, suit or proceeding against Officer in the event and only to the extent
it shall be ultimately determined by a final judicial decision (from which there
is no right of appeal) that Officer is not entitled, under the provisions of the
Law, the Bylaws, this Agreement or otherwise, to be indemnified by Corporation
for such expenses.
(c) Notwithstanding the foregoing, Corporation shall not be required
to advance such expenses to Officer if Officer (i) commences any action, suit or
proceeding as a plaintiff unless such advance is specifically approved by a
majority of the Board of Directors or (ii) is a party to an action, suit or
proceeding brought by Corporation and approved by a majority of the Board which
alleges willful misappropriation of corporate assets by Officer, disclosure of
confidential information in violation of Officer's fiduciary or contractual
obligations to Corporation, or any other willful and deliberate breach in bad
faith of Officer's duty to Corporation or its stockholders.
8. Enforcement.
(a) Corporation expressly confirms and agrees that it has entered
into this Agreement and assumed the obligations imposed on Corporation hereby in
order to induce Officer to continue as an officer of Corporation, and
acknowledges that Officer is relying upon this Agreement in continuing in such
capacity.
(b) In the event Officer is required to bring any action to enforce
rights or to collect moneys due under this Agreement and is successful in such
action, Corporation shall reimburse Officer for all of Officer's reasonable fees
and expenses in bringing and pursuing such action.
9. Subrogation. In the event of payment under this agreement, Corporation
shall be subrogated to the extent of such payment to all of the rights of
recovery of Officer, who shall execute all documents required and shall do all
acts that may be necessary to secure such rights and to enable Corporation
effectively to bring suit to enforce such rights.
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<PAGE>
10. Non-Exclusivity of Rights. The rights conferred on Officer by this
Agreement shall not be exclusive of any other right which Officer may have or
hereafter acquire under any statute, provision of Corporation's Certificate of
Incorporation or Bylaws, agreement, vote of stockholders or directors, or
otherwise, both as to action in his or her official capacity and as to action in
another capacity while holding office.
11. Survival of Rights. The rights conferred on Officer by this Agreement
shall continue after Officer has ceased to be a director, officer, employee or
other agent of Corporation or such other entity and shall inure to the benefit
of Officer's heirs, executors and administrators.
12. Separability. Each of the provisions of this Agreement is a separate
and distinct agreement and independent of the others, so that if any or all of
the provisions hereof shall be held to be invalid or unenforceable to any extent
for any reason, such invalidity or unenforceability shall not affect the
validity or enforceability of the other provisions hereof or the obligation of
Corporation to indemnify Officer to the full extent provided by the Bylaws and
the Law, and, if applicable, the Code, and the affected provision shall be
construed and enforced so as to effectuate the parties' intent to the maximum
extent possible.
13. Governing Law. This Agreement shall be interpreted and enforced in
accordance with the internal laws of the State of Delaware as applied to
contracts entered into and to be performed wholly within such State.
14. Binding Effect. This Agreement shall be binding upon Officer and upon
Corporation, its successors and assigns, and shall inure to the benefit of
Officer, his or her heirs, personal representatives and assigns and to the
benefit of Corporation, its successors and assigns.
15. Amendment and Termination. No amendment, modification, termination or
cancellation of this Agreement shall be effective unless set forth in a writing
signed by both parties hereto.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on and
as of the day and year first above written.
CORPORATION: COLLATERAL THERAPEUTICS, INC.,
a Delaware corporation
By:
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(Signature)
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Print Name and Title
OFFICER:
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[SIGNATURE PAGE TO INDEMNIFICATION AGREEMENT]
