<TABLE>
----------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------------
FORM 10-Q
_X_ QUARTERLY REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended September 30, 1998
OR
___ TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File No. 0-15271
CISTRON BIOTECHNOLOGY, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 22-2487972
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
10 Bloomfield Avenue, Pine Brook, New Jersey 07058
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code:
(973) 575-1700
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 and 15 (d) of the Securities
Exchange Act of 1934 during the preceding 12 months and (2) has been
subject to such filing requirements for the past 90 days.
Yes _X_ No ___
The aggregate number of Registrant's outstanding shares on November 10,
1998 was 24,317,020 shares of Common Stock, .01 par value.
Page 1 of 13 pages
<PAGE> 2
CISTRON BIOTECHNOLOGY, INC.
---------------------------
(A DEVELOPMENT STAGE COMPANY)
---------------------------
INDEX
-----
PAGE
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Balance sheets as of September 30, 1998 and June 30, 1998... 3
Statements of operations for the three months ended
September 30, 1998 and 1997................................. 4
Statements of cash flows for the three months ended
September 30, 1998 and 1997................................. 5
Notes to financial statements............................... 6
Item 2. Management's discussion and analysis of results of
operations and financial condition.......................... 8
PART II - OTHER INFORMATION............................................ 11
Item 2. Changes in Securities................................ 11
Item 5. Other Information.................................... 12
Item 6. Exhibits and Report on Form 8-K...................... 12
Signatures................................................... 13
-2-
<PAGE> 3
<CAPTION>
CISTRON BIOTECHNOLOGY, INC.
---------------------------
BALANCE SHEETS
--------------
June 30, September 30,
1998 1998
------------ -------------
(unaudited)
ASSETS
- ------
<S>
CURRENT ASSETS: <C> <C>
Cash and equivalents $ 5,832,031 $ 5,597,609
Accounts receivable-trade 101,859 58,505
Accounts receivable-other 2,940,673 2,980,222
Inventories 3,635 2,548
Taxes receivable 329,024 329,024
Notes receivable $230,000; reserve $230,000" - -
---------- ----------
TOTAL CURRENT ASSETS 9,207,222 8,967,908
ACCOUNTS RECEIVABLE - OTHER - Long Term 3,670,221 3,721,116
---------- ----------
PROPERTY AND EQUIPMENT:
Machinery and equipment 502,908 502,908
Furniture and fixtures 147,113 147,113
Leasehold improvements 77,674 77,674
727,695 727,695
---------- ----------
Less: Accumulated depreciation 701,477 702,736
---------- ----------
26,218 24,959
---------- ----------
SECURITY DEPOSITS 23,938 23,938
---------- ----------
PATENTS, Net of accumulated amortization
of $14,536 and $15,198, respectively 22,569 21,907
DEFERRED TAX ASSET 49,313 49,313
TOTAL ASSETS $ 12,999,481 $ 12,809,141
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
CURRENT LIABILITIES:
Accrued expenses and accounts payable $ 114,894 $ 71,637
Taxes payable 348,898 284,718
Other current liabilities 691,058 700,352
---------- ----------
TOTAL CURRENT LIABILITIES 1,154,850 1,056,707
---------- ----------
Other non-current liabilities 902,174 914,693
---------- ----------
SHAREHOLDERS' EQUITY:
Common stock, $.01 par value; 50,000,000 shares
authorized; issued and outstanding 26,930,187
shares in each period 269,302 269,302
Additional paid-in capital 8,683,680 8,683,680
Earnings accumulated during the development stage 2,384,125 2,279,409
Treasury stock 3,946,500 shares at cost (394,650) (394,650)
---------- ----------
TOTAL SHAREHOLDERS' EQUITY 10,942,457 10,837,741
---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 12,999,481 $ 12,809,141
========== ==========
See accompanying notes to financial statements.
-3-
</TABLE>
<PAGE> 4
<TABLE>
<CAPTION>
CISTRON BIOTECHNOLOGY, INC.
---------------------------
STATEMENTS OF OPERATIONS
------------------------
(UNAUDITED)
February 2, 1982
(commencement of
Three Months ended September 30, operations) to
1997 1998 September 30, 1998
----------------------------------------------------
<S> <C> <C> <C>
Sales....................................... $ 175,290 $ 153,570 $ 9,568,555
Cost of sales............................... 81,315 79,634 4,196,963
---------- ---------- ----------
Gross profit......................... 93,975 73,936 5,371,592
Other income:
Litigation settlements.................... - - 14,684,206
License fees and funded research.......... 100,000 - 4,111,149
Expenses:
Research and development.................. 98,420 103,661 8,647,007
Administrative and marketing.............. 319,393 225,669 11,432,731
Occupancy................................. 46,122 50,213 2,521,178
---------- ---------- ----------
Total expenses.............................. 463,935 379,543 22,600,916
Operating income (loss).............. (269,960) (305,607) 1,566,031
Interest income/(expense) - net............. 138,282 136,711 1,017,275
Other expense............................... - - 59,895
Amortization of deferred financing costs.... - - 173,079
Acquisition expense......................... - - 429,620
---------- ---------- ----------
Income (loss) before income taxes
and extraordinary credit................... (131,678) (168,896) 1,920,712
Income tax provision (benefit).............. (63,338) (64,180) 1,403,619
---------- ---------- ----------
Income/(loss) before extraordinary credit... (68,340) (104,716) 517,093
Extraordinary credit - benefit of tax loss
carryforward.............................. - - 262,838
---------- ---------- ----------
Net income/(loss).................... $ (68,340) $ (104,716) $ 779,931
========== ========== ==========
Net loss per share.......................... $ - $ -
Weighted average shares outstanding......... 26,884,990 22,983,687
========== ==========
Net income/(loss) per share -
assuming dilution.......................... $ - $ -
========== ==========
Weighted average shares outstanding
assuming dilution.......................... 26,884,990 22,983,687
========== ==========
See accompanying notes to financial statements
-4-
</TABLE>
<PAGE> 5
<TABLE>
<CAPTION>
CISTRON BIOTECHNOLOGY, INC.
---------------------------
STATEMENTS OF CASH FLOWS
------------------------
(UNAUDITED)
-----------
February 2, 1982
(commencement of
Three Months ended September 30, operations) to
1997 1998 September 30, 1998
------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from customers $ 190,323 $ 199,319 $ 11,454,013
Cash paid to suppliers and employees (1,112,103) (504,529) (31,623,299)
Interest received 69,655 68,080 674,137
Acquisition expenses paid - - (429,620)
Royalties, research funding, license fees received 100,000 - 2,677,987
Other receipts 82 2,708 15,140,256
---------- ---------- -----------
Net cash provided by (used in) operating activities (752,043) (234,422) (2,106,526)
---------- ---------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Collection of note receivable - - 15,097
Issuance of note receivable - - (230,000)
Purchase of property and equipment - - (762,472)
---------- ---------- -----------
Net cash (used in) investing activities - - (977,375)
---------- ---------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of capital stock and
additional contributions - - 9,946,398
Principal payments on notes payable - - (870,238)
---------- ---------- -----------
Purchase of treasury stock - - (394,650)
---------- ---------- -----------
Net cash provided by financing activities - - 8,681,510
---------- ---------- -----------
Net change in cash and cash equivalents (752,043) (234,422) 5,597,609
CASH AND CASH EQUIVALENTS, beginning of period 6,368,228 5,832,031 -
---------- ---------- -----------
CASH AND CASH EQUIVALENTS, end of period $ 5,616,185 $ 5,597,609 $ 5,597,609
========== ========== ===========
RECONCILIATION OF NET INCOME (LOSS) TO NET CASH
PROVIDED BY (USED IN) OPERATING ACTIVITIES:
Net income (loss) $ (68,340) $ (104,716) $ 779,931
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:
Depreciation and amortization 1,976 1,921 744,786
Issuance of warrants 65,000 - 65,000
Deferred income taxes (77,163) - (49,313)
Loss on disposal of property and equipment 4,552 - 8,531
Increase in reserve for note receivable - - 230,000
Amortization of deferred financing costs and other - - 195,179
Decrease (increase) in assets:
Accounts receivable 12,257 43,354 (58,505)
Inventory 1,115 1,087 (2,548)
Taxes receivable - - (329,024)
Notes and other long-term receivables (90,440) (90,444) (6,717,038)
Security Deposits - - (23,938)
Intangible assets - - (37,105)
Increase (decrease) in liabilities:
Accounts payable and accrued expenses (576,638) (43,257) 1,536,653
Other current and non-current liabilities (24,362) (42,367) 1,550,865
---------- ---------- -----------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES: $ (752,043) $ (234,422) $ (2,106,526)
========== ========== ===========
See accompanying notes to financial statements
-5-
</TABLE>
<PAGE> 6
CISTRON BIOTECHNOLOGY, INC.
---------------------------
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
A. BASIS OF PRESENTATION
---------------------
The financial statements for the periods ended September 30, 1998 and
1997 have been prepared without audit and, in the opinion of management,
all adjustments (which include only normal recurring adjustments)
necessary to fairly present the Company's financial position, results of
operations, and cash flows at September 30, 1998 and 1997 and for the
periods then ended have been made.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been omitted. These financial statements
should be read in conjunction with the financial statements and notes
thereto included in the Company's Annual Report on Form 10-K for the
fiscal year ended June 30, 1998. The results of operations for the
periods ended September 30, 1998 and 1997 are not necessarily indicative
of the operating results for the full year.
B. OTHER INCOME
------------
During the three-month period ended September 30, 1997, the Company
received non-refundable research and development funding of $100,000
representing the ninth of 10 consecutive quarterly research and
development payments of $100,000 which another company had agreed to
make to Cistron.
C. INCOME TAXES
------------
Tax benefits of $63,338 and $64,180 were recorded in the three-month
periods ended September 30, 1997 and 1998, respectively, against the net
losses incurred.
D. ACCOUNTS RECEIVABLE
-------------------
Accounts receivable - other consists of amounts due in November 1998
(current) and amounts due in November 1999 and 2000 (long term) pursuant
to a litigation settlement agreement entered into in 1996. Long-term
amounts have been discounted to reflect their present value.
E. CHANGES IN SHAREHOLDERS' EQUITY
-------------------------------
During the three-month period ended September 30, 1997, shareholders'
equity decreased by a net loss of $68,340 which was partially offset by
a $65,000 increase in additional paid-in capital as the result of
recording the value of warrants issued to third parties. During the
three-month period ended September 30, 1998, shareholders' equity
decreased due to a net loss of $104,716.
-6-
<PAGE> 7
F. EARNINGS PER SHARE CALCULATIONS
-------------------------------
In February 1997, The Financial Accounting Standards Board issued
Statement of Accounting Standards ("SFAS") No. 128, "Earnings Per
Share". SFAS No. 128 specifies the computation, presentation and
disclosure requirements for earnings per share ("EPS") and became
effective for both interim and annual periods ending after December 15,
1997. All prior period EPS data has been restated to conform with the
provisions of SFAS No. 128. The following is a reconciliation of the
numerators and denominators used to calculate Earnings per Share:
<TABLE>
<CAPTION>
Three Months Ended
September 30,
1997 1998
--------------------------------
<S> <C> <C>
Earnings per common share:
- ------------------------------
Net income (loss) (numerator) $ (68,340) $ (104,716)
Weighted average shares
(denominator) 26,884,990 22,983,687
Income (loss) per share $ - $ -
========== ==========
Earnings per common share -
assuming dilution:
- -----------------------------
Net income (loss) (numerator) $ (68,340) $ (104,716)
Weighted average shares 26,884,990 22,983,687
Effect of dilutive options - -
========== ==========
Weighted average shares -
assuming dilution (denominator) 26,884,990 22,983,687
Income (loss) per share $ - $ -
========== ==========
</TABLE>
G. NEW ACCOUNTING PRONOUNCEMENT
----------------------------
In June 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 131, "Disclosures About Segments
of an Enterprise and Related Information." This Statement became
effective for the Company during the current year. The Company is
currently in compliance with this accounting pronouncement.
-7-
<PAGE> 8
Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition
--------------------------------------------------
The following discussion should be read in conjunction with and is
qualified in its entirety by the accompanying financial information and
notes thereto, and management's discussion and analysis of results of
operations and financial condition contained in the Company's Annual Report
on Form 10-K for the fiscal year ended June 30, 1998.
Certain statements in this discussion and analysis constitute forward-
looking statements, are not historical facts, and involve risks and
uncertainties that could cause actual results to differ from those expected
and projected. Such risks and uncertainties include but are not limited
to: (i) general economic conditions; (ii) conditions specific to the
biotechnology industry; (iii) the Company's ability to develop or acquire
new technology or products through licensing, merger or acquisition and to
obtain regulatory approval to commercialize diagnostic or therapeutic
products; (iv) the effectiveness and ultimate market acceptance of any such
products; (v) limitations on third party reimbursements with respect to any
such products; and (vi) competition. The Company does not undertake to
update or revise any forward-looking statements contained herein whether as
a result of new information, future events or otherwise.
Results of Operations
- ---------------------
The Company sells its products to the research market and has not
generated significant revenues therefrom. None of its products have been
submitted to or received approval from the Food and Drug Administration for
the sale of such products to the diagnostic or therapeutic markets.
The Company believes it is a development stage enterprise because
planned principal operations have not yet commenced. The Company's planned
principal operations include the development of clinical and therapeutic
products for distribution through pharmaceutical and diagnostic companies.
This requires the approval of the Company's products by the Food and Drug
Administration ("FDA"). At September 30, 1998, none of the Company's
products had received such approval. In addition, the Company continues to
devote most of its efforts to activities such as research and development,
financial planning and developing markets which are typical activities for
a development stage enterprise. Specifically, the Company has expended
funds relating to the dental assay and vaccine adjuvant programs. With
respect to financial planning, from September 1997 to September 1998, the
Company engaged the services of BlueStone Capital Partners, LP
("Bluestone") to act as Cistron's financial advisor as to corporate
strategic and financial initiatives. In October 1998, the Company engaged
Genome Securities, Inc. to act in this capacity. Accordingly, as the
Company has not yet commenced principal operations and is devoting most of
its efforts to activities typical of a development stage enterprise as
outlined in Statement of Financial Accounting Standards No.7, the Company
believes that it continues to be in the development stage.
-8-
<PAGE> 9
Three Months Ended September 30, 1998 and Three Months Ended September 30, 1997
- -------------------------------------------------------------------------------
Sales decreased $21,720 (12.4%) in the quarter ended September 30, 1998
versus the same period of the prior year due to decreased bulk cytokine
assay kit components offset, in part, by increased bulk cytokine protein
sales. While customers may vary, Cistron's product sales are usually
concentrated among a limited number of customers. In the quarter ended
September 30, 1997, two customers accounted for approximately 65% of sales
while in the quarter ended September 30, 1998, three customers accounted
for approximately 60% of sales. Export sales decreased $35,975 (55.0%)
primarily due to decreased bulk assay kit component sales. Domestic sales
increased $14,255 (13.0%) due to increased protein sales, offset, in part,
by lower bulk assay kit component sales.
Cost of sales decreased $1,681 (2.1%) from the prior year due to the
lower sales volume, offset, in part, by increased manufacturing salary expense.
During the quarter ended September 30, 1997, the Company received non-
refundable research and development funding of $100,000, representing the
ninth of 10 consecutive quarterly research and development payments of
$100,000 which another company had agreed to make to Cistron.
Operating expenses decreased $84,392 (18.2%) in the quarter ended
September 30, 1998 versus the same quarter of the prior year. Research and
development expenses increased $5,241 (5.3%) due to higher external
research funding for vaccine adjuvant studies, offset, by lower research
salary and consulting expenses.
Administrative and marketing expenses decreased $93,724 (29.3%)
primarily due to lower consulting expenses in the quarter ended September 30,
1998 as compared to last year's quarter, in which BlueStone Capital Partners,
LP were engaged and $65,000 was charged as non-cash compensation related to
the issuance of an initial warrant to purchase 400,000 shares. Occupancy
expenses increased $4,091 (8.9%) as the result of higher utility expenses
incurred in the quarter ended September 30, 1998 than in the same quarter
of the previous year.
Interest income of $68,080 was earned on the investment of higher cash
balances. In addition, net interest income of $68,631 was recognized on
accounts receivable-other and other non-current liabilities to reflect the
increase in their present value.
The Company had an operating loss of $305,607 in the quarter and there
can be no assurance that its operations will reach profitability.
-9-
<PAGE> 10
Liquidity and Capital Resources
- -------------------------------
At September 30, 1998, the Company had current assets of $8,967,908
including cash and cash equivalents of $5,597,609 and had current
liabilities of $1,056,707. Cash used in the quarter ended September 30,
1998 was largely for operating expenses.
In September 1997, the Company engaged the services of BlueStone
Capital Partners, LP to act as Cistron's financial advisor as to corporate
strategic and financial initiatives. The Company's agreement with BlueStone
was not renewed at its expiration in September 1998. In October 1998,
Cistron engaged Genome Securities, Inc., whose Chairman and CEO, Robert
Naismith, Ph. D. is also a member of the Company's Board of Directors, to
perform these services. In this regard, the Company has held exploratory
discussions with several biotechnology and pharmaceutical companies
regarding possible strategic alliances including joint ventures, mergers or
the sale of the Company. There can be no assurances that any of these
discussions will result in any agreements with the Company.
On June 30, 1998, Cistron and Pasteur Merieux Serums & Vaccins, S.A.
(PMS&V), the world's largest vaccine company, entered into a letter of
intent for an option and license agreement pertaining to the use of IL-1 as
a vaccine adjuvant in the fields of preventive and therapeutic vaccines.
On October 30, 1998, PMS&V purchased 1,333,333 shares of Cistron common
stock at approximately $.75 per share and received warrants to purchase
666,667 additional shares at $.25 per share, for an aggregate price of
$1,000,000. BlueStone Capital is entitled to a fee from Cistron of 7% of
this transaction and to receive an additional warrant to purchase 400,000
shares of common stock at $.25 per share.
Simultaneously, the parties also entered into an option and
collaboration agreement, under which PMS&V obtained a three-year option to
acquire an exclusive license to use Cistron's interleukin-1 beta technology
in the fields of therapeutic and preventive vaccines. Under that agreement,
PMS&V also agreed to fund Cistron's vaccine adjuvant development program over
the three-year period for $900,000. The agreement contemplates that PMS&V
will conduct its own preclinical and clinical work on the use of IL-1 beta as
a vaccine adjuvant in these fields.
If the option is exercised, Cistron could receive an aggregate of $31
million in milestone payments based upon the development progress of
adjuvanted vaccine products using Cistron's IL-1 beta technology or joint
technology developed by the parties, through clinical trials and FDA
approvals, provided PMS&V exercises all its rights under the agreement and
subject to completion of the development program as currently contemplated.
Cistron would also receive royalties should PMS&V sell vaccines using that
technology.
There can be no assurance that PMS&V will exercise its option to
license IL-1 adjuvant rights or if they do, that product development milestones
will be achieved.
Management believes that it will have sufficient assets to fund the
Company's current programs and plans through fiscal 1999 and beyond.
-10-
<PAGE> 11
PART II - OTHER INFORMATION
- ---------------------------
Item 1. Legal Proceedings
-----------------
Not applicable.
Item 2. Changes in Securities
---------------------
a. Not applicable.
b. Not applicable.
c. On October 30, 1998, the Company issued and sold to Pasteur
Merieux Serums & Vaccins, S.A. ("PMS&V") 1,333,333 shares of Common
Stock of the Company (the "Common Stock") and a warrant to purchase
666,667 shares of Common Stock at an exercise price of $.25 per
share, for an aggregate consideration of $1,000,000, under the terms
of a Common Stock and Warrant Purchase Agreement dated as of October
30, 1998 between the Company and PMS&V. The shares of Common Stock
and the warrant were purchased for investment and the issuance of
those securities was exempt from the registration requirements of
the Securities Act of 1933, as amended, by virtue of Section 4(2)
thereof and Rule 506 thereunder. The certificate representing the
shares of Common Stock and the warrant were appropriately legended
to reflect that they have not been registered under said Act.
On October 30, 1998, at partial compensation for the financial
advisory services of BlueStone Capital Partners, L.P. ("BlueStone"),
on the transactions described in the preceding paragraph, the
Company issued to BlueStone's designee, Robert Naismith, Ph.D. (a
former Managing Director of BlueStone), a warrant to purchase
400,000 shares of Common Stock at an exercise price of $.25 per
share. The warrant was purchased for investment and the issuance of
the warrant was exempt from the registration requirements of the
Securities Act of 1933, as amended, by virtue of Section 4(2)
thereof. The warrant was appropriately legended to reflect that
neither it nor the shares of Common Stock issuable upon exercise of
the warrant have been registered under said Act.
Item 3. Defaults upon Senior Securities
-------------------------------
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
Not applicable.
-11-
<PAGE> 12
Item 5. Other Information
-----------------
On October 30, 1998, PMS&V purchased 1,333,333 shares of Cistron
common stock at approximately $.75 per share and received warrants
to purchase 666,667 additional shares at $.25 per share, for an
aggregate price of $1,000,000. PMS&V was granted demand and
piggyback registration rights with certain priorities (i.e. PMS&V
will be included in the registration of a potential future offering
of other securities of the Company).
Simultaneously, the parties also entered into an option and
collaboration agreement, under which PMS&V obtained a three-year
option to acquire an exclusive license to use Cistron's interleukin-
1 beta technology in the fields of therapeutic and preventive
vaccines. Under that agreement, PMS&V also agreed to fund Cistron's
vaccine adjuvant development program over the three-year period for
$900,000. The agreement contemplates that PMS&V will conduct its
own preclinical and clinical work on the use of IL-1 beta as a
vaccine adjuvant in these fields.
If the option is exercised, Cistron could receive an aggregate of
$31 million in milestone payments based upon the development
progress of adjuvanted vaccine products using Cistron's IL-1 beta
technology or joint technology developed by the parties, through
clinical trials and FDA approvals, provided PMS&V exercises all its
rights under the agreement and subject to completion of the
development program as currently contemplated. Cistron would also
receive royalties should PMS&V sell vaccines using that technology.
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
a. Exhibit.
4.1 Common Stock Purchase Warrant of Registrant issued
to Kirkland & Ellis LLP to purchase 250,000 shares
of Common Stock.
4.1a Amendment to Common Stock Purchase Warrant of
Registrant issued to Kirkland & Ellis LLP to
purchase 250,000 shares of Common Stock.
4.2 Common Stock Purchase Warrant of Registrant issued
to BlueStone Capital Partners, L.P. to purchase
400,000 shares of Common Stock.
4.3 Common Stock and Warrant Purchase Agreement pursuant
to which Pasteur Merieux Serums & Vaccins, S.A.
purchased 1,333,333 shares of Common Stock and a
warrant to purchase 666,667 shares of Common Stock.
4.4 Registration Rights Agreement between Registrant and
Pasteur Merieux Serums & Vaccins, S.A.
4.5 Common Stock Purchase Warrant of Registrant issued
to Robert Naismith, Ph.D. to purchase 400,000 shares
of Common Stock.
-2-
<PAGE> 13
10.18 Collaboration and Option Agreement between
Registrant and Pasteur Merieux Serums & Vaccins, S.A.
+ Portions have been omitted and filed separately
with the Securities and Exchange Commission pursuant to a
request for confidential treatment.
10.19 Letter of engagement, dated October 5, 1998, between
Registrant and Genome Securities, Inc.
27. Financial Data Schedule
b. Reports on Form 8-K. Not applicable.
_________________________
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: November 10, 1998 CISTRON BIOTECHNOLOGY, INC.
BRUCE C. GALTON
----------------
Bruce C. Galton
Chairman & CEO,
Chief Financial Officer and
Treasurer
(Principal Financial and
Accounting Officer)
-13-
<PAGE> 1
Void after 5:00 P.M. Common Stock Warrant
New York Time To Purchase 250,000 Shares
December 5, 2000 Of Common Stock of Cistron
Biotechnology, Inc.
No. 1
CISTRON BIOTECHNOLOGY, INC.
1.1. Common Stock Purchase Warrant
__________________
This Warrant and the shares of Common Stock issuable upon
exercise of this Warrant have not been registered under the
Securities Act of 1933, as amended (the "Act"), and may not be
sold or otherwise disposed of except (a) to a person who, in the
opinion of counsel reasonably acceptable to the Company, is a
person to whom the securities may be legally transferred without
registration and without delivery of a current prospectus under
the Act or (b) to a person upon delivery of a prospectus or
offering circular then meeting the requirements of the Act
relating to such securities and the offering thereof for such
sale or disposition.
__________________
This certifies that, FOR VALUE RECEIVED, KIRKLAND & ELLIS or registered
assigns (the "Holder"), is entitled to purchase, subject to the provisions of
this Warrant, from CISTRON BIOTECHNOLOGY, INC., a Delaware corporation (the
"Company"), 250,000 shares of the Company's common stock, $.01 par value (the
"Common Stock"), at a price of $.50 per share at any time prior to 5:00 P.M.,
New York Time, on December 5, 2000, at which time this Warrant shall expire
and become void. The number of shares of Common Stock to be received upon
exercise of this Warrant and the price to be paid for each share of Common
Stock are subject to possible adjustment from time to time as hereinafter set
forth. The shares of Common Stock or other securities or property deliverable
upon such exercise as adjusted from time to time are hereinafter sometimes
referred to as the "Warrant Shares" and the exercise price of a share of
Common Stock in effect at any time and as adjusted from time to time is
hereinafter sometimes referred to as the "Exercise Price." Unless the context
otherwise requires, the term "Warrant" as used herein includes this Warrant
and any other warrant or warrants that may be issued pursuant to the provisions
of this Warrant, whether upon transfer, assignment, partial exercise,
divisions, combinations, exchange, or otherwise, and the term "Holder"
includes any transferee or transferees or assignee or assignees of the Holder
named above, all of whom shall be subject to the provisions of this Warrant,
and, when used with reference to Warrant Shares, means the holder or holders
of such Warrant Shares.
-1-
<PAGE> 2
Section 1. Exercise of Warrant.
--------------------
1.1. Method of Exercise. This Warrant may be exercised in whole or in
part, but for not less than 25,000 Warrant Shares or the balance then
exercisable, at any time by the Holder prior to 5:00 P.M., New York Time,
on December 5, 2000, by presentation and surrender hereof to the Company at
its principal office with the Subscription Form annexed hereto, duly
executed and accompanied by payment, by certified or official bank checks
payable to the order of the Company, of the Exercise Price for the total
number of Warrant Shares purchased.
1.2. Delivery of Shares. Upon proper exercise of this
Warrant, the Company promptly shall deliver certificates for the Warrant
Shares to the Holder duly legended as authorized in the Subscription Form.
1.3. Partial Exercise. If this Warrant is exercised in part
only, the Company shall, upon presentation of this Warrant upon such
exercise, execute and deliver (with the certificate for the Warrant Shares
purchased) a new Warrant evidencing the rights of the Holder hereof to
purchase the balance of the Warrant Shares purchasable hereunder upon the
same terms and conditions as herein set forth.
1.4. Fractional Shares. No fractional shares or scrip
representing fractional shares shall be issued upon exercise of this
Warrant but, in lieu thereof, the Company shall round up to the next full
share.
Section 2. Exercise Price and Adjustments.
-------------------------------
2.1. Initial Exercise Price and Capital Adjustments. The
Exercise Price at which the Warrant Shares shall be purchasable shall be
$.50 per share, subject to adjustment from time to time in the event of
stock dividends, stock subdivisions, stock splits, or stock combinations,
as follows: In the event the Company shall at any time after the date
hereof issue shares of its Common Stock as a stock dividend or shall
subdivide or split or combine the outstanding shares of its Common Stock,
the Exercise Price shall forthwith proportionately be decreased in the case
of a stock dividend, subdivision, or stock split or proportionately be
increased in the case of combination, to the nearest one cent to give
effect to such change. Concurrently, the number of Warrant Shares issuable
upon exercise of this Warrant shall be increased or decreased in proportion
to the increase or decrease in the number of shares of Common Stock
outstanding resulting from such change. Any such adjustment shall become
effective at the close of business on the date that the subdivision or
combination shall become effective, in the event of a subdivision or
combination, or at the close of business on the record date fixed for the
determination of stockholders entitled to receipt of the stock dividend, in
the event of a stock dividend.
2.2. Reorganizations, Mergers, and Sale of Assets. In the
event of any reorganization or reclassification of the outstanding shares
of Common Stock (other than a change in par value, or from par value to no
par value, or from no par value to par value, or as a
-2-
<PAGE> 3
result of a subdivision or combination) or in the case of any consolidation
of the Company with, or merger of the Company into, another corporation after
which no securities of the Company will be publicly held, or in the case of
any sale, lease, or conveyance of all, or substantially all, of the
property, assets, business, and goodwill of the Company as an entity, the
Holder shall thereafter have the right upon exercise to purchase the kind
and amount of shares of stock and other securities and property receivable
upon such reorganization, reclassification, consolidation, merger, or sale
by a holder of the number of shares of Common Stock that the Holder would
have received had he exercised this Warrant immediately prior to such
reorganization, reclassification, consolidation, merger, or sale, at a
price equal to the aggregate Exercise Price then in effect pertaining to
this Warrant (the kind, amount, and price of such stock and other
securities to be subject to adjustment as herein provided).
2.3. Liquidation and Dissolution. In the event the Company
shall, at any time prior to the expiration of this Warrant and prior to the
exercise thereof, dissolve, liquidate, or wind up its affairs, the Holder
shall be entitled, upon the exercise thereof, to receive, in lieu of the
shares that he would have been entitled to receive, the same kind and
amount of assets as would have been issued, distributed, or paid to him
upon any such dissolution, liquidation, or winding up with respect to such
shares had he been the holder of record of such shares on the record date
for the determination of those entitled to receive any such liquidating
distribution. After any such dissolution, liquidation, or winding up that
shall result in any cash distribution in excess of the Exercise Price
provided for by this Warrant, the Holder may, at his option, exercise the
same without making payment of the Exercise Price, and in such case, the
Company shall upon the distribution to the Holder consider that the
Exercise Price has been paid in full to it and, in making settlement to the
Holder, shall deduct from the amount payable to the Holder an amount equal
to such Exercise Price.
2.4. Amendments Not Required to Reflect Adjustments.
Irrespective of any adjustments in the Exercise Price or the number or kind
of shares purchasable upon exercise of this Warrant, this Warrant may
continue to express the same price and number and kind of shares as
originally issued and need not be amended to reflect each such adjustment.
Section 3. Exchange, Assignment, or Loss of Warrant.
-----------------------------------------
3.1. Exchange of Warrant. This Warrant is exchangeable,
without expense, at the option of the Holder, upon presentation and
surrender hereof to the Company for other Warrants of different
denominations entitling the Holder thereof to purchase in the aggregate the
same number of Warrant Shares purchasable hereunder on the same terms and
conditions as herein set forth.
3.2. Assignment of Warrant. Subject to compliance with
Section 4 hereof, this Warrant may be assigned by presentation and
surrender to the Company at its principal office or at the office of its
stock transfer agent, if any, with the Assignment Form annexed hereto duly
executed accompanied by funds sufficient to pay any transfer tax. Upon
such presentation and surrender, the Company shall, without charge, execute
and deliver a new Warrant in the name of the assignee named in the
Assignment Form and shall promptly cancel this Warrant.
-3-
<PAGE> 4
3.3. Loss or Mutilation of Warrant. Upon receipt by the
Company of evidence satisfactory to it of the loss, theft, destruction, or
mutilation of this Warrant, and (in the case of loss, theft, or
destruction) or reasonably satisfactory indemnification, and upon surrender
and cancellation of this Warrant, if mutilated, the Company will execute
and deliver a new Warrant of like tenor and date and any such lost, stolen,
or destroyed Warrant shall thereupon become void. Any such new Warrant
executed and delivered shall constitute an additional contractual
obligation on the part of the Company, whether or not this Warrant so lost,
stolen, destroyed, or mutilated shall be at any time enforceable by anyone.
Section 4. Compliance with Securities Act of 1933.
---------------------------------------
4.1. Disposition of Warrant and/or Warrant Shares. This
Warrant and/or the Warrant Shares may not be sold or otherwise disposed of
except as follows:
(a) To a person who, in the opinion of counsel reasonably
satisfactory to the Company, is a person to whom this Warrant or the
Warrant Shares may legally be transferred without registration and
without the delivery of a current prospectus under the Act with respect
thereto and then only against receipt of an agreement of such person
to comply with the provisions of this Section 4 with respect to any
resale or other disposition of such securities unless, in the opinion
of counsel, such agreement is not required; or
(b) To any person upon delivery of a prospectus or offering
circular then meeting the requirements of the Act relating to such
securities and the offering thereof for such sale or disposition.
4.2 Legending of Certificates. Each certificate for Warrant Shares
or for any other security issued or issuable upon exercise of this Warrant
shall contain a legend on the face thereof, in form and substance
satisfactory to counsel to the Company, setting forth the restrictions on
transfer thereof contained in this Section 4.
Section 5. Company Covenants.
------------------
5.1 Reservation and Issuance of Warrant Shares. The Company hereby
undertakes until expiration of this Warrant to reserve for issuance and/or
delivery upon exercise of this Warrant, such number of shares of its Common
Stock as shall be required for issuance and/or delivery upon exercise
hereon in full and agrees that all Warrant Shares so issued and/or
delivered will be validly issued, fully paid, and non-assessable and
further agrees to pay all taxes and charges that may be imposed upon such
issuance and/or delivery.
5.2 Officer's Certificate. In the event the Exercise Price shall be
adjusted as required by Section 2 hereof, the Company shall mail to the
Holder an officer's certificate setting forth the adjustments so required
and including, in reasonable detail, the
-4-
<PAGE> 5
method of calculating the adjustments and the transaction requiring the
adjustment.
Section 6. Miscellaneous.
--------------
6.1 Status of Holder. The Holder shall not be entitled to vote or
receive dividends and shall not otherwise be deemed a shareholder of the
Company.
6.2 Notices. All notices required hereunder shall be sent by first-
class mail, postage prepaid, and shall be addressed, if to the Holder, to
the last known address furnished to the Company and if to the Company, to:
Cistron Biotechnology, Inc., 10 Bloomfield Avenue, Pine Brook, New Jersey
07058, Attn: Bruce Galton, President, unless another address is designated
in writing by the Holder of the Company.
6.3 Binding Effect. This Warrant shall be binding upon the Company,
its successors, and/or assigns and upon the Holder.
6.4 Governing Law. The validity, interpretation and performance of
this Warrant shall be governed by the laws of the State of New York.
IN WITNESS WHEREOF, this Warrant has been duly executed by the Company
under its corporate seal as of the 6th day of December, 1996.
CISTRON BIOTECHNOLOGY, INC.
By:/s/BRUCE C. GALTON
------------------
Name: BRUCE C. GALTON
ATTEST:
/s/SETH I. TRUWIT, ESQ.
- -----------------------
Name: SETH I. TRUWIT, ESQ.
-5-
<PAGE> 6
FORM OF ASSIGNMENT
(To be signed only upon such assignment)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto
the right represented by the within Warrant to purchase, from CISTRON
BIOTECHNOLOGY, INC. (the "Company"), shares of the Common Stock of the
Company, to which the within Warrant relates, and appoints
attorney to transfer said right, with full power of substitution
in the premises.
Dated:
_____________________________
(Signature must conform in all
respects to name of holder as
specified on the face of the
Warrant)
ATTEST:
_____________________________
Name
-6-
<PAGE> 7
FORM OF SUBSCRIPTION
(To be signed only upon exercise of Warrant)
To: CISTRON BIOTECHNOLOGY, INC.
The undersigned, the holder of the within Warrant, hereby irrevocably
elects to exercise the purchase rights represented by said Warrant for, and
to purchase thereunder, shares of Common Stock of the Company, and herewith
makes payment of $ therefor, consents to the affixation of a
legend on the certificate for such shares to the effect that such shares
have not been registered under the Securities Act of 1933, as amended (the
"Act"), and may be transferred only in compliance with the Act, and requests
that such certificate(s) be issued in the name of and be delivered to
whose address is
and if such shares shall not be all of the shares purchased hereunder, that
a new Warrant of like tenor for the balance of shares purchasable hereunder
be delivered to the undersigned.
Dated: _________________________________
(Signature must conform in all
respects to name of holder as
specified on the face of the
Warrant)
-7-
<PAGE> 1
February 4, 1998
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
Re: Warrants to purchase 250,000 of Common
Stock of Cistron Biotechnology, Inc.
--------------------------------------
Gentlemen:
In consideration for your agreement to the terms set forth in your
letter dated October 17, 1997, Cistron Biotechnology, Inc. ("Cistron")
agrees to amend the warrant dated December 6, 1996, entitling you to purchase
up to 250,000 shares of Cistron's Common Stock at $.50 per share.
Pursuant to the terms of this letter agreement, you may elect to
exercise your warrants, as amended herein, and receive, without the payment of
any cash consideration, shares equal to the value of your warrants or any
portion thereof by the surrender of the warrants or such portion to Cistron.
Upon such surrender, Cistron shall issue to you such number of fully paid and
non-assessable shares of its Common Stock as is computed using the following
formula:
X=Y(A-B)
------
A
where X equals the number of shares to be issued to you, Y equals the
number of shares covered by your warrants in respect of which this net
issue election is made, A equals the fair market value of one share of
Common Stock at the time the net issue election is made and B equals the
exercise price in effect under your warrants at the time this net issue
election is made. The determination of fair market value shall be closing
bid price of the Common Stock on the trading day immediately preceding the
date of exercise or if there shall be no such closing bid price then as
determined in good faith by Cistron's Board of Directors.
-1-
<PAGE>2
Except as modified herein, all terms and provisions of your
warrants shall remain in full force and effect.
Please indicate your agreement with the foregoing by signing below
where indicated below and returning a copy of this letter to me by fax
and mail.
Very truly yours,
CISTRON BIOTECHNOLOGY, INC.
By:/s/BRUCE C. GALTON
------------------
BRUCE C. GALTON
Acting Chairman and Chief
Executive Officer
ACKNOWLEDGED AND ACCEPTED:
KIRKLAND & ELLIS
By: /s/ROBERT G. KRUPKA
-------------------
Name:ROBERT G. KRUPKA
Title: PARTNER
-2-
<PAGE>2
<PAGE> 1
Void after 5:00 P.M. Common Stock Warrant
New York Time to Purchase 400,000 Shares
September 3, 2002 of Common Stock of Cistron
Biotechnology, Inc.
CISTRON BIOTECHNOLOGY, INC.
Common Stock Purchase Warrant
__________________
This Warrant and the shares of Common Stock
issuable upon exercise of this Warrant have not been
registered under the Securities Act of 1933, as amended
(the "Act"), and may not be sold or otherwise disposed
of except (a) to a person who, in the opinion of
counsel reasonably acceptable to the Company, is a
person to whom the securities may be legally
transferred without registration and without delivery
of a current prospectus under the Act or (b) to a
person upon delivery of a prospectus or offering
circular then meeting the requirements of the Act
relating to such securities and the offering thereof
for such sale or disposition.
__________________
-1-
<PAGE>2
This certifies that, FOR VALUE RECEIVED, BLUESTONE CAPITAL
PARTNERS, L.P. or registered assigns (the "Holder"), is entitled to
purchase, subject to the provisions of this Warrant, from CISTRON
BIOTECHNOLOGY, INC., a Delaware corporation (the "Company"), 400,000 shares
of the Company's common stock, $.01 par value (the "Common Stock"), at a
price of $.25 per share, exercisable to the extent provided below, at any
time prior to 5:00 P.M., New York Time, on September 3, 2002, at which time
this Warrant shall expire and become void. The Holder has entered into a
consulting agreement (the "Consulting Agreement") with the Company dated
the date hereof for a term of six months, subject to renewal or earlier
termination as provided therein. The number of shares of Common Stock to
be received upon exercise of this Warrant and the price to be paid for each
share of Common Stock are subject to possible adjustment from time to time
as hereinafter set forth. The shares of Common Stock or other securities
or property deliverable upon such exercise as adjusted from time to time
are hereinafter sometimes referred to as the "Warrant Shares" and the
exercise price of a share of Common Stock in effect at any time and as
adjusted from time to time is hereinafter sometimes referred to as the
"Exercise Price." Unless the context otherwise requires, the term
"Warrant" as used herein includes this Warrant and any other warrant or
warrants that may be issued pursuant to the provisions of this Warrant,
whether upon transfer, assignment, partial exercise, divisions,
combinations, exchange, or otherwise, and the term "Holder" includes any
transferee or transferees or assignee or assignees of the Holder named
above, all of whom shall be subject to the provisions of this Warrant, and,
when used with reference to Warrant Shares, means the holder or holders of
such Warrant Shares. Commencing on the date hereof, 200,000 Warrant Shares
shall be exercisable, commencing December 3, 1997, subject to the
Consulting Agreement then being in full force and effect, 100,000
additional Warrant Shares shall become first exercisable and commencing
March 3, 1998, subject to the Consulting Agreement then being in full force
and effect, 100,000 additional Warrant Shares shall become first
exercisable.
Section 1. Exercise of Warrant.
--------------------
1.1. Method of Exercise. This Warrant may be exercised
in whole or in part, but for not less than 25,000 Warrant Shares or the
balance then exercisable, at any time by the Holder prior to 5:00 P.M., New
York Time, on September 3, 2002 by presentation and surrender hereof to the
Company at its principal office with the Subscription Form annexed hereto,
duly executed and accompanied by payment, by certified or official bank
checks payable to the order of the Company, of the Exercise Price for the
total number of Warrant Shares purchased.
1.2. Delivery of Shares. Upon proper exercise of this
Warrant, the Company promptly shall deliver certificates for the Warrant
Shares to the Holder duly legended as authorized in the Subscription Form.
-2-
<PAGE>3
1.3. Partial Exercise. If this Warrant is exercised in
part only, the Company shall, upon presentation of this Warrant upon such
exercise, execute and deliver (with the certificate for the Warrant Shares
purchased) a new Warrant evidencing the rights of the Holder hereof to
purchase the balance of the Warrant Shares purchasable hereunder upon the
same terms and conditions as herein set forth.
1.4. Fractional Shares. No fractional shares or scrip
representing fractional shares shall be issued upon exercise of this
Warrant but, in lieu thereof, the Company shall round up to the next full
share.
Section 2. Exercise Price and Adjustments.
-------------------------------
2.1. Initial Exercise Price and Capital Adjustments. The
Exercise Price at which the Warrant Shares shall be purchasable shall be
$.25 per share, subject to adjustment from time to time in the event of
stock dividends, stock subdivisions, stock splits, or stock combinations,
as follows: In the event the Company shall at any time after the date
hereof issue shares of its Common Stock as a stock dividend or shall
subdivide or split or combine the outstanding shares of its Common Stock,
the Exercise Price shall forthwith proportionately be decreased in the case
of a stock dividend, subdivision, or stock split or proportionately be
increased in the case of combination, to the nearest one cent to give
effect to such change. Concurrently, the number of Warrant Shares issuable
upon exercise of this Warrant shall be increased or decreased in proportion
to the increase or decrease in the number of shares of Common Stock
outstanding resulting from such change. Any such adjustment shall become
effective at the close of business on the date that the subdivision or
combination shall become effective, in the event of a subdivision or
combination, or at the close of business on the record date fixed for the
determination of stockholders entitled to receipt of the stock dividend, in
the event of a stock dividend.
2.2. Reorganizations, Mergers, and Sale of Assets. In the
event of any reorganization or reclassification of the outstanding shares
of Common Stock (other than a change in par value, or from par value to no
par value, or from no par value to par value, or as a result of a
subdivision or combination) or in the case of any consolidation of the
Company with, or merger of the Company into, another corporation after
which no securities of the Company will be publicly held, or in the case of
any sale, lease, or conveyance of all, or substantially all, of the
property, assets, business, and goodwill of the Company as an entity, the
Holder shall thereafter have the right upon exercise to purchase the kind
and amount of shares of stock and other securities and property receivable
upon such reorganization, reclassification, consolidation, merger, or sale
by a holder of the number of shares of Common Stock that the Holder would
have received had he exercised this Warrant immediately prior to such
reorganization, reclassification, consolidation, merger, or sale, at a
price equal to the aggregate Exercise Price then in effect pertaining to
this Warrant (the kind, amount, and price of such stock and other
securities to be subject to adjustment as herein provided).
-3-
<PAGE>4
2.3. Liquidation and Dissolution. In the event the
Company shall, at any time prior to the expiration of this Warrant and
prior to the exercise thereof, dissolve, liquidate, or wind up its affairs,
the Holder shall be entitled, upon the exercise thereof, to receive, in
lieu of the shares that he would have been entitled to receive, the same
kind and amount of assets as would have been issued, distributed, or paid
to him upon any such dissolution, liquidation, or winding up with respect
to such shares had he been the holder of record of such shares on the
record date for the determination of those entitled to receive any such
liquidating distribution. After any such dissolution, liquidation, or
winding up that shall result in any cash distribution in excess of the
Exercise Price provided for by this Warrant, the Holder may, at his option,
exercise the same without making payment of the Exercise Price, and in such
case, the Company shall upon the distribution to the Holder consider that
the Exercise Price has been paid in full to it and, in making settlement to
the Holder, shall deduct from the amount payable to the Holder an amount
equal to such Exercise Price.
2.4. Amendments Not Required to Reflect Adjustments.
Irrespective of any adjustments in the Exercise Price or the number or kind
of shares purchasable upon exercise of this Warrant, this Warrant may
continue to express the same price and number and kind of shares as
originally issued and need not be amended to reflect each such adjustment.
Section 3. Exchange, Assignment, or Loss of Warrant.
-----------------------------------------
3.1. Exchange of Warrant. This Warrant is exchangeable,
without expense, at the option of the Holder, upon presentation and
surrender hereof to the Company for other Warrants of different
denominations entitling the Holder thereof to purchase in the aggregate the
same number of Warrant Shares purchasable hereunder on the same terms and
conditions as herein set forth.
3.2. Assignment of Warrant. Subject to compliance with
Section 4 hereof, this Warrant may be assigned by presentation and
surrender to the Company at its principal office or at the office of its
stock transfer agent, if any, with the Assignment Form annexed hereto duly
executed accompanied by funds sufficient to pay any transfer tax. Upon
such presentation and surrender, the Company shall, without charge, execute
and deliver a new Warrant in the name of the assignee named in the
Assignment Form and shall promptly cancel this Warrant.
3.3. Loss or Mutilation of Warrant. Upon receipt by the
Company of evidence satisfactory to it of the loss, theft, destruction, or
mutilation of this Warrant, and (in the case of loss, theft, or
destruction) or reasonably satisfactory indemnification, and upon surrender
and cancellation of this Warrant, if mutilated, the Company will execute
and deliver a new Warrant of like tenor and date and any such lost, stolen,
or destroyed Warrant shall thereupon become void. Any such new Warrant
executed and delivered shall constitute an
-4-
<PAGE>5
additional contractual obligation on the part of the Company, whether or not
this Warrant so lost, stolen, destroyed, or mutilated shall be at any time
enforceable by anyone.
Section 4. Compliance with Securities Act of 1933.
---------------------------------------
4.1. Disposition of Warrant and/or Warrant Shares. This
Warrant and/or the Warrant Shares may not be sold or otherwise disposed of
except as follows:
(a) To a person who, in the opinion of counsel
reasonably satisfactory to the Company, is a person to whom this
Warrant or the Warrant Shares may legally be transferred without
registration and without the delivery of a current prospectus
under the Act with respect thereto and then only against receipt
of an agreement of such person to comply with the provisions of
this Section 4 with respect to any resale or other disposition of
such securities unless, in the opinion of counsel, such agreement
is not required; or
(b) To any person upon delivery of a prospectus
or offering circular then meeting the requirements of the Act
relating to such securities and the offering thereof for such
sale or disposition.
4.2. Legending of Certificates. Each certificate for
Warrant Shares or for any other security issued or issuable upon exercise
of this Warrant shall contain a legend on the face thereof, in form and
substance satisfactory to counsel to the Company, setting forth the
restrictions on transfer thereof contained in this Section 4.
Section 5. Registration Rights.
--------------------
5.1. Demand Registration Rights. At any time subsequent
to September 4, 1997 and prior to the Termination Date, upon the written
request of the Holders of a majority of the Warrant Shares issuable (or
issued) under this Warrant, the Company shall on one occasion promptly file
(notwithstanding that at the time of the request this Warrant shall not
theretofore have been exercised) and process to effectiveness under the
Securities Act of 1933, the requisite post-effectiveness amendments or new
registration statement necessary to permit the public offering of the
Warrant Shares requested to be registered in such written request and shall
keep the final prospectus current for a period of nine months to permit the
public offering to be effected during such period. All costs, expenses and
fees of such registration shall be paid by the Company.
5.2. "Piggyback" Registration Rights. In the event the
Company at any time subsequent to September 4, 1997 and prior to the
Termination Date contemplates the filing of a registration statement under
the Securities Act of 1933 on Form S-1, S-2 or S-3 for the public offering
of shares of its Common Stock for its own account, the Company shall give
written notice thereof to the Holder of this Warrant (and/or the Warrant
Shares issued upon
-5-
<PAGE>6
exercise hereof) at least 30 days prior to the anticipated filing date and,
upon the written request of such Holder, will, subject to the consent of the
managing underwriter of such offering, include in such registration statement,
at the Company's expense, the number of Warrant Shares requested. Nothing in
this Section 5.2 shall be deemed to create any liability on the part of the
Company to the Holder if the Company, at its sole discretion, should decide
not to proceed with the processing of such registration statement after filing
and before the registration statement shall become effective. The Company
shall be under no obligation to the Holder to keep such registration statement
current after completion of the offering by the underwriters. Any Warrant
Shares not sold by the Holder pursuant to such registration statement shall
be de-registered.
5.3. Expenses. The expenses to be paid by the Company in
connection with the registration rights granted in Section 5.2 shall
include, without limitation, the fees and expenses of the Company's counsel
and accountants, the costs and expenses incident to the preparation,
printing, filing and processing to effectiveness of the registration
statement, the costs of furnishing the selling Holder of Warrant Shares
with a reasonable number of copies of the Final Prospectus, and the fees
and disbursements incurred in qualifying the Warrant Shares under
applicable blue sky or securities laws, but shall not include any
underwriting discounts or commissions, stock transfer taxes and fees and
expenses of counsel for the Holder of this Warrant and/or the Warrant
Shares issuable upon exercise hereof.
5.4. Information To Be Furnished By Holder. The Holder
shall furnish in writing to the Company all appropriate information
reasonably requested by the Company concerning such Holder in connection
with the preparation and processing of the requisite registration statement
or post-effective amendments relating to a public offering of the Warrant
Shares, including a shareholder's questionnaire, a warranty as to legal
capacity to sell and a statement as to knowledge of adverse facts relating
to the Company, and shall otherwise cooperate with the Company in
connection therewith.
5.5. Indemnification. The Company shall indemnify and
hold harmless each Holder of Warrant Shares included in any registration
statement or post-effective amendment relating to a public offering of
Warrant Shares and each underwriter, within the meaning of the Securities
Act of 1933, who may purchase Warrant Shares from, or sell Warrant Shares
on behalf of, any such Holder from and against any and all losses, claims,
damages and liabilities, joint or several, to which any such person may
become subject under the Securities Act of 1933, or otherwise, caused by,
arising out of or based upon any untrue statement or alleged untrue
statement of a material fact contained in such registration statement or
post-effective amendment or any prospectus included therein, or caused by,
arising out of or based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, and to reimburse each such Holder
and underwriter for any legal or other expenses reasonably incurred in
-6-
<PAGE>7
connection with investigating or defending any such loss, claim, damage,
liability or action, except insofar as such losses, claims, damages or
liabilities arose out of or are based upon any such untrue statement or
alleged untrue statement or omission or alleged omission based upon
information furnished in writing to the Company by such Holder or
underwriter expressly for use in such registration statement or post-
effective amendment, which indemnification shall include such person, if
any, who controls any such Holder or underwriter within the meaning of the
Securities Act of 1933; provided, however, that the Company shall not be
obligated to so indemnify any such Holder or underwriter unless such Holder
or underwriter shall at the same time reciprocally indemnify the Company,
its directors, each officer signing the related registration statement or
post-effective amendment and each person, if any, who controls the Company
within the meaning of the Securities Act of 1933 from and against any and
all losses, claims, damages and liabilities, joint and several, to which
the Company or any such person may become subject under the Securities Act
of 1933, or otherwise, caused by, arising out of or based upon any true
statement or alleged untrue statement of a material fact contained in such
registration statement or post-effective amendment or any prospectus
included therein, or caused by, arising out of or based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and to
reimburse the Company and each such person for any legal or other expenses
reasonably incurred in connection with investigating or defending any such
loss, claim, damage, liability or action, but only to the extent that such
untrue statement or alleged untrue statement, omission or alleged omission
is caused by, arises out of or is based upon information furnished in
writing to the Company by such Holder or underwriter expressly for use in
such registration statement or post-effective amendment.
Section 6. Company Covenants.
------------------
6.1. Reservation and Issuance of Warrant Shares. The
Company hereby undertakes until expiration of this Warrant to reserve for
issuance and/or delivery upon exercise of this Warrant, such number of
shares of its Common Stock as shall be required for issuance and/or
delivery upon exercise hereon in full and agrees that all Warrant Shares so
issued and/or delivered will be validly issued, fully paid, and non-
assessable and further agrees to pay all taxes and charges that may be
imposed upon such issuance and/or delivery.
6.2. Officer's Certificate. In the event the Exercise
Price shall be adjusted as required by Section 2 hereof, the Company shall
mail to the Holder an officer's certificate setting forth the adjustments
so required and including, in reasonable detail, the method of calculating
the adjustments and the transaction requiring the adjustment.
Section 7. Miscellaneous.
--------------
7.1. Status of Holder. The Holder shall not be entitled
to vote or receive dividends and shall not otherwise be deemed a
shareholder of the Company.
-7-
<PAGE>8
7.2. Notices. All notices required hereunder shall be
sent by first-class mail, postage prepaid, and shall be addressed, if to
the Holder, to the last known address furnished to the Company and if to
the Company, to: Cistron Biotechnology, Inc., 10 Bloomfield Avenue, Pine
Brook, New Jersey 07058, Attn: Bruce Galton, President, unless another
address is designated in writing by the Holder of the Company.
7.3. Binding Effect. This Warrant shall be binding upon
the Company, its successors, and/or assigns and upon the Holder.
7.4. Governing Law. The validity, interpretation and
performance of this Warrant shall be governed by the laws of the State of
New York.
-8-
<PAGE>9
IN WITNESS WHEREOF, this Warrant has been duly executed by
the Company under its corporate seal as of the 4th day of September 1997.
CISTRON BIOTECHNOLOGY, INC.
By:/s/BRUCE C. GALTON
------------------
Name: BRUCE C. GALTON
Title: CHAIRMAN OF THE BOARD
CHIEF EXECUTIVE OFFICER
ATTEST:
/s/SETH I. TRUWIT, ESQ.
- -----------------------
Name: SETH I. TRUWIT
-9-
<PAGE>10
FORM OF ASSIGNMENT
(To be signed only upon such assignment)
FOR VALUE RECEIVED, the undersigned hereby sells,
assigns and transfers unto
the right represented by the within Warrant to purchase, from
CISTRON BIOTECHNOLOGY, INC. (the "Company"), shares of the Common
Stock of the Company, to which the within Warrant relates, and
appoints
attorney to transfer said right, with full power of substitution
in the premises.
Dated:
______________________________
(Signature must conform in all
respects to name of holder as
specified on the face of the
Warrant)
ATTEST:
_____________________________
Name:
-10-
<PAGE>11
FORM OF SUBSCRIPTION
(To be signed only upon exercise of Warrant)
To: CISTRON BIOTECHNOLOGY, INC.
The undersigned, the holder of the within Warrant, hereby
irrevocably elects to exercise the purchase rights represented by said
Warrant for, and to purchase thereunder, shares of Common Stock of the
Company, and herewith makes payment of $ therefor, consents
to the affixation of a legend on the certificate for such shares to the
effect that such shares have not been registered under the Securities Act
of 1933, as amended (the "Act"), and may be transferred only in compliance
with the Act, and requests that such certificate(s) be issued in the name
of and be delivered to
whose address is
and if such shares shall not be all of the shares purchased hereunder, that
a new Warrant of like tenor for the balance of shares purchasable hereunder
be delivered to the undersigned.
Dated: _________________________________
(Signature must conform in all
respects to name of holder as
specified on the face of the
Warrant)
-11-
<PAGE> 1
COMMON STOCK AND WARRANT PURCHASE AGREEMENT
THIS COMMON STOCK AND WARRANT PURCHASE AGREEMENT (this "Agreement"),
is entered into as of October 30, 1998, by CISTRON BIOTECHNOLOGY, INC., a
Delaware corporation (the "Company") and PASTEUR MeRIEUX SERUMS & VACCINS,
S.A., a societe anonyme organized under the Laws of France (the
"Purchaser").
WHEREAS, the Company has authorized the sale and issuance to Purchaser
of 1,333,333 shares of Common Stock of the Company (the "Shares") and a
warrant to purchase 666,667 shares of Common Stock at $0.25 per share,
subject to adjustment in the form of Exhibit A hereto (the "Warrant") for
the aggregate purchase price of $1,000,000.
WHEREAS, the Company desires to issue and sell the Shares and Warrant
to the Purchaser, and Purchaser desires to purchase the shares, on the terms
and conditions set forth herein; and
NOW, THEREFORE, in consideration to the mutual covenants and agreements
contained herein and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged by the parties, the
parties hereto agree as follows:
ARTICLE 1
SALE AND PURCHASE
SECTION 1.1 SALE AND PURCHASE. Upon the terms and subject to the
conditions hereof, the Company hereby issues and sells to the Purchaser, and
the Purchaser purchases and accepts from the Company, the Shares and Warrant.
ARTICLE 2
CLOSING, DELIVERY AND PAYMENT
SECTION 2.1 CLOSING. The closing of the sale and purchase of the Shares
under this Agreement (the "Closing") has been held on the date hereof at the
principal offices of the Company, 10 Bloomfield Avenue, Pine Brook, New
Jersey 07058.
SECTION 2.2 DELIVERY. At the Closing, the Company delivered to the
Purchaser one or more stock certificates registered in the name of the
Purchaser representing the Shares to be purchased hereunder, the Warrant,
the registration rights agreement in the form of Exhibit B hereto (the
"Registration Rights Agreement") and the other documents required to be
delivered pursuant to Article 6 and the Purchaser paid the aggregate
purchase price for the Shares and Warrant of $1,000,000 by wire transfer of
immediately available funds delivered in accordance with the Company's
instructions and delivered the other documentation to the Company required
pursuant to Article 6.
-1-
<PAGE>2
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Purchaser that,
except as disclosed in writing to the Company in a disclosure schedule
previously delivered by the Company to the Purchaser (the "Disclosure
Schedule"):
SECTION 3.1 ISSUER'S ORGANIZATION, GOOD STANDING AND QUALIFICATION. The
Company is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware, and has all requisite
corporate power and authority to own, operate and lease its properties and
to carry on its business as presently conducted and as described in the
Company's Annual Report on Form 10-K for the fiscal year ended June 30,
1998 (the "Company 10-K for 1998") as filed with the United States
Securities and Exchange Commission (the "SEC"). The Company is duly
qualified as a foreign corporation and is in good standing in each
jurisdiction where the character of the property owned or leased by it or
the nature of its activities makes such qualification necessary, except for
those jurisdictions where the failure to do so would not, individually or
in the aggregate, have a material adverse effect on the business or
financial condition or operations of the Company.
SECTION 3.2 ISSUER'S POWER AND AUTHORITY. (a) The Company has all
requisite power and authority to execute and deliver this Agreement and to
perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution, delivery and performance by the Company
of this Agreement and the Warrant and the consummation by the Company of the
transactions contemplated hereby have been duly authorized and approved by
the Company's Board of Directors and no further action on the part of the
Company or its stockholders is necessary to authorize the execution,
delivery and performance of this Agreement, the Warrant or the consummation
by the Company of the transactions contemplated hereby. This Agreement,
the Warrant and the Registration Agreement have been duly executed and
delivered by the Company and constitute the valid and binding obligation of
the Company, enforceable against the company in accordance with their
respective terms, except as enforcement thereof (i) may be limited by
bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium
or other similar laws relating to or affecting enforcement of creditors'
rights generally, or (ii) is subject to general principles of equity
(regardless of whether enforcement is considered in a proceeding in equity
or at law).
SECTION 3.3 NO CONFLICT, CONSENTS.
(a) No Conflict. The execution and delivery of this Agreement by the
Company does not, and the performance of this Agreement and the consummation
of any of the transactions contemplated by this Agreement by the Company will
not, directly or indirectly (with or without notice or lapse of time):
(i) contravene, conflict with or result in a violation of (A) any of
the provisions of the certificate of incorporation or bylaws of the Company, or
(B) any resolution adopted by the Company's Board of Directors;
-2-
<PAGE>3
(ii) contravene, conflict with or result in a violation of, any law,
rule, regulation or order binding upon the Company or any of the properties or
assets owned or used by the Company;
(iii) contravene, conflict with or result in a violation of any of the
terms or requirements of any governmental authorization that is held by the
Company or that otherwise relates to the business of, or any of the properties
or assets owned or used by, the Company;
(iv) contravene, conflict with or result in a violation or breach of,
or result in a default under, any provision of any material contract to which
the Company is a party, or give any person or entity the right to (A) declare a
default or exercise any remedy under any such contract, (B) accelerate the
maturity or performance of any such contract, or (C) cancel, terminate,
amend or modify any such contract; or
(v) result in the imposition or creation of any lien or other
encumbrance on or with respect to any property or asset owned or used by the
Company.
(b) Consents. The execution and delivery of this Agreement does not, and
the performance of this Agreement will not, require any filing with or the
giving any notice to, or obtaining the consent from, any person, entity or
governmental authority, except for applicable requirements, if any, of (i)
the Securities Act of 1933, as amended (the "Securities Act"), (ii) the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and (iii)
state securities or "blue sky" laws.
SECTION 3.4 REPORTS; FINANCIAL STATEMENTS; LIABILITIES.
(a) The Company has filed all required forms, reports and documents with
the SEC required to be filed by it with respect to all periods commencing
since July 1, 1996 (the "SEC Reports"), all of which have complied in all
material respects with all applicable requirements of the Securities Act
and the Exchange Act, as the case may be, and the rules and regulations
promulgated thereunder. None of such forms, reports or documents
(including the financial statements included therein, which are dealt with
in the following paragraph), at the time filed, contained any untrue
statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements therein,
in light of the circumstances under which they were made, not misleading.
There are no material contracts or documents of the Company required to be
filed as exhibits to the SEC Reports by the Securities Act or the Exchange
Act, as the case may be, or the rules and regulations promulgated thereunder
that have not been so filed.
(b) The audited financial statements and unaudited interim financial statements
of the Company included in the SEC Reports (the "Financial Statements")
were prepared in accordance with generally accepted accounting principles
applied on a consistent basis throughout the periods covered (except as may
be indicated therein or in the notes thereto or, in the case of unaudited
interim statements, to the extent they may not include footnotes or may be
condensed or summary financial statements). The Financial Statements
fairly present the financial position to the Company as at the respective
dates thereof and the results of operations and cash flows of the Company
for the periods covered thereby, subject, in the case of unaudited interim
financial
-3-
<PAGE>4
statements, to normal and recurring year-end adjustments, which
were not and are not expected, individually or in the aggregate, to be
material in amount).
SECTION 3.6 ABSENCE OF CERTAIN CHANGES. Since June 30, 1998, there has
not been, except as indicated in any subsequently filed SEC Reports, any
change in the assets, liabilities, financial condition or operations of the
company from that reflected in the Company 10-K for 1998, other than
changes in the ordinary course of business, none of which individually or
in the aggregate has had or is expected to have a material adverse effect
on the Company.
SECTION 3.6 NO INTEGRATION. Neither the Company nor any of its
affiliates, nor any person acting on its or their behalf, has, within the
six-month period prior to the date hereof, offered or sold or otherwise
disposed of any shares of its capital stock or instruments representing
interest in its capital stock, nor agreed to do any of the foregoing by
means of any form of general solicitation or advertising within the meaning
of Rule 502(c) under the Securities Act.
SECTION 3.7 NO BROKERS. Except as set forth on the Disclosure Schedule,
no broker, finder or investment banker is entitled to any brokerage, finder
or other fee or commission in connection with the transactions contemplated
by this Agreement based on arrangements made by or on behalf of the Company.
SECTION 3.8 CAPITALIZATION. The authorized capital stock of the Company
immediately following the Closing is set forth on the Disclosure Schedule.
(a) Other than that which is set forth on Disclosure Schedule there are
no other authorized or issued shares of capital stock of the Company.
(b) Other than that which is set forth on the Disclosure Schedule there
are: (i) no outstanding warrants, options, agreements, convertible securities
or other commitments or instruments pursuant to which the Company is or may
become obligated to issue, sell, repurchase or redeem any shares of capital
stock or other securities of the Company, except pursuant to the Company's
certificate of incorporation, this Agreement and the Warrant; (ii) no
preemptive, contractual or similar rights to purchase or otherwise acquire
shares of capital stock of the Company pursuant to any provision of law or
any agreement to which the Company is a party, except pursuant to this
Agreement and the Warrant; (iii) no restrictions on the transfer of capital
stock of the Company imposed by any statute, other than those imposed by
relevant state and federal securities laws, or any agreement to which the
Company is a party, or any order of any court or any governmental agency to
which the Company is subject; (iv) to the best of our knowledge and belief,
no cumulative voting rights for any of the Company's capital stock; (v) no
registration rights under the Securities Act, with respect to shares of the
Company's capital stock, except pursuant to the Registration Agreement;
(vi) to the best of the Company's knowledge and belief, no options or other
rights to purchase shares of capital stock from stockholders of the Company
granted by such stockholders, except pursuant to the Warrant; and (vii) no
agreements, written or oral, between the Company and any holder of its
securities, or, to the best of the Company's knowledge and belief, among
holders of its securities, relating to
-4-
<PAGE>5
the acquisition, disposition or voting of the securities of the Company,
except pursuant to the Warrant and Registration Agreement.
SECTION 3.9 BUSINESS OF THE COMPANY. Since 1990 each employee of or
consultant to the Company who has or is proposed to have access to
confidential and/or proprietary information of the Company (other than the
Company's legal counsel) is a signatory to, and is bound by, an agreement
with the Company relating to nondisclosure, proprietary information and
assignment of intellectual property rights.
SECTION 3.10 SECURITIES LAWS. Neither the Company nor, to the best
knowledge of the Company, anyone acting on its behalf has offered securities
of the Company for sale to, or solicited any offers to buy the same from, or
sold securities of the Company to, any person or organization, in any case so
as to subject the Company, its promoters, directors and/or officers to any
liability under the Securities Act, the Exchange Act, or any state
securities or "blue sky" law (collectively, "Securities Laws"). The sale
of the Shares will not violate any provision of the Securities Laws when
offered, issued and sold in accordance with this Agreement or the Warrant.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the Company as follows:
SECTION 4.1 PURCHASER'S ORGANIZATION, GOOD STANDING AND QUALIFICATION. The
Purchaser is a societe anonyme duly organized, validly existing and in
good standing under the laws of France, and has all requisite corporate
power and authority to own, operate and lease its properties and to carry
on its business as presently conducted. The Purchaser is duly qualified as
a foreign corporation and is in good standing in each jurisdiction where
the character of the property owned or leased by it or the nature of its
activities makes such qualification necessary, except for those
jurisdictions where the failure to do so would not, individually or in the
aggregate, have a material adverse effect on the business or financial
condition or operations of the Purchaser.
SECTION 4.2 PURCHASER'S POWER AND AUTHORITY. The Purchaser has all
requisite power and authority to execute and deliver this Agreement and to
perform its obligations under such agreements and to consummate the
transactions contemplated hereby. The execution, delivery and performance
by the Purchaser of this Agreement and the consummation by the Purchaser of
the transactions contemplated hereby have been duly authorized and approved
by the Purchaser's Board of Directors and no further action on the part of
the Purchaser or its stockholders is necessary to authorize the execution,
delivery and performance of such agreements or the consummation by the
Purchaser of the transactions contemplated hereby. This Agreement has been
duly executed and delivered by the Purchaser and constitutes the valid and
binding obligation of the Purchaser, enforceable against the Purchaser in
accordance with its terms, except as enforcement thereof (i) may be limited
by bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or other similar laws
-5-
<PAGE>6
relating to or affecting enforcement of creditors' rights generally, or
(ii) is subject to general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law).
SECTION 4.3 NO CONFLICT; CONSENTS.
(a) No Conflict. The execution and delivery of this Agreement by the
Purchaser does not, and the performance of this Agreement and the consummation
of any of the transactions contemplated by this Agreement by the Purchaser will
not, directly or indirectly (with or without notice or lapse of time):
(i) contravene, conflict with or result in a violation of (A) any of
the provisions of the articles of incorporation or bylaws of the Purchaser, or
(B) any resolution adopted by the Purchaser's Board of Directors;
(ii) contravene, conflict with or result in a violation of, any law,
rule, regulation or order binding upon the Purchaser or any of the properties
or assets owned or used by the Purchaser;
(iii) contravene, conflict with or result in a violation of any of the
terms or requirements of, any governmental authorization that is held by the
Purchaser or that otherwise relates to the business of, or any of the
properties or assets owned or used by, the Purchaser;
(iv) result in the imposition or creation of any lien or other
encumbrance on or with respect to any property or asset owned or used by the
Purchaser.
(b) Consents. The execution and delivery of this Agreement do not, and
the performance of this Agreement and the consummation of the transactions
contemplated hereby will not, require any filing with or the giving of any
notice to, or the obtaining any consent from, any governmental authority.
SECTION 4.4 INVESTMENT REPRESENTATIONS.
(a) Representations. The Purchaser understands that the Shares and Warrants
(and the shares of Common Stock issuable upon exercise of the Warrant) have
not been, and will not be, registered under the Securities Act or any other
securities law. The Purchaser also understands that the Shares and
Warrants are being offered and sold pursuant to an exemption from
registration contained in Section 4(2) of the Securities Act as part of an
issue not involving a public offering. To confirm to the Company the basis
of such an exemption, Purchaser hereby represents and warrants to the
Company as follows:
(i) Purchaser Bears Economic Risk. The Purchaser understands that it
must bear the economic risk of this investment indefinitely unless the Shares
and Warrants (and the shares of Common Stock underlying the Warrants) are
registered pursuant to the Securities Act, or an exemption from
registration is available. Purchaser acknowledges that Company is a
development stage company and has not operated profitably and there can be
no assurance it will operate profitably. Purchaser acknowledges that it is
fully capable of bearing such economic risk.
-6-
<PAGE>7
(ii) Acquisition for Own Account. The Purchaser is acquiring the
Shares and Warrant for the Purchaser's own account for investment only, and
not with a view towards their distribution or resale.
(iii) Purchaser Can Protect Its Interest. The Purchaser represents
that by reason of its, or of its management's, business or financial experience,
the Purchaser has the capacity to protect its own interests in connection
with the transactions contemplated in this Agreement. Further, the
Purchaser is aware of no publication of any advertisement in connection
with the transactions contemplated in the Agreement.
(iv) Accredited Investor. The Purchaser represents that it is an
"accredited investor" within the meaning of Regulation D under the Securities
Act.
(v) Company Information. The Purchaser has requested, received,
reviewed and considered all the information that the Purchaser considers
necessary for making an informed decision to invest in the Shares and Warrant,
and that Purchaser has received or has access (on its own) to copies of the SEC
Reports, including (i) the Company's report on Form 10-K for 1998. The
Purchaser has also had an opportunity (i) to ask questions of and receive
answers from the Company regarding the contemplated issuance of the Shares
and Warrant, and the business, properties, prospects and financial
condition of the Company, and (ii) to obtain such additional information
(to the extent that the Company possessed such information or could acquire
it without unreasonable effort or expense) necessary to verify the accuracy
of any information furnished to the Purchaser or to which the Purchaser had
access.
(b) Rule 144. Purchaser acknowledges and agrees that the Shares and
Warrants (and shares of Common Stock issuable upon exercise of the Warrant)
must be held indefinitely unless they are subsequently registered under the
Securities Act or an exemption from such registration is available.
Purchaser understands that except for its obligations under the
Registration Agreement to be delivered under Article 6, the Company is
under no obligation (A) to register the Shares or Warrant (or shares of
Common Stock isusable upon exercise of the Warrant) under the Securities
Act or any state securities act or (B) to comply with the requirements for
any exemption which might otherwise be available thereunder. Further,
Purchaser acknowledges that except for its obligations under the
Registration Agreement to be delivered under Article 6, the Company has
made no agreement to register the Shares or Warrant (or shares of Common
Stock issauble upon exercise of the Warrant) under such laws or to take
action to provide for the future availability of any exemption thereunder.
Purchaser has been advised or is aware of the provisions of Rule 144
promulgated under the Securities Act as in effect from time to time, which
permits limited resale of securities purchased in a private placement
subject to the satisfaction of certain conditions including, among other
things, the availability of certain current public information about the
Company, the resale occurring following the required holding period under
Rule 144 and the number of shares being sold during any three-month period
not exceeding specified limitations.
-7-
<PAGE>8
(c) Legend. Purchaser understands and agrees that stop-transfer
instructions may be noted on the appropriate records of Company, and that
there will be placed on the certificates for the Shares and on the Warrant, or
any substitutions therefor, a legend stating in substance:
The securities evidenced by this certificate have not been
registered under the Securities Act of 1933, as amended (the
"Securities Act"), in reliance upon the exemption from
registration under the Securities Act and have not been
registered under the securities laws of applicable states in
reliance upon applicable exemptions from registration under the
securities laws of such states. These shares have been acquired
for investment purposes only and may not be offered, sold or
transferred, nor will any assignee or transferee thereof be
recognized by the Company as having any interest in these
shares, in the absence of (i) an effective registration
statement with respect to the shares under the Securities Act
and applicable state securities laws or (ii) compliance with
applicable exemptions from registration under the Securities Act
and applicable state securities laws. The Company may, if it
deems appropriate in its sole discretion, require an opinion of
counsel satisfactory to the Company that the offer, sale or
transfer of these shares is exempt from registration under the
Securities Act and applicable state securities laws.
ARTICLE 5
CERTAIN COVENANTS OF THE COMPANY
SECTION 5.1 RULE 144. If at any time the Company is not subject to
Section 13 or 15(d) of the Exchange Act, the Company shall cause to be made
publicly available the information concerning the Company specified in
paragraphs (a)(5)(i) to (xiv), inclusive, and (xvi) of Rule 15c2-11 under the
Exchange Act.
SECTION 5.2 PRESS RELEASES; DISCLOSURES. Neither the Company nor the
Purchaser shall, without the prior written consent of the other, issue any
press release or make any other public announcement or furnish any
statement to any person or entity (other than either party's respective
Affiliates, as that term is defined under the Securities Act) concerning
the existence of this Agreement and the transactions contemplated by this
Agreement except for (i) general statements referring to the existence of
this Agreement, specifying its nature (Common Stock and Warrant Purchase),
the identity of the parties but no other details, (ii) disclosures made in
compliance with Section 4.1 (a) of the Collaboration and Option Agreement,
dated as of October 30, 1998, by and between the Company and the Purchaser
(the "Collaboration Agreement") or under any license agreement entered into
under the Collaboration Agreement, (iii) attorneys, consultants and
accountants retained to represent them in connection with the transactions
contemplated hereby or as may be reasonably necessary to either party's
bankers, investors, attorneys or other professional advisers in connection
with a merger or acquisition, provided such advisors are bound by
confidentiality obligations essentially identical to those set forth in
Section 4.1 of the Collaboration Agreement or any license agreement entered
into under the Collaboration Agreement, and (iv) occasional brief comments
by the respective executive officers of both parties consistent with such
guidelines for public statements as may be mutually agreed by the parties
made in connection with routine interviews with analysts or members
-8-
<PAGE>9
of the financial press. In addition, either party (after consultation with
counsel) in its own right may make such further announcements and
disclosures, if any, as may be required by applicable securities laws and
regulations (such as, without limitation, regulations of the SEC or the
French Commission des Operations de Bourse (COB), or any equivalent
authority of any country having jurisdiction), in which case the party
making the announcement or disclosure shall use its best efforts to give
advance notice to and discuss such announcement or disclosure with the
other party and such other party's attorneys.
ARTICLE 6
CLOSING DOCUMENTS
SECTION 6.1 COMPANY'S DOCUMENTS. Simultaneously with the execution and
delivery of this Agreement, the Company has delivered a certificate of Seth
I. Truwit, its corporate secretary, certifying as to (1): the Company's
current Certificate of Incorporation, as amended, duly certified by the
Secretary of State of the State of Delaware, and that the Company is duly
incorporated, validly existing and in good standing under Delaware law, (2)
the Company's current by-laws, as amended, (3) the resolution(s) adopted by
the Board of Directors of the Company approving this Agreement, the
issuance of the Shares and the Warrant and the transactions contemplated
hereby and thereby, and (4) a legal opinion from Epstein Becker & Green, PC
in a form reasonably satisfactory to the Purchaser.
SECTION 6.2 PURCHASER'S DOCUMENTS. Simultaneously with the execution and
delivery of this Agreement, Purchaser has delivered to the Company a
certificate of its corporate secretary, certifying as to (1): the Company's
current Certificate of Incorporation, as amended, duly certified by the
appropriate regulatory authority of France, (2) the Purchaser's current by-
laws, as amended, and (3) the power of attorney executed by the Chairman of
the Purchaser appointing certain individuals to execute this Agreement and
the Registration Rights Agreement and the transactions contemplated hereby
and thereby.
ARTICLE 7
MISCELLANEOUS
SECTION 7.1 FEES AND EXPENSES. Each party to this Agreement shall bear and
pay all fees, costs and expenses (including legal fees and accounting fees)
that have been incurred or that are incurred by such party in correction
with the transactions contemplated by this Agreement, including all fees,
costs and expenses incurred by such party in connection with or by virtue
of (a) the investigation and review conducted by the Purchaser with respect
to the Company's business (and the furnishing of information to the
Purchaser in connection with such investigation and review), (b) the
negotiation, preparation and review of this Agreement (including the
Disclosure Schedule) and all agreements, certificates, opinions and other
instruments and documents delivered or to be delivered in connection with
the transactions contemplated by this Agreement, (c) the preparation and
submission of any filing or notice required to be made or given in
connection with any of the transactions contemplated by this
-9-
<PAGE>10
Agreement, and the obtaining of any consent required to be obtained in
connection with any of such transactions, and (d) the consummation of the
transactions contemplated by this Agreement.
SECTION 7.2 GOVERNING LAW. This Agreement shall be governed in all
respects by the laws of the State of New York.
SECTION 7.3 SURVIVAL. The representations, warranties, covenants and
agreements made herein shall survive any investigation made by the
Purchaser and the closing of the transactions contemplated hereby for a
period of two years from the date hereof, except those contained in Section
5.1 shall survive until the Purchaser no longer holds any Shares and those
contained in Section 5.2 shall survive until the Purchaser is no longer
deemed, under Section 13(d) of the Exchange Act, to own beneficially more
than 5% of the Common Stock of the Company.
SECTION 7.4 SUCCESSORS AND ASSIGNS. Except as otherwise expressly
provided herein, the provisions hereof shall inure to the benefit of, and
be binding upon, the successors, assigns, heirs, executors and administrators
of the parties hereto and shall inure to the benefit of and be enforceable by
each person who shall be a holder of the Shares or Warrant (or shares of
Common Stock issuable upon exercise of the Warrant) from time to time.
SECTON 7.5 ENTIRE AGREEMENT. This Agreement and the other documents
delivered pursuant hereto constitute the full and entire understanding and
agreement between the parties with regard to the subjects hereof and no
party shall be liable or bound to any other in any manner by any
representations, warranties, covenants and agreements except as
specifically set forth herein and therein.
SECTION 7.6 SEVERABILITY. In the event that any provision of this
Agreement, or the application of any such provision to any person or entity
or set of circumstances, shall be determined to be invalid, unlawful, void or
unenforceable to any extent, the remainder of this Agreement, and the
application of such provision to persons or entities or circumstances other
than those as to which it is determined to be invalid, unlawful, void or
unenforceable, shall not be impaired or otherwise affected and shall
continue to be valid and enforceable to the fullest extent permitted by
law.
-10-
<PAGE>11
SECTION 7.7 NOTICES.
(a) All notices, requests, demands and other communications hereunder
shall be in writing and shall be either (i) delivered by hand, (ii) mailed
by registered or certified mail, return receipt requested, (iii) sent by
overnight courier service, or (iv) sent by facsimile (with a confirming
copy delivered as specified in any of the preceding clauses (i), (ii) or
(iii)), to the parties addressed as follows:
If to Purchaser:
---------------
Pasteur Merieux Serums & Vaccins, S.A.
58, avenue Leclerc
69007 Lyon, France
Telecopy No: 011 33 4 72 73 77 84
Attention: Senior Vice President, Legal and Corporate Affairs
with copies to:
Pasteur Merieux Connaught - USA
Route 611
Swiftwater, PA 18370
Telecopy No: (717) 839-4600
Attention: Vice President, Business Development
and
L. Kevin O'Mara, Jr., Esq.
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
590 Madison Avenue
New York, NY 10022
Telecopy No: (212) 872-1002
-11-
<PAGE>12
If to the Company:
-----------------
Cistron Biotechnology, Inc.
10 Bloomfield Avenue
Pine Brook, NJ 07058
Telecopy Number: (973) 575-4054
Attention: President
With a copy to:
Seth I. Truwit, Esq.
Epstein Becker & Green, PC
250 Park Avenue
New York, NY 10177
Telecopy Number: (212) 661-0989
(b) All notices, requests, instructions or documents given to any
party in accordance with this Section shall be deemed to have been given
(i) on the date of receipt, if delivered by hand, sent by overnight courier
service, or sent by facsimile or (ii) on the date which is seven business
days after delivery to the United States Postal Service, if mailed in the
manner prescribed above. Any party hereto may change its address specified
for notices herein by designating a new address for such notices by a notice
given in accordance with this Section.
SECTION 7.8 REMEDIES CUMULATIVE; SPECIFIC PERFORMANCE. The rights and
remedies of the parties hereto shall be cumulative (and not alternative).
The parties to this Agreement agree that, in the event of any breach or
threatened breach by any party to this Agreement of any covenant,
obligation or other provision set forth in this Agreement for the benefit
of any other party to this Agreement, such other party shall be entitled
(in addition to any other remedy that may be available to it) to (a) a
decree or order of specific performance or mandamus to enforce the
observance and performance of such covenant, obligation or other provision,
and (b) an injunction restraining such breach or threatened breach.
SECTION 7.9 WAIVER. No failure on the part of any party to exercise any
power, right, privilege or remedy under this Agreement, and no delay on the
part of any party in exercising any power, right, privilege or remedy under
this Agreement, shall operate as a waiver of such power, right, privilege
or remedy; and no single or partial exercise of any such power, right,
privilege or remedy shall preclude any other or further exercise thereof or
of any other power, right, privilege or remedy. No party shall be deemed
to have waived any claim arising out of this Agreement, or any power,
right, privilege or remedy under this Agreement, unless the waiver of such
claim, power, right, privilege or remedy is expressly set forth in a
written instrument duly executed and delivered on behalf of such party; and
any such waiver shall not be applicable or have any effect except in the
specific instance in which it is given.
SECTION 7.10 AMENDMENTS. This Agreement may not be amended, modified,
altered or supplemented other than by means of a written instrument duly
executed and delivered on behalf of all of the parties hereto.
-12-
<PAGE>13
SECTION 7.11 HEADINGS. The headings contained in this Agreement are for
convenience of reference only and are not to be considered in construing
this Agreement.
SECTION 7.12 COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall constitute an original and all of which,
when taken together, shall constitute one agreement.
[SIGNATURES ON NEXT PAGE]
-13-
<PAGE>14
IN WITNESS WHEREOF, the parties hereto have executed this COMMON STOCK AND
WARRANT PURCHASE AGREEMENT as of the date set forth in the first paragraph
hereof.
COMPANY: PURCHASER:
CISTRON BIOTECHNOLOGY, INC. PASTEUR MERIEUX SERUMS & VACCINS, S.A.
By: /s/BRUCE C. GALTON By: /s/DAVID J. WILLIAMS
------------------ ---------------------
Name: BRUCE C. GALTON Name: DAVID J. WILLIAMS
Title: Chairman of the Board Title: President
and Chief Financial Officer and Chief Operating Officer
-14-
<PAGE>15
Void after 5:00 P.M. Common Stock Warrant
New York Time to Purchase 666,667 Shares
October 29, 2001 of Common Stock of Cistron
Biotechnology, Inc.
No. 3
CISTRON BIOTECHNOLOGY, INC.
Common Stock Purchase Warrant
__________________
This Warrant is being issued pursuant to the
Common Stock and Warrant Purchase Agreement dated the
date hereof, between Cistron Biotechnology, Inc. and
the Holder and is issued subject to the terms of such
Common Stock and Warrant Purchase Agreement. This
Warrant and the shares of Common Stock issuable upon
exercise of this Warrant have not been registered under
the Securities Act of 1933, as amended (the "Act"), and
may not be sold or otherwise disposed of except (a) to
a person who, in the opinion of counsel reasonably
acceptable to the Company, is a person to whom the
securities may be legally transferred without
registration and without delivery of a current
prospectus under the Act or (b) to a person upon
delivery of a prospectus or offering circular then
meeting the requirements of the Act relating to such
securities and the offering thereof for such sale or
disposition.
__________________
This certifies that, FOR VALUE RECEIVED, PASTEUR MERIEUX SERUMS &
VACCINS, S.A. or registered assigns (the "Holder"), is entitled to
purchase, subject to the provisions of this Warrant, from CISTRON
BIOTECHNOLOGY, INC., a Delaware corporation (the "Company"), 666,667 shares
of the Company's common stock, $.01 par value (the "Common Stock"), at a
price of $.25 per share at any time prior to 5:00 P.M., New York Time, on
October 29, 2001, at which time this Warrant shall expire and become void.
The number of shares of Common Stock to be received upon exercise of this
Warrant and the price to be paid for each share of Common Stock are subject
to possible adjustment from time to time as hereinafter set forth. The
shares of Common Stock or other securities or property deliverable upon
such exercise as adjusted from time to time are hereinafter sometimes
referred to as the "Warrant Shares" and the exercise price of a share of
Common Stock in effect at any time and as adjusted from time to time is
hereinafter sometimes referred to as the "Exercise Price." Unless the
context otherwise requires, the term "Warrant" as used herein includes this
Warrant and any other warrant or warrants that may be issued pursuant to
the provisions of this Warrant, whether upon transfer, assignment, partial
exercise, divisions, combinations, exchange, or otherwise, and the term
"Holder" includes any transferee or transferees or assignee or assignees of
the Holder named above, all of whom shall be subject to the provisions of
this Warrant, and, when used with reference to Warrant Shares, means the
holder or holders of such Warrant Shares.
Section 1. Exercise of Warrant.
--------------------
1.1. Method of Exercise. This Warrant may be exercised in
whole or in part, but for not less than 50,000 Warrant Shares or the
balance then exercisable, at any time by the Holder prior to 5:00 P.M., New
York Time, on October 29, 2001, by presentation and surrender hereof to the
Company at its
-15-
<PAGE>16
principal office with the Subscription Form annexed hereto, duly executed
and accompanied by payment, by certified or official bank checks payable to
the order of the Company, of the Exercise Price for the total number of
Warrant Shares purchased.
1.2. Delivery of Shares. Upon proper exercise of this
Warrant, the Company promptly shall deliver certificates for the Warrant
Shares to the Holder duly legended as authorized in the Subscription Form.
1.3. Partial Exercise. If this Warrant is exercised in
part only, the Company shall, upon presentation of this Warrant upon such
exercise, execute and deliver (with the certificate for the Warrant Shares
purchased) a new Warrant evidencing the rights of the Holder hereof to
purchase the balance of the Warrant Shares purchasable hereunder upon the
same terms and conditions as herein set forth.
1.4. Fractional Shares. No fractional shares or scrip
representing fractional shares shall be issued upon exercise of this
Warrant but, in lieu thereof, the Company shall round up to the next full
share.
Section 2. Exercise Price and Adjustments.
-------------------------------
2.1. The Exercise Price at which the Warrant Shares shall
be purchasable shall be $.25 per share, subject to adjustment as follows:
(a) Stock Dividends. If at any time after the
date of the issuance of this Warrant (i) the Company shall pay a stock
dividend payable in shares of Common Stock or (ii) the number of shares of
Common Stock shall have been increased by a subdivision or split-up of
shares of Common Stock, then, on the date of the payment of such dividend
or immediately after the effective date of subdivision or split-up, as the
case may be, the number of shares to be delivered upon exercise of this
Warrant will be increased so that the Holder will be entitled to receive
the number of shares of Common Stock that such Holder would have owned
immediately following such action had this Warrant been exercised
immediately prior thereto, and the Exercise Price will be adjusted as
provided below in paragraph (d).
(b) Combination of Common Stock. If the number
of shares of Common Stock outstanding at any time after the date of the
issuance of this Warrant shall have been decreased by a combination of the
outstanding shares of Common Stock, then, immediately after the effective
date of such combination, the number of shares of Common Stock to be
delivered upon exercise of this Warrant will be decreased so that the
Holder thereafter will be entitled to receive the number of shares of
Common Stock that such Holder would have owned immediately following such
action had this Warrant been exercised immediately prior thereto, and the
Exercise Price will be adjusted as provided below in paragraph (d).
(c) Reorganization, etc. If any capital
reorganization of the Company, or any reclassification of the Common Stock,
or any consolidation of the Company with or merger of the Company with or
into any other person or any sale, lease or other transfer of all or
substantially all of the assets of the Company to any other person, shall
be effected in such a way that the holders of Common Stock shall be
entitled to receive stock, other securities or assets (whether such stock,
other securities or assets are issued or distributed by the Company or
another person) with respect to or in exchange for Common Stock, then, upon
exercise of this Warrant the Holder shall have the right to receive the
kind and amount of stock, other securities or assets receivable upon such
reorganization, reclassification, consolidation, merger or sale, lease or
other transfer of all or substantially all the assets of the Company that
such Holder would have been entitled to receive upon exercise of this
Warrant had this Warrant been exercised immediately before such
reorganization, reclassification, consolidation, merger or sale, lease or
other transfer of all or substantially all the assets of the
-16-
<PAGE>17
Company, subject to adjustments that shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Section 2.1.
(d) Exercise Price Adjustment. Whenever the
number of Warrant Shares purchasable upon the exercise of the Warrant is
adjusted as provided pursuant to this Section 2.1, the Exercise Price
payable upon the exercise of this Warrant shall be adjusted by multiplying
such Exercise Price immediately prior to such adjustment by a fraction, of
which the numerator shall be the number of Warrant Shares purchasable upon
the exercise of the Warrant immediately prior to such adjustment, and of
which the denominator shall be the number of Warrant Shares purchasable
immediately thereafter; provided that the Exercise Price for each Warrant
Share shall in no event be less than the par value of such Warrant Share.
2.2. No Adjustment for Dividends. Except as provided in
Section 2.1, no adjustment in respect of any dividends shall be made during
the term of this Warrant or upon the exercise of this Warrant.
Notwithstanding any other provision hereof, no adjustments shall be made on
Warrant Shares issuable on the exercise of this Warrant for any cash
dividends paid or payable to holders of record of Common Stock prior to the
date as of which the Holder shall be deemed to be the record holder of such
Warrant Shares.
2.3. Notice of Adjustment. Whenever the number of Warrant
Shares or the Exercise Price of such Warrant Shares is adjusted, as herein
provided, the Company shall promptly mail by first class, postage prepaid,
to the Holder, notice of such adjustment or adjustments and a certificate
of a firm of independent public accountants of recognized standing selected
by the Board of Directors of the Company (who are the independent public
accountants regularly employed by the Company) setting forth the number of
Warrant Shares and the Exercise Price of such Warrant Shares after such
adjustment, setting forth a brief statement of the facts requiring such
adjustment and setting forth the computation by which such adjustment was
made.
2.4. Amendments. Any provision of this Warrant may be
amended and the observance thereof waived only with the written consent of
the company and the Holder.
2.5. Cashless Exercise. On any date on which this Warrant
is exercisable, in lieu of the payment of the Exercise Price, the Holder
shall have the right (the "Cashless Exercise Right") (but not the
obligation), to require the Company to convert this Warrant, in whole or in
part, into Common Stock in accordance with Section 1, and to require the
Company to deliver to the Holder (without payment by the Holder of any of
the Exercise Price) and in accordance with Section 1 that amount of Common
Stock, equal to the quotient obtained by dividing (x) the value of the
Warrant at the time the Cashless Exercise Right is exercised (determined by
subtracting the aggregate Exercise Price in effect immediately prior to the
exercise of the Cashless Exercise Right from the aggregate Fair Market
Value for the shares of Stock covered by the Warrant immediately prior to
the exercise of the Cashless Exercise Right) by (y) the Fair Market Value
of one share of Common Stock immediately prior to the exercise of the
Cashless Exercise Right.
(a) The Cashless Exercise Right may be exercised
by the Holder by delivering the Warrant, with a duly executed Subscription
Form with the conversion section completed, to the Company, exercising the
Cashless Exercise Right and specifying the total percentage of this Warrant
that will be exercised.
(b) Fair Market Value of one share of Common
Stock as of a particular date shall mean the average of the closing bid and
asked prices as they are reported on the principal exchange of the Common
Stock for the twenty (20) trading days ending on the day preceding the date
the Warrant is exercised.
-17-
<PAGE>18
Section 3. Exchange, Assignment, or Loss of Warrant.
-----------------------------------------
3.1. Exchange of Warrant. This Warrant is exchangeable,
without expense, at the option of the Holder, upon presentation and
surrender hereof to the Company for other Warrants of different
denominations entitling the Holder thereof to purchase in the aggregate the
same number of Warrant Shares purchasable hereunder on the same terms and
conditions as herein set forth.
3.2. Assignment of Warrant. Subject to compliance with
Section 4 hereof, this Warrant may be assigned by presentation and
surrender to the Company at its principal office or at the office of its
stock transfer agent, if any, with the Assignment Form annexed hereto duly
executed accompanied by funds sufficient to pay any transfer tax. Upon
such presentation and surrender, the Company shall, without charge, execute
and deliver a new Warrant in the name of the assignee named in the
Assignment Form and shall promptly cancel this Warrant.
3.3. Loss or Mutilation of Warrant. Upon receipt by the
Company of evidence satisfactory to it of the loss, theft, destruction, or
mutilation of this Warrant, and (in the case of loss, theft, or
destruction) of reasonably satisfactory indemnification, and upon surrender
and cancellation of this Warrant, if mutilated, the Company will execute
and deliver a new Warrant of like tenor and date and any such lost, stolen,
or destroyed Warrant shall thereupon become void. Any such new Warrant
executed and delivered shall constitute an additional contractual
obligation on the part of the Company, whether or not this Warrant so lost,
stolen, destroyed, or mutilated shall be at any time enforceable by anyone.
3.4. Ownership of Warrant. The Company may deem and treat
the person in whose name this Warrant is registered as the holder and owner
hereof (notwithstanding any notations of ownership or writing hereon made
by anyone other than the Company) for all purposes and shall not be
affected by any notice to the contrary.
Section 4. Compliance with Securities Act of 1933.
---------------------------------------
4.1. Disposition of Warrant and/or Warrant Shares. This
Warrant and/or the Warrant Shares may not be sold or otherwise disposed of
except as follows:
(a) To a person who, in the opinion of counsel
reasonably satisfactory to the Company, is a person to whom this
Warrant or the Warrant Shares may legally be transferred without
registration and without the delivery of a current prospectus
under the Act with respect thereto and then only against receipt
of an agreement of such person to comply with the provisions of
this Section 4 with respect to any resale or other disposition of
such securities unless, in the opinion of counsel, such agreement
is not required; or
(b) To any person upon delivery of a prospectus or
offering circular then meeting the requirements of the Act
relating to such securities and the offering thereof for such
sale or disposition.
4.2. Legending of Certificates. Each certificate for
Warrant Shares or for any other security issued or issuable upon exercise
of this Warrant shall contain a legend on the face thereof, in form and
substance satisfactory to counsel to the Company, setting forth the
restrictions on transfer thereof contained in this Section 4.
-18-
<PAGE>19
Section 5. Company Covenants.
------------------
5.1. Reservation and Issuance of Warrant Shares. The
Company hereby undertakes until expiration of this Warrant to reserve for
issuance and/or delivery upon exercise of this Warrant, such number of
shares of its Common Stock as shall be required for issuance and/or
delivery upon exercise hereon in full and agrees that all Warrant Shares so
issued and/or delivered will be validly issued, fully paid, and non-
assessable and further agrees to pay all taxes and charges that may be
imposed upon such issuance and/or delivery.
5.2. Officer's Certificate. In the event the Exercise
Price shall be adjusted as required by Section 2 hereof, the Company shall
mail to the Holder an officer's certificate setting forth the adjustments
so required and including, in reasonable detail, the method of calculating
the adjustments and the transaction requiring the adjustment.
5.3. Notices of Corporate Action. So long this Warrant
has not been exercised in full, in the event of
(a) any taking by the Company 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 or other
distribution, or any right to subscribe for, purchase or otherwise acquire
any shares of Common Stock of any class or any other securities or
property, or to receive any other right,
(b) any capital reorganization of the Company,
any reclassification or recapitalization of the capital stock of the
Company or any consolidation or merger involving the Company and any other
person or any transfer of all or substantially all the assets of the
Company to any other person, or
(c) any voluntary or involuntary dissolution,
liquidation or winding-up of the Company, the Company will mail to the
Holder a notice specifying (i) the date or expected 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 any such dividend, distribution or
right and (ii) the date or expected date on which any such reorganization,
reclassification, recapitalization, consolidation, merger, transfer,
dissolution, liquidation or winding-up is to take place and the time, if
any such time is to be fixed, as of which the holders of record of Common
Stock (or other securities) shall be entitled to exchange their shares of
Common Stock (or other securities) for the securities or other property
deliverable upon such reorganization, reclassification, recapitalization,
consolidation, merger, transfer, dissolution, liquidation or winding-up.
Such notice shall be delivered at least 10 days prior to the date therein
specified, in the case of any date referred to in the foregoing
subdivisions (i) and (ii).
Section 6. Miscellaneous.
--------------
6.1. Status of Holder. The Holder shall not be entitled
to vote or receive dividends and shall not otherwise be deemed a
shareholder of the Company.
6.2. Notices. All notices required hereunder shall be
sent by first-class mail, postage prepaid, and shall be addressed, if to
the Holder, to the last known address furnished to the Company and if to
the Company, to: Cistron Biotechnology, Inc., 10 Bloomfield Avenue, Pine
Brook, New Jersey 07058, Attn: Bruce Galton, Chairman and Chief Executive
Officer, unless another address is designated in writing by the Holder of
the Company.
-19-
<PAGE>20
6.3. Binding Effect. This Warrant shall be binding upon
the Company, its successors, and/or assigns and upon the Holder.
6.4. Governing Law. The validity, interpretation and
performance of this Warrant shall be governed by the laws of the State of
New York.
6.5. No Rights or Liabilities as Common Stockholder.
Nothing contained in this Warrant shall be determined as conferring upon
the Holder any rights as a stockholder of the Company or as imposing any
liabilities on the Holder to purchase any securities whether such
liabilities are asserted by the Company or by creditors or stockholders of
the Company or otherwise.
IN WITNESS WHEREOF, this Warrant has been duly executed by the
Company under its corporate seal as of this 30th day of October 1998.
CISTRON BIOTECHNOLOGY, INC.
By:/s/BRUCE C. GALTON
------------------
Name: BRUCE C. GALTON
Title: Chairman of the Board
and Chief Executive Officer
ATTEST:
/s/ SETH I. TRUWIT, ESQ.
- ------------------------
Name: SETH I. TRUWIT, ESQ.
-20-
<PAGE>21
FORM OF ASSIGNMENT
(To be signed only upon such assignment)
FOR VALUE RECEIVED, the undersigned hereby sells,
assigns and transfers unto
the right represented by the within Warrant to purchase, from
CISTRON BIOTECHNOLOGY, INC. (the "Company"), shares of the Common
Stock of the Company, to which the within Warrant relates, and
appoints
attorney to transfer said right, with full power of substitution
in the premises.
Dated:
______________________________
(Signature must conform in all
respects to name of holder as
specified on the face of the
Warrant)
ATTEST:
_____________________________
Name:
-21-
<PAGE>22
FORM OF SUBSCRIPTION
(To be signed only upon exercise of Warrant)
To: CISTRON BIOTECHNOLOGY, INC.
The undersigned, the holder of the within Warrant, hereby
irrevocably elects to exercise the purchase rights represented by said
Warrant for, and to purchase thereunder, shares of Common Stock of the
Company, and herewith makes payment of $ therefor, consents
to the affixation of a legend on the certificate for such shares to the
effect that such shares have not been registered under the Securities Act
of 1933, as amended (the "Act"), and may be transferred only in compliance
with the Act, and requests that such certificate(s) be issued in the name
of and be delivered to
whose address is
and if such shares shall not be all of the shares purchased hereunder, that
a new Warrant of like tenor for the balance of shares purchasable hereunder
be delivered to the undersigned.
Cashless Exercise Price Conversion Section
By checking the following box the undersigned hereby irrevocably
elects to exercise the Cashless Exercise Right in accordance with Section 2.5.
Dated: _________________________________
(Signature must conform in all
respects to name of holder as
specified on the face of the
Warrant)
-22-
<PAGE> 1
REGISTRATION RIGHTS AGREEMENT
THIS AGREEMENT, dated as of October 30, 1998, is entered
into by and among Cistron Biotechnology, Inc., a corporation
organized under the laws of Delaware (the "Company") and Pasteur
Merieux Serums & Vaccins, S.A., a societe anonyme organized under
the laws of France (the "Shareholder").
W I T N E S S E T H:
WHEREAS, on the date hereof, the Company and the
Shareholder are entering into a Common Stock and Warrant Purchase
Agreement (the "Common Stock and Warrant Purchase Agreement"),
relating to the Shareholder's investment in the Company; and
WHEREAS, the Company, as partial inducement for the
Shareholder to enter into the Common Stock and Warrant Purchase
Agreement, has elected to grant to the Shareholder the
registration rights provided for herein.
NOW, THEREFORE, in consideration of the premises, mutual
covenants and agreements herein contained and for other good and
valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties hereto hereby agree as follows:
ARTICLE 1. Certain Definitions.
--------------------
(a) For the purposes of this Agreement, the following
terms shall have the respective meanings set forth below:
"Advice" is as defined in Section 2.5.
"Agreement" means this Agreement, as from time to time
assigned, supplemented, amended or modified in accordance with the
terms hereof.
"Common Stock and Warrant Purchase Agreement" is as defined
in the recitals.
"Company" is as defined in the preamble.
"Demand Registration" is as defined in Section 2.1.
"Demand Request" is as defined in Section 2.1.
"Exchange Act" means the United States Securities Exchange
Act of 1934, as amended, or any similar federal law then in force.
"Indemnified Person" is as defined in Section 2.9(a).
"Material Adverse Effect" is as defined in Section 2.3(a).
"NASD" is as defined in Section 2.4(p).
"Proposed Registration" is as defined in Section 2.2(a).
-1-
<PAGE>2
"Restricted Shares" means any Shares or other securities of
the Company which have not been registered under the Securities
Act and which are owned by the Shareholder.
"SEC" means the United States Securities and Exchange
Commission.
"Securities Act" means the United States Securities Act of
1933, as amended, or any similar federal law then in force.
"Shareholder" is as defined in the preamble.
"Shares" means common stock of the Company, par value $.01
per share.
"Suspension Notice" is as defined in Section 2.5.
(b) Capitalized terms used herein but not defined
herein shall have the meaning set forth in the Common Stock and
Warrant Purchase Agreement.
ARTICLE 2. Registration Rights.
--------------------
2.1. Demand Registration. At any time after October 30,
2000 the Shareholder may require the Company (pursuant to a
written notice to the Company) to effect the registration under
the Securities Act of Shares of the Company (a "Demand
Registration"). Such request (a "Demand Request") by the
Shareholder shall (i) specify the class and number of Shares which
the Shareholder intends to sell or dispose of, and (ii) state the
intended method or methods by which the Shareholder intends to
sell or dispose of such Shares. In connection with any
underwritten public offering, the underwriter thereof shall be
selected by the Company, subject to the consent of the
Shareholder, which shall not be unreasonably withheld. Upon
receipt of a Demand Request, the Company shall (as requested) (i)
cause to be filed, within seventy-five (75) calendar days of the
date of delivery to the Company of the request, a registration
statement covering such Shares which the Company has been so
requested to register, providing for the registration under the
Securities Act of such Shares to the extent necessary to permit
the disposition of such Shares so to be registered in accordance
with the intended method of distribution specified in such request
(provided, further, that in either case the Company may delay
making such filing or taking such action by not more than sixty
(60) calendar days if the Company, prior to the time it would
otherwise have been required to file such registration statement
or take such action, determines in good faith that the filing of
such registration statement or the taking of such action would
require the disclosure of material nonpublic information that, in
the reasonable judgment of the Company, would be detrimental to
the Company if so disclosed (and a delay would be likely to reduce
the detrimental effect of such disclosure or obviate the need for
such disclosure to be made), or would otherwise adversely affect a
financing, acquisition, disposition, merger or other material
transaction), and shall use its best efforts to have such
registration statement declared effective by the SEC as soon as
practicable thereafter. The Shareholder shall have the right to
exercise up to one (1) such Demand Registration right.
2.2. Piggyback Rights.
-----------------
(a) Each time that the Company proposes (either
unilaterally or pursuant to the exercise of demand registration
rights by any other third party) for any reason to register any of
its securities under the Securities Act (a "Proposed
Registration"), other than pursuant to a registration statement on
Form F-4 or Form F-8 or similar or successor forms, the Company
shall promptly give
-2-
<PAGE> 3
written notice of such Proposed Registration to the Shareholder
(which notice shall be given not less than thirty (30) calendar
days prior to the effective date of the Company's registration
statement) and such holders shall have the right, on a pro rata
basis, to request inclusion of any of the Shareholder's Shares
in the Proposed Registration. No registration pursuant to this
Section 2.2 shall relieve the Company of its obligation to register
Shares pursuant to Section 2.1.
(b) The Shareholder shall have twenty-five (25)
calendar days from the receipt of such notice to deliver to the
Company a written request specifying the number of Shares the
Shareholder intends to sell and the Shareholder's intended method
of disposition. The Shareholder shall have the right to withdraw
its request for inclusion of such Shares in any registration
statement pursuant to this Section 2.2 by giving written notice to
the Company of such withdrawal. Subject to Section 2.3 below, the
Company shall include in such registration statement all such
Shares so requested to be included therein; provided, however,
that the Company may at any time withdraw or cease proceeding with
any such piggyback registration if it shall at the same time
withdraw or cease proceeding with the registration of all other
equity securities originally proposed to be registered.
(c) In the event that the Proposed Registration by the
Company is, in whole or in part, an underwritten public offering
of securities of the Company, any request under Section 2.2(b)
hereof must specify that the Shares be included in the
underwriting on the same terms and conditions as the Shares
otherwise being sold through underwriters under such registration.
2.3. Priority on Registrations.
--------------------------
(a) Notwithstanding the foregoing, if the Shares
requested to be included in the Proposed Registration pursuant to
Section 2.2 hereof by the Shareholder differ from the type of
securities proposed to be registered by the Company and the
managing underwriter advises the Company that due to such
differences the inclusion of such Shares would materially and
adversely affect the price or success of the offering (a "Material
Adverse Effect"), then (i) the number of the Shareholder' Shares
to be included in the registration statement shall be reduced to
an amount which, in the judgment of the managing underwriter,
would eliminate such Material Adverse Effect or (ii) if no such
reduction would, in the judgment of the managing underwriter,
eliminate such Material Adverse Effect, then the Company shall
have the right to exclude all such Shares from such registration
statement provided no other securities of such type are included
and offered for the account of any other person in such
registration statement. Any partial reduction in the number of
Shares to be included in the registration statement pursuant to
clause (i) of the immediately preceding sentence shall be effected
pro rata based on the ratio which the Shareholder's requested
Shares bears to the total number of Shares requested to be
included in such registration statement by all other persons who
have requested that their Shares be included in such registration
statement.
(b) If the Shares requested to be included in the
registration statement are of the same type as the securities
being registered by the Company and the managing underwriter
advises the Company that the inclusion of such Shares would cause
a Material Adverse Effect, the Company will be obligated to
include in such registration statement, as to the Shareholder
(subject to the priority rules set forth below), the greater of
(i) that portion of the Shares the Shareholder has requested be
registered which the managing underwriter believes may be included
(together with only securities to be offered by the Company)
without causing a Material Adverse Effect, or (ii) that portion of
the Shares the Shareholder has requested to be registered equal to
the ratio which the Shareholder's requested Shares bears to the
total number of Shares requested to be included in such
registration statement by all other persons (other than (i) the
Company, if such registration has been
-3-
<PAGE> 4
initiated by the Company for securities to be offered by the Company
or (ii) the Shareholder, if such registration has been initiated by it
pursuant to Section 2.1 hereof) who have requested that their
Shares be included in such registration statement. It is
acknowledged by the Shareholder that pursuant to the foregoing
provision, the securities to be included in such registration
shall be allocated (A) if the Company initiates the Proposed
Registration (either unilaterally or pursuant to the exercise of
demand registration rights by any other third party), (1) first,
to the Company or such other third party exercising demand
registration rights, (2) second, to the Shareholder (in accordance
with the above described ratio if all Shares proposed to be
included in the Proposed Registration cannot be so included) and
(3) third, to all other persons requesting securities to be
included therein (in accordance with the above described ratio if
all Shares proposed to be included in the Proposed Registration
cannot be so included) and (B) if the Shareholder exercises a
right to cause a Demand Registration, (1) first, to the
Shareholder and (2) second, to all other persons requesting
securities to be included therein (in accordance with the above
described ratio if all Shares proposed to be included in the
Proposed Registration cannot be so included). If as a result of
the provisions of this Section 2.3(b) the Shareholder shall not be
entitled to include all of its Shares in a registration that the
Shareholder has requested to be so included, the Shareholder may
withdraw the Shareholder's request to include Shares in such
registration statement. The Shares that are excluded from the
underwritten public offering pursuant to the preceding sentence
shall be withheld from the market by the Shareholder for a period,
not to exceed one hundred eighty (180) calendar days from the
closing of such underwritten public offering, that the managing
underwriter(s) determines as necessary in order to effect such
underwritten public offering. In granting any future registration
rights the Company will include the priority of registration
herein.
(c) The Shareholder may not participate in any
registration statement hereunder unless the Shareholder completes,
executes and delivers all questionnaires, powers of attorney,
indemnities, underwriting agreements, and other documents
reasonably required under the terms of such underwriting
arrangements, including an opinion of its counsel; provided,
however, that the Shareholder shall not be required to make any
representations or warranties in connection with any such
registration other than representations and warranties as to (i)
the Shareholder's ownership of its Shares to be sold or
transferred free and clear of all liens, (ii) the Shareholder's
power and authority to effect such transfer, and (iii) such
matters pertaining to compliance with securities laws as may be
reasonably requested.
2.4. Registration Procedures. Whenever the Shareholder
has requested that any Shares be registered pursuant to the
provisions of this Article 2, the Company will use its
commercially reasonable efforts to effect the registration and the
sale of such Shares in accordance with the intended method of
disposition thereof as set forth in the written request, and
pursuant thereto the Company shall:
(a) prepare and file with the SEC a registration
statement with respect to such securities on the appropriate
forms, and use its best efforts to cause such registration
statement(s) to become and remain effective in accordance with
Section 2.4(b) hereof and in accordance with all laws, rules and
regulations applicable thereto;
(b) prepare and file with the SEC such amendments and
supplements to such registration statements and the prospectus
used in connection therewith as may be necessary to keep such
registration statement effective until the earlier of (i) the sale
of all Shares covered thereby or (ii) the expiration of nine
months from the effective date of the registration statement, and to
-4-
<PAGE>5
comply with the provisions of the Securities Act with respect
to the sale or other disposition of all Shares covered by such
registration statement;
(c) furnish to the Shareholder pursuant to Section 2.1
or Section 2.2 such number of copies of any summary prospectus or
other prospectus, including a preliminary prospectus, in
conformity with the requirements of the Securities Act, and such
other documents as the Shareholder may reasonably request in order
to facilitate the public sale or other disposition of such Shares;
(d) use its best efforts to register or qualify the
Shares covered by such registration statement under the securities
or blue sky laws of such jurisdictions as the Shareholder shall
reasonably request and do any and all other acts or things which
may be necessary or advisable to enable the Shareholder to
consummate the public sale or other disposition in such
jurisdictions of such Shares; provided, however, that the Company
shall not be required to consent to general service of process for
all purposes in any jurisdiction where it is not then subject to
process, qualify to do business as a foreign company where it
would not be otherwise required to qualify or submit to liability
for state or local taxes where it is not otherwise liable for such
taxes;
(e) at any time when a prospectus relating thereto
covered by such registration statement is required to be delivered
under the Securities Act within the appropriate period mentioned
in Section 2.4(b) hereof, promptly notify the Shareholder and each
underwriter and (if requested by the Shareholder) confirm such
notice in writing (i) when a prospectus or any prospectus
supplement or post-effective amendment has been filed and, with
respect to a registration statement or any post-effective
amendment, when the same has become effective, (ii) of the
issuance by any state securities or other regulatory authority of
any order suspending the qualification or exemption from
qualification of any of the Shares under state securities or blue
sky laws or the initiation of any proceedings for that purpose,
and (iii) of the happening of any event as a result of which the
prospectus included in such registration, as then in effect,
includes an untrue statement of a material fact or omits to state
a material fact required to be stated therein or necessary to make
the statements therein not misleading in light of the
circumstances then existing and, at the request of the
Shareholder, prepare, file and furnish to the Shareholder a
reasonable number of copies of a supplement to or an amendment of
such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such shares, such prospectus shall
not include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary
to make the statements therein not misleading in the light of the
circumstances then existing;
(f) if the Company has delivered preliminary or final
prospectuses to the Shareholder and after having done so the
prospectus is amended to comply with the requirements of the
Securities Act, the Company shall promptly notify the Shareholder
and, if requested, the Shareholder shall immediately cease making
offers of Shares and return all prospectuses to the Company. The
Company shall promptly provide the Shareholder with revised
prospectuses and, following receipt of the revised prospectuses,
the Shareholder shall be free to resume making offers of the
Shares;
(g) furnish, at the request of the Shareholder on the
date such Shares are delivered to the underwriters for sale in
connection with a registration pursuant to this Article 2, if such
securities are being sold through underwriters, or, if such
securities are not being sold through underwriters, on the date
that the registration statement with respect to such securities
becomes effective, (i) an opinion, dated such date, of the counsel
representing the Company for the purposes
-5-
<PAGE>6
of such registration, in form and substance as is customarily given
to underwriters in an underwritten public offering, addressed to the
underwriters, if any, and to the Shareholder and (ii) a letter dated
such date, from the independent certified public accountants of the
Company, in form and substance as is customarily given by independent
certified public accountants to underwriters in an underwritten
public offering, addressed to the underwriters, if any, and the
Shareholder;
(h) if any proposed registration effected pursuant to
Section 2.1 or Section 2.2 involves an underwritten public
offering, (i) subject to Section 2.1, select a reputable managing
underwriter to underwrite such public offering, (ii) cause all
Shares to be listed for trading on the principal national
securities exchange where the Company's common stock is listed for
trading, and (iii) enter into (A) an underwriting agreement with
the underwriter providing for such representations, warranties,
covenants, conditions and indemnities as may be requested by the
underwriter and (B) a deposit agreement with a depositary, if
applicable, providing for such representations, warranties,
covenants, conditions and indemnities as may be requested by the
depositary;
(i) before filing a registration statement or amendment
thereto, furnish to each Shareholder and its counsel and other
representatives and the underwriters, if any, copies of each such
registration statement or amendment proposed to be filed, which
documents shall be made available on a timely basis for review and
comment by the Shareholder, the underwriters (if any) and their
respective representatives;
(j) make generally available to the Company's security
holders an earnings statement satisfying the provisions of Section
11(a) of the Securities Act no later than thirty (30) calendar
days after the end of the 12-month period beginning with the first
day of the Company's first fiscal quarter commencing after the
effective date of a registration statement, which earnings
statement shall cover said 12-month period, and which requirement
will be deemed to be satisfied if the Company timely files
complete and accurate information on Forms 20-F and 6-K under the
Exchange Act and otherwise complies with Rule 158 under the
Securities Act;
(k) if requested by the managing underwriter or the
Shareholder, promptly incorporate in a prospectus supplement or
post-effective amendment such information as the managing
underwriter or the Shareholder reasonably requests to be included
therein, including, without limitation, with respect to the Shares
being sold by the Shareholder, the purchase price being paid
therefor by the underwriters and with respect to any other terms
of the underwritten offering of the Shares to be sold in such
offering, and promptly make all required filings of such
prospectus supplement or post-effective amendment;
(l) as promptly as practicable after filing with the
SEC of any document which is incorporated by reference into a
registration statement (in the form in which it was incorporated),
deliver a copy of each such document to the Shareholder;
(m) cooperate with the Shareholder and the managing
underwriter to facilitate the timely preparation and delivery of
certificates (which shall not bear any restrictive legends unless
required under applicable law) representing securities sold under
any registration statement (if any), and enable such securities to
be in such denominations and registered in such names as the
managing underwriter or such sellers may request and keep
available and make available to the Company's transfer agent prior
to the effectiveness of such registration statement a supply of
such certificates;
-6-
<PAGE>7
(n) in the event that the Shareholder may be considered
to be a "control person," promptly make available for inspection
by the Shareholder, any underwriter participating in any
disposition pursuant to any registration statement, and any
attorney, accountant or other agent or representative retained by
any the Shareholder or underwriter (collectively, the
"Inspectors"), all financial and other records, pertinent
corporate documents and properties of the Company (collectively,
the "Records"), as shall be reasonably necessary to enable them to
exercise their due diligence responsibility, and cause the
Company's officers, directors and employees to supply all
information requested by any such Inspector in connection with
such registration statement; provided, that, unless the disclosure
of such Records is necessary to avoid or correct a misstatement or
omission in the registration statement or the release of such
Records is ordered pursuant to a subpoena or other order from a
court of competent jurisdiction, the Company shall not be required
to provide any information under this subparagraph (n) if (i) the
Company believes, after consultation with counsel for the Company,
that to do so would cause the Company to forfeit an attorney-
client privilege that was applicable to such information or (ii)
if either (A) the Company has requested and been granted from the
SEC confidential treatment of such information contained in any
filing with the SEC of documents provided supplementally or
otherwise or (B) the Company reasonably determines in good faith
that such Records are confidential and so notifies the Inspectors
in writing unless prior to furnishing any such information with
respect to (i) or (ii) the Shareholder requesting such information
agrees to enter into a confidentiality agreement in customary form
and subject to customary exceptions; and provided, further, that
the Shareholder agrees that it will, upon learning that disclosure
of such Records is sought in a court of competent jurisdiction,
give notice to the Company and allow the Company at its expense,
to undertake appropriate action and to prevent disclosure of the
Records deemed confidential;
(o) provide, if required, a CUSIP number for the Shares
included in any registration statement not later than the
effective date of such registration statement;
(p) cooperate with the Shareholder and each underwriter
participating in the disposition of such Shares and their
respective counsel in connection with any filings required to be
made with the National Association of Securities Dealers, Inc.
("NASD");
(q) during the period when the prospectus is required
to be delivered under the Securities Act, promptly file all
documents required to be filed with the SEC pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act;
(r) notify the Shareholder promptly of any request by
the SEC for the amending or supplementing of such registration
statement or prospectus or for additional information;
(s) prepare and file with the SEC promptly any
amendments or supplements to such registration statement or
prospectus which, in the opinion of counsel for the Company or the
managing underwriter, is required in connection with the
distribution of the Shares;
(t) advise the Shareholder, promptly after it shall
have received notice or obtain knowledge thereof, of the issuance
of any stop order by the SEC suspending the effectiveness of such
registration statement or the initiation or threatening of any
proceeding for such purpose and promptly use its best efforts to
prevent the issuance of any stop order or to obtain its withdrawal
at the earliest possible moment if such stop order should be
issued; and
-7-
<PAGE>8
(u) in the case of a Demand Request pursuant to Section
2.1 if the Shareholder so requests, to request acceleration of
effectiveness of the registration statement from the SEC, provided
at the time of such request the Company does not, in good faith,
believe it is necessary to amend further the registration
statement in order to comply with the provisions of this Section
2.4. If the Company wishes to further amend the registration
statement prior to requesting acceleration, it shall have five (5)
Business Days to so amend prior to requesting acceleration.
2.5. Suspension of Dispositions. The Shareholder agrees
that upon receipt of any notice (a "Suspension Notice") from the
Company of the happening of any event of the kind described in
Section 2.4(e)(iii), the Shareholder will forthwith discontinue
disposition of Shares until the Shareholder's receipt of the
copies of the supplemented or amended prospectus, or until it is
advised in writing (the "Advice") by the Company that the use of
the prospectus may be resumed, and has received copies of any
additional or supplemental filings which are incorporated by
reference in the prospectus, and, if so directed by the Company,
the Shareholder will deliver to the Company all copies, other than
permanent file copies then in the Shareholder's possession, of the
prospectus covering such Shares current at the time of receipt of
such Suspension Notice. In the event the Company shall give any
such Suspension Notice, the time period regarding the
effectiveness of registration statements set forth in Section
2.4(b) hereof shall be extended by the number of days during the
period from and including the date of the giving of the Suspension
Notice to and including the date when each seller of Shares
covered by such registration statement shall have received the
copies of the supplemented or amended prospectus or the Advice.
The Company shall use its commercially reasonable efforts and take
such actions as are reasonably necessary to render the Advice as
promptly as practicable.
2.6. Cooperation upon a Registration. The Shareholder
and the Company agree that, in connection with any exercise of
registration rights pursuant to this Article 2, the Shareholder
will authorize, and will authorize and direct the Company to take,
such actions as are necessary or appropriate to effectuate such
registration. In addition, the Shareholder agrees to cooperate
fully with the Company and the underwriters of any underwritten
public offering in the preparation of all documentation necessary
or desirable to effectuate any registration of any Shares under
the Securities Act pursuant to this Article 2, or registration or
qualification of any Shares pursuant to Section 2.4(d) hereof. In
addition, the Company agrees to cooperate fully with the
Shareholder in connection with any such registration or
qualification.
2.7. Limitations. Notwithstanding anything in this
Agreement to the contrary, if requested in writing by the managing
underwriter(s), if any, of any underwritten public offering of the
Company's capital stock pursuant to this Article 2, the
Shareholder agrees not to offer, sell, contract to sell or
otherwise dispose of any shares of capital stock of the Company
except as part of such underwritten public offering within thirty
(30) calendar days before or one hundred eighty (180) calendar
days after the effective date of the registration statement filed
with respect to said offering, unless expressly authorized to do
so by the managing underwriter(s).
2.8. Expenses. The Company shall pay all expenses
incurred by the Company in complying with Sections 2.1, 2.2 and
2.4 hereof, including, without limitation, all registration and
filing fees (including all expenses incident to filing with the
NASD), fees and expenses of complying with the securities or blue
sky laws of all such jurisdictions in which the Shares are
proposed to be offered and sold (including reasonable fees and
disbursements of counsel in connection with blue sky qualification
of Shares), rating agency fees, printing expenses, messenger and
delivery expenses, the Company's internal expenses (including
without limitation all salaries
-8-
<PAGE>9
and expenses of its officers and employees performing legal or
accounting duties), fees and expenses incurred in connection with
any listing of the Shares, fees and expenses of counsel for the
Company and its independent certified public accountants (including
the expenses of any special audit or cold comfort letters required by
or incident to such performance), securities act liability insurance
(if the Company elects to obtain such insurance) and fees and
disbursements of underwriters (to the extent the Company is liable
therefor under the terms of any underwriting agreement), whether
or not any registration statement becomes effective; provided,
however, that all underwriting discounts and selling commissions
applicable to the Shares covered by registrations effected
pursuant to Section 2.1 or Section 2.2 hereof shall be borne by
the Shareholder, in proportion to the number of Shares sold by the
Shareholder, and except as expressly provided in this Section 2.8,
in no event shall the Company pay any fees or expenses
attributable to any counsel, accountants or other persons retained
or employed by the Shareholder.
2.9. Indemification.
---------------
(a) In the event of any registration of any Shares
under the Securities Act pursuant to this Article 2 or
registration or qualification of any Shares pursuant to Section
2.4(d) hereof, the Company shall indemnify and hold harmless the
Shareholder, each underwriter of such shares, if any, each broker
or any other person acting on behalf of the Shareholders, each
director, officer, employee and partner of any of the foregoing
and each other person, if any, who controls any of the foregoing
persons, within the meaning of the Securities Act (each, an
"Indemnified Person"), against any losses, claims, damages,
liabilities or expenses, joint or several, to which any of the
foregoing persons may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of, are related to,
result from or are based upon an untrue statement or alleged
untrue statement of a material fact contained in any registration
statement under which such Shares were registered under the
Securities Act, any preliminary prospectus or final prospectus
contained therein, or any amendment or supplement thereto, or any
document incident to registration or qualification of any Shares
pursuant to Section 2.4(d) hereof, or arise out of, are related
to, result from or are based upon the omission or alleged omission
to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading or, with
respect to any prospectus, necessary to make the statements
therein, in light of the circumstances under which they were made,
not misleading, or any violation by the Company of the state
securities or blue sky laws applicable to the Company and relating
to action or inaction required of the Company in connection with
such registration or qualification under such state securities or
blue sky laws. The Company shall reimburse on demand each
Indemnified Person for any legal or any other costs and expenses
reasonably incurred by any of them in connection with
investigating, preparing for, defending or settling any such loss,
claim, damage, liability or action by any governmental agency or
body; provided, however, that the Company shall not be liable in
any such case to the extent that any such loss, claim, damage,
liability or expense arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged
omission made in said registration statement, preliminary or final
prospectus or amendment or supplement thereto or any document
incident to registration or qualification of any Shares pursuant
to Section 2.4(d) hereof, in reliance upon and in conformity with
written information furnished to the Company by the Shareholder,
underwriter, broker, other person or controlling person
specifically for use in the preparation thereof or arises out of
or is based upon the Indemnified Person's failure to deliver a
copy of the registration statement or prospectus or any amendments
or supplements thereto after the Company has furnished such
Indemnified Person with a sufficient number of copies of the same.
-9-
<PAGE>10
(b) Before Shares shall be included in any registration
pursuant to this Article 2, the Shareholder will furnish to the
Company in writing such information and affidavits as the Company
reasonably requests for use in connection with any such
registration statement and prospectus, and the Shareholder and any
underwriter acting on its behalf shall have agreed to indemnify
and hold harmless (in the same manner and to the same extent as
set forth in paragraph (a) above) the Company, each member of the
Board of Directors of the Company, each officer of the Company who
signs such registration statement, every other participating
shareholder and any person who controls the Company within the
meaning of the Securities Act, with respect to any untrue
statement or omission from such registration statement, any
preliminary prospectus or final prospectus contained therein, or
any amendment or supplement thereto, if such untrue statement or
omission was made in reliance upon and in conformity with such
written information furnished to the Company by the Shareholder or
such underwriter for use in the preparation of such registration
statement, preliminary prospectus, final prospectus or amendment
or supplement; provided, however, that the maximum amount of
liability in respect of such indemnification shall be limited to
an amount equal to the net proceeds actually received by the
Shareholder from the sale of Shares effected pursuant to such
registration.
(c) Promptly after receipt by an Indemnified Person of
notice of the commencement of any action involving a claim
referred to in Section 2.9(a) or (b) hereof, such Indemnified
Person will, if a claim in respect thereof is to be made against
the indemnifying party under this Section 2.9, give written notice
to the latter of the commencement of such action (provided that
the failure to give such notice shall not limit the rights of such
Indemnified Person to the extent that such failure or delay in
notifying the indemnifying party does not prevent the indemnifying
party from presenting a proper defense against the claim). In
case any such action is brought against an Indemnified Person, the
indemnifying party will be entitled to participate in and to
assume the defense thereof, jointly with any other indemnifying
party similarly notified to the extent that it may wish, with
counsel reasonably satisfactory to such Indemnified Person, and,
after notice to such Indemnified Person from the indemnifying
party of its election to assume the defense thereof; provided,
however, that, if any Indemnified Person shall have reasonably
concluded that there may be one or more legal defenses available
to such Indemnified Person which are different from, in conflict
with or additional to those available to the indemnifying party,
or that such claim or litigation involves or could have an effect
upon matters beyond the scope of the indemnity agreement provided
in this Section 2.9, or if the indemnifying party fails to take
diligent action to defend such claim within twenty (20) calendar
days following notice thereof from the Indemnified Person, the
indemnifying party shall not have the right to assume the defense
of such action on behalf of such Indemnified Person, and such
indemnifying party shall reimburse such Indemnified Person and any
person controlling such Indemnified Person for the fees and
expenses of counsel retained by the Indemnified Person which are
reasonably related to the matters covered by the indemnity
agreement provided in this Section 2.9. If the indemnifying party
does assume its own defense as permitted hereunder, from such time
the Indemnified Person shall bear the expenses of its own separate
counsel. If such defense is not assumed by the indemnifying party
as permitted hereunder, the indemnifying party will not be subject
to any liability for any settlement made by the Indemnified Person
without its written consent, which consent shall not be
unreasonably withheld. If such defense is assumed by the
indemnifying party pursuant to the provisions hereof, such
indemnifying party shall not make any settlement of the applicable
claim indemnified against hereunder without the written consent of
the Indemnified Person or persons, which consent shall not be
unreasonably withheld. An indemnifying party who is not entitled
to, or elects not to, assume the defense of a claim will not be
obligated to pay the fees and expenses of more than one counsel
for all parties indemnified by such indemnifying party with
respect to such claim, unless in the
-10-
<PAGE>11
reasonable judgment of any Indemnified Person, a conflict
of interest may exist between such Indemnified Person and any
other such Indemnified Person with respect to such claim, in
which event the indemnifying party shall be obligated to pay the
reasonable fees and disbursements of such additional counsel or
counsels.
(d) In order to provide for just and equitable
contribution to joint liability under the Securities Act in any
case in which an Indemnified Person makes a claim for
indemnification pursuant to this Section 2.9, but it is judicially
determined (by the entry of a final judgment or decree by a court
of competent jurisdiction and the expiration of time to appeal or
the denial of the last right of appeal) that such indemnification
may not be enforced in such case notwithstanding the fact that
this Section 2.9 provides for indemnification in such case, then
the Company and the Shareholder will contribute to the aggregate
losses, claims, damages or liabilities to which they may be
subject as is appropriate to reflect, as between the Company and
the Shareholder, on the one hand, and the underwriter on the other
hand, the relative fault of the Company and the Shareholder in
connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities, it being understood that
the parties acknowledge that the overriding equitable
consideration to be given effect in connection with this provision
is the ability of one party or the other to correct the statement
or omission which resulted in such losses, claims, damages or
liabilities, and that it would not be just and equitable if
contribution pursuant hereto were to be determined by pro rata
allocation or by any other method of allocation which does not
take into consideration the foregoing equitable considerations.
Notwithstanding the foregoing, (i) the Shareholder will not be
required to contribute any amount in excess of the net proceeds to
it of all Shares sold by it pursuant to such registration
statement, (ii) no underwriter shall be required to contribute any
amount in excess of the proceeds to it from the offering pursuant
to such registration statement, and (iii) no person guilty of
fraudulent misrepresentation, within the meaning of Section 11(f)
of the Securities Act, shall be entitled to contribution from any
person who is not guilty of such fraudulent misrepresentation. If
indemnification is available under this Section 2.9, the
indemnifying parties shall indemnify each Indemnified Person to
the full extent provided in Section 2.9(a) and Section 2.9(b)
without regard to the relative fault of said indemnifying party or
Indemnified Person or any other equitable consideration provided
for in this Section 2.9(d).
(e) Notwithstanding any of the foregoing, if in
connection with an underwritten public offering of any Shares, the
Company, the Shareholder and the underwriters enter into an
underwriting or purchase agreement relating to such offering which
contains provisions covering indemnification among the parties,
the indemnification provided thereunder shall be in addition to
(and not in lieu of) the indemnification provided to the
Shareholders hereunder.
(f) The indemnification and contribution required by
this Section 2.9 shall be made by periodic payment of the amount
thereof during the course of the investigation or defense, as and
when bills are received or expense, loss, damage or liability is
incurred; provided, that if a court of competent jurisdiction
finally determines that any Indemnified Person which has received
payments hereunder does not have an indemnification right under
this Section 2.9 for any reason, then such Indemnified Person
shall within five (5) calendar days of such final determination,
refund all amounts received hereunder to the Company or the
Shareholder, as the case may be.
(g) The indemnification and contribution provided for
hereunder will remain in full force and effect regardless of any
investigation made by or on behalf of any Indemnified Person and
will survive the transfer of Shares.
-11-
<PAGE>12
ARTICLE 3. Miscellaneous
-------------
3.1. Notices. Any and all notices, consents, offers,
acceptances, or any other communication provided for herein shall
be sufficient if given in writing and deemed received when
delivered by first class, registered or certified mail, postage
prepaid or overnight courier or hand delivery, or when sent by
facsimile transmission (confirmed by facsimile machine report and
with a confirmation letter sent by first class mail, postage
prepaid) which shall be addressed, or sent to the address or
telecopier number of the party set forth below its signature
hereto or, in each case, such other address or telecopier number,
as the case may be, as such party may from time to time designate
in writing to the other parties.
3.2. Amendment and Waiver. No change or modification
of, or waiver of compliance with, this Agreement shall be valid
unless the same shall be in writing and signed by all of the
parties hereto.
3.3. Termination. This Agreement may be terminated at
any time by an instrument in writing signed by all of the parties
hereto. This Agreement shall terminate automatically in the event
that (i) the Shareholder transfers all of its Restricted Shares,
or (ii) the Shareholder may sell all of its Restricted Shares
pursuant to Rule 144(k) of the Securities Act. Unless sooner
terminated, this Agreement shall terminate fifteen (15) years from
the date hereof, unless, at any time within one (1) year prior to
such date, both of the parties extend its duration for as many
additional periods, each not to exceed ten (10) years, as they may
desire.
3.4. No Waiver. No failure or delay on the part of the
Company or the Shareholder in exercising any right, between the
Company and the Shareholder shall operate as a waiver thereof nor
shall any single or partial exercise of any right, power or
privilege hereunder preclude the simultaneous or later exercise of
any other right, power or privilege. The rights and remedies
herein expressly provided are cumulative and not exclusive of any
rights or remedies which the Company or the Shareholder would
otherwise have. No notice to or demand on the Company or the
Shareholder, as the case may be, in any case shall entitle the
Company or the Shareholder, as the case may be, to any other or
further notice or demand in similar or other circumstances or
constitute a waiver of the rights of the Company or the
Shareholder to take any other or further action in any
circumstances without notice or demand.
3.5. Specific Performance. Each party to this Agreement
acknowledges that the other parties will suffer irreparable injury
in the event of any breach of any provision of this Agreement and
that therefore the remedy at law for any breach or threatened
breach of any such provision of this Agreement will be inadequate.
Accordingly, upon a breach or threatened breach of any such
provision of this Agreement by any party hereto, the other parties
shall, in addition and without prejudice to any of the rights and
remedies they may have, be entitled as a matter of right, without
proof of actual damages, to seek specific performance of such
provisions of this Agreement and to such other injunctive or
equitable relief to enforce, or prevent any violations (whether
anticipatory, continuing or future) of, such provisions of this
Agreement.
3.6. Counterparts and Headings. This Agreement may be
executed in two or more counterparts, each of which shall be
deemed to be an original, but all of which together shall
constitute one and the same instrument. All headings and any
cover page are inserted for convenience or reference only and
shall not affect its meaning or interpretation.
-12-
<PAGE>13
3.7. Nouns and Pronouns. Whenever the context may
require, any pronouns used herein shall include the corresponding
masculine, feminine or neuter forms, and the singular form of
nouns and pronouns shall include the plural and vice-versa.
3.8. Expenses. Except as provided in Section 2.8
hereto, each of the parties to this Agreement shall bear its own
expenses, including, without limitation, the fees and
disbursements of its respective counsel, in connection with the
negotiation and execution of this Agreement and the consummation
of the transactions contemplated hereby.
3.9. Governing Law. This Agreement will be governed by,
and construed and enforced in accordance with, the laws of the
State of New York, U.S.A., without regard to its conflict of law
rules.
3.10. Successors and Assigns. This Agreement shall
be binding upon and shall inure to the benefit of the Company and
its successors, and the Shareholder and its successors and
assigns; provided that the rights and obligations of the
Shareholder hereunder shall inure to the benefit of and be binding
upon any transferee of the Shareholder only if such transferee (i)
is an affiliate of the Shareholder and (ii) agrees in writing to
be bound by the provisions of this Agreement.
3.11. Severability. In the event that any provision
of this Agreement becomes or is declared by a court of competent
jurisdiction to be illegal, invalid or unenforceable, the
remaining provisions hereof shall nevertheless continue in full
force and effect as though the illegal, invalid or unenforceable
provisions were not a part hereof, and the parties shall exert
their best efforts to amend this Agreement to include a provision
which is legal, valid and enforceable, or to take such other
action, which in either case carries out the original intent of
the parties.
3.12. Complete Agreement. This Agreement contains
the entire agreement among the parties with respect to the subject
matter hereof and supersedes all prior and contemporaneous
arrangements or understandings, whether written or oral, between
or among any of the parties hereto, with respect to the subject
matter hereof.
3.13. Further Assurances. Each of the parties to
this Agreement agrees to execute such other documents and take
such other action as may be reasonably necessary to implement and
carry out the intent of this agreement.
-13-
<PAGE>14
IN WITNESS WHEREOF, the parties hereto have signed this
Agreement as of the day and year first above written.
CISTRON BIOTECHNOLOGY, INC.
By: /s/BRUCE C. GALTON
------------------
Name: BRUCE C. GLATON
Title: Chairman of the Board
and Chief Executive Officer
Notice Address:
Cistron Biotechnology, Inc.
101 Bloomfield Avenue
Pine Brook, NJ 07058
Attention: Chairman
Telecopier: (973) 575-4854
with a copy to:
Seth I. Truwit, Esq.
Epstein Becker & Green, PC
250 Park Avenue
New York, NY 10177
Telephone: (212) 351-4709
Telecopier: (212) 661-0989
Pasteur Merieux Serums & Vaccins, S.A.
By: /s/DAVID J. WILLIAMS
--------------------
Name: DAVOD J. WILLIAMS
Title: President
and Chief Operating Officer
Notice Address:
with a copy to:
Pasteur Merieux Serums & Vaccins, S.A.
58, avenue Leclerc
69007 Lyon, France
Attention: Senior Vice President, Legal and
Corporate Affairs
Telecopier: 011 33 4 72 73 77 84
Pasteur Merieux Connaught - USA
-14-
<PAGE>15
Route 611
Swiftwater, PA 18370
Attention: Vice President,
Business Development
Telecopier: (717) 839-4600
and
Akin, Gump, Strauss, Hauer & Feld, LLP
590 Madison Avenue
New York, New York 10022
Attention: L. Kevin O'Mara, Jr., Esq.
Telephone: (212) 872-1021
Telecopier: (212) 872-1002
-15-
<PAGE> 1
Void after 5:00 P.M. Common Stock Warrant
New York Time to Purchase 400,000 Shares
September 3, 2002 of Common Stock of Cistron
Biotechnology, Inc.
No. 4
CISTRON BIOTECHNOLOGY, INC.
Common Stock Purchase Warrant
__________________
This Warrant and the shares of Common Stock issuable
upon exercise of this Warrant have not been registered under the
Securities Act of 1933, as amended (the "Act"), and may not be
sold or otherwise disposed of except (a) to a person who, in the
opinion of counsel reasonably acceptable to the Company, is a
person to whom the securities may be legally transferred without
registration and without delivery of a current prospectus under
the Act or (b) to a person upon delivery of a prospectus or
offering circular then meeting the requirements of the Act relating
to such securities and the offering thereof for such sale or
disposition.
__________________
-1-
<PAGE>2
This certifies that, FOR VALUE RECEIVED, ROBERT NAISMITH,
PH.D., or registered assigns (the "Holder"), is entitled to purchase, subject
to the provisions of this Warrant, from CISTRON BIOTECHNOLOGY, INC., a Delaware
corporation (the "Company"), 400,000 shares of the Company's common stock,
$.01 par value (the "Common Stock"), at a price of $.25 per share, exercisable
at any time prior to 5:00 P.M., New York Time, on September 3, 2002, at which
time this Warrant shall expire and become void. The Holder is being issued
this Warrant pursuant to an instruction letter from BlueStone Capital Partners,
L.P. ("BlueStone"), which was entitled to said Warrant pursuant to the
consulting agreement dated September 4, 1997 between the Company and Blues-
Stone, as amended, as partial consideration to BlueStone in connection with the
exeuction and delivery of agreements between the Company and PASTEUR MERIEUX
SERUMS & VACCINS, S.A., a societe anonyme organized under the Laws of France
("PMS&V") on the date hereof. This Warrant is subject to the provisions of a
letter agreement, dated October 29, 1998, between the Company and PMS&V in
which the Company granted PMS&V a priority with respect to the piggyback
registration of its shares over other security holders of the Company who have
piggyback registration rights. The number of shares of Common Stock to be
received upon exercise of this Warrant and the price to be paid for each share
of Common Stock are subject to possible adjustment from time to time as
hereinafter set forth. The shares of Common Stock or other securities or
property deliverable upon such exercise as adjusted from time to time are
hereinafter sometimes referred to as the "Warrant Shares" and the exercise
price of a share of Common Stock in effect at any time and as adjusted from
time to time is hereinafter sometimes referred to as the "Exercise Price."
Unless the context otherwise requires, the term "Warrant" as used herein
includes this Warrant and any other warrant or warrants that may be issued
pursuant to the provisions of this Warrant, whether upon transfer, assignment,
partial exercise, divisions, combinations, exchange, or otherwise, and the
term "Holder" includes any transferee or transferees or assignee or assignees
of the Holder named above, all of whom shall be subject to the provisions of
this Warrant, and, when used with reference to Warrant Shares, means the holder
or holders of such Warrant Shares.
Section 1. Exercise of Warrant.
--------------------
1.1. Method of Exercise. This Warrant may be exercised in
whole or in part, but for not less than 25,000 Warrant Shares or the balance
then exercisable, at any time by the Holder prior to 5:00 P.M., New York Time,
on September 3, 2002 by presentation and surrender hereof to the Company at
its principal office with the Subscription Form annexed hereto, duly executed
and accompanied by payment, by certified or official bank checks payable to
the order of the Company, of the Exercise Price for the total number of
Warrant Shares purchased.
1.2. Delivery of Shares. Upon proper exercise of this
Warrant, the Company promptly shall deliver certificates for the Warrant Shares
to the Holder duly legended as authorized in the Subscription Form.
-2-
<PAGE>3
1.3. Partial Exercise. If this Warrant is exercised in part
only, the Company shall, upon presentation of this Warrant upon such exercise,
execute and deliver (with the certificate for the Warrant Shares purchased) a
new Warrant evidencing the rights of the Holder hereof to purchase the balance
of the Warrant Shares purchasable hereunder upon the same terms and conditions
as herein set forth.
1.4. Fractional Shares. No fractional shares or scrip
representing fractional shares shall be issued upon exercise of this Warrant
but, in lieu thereof, the Company shall round up to the next full share.
Section 2. Exercise Price and Adjustments.
-------------------------------
2.1. Initial Exercise Price and Capital Adjustments. The
Exercise Price at which the Warrant Shares shall be purchasable shall be $.25
per share, subject to adjustment from time to time in the event of stock
dividends, stock subdivisions, stock splits, or stock combinations, as follows:
In the event the Company shall at any time after the date hereof issue shares
of its Common Stock as a stock dividend or shall subdivide or split or
combine the outstanding shares of its Common Stock, the Exercise Price shall
forthwith proportionately be decreased in the case of a stock dividend, sub-
division, or stock split or proportionately be increased in the case of
combination, to the nearest one cent to give effect to such change.
Concurrently, the number of Warrant Shares issuable upon exercise of this
Warrant shall be increased or decreased in proportion to the increase or
decrease in the number of shares of Common Stock outstanding resulting from
such change. Any such adjustment shall become effective at the close of
business on the date that the subdivision or combination shall become
effective, in the event of a subdivision or combination, or at the close of
business on the record date fixed for the determination of stockholders
entitled to receipt of the stock dividend, in the event of a stock dividend.
2.2. Reorganizations, Mergers, and Sale of Assets. In the
event of any reorganization or reclassification of the outstanding shares of
Common Stock (other than a change in par value, or from par value to no par
value, or from no par value to par value, or as a result of a subdivision or
combination) or in the case of any consolidation of the Company with, or
merger of the Company into, another corporation after which no securities of
the Company will be publicly held, or in the case of any sale, lease, or
conveyance of all, or substantially all, of the property, assets, business,
and goodwill of the Company as an entity, the Holder shall thereafter have the
right upon exercise to purchase the kind and amount of shares of stock and
other securities and property receivable upon such reorganization,
reclassification, consolidation, merger, or sale by a holder of the number of
shares of Common Stock that the Holder would have received had he exercised
this Warrant immediately prior to such reorganization, reclassification,
consolidation, merger, or sale, at a price equal to the
-3-
<PAGE>4
aggregate Exercise Price then in effect pertaining to this Warrant (the kind,
amount, and price of such stock and other securities to be subject to
adjustment as herein provided).
2.3. Liquidation and Dissolution. In the event the Company
shall, at any time prior to the expiration of this Warrant and prior to the
exercise thereof, dissolve, liquidate, or wind up its affairs, the Holder shall
be entitled, upon the exercise thereof, to receive, in lieu of the shares that
he would have been entitled to receive, the same kind and amount of assets as
would have been issued, distributed, or paid to him upon any such dissolution,
liquidation, or winding up with respect to such shares had he been the holder
of record of such shares on the record date for the determination of those
entitled to receive any such liquidating distribution. After any such
dissolution, liquidation, or winding up that shall result in any cash
distribution in excess of the Exercise Price provided for by this Warrant,
the Holder may, at his option, exercise the same without making payment of the
Exercise Price, and in such case, the Company shall upon the distribution to
the Holder consider that the Exercise Price has been paid in full to it and,
in making settlement to the Holder, shall deduct from the amount payable to
the Holder an amount equal to such Exercise Price.
2.4. Amendments Not Required to Reflect Adjustments.
Irrespective of any adjustments in the Exercise Price or the number or kind
of shares purchasable upon exercise of this Warrant, this Warrant may continue
to express the same price and number and kind of shares as originally issued
and need not be amended to reflect each such adjustment.
Section 3. Exchange, Assignment, or Loss of Warrant.
3.1. Exchange of Warrant. This Warrant is exchangeable,
without expense, at the option of the Holder, upon presentation and surrender
hereof to the Company for other Warrants of different denominations entitling
the Holder thereof to purchase in the aggregate the same number of Warrant
Shares purchasable hereunder on the same terms and conditions as herein set
forth.
3.2. Assignment of Warrant. Subject to compliance with
Section 4 hereof, this Warrant may be assigned by presentation and surrender
to the Company at its principal office or at the office of its stock transfer
agent, if any, with the Assignment Form annexed hereto duly executed
accompanied by funds sufficient to pay any transfer tax. Upon such
presentation and surrender, the Company shall, without charge, execute and
deliver a new Warrant in the name of the assignee named in the Assignment
Form and shall promptly cancel this Warrant.
3.3. Loss or Mutilation of Warrant. Upon receipt by the
Company of evidence satisfactory to it of the loss, theft, destruction, or
mutilation of this Warrant, and (in the case of loss, theft, or destruction)
or reasonably satisfactory indemnification, and upon
-4-
<PAGE>5
surrender and cancellation of this Warrant, if mutilated, the Company will
execute and deliver a new Warrant of like tenor and date and any such lost,
stolen, or destroyed Warrant shall thereupon become void. Any such new
Warrant executed and delivered shall constitute an additional contractual
obligation on the part of the Company, whether or not this Warrant so lost,
stolen, destroyed, or mutilated shall be at any time enforceable by anyone.
Section 4. Compliance with Securities Act of 1933.
---------------------------------------
4.1. Disposition of Warrant and/or Warrant Shares. This
Warrant and/or the Warrant Shares may not be sold or otherwise disposed of
except as follows:
(a) To a person who, in the opinion of counsel
reasonably satisfactory to the Company, is a person to whom this
Warrant or the Warrant Shares may legally be transferred without
registration and without the delivery of a current prospectus under
the Act with respect thereto and then only against receipt of an
agreement of such person to comply with the provisions of this
Section 4 with respect to any resale or other disposition of such
securities unless, in the opinion of counsel, such agreement is not
required; or
(b) To any person upon delivery of a prospectus or
offering circular then meeting the requirements of the Act relating to
such securities and the offering thereof for such sale or disposition.
4.2. Legending of Certificates. Each certificate for
Warrant Shares or for any other security issued or issuable upon exercise of
this Warrant shall contain a legend on the face thereof, in form and substance
satisfactory to counsel to the Company, setting forth the restrictions on
transfer thereof contained in this Section 4.
Section 5. Registration Rights.
--------------------
5.1. Demand Registration Rights. At any time subsequent to
the date hereof and prior to the Termination Date, upon the written request of
the Holders of a majority of the Warrant Shares issuable (or issued) under this
Warrant, the Company shall on one occasion promptly file (notwithstanding that
at the time of the request this Warrant shall not theretofore have been
exercised) and process to effectiveness under the Securities Act of 1933, the
requisite post-effectiveness amendments or new registration statement necessary
to permit the public offering of the Warrant Shares requested to be registered
in such written request and shall keep the final prospectus current for a
period of nine months to permit the public offering to be effected during such
period. All costs, expenses and fees of such registration shall be paid by
the Company.
-5-
<PAGE>6
5.2. "Piggyback" Registration Rights. Pursuant to a letter
agreement between BlueStone and the Company, dated October 29, 1998, Bluestone
granted PMS&V a priority with respect to piggyback registration of its shares
over other security holders of the Company who have piggyback registration
rights, including the shares issuable upon exercise of this Warrant. Subject
to the foregoing, in the event the Company at any time subsequent to the date
hereof and prior to the Termination Date contemplates the filing of a
registration statement under the Securities Act of 1933 on Form S-1, S-2 or
S-3 for the public offering of shares of its Common Stock for its own account,
the Company shall give written notice thereof to the Holder of this Warrant
(and/or the Warrant Shares issued upon exercise hereof) at least 30 days prior
to the anticipated filing date and, upon the written request of such Holder,
will, subject to the consent of the managing underwriter of such offering,
include in such registration statement, at the Company's expense, the number
of Warrant Shares requested. Nothing in this Section 5.2 shall be deemed to
create any liability on the part of the Company to the Holder if the Company,
at its sole discretion, should decide not to proceed with the processing of
such registration statement after filing and before the registration statement
shall become effective. The Company shall be under no obligation to the
Holder to keep such registration statement current after completion of the
offering by the underwriters. Any Warrant Shares not sold by the Holder
pursuant to such registration statement shall be de-registered.
5.3. Expenses. The expenses to be paid by the Company in
connection with the registration rights granted in Section 5.2 shall include,
without limitation, the fees and expenses of the Company's counsel and
accountants, the costs and expenses incident to the preparation, printing,
filing and processing to effectiveness of the registration statement, the
costs of furnishing the selling Holder of Warrant Shares with a reasonable
number of copies of the Final Prospectus, and the fees and disbursements
incurred in qualifying the Warrant Shares under applicable blue sky or
securities laws, but shall not include any underwriting discounts or
commissions, stock transfer taxes and fees and expenses of counsel for the
Holder of this Warrant and/or the Warrant Shares issuable upon exercise
hereof.
5.4. Information To Be Furnished By Holder. The Holder
shall furnish in writing to the Company all appropriate information
reasonably requested by the Company concerning such Holder in connection
with the preparation and processing of the requisite registration statement
or post-effective amendments relating to a public offering of the Warrant
Shares, including a shareholder's questionnaire, a warranty as to legal
capacity to sell and a statement as to knowledge of adverse facts relating
to the Company, and shall otherwise cooperate with the Company in connection
therewith.
5.5. Indemnification. The Company shall indemnify and
hold harmless each Holder of Warrant Shares included in any registration
statement or post-effective amendment relating to a public offering of
Warrant Shares and each underwriter,
-6-
<PAGE>7
within the meaning of the Securities Act of 1933, who may purchase Warrant
Shares from, or sell Warrant Shares on behalf of, any such Holder from and
against any and all losses, claims, damages and liabilities, joint or several,
to which any such person may become subject under the Securities Act of 1933,
or otherwise, caused by, arising out of or based upon any untrue statement or
alleged untrue statement of a material fact contained in such registration
statement or post-effective amendment or any prospectus included therein, or
caused by, arising out of or based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, and to reimburse each such Holder
and underwriter for any legal or other expenses reasonably incurred in
connection with investigating or defending any such loss, claim, damage,
liability or action, except insofar as such losses, claims, damages or
liabilities arose out of or are based upon any such untrue statement or
alleged untrue statement or omission or alleged omission based upon information
furnished in writing to the Company by such Holder or underwriter expressly
for use in such registration statement or post-effective amendment, which
indemnification shall include such person, if any, who controls any such
Holder or underwriter within the meaning of the Securities Act of 1933;
provided, however, that the Company shall not be obligated to so indemnify any
such Holder or underwriter unless such Holder or underwriter shall at the same
time reciprocally indemnify the Company, its directors, each officer signing
the related registration statement or post-effective amendment and each person,
if any, who controls the Company within the meaning of the Securities Act of
1933 from and against any and all losses, claims, damages and liabilities,
joint and several, to which the Company or any such person may become subject
under the Securities Act of 1933, or otherwise, caused by, arising out of or
based upon any true statement or alleged untrue statement of a material fact
contained in such registration statement or post-effective amendment or any
prospectus included therein, or caused by, arising out of or based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
to reimburse the Company and each such person for any legal or other expenses
reasonably incurred in connection with investigating or defending any such
loss, claim, damage, liability or action, but only to the extent that such
untrue statement or alleged untrue statement, omission or alleged omission is
caused by, arises out of or is based upon information furnished in writing to
the Company by such Holder or underwriter expressly for use in such
registration statement or post-effective amendment.
Section 6. Company Covenants.
------------------
6.1. Reservation and Issuance of Warrant Shares. The
Company hereby undertakes until expiration of this Warrant to reserve for
issuance and/or delivery upon exercise of this Warrant, such number of shares
of its Common Stock as shall be required for issuance and/or delivery upon
exercise hereon in full and agrees that all Warrant Shares so issued and/or
delivered will be validly issued, fully paid, and non-assessable and further
agrees to pay all taxes and charges that may be imposed upon such issuance
and/or delivery.
-7-
<PAGE>8
6.2. Officer's Certificate. In the event the Exercise Price
shall be adjusted as required by Section 2 hereof, the Company shall mail to
the Holder an officer's certificate setting forth the adjustments so required
and including, in reasonable detail, the method of calculating the adjustments
and the transaction requiring the adjustment.
Section 7. Miscellaneous.
--------------
7.1. Status of Holder. The Holder shall not be entitled to
vote or receive dividends and shall not otherwise be deemed a shareholder of
the Company.
7.2. Notices. All notices required hereunder shall be sent
by first-class mail, postage prepaid, and shall be addressed, if to the Holder,
to the last known address furnished to the Company and if to the Company, to:
Cistron Biotechnology, Inc., 10 Bloomfield Avenue, Pine Brook, New Jersey
07058, Attn: Bruce Galton, Chairman and Chief Executive Officer, unless
another address is designated in writing by the Holder of the Company.
7.3. Binding Effect. This Warrant shall be binding upon
the Company, its successors, and/or assigns and upon the Holder.
7.4. Governing Law. The validity, interpretation and
performance of this Warrant shall be governed by the laws of the State of
New York.
-8-
<PAGE>9
IN WITNESS WHEREOF, this Warrant has been duly executed by
the Company under its corporate seal as of the 30th day of October 1998.
CISTRON BIOTECHNOLOGY, INC.
By:/s/BRUCE C. GALTON
------------------
Name: BRUCE C. GALTON
Title: Chairman of the Board and
Chief Executive Officer
ATTEST:
/s/SEITH I. TRUWIT, ESQ.
- ------------------------
Name: SETH IT TRUWIT, ESQ.
-9-
<PAGE>10
FORM OF ASSIGNMENT
(To be signed only upon such assignment)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns
and transfers unto
the right represented by the within Warrant to purchase, from CISTRON
BIOTECHNOLOGY, INC. (the "Company"), shares of the Common Stock of the
Company, to which the within Warrant relates, and appoints
attorney to transfer said right, with full power of substitution in the
premises.
Dated:
______________________________
(Signature must conform in all
respects to name of holder as
specified on the face of the
Warrant)
ATTEST:
_____________________________
Name:
-10-
<PAGE>11
FORM OF SUBSCRIPTION
(To be signed only upon exercise of Warrant)
To: CISTRON BIOTECHNOLOGY, INC.
The undersigned, the holder of the within Warrant, hereby
irrevocably elects to exercise the purchase rights represented by said
Warrant for, and to purchase thereunder, shares of Common Stock of the
Company, and herewith makes payment of $ therefor, consents to the
affixation of a legend on the certificate for such shares to the effect
that such shares have not been registered under the Securities Act of 1933,
as amended (the "Act"), and may be transferred only in compliance with the
Act, and requests that such certificate(s) be issued in the name of and be
delivered to
whose address is
and if such shares shall not be all of the shares purchased hereunder, that
a new Warrant of like tenor for the balance of shares purchasable hereunder
be delivered to the undersigned.
Dated: _________________________________
(Signature must conform in all
respects to name of holder as
specified on the face of the
Warrant)
<PAGE> 1
----------------------------------
COLLABORATION and OPTION AGREEMENT
IL-1 BETA
----------------------------------
This Agreement is entered this 30th day of October, 1998 (the "Effective
Date") into by and between :
CISTRON BIOTECHNOLOGY, INC., a corporation organized and existing
under the laws of the State of Delaware, having its principal place
of business at 10, Bloomfield Avenue, Pine Brook, New Jersey 07058,
USA
(hereinafter referred to as "CISTRON")
and
PASTEUR MERIEUX Serums & Vaccins - a Pasteur Merieux Connaught
Company, a societe anonyme organized and existing under the laws of
the French Republic, having its registered head office at 58, avenue
Leclerc, 69007, Lyon, France,
(hereinafter referred to as "PMC")
WITNESSETH
----------
WHEREAS, CISTRON has developed intellectual property, including inventions
which are the subject matter of patents and patent applications and secret
and substantial know-how, relating to a cytokine called Interleukin 1 beta
("IL-1b" or the "FACTOR") used as an immuno-adjuvant ;
WHEREAS, PMC wishes to obtain from CISTRON an option for a license to use
CISTRON' inventions relating to the FACTOR for use as an adjuvant in human
vaccines, and CISTRON is shalling to grant such license option to PMC,
subject to the terms of and conditioned upon this Agreement ;
WHEREAS, CISTRON and PMC also want to collaborate in order to identify and
discover vaccine antigens suitable for combination with the FACTOR as an
adjuvant, to be used as either mucosal or parenteral preparations for the
prevention or treatment and/or cure of infectious diseases and cancers,
which shall be used by PMC to evaluate potential vaccine products for use
in humans, thus expanding the intellectual property portfolio with respect
to the use of the FACTOR as an immuno-adjuvant.
NOW, THEREFORE, in consideration of the respective representations and
covenants of each of the Parties as set forth below, CISTRON and PMC,
intending to be legally bound, agree as
follows :
ARTICLE I - DEFINITIONS AND INTERPRETATION
- ------------------------------------------
1.1. Definitions : For the purposes of this Agreement the following words
and phrases shall have the following meanings :
-1-
<PAGE>2
(a) "Affiliate" means, with respect to any Person, (i) any other
Person of which the securities or other ownership interests
representing fifty per cent (50 %) or more of the equity or fifty
per cent (50 %) or more of the ordinary voting power or fifty per
cent (50 %) or more of the general partnership interest are, at
the time such determination is being made, owned, Controlled or
held, directly or indirectly, by such Person (a "Subsidiary"), or
(ii) any other Person which, at the time such determination is
being made, is Controlling or under common Control with, such
Person. As used herein, the term "Control", whether used as a
noun or verb, refers to the possession, directly or indirectly,
of the power to direct, or cause the direction of, the management
or policies of a Person, whether through the ownership of voting
securities, by contract or otherwise.
(b) "Agreement" means this agreement, all amendments and supplements
to this Agreement and all schedules to this Agreement, including
the following :
Schedule A - OPTIONED PATENTS
Exhibit 1 - RESEARCH PROGRAM
Exhibit 2 - LICENSE AGREEMENT
(c) "Biological Materials" shall mean any biological materials
including but not limited to structural genes, genetic sequences,
promoters, enhancers, probes, linkage probes, vectors, hosts,
plasmids, peptides, polypeptides, transformed cell lines,
transgenic animals, proteins, biological modifiers, antigens,
reagents, hybridomas, antibodies, toxins, lectins, enzymes,
lipids, hormones, viruses, cells or parts of cells, cell lines,
fragments of any of the foregoing and any other biologically
active material or compound, whether or not occurring naturally
or howsoever derived, modified, conjugated, cross-linked,
immobilized, reduced, purified or produces, whether by
recombinant DNA techniques and/or otherwise.
(d) "Calendar Quarter" means any of the three-month periods beginning
January 1, April 1, July 1 and October 1 in any year.
(e) "CISTRON Improvement" means Improvements which are conceived
during the term of this Agreement solely or jointly by employees
or contractors acting on behalf of CISTRON or its Affiliates, to
the extent that CISTRON has now or hereafter shall have the right
to grant licenses, immunities or other rights thereon.
(f) "CISTRON Technology" means the OPTIONED PATENTS, the OPTIONED
KNOW-HOW and the CISTRON Improvements, and shall include
CISTRON's share in any JOINT INVENTIONS and Joint Patent Rights.
(g) "Confidential Information" has the meaning ascribed to it in
Section 4.1. of this Agreement.
(h) "Event of Force Majeure" has the meaning ascribed to it in
Article 4.4. of this Agreement.
(i) "FACTOR" means the cytokine (a protein) called Interleukin 1
beta, or IL-1b, as described in the OPTIONED PATENTS, and any
derivatives thereof, and is intended to refer to both the protein
itself and the gene encoding thereto.
(j) "Field of Preventative Vaccines" means the field comprised of
bio-pharmaceutical products for the prevention through active
immunization against infectious diseases and/or cancers in
humans.
(k) "Field of Therapeutic Vaccines" means the field comprised of bio-
pharmaceutical products for the immunotherapy through active
immunization against infectious diseases and/or cancers in
humans.
-2-
<PAGE>3
(l) "Field of Use" means either the Field of the Therapeutic Vaccines
or the Field of the Preventative Vacines or both.
(m) "Improvements" means all patentable and non-patentable
inventions, discoveries, technology and information of any type
whatsoever, including without limitation Biological Materials,
methods, processes, technical information, knowledge, experience
and know-how which utilize, incorporate, derive from, or are
based on CISTRON Technology or could not be conceived, developed
or reduced to practice but for the use of the CISTRON Technology.
(n) "JOINT INVENTIONS" and "Joint Patent Rights" have the meaning
ascribed to it in Section 3.7 hereof.
(o) "License Issue Fee" is defined in Section 2.2.3 hereof.
(p) "OPTIONED KNOW-HOW" means any and all technical information,
discoveries, improvements, processes, formulae, data,
engineering, technical and shop drawings, inventions, Biological
Materials, shop-rights, know-how and trade secrets which is
useful or necessary to make, have made, use or sell the FACTOR
and/or PRODUCTS or to practice under the OPTIONED PATENTS in the
Field of Use, which have been, or hereafter are, either developed
reduced to practice by CISTRON or its Affiliates, or the rights
to which in the Field of Use have been acquired by CISTRON or its
Affiliates and to which CISTRON or its Affiliates have a
transferable interest.
(q) "OPTIONED PATENTS" means :
(i) any existing patents and patent applications listed in
Schedule A to this Agreement ;
(ii) any future patents issued from any patent applications
referred to in Paragraph 1.(p).(i) above and any future
patents issued from a patent application filed in any country
in the Territory which corresponds to a patent or patent
application identified in Paragraph 1.(p).(i) above ;
(iii) any reissues, confirmations, renewals, extensions,
counterparts, divisions, continuations, continuations-in-
part, supplemental protection certificates or utility models
issued, assigned or licensed to CISTRON or its Affiliates of
or relating to the patents or patent applications identified
in Paragraph 1.(p).(i) and (ii) above
(iv) any future patents and patent applications covering CISTRON
Improvements, solely or jointly owned by CISTRON or its
Affiliates, or licensed by CISTRON or its Affiliates with the
right to sublicense any JOINT INVENTIONS or Joint Patent
Rights.
(r) "Notice of Dispute" has the meaning ascribed to it in Section
4.7.4.(a) of this Agreement.
(s) "Option" and "Option Period" are defined in Article 2 hereof.
(t) "Parties" means PMC and CISTRON, and "Party" means any one of
them.
(u) "Person" means an individual, corporation, partnership, trust,
business trust, association, joint stock company, pool,
syndicate, sole proprietorship, unincorporated organization,
governmental authority or any other form of entity not
specifically listed herein.
(v) "PMC Improvement" means Improvements which are conceived during
the term of this Agreement solely or jointly by employees or
contractors acting on behalf of PMC
-3-
<PAGE>4
or its Affiliates, to the extent that PMC has now or hereafter
shall have the right to grant licenses, immunities or other
rights thereon.
(w) "PRODUCTS" means any and all vaccines or other bio-pharmaceutical
products intended for use in the Field of Preventative Vaccines
or the Field of Therapeutic Vaccines which (i) incorporate the
FACTOR as an adjuvant or (ii) more generally utilize any or are
based on any CISTRON Technology.
(x) "Selected Field of Use" is defined in Section 2.2.3 hereof.
(y) "Third-Party" means any Person other than PMC, CISTRON and their
respective Affiliates.
(z) "Valid Patent Claim" means a claim of an issued and unexpired
patent or patent application included in OPTIONED PATENTS which
has not been held permanently revoked, unenforceable or invalid
by a decision of a court or other governmental agency of
competent jurisdiction, unappealable or unappealed within the
time allowed for appeal, and which has not been admitted to be
invalid or unenforceable through reissue or disclaimer or
otherwise. If there should be two or more decisions within the
same country which are conflicting with respect to the invalidity
of the same claim, the decision of the highest tribunal shall
thereafter control. However, should the tribunals be of equal
authority, then the decision or decisions holding the claim valid
shall prevail where the conflicting decisions are equal in number
and the majority of decisions shall prevail where the conflicting
decisions are not equal in number.
1.2. Certain Rules of Interpretation in this Agreement and the Schedules:
(a) An accounting term not otherwise defined has the meaning assigned
to it by, and every accounting matter shall be determined in
accordance with, generally accepted accounting principles in the
United States of America;
(b) Unless otherwise specified, all references to monetary amounts
are to United States dollars currency (US$);
(c) The descriptive headings of Articles and Sections are inserted
solely for convenience of reference and are not intended as
complete or accurate descriptions of the content of such Articles
or Sections ;
(d) The use of words in the singular or plural, or with a particular
gender, shall not limit the scope or exclude the application of
any provision of this Agreement to such Person or Persons or
circumstances as the context otherwise permits ;
(e) Whenever a provision of this Agreement requires an approval or
consent by a Party to this Agreement and notification of such
approval or consent is not delivered within the applicable time
limit, then, unless otherwise specified, the Party whose approval
or consent is required shall be conclusively deemed to have
withheld its approval or consent ;
(f) Unless otherwise specified, time periods within or following
which any payment is to be made or act is to be done shall be
calculated by excluding the day on which the period commences and
including the day on which the period ends and by extending the
period to the next business day following if the last day of the
period is not a business day in the jurisdiction of the Party to
make such payment or do such act ; and
(g) Whenever any payment is to be made or action to be taken under
this Agreement is required to be made or taken on a day other than
a business day, such payment shall be made or action taken on the
next business day following such day in the jurisdiction of the
Party to make such payment or do such act.
-4-
<PAGE>5
ARTICLE 2 - OPTION
- ------------------
2.1. Research License to PMC
-----------------------
Subject to the provisions of this Agreement, CISTRON hereby grants to
PMC and its Affiliates, and PMC hereby accepts, for the term provided
for in section 2.2.2. hereof (the "Option Period"), the right to use
CISTRON Technology solely for the purpose of conducting research &
development activities (including pre-clinical and clinical studies)
in the Field of Use relating to the FACTOR and PRODUCTS and evaluating
PMC's interest in exercising the Option. PMC shall communicate to
CISTRON an outline of the research work that PMC intends to conduct
during the Option Period and shall keep CISTRON informed of its
progress throughout such term in accordance with Section 3.2 hereof.
CISTRON agrees that promptly following the execution of this Agreement,
it shall make available to PMC and/or a designated PMC Affiliate such
OPTIONED KNOW-HOW (including, but not limited to, non-published patent
applications) and such quantities of research grade FACTOR as
reasonably necessary to enable PMC to conduct its own research &
development activities during the Option Period and to evaluate its
interest in exercising the Option; provided, however, that CISTRON
shall not be obligated to provide PMC with more than One Hundred
milligrams (100 mg) of research grade FACTOR per Calendar Quarter.
PMC hereby covenants to CISTRON that PMC shall not use research grade
FACTOR supplied to it by CISTRON hereunder for the purpose of clinical
trials or any similar experiments in humans. PMC shall be responsible
for manufacturing or having manufactured clinical grade FACTOR, provided
that PMC shall consult with CISTRON in this respect and shall exert
commercially reasonable efforts in organizing such manufacturing so
that there is sufficient supply of FACTOR for use by CISTRON for the
needs of the Research Program and other CISTRON needs in addition to
PMC's needs. CISTRON shall indicate to PMC its best estimates of the
quantities of FACTOR that it may need during the Option Period.
Certain research & development activities to be performed during the
Option Period shall be conducted on a collaborative basis by PMC and
CISTRON in accordance with and subject to the terms & conditions set
forth in Article 3.
2.2. Option
------
2.2.1. Grant of the Option.
--------------------
Subject to the provisions of this Agreement, CISTRON hereby grants to
PMC, and PMC hereby accepts, an exclusive option (the "Option") to
enter into a license under terms and conditions set forth in the
License Agreement herewith attached as Exhibit 2. Without limiting the
generality of the foregoing, CISTRON covenants that during the Option
Period, neither CISTRON nor its Affiliates shall grant to any Third-
Party any right, license or privilege to use CISTRON Technology in the
Field of Use. PMC may exercise the Option at any time on or before the
expiration of the Option Period in accordance with Section 2.2.3
hereinafter.
2.2.2. Option Period.
--------------
The Option Period shall commence on the Effective Date and shall
continue for a period of three (3) years thereafter, unless otherwise
terminates in accordance with its terms.
-5-
<PAGE>6
2.2.3. Exercise of the Option.
-----------------------
PMC may exercise the Option at any time during the Option Period but
in any case no later than the date upon which the Option Period shall
expire by (i) providing written notice to CISTRON not less than thirty
(30) days prior to the expiration of the Option Period specifying the
Selected Field(s) of Use and (ii) by paying to CISTRON a non-
refundable, non-creditable license issue fee of Three Million and Five
Hundred Thousand US Dollars (3,500,000.- US$) per Selected Field of
Use (the "License Issue Fee"), provided, however, that the License
Issue Fee with respect to the Field of Preventative Vaccines shall be
paid at the latest by October 31, 2001 if such field is selected by
PMC, and the License Issue Fee with respect to the Field of
Therapeutic Vaccines shall be paid not later than January 30, 2002,
if such field is selected by PMC. For the purpose of this Agreement,
"Selected Field of Use" shall mean the field in which PMC may choose
to exercise its option right and therefore obtain the LICENSE, which
may be comprised of the Field of the Preventative Vaccines, or the
Field of the Therapeutic Vaccines, or both.
2.2.4. Effect of Failure to Exercise Option.
-------------------------------------
Without prejudice to the last paragraph of this Section 2.2.4., in the
event PMC fails to properly and timely exercise the Option in the
Field of Use, PMC shall be deemed to have forfeited all its rights
hereunder, and it shall promptly return to CISTRON all CISTRON
Technology and all embodiments of such technology.
Without prejudice to the last paragraph of this Section 2.2.4., in the
event PMC fails to properly and timely exercise the Option in either
the Field of Preventative Vaccines or the Field of Therapeutic
Vaccines, then PMC shall be deemed to have forfeited its rights
hereunder to the extent such rights pertain to the non-selected field
and it shall promptly return to CISTRON all CISTRON Technology and all
embodiments of such technology.
In both cases, PMC and CISTRON shall remain joint owners of JOINT
INVENTIONS under the terms and conditions of Section 3.7 hereof.
2.2.5. Actions to be Taken upon Option Exercise.
-----------------------------------------
In the event that PMC exercises the Option in a Field of Use, it shall
send to CISTRON along with the notice provided for in Section 2.2.3.
hereof, two original counterparts of the License Agreement herewith
attached as Exhibit 2, ready for execution, adjusted to reflect the
Selected Field of Use if required. PMC shall also join a term sheet
describing proposed terms and conditions for the continued
commercialization of JOINT INVENTIONS by CISTRON outside the Selected
Field of Use.
ARTICLE 3 - RESEARCH COLLABORATION.
- -----------------------------------
3.1. Object.
-------
Pursuant to a mutually agreed upon research program attached hereto as
Exhibit 1 (the "Research Program"), CISTRON agrees to conduct
research works described therein and PMC agrees to support and fund
such Research Program in accordance with the terms and conditions set
forth here below.
3.2. Oversight of the Research Program.
----------------------------------
The Parties shall meet as they deem fit and in any event not less
than once a year during the term of the Research Program, at such
dates and times as agreed to by the Parties. Face to face meetings
shall normally take place at CISTRON's premises or such other place
as may be mutually agreed upon. Meetings may be held by
telecommunication means. At such meetings, CISTRON shall present the
status of performance by CISTRON under the Research Program and
purposes and conditions of any collaboration with a Third-Party that
-6-
<PAGE>7
CISTRON may intend to enter into in connection with the Research
Program and the Parties shall jointly evaluate the results thereof
and set priorities therefor in accordance with CISTRON's
recommendations. PMC shall have the right to comment on CISTRON's
recommendations, and CISTRON shall give due consideration to such
PMC's comments, but CISTRON shall have the final decision on any
matters relating to the performance of the Research Program.
Similarly, during the above-mentioned meetings, PMC shall present the
status of performance by PMC under its own research program, and the
Parties shall jointly evaluate the results thereof and set priorities
therefor in accordance with PMC's recommendations. CISTRON shall have
the right to comment on PMC's recommendations, and PMC shall give due
consideration to such CISTRON's comments, but PMC shall have the
final decision on any matters relating to the performance of PMC
research in the Field of Use. The Parties shall prepare written
minutes of each meeting and a written record of all decisions whether
made at a formal meeting or not. Such minutes shall incorporate semi-
annual research reports prepared by CISTRON and semi-annual reports
prepared by PMC.
3.3. Conduct of Research Program.
----------------------------
3.3.1. Good Laboratory Practice. The Research Program shall be conducted
by CISTRON at CISTRON's laboratories and/or at Third-Party research
laboratories contracted by CISTRON. CISTRON shall use all reasonable
efforts to complete research works in accordance with the said
Program. Any research work performed by CISTRON pursuant hereto shall
be in compliance with current Good Laboratory Practices (cGLP) as
applicable in the United States of America.
3.3.2. Laboratory Notebooks. CISTRON shall cause its employees, agents
and subcontractors to maintain laboratory notebooks. Such laboratory
notebooks shall set forth such work in detail, including a clear
description of the purposes for which the work has been undertaken
and the results expected ; sufficient details, diagrams, plans,
sketches and identification of materials (including Biological
Materials) used, formulations and operating conditions under which
the work was conducted as may be necessary to understand and
reproduce the work conducted ; identification of any intermediate or
final results achieved ; and if such laboratory notebooks contain any
interpretations of data, they shall also describe the rough data upon
which such interpretations have been based. CISTRON shall further
cause its employees, agents and subcontractors maintaining such
laboratory notebooks to have their work corroborated periodically,
which corroboration shall include at least personal witnessing of the
notebooks indicating that the witness has read and understood the
material on the page witnessed on the date that he or she signed it.
3.4. Financial conditions.
---------------------
3.4.1. Support commitment. In consideration of the work performed by
CISTRON pursuant to and in accordance with the Research Program, PMC
shall pay to CISTRON during the Research Program Three Hundred
Thousand United States dollars (300,000.- US$) per year for three
(3) years. Such payments shall be non-refundable, guaranteed and not
contingent upon any research milestones.
3.4.2. Payments Schedule. Support payments shall be made by PMC to
CISTRON in twelve (12) quarterly payments of Seventy Five Thousand
United States dollars (75,000- US$) in advance with the first
payment to be made within fifteen (15) days of the Effective Date of
this Agreement, and the other payments payable on the first day of
each of the subsequent Calendar Quarters.
-7-
<PAGE>8
3.4.3. No Conflict With Research Program. CISTRON agrees that the funds
provided by PMC hereunder shall be applied to the Research Program
and to Field of Use-related research and may not, without PMC prior
written approval, be used in support of any r research at CISTRON
which would not be closely related to the Field of Use, the FACTOR or
PRODUCTS.
3.4.4. Title to Equipment. CISTRON shall retain title to any equipment
purchased with funds provided by PMC under this Agreement, if such
purchase is mutually agreed upon to support the Research Program.
3.5. Term of the Research Program.
The term of the Research Program shall be three (3) years as from the
Effective Date.
3.6. Confidentiality.
In order to facilitate the Research Program, either Party may disclose
confidential or proprietary information owned or controlled by it to
the other. It is hereby understood and agreed that such information
shall be deemed "Confidential Information" as defined in Article 4.1.
and treated as such.
3.7. JOINT INVENTIONS.
-----------------
3.7.1 Inventions Arising During Option Period. All right, title and
interest in and to any technology or invention, whether or not
patentable, and any patent applications and patents based thereof,
made or conceived by or on behalf of either Party during the Option
Period which are (i) CISTRON Improvements, (ii) PMC Improvements or
(iii) inventions made jointly by CISTRON employees and PMC employees
in the course of the Research Program, shall be deemed to be joint
inventions ("Joint Inventions") and shall be jointly owned by the
Parties on an equal basis. In the event that CISTRON wishes to
commercialize any Joint Invention which does not infringe on any
CISTRON Technology (i) outside the Fields of Use at any time, or
(ii) within either Field of Use following the expiration of the
Option Period (assuming PMC has declined to exercise the PMC Option
in respect of such Field of Use), CISTRON agrees to pay a royalty to
PMC, on the terms provided below. In the event that PMC wishes to
commercialize any Joint Invention (i) outside the Fields of Use at
any time, or (ii) within either Field of Use following the
expiration of the Option Period (assuming PMC has declined to
exercise the PMC Option in respect of such Field of Use), PMC agrees
to pay a royalty to CISTRON, on the terms provided below. In the
event that PMC wishes to commercialize any Joint Invention which
does infringe on any CISTRON Technology, it shall only do so under a
license from CISTRON.
3.7.2. Inventions Arising Subsequent to Option Period. Each of the
Parties hereto shall have the rights set forth below in respect of
any and all inventions, whether or not patentable, made by either
Party following expiration of the Option Period: (a) in the event
that PMC has made an invention, PMC shall own all right, title and
interest in and to such invention and shall be free to use such
invention as it sees fit, provided it does not infringe upon any
CISTRON Technology under which PMC does not have a license (provided
this shall not limit PMC's obligations under that certain license
agreement between the Parties), and (b) in the event that CISTRON
has made an invention which is derived from or based upon any Joint
Invention, CISTRON will own all right, title and interest in and to
such invention, and (i) if PMC has not exercised the PMC Option,
CISTRON shall be free to use such invention as it sees fit, and
shall pay a royalty to PMC on sales of products using such invention
on the terms provided below, and (ii) if PMC has exercised the PMC
Option in respect of either or both Fields of Use, the rights to
such invention shall be automatically included in the
-8-
<PAGE>9
LICENSE AGREEMENT and licensed thereunder to PMC in the applicable
Field(s) of Use, and CISTRON shall be free to use such invention as
it sees fit outside the applicable Field(s) of Use, and shall pay a
royalty to PMC on sales of products using such invention, on the terms
provided below.
3.7.3 Determination of Royalties. In determining the royalty payable
to the other Party, in the event a royalty is to be paid pursuant to
subparagraph 3.7.1 or 3.7.2 hereof, the Parties agree to negotiate
in good faith a reasonable royalty which reflects the value of the
Joint Invention in relation to all other technology and proprietary
rights included in such product and, in the case of subparagraph
3.7.2 hereof only, the importance of the Joint Invention to the
discovery of the subsequent invention by a Party.
3.7.4 As to any JOINT INVENTIONS made by the Parties during the term of
this Agreement, CISTRON shall have the first right to file patent
applications with respect to such inventions in the name of both
Parties. CISTRON may elect not to file and if it does so, PMC
shall have the right to file the patent application. Any patents
and patent applications covering a JOINT INVENTION are referred
to herein as "Joint Patent Rights". In any case, the filing Party
shall give the non-filing Party an opportunity to review the text
of the application before filing, shall consult with the non-
filing Party with respect thereto and shall supply the non-filing
Party with a copy of the applications as filed, together with
notice of its filing date and serial number and fifty percent
(50%) of the out-of-pocket costs and expenses of the filing Party
shall be reimbursed by the other Party. Both Parties shall keep
the other advised of the status of actual and prospective patent
application filings and upon request, provide advanced copies of
any documents related to such filings and thereafter to the
prosecution and maintenance of all patent applications and
patents pertaining to Joint Patent Rights.
3.8 Commercialization of Inventions.
--------------------------------
CISTRON and PMC each hereby represents that all employees and other
Persons acting on its behalf in performing its obligations under
this Agreement shall be obligated under a binding written
agreement to assign to it, or as it shall direct, all
Improvements conceived or reduced to practice by such employees
or other Persons during the term of this Agreement.
3.8.1 Patent Prosecution and Maintenance.
-----------------------------------
OPTIONED PATENTS. CISTRON shall be responsible for and shall control
the preparation, filing, prosecution, grant and maintenance of all
OPTIONED PATENTS. CISTRON shall prepare, file, prosecute and maintain
such OPTIONED PATENTS in good faith consistent with its customary
patent policy and its reasonable business judgement, and shall
consider in good faith the interests of PMC in so doing.
Costs. With respect to all filings hereunder, the filing Party shall
be responsible for payment of all costs and expenses related to such
filings, prosecution and maintenance, unless relieved of same
pursuant to Section 3.8.2 hereinafter, and except for jointly owned
patents, for which fifty percent (50%) of all such costs and expenses
shall be reimbursed to the filing Party by the other Party.
3.8.2 Option to Prosecute and Maintain Patents.
-----------------------------------------
CISTRON shall give notice to PMC of any intention to cease prosecution
and/or maintenance, or not to proceed with an extension, of OPTIONED
PATENTS and, in such case, shall permit PMC, at PMC's sole
discretion, to continue prosecution or maintenance or proceed with
the extension at its own expenses. If PMC elects to continue
prosecution or maintenance or to proceed with the extension, CISTRON
shall execute such documents and perform such acts at PMC's expense
as may be reasonably necessary to effect an
-9-
<PAGE>10
assignment of such OPTIONED PATENTS to PMC in a timely manner, and
more generally to permit PMC to continue such prosecution and
maintenance or to proceed with the extension. Any patents and patent
applications so assigned shall not be considered as OPTIONED PATENTS
as of the date of such assignment. No royalties shall be payable by
PMC on sales of PRODUCTS covered only by a Valid Patent Claim of a
OPTIONED PATENT which has been assigned to PMC pursuant to this
Section 3.8.
3.8.3 Interference, Opposition, Reexamination and Reissue.
----------------------------------------------------
(i) The Parties shall use their respective best efforts to within
ten (10) days of learning of any interference, opposition,
reexamination or reissue event, inform the other Party of any
request for, or filing or declaration thereof relating to
OPTIONED PATENTS. The Parties shall thereafter consult and
cooperate fully to determine the course of action with respect
to any such proceeding. Both Parties shall have the right to
review and comment on any submission to be made in connection
with any such proceeding.
(ii) CISTRON shall not institute any reexamination or reissue
proceeding relating to OPTIONED PATENTS without having first
consulted PMC.
(iii) In connection with any interference, opposition, reissue or
reexamination proceeding relating to OPTIONED PATENTS, the
Parties shall cooperate fully and shall provide each other
with any information or assistance that either Party may
reasonably request. CISTRON shall keep PMC informed of
developments in any such action or proceeding, including,
to the extent permissible, the status of any settlement
negotiations and the terms of any offer related thereto.
(iv) CISTRON shall bear the expense of any interference, opposition,
reexamination or reissue proceeding relating to OPTIONED
PATENTS.
3.8.4 Enforcement and Defense.
------------------------
(i) Each Party shall give the other notice of either (a) any
infringement of OPTIONED PATENTS, or (b) any misappropriation
or misuse of OPTIONED KNOW-HOW that has come to its attention.
The Parties shall thereafter consult and cooperate fully to
determine a course of action, including but not limited to the
commencement of legal action by either or both Parties to
terminate any infringement of OPTIONED PATENTS or any
misappropriation or misuse of OPTIONED KNOW-HOW.
(ii) In the event that OPTIONED PATENTS are infringed by any Third-
Party with respect to a PRODUCT in the Field of Use, CISTRON,
upon notice to PMC, shall have the first right, but not the
obligation, to institute and prosecute any action or proceeding
under OPTIONED PATENTS with respect to such infringement, by
counsel of its choice, or to control the defense of any
declaratory judgment action arising from such infringement or
from the misappropriation or misuse of OPTIONED KNOW-HOW, at its
own expense and in the name of both Parties. CISTRON shall not
settle, compromise or take any action in such litigation which
diminish, limit or inhibit the scope, validity or enforceability
of OPTIONED PATENTS without the express permission of PMC.
CISTRON shall keep PMC advised of the progress of such
proceedings.
(iii) In the event that a Third-Party is infringing any OPTIONED
PATENTS with respect to a PRODUCT in the Field of Use and CISTRON
does not elect to institute an action, PMC, upon notice to
CISTRON, shall have the right, but not the obligation, to
institute and prosecute any action or proceeding under OPTIONED
PATENTS with respect to such infringement, by counsel of its
choice, or to control the defense of any declaratory judgment
action arising from such infringement or from the
misappropriation or misuse of OPTIONED KNOW-HOW, at its own
expense and in the name of both Parties. PMC shall not settle,
compromise or take any action in such litigation which diminish,
limit or
-10-
<PAGE>11
inhibit the scope, validity or enforceability of OPTIONED
PATENTS without the prior approval of CISTRON, which
shall not be unreasonably withheld.
(iv) With respect to any action to terminate any infringement of
OPTIONED PATENTS or any misappropriation or misuse of OPTIONED
KNOW-HOW, the Parties shall cooperate fully and shall provide
each other with any information and assistance that either Party
may reasonably request. In particular, either Party shall execute
such documents necessary for the other Party to initiate and
prosecute the action or proceeding and cause its Affiliates and
Sublicensees to execute all such documents, if required. In the
event that either Party is unable to initiate or prosecute an
action solely in its own name, the other Party shall then join
such action voluntarily. Each Party shall keep the other
informed of the development of any action or proceeding
including, to the extent permissible by law, the status of any
settlement negotiations and the terms of any offer related
thereto.
(v) Any recovery obtained by either or both Parties in connection
with or as a result of any action or proceeding contemplated by
this Section 3.8, whether by settlement or otherwise, shall be
allocated in order as follows:
(a) The Party which initiated and prosecuted the action shall
recoup all of its costs and expenses incurred in connection
with the action (provided that if PMC was the initiating
Party and that the action proceeds were not sufficient for
PMC to recoup all its costs and expenses, then PMC shall be
allowed to deduct the balance of its unrecovered costs and
expenses from royalties payable to CISTRON under Article 3
hereof) ;
(b) The other Party shall then, to the extent possible, recover
its costs and expenses incurred in connection with the
action; and
(c) The amounts of any recovery remaining shall then be
allocated between the Parties with PMC receiving all amounts
in respect of damages in the Field of Use and CISTRON
receiving all amounts in respect of damages out of the Field
of Use, except that any amounts recovered in connection with
infringement actions relating to jointly-owned patents shall
be equally shared between the Parties.
(vi) CISTRON shall inform PMC of any certification regarding any
OPTIONED PATENTS it has received pursuant to 21 United States
Code 355(b)(2)(A)(iv) or (j)(2)(A)(vii)(IV), or any similar
provision in other countries, and shall provide PMC with a copy
of such certification within five (5) days of receipt. Both
Parties rights with respect to the initiation and prosecution of
any legal action as a result of such certification or any
recovery obtained as a result of such legal action shall be as
defined in paragraphs (a) to (c) of this Section 3.8.4(v).
3.8.5 Notice of Patent Events.
------------------------
CISTRON shall promptly give notice to the other Party of the grant,
lapse, revocation, surrender or invalidation of any OPTIONED PATENTS.
3.8.6 Patent Term Restoration.
------------------------
CISTRON shall notify PMC of (a) the issuance of each U.S. patent
included within the OPTIONED PATENTS, giving the date of issue and
patent number for each such patent, and (b) each notice pertaining to
any patent included within the OPTIONED PATENTS which it receives as
patent owner pursuant to the United Sates Drug Price Competition and
Patent Term Restoration Act of 1984 (hereinafter called the "Act"),
including notices pursuant
-11-
<PAGE>12
to 101 and 103 of the Act from Persons who have filed a biological
license application ("BLA") or an abbreviated new drug application
("ANDA"), whichever is applicable. Such notices shall be given
promptly, but in any event within five (5) calendar days of each such
patent's date of issue or receipt of each such notice pursuant to the
A
ct, whichever is applicable. CISTRON shall notify PMC of each filing
for patent term restoration under the Act, any allegations of failure
to show due diligence and all awards of patent term restoration
(extensions) with respect to the OPTIONED PATENTS.
Likewise, CISTRON or PMC, as the case may be, shall inform the other
Party of patent extensions and periods of data exclusivity in the rest
of the world regarding any PRODUCTS and more generally the Parties
shall diligently cooperate with respect to any procedures for patent
and period of data exclusivity extensions, such as but not limited to
Supplementary Protection Certificates, the above-mentioned Patent
Term Restoration and corresponding GATT regulations.
ARTICLE 4 - GENERAL PROVISIONS
- ------------------------------
4.1. Confidentiality
---------------
(a) - General
-------
Except as expressly set forth in this Section 4.1., each Party
shall cause its respective Affiliates, officers, directors,
employees, agents and subcontractors (collectively,
"Representatives") to keep confidential any and all technical,
commercial, scientific and other data, processes, documents or
other information (whether in oral or written form) or physical
object (including, without limitation, Biological Materials,
intellectual property, marketing data, agreements between any
Party and a Third-Party, license applications, and business
plans and projections of any Party) acquired from the other
Party (the "Other Party"), its Affiliates or its
Representatives prior to or after the date of this Agreement
and which relates (in the case of a Party) to the Other Party
or any of its Affiliates or their respective businesses
("Confidential Information"), and each Party shall not disclose
directly or indirectly, and shall cause its Representatives not
to disclose directly or indirectly, any Confidential
Information to anyone outside such Person, such Affiliates and
their respective Representatives, except that the foregoing
restriction shall not apply to any information disclosed
hereunder to any Party, if such Person (the "Receiving Person")
can demonstrate that such Confidential Information:
(i) is or hereafter becomes generally available to the trade
or public other than by reason of any breach or default
by the Receiving Person, any of its Affiliates or any
Representative of the foregoing with respect to a
confidentiality obligation under this Agreement;
(ii) was already known to the Receiving Person or such
Affiliate or Representative;
(iii) is disclosed to the Receiving Person or such Affiliate
or Representative by a Third-Party who has the right to
disclose such information;
(iv) based on such Person's good faith judgement with the
advice of counsel, is otherwise required to be disclosed
in compliance with applicable legal requirements to a
public authority such as, without limitation, the US
Food & Drug Administration (FDA), the European Medicine
Evaluation Agency (EMEA), the French Agence du Medicament
or any comparable authority of any country having
jurisdiction.
Whenever the Receiving Person becomes aware of any state of
facts which would or might result in disclosure of Confidential
Information pursuant to subparagraph (iv)
-12-
<PAGE>13
above with the exception of the case here below referred to
in Section 4.1.(g) in fine, it shall, if possible, promptly
notify the Person making disclosure (the "Disclosing Person")
prior to any such disclosure so that the Disclosing Person may
seek a protective order or other appropriate remedy and/or
waive compliance with the provisions of this Agreement.
In any event, if the Receiving Person is unable to promptly
notify the Disclosing Person or if such protective order or
other remedy is not obtained, or if the Disclosing Person
waives compliance with the provisions of this Agreement, the
Receiving Person shall furnish only that portion of the
information which it is advised by counsel is legally required
and shall exercise reasonable efforts to obtain assurance that
confidential treatment shall be accorded the Confidential
Information.
Each Party shall be entitled, in addition to any other right or
remedy it may have, at law or in equity, to an injunction,
without the posting of any bond or other security except as
required by the relevant laws, enjoining or restraining the
other Party from any violation or threatened violation of this
Section 4.1.
(b) - Use of Confidential Information
-------------------------------
Each Party agrees that no Confidential Information shall:
(i) be used in its own business except as necessary to the
fulfilment of the rights and obligations of such Party
under this Agreement;
(ii) be assigned, licensed, sublicensed, marketed, transferred
or loaned, directly or indirectly to any Third-Party
other than a Representative or an Affiliate
Representative of such Party, except as necessary to the
fulfilment of the rights and obligations of the Parties
under this Agreement;
(iii) be used or exploited by such Party or any of its
Affiliates or their Representatives for its or their
respective benefit or the benefit of any other
relationships with customers of such Party and its
Affiliates.
Without limiting the generality of the foregoing, each Party
agrees that, it shall not (and shall not permit any of its
Affiliates) at any time use any Confidential Information in
the conduct of its business without the prior written consent
of the Other Party.
The obligations set forth in this Section 4.1. shall extend to
copies, if any, of Confidential Information made by any
Representatives referred to in paragraph (a) and to documents
prepared by such Persons which embody or contain Confidential
Information.
(c) - Protection of Confidential Information
--------------------------------------
Each Party shall deal with Confidential Information so as to
protect it from disclosure with a degree of care not less than
that used by it in dealing with its own information intended
to remain exclusively within its knowledge and shall take
reasonable steps to minimise the risk of disclosure of
Confidential Information which shall include, without
limitation, ensuring that only its Affiliates and its and
their Representatives who have a bona fide "need to know" such
Confidential Information for purposes permitted or contemplated
by this Agreement shall have access thereto. Each Party, shall
notify all of its Representatives who have access to
Confidential Information of its confidentiality and the care
therefor required, and shall obtain from any Affiliate or any
agent or subcontractor who is a Representative that is
permitted access to such Confidential Information in accordance
with this Section 4.1. an agreement of confidentiality
incorporating the restrictions set forth herein.
-13-
<PAGE>14
(d) - Survival of Obligations
-----------------------
The obligations set forth in this Section 4.1. shall survive
the termination of this Agreement for a period of five (5)
years.
(e) - Return of Confidential Information
----------------------------------
Within thirty (30) days after the termination of this
Agreement, the Receiving Person shall (and shall cause its
Affiliates' Representatives and its Affiliates to) return to
the Disclosing Person or destroy all related documents and
tangible items (including but not limited to unused Biological
Materials) then in its possession which it has received from
the Disclosing Person or any Affiliate or Representative
thereof pertaining, referring or relating to the Disclosing
Person's Confidential Information, as well as all copies,
summaries, records, descriptions, modifications, and
duplications that it, or any of its Affiliates or
Representatives, has made from the documents or tangible items
received from the Disclosing Person or any Affiliate or
Representative thereof; provided, however, that the Receiving
Person may retain one copy of each document in its legal files
solely to permit the Receiving Person to continue to comply
with its obligations hereunder and, in addition, may upon
notice to the Disclosing Person, retain in its legal files
or in the office of outside legal counsel one copy of any
document solely for use in any pending legal proceeding to
which such document relates.
(f) - Publications
------------
Each Party shall have the right to publish or present the
results of the Research Program or of any research related
to the Field of Use and announce scientific progress of the
Research Program, provided such publication, presentation or
announcement (and any revisions thereof, a "Publication") is
submitted to the other Party at least sixty (60) days prior
to submitting it to any Third-Party (including any editing
Person). The other Party shall have sixty (60) days after
receipt of the draft Publication to review and comment on
such draft. Upon notice within such sixty (60) day period by
the other Party that such Party reasonably believes the
Publication would amount to the public disclosure of a
patentable JOINT INVENTION upon which a patent application
should be filed prior to any such disclosure, submission of
the concerned Publication to Third Parties shall be delayed
for a ninety (90) day period from the date of said notice, or
for such longer period which may appear necessary for
appropriately drafting and filing a patent application covering
such invention. In addition, each Party shall duly take into
account comments made by the other Party on any Publication and
shall accept to have employees or others acting on behalf of
the other Party be mentioned as co-authors on any Publication
describing results to which such Persons shall have
contributed. The terms of this paragraph may be modified from
time to time in accordance with the Sponsored Research
Agreement with Duke University dated September 1, 1998.
(g) - Press Releases and other Disclosures to Third Parties.
--------------
Neither CISTRON nor PMC shall, without the prior written
consent of the other, issue any press release or make any other
public announcement or furnish any statement to any Person
(other than either Party's respective Affiliates) concerning
the existence of this Agreement and the transactions
contemplated by this Agreement, except for (i) general
statements referring to the existence of this Agreement,
specifying its nature (Research Collaboration and License
Option), the Field of Use and identity of the Parties but no
other details, (ii) disclosures made in compliance with
Section 4.1.(a) hereof, (iii) attorneys, consultants, and
accountants retained to represent them in connection with the
transactions contemplated hereby or as may be reasonably
necessary to either Party's bankers, investors, attorneys or
other professional advisers in connection with a merger or
acquisition, provided such advisors are bound by
confidentiality obligations essentially identical to those
provided for herein, and (iv) occasional, brief comments by
the respective executive officers of both Parties consistent
with such guidelines for public statements as may be mutually
agreed by the Parties made in connection with routine
interviews with analysts or members of
-14-
<PAGE>15
the financial press. In addition, either Party (after
consultation with counsel) in its own right may make such
further announcements and disclosures, if any, as may be
required by applicable security laws and regulations (such as,
without limitation, regulations of the US Securities &
Exchange Commission (SEC) or the French Commission des
Operations de Bourse (COB), or any equivalent authority of any
country having jurisdiction), in which case the Party making
the announcement or disclosure shall use its best efforts to
give advance notice to, and discuss such announcement or
disclosure with, the other Party and such other Party's
attorneys.
4.2. Term and termination.
---------------------
4.2.1. Expiration.
-----------
This Agreement shall terminate on the third (3rd) anniversary of the
Effective Date.
4.2.2. Termination for Cause.
----------------------
(i) Either Party may terminate this Agreement, at its option, upon
or after the breach of any material provision of the Agreement
by the other Party, if such breaching Party has not cured such
breach within ninety (90) days after written notice thereof from
the other Party.
(ii) Subject to any applicable bankruptcy law of public order, PMC or
CISTRON may terminate this Agreement upon written notice to the
other Party if the other Party makes a general assignment for
the benefit of creditors, is the subject of proceedings in
voluntary or involuntary bankruptcy or has a receiver or trustee
appointed for substantially all of its property ; provided that
in the case of an involuntary bankruptcy proceeding such right
to terminate shall only become effective if the other Party
consents thereto or such proceeding is not dismissed within
ninety (90) days after the filing thereof.
4.2.4. Effect of Expiration and Termination.
-------------------------------------
Expiration or termination of the Agreement shall not relieve the
Parties of any obligation accruing prior to such expiration or
termination. The provisions of Sections 2.2.4, 2.2.5, 3.6, 3.7, 3.8,
4.3, 4.4, 4.7.1, 4.7.2, 4.7.4 and 4.7.6 to 4.7.9 included, and
Articles 1 and 4, shall survive the expiration or termination of the
Agreement for their own term or for so long as such provisions have
to remain operative so as to give full effect to the intent of the
Parties with respect thereto.
4.3. Indemnity.
----------
4.3.1. Direct Indemnity.
-----------------
4.3.1.1. Each Party shall indemnify and hold harmless the other Party, its
Affiliates, and their respective directors, officers, shareholders,
agents, consultants and employees from and against all Third-Party
claims, demands, liabilities, damages (including damages directly or
indirectly suffered by the other Party and/or its Affiliates and
their respective directors, officers, shareholders, agents,
consultants and employees) and expenses, including attorneys' fees
and costs (collectively, the "Liabilities") arising out of the breach
of any material provision of this Agreement by the indemnifying Party
or caused by an intentional act or omission of the indemnifying
Party.
-15-
<PAGE>16
4.3.1.2. PMC shall defend, indemnify and hold harmless CISTRON, its
Affiliates, and their respective directors, officers, shareholders,
agents, consultants and employees, from and against all Liabilities
suffered or incurred arising out of any Third-Party claims in
connection with the manufacture, design, testing, possession,
distribution, use, sale or other disposition by or through PMC, its
Affiliates or Sublicensees of any PRODUCTS, except in each case to
the extent such Liabilities resulted from the gross negligence,
recklessness or intentional acts or omissions by CISTRON.
4.3.2. Procedure.
----------
A Party (the "Indemnitee") that intends to claim indemnification
under this Section 4.3. shall promptly notify the other Party (the
"Indemnitor") of any Liability or action in respect of which the
Indemnitee intends to claim such indemnification, and the Indemnitor
shall have the right to participate in, and, to the extent the
Indemnitor so desires, jointly with any other Indemnitor similarly
noticed, to assume the defense thereof with counsel selected by the
Indemnitor ; provided, however, that the Indemnitee shall have the
right to retain its own counsel, with the fees and expenses to be
paid by the Indemnitor, if representation of such Indemnitee by the
counsel retained by the Indemnitor would be inappropriate due to
actual or potential differing interests between such Indemnitee and
any other Party represented by such counsel in such proceedings.
The indemnity obligations under this Section 4.3. shall not apply to
amounts paid in settlement of any loss, claim, damage, liability or
action if such settlement is effected without the consent of the
Indemnitor, which consent shall not be withheld unreasonably. The
failure to deliver notice to the Indemnitor within a reasonable time
after the commencement of any such action, if prejudicial to its
ability to defend such action, shall relieve such Indemnitor of any
liability to the Indemnitee under this Section 4.3. The Indemnitee,
its Affiliates, employees and agents, shall cooperate fully with the
Indemnitor and its legal representatives in the investigation of any
action, claim or liability covered by this indemnification.
4.4. Force Majeure.
--------------
No Party (or any of its Affiliates) shall be held liable or
responsible to the other Party (or any of its Affiliates) nor be
deemed to have defaulted under or breached the Agreement for failure
or delay in fulfilling or performing any term of the Agreement when
such failure or delay is caused by or results from causes beyond the
reasonable control of the affected Party (or any of its Affiliates)
including but not limited to fire, floods, embargoes, war, acts of
war (whether war be declared or not), insurrections, riots, civil
commotions, strikes, lockouts or other labor disturbances, acts of
God or acts, omissions or delays in acting by any governmental
authority or the other Party (collectively, "Events of Force
Majeure") ; provided, however, that the affected Party (i) shall
immediately notify the other Party of the occurrence of any such
Event of Force Majeure and (ii) shall exert all reasonable efforts to
eliminate, cure or overcome any such Event of Force Majeure and to
resume performance of its covenants with all possible speed ; and
provided, further, that nothing contained herein shall require any
Party to settle on terms unsatisfactory to such Party any strike,
lockout or other labor difficulty, any investigation or proceeding by
any governmental authority or any litigation by any Third-Party.
Notwithstanding the foregoing, to the extent that an Event of Force
Majeure continues for a period in excess of six (6) months, the
affected Party shall promptly notify in writing the other Party of
such Event of Force Majeure and within four (4) months of the other
Party's receipt of such notice, the Parties agree to negotiate in
good faith either (i) to resolve the Event of Force Majeure, if
possible, (ii) to extend by mutual agreement the time period to
resolve, eliminate, cure or overcome such Event of Force Majeure,
(iii) to amend this Agreement to the extent reasonably possible, or
(iv) to terminate this Agreement.
-16-
<PAGE>17
4.5. Assignment.
-----------
This Agreement in its entirety may not be assigned or otherwise
transferred, nor, except as expressly provided hereunder, may any
right or obligations pertaining to the Field of Use hereunder be
assigned or transferred to any Third-Party by either Party without the
consent of the other Party ; provided, however, that either Party may,
without such consent, assign this Agreement and its rights and
obligations hereunder to any of its Affiliates or in connection with
the transfer or sale of all or substantially all of its business, or
in the event of its merger or consolidation or change in control or
similar transaction. Any permitted assignee shall assume all
obligations of its assignor under this Agreement. Without limiting the
generality of the foregoing, without the prior written consent of PMC,
CISTRON shall not under any circumstances assign or transfer any
CISTRON Technology in the Field of Use unless (i) all of the rights
and obligations of CISTRON under this Agreement are assigned to the
same transferee(s) concurrently therewith, and (ii) such transferee(s)
expressly assume(s) in writing the performance of all terms and
conditions of this Agreement to be performed by CISTRON and such
assignment shall not relieved the assignor of any of its obligations
under this Agreement. Each Party acknowledges that the other Party
would suffer irreparable injury in the event of any breach of this
Article 4.5. that therefore the remedy at law for any breach or
threatened breach hereof by any Party shall be inadequate.
Accordingly, upon a breach or threatened breach hereof by any Party,
the other Party shall, in addition and without prejudice to any other
rights and remedies it may have, be entitled as a matter of right,
without proof of actual damages, to seek specific performance hereof
and to such other injunctive or equitable relief to enforce, or
prevent any violations (whether anticipatory, continuing or future)
hereof.
4.6. Severability.
-------------
Each Party hereby agrees that it does not intend to violate any public
policy, statutory or common laws, rules, regulations, treaty or
decision of any government agency or executive body thereof of any
country or community or association of countries. Should one or more
provisions of this Agreement be or become invalid, the Parties hereto
shall substitute, by mutual consent, valid provisions for such invalid
provisions which valid provisions in their economic effect are
sufficiently similar to the invalid provisions that it can be
reasonably assumed that the Parties would have entered into this
Agreement with such provisions. In case such provisions cannot be
agreed upon, the invalidity of one or several provisions of this
Agreement shall not affect the validity of this Agreement as a whole,
unless the invalid provisions are of such essential importance to this
Agreement that it is to be reasonably assumed that the Parties would
not have entered into this Agreement without the invalid provisions.
4.7. Miscellaneous.
--------------
4.7.1. Notices.
--------
Any consent, notice or report required or permitted to be given or
made under this Agreement by one of the Parties hereto to the other
shall be in writing, delivered Personally or by facsimile (and
promptly confirmed by Personal delivery, first class air mail or
courier), first class air mail or courier, postage prepaid (where
applicable), addressed to such other Party at its address indicated
below, or to such other address as the addressee shall have last
furnished in writing to the addressor and (except as otherwise
provided in this Agreement) shall be effective upon receipt by the
addressee.
If to CISTRON :
Cistron Biotechnology, Inc.
101 Bloomfield Avenue
Pine Brook, NJ 07058
-17-
<PAGE>18
Attention: Chairman
Telecopier: (973) 575-4854
with a copy to:
Seth I. Truwit, Esq.
Epstein Becker & Green, PC
250 Park Avenue
New York, NY 10177
Telephone: (212) 351-4709
Telecopier: (212) 661-0989
If to PMC :
Pasteur Merieux Serums & Vaccins, S.A.
58, avenue Leclerc
69007 Lyon, France
Attention: Senior Vice President, Legal and Corporate Affairs
Telecopier: 011 33 4 72 73 77 84
Pasteur Merieux Connaught - USA
Route 611
Swiftwater, PA 18370
Attention: Vice President, Business Development
Telecopier: (717) 839-4600
and
Akin, Gump, Strauss, Hauer & Feld, LLP
590 Madison Avenue
New York, New York 10022
Attention: L. Kevin O'Mara, Jr., Esq.
Telephone: (212) 872-1021
Telecopier: (212) 872-1002
4.7.2. Applicable Law.
---------------
The Agreement shall be governed by and construed in accordance with
the laws of State of New-York., without regard to the conflict of law
principles thereof.
4.7.3. Representations, warranties and covenants.
------------------------------------------
4.7.3.1. Representations and Warranties of PMC.
--------------------------------------
(a) PMC is a Societe Anonyme duly organized and existing under the
laws of France, with the corporate power to own, lease and operate
its properties and to carry on its business as now conducted.
(b) PMC has all necessary corporate power and authority to enter into
this Agreement and to consummate the transactions contemplated
hereby.
(c) The execution, delivery and performance of this Agreement by PMC
does not conflict with or contravene the statuts of PMC nor shall
the execution, delivery or performance of this Agreement conflict
with or result in a breach of, or entitle any Party thereto to
terminate, any material agreement or instrument to which PMC is a
Party, or by which any of its assets or properties is bound.
-18-
<PAGE>19
(d) This Agreement has been duly authorized, executed and delivered
by PMC and constitutes a legal, valid and binding agreement of
PMC, enforceable against PMC in accordance with its terms, except
as enforceability may be limited by bankruptcy, insolvency,
moratorium, reorganization or other similar laws affecting
creditors' rights generally.
4.7.3.2. Representations, Warranties and Covenants of CISTRON.
-----------------------------------------------------
(a) CISTRON is a corporation duly incorporated and validly existing
as a corporation in good standing under the laws of the State of
Delaware with the corporate power to own, lease and operate its
properties and to carry on its business as now conducted.
(b) CISTRON has all necessary corporate power and authority to enter
into this Agreement and to consummate the transactions
contemplated hereby.
(c) The execution, delivery and performance of this Agreement by
CISTRON does not conflict with or contravene its certificate of
incorporation or by-laws, nor shall the execution, delivery or
performance of this Agreement conflict with or result in a breach
of, or entitle any Party thereto to terminate, any material
agreement or instrument to which CISTRON is a Party, or by which
any of its assets or properties is bound.
(d) This Agreement has been duly authorized, executed and delivered
by CISTRON and constitutes a legal, valid and binding agreement of
CISTRON, enforceable against CISTRON in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency,
moratorium, reorganization or other similar laws affecting
creditors' rights generally.
(e) All OPTIONED PATENTS listed on Schedule A as amended from time to
time, but for the purpose of this Section 4.7.3.2 and for such
purpose only excluding any Joint Patent Rights, have been
registered in, filed in or issued by the appropriate patent
offices of each jurisdiction as indicated on such Schedule A, and
in each case is currently in effect and all maintenance fees and
renewals thereof have been duly made with respect thereto. CISTRON
owns or has full and exclusive rights to use and exploit under
licenses (and to license or sublicense) all its rights under such
OPTIONED PATENTS and the OPTIONED KNOW-HOW. Except as set forth on
Schedule 4.7.3(e) hereto, there have been no material claims made
against CISTRON asserting the invalidity or non-enforceability of,
or with respect to such OPTIONED PATENTS , the misuse of such
OPTIONED PATENTS or the OPTIONED KNOW-HOW, nor is CISTRON aware
that any such claims exist. Except as set forth on Schedule
4.7.3(e) hereto, CISTRON has not received a notice of conflict of
such OPTIONED PATENTS or the OPTIONED KNOW-HOW with the asserted
rights of others, or otherwise challenging its rights to use any
of such OPTIONED PATENTS, or the OPTIONED KNOW-HOW.
None of the rights of CISTRON under the OPTIONED PATENTS or
OPTIONED KNOW-HOW shall be adversely affected by the execution,
delivery or performance of this Agreement, or the consummation of
the transaction contemplated herein. EXCEPT AS OTHERWISE EXPRESSLY
SET FORTH IN THIS SECTION, NEITHER PARTY MAKES ANY REPRESENTATION
OR EXTENDS ANY WARRANTIES OF ANY KIND EITHER EXPRESS OR IMPLIED,
INCLUDING BUT NOT LIMITED TO WARRANTIES OF MERCHANTABILITY,
FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT, OR VALIDITY OF
ANY PATENT RIGHTS ISSUED OR PENDING.
-19-
<PAGE>20
4.7.4. Dispute Resolution.
-------------------
The Parties agree that if any dispute or disagreement arises between
PMC on the one hand and CISTRON on the other in respect of this
Agreement, they shall follow the following procedure in an attempt to
resolve the dispute or disagreement.
(a) The Party claiming that such a dispute exists shall give notice
in writing ("Notice of Dispute") to the other Party of the nature
of the dispute;
(b) Within twenty eight (28) business days of receipt of a Notice of
Dispute, a nominee or nominees of PMC and a nominee or nominees
of CISTRON shall meet in Person and exchange written summaries
reflecting, in reasonable detail, the nature and extent of the
dispute, and at this meeting they shall use their reasonable
endeavours to resolve the dispute ;
(c) If, within a further period of twenty eight (28) business days,
the dispute has not been resolved or if, for any reason, the
required meeting has not been held, then the Parties agree that
any dispute shall be referred to an arbitrator appointed by
agreement of CISTRON and PMC or, if no such agreement is reached
within sixty (60) business days after a Party commences the
arbitration, then by a panel of three arbitrators, with each of
PMC and CISTRON to select one arbitrator and those two
arbitrators to select the third. If all three arbitrators have
not been selected within sixty (60) business days after a Party
commences the arbitration, then the Parties agree to abide by the
selection of the remaining arbitrator to be named by a
representative of the International Chamber of Commerce.
The Parties agree that the Rules of the International Chamber of
Commerce shall govern such arbitration and that any decision of
the arbitrators shall be final and binding and shall be
enforceable in any court of competent jurisdiction worldwide
(regardless of whether one of the Parties fails or refuses to
participate in the arbitration). The Parties agree that all
arbitrations shall be conducted in the English language and that
the exclusive venue of all arbitrations shall be in Zurich,
Switzerland. The Party determined by the arbitrators to be the
Party substantially prevailing in the arbitration shall be
entitled to recover its legal and consultants' fees and other
costs reasonably incurred in connection with the arbitration (as
determined by the arbitrators) ; and
(d) in the event of a dispute regarding any payments owing under this
Agreement, all undisputed amounts shall be paid promptly when due
and the balance, if any, promptly after resolution of the
dispute.
4.7.5. Entire Agreement.
-----------------
This Agreement contains the entire understanding of the Parties with
respect to the subject matter hereof. All express or implied
agreements and understandings, either oral or written, heretofore
made, including but not limited to Option Agreements to the extent,
but only to the extent, they are inconsistent with any provisions of
this Agreement (in which case the relevant provision of this
Agreement shall prevail) are expressly superseded by this Agreement.
This Agreement may be amended, or any term hereof modified, only by a
written instrument duly executed by both Parties hereto.
4.7.6. Independent Contractors.
------------------------
CISTRON and PMC each acknowledge that they shall be independent
contractors and that the relationship between the two Parties shall
not constitute a partnership, joint venture or agency. Neither
CISTRON nor PMC shall have the authority to make any statements,
representations or commitments of any kind, or to take any action,
which shall be binding on the other Party, without the prior consent
of the other Party to do so.
-20-
<PAGE>21
4.7.7. Affiliates.
-----------
Each Party shall cause its respective Affiliates to comply fully with
the provisions of this Agreement to the extent such provisions
specifically relate to, or are intended to specifically relate to,
such Affiliates, as though such Affiliates were expressly named as
joint obligors hereunder.
4.7.8. Waiver.
-------
The waiver by either Party hereto of any right hereunder or the
failure to perform or of a breach by the other Party shall not be
deemed a waiver of any other right hereunder or of any other breach
or failure by said other Party whether of a similar nature or
otherwise.
4.7.9. No Implied License.
-------------------
Nothing in this Agreement shall be deemed to constitute, by
implication or otherwise, the grant by PMC to CISTRON, or by CISTRON
to PMC, of any license to, or interest in, or other rights under any
patent, patent application, proprietary know-how, trade secrets or
other intellectual property rights owned or possessed by PMC or
CISTRON, whichever is applicable, except as expressly provided for
herein.
4.7.10. 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.
-21-
<PAGE>22
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date
first set forth above.
For CISTRON BIOTECHNOLOGY, INC.
By : /s/BRUCE C. GALTON
-------------------
Name : BRUCE C. GALTON
Title : Chairman of the Board and
Chief Executive Officer
For PASTEUR MERIEUX Serums & Vaccins S.A.
By : /s/DAVID J. WILLIAMS
--------------------
Name : DAVID J. WILLIAMS
Title : President and
Chief Operating Officer
- -----------------------
-22-
<PAGE>23
EXHIBIT-2
---------
Confidential treatment has been requested for portions of the exhibit. The
copy filed herewith omits the information subject to the confidentiality
request. Omissions are designated as ["xxxxx"]. The portions omitted have
been filed separately with the Securities and Exhange Commission pursuant
to such request for confidential information.
--------------------------------------
LICENSE AGREEMENT
IL-1 BETA
--------------------------------------
This Agreement is entered this 30th day of October, 1998 (the "Effective
Date") into by and between :
CISTRON BIOTECHNOLOGY, INC., a corporation organized and existing under
the laws of the State of Delaware, having its principal place of
business at 10, Bloomfield Avenue, Pine Brook, New Jersey 07058, USA
(hereinafter referred to as "CISTRON")
and
- ---
PASTEUR MERIEUX Serums & Vaccins - a Pasteur Merieux Connaught Company
-, a societe anonyme organized and existing under the laws of the
French Republic, having its registered head office at 58, avenue
Leclerc, 69007, Lyon, France,
(hereinafter referred to as "PMC")
WITNESSETH
----------
WHEREAS, CISTRON has developed intellectual property, including inventions
which are the subject matter of patents and patent applications and secret
and substantial know-how, relating to a cytokine called Interleukin 1 beta
("IL-1b" or the "FACTOR") used as an immunoadjuvant ;
WHEREAS, PMC and CISTRON are parties to the Collaboration & Option
Agreement dated October 30th, 1998, under which PMC has exercised its option
to obtain from CISTRON a license in order to have the right to use CISTRON'
inventions relating to the FACTOR for use as an adjuvant in human vaccines,
and CISTRON has agreed to grant such licenses to PMC, subject to the terms
of and conditioned upon this Agreement ;
NOW, THEREFORE, in consideration of the respective representations and
covenants of each of the Parties as set forth below, CISTRON and PMC,
intending to be legally bound, agree as
follows :
-23-
<PAGE>24
ARTICLE I - DEFINITIONS AND INTERPRETATION
- ------------------------------------------
1.1. Definitions : For the purposes of this Agreement the following words
and phrases shall have the following meanings :
(a) "Affiliate" means, with respect to any Person, (i) any other
Person of which the securities or other ownership interests
representing fifty per cent (50 %) or more of the equity or
fifty per cent (50 %) or more of the ordinary voting power or
fifty per cent (50 %) or more of the general partnership
interest are, at the time such determination is being made,
owned, Controlled or held, directly or indirectly, by such
Person (a "Subsidiary"), or (ii) any other Person which, at
the time such determination is being made, is Controlling or
under common Control with, such Person. As used herein, the
term "Control", whether used as a noun or verb, refers to the
possession, directly or indirectly, of the power to direct, or
cause the direction of, the management or policies of a
Person, whether through the ownership of voting securities,
by contract or otherwise.
(b) "Agreement" means this agreement, all amendments and
supplements to this Agreement and all schedules to this
Agreement, including the following :
Schedule A - LICENSED PATENTS.
----------
Exhibit 1 - Tax Form re. French Withholding Tax.
---------
(c) "Biological Materials" shall mean any biological materials
including but not limited to structural genes, genetic
sequences, promoters, enhancers, probes, linkage probes,
vectors, hosts, plasmids, peptides, polypeptides, transformed
cell lines, transgenic animals, proteins, biological modifiers,
antigens, reagents, hybridomas, antibodies, toxins, lectins,
enzymes, lipids, hormones, viruses, cells or parts of cells,
cell lines, fragments of any of the foregoing and any other
biologically active material or compound, whether or not
occurring naturally or howsoever derived, modified, conjugated,
cross-linked, immobilized, reduced, purified or produces,
whether by recombinant DNA techniques and/or otherwise.
(d) "Calendar Quarter" means any of the three-month periods
beginning January 1, April 1, July 1 and October 1 in any year.
(e) "CISTRON Improvements" means Improvements which are conceived
during the term of this Agreement solely or jointly by
employees and/or contractors (other than PMC) acting on behalf
of CISTRON or its Affiliates, to the extent that CISTRON has
now or hereafter shall have the right to grant licenses,
immunities or other rights thereon.
(f) "CISTRON Technology" means the LICENSED PATENTS, the LICENSED
KNOW-HOW and the CISTRON Improvements, and shall include
CISTRON's interest in any Joint Inventions as such latter term
is defined under the Collaboration & Option Agreement and under
this Agreement .
(g) "Collaboration & Option Agreement" means the Collaboration &
Option Agreement signed by the Parties hereto on October 30th,
1998.
(h) "Confidential Information" has the meaning ascribed to it in
Section 8.1. of this Agreement.
-24-
<PAGE>25
(i) "Event of Force Majeure" has the meaning ascribed to it in
Article 8.4. of this Agreement.
(j) "FACTOR" means the cytokine (a protein) called Interleukin 1
beta, or IL-1b, as described in the LICENSED PATENTS, and any
derivatives thereof, and is intended to refer to both the
protein itself and the gene encoding thereto.
[OPTIONAL : will depend on how Option is exercised.
(k) "Field of Preventative Vaccines" means the field comprised of
bio-pharmaceutical products for the prevention through active
immunization against infectious diseases and/or cancers in
humans.
(l) "Field of Therapeutic Vaccines" means the field comprised of
bio-pharmaceutical products for the immunotherapy through
active immunization against infectious diseases and/or cancers
in humans.
(m) "Field of Use" means either the Field of the Therapeutic
Vaccines or the Field of the Preventative Vacines or both.]
(n) "First Commercial Sale" means, in each country of the
Territory, the first sale of a PRODUCT by PMC, its Affiliates
or Sublicensees, to Third-Parties, in each case for use or
consumption of such PRODUCT in such country by the general
public.
(o) "Improvements" means all patentable and non-patentable
inventions, discoveries, technology and information of any type
whatsoever, including without limitation Biological Materials,
methods, processes, technical information, knowledge,
experience and know-how which are made during the term of this
Agreement and which utilize, incorporate, are derived from or
are based on, CISTRON Technology, or could not be conceived,
developed or reduced to practice but for the use of the CISTRON
Technology.
(oo) "Joint Inventions" have the meaning ascribed to them in Section
7.2. hereof.
(p) "LICENSE" has the meaning ascribed to it in Section 2.1.1. of
this Agreement.
(q) "LICENSED KNOW-HOW" means any and all technical information,
discoveries, improvements, processes, formulae, data,
engineering, technical and shop drawings, inventions,
Biological Materials, shop-rights, know-how and trade secrets
which is useful or necessary to make, have made, use or sell
the FACTOR and/or PRODUCTS or to practice under the LICENSED
PATENTS in the Field of Use, which have been, or hereafter are,
either developed by CISTRON or its Affiliates, or the rights to
which in the Field of Use have been acquired by CISTRON or its
Affiliates and to which CISTRON or its Affiliates have a
transferable interest. LICENSED KNOW-HOW expressly includes any
and all technology developed in the Field of Use by the Parties
pursuant to and in accordance with the Collaboration & Option
Agreement and which constitutes Joint Inventions as such term
is defined in such agreement.
(r) "LICENSED PATENTS" means :
(i) any existing patents and patent applications listed in
Schedule A to this Agreement, including any Joint Patent
Rights as such term is defined in the Collaboration &
Option Agreement ;
(ii) any future patents issued from any patent applications
referred to in Paragraph 1.(r).(i) above and any future
patents issued from a patent application filed in any
country in the Territory which corresponds to a patent or
patent application identified in Paragraph 1.(r).(i)
above;
-25-
<PAGE>26
(iii) any reissues, confirmations, renewals, extensions,
counterparts, divisions, continuations, continuations-in-
part, supplemental protection certificates or utility
models issued, assigned or licensed to CISTRON or its
Affiliates of or relating to the patents or patent
applications identified in Paragraph 1.(r).(i) and (ii)
above ;
(iv) any future patents and patent applications covering
CISTRON Improvements, solely or jointly owned by CISTRON
or its Affiliates, or licensed by CISTRON or its
Affiliates with the right to sublicense, and CISTRON's
interest in any Joint Inventions.
(rr) "Net Sales" shall mean gross invoice price of PRODUCTS sold by
PMC, its Affiliates and Sublicensees to the first Third-Party
(including unaffiliated Third-Party distributors, except in the
circumstances referred to in Section 6.3 hereof, and provided
further that where a distributor is an Affiliate, but not a
Subsidiary of PMC, such distributor shall be deemed a Third-
Party for the purpose of calculating Net Sales hereunder) less,
to the extent actually incurred or allowed and if not already
deducted in the amount invoiced :
(i) normal or customary trade and/or quantity discounts,
credits, allowances, rebates, returns (including, but not
limited to, wholesaler and retailer returns) ;
(ii) retroactive price reductions ;
(iii) excise taxes, other consumption taxes, customs duties and
compulsory payments made to governmental authorities ;
(iv) sales commissions that are actually paid to Third-Party
distributors and selling agents ; and
(v) transportation, transit and insurance for transportation
each to the extent separately invoiced and paid by PMC.
(s) "Notice of Dispute" has the meaning ascribed to it in Section
8.8.4.(a) of this Agreement.
(t) "Parties" means PMC and CISTRON, and "Party" means any one of
them.
(u) "Person" means an individual, corporation, partnership, trust,
business trust, association, joint stock company, pool,
syndicate, sole proprietorship, unincorporated organization,
governmental authority or any other form of entity not
specifically listed herein.
(v) "Phase III" means the first large scale safety and efficacy
clinical trial relating to a PRODUCT.
(w) "PMC Improvements" means Improvements which are conceived
during the term of this Agreement solely or jointly by
employees and/or contractors (other than CISTRON) acting on
behalf of PMC or its Affiliates, to the extent that PMC has now
or hereafter shall have the right to grant licenses, immunities
or other rights thereon.
(ww) "PRODUCTS" means any and all vaccines or other bio-
pharmaceutical products intended for use [in the Field of
Preventative Vaccines or the Field of Therapeutic Vaccines or
both - OPTIONAL : will depend on how Option is exercised]
which (i) incorporate the FACTOR as an adjuvant or (ii) more
generally utilize any or are based on any CISTRON Technology.
-26-
<PAGE>27
(x) "Royalty Term" means, with respect to each PRODUCT in each
country in the Territory, the period of time equal to the
longer of (a) fifteen (15) years from the date of First
Commercial Sale of such PRODUCT in such country or (b) the term
for which a Valid Patent Claim in such country remains in
effect and, but for a license granted by this Agreement, would
be infringed by the manufacture, use or sale of such PRODUCT in
the Field of Use in such country.
(xx) "Sublicensee" means any Person acting pursuant to a sublicense
granted to it by PMC under the terms of this Agreement.
(y) "Territory" means all countries in the world.
(yy) "Third-Party" means any Person other than PMC, CISTRON and
their respective Affiliates.
(z) "Valid Patent Claim" means a claim of an issued and unexpired
patent or patent application included in LICENSED PATENTS which
has not been held permanently revoked, unenforceable or invalid
by a decision of a court or other governmental agency of
competent jurisdiction, unappealable or unappealed within the
time allowed for appeal, and which has not been admitted to be
invalid or unenforceable through reissue or disclaimer or
otherwise. If there should be two or more decisions within the
same country which are conflicting with respect to the
invalidity of the same claim, the decision of the highest
tribunal shall thereafter control. However, should the
tribunals be of equal authority, then the decision or decisions
holding the claim valid shall prevail where the conflicting
decisions are equal in number and the majority of decisions
shall prevail where the conflicting decisions are not equal in
number.
1.2. Certain Rules of Interpretation in this Agreement and the Schedules:
--------------------------------------------------------------------
(a) An accounting term not otherwise defined has the meaning
assigned to it by, and every accounting matter will be
determined in accordance with, generally accepted accounting
principles in the United States of America ;
(b) Unless otherwise specified, all references to monetary amounts
are to United States dollars currency (US$) ;
(c) The descriptive headings of Articles and Sections are inserted
solely for convenience of reference and are not intended as
complete or accurate descriptions of the content of such
Articles or Sections ;
(d) The use of words in the singular or plural, or with a
particular gender, shall not limit the scope or exclude the
application of any provision of this Agreement to such Person
or Persons or circumstances as the context otherwise permits ;
(e) Whenever a provision of this Agreement requires an approval or
consent by a Party to this Agreement and notification of such
approval or consent is not delivered within the applicable time
limit, then, unless otherwise specified, the Party whose
approval or consent is required shall be conclusively deemed to
have withheld its approval or consent ;
(f) Unless otherwise specified, time periods within or following
which any payment is to be made or act is to be done shall be
calculated by excluding the day on which the period commences
and including the day on which the period ends and by extending
the period to the next business day following if the last day
of the period is not a business day in the jurisdiction of the
Party to make such payment or do such act ; and
-27-
<PAGE>28
(g) Whenever any payment is to be made or action to be taken under
this Agreement is required to be made or taken on a day other
than a business day, such payment shall be made or action taken
on the next business day following such day in the jurisdiction
of the Party to make such payment or do such act.
ARTICLE 2 - LICENSE.
- --------------------
2.1. Grant.
------
Subject to and conditioned upon the provisions of this Agreement,
CISTRON hereby grants to PMC, and PMC hereby accepts, a license
(the "LICENSE") in the Territory to make, have made, use and sell
PRODUCTS and FACTOR under the LICENSED PATENTS in the Field of Use
and by using LICENSED KNOW-HOW, CISTRON Improvements and Joint
Inventions in the Field of Use.
2.2. Exclusivity
-----------
(i) Subject to and conditioned upon the provisions of this
Agreement, the LICENSE granted pursuant to this Article II
shall be exclusive (exclusive even as to CISTRON and CISTRON
Affiliates) to PMC in the Field of Use. Without limiting the
generality of the foregoing, CISTRON covenants that during the
term of this Agreement, neither CISTRON nor its Affiliates shall
grant to any other Person any right , license or privilege to
make, have made, use or sell PRODUCTS or to otherwise exploit
CISTRON Technology (including for the manufacturing of the
FACTOR) and Joint Inventions in connection with such PRODUCTS in
the Field of Use.
(ii) For greater certainty, CISTRON has and retains all rights in
and to the CISTRON Technology outside the Field of Use and PMC
has no rights in the CISTRON Technology outside the Field of Use.
2.3. PMC 's Rights to Sublicense
---------------------------
(i) PMC shall have the right, with CISTRON's prior written consent
(which consent shall not be unreasonably withheld), to
sublicense in the Field of Use to Third-Parties all or any
portion of the rights to LICENSED PATENTS and LICENSED KNOW-
HOW and CISTRON Improvements granted to PMC pursuant to this
Agreement under the LICENSE. No permitted Sublicensee pursuant
hereto shall have the right to grant further sublicenses to any
Third-Party.
(ii) PMC shall have the right, without obtaining the further consent
of CISTRON, to sublicense in the Field of Use all or any
portion of the rights to the LICENSED PATENTS, the LICENSED
KNOW-HOW and CISTRON Improvements granted to it pursuant to
this Agreement under the LICENSE (i) to any of its Affiliates,
and (ii) to any Person in any country of the Territory if
required to do so by any governmental authority having
jurisdiction in such country. No permitted Sublicensee pursuant
hereto shall have the right to grant further sublicenses to any
Third-Party.
(iii) PMC agrees that all sublicenses granted by PMC hereunder
shall expressly bind Sublicensees to the terms of Article 8.1.,
"Confidentiality" and to all other relevant provisions of this
Agreement. In the event PMC grants sublicenses, PMC shall still
be under the obligation to pay Milestone Payments to CISTRON as
provided for in
-28-
<PAGE>29
Section 4.6. hereof, and PMC shall pay royalties to CISTRON as
if Net Sales of the Sublicensees were Net Sales of PMC and
CISTRON shall be expressly made a Third-Party beneficiary
thereof. PMC shall be responsible for the performance by any
sub-PMC of all such terms, conditions and obligations. In
addition PMC shall pay to CISTRON Twenty Five percent (25%) of
any incremental consideration that PMC may receive from any
Third-Party Sublicensee such as but not limited to license
issue fees and milestone payments.
(iv) Any sublicenses granted by PMC shall include a requirement that
the Sublicensee maintains records and permit inspection on
terms essentially identical to Sections 5.1. and 5.2 hereof. At
CISTRON's request, PMC shall arrange for an independent
certified public accountant selected by CISTRON to inspect the
records of Sublicensees for the purpose of verifying royalties
due to CISTRON and shall cause such accountant to report the
results thereof to CISTRON.
(v) Any sublicenses granted by PMC shall provide for the
termination of the sublicense, or, if the Sublicensee is a
Third-Party, at the option of such Sublicensee, the conversion
to a license directly between such Sublicensee and CISTRON,
upon termination of this Agreement under Article 8.2. (other
than expiration under Section 8.2.1 or a termination by PMC
further to a breach by CISTRON pursuant to Section 8.2.3). Such
conversion shall be subject to CISTRON's approval and
contingent upon acceptance by the Sublicensee of the remaining
provisions of this Agreement.
(vi) PMC shall notify CISTRON of each sublicense granted to Third-
Parties and shall provide CISTRON with the name and address of
each Sublicensee and a description of the PRODUCTS and
territory covered by each sublicenses.
2.4. Sublicenses to PMC.
-------------------
To the extent LICENSED PATENTS have been, or shall be, licensed by
CISTRON from a Third-Party under an agreement with such Third-Party
(a "Third-Party License"), PMC understands and agrees as follows :
(i)- The rights sub-licensed to PMC by CISTRON are subject to the
terms and conditions, restrictions, limitations and obligations
of the relevant Third-Party License ;
(ii)- PMC shall comply with the terms and conditions,
restrictions, limitations and obligations of such Third-Party
License(s) to the extent PMC has been permitted to review such
terms, conditions, restrictions, limitations and obligations.
CISTRON shall give PMC, upon request, a reasonable opportunity
to review the same except to the extent that confidentiality
obligations towards Third-Parties may prevent CISTRON from
doing so. In any event, CISTRON shall act reasonably in
advising PMC of the scope of PMC's obligations pursuant to any
relevant Third-Party License.
2.5. Licenses to CISTRON.
--------------------
In the event that CISTRON wishes to commercialize any PMC
Improvements outside the Field of Use at any time during the term of
this Agreement, CISTRON shall so notify PMC and the Parties agree to
then negotiate in good faith the terms and conditions of a license
to be granted by PMC to CISTRON covering such PMC Improvements,
including a reasonable royalty which shall reflect the value of the
PMC Improvements in relation to all other
-29-
<PAGE>30
technology and proprietary rights included in the product and/or
process that CISTRON wishes to commercialize.
2.5 Subcontracting.
---------------
Notwithstanding anything herein provided for to the contrary, PMC
shall be allowed to (i) sub-contract in whole or in part PRODUCTS
development to Third-Parties such as, without limitation, clinical
research organizations, (ii) appoint sales agents and distributors
to market and distribute PRODUCTS and (iii) sub-contract
manufacturing of PRODUCTS and FACTOR with Third-Parties or with
PMC's Affiliates.
2.6. Procedures for Provision of Know-How.
-------------------------------------
2.6.1. Disclosure of Technology.
-------------------------
From time to time during the term of this Agreement, CISTRON shall
disclose or cause its Affiliates to disclose to PMC such CISTRON
Technology as may be reasonably necessary to enable PMC to develop,
manufacture and commercialize PRODUCTS in the Field of Use on the
terms and subject to the conditions of this Agreement. In addition,
during the term of this Agreement, CISTRON shall, upon PMC's
reasonable request and with adequate notice to CISTRON, make
available to PMC at PMC's or its Affiliates' manufacturing
facilities or the facility of a Third-Party manufacturer who shall
have contracted with PMC to manufacture PRODUCTS, CISTRON's or
CISTRON Affiliate's Personnel to provide technical assistance to
PMC's Personnel, or PMC Affiliates' Personnel or Third-Party
manufacturer's Personnel. PMC shall pay or have paid by its
concerned Affiliates all expenses incurred by CISTRON or its
Affiliates in connection with such technical assistance.
2.6.2. Communication among Parties.
----------------------------
Each of PMC and CISTRON shall appoint (a) specific individual(s) who
shall be available and shall act as (a) liaison Person(s) to
facilitate the day-to-day communications among the Parties. The
names and addresses of the liaison Persons who shall act on behalf
of each of the Parties shall be provided by each of the Parties to
the other immediately following the execution of this Agreement.
Each of PMC and CISTRON agrees to notify the other in accordance
with the terms of Section 8.8.1. of this Agreement in the event of a
change in liaison Person.
2.6.3. Identification of Know-How.
---------------------------
The Parties agree that all information and Biological Materials
comprised in the LICENSED KNOW-HOW to be transferred to PMC pursuant
to this Agreement shall be so transferred in the case of written
information, by memoranda bearing the mention "Confidential", and,
in the case of Biological Materials, by clearly marked and numbered
containers. PMC shall designate an individual who shall be
responsible for receiving information and Materials
-30-
<PAGE>31
from CISTRON and/or its Affiliates and the Parties agree that such
information and Materials shall in all cases (except where the Parties
agree otherwise) be sent solely to the attention of such individual.
Upon receipt of information and/or Biological Materials, the designated
individual shall, on behalf of PMC, send an acknowledgement to
CISTRON and/or its Affiliates confirming receipt of information
and/or Biological Materials. The Parties agree that they shall in
good faith work together to establish and maintain a system to
record the transmission of information and/or materials under this
Agreement and make all commercially reasonable efforts to ensure
such system is followed.
2.6.4. Confidentiality.
----------------
All information transferred pursuant to this Agreement shall be
deemed to be "Confidential Information" in accordance with Section
8.1 hereof.
ARTICLE 3 - DEVELOPMENT AND COMMERCIALIZATION.
- ----------------------------------------------
3.1. Development and Commercialization Efforts.
------------------------------------------
PMC (i) shall use commercially reasonable efforts to diligently
conduct such preclinical and clinical trials that are necessary or
desirable to obtain all regulatory approvals to develop and
commercialize such PRODUCTS, (ii) shall diligently develop and
obtain necessary approval to market such PRODUCTS (including, as the
case may be, pricing approval), and (iii) shall commence marketing
and market such PRODUCTS in each country in which PMC has received
all applicable regulatory approvals therefor. PMC shall comply with
all applicable good laboratory, clinical and manufacturing practices
in the development and commercialization of such PRODUCTS, and shall
cause its Affiliates and subcontractors to do the same. PMC shall be
solely responsible for funding all costs of the development and
commercialization of each such PRODUCTS.
PMC and CISTRON agree to negotiate in good faith PRODUCT development
milestones within ninety (90) days following execution of this
Agreement.
3.2. Development and Commercialization Reports.
------------------------------------------
During the term of this Agreement, PMC shall keep CISTRON reasonably
informed as to the progress of the development of PRODUCTS by
notifying CISTRON of completion of each significant step. All
information disclosed by PMC pursuant to this Section 3.2 shall be
subject to Article 8 hereof.
PMC shall send to CISTRON at the latest before the end of the first
Calendar Quarter of each year during the term of this Agreement a
report describing in sufficient details all development and
commercialization efforts made by PMC pursuant hereto during the
preceding year.
-31-
<PAGE>32
ARTICLE 4 - ROYALTIES AND MILESTONES.
- -------------------------------------
4.1. Earned Royalties.
-----------------
During the Royalty Term, PMC shall pay to CISTRON a royalty of
["xxxxx"] of Net Sales of PRODUCTS ; provided, however, that the
royalty shall be reduced to ["xxxxx"] of Net Sales of PRODUCTS in
countries where there is no Valid Patent Claim and there is a
competitor of PMC using a formulation or formulations of the same
antigen(s) than PMC with an IL-1b.
4.2. Third-Party Royalties.
----------------------
If PMC, its Affiliates or Sublicensees is required to pay royalties
to any Third-Party in order to make, have made, use or sell a
PRODUCT in a country, then the royalty set-forth in Section 6.1
hereof for such PRODUCT in such country shall be reduced by fifty
percent (50%) of the amount paid by PMC to such Third-Parties ;
provided, however, that in no event the rate of the royalty payable
by PMC to CISTRON pursuant hereto shall be less than ["xxxxx"] of
Net Sales of such PRODUCT in such country.
4.3. Single Royalty : Non-Royalty Sales.
-----------------------------------
In no event shall more than one royalty be payable under Sections
4.1. and 4.2. with respect to a particular unit of PRODUCTS. No
royalty shall be payable under this Article 6 with respect to sales
of PRODUCTS among PMC and its Subsidiaries, or among Sublicensees
and their Affiliates, or among PMC and its Sublicensees, but a
royalty shall be due upon the subsequent sale of the PRODUCTS to a
Third-Party. No royalty shall be payable for (i) PRODUCTS used in
clinical trials, or (ii) PRODUCTS used by PMC, its Affiliates or
Sublicensees, for research, (iii) customary quantities of PRODUCTS
distributed as free samples or (iv) reasonable quantities of
PRODUCTS disposed by PMC as donations to Third-Parties (such as
humanitarian and charitable organizations).
4.4. Royalties for Sale of Bulk Products.
------------------------------------
In those cases where PMC, its Subsidiaries or Sublicensees sell
PRODUCTS in bulk to a Third-Party, the royalty due to CISTRON
hereunder shall be calculated on the Net Sales of bulk PRODUCTS to
said Third-Party.
4.5. Compulsory Licenses.
--------------------
If a compulsory license is granted with respect to a PRODUCT in any
country in the Territory with a royalty rate lower than the royalty
rates provided within this Article 4, then the rate of the royalty
to be paid on Net Sales in that country under Article 4 shall be
reduced to the rate paid by the compulsory licensee.
4.6. Milestone Payments.
-------------------
As additional consideration for the LICENSE, rights and privileges
granted to it hereunder, PMC shall pay to CISTRON the following
milestone payments within thirty (30) days of the occurrence of each
event set forth below, whether such events are achieved by PMC, its
Affiliates or Sublicensees :
[OPTIONAL : will depend on how Option is exercised.
- ---------------------------------------------------------------------------
Confidential treatment has been requested for portions of this page of this
exhibit. The copy filed herewith omits the information subject to the
confidentiality request. Omissions are designated as ["xxxxx"]. The
portions omitted have been filed separately with the Securities and
Exchange Commission pursuant to such request for confidential information.
- ---------------------------------------------------------------------------
-32-
<PAGE>33
a) Upon commencement of the first Phase III clinical trial with
respect to each of the first (1st) and second (2nd) PRODUCT
belonging to the Field of Preventative Vaccines (provided such
field is included in the Selected Field of Use), ["xxxxx"] for
each;
(b) Upon receipt of the product registration in [either] the United
States of America [or the European Union] with respect to each
of the first (1st) and the second (2nd) PRODUCT belonging to
the Field of Preventative Vaccines, ["xxxxx"] for each ;
(c) Upon commencement of the first Phase III clinical trial with
respect to each the first (1st) and the second (2nd) PRODUCT
belonging to the Field of Therapeutic Vaccines (provided such
field is included in the Selected Field of Use), ["xxxxx"] for
each ;
(d) Upon receipt of the product registration in [either] the United
States of America [or European Union] with respect to each of
the first (1st) and the second (2nd) PRODUCT belonging to the
Field Therapeutic Vaccines, ["xxxxx"] for each.]
ARTICLE 5 - ROYALTY REPORTS AND ACCOUNTING.
- -------------------------------------------
5.1. Reports, Exchange Rates.
------------------------
During the term of this Agreement following the First Commercial
Sale, PMC shall furnish to CISTRON, with respect to each Calendar
Quarter, a written report showing in reasonably specific detail, on
a country-by-country basis, (a) the gross sales of PRODUCTS sold by
PMC, its Affiliates and its Sublicensees in the Territory during the
corresponding Calendar Quarter and the calculation of Net Sales from
such gross sales ; (b) the royalties payable in United States
dollars, if any, which shall have accrued hereunder based upon Net
Sales of PRODUCTS ; (c) the withholding taxes, if any, required by
law to be deducted in respect of such royalties ; (d) the date of
the First Commercial Sale of PRODUCTS having occurred in each
country in the Territory during the corresponding Calendar Quarter
and (e) the exchange rates used in determining the royalty amount
expressed in United States dollars.
With respect to sales (if any) of PRODUCTS invoiced in United States
dollars, the gross sales, Net Sales, and royalties payable shall be
expressed in United Sates dollars. With respect to sales of PRODUCTS
invoiced in a currency other than United Sates dollars, the gross
sales, Net Sales and royalties payable shall be expressed in the
currency of the invoice issued by the Party making the sale together
with the United States dollars equivalent of the royalty payable,
calculated using the rate of exchange published in the Wall Street
Journal for such currency on the last business day of the concerned
Calendar Quarter. Reports and payments shall be due on the forty
fifth (45th) day following the close of each Calendar Quarter. PMC
shall keep complete and accurate records in sufficient detail to
properly reflect all gross sales and Net Sales and to enable the
royalties payable hereunder to be determined.
5.2. Audits.
-------
5.2.1. Upon the written request of CISTRON and not more than once in each
calendar year, PMC shall permit an independent certified public
accounting firm of internationally recognized standing, selected by
CISTRON and reasonably acceptable to PMC, at CISTRON's
- ---------------------------------------------------------------------------
Confidential treatment has been requested for portions of this page of this
exhibit. The copy filed herewith omits the information subject to the
confidentiality request. Omissions are designated as ["xxxxx"]. The
portions omitted have been filed separately with the Securities and
Exchange Commission pursuant to such request for confidential information.
- ---------------------------------------------------------------------------
-33-
<PAGE>34
expense, to have access during normal business hours to such of the
records of PMC as may be reasonably necessary to verify the accuracy
of the royalty reports hereunder for any year ending not more than
three (3) years prior to the date of such request. The accounting
firm shall disclose to CISTRON only whether the records are correct
or not and the specific details concerning any discrepancies. No
other information shall be shared.
5.2.2. If such accounting firm concludes that additional royalties were
owed during such period, PMC shall pay the additional royalties
within thirty (30) days of the date CISTRON delivers to PMC such
accounting firm's written report so concluding. The fees charged by
such accounting firm shall be paid by CISTRON ; provided, however,
if the audit discloses that the royalties payable by PMC for the
audited period are more than one hundred and twenty percent (120%)
of the royalties actually paid for such period, then PMC shall pay
the reasonable fees and expenses charged by such accounting firm.
5.2.3. PMC shall include in each permitted sublicense granted by it
pursuant to the Agreement a provision requiring the SUBLICENSEE to
make reports to PMC, to keep and maintain records of sales made
pursuant to such sublicense and to grant access to such records by
CISTRON's independent accountant to the same extent required with
respect to PMC's records under this Agreement.
5.2.4. Except in the case of circumstances which would have prevented an
error or anomaly from being disclosed during the audit hereabove
mentioned, such as fraud or other failure to provide accurate
information, upon the expiration of three (3) years following the
end of any calendar year, the calculation of royalties payable with
respect to such year shall be binding and conclusive upon CISTRON,
and PMC, its Affiliates and Sublicensees shall be released from any
liability or accountability with respect to royalties for such year.
5.3. Confidential Financial Information.
-----------------------------------
CISTRON shall treat all financial information subject to review
under this Article 6 or under any sublicense agreement as
confidential, and shall cause its accounting firm to retain all such
financial information in confidence.
ARTICLE 6 - PAYMENTS.
- ---------------------
6.1. Payment Term.
-------------
Royalties shown to have accrued by each royalty report provided for
under Article 5 of this Agreement shall be due on the date such
royalty report is due. Payment of royalties in whole or in part may
be made in advance of such due date.
6.2. Payment Method.
---------------
All payments by PMC to CISTRON under this Agreement shall be paid in
United States dollars, and all such payments shall be made without
deduction of bank transfer fees by bank wire transfer in immediately
available funds to the following bank account :
Account No. 6101198381
Bank : Bank of New York, 399 Ridgedale Ave.,
E. Hanover, N.J. 07936-1488
Code : 021202719
Addressee : Cistron Biotechnology, Inc.
or to any other bank account designated in writing from time to
time, to PMC, by CISTRON.
-34-
<PAGE>35
6.3. Withholding Taxes.
------------------
Royalties and milestone payments shall be paid by PMC to CISTRON,
after deduction of any applicable withholding taxes. Prior to any
payment by PMC to CISTRON, PMC shall provide to CISTRON any forms
required to attest CISTRON's fiscal domiciliation in order to allow
PMC to claim application of the reduced rate of withholding tax
provided for in any applicable bilateral fiscal convention. CISTRON
shall promptly return such forms to PMC. In the event CISTRON fails
to promptly return such forms duly filled and signed, PMC shall
declare and pay withholding tax at the common law rate of the
applicable corporate income tax, and such tax shall then be deducted
from the corresponding payment by PMC to CISTRON. PMC shall pay
withholding tax to the proper taxing authority and proof of payment
of such tax shall be secured and sent to CISTRON as evidence of such
payment. If, in the opinion of either Party, the provisions of this
section become extremely burdensome, the Parties agree to meet and
discuss such other options as may be available to them.
In order to properly document the tax file, CISTRON shall file or
have filed, and sign or have signed, the tax form herewith attached
as Exhibit 1 prior to each milestones or royalty payment owing from
PMC to CISTRON hereunder.
ARTICLE 7 - INVENTIONS AND PATENTS.
- -----------------------------------
7.1. Ownership and Commercialization of Inventions.
----------------------------------------------
Ownership of Inventions : All rights, title and interest in and to
any technology or invention, whether or not patentable, and any
patent applications and patents based thereon, made or conceived (i)
by employees or others acting solely on behalf of CISTRON or its
Affiliates, including but not limited to CISTRON Improvements, shall
be owned solely by CISTRON or its Affiliates ; (ii) by employees or
others acting solely on behalf of PMC or its Affiliates, including
but not limited to PMC Improvements, shall be owned solely by PMC or
its Affiliates and (iii) by both employees or others acting on
behalf of CISTRON or its Affiliates and on behalf of PMC or its
Affiliates, shall be jointly owned by CISTRON and PMC (the "Joint
Inventions").
CISTRON and PMC each hereby represents that all employees and other
Persons acting on its behalf in performing its obligations under
this Agreement shall be obligated under a binding written agreement
to assign to it, or as it shall direct, all Improvements conceived
or reduced to practice by such employees or other Persons during the
term of this Agreement.
Commercialization of Joint Inventions : During the term of this
Agreement PMC shall have the exclusive right to commercialize Joint
Inventions in the Field of Use and shall pay royalties to CISTRON in
accordance with this Agreement in consideration for such right. In
the event that CISTRON wishes to commercialize any Joint Invention
outside the Field of Use, CISTRON agrees to pay a royalty.
The Parties agree to negotiate in good faith such royalty so that it
reflects the value of the Joint Invention in relation to all other
technology and proprietary rights included in the product and/or
process embodying such Joint Invention.
-35-
<PAGE>36
7.2. Patent Prosecution and Maintenance.
-----------------------------------
Licensed Patents. CISTRON shall be responsible for and shall control
the preparation, filing, prosecution, grant and maintenance of all
LICENSED PATENTS. CISTRON shall prepare, file, prosecute and
maintain such LICENSED PATENTS in good faith consistent with its
customary patent policy and its reasonable business judgement, and
shall consider in good faith the interests of PMC in so doing.
Joint Inventions. As to any Joint Inventions, CISTRON shall have the
first right to file patent applications with respect to such
inventions in the name of both Parties. CISTRON may elect not to
file and if it does so, PMC shall have the right to file the patent
applications in the name of both Parties. In each case, the filing
Party shall give the non-filing Party an opportunity to review the
text of the applications before filing, shall consult with the non-
filing Party with respect thereto and shall supply the non-filing
Party with a copy of all applications as filed, together with notice
of their filing dates and serial numbers and fifty percent (50%) of
the out-of-pocket costs and expenses of the filing Party shall be
reimbursed by the other Party. Both Parties shall keep the other
advised of the status of actual and prospective patent application
filings and upon request, provide advanced copies of any documents
related to such filings and thereafter to the prosecution and
maintenance of all patent applications and patents.
Costs. With respect to all filings hereunder, the filing Party shall
be responsible for payment of all costs and expenses related to such
filings, prosecution and maintenance, unless relieved of same
pursuant to Section 7.3 hereinafter, and except for jointly owned
patents, for which fifty percent (50%) of all such costs and
expenses shall be reimbursed to the filing Party by the other Party.
7.3. Option to Prosecute and Maintain Patents.
-----------------------------------------
CISTRON shall give notice to PMC of any intention to cease
prosecution and/or maintenance, or not to proceed with an extension,
of LICENSED PATENTS and, in such case, shall permit PMC, at PMC's
sole discretion, to continue prosecution or maintenance or proceed
with the extension at its own expenses. If PMC elects to continue
prosecution or maintenance or to proceed with the extension, CISTRON
shall execute such documents and perform such acts at PMC's expense
as may be reasonably necessary to effect an assignment of such
LICENSED PATENTS to PMC in a timely manner, and more generally to
permit PMC to continue such prosecution and maintenance or to
proceed with the extension. Any patents and patent applications so
assigned shall not be considered as LICENSED PATENTS as of the date
of such assignment. No royalties shall be payable by PMC on sales of
PRODUCTS covered only by a Valid Patent Claim of a LICENSED PATENT
which has been assigned to PMC pursuant to this Section 7.3.
7.4. Interference, Opposition, Reexamination and Reissue.
----------------------------------------------------
(i) The Parties shall use their respective best efforts to within
ten (10) days of learning of any interference, opposition,
reexamination or reissue event, inform the other Party of any
request for, or filing or declaration thereof relating to
LICENSED PATENTS. The Parties shall thereafter consult and
cooperate fully to determine the course of action with respect
to any such proceeding. Both Parties shall have the right to
review and comment on any submission to be made in connection
with any such proceeding.
(ii) CISTRON shall not institute any reexamination or reissue
proceeding relating to LICENSED PATENTS without having first
consulted PMC.
-36-
<PAGE>37
(iii) In connection with any interference, opposition, reissue
or reexamination proceeding relating to LICENSED PATENTS, the
Parties shall cooperate fully and shall provide each other with
any information or assistance that either Party may reasonably
request. CISTRON shall keep PMC informed of developments in any
such action or proceeding, including, to the extent permissible,
the status of any settlement negotiations and the terms of any
offer related thereto.
(iv) CISTRON shall bear the expense of any interference, opposition,
reexamination or reissue proceeding relating to LICENSED PATENTS.
7.5. Enforcement and Defense.
------------------------
(i) Each Party shall give the other notice of either (a) any
infringement of LICENSED PATENTS, or (b) any misappropriation or
misuse of LICENSED KNOW-HOW that has come to its attention. The
Parties shall thereafter consult and cooperate fully to determine
a course of action, including but not limited to the commencement
of legal action by either or both Parties to terminate any
infringement of LICENSED PATENTS or any misappropriation or
misuse of LICENSED KNOW-HOW.
(ii) In the event that LICENSED PATENTS are infringed by any Third-
Party with respect to a PRODUCT in the Field of Use, CISTRON,
upon notice to PMC, shall have the first right, but not the
obligation, to institute and prosecute any action or proceeding
under LICENSED PATENTS with respect to such infringement, by
counsel of its choice, or to control the defense of any
declaratory judgment action arising from such infringement or
from the misappropriation or misuse of LICENSED KNOW-HOW, at its
own expense and in the name of both Parties. CISTRON shall not
settle, compromise or take any action in such litigation which
diminish, limit or inhibit the scope, validity or enforceability
of LICENSED PATENTS without the express permission of PMC.
CISTRON shall keep PMC advised of the progress of such
proceedings.
(iii) In the event that a Third-Party is infringing any LICENSED
PATENTS with respect to a PRODUCT in the Field of Use
and CISTRON does not elect to institute an action, PMC, upon
notice to CISTRON, shall have the right, but not the obligation,
to institute and prosecute any action or proceeding under
LICENSED PATENTS with respect to such infringement, by counsel of
its choice, or to control the defense of any declaratory judgment
action arising from such infringement or from the
misappropriat on or misuse of LICENSED KNOW-HOW, at its own
expense and in the name of both Parties. PMC shall not settle,
compromise or take any action in such litigation which diminish,
limit or inhibit the scope, validity or enforceability of
LICENSED PATENTS without the prior approval of CISTRON, which
shall not be unreasonably withheld.
(iv) With respect to any action to terminate any infringement of
LICENSED PATENTS or any misappropriation or misuse of LICENSED
KNOW-HOW, the Parties shall cooperate fully and shall provide
each other with any information and assistance that either Party
may reasonably request. In particular, either Party shall execute
such documents necessary for the other Party to initiate and
prosecute the action or proceeding and cause its Affiliates and
Sublicensees to execute all such documents, if required. In the
event that either Party is unable to initiate or prosecute an
action solely in its own name, the other Party shall then join
such action voluntarily. Each Party shall keep the other informed
of the development of any action or proceeding including, to the
extent permissible by law, the status of any settlement
negotiations and the terms of any offer related thereto.
(v) Any recovery obtained by either or both Parties in connection
with or as a result of any action or proceeding contemplated by
this Section 7.5, whether by settlement or otherwise, shall be
allocated in order as follows :
(a) The Party which initiated and prosecuted the action shall
recoup all of its costs and expenses incurred in connection
with the action (provided that if PMC was the
-37-
<PAGE>38
initiating Party and that the action proceeds were not
sufficient for PMC to recoup all its costs and expenses,
then PMC shall be allowed to deduct the balance of its
unrecovered costs and expenses from royalties payable to
CISTRON under Article 4 hereof) ;
(b) The other Party shall then, to the extent possible, recover
its costs and expenses incurred in connection with the
action; and
(c) The amounts of any recovery remaining shall then be
allocated between the Parties with PMC receiving all amounts
in respect of damages in the Field of Use and CISTRON
receiving all amounts in respect of damages out of the Field
of Use, except that any amounts recovered in connection with
infringement actions relating to jointly-owned patents shall
be equally shared between the Parties.
(vi) CISTRON shall inform PMC of any certification regarding any
LICENSED PATENTS it has received pursuant to 21 United States
Code 355(b)(2)(A)(iv) or (j)(2)(A)(vii)(IV), or any similar
provision in other countries, and shall provide PMC with a copy
of such certification within five (5) days of receipt. Both
Parties rights with respect to the initiation and prosecution of
any legal action as a result of such certification or any
recovery obtained as a result of such legal action shall be as
defined in paragraphs (a) to (c) of this Section 7.5.
7.6. Notice of Patent Events.
------------------------
CISTRON shall promptly give notice to the other Party of the grant,
lapse, revocation, surrender or invalidation of any LICENSED
PATENTS.
7.7. Patent Term Restoration.
------------------------
CISTRON shall notify PMC of (a) the issuance of each U.S. patent
included within the LICENSED PATENTS, giving the date of issue and
patent number for each such patent, and (b) each notice pertaining
to any patent included within the LICENSED PATENTS which it receives
as patent owner pursuant to the United Sates Drug Price Competition
and Patent Term Restoration Act of 1984 (hereinafter called the
"Act"), including notices pursuant to 101 and 103 of the Act
from Persons who have filed a biological license application ("BLA")
or an abbreviated new drug application ("ANDA"), whichever is
applicable. Such notices shall be given promptly, but in any event
within five (5) calendar days of each such patent's date of issue or
receipt of each such notice pursuant to the Act, whichever is
applicable. CISTRON shall notify PMC of each filing for patent term
restoration under the Act, any allegations of failure to show due
diligence and all awards of patent term restoration (extensions) with
respect to the LICENSED PATENTS.
Likewise, CISTRON or PMC, as the case may be, shall inform the other
Party of patent extensions and periods of data exclusivity in the
rest of the world regarding any PRODUCTS and more generally the
Parties shall diligently cooperate with respect to any procedures
for patent and period of data exclusivity extensions, such as but
not limited to Supplementary Protection Certificates, the above-
mentioned Patent Term Restoration and corresponding GATT
regulations.
-38-
<PAGE>39
ARTICLE 8 - GENERAL PROVISIONS
- ------------------------------
8.1. Confidentiality
---------------
(a) - General
-------
Except as expressly set forth in this section 8, each Party
shall cause its respective affiliates, officers, directors,
employees, agents and subcontractors (collectively,
"Representatives") to keep confidential any and all technical,
commercial, scientific and other data, processes, documents or
other information (whether in oral or written form) or
physical object (including, without limitation, Biological
Materials, intellectual property, marketing data, agreements
between any Party and a Third-Party, license applications, and
business plans and projections of any Party) acquired from the
other Party (the "Other Party"), its affiliates or its
Representatives prior to or after the date of this Agreement
and which relates (in the case of a Party) to the Other Party
or any of its Affiliates or their respective businesses
("Confidential Information"), and each Party shall not disclose
directly or indirectly, and shall cause its Representatives not
to disclose directly or indirectly, any Confidential
Information to anyone outside such Person, such affiliates and
their respective Representatives, except that the foregoing
restriction shall not apply to any information disclosed
hereunder to any Party, if such Person (the "Receiving Person")
can demonstrate that such Confidential Information :
(i) is or hereafter becomes generally available to the trade
or public other than by reason of any breach or default
by the Receiving Person, any of its affiliates or any
Representative of the foregoing with respect to a
confidentiality obligation under this Agreement ;
(ii) was already known to the Receiving Person or such
affiliate or Representative ;
(iii) is disclosed to the Receiving Person or such affiliate
or Representative by a Third-Party who has the right
to disclose such information ;
(iv) based on such Person's good faith judgement with the
advice of counsel, is otherwise required to be disclosed
in compliance with applicable legal requirements to a
public authority such as, without limitations, the U.S.
Food & Drug Administration (FDA), the European Medicines
Evaluation Agency (EMEA), the French Agence du Medicament
or any comparable authority of any country having
jurisdiction.
Whenever the Receiving Person becomes aware of any state of
facts which would or might result in disclosure of Confidential
Information pursuant to subparagraph (iv) above with the
exception of the case here below referred to in Section 4.1.(g)
in fine, it shall, if possible, promptly notify the Person
making disclosure (the "Disclosing Person") prior to any such
disclosure so that the Disclosing Person may seek a protective
order or other appropriate remedy and/or waive compliance with
the provisions of this Agreement.
In any event, if the Receiving Person is unable to promptly
notify the Disclosing Person or if such protective order or
other remedy is not obtained, or if the Disclosing Person
waives compliance with the provisions of this Agreement, the
Receiving Person will furnish only that portion of the
information which it is advised by counsel is legally required
and will exercise reasonable efforts to obtain assurance that
confidential treatment will be accorded the Confidential
Information.
Each Party shall be entitled, in addition to any other right
or remedy it may have, at law or in equity, to an injunction,
without the posting of any bond or other security except as
required by the relevant laws, enjoining or restraining any
other Party from any violation or threatened violation of
this Section 8.
-39-
<PAGE>40
(b) - Use of Confidential Information
-------------------------------
Each Party agrees that no Confidential Information shall :
(i) be used in its own business except as necessary to the
fulfilment of the rights and obligations of such Party
under this Agreement ;
(ii) be assigned, licensed, sublicensed, marketed,
transferred or loaned, directly or indirectly to any
third Party other than a Representative or an Affiliate
Representative of such Party, except as necessary to the
fulfilment of the rights and obligations of the parties
under this Agreement ;
(iii) be used or exploited by such Party or any of its
Affiliates or their Representatives for its or their
respective benefit or the benefit of any other
relationships with customers of such Party and its
affiliates.
Without limiting the generality of the foregoing, each Party
agrees that, it shall not (and shall not permit any of its
Affiliates) at any time use any Confidential Information in the
conduct of its business without the prior written consent of
the Other Party.
The obligations set forth in this Section 8.1. shall extend to
copies, if any, of Confidential Information made by any
Representatives referred to in paragraph (a) and to documents
prepared by such Persons which embody or contain Confidential
Information.
(c) - Protection of Confidential Information
--------------------------------------
Each Party shall deal with Confidential Information so as to
protect it from disclosure with a degree of care not less than
that used by it in dealing with its own information intended to
remain exclusively within its knowledge and shall take
reasonable steps to minimize the risk of disclosure of
Confidential Information which shall include, without
limitation, ensuring that only its affiliates and its and their
Representatives who have a bona fide "need to know" such
Confidential Information for purposes permitted or contemplated
by this Agreement shall have access thereto.
Each Party, shall notify all of its Representatives who have
access to Confidential Information of its confidentiality and
the care therefor required, and shall obtain from any Affiliate
or any agent or subcontractor who is a Representative that is
permitted access to such Confidential Information in accordance
with this Section 8.1., an agreement of confidentiality
incorporating the restrictions set forth herein.
(d) - Survival of Obligations
-----------------------
The obligations set forth in this Section 8.1. shall survive
the termination of this Agreement for a period of five (5)
years.
(e) - Return of Confidential Information
----------------------------------
Within thirty (30) days after the termination of this
Agreement, the Receiving Person shall (and shall cause its
Affiliates' Representatives and its Affiliates to) return to
the Disclosing Person or destroy all related documents and
tangible items (included but not limited to unused Biological
Materials) then in its possession which it has received from
the Disclosing Person or any affiliate or Representative
thereof pertaining, referring or relating to the Disclosing
Person's Confidential Information, as well as all copies,
summaries, records, descriptions, modifications, and
duplications that it, or any of its affiliates
or Representatives, has made from the documents or tangible
items received from the Disclosing Person or any affiliate or
Representative thereof; provided, however, that the Receiving
Person may retain one copy of each document in its legal files
solely to permit the Receiving Person to continue to comply
with its obligations hereunder and, in addition, may upon
notice to the Disclosing Person, retain in its legal files or
in the
-40-
<PAGE>41
office of outside legal counsel one copy of any document
solely for use in any pending legal proceeding to which such
document relates.
(f) - Publications
------------
Each Party shall have the right to publish or present the
results of the Research Program or of any research related to
the Field of Use and announce scientific progress of the
Research Program, provided such publication, presentation or
announcement (and any revisions thereof, a "Publication") is
submitted to the other Party at least ninety (90) days prior
to submitting it to any Third-Party (including any editing
Person). The other Party shall have ninety (90) days after
receipt of the draft Publication to review and comment on such
draft. Upon notice within such ninety (90) day period by the
other Party that such Party reasonably believes the
Publication would amount to the public disclosure of
a patentable invention (including but not limited to a Joint
Invention) upon which a patent application should be filed
prior to any such disclosure, submission of the concerned
Publication to Third-Parties shall be delayed for a ninety (90)
day period from the date of said notice, or for such longer
period which may appear necessary for appropriately drafting
and filing a patent application covering such invention. In
addition, each Party shall take into account comments made by
the other Party on any Publication and shall accept to have
employees or others acting on behalf of the other Party be
mentioned as co-authors on any Publication describing results
to which such Persons shall have contributed. The Parties
acknowledge the provisions relating to publications as set
forth in the Research Agreement between CISTRON and Duke
University dated September 1, 1998, and agree that such
provisions shall prevail and control any publication
proposed under such Research Agreement.
(g) Press Releases and other Disclosures to Third-Parties.
Neither CISTRON nor PMC shall, without the prior written
consent of the other, issue any press release or make any
other public announcement or furnish any statement to any
Person (other than either Party's respective Affiliates)
concerning the existence of this Agreement and the
transactions contemplated by this Agreement, except for
(i) general statements referring to the existence of this
Agreement, specifying its nature (Research Collaboration and
License Option), the Field of Use and identity of the Parties
but no other details, (ii) disclosures made in compliance with
Section 4.1.(a) hereof, (iii) attorneys, consultants, and
accountants retained to represent them in connection with the
transactions contemplated hereby or as may be reasonably
necessary to either Party's bankers, investors, attorneys or
other professional advisers in connection with a merger or
acquisition, provided such advisors are bound by
confidentiality obligations essentially identical to those
provided for herein, and (iv) occasional, brief comments by
the respective executive officers of both Parties consistent
with such guidelines for public statements as may be mutually
agreed by the Parties made in connection with routine
interviews with analysts or members of the financial press.
In addition, either Party (after consultation with counsel) in
its own right may make such further announcements and
disclosures, if any, as may be required by applicable security
laws and regulations (such as, without limitation, regulations
of the US Securities & Exchange Commission (SEC) or the French
Commission des Operations de Bourse (COB), or any equivalent
authority of any country having jurisdiction), in which case
the Party making the announcement or disclosure shall use its
best efforts to give advance notice to, and discuss such
announcement or disclosure with, the other Party and such other
Party's attorneys.
-41-
<PAGE>42
8.2. Term and termination.
---------------------
8.2.1. Expiration.
-----------
Unless terminated earlier pursuant to this Section 8.2. or Section
8.4. hereof, the Agreement shall expire on the expiration of PMC's
obligations to pay royalties under the Agreement in accordance with
the Royalty Term. Thereafter, PMC and its permitted Sublicensees (if
any) shall have a perpetual, fully paid-up, royalty-free, non-
cancellable, worldwide license or sub-license (whichever is
applicable) to the CISTRON Technology.
8.2.2. Termination by PMC.
-------------------
PMC shall have the right at any time, in its sole discretion, to
terminate this Agreement, by giving not less than three (3) months'
prior written notice to CISTRON of such termination.
8.2.3. Termination for Cause.
----------------------
(i) Either Party may terminate this Agreement, at its option, upon
or after the breach of any material provision of the Agreement
by the other Party, if such breaching Party has not cured such
breach within ninety (90) days after written notice thereof
from the other Party.
(ii) PMC or CISTRON may terminate this Agreement upon written
notice to the other Party if the other Party makes a general
assignment for the benefit of creditors, is the subject of
proceedings in voluntary or involuntary bankruptcy or has a
receiver or trustee appointed for substantially all of its
property ; provided that in the case of an involuntary
bankruptcy proceeding such right to terminate shall only
become effective if the other Party consents thereto or such
proceeding is not dismissed within ninety (90) days after the
filing thereof.
(iii) Each of the parties hereto acknowledges and agrees that this
Agreement (i) constitutes a license of Intellectual Property
(as such term is defined in the United States Bankruptcy Code,
as amended (the "Code"), and (ii) is an executory contract,
with significant obligations to be performed by each Party
hereto. The parties agree that PMC as LICENSEE may fully
exercise all of its rights and elections under the Code,
including, without limitation, those set forth in Section 365
(n) of the Code. The parties further agree that, in the event
that PMC elects to retain its rights as a licensee under the
Code, PMC shall be entitled to complete access to the CISTRON
Technology licensed to it hereunder and all embodiments of
such technology. Such embodiments of the CISTRON Technology
shall be delivered to PMC not later than (a) the commencement
of bankruptcy proceedings against CISTRON, unless CISTRON
elects to perform its obligations under the Agreement, or (b)
if not delivered under (a) above, upon the rejection of the
Agreement by or on behalf of CISTRON.
8.2.4. Effect of Expiration and Termination.
-------------------------------------
Expiration or termination of the Agreement shall not relieve the
Parties of any obligation accruing prior to such expiration or
termination. The provisions of Sections [TO BE COMPLETED] and
Articles [TO BE COMPLETED] shall survive the expiration or
termination of the Agreement.
Upon termination of this Agreement pursuant to Sections 8.2.2 or
8.2.3, and in the latter case, provided it is terminated as a
result of a breach of a material obligation of PMC hereunder, all
rights granted to PMC hereunder shall revert to CISTRON, PMC shall
return the entire CISTRON Technology and all embodiments of such
technology to CISTRON and shall cease any use of it forthwith.
CISTRON shall have a right of first refusal on PMC's
-42-
<PAGE>43
intellectual property rights pertaining to any PRODUCT that was
developed by PMC at the date of termination (including PMC rights on
Joint Inventions), and CISTRON and PMC shall negotiate in good faith
the Terms and conditions of a license from PMC to CISTRON on such
PMC's rights relating to such PRODUCT(S) provided, however, that such
rights shall not include any intellectual property relating solely
to antigens or to any compound other than the FACTOR and provided,
further, that PMC shall be under no obligation neither to provide
any technical assistance nor to supply any product or Biological
Material. In the event that after termination and reversal of rights
and/or license to CISTRON hereunder, CISTRON either alone or in
collaboration with any Third-Party or through licenses and sub-
licenses eventually commercialize a PRODUCT, CISTRON shall pay to
PMC an amount equal to one half (50%) of any compensation received,
either in kind or in cash, by CISTRON with respect to or in
connection with such PRODUCT(S).
Upon termination of this Agreement pursuant to Section 8.2.3 further
to a breach of a material obligation of CISTRON hereunder, the
LICENSE shall be deemed terminated and replaced by a perpetual,
fully paid-up, royalty-free, non-cancelable, exclusive and worldwide
license to the CISTRON Technology to PMC, with the right to grant or
maintain sub-licenses.
8.3. Indemnity.
----------
8.3.1. Direct Indemnity.
-----------------
8.3.1.1. Each Party shall indemnify and hold harmless the other Party,
its Affiliates, and their respective directors, officers,
shareholders, agents, consultants and employees from and against all
Third-Party claims, demands, liabilities, damages (including damages
directly or indirectly suffered by the other Party and/or its
Affiliates and their respective directors, officers, shareholders,
agents, consultants and employees) and expenses, including
attorneys' fees and costs (collectively, the "Liabilities") arising
out of the breach of any material provision of this Agreement by the
indemnifying Party or caused by an intentional act or omission of
the indemnifying Party.
8.3.1.2. PMC shall defend, indemnify and hold harmless CISTRON, its
Affiliates, and their respective directors, officers, shareholders,
agents, consultants and employees, from and against all Liabilities
suffered or incurred arising out of any Third-Party claims in
connection with the manufacture, design, testing, possession,
distribution, use, sale or other disposition by or through PMC, its
Affiliates or Sublicensees of any PRODUCTS, except in each case to
the extent such Liabilities resulted from the gross negligence,
recklessness or intentional acts or omissions by CISTRON.
8.3.2. Procedure.
----------
A Party (the "Indemnitee") that intends to claim indemnification
under this Article 8.3. shall promptly notify the other Party (the
"Indemnitor") of any Liability or action in respect of which the
Indemnitee intends to claim such indemnification, and the Indemnitor
shall have the right to participate in, and, to the extent the
Indemnitor so desires, jointly with any other Indemnitor similarly
noticed, to assume the defense thereof with counsel selected by the
Indemnitor ; provided, however, that the Indemnitee shall have the
right to retain its own counsel, with the fees and expenses to be
paid by the Indemnitor, if representation of such Indemnitee by the
counsel retained by the Indemnitor would be inappropriate due to
actual or potential differing interests between such Indemnitee and
any other Party represented by such counsel in such proceedings.
-43-
<PAGE>44
The indemnity obligations under this Article 8.3. shall not apply to
amounts paid in settlement of any loss, claim, damage, liability or
action if such settlement is effected without the consent of the
Indemnitor, which consent shall not be withheld unreasonably. The
failure to deliver notice to the Indemnitor within a reasonable time
after the commencement of any such action, if prejudicial to its
ability to defend such action, shall relieve such Indemnitor of any
liability to the Indemnitee under this Article 8.3. The Indemnitee,
its Affiliates, employees and agents, shall cooperate fully with the
Indemnitor and its legal representatives in the investigation of any
action, claim or liability covered by this indemnification.
8.4. Force Majeure.
--------------
No Party (or any of its Affiliates) shall be held liable or
responsible to the other Party (or any of its Affiliates) nor be
deemed to have defaulted under or breached the Agreement for failure
or delay in fulfilling or performing any term of the Agreement when
such failure or delay is caused by or results from causes beyond the
reasonable control of the affected Party (or any of its Affiliates)
including but not limited to fire, floods, embargoes, war, acts of
war (whether war be declared or not), insurrections, riots, civil
commotions, strikes, lockouts or other labor disturbances, acts of
God or acts, omissions or delays in acting by any governmental
authority or the other Party (collectively, "Events of Force
Majeure") ;
provided, however, that the affected Party (i) shall immediately
notify the other Party of the occurrence of any such Event of Force
Majeure and (ii) shall exert all reasonable efforts to eliminate,
cure or overcome any such Event of Force Majeure and to resume
performance of its covenants with all possible speed ; and provided,
further, that nothing contained herein shall require any Party to
settle on terms unsatisfactory to such Party any strike, lockout or
other labor difficulty, any investigation or proceeding by any
governmental authority or any litigation by any Third-Party.
Notwithstanding the foregoing, to the extent that an Event of Force
Majeure continues for a period in excess of six (6) months, the
affected Party shall promptly notify in writing the other Party of
such Event of Force Majeure and within four (4) months of the other
Party's receipt of such notice, the Parties agree to negotiate in
good faith either (i) to resolve the Event of Force Majeure, if
possible, (ii) to extend by mutual agreement the time period to
resolve, eliminate, cure or overcome such Event of Force Majeure,
(iii) to amend this Agreement to the extent reasonably possible, or
(iv) to terminate this Agreement.
8.5. Assignment.
-----------
This Agreement in its entirety may not be assigned or otherwise
transferred, nor, except as expressly provided hereunder, may any
right or obligations pertaining to the Field of Use hereunder be
assigned or transferred to any Third-Party by either Party without
the consent of the other Party ; provided, however, that either Party
may, without such consent, assign this Agreement and its rights and
obligations hereunder to any of its Affiliates or in connection with
the transfer or sale of all or substantially all of its business, or
in the event of its merger or consolidation or change in control or
similar transaction. Any permitted assignee shall assume all
obligations of its assignor under this Agreement. Without limiting
the generality of the foregoing, without the prior written consent of
PMC, CISTRON shall not under any circumstances assign or transfer any
CISTRON Technology in the Field of Use unless (i) all of the rights
and obligations of CISTRON under this Agreement are assigned to the
same transferee(s) concurrently therewith, and (ii) such
transferee(s) expressly assume(s) in writing the performance of all
terms and conditions of this Agreement to be performed by CISTRON and
such assignment shall not relieved the assignor of any of its
obligations under this Agreement. Each Party acknowledges that the
other Party would suffer irreparable injury in the event of any
breach of this Article 8.5. and that therefore the remedy at law for
any breach or threatened breach hereof by any Party shall be
inadequate. Accordingly, upon a breach or threatened breach hereof by
any Party, the other Party shall, in addition and without prejudice
to any other rights and remedies it may have, be entitled as a matter
of right, without proof of
-44-
<PAGE>45
actual damages, to seek specific performance hereof and to such other
injunctive or equitable relief to enforce, or prevent any violations
(whether anticipatory, continuing or future) hereof.
8.6. Adverse Experience Reporting.
-----------------------------
During the term of the Agreement, each Party shall notify the other
immediately of any information (howsoever obtained and from whatever
source) concerning any unexpected side effect, injury, toxicity or
sensitivity reaction, or any unexpected incidence, and the severity
thereof, associated with the clinical uses, studies, investigations,
tests and marketing of a PRODUCTS. For purposes of this Article 8.6.,
"unexpected" shall mean (x) for a non-marketed PRODUCTS, an
experience that is not identified in nature, severity or frequency in
the current clinical investigator's confidential information
brochure, and (y) for a marketed PRODUCTS, an experience which is not
listed in the current labeling for such PRODUCTS, and includes an
event that may be symptomatically and patho-physiologically related
to an event listed in the labeling but differs from the event because
of increased frequency or greater severity or specificity. Each Party
further shall immediately notify the other of any information
received regarding any threatened or pending action by an agency
which may affect the safety and efficacy claims of a Product. Upon
receipt of any such information, the Parties shall consult with each
other in an effort to arrive at a mutually acceptable procedure for
taking appropriate action ; provided, however, that nothing contained
herein shall be construed as restricting either Party's right to make
a timely report of such matter to any government agency or take other
action that it deems to be appropriate or required by applicable law
or regulation.
8.7. Severability.
-------------
Each Party hereby agrees that it does not intend to violate any
public policy, statutory or common laws, rules, regulations, treaty
or decision of any government agency or executive body thereof of any
country or community or association of countries. Should one or more
provisions of this Agreement be or become invalid, the Parties hereto
shall substitute, by mutual consent, valid provisions for such
invalid provisions which valid provisions in their economic effect
are sufficiently similar to the invalid provisions that it can be
reasonably assumed that the Parties would have entered into this
Agreement with such provisions. In case such provisions cannot be
agreed upon, the invalidity of one or several provisions of this
Agreement shall not affect the validity of this Agreement as a whole,
unless the invalid provisions are of such essential importance to
this Agreement that it is to be reasonably assumed that the Parties
would not have entered into this Agreement without the invalid
provisions.
8.8. Miscellaneous.
--------------
8.8.1. Notices.
--------
Any consent, notice or report required or permitted to be given or
made under this Agreement by one of the Parties hereto to the other
shall be in writing, delivered Personally or by facsimile (and
promptly confirmed by Personal delivery, first class air mail or
courier), first class air mail or courier, postage prepaid (where
applicable), addressed to such other Party at its address indicated
below, or to such other address as the addressee shall have last
furnished in writing to the addressor and (except as otherwise
provided in this Agreement) shall be effective upon receipt by the
addressee.
If to CISTRON :
CISTRON BIOTECHNOLGY, Inc.
10 Bloomfield Avenue
Pine Brook, NJ 07058
-45-
<PAGE>46
Attention : Chairman
Telecopier : (973) 575-4854
Telephone : (973) 575-1700
with a copy to :
Seth I. Truwit, Esq.
Epstein Becker & Green, PC
250 Park Avenue
New York, NY 10177
Telecopier : (212) 661-0989
Telephone : (212) 351-4709
If to PMC :
PASTEUR MERIEUX Serums & Vaccins, S.A.
58, avenue Leclerc
69007 Lyon, France
Attention : Senior Vice President, Legal & Corporate Affairs
and General Counsel
Telecopier : 011 33 4 37 37 70 61
Telephone : 011 33 4 37 37 77 84
CONNAUGHT LABORATORIES Inc.
Route 611,
Swiftwater, PA 18370
Attention : Vice President, Business Development
Telecopier : (717) 839-4600
Telephone : (717) 839-4366
8.8.2. Applicable Law.
---------------
The Agreement shall be governed by and construed in accordance with
the laws of the State of New York, without regard to the conflict of
law principles thereof.
8.8.3. Representations, warranties and covenants.
------------------------------------------
8.8.3.1. Representations and Warranties of PMC.
--------------------------------------
(a) PMC is a Societe Anonyme duly organized and existing under the
laws of France, with the corporate power to own, lease and
operate its properties and to carry on its business as now
conducted.
(b) PMC has all necessary corporate power and authority to enter into
this Agreement and to consummate the transactions contemplated
hereby.
(c) The execution, delivery and performance of this Agreement by PMC
does not conflict with or contravene the statutes of PMC nor will
the execution, delivery or performance of this Agreement conflict
with or result in a breach of, or entitle any Party thereto to
terminate, any material agreement or instrument to which PMC is a
Party, or by which any of its assets or properties is bound.
(d) This Agreement has been duly authorized, executed and delivered
by PMC and constitutes a legal, valid and binding agreement of
PMC, enforceable against PMC in accordance with its terms, except
as enforceability may be limited by bankruptcy, insolvency,
moratorium, reorganization or other similar laws affecting
creditors' rights generally.
-46-
<PAGE>47
8.8.3.2. Representations, Warranties and Covenants of CISTRON.
-----------------------------------------------------
(a) CISTRON is a corporation duly incorporated and validly existing
as a corporation in good standing under the laws of the State of
Delaware with the corporate power to own, lease and operate its
properties and to carry on its business as now conducted.
(b) CISTRON has all necessary corporate power and authority to enter
into this Agreement and to consummate the transactions
contemplated hereby.
(c) The execution, delivery and performance of this Agreement by
CISTRON does not conflict with or contravene its certificate of
incorporation or by-laws, nor will the execution, delivery or
performance of this Agreement conflict with or result in a breach
of, or entitle any Party thereto to terminate, any material
agreement or instrument to which CISTRON is a Party, or by which
any of its assets or properties is bound.
(d) This Agreement has been duly authorized, executed and delivered
by CISTRON and constitutes a legal, valid and binding agreement
of CISTRON, enforceable against CISTRON in accordance with its
terms, except as enforceability may be limited by bankruptcy,
insolvency, moratorium, reorganization or other similar laws
affecting creditors' rights generally.
(e) All LICENSED PATENTS listed on Schedule A as amended from time to
time, have been registered in, filed in or issued by the
appropriate patent offices of each jurisdiction as indicated on
such Schedule A, and in each case is currently in effect and all
maintenance fees and renewals thereof have been duly made with
respect thereto. CISTRON owns or has full and exclusive rights to
use and exploit under licenses (and to license or sublicense) all
its rights under such LICENSED PATENTS and the LICENSED KNOW-HOW.
Except as set forth on schedule 8.8.3.2.(e) hereto, there have
been no material claims made against CISTRON asserting the
invalidity or non-enforceability of, or with respect to such
LICENSED PATENTS , the misuse of such LICENSED PATENTS or the
LICENSED KNOW-HOW, nor is CISTRON aware that any such claims
exist. Except as set forth on schedule 8.8.3.2.(e) hereto,
CISTRON has not received a notice of conflict of such LICENSED
PATENTS or the LICENSED KNOW-HOW with the asserted rights of
others, or otherwise challenging its rights to use any of such
LICENSED PATENTS, or the LICENSED KNOW-HOW. None of the rights of
CISTRON under the LICENSED PATENTS or LICENSED KNOW-HOW shall be
adversely affected by the execution, delivery or performance of
this Agreement, or the consummation of the transaction
contemplated herein. EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN
THIS SECTION, NEITHER PARTY MAKES ANY REPRESENTATION OR EXTENDS
ANY WARRANTIES OF ANY KIND EITHER EXPRESS OR IMPLIED, INCLUDING
BUT NOT LIMITED TO WARRANTIES OF MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE, NON-INFRINGEMENT, OR VALIDITY OF ANY PATENT
RIGHTS ISSUED OR PENDING.
8.8.4. Dispute Resolution.
-------------------
The Parties agree that if any dispute or disagreement arises between
PMC on the one hand and CISTRON on the other in respect of this
Agreement, they shall follow the following procedure in an attempt
to resolve the dispute or disagreement.
(a) The Party claiming that such a dispute exists shall give notice
in writing ("Notice of Dispute") to the other Party of the
nature of the dispute ;
(b) Within twenty eight (28) business days of receipt of a Notice
of Dispute, a nominee or nominees of PMC and a nominee or
nominees of CISTRON shall meet in Person and exchange written
summaries reflecting, in reasonable detail, the nature and
extent of the dispute, and at this meeting they shall use their
reasonable endeavours to resolve the dispute ;
-47-
<PAGE>48
(c) If, within a further period of twenty eight (28) business days,
the dispute has not been resolved or if, for any reason, the
required meeting has not been held, then the Parties agree that
any dispute shall be referred to an arbitrator appointed by
agreement of CISTRON and PMC or, if no such agreement is
reached within sixty (60) business days after a Party commences
the arbitration, then by a panel of three arbitrators, with
each of PMC and CISTRON to select one arbitrator and those two
arbitrators to select the third. If all three arbitrators have
not been selected within sixty (60) business days after a Party
commences the arbitration, then the Parties agree to abide by
the selection of the remaining arbitrator to be named by a
representative of the International Chamber of Commerce. The
Parties agree that the Rules of the International Chamber of
Commerce shall govern such arbitration and that any decision of
the arbitrators shall be final and binding and shall be
enforceable in any court of competent jurisdiction worldwide
(regardless of whether one of the Parties fails or refuses to
participate in the arbitration). The Parties agree that all
arbitrations shall be conducted in the English language and
that the exclusive venue of all arbitrations shall be in
Zurich, Switzerland. The Party determined by the arbitrators to
be the Party substantially prevailing in the arbitration shall
be entitled to recover its legal and consultants' fees and
other costs reasonably incurred in connection with the
arbitration (as determined by the arbitrators) ; and
(d) in the event of a dispute regarding any payments owing under
this Agreement, all undisputed amounts shall be paid promptly
when due and the balance, if any, promptly after resolution of
the dispute.
8.8.5. Entire Agreement.
-----------------
This Agreement contains the entire understanding of the Parties with
respect to the subject matter hereof. All express or implied
agreements and understandings, either oral or written, heretofore
made, are expressly superseded by this Agreement. This Agreement may
be amended, or any term hereof modified, only by a written
instrument duly executed by both Parties hereto.
8.8.6. Independent Contractors.
------------------------
CISTRON and PMC each acknowledge that they shall be independent
contractors and that the relationship between the two Parties shall
not constitute a partnership, joint venture or agency. Neither
CISTRON nor PMC shall have the authority to make any statements,
representations or commitments of any kind, or to take any action,
which shall be binding on the other Party, without the prior consent
of the other Party to do so.
8.8.7. Affiliates.
-----------
Each Party shall cause its respective Affiliates to comply fully
with the provisions of this Agreement to the extent such provisions
specifically relate to, or are intended to specifically relate to,
such Affiliates, as though such Affiliates were expressly named as
joint obligors hereunder.
8.8.8. Waiver.
-------
The waiver by either Party hereto of any right hereunder or the
failure to perform or of a breach by the other Party shall not be
deemed a waiver of any other right hereunder or of any other breach
or failure by said other Party whether of a similar nature or
otherwise.
8.8.9. No Implied Licence.
-------------------
Nothing in this Agreement shall be deemed to constitute, by
implication or otherwise, the grant by PMC to CISTRON, or by CISTRON
to PMC, of any license to, or interest in, or other rights under any
patent, patent application, proprietary know-how, trade secrets or
other intellectual property rights owned or possessed by PMC or
CISTRON, whichever is applicable, except as expressly provided for
herein.
-48-
<PAGE>49
8.8.10. 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.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date
first set forth above.
For CISTRON BIOTECHNOLOGY, INC.
By:/s/BRUCE C. GALTON
------------------
Name : BRUCE C. GALTON
Title : Chairman of the Board
and Chief Executive Officer
For PASTEUR MERIEUX Sewrums & Vaccins S.A.
By: /s/DAVID J. WILLIAMS
--------------------
Name : DAVID J. WILLIAMS
Title : President and
Chief Operating Officer
-49-
<PAGE>50
SCHEDULE A
____________
LICENSED PATENTS
-50-
<PAGE>51
SCHEDULE B -
PROVISIONS GOVERNING OWNERSHIP
AND MANAGEMENT OF JOINT INVENTIONS.
-51-
<PAGE> 1
Robert W. Naismith, Ph.D. 800 James Avenue, Suite 201
Chairman/CEO Scranton, PA 18510-1544
Tel (717) 961-8944
Fax (717) 961-2324
Email: [email protected]
Confidential
- ------------
October 5, 1998
Mr. Bruce C. Galton
Chairman & CEO
Cistron Biotechnology, Inc.
Box 2004
10 Bloomfield Avenue ENGAGEMENT LETTER
Pine Brook, NJ 07058
Dear Mr. Galton:
This letter is to confirm our understanding that Cistron
Biotechnology, Inc. ("Cistron" or the "Company") desires to
engage Genome Securities, Inc. ("GSI") to act as the Company's
exclusive financial advisor ("Financial Advisor") for a period
six months and renewable at the option of the Company and GSI,
by mutual agreement, for additional six month periods. In
addition, during the period of such agreement, GSI will act as
the Company's mergers and acquisitions advisor ("M&A Advisor"),
exclusive corporate partner advisor ("Partner Advisor"), and as
private placement agent ("Placement Agent") for any best efforts
debt or private equity financing of the Company's Securities.
1. Financial Advisor
-----------------
As Financial Advisor, GSI will assist and advise the Cistron
on various financial matters on an as requested basis. These
matters include but are not limited to the following:
- Advise Cistron on technical and scientific strategies;
- Advise company on general corporate strategic and
financial initiatives;
- Consult and assist the Company with the preparation of an
information package to be sent to potential financial
partners;
- Assist the Company with structuring and negotiating terms
and conditions of a strategic/financial partnership;
For acting as Financial Advisor, Cistron shall pay GSI:
- A monthly financial advisory fee (the "Financial Advisory
Fee") in the amount of $10,000 payable monthly in advance.
-1-
<PAGE>2
2. M&A Advisor
-----------
As M&A Advisor, GSI will assist and advise Cistron on an as
requested basis in the following manner:
- Identify, evaluate and analyze potential M&A
transactions;
- Assist in negotiations;
- Structure the transaction;
- Assist in documentation and
- Effect the closing of the transaction.
For the purpose of this agreement, an Acquisition by the
Company shall include any acquisition, merger, consolidation,
tender offer, business combination or similar transaction
involving 50% or more of a Candidate's business, assets or
voting stock.
For acting as M&A Advisor, the Company shall pay GSI a
transaction fee ("Transaction Fee") equal to the greater of
the following:
- $100,000 at the signing of a letter of intent plus a
graduated percentage, 5/3/1, of the Transaction Value,
payable in cash promptly upon consummation of a Transaction
if, during the term of this agreement or within 24 months
thereafter, a Transaction is consummated or a definitive
agreement is entered into with a party that was introduced
to the Company by GSI that subsequently results in a
Transaction. Said fee will be credited against the minimum
transaction fee.
- A minimum transaction fee of $250,000 or a graduated
percentage shall be applied to the Transaction Value in the
following manner: 5% of the first $10.0 million of
Transaction Value, 3% of the second $10.0 million of
Transaction Value and 1% of the remaining Transaction Value
above $20.0 million.
- For any Transaction where a party was identified by
Cistron, a Transaction Value will be calculated in the
following manner: 3.5% of the first $10.0 million of
Transaction Value, 2.5% of the second $10.0 million of
Transaction Value and 1% of the remaining Transaction Value
above $20.0 million.
"Transaction Value" shall mean the total proceeds and other
consideration paid or received or to be paid or received in
connection with a transaction (which consideration shall be
deemed to include amounts in escrow), including, without
limitation: (i) cash; (ii) notes, securities and other
property; (iii) liabilities, including all debt, pension
liabilities and guarantees, assumed; (iv) payments made in
installments; (v) amounts payable under consulting agreements,
agreements not to compete or similar arrangements (including
such payments to management); (vi) contingent payments
(whether or not related to future earnings or operations); and
(vii) if the transaction involves the disposition of assets,
the net value of current assets not sold. For purposes of
computing any fees payable to GSI hereunder, non-cash
consideration shall be valued as follows: (x) publicly traded
securities shall be valued at the average of their closing
prices (as reported in The Wall Street Journal) for the five
trading
-2-
<PAGE>3
days prior to the closing of the transaction and (y) any other
non-cash consideration shall be valued at the fair market
value thereof as determined in good faith by the Company and
GSI. Future payments due GSI will be paid to GSI as received by
Cistron.
In addition, for acting as M&A Advisor in a Transaction, the
Company shall issue GSI 400,000 warrants to purchase the
Company Stock exercisable at the closing bid price on the date
of the signing this agreement which will vest upon
consummation of a merger or acquisition transaction. Said
warrants shall have a five-year term and registration shall be
the sole responsibility of the company.
3. Partner Advisor
---------------
As the Company's external Partner Advisor, GSI shall introduce
the Company to potential corporate partners ("Corporate
Partners") in the following manner:
- Identify and evaluate Corporate Partners;
- Provide The Company with a list of Corporate Partners to
be contacted and regular written reports detailing
activity status;
- Assist the Company in preparing an information package to
be sent to Corporate Partners;
- Assist the Company with structuring and negotiating terms
and conditions of the Corporate Partner relationship; and
- Effect the closing of a Corporate Partner Transaction
(the "Partner Transaction").
For purposes of this agreement, a Corporate Partner
Transaction may include but is not limited to: (a) a joint
venture, partnership, license or other contract for research,
development, manufacturing, marketing, distribution, sale or
other activity; (b) the purchase of, or commitment to purchase
from the Company less than 50% of its business, assets or
voting stock; (c) the acquisition of any of the Company's
assets or any rights, in respect to its products and/or
technology; and (d) a commitment by the Candidate to provide
funding for all or part of the Company's research and
development activities, whether such work is performed or
managed by the Company or the candidate.
For acting as Partner Advisor, Cistron shall pay GSI 7% of the
Corporate Partner Value, payable in cash promptly upon
consummation of a Partner Transaction if, during the term of
this agreement or within 12 months thereafter, a Partner
Transaction is consummated or a definitive agreement is
entered into with a Corporate Partner which was introduced to
the Company by GSI that subsequently results in a Partner
Transaction. In the event a successful
corporate partnership is consummated as a result of Cistron's
efforts, GSI's normal fee will be reduced by 10%. Fees due
GSI will not include internal funding expended by Cistron's
partner unless said expenditures were define in the Partnering
agreement.
"Corporate Partner Value" shall mean the total proceeds and
other consideration paid or received or to be paid or received
in connection with a Partner Transaction (which
-3-
<PAGE>4
consideration shall be deemed to include amounts in escrow),
including, without limitation: (i) cash; (ii) notes, securities
and other property; (iii) liabilities, including all debt, pension
liabilities and guarantees, assumed; (iv) payments made in
installments; (v) amounts payable under consulting agreements,
agreements not to compete or similar arrangements (including
such payments to management); (vi) contingent payments
(whether or not related to future earnings or operations); and
(vii) if the transaction involves the disposition of assets,
the net value of current assets not sold. For purposes of
computing any fees payable to GSI hereunder, non-cash
consideration shall be valued as follows: (x) publicly traded
securities shall be valued at the average of their closing
prices (as reported in The Wall Street Journal) for the five
trading days prior to the closing of the transaction and (y)
any other non-cash consideration shall be valued at the fair
market value thereof as determined in good faith by the
Company and GSI. Future payments due GSI will be paid to GSI
as received by Cistron.
4. Placement Agent
---------------
As Private Placement Agent for any debt or private equity
financing, on a best efforts basis GSI shall introduce the
Company to potential institutional and qualified investors
(the "Offering") in the following manner:
- Consult and assist the Company with the preparation of an
information package ("Information Package") to be sent to
potential investors;
- Introduce the Company to potential institutional and
qualified investors;
- Assist the Company with structuring and negotiating terms
and conditions; and
- Assist the Company to close on the Offering.
For acting as Best Effort Private Placement Agent, the Company
shall pay GSI a placement agent fee ("Placement Agent Fee") in
the following manner:
- 8% of the total gross proceeds raised from the Offering,
payable in cash at the closing of the Offering; plus
- Warrants equal to 10% of the value of the Offering
exercisable at the same price and terms as those
associated with the Offering
If at any time during a period of twelve (12) months from the
time of termination or expiration of this agreement the
Company directly or through a private placement sells any type
of security to an investor which was identified by GSI during
the term of this agreement, the Company shall pay GSI a fee
equal to what the Private Placement Agent Fee would have been
with regard to such sale.
It is expressly understood and acknowledged that GSI for the
purpose of a public offering, will act as Cistrons exclusive
placement agent to identify a lead manager to undertake a
financing by the company on terms customary for similar
transactions. In order to encourage GSI to undertake this
assignment it is agreed that the company will require the
underwriters
-4-
<PAGE>5
to include GSI as a Financial Advisor to the Offering Memorandum:
GSI will receive 20% of the underwriters commissions.
5. The term of the engagement to act as the Company's exclusive
Financial Advisor shall be for a period of six months. If
mutually agreed such engagement will be renewed every six
months. Subject to the provisions of paragraphs I through 4
and 6 through 11 and the indemnification letter which shall
survive any termination or expiration of this agreement,
either party may terminate the engagement hereunder at any
time, with or without cause, by giving the other party at
least 30 days prior written notice.
6. In order to coordinate the efforts to effect a transaction
satisfactory to the Company during the period of engagement
hereunder, including any extensions thereof, in the event that
the Company, or its directors, management, or shareholders
receive any meaningful inquiry or are otherwise aware of the
interest of any third party concerning any transaction
contemplated in paragraphs 1, 2, 3 and 4 the Company agrees to
promptly inform GSI of the third party and its interest and
request GSI's services as contemplated hereunder.
7. In connection with GSI's activities on the Company's behalf,
Cistron will furnish GSI with all information which it may
reasonably request and will provide GSI access to the
officers, directors, accountants and counsel of Cistron.
Cistron acknowledges that in rendering its services hereunder,
GSI shall be solely using and relying on the information
provided by the Company. GSI does not assume responsibility
for the accuracy or completeness of any information. Any
advice rendered by GSI pursuant to this agreement may not be
disclosed publicly without its prior written consent.
8. In addition to any fees that may be payable to GSI hereunder
(and regardless of whether a Transaction occurs), the Company
hereby agrees to reimburse GSI for travel and all other out of
pocket expenses incurred in performing its services hereunder,
including the fees and expenses of its legal counsel. Such
expense shall be submitted on a monthly basis and reimbursed
upon receipt. All expenses in excess of five thousand dollars
($5,000) will be first approved by Cistron. Any advertising
expenses to be incurred by Cistron will require prior
approval.
9. The Company agrees that GSI has the right to place
advertisements in financial and other newspapers and journals
describing its services to the Company hereunder upon review
and approval by the Company whose approval should not be
unreasonably withheld.
10. GSI will act under this letter agreement as an independent
contractor with duties to the Company. Because GSI will be
acting on the' Company's behalf in this capacity, it is GSI's
practice to receive indemnification. A copy of GSI's standard
indemnification form is attached to this letter.
11. GSI and Cistron mutually agree that they will not disclose
any confidential information received from the other party to
others except with the written permission of the other party
-5-
<PAGE>6
or as such disclosure may be required by law. In addition, GSI
will use its best efforts not to undertake a conflicting
assignment. If such a conflict is perceived to exist, GSI will
notify Cistron of the possible conflict.
12. This agreement shall be governed by and construed in
accordance with the laws of the State of Pennsylvania
applicable to contracts executed in and to be performed in
that state.
13. All fees due BlueStone Capital Partners and/or Genome
Securities, Inc for previous assignments will be excluded
from this agreement.
If the terms of our engagement as set forth in this letter are
satisfactory to you, kindly sign and date the enclosed copy of
this letter and indemnification form and return it to us. If
this agreement is not executed by both parties within ten (10)
days from its date it shall cease to be a valid offer to assist
and represent the Company.
Very truly yours,
Genome Securities, Inc.
By: /s/ROBERT J. NAISMITH, PH.D.
----------------------------
Robert W. Naismith, Ph.D.
Chairman and CEO
ACCEPTED AND AGREED TO as of the date hereof 10-8-1998.
CISTRON BIOTECHNOLOGY
By: /s/BRUCE C. GALTON
------------------
Bruce C. Galton
Chairman and CEO
-6-
<PAGE>7
Cistron Biotechnology, Inc.
10 Bloomfield Avenue
Pine Brook, NJ 07058
October 5, 1998
Genome Securities, Inc.
800 James Avenue
Scranton, PA 18510
Gentlemen:
This letter will confirm that we have engaged GSI to advise and assist us
in connection with the matters referred to in our letter agreement dated
October 5, 1998 (the "Engagement Letter"). In consideration of your
agreement to act on our behalf in connection with such matters, we agree to
indemnify and hold harmless you and your affiliates and you and their
respective officers, directors, employees and agents and each other person,
if any, controlling you or any of your affiliates (you and each such other
person being an "Indemnified Person") from and against any losses, claims,
damages or liabilities related to, arising out of or in connection with the
engagement (the "Engagement") under the Engagement Letter, and will
reimburse each Indemnified Person for all expenses (including fees and
expenses of counsel) as they are incurred in connection with investigating,
preparing, pursuing or defending any action, claim, suit, investigation or
proceeding related to, arising out of or in connection with the Engagement,
whether or not pending or threatened and whether or not any Indemnified
Person is a party. We will not, however, be responsible for any losses,
claims, damages or liabilities (or expenses relating thereto) that are
finally judicially determined to have resulted from the bad faith or gross
negligence of any Indemnified Person. We also agree that no Indemnified
Person shall have any liability (whether direct or indirect, in contract or
tort or otherwise) to us for or in connection with the Engagement except
for any such liability for losses, claims, damages or liabilities incurred
by us that are finally judicially determined to have resulted from the bad
faith or gross negligence of such Indemnified Person.
We will not, without your prior written consent, settle, compromise,
consent to the entry of any judgment in or otherwise seek to terminate any
action, claim, suit or proceeding in respect of which indemnification may
be sought hereunder (whether or not any Indemnified Person is a party
thereto) unless such settlement, compromise, consent or termination
includes a release of each Indemnified Person from any liabilities arising
out of such action, claim, suit or proceeding. No Indemnified Person
seeking indemnification, reimbursement or contribution under this
agreement will, without our prior written consent, settle, compromise,
consent to the entry of any judgment in or otherwise seek to terminate any
action, claim, suit, investigation or proceeding referred to in the
preceding paragraph.
If the indemnification provided for in the first paragraph of this
agreement is judicially determined to be unavailable (other than in
accordance with the third sentence of the first paragraph hereof) to an
Indemnified Person in respect of any losses, claims, damages or
-7-
<PAGE>8
liabilities referred to herein, then, in lieu of indemnifying such
Indemnified Person hereunder, we shall contribute to the amount paid or
payable by such Indemnified Person as a result of such losses, claims,
damages or liabilities (and expense relating thereto) (i) in such proportion
as is appropriate to reflect the relative benefits to you, on the one hand,
and us, on the other hand, of the Engagement or (ii) if the allocation
provided by clause (i) above is not available, in such proportion as is
appropriate to reflect not only the relative benefits referred to in such
clause (i) but also the relative fault of each of you and us, as well as any
other relevant equitable considerations; provided, however, in no event shall
your aggregate contribution to the amount paid or payable exceed the
aggregate amount of fees actually received by you under the Engagement
Letter. For the purposes of this agreement, the relative benefits to us and
you of the Engagement shall be deemed to be in the same proportion as (a)
the total value paid or contemplated to be paid or received or contemplated
to be received by us or our shareholders, as the case may be, in the
transaction or transactions that are the subject of the Engagement, whether
or not any such transaction is consummated, bears to (b) the fees paid or
to be paid to you under the Engagement Letter.
The provisions of this agreement shall apply to the Engagement and any
modification thereof and shall remain in full force and effect regardless
of any termination or the completion of your services under the Engagement
Letter.
This agreement and the Engagement Letter shall be governed by and construed
in accordance with the laws of the State of Pennsylvania applicable to
contracts executed and to be performed in that state.
Very truly yours,
/s/BRUCE C. GALTON
---------------
BRUCE C. GALTON
for CISTRON BIOTECHNOLOGY, INC.
-8-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This Schedule contains summary financial information taken from the balance
sheet as of September 30, 1998 (unaudited) and the statement of operations
for the three-month period ended September 30, 1998 (unaudited) and is
qualified in its entirety by reference to the Company's Annual Report on
Form 10-K for the fiscal year ended June 30, 1999.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> SEP-30-1998
<CASH> 5,597,609
<SECURITIES> 0
<RECEIVABLES> 3,268,727
<ALLOWANCES> (230,000)
<INVENTORY> 2,548
<CURRENT-ASSETS> 8,967,908
<PP&E> 727,695
<DEPRECIATION> 702,736
<TOTAL-ASSETS> 12,809,141
<CURRENT-LIABILITIES> 1,055,707
<BONDS> 0
0
0
<COMMON> 269,302
<OTHER-SE> 10,568,439
<TOTAL-LIABILITY-AND-EQUITY> 12,809,141
<SALES> 153,570
<TOTAL-REVENUES> 290,281
<CGS> 79,634
<TOTAL-COSTS> 79,634
<OTHER-EXPENSES> 379,543
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (168,896)
<INCOME-TAX> (64,180)
<INCOME-CONTINUING> (104,716)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (104,716)
<EPS-PRIMARY> 0.00
<EPS-DILUTED> 0.00
</TABLE>
