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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------------------
FORM 8-K
CURRENT REPORT FILED PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT
(DATE OF EARLIEST EVENT REPORTED): NOVEMBER 12, 1998
ARONEX PHARMACEUTICALS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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DELAWARE 0-20111 76-0196535
(STATE OR OTHER JURISDICTION OF (COMMISSION FILE NUMBER) (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
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8707 TECHNOLOGY FOREST PLACE
THE WOODLANDS, TEXAS 77381-1191
(ADDRESS OF PRINCIPAL
EXECUTIVE OFFICES
AND ZIP CODE)
(281) 367-1666
(REGISTRANT'S TELEPHONE NUMBER,
INCLUDING AREA CODE)
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ITEM 5. OTHER EVENTS
On November 12, 1998, Aronex Pharmaceuticals, Inc. (the "Company") entered
into a License Agreement with Abbott Laboratories ("Abbott") with respect to the
Company's NYOTRAN product. The License Agreement provides Abbott with exclusive
worldwide rights to market and sell NYOTRAN, subject to rights previously
granted to Grupo Ferrer Internacional, S.A. in Spain and Portugal and certain
copromotion rights retained by the Company in the United States and Canada.
Abbott agreed to pay the Company up-front payments of $2.8 million, which
payments were received by the Company on November 25, 1998. Abbott has also
agreed to provide funding for continuing clinical development of NYOTRAN and to
make subsequent milestone payments as specified regulatory goals and sales
targets are achieved. Abbott will also pay the Company escalating royalties on
all product sales of NYOTRAN.
In connection with the License Agreement, the Company entered into a Stock
Purchase Agreement with Abbott on November 12, 1998 under which Abbott agreed to
purchase 837,989 shares of the Company's common stock for $3.0 million in cash.
The sale of such shares was completed on November 30, 1998 pursuant to the terms
of the Stock Purchase Agreement. The sale of such shares was not registered
under the Securities Act of 1933, as amended (the "Securities Act"), and was
made in reliance on Section 4(2) of the Securities Act and Rule 506 of
Regulation D.
Item 7. Exhibits
*Exhibit 10.1 -- License Agreement, dated November 12, 1998, between
Abbott Laboratories and Aronex Pharmaceuticals, Inc.
*Exhibit 10.2 -- Stock Purchase Agreement, dated November 12, 1998,
between Abbott Laboratories and Aronex Pharmaceuticals,
Inc.
*Confidential treatment has been requested for portions of the referenced
agreement. The copy filed as an exhibit omits the information subject to
the confidentiality request.
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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 hereunto duly authorized.
Aronex Pharmaceuticals, Inc.
Date: November 30, 1998
By: /s/ Geoffrey F. Cox, Ph.D.
-----------------------------------
Geoffrey F. Cox, Ph.D.
Chairman of the Board
and Chief Executive Officer
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EXHIBIT INDEX
Exhibit 10.1 -- License Agreement, dated November 12, 1998, between
Abbott Laboratories and Aronex Pharmaceuticals, Inc.
Exhibit 10.2 -- Stock Purchase Agreement, dated November 12, 1998,
between Abbott Laboratories and Aronex Pharmaceuticals,
Inc.
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EXHIBIT 10.1
Portions of this Exhibit have been omitted pursuant to a request for
confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act
of 1934, as amended, and Rule 406 under the Securities Act of 1933, as amended.
These omitted portions have been marked with "*" and have been filed separately
with the Securities and Exchange Commission.
LICENSE AGREEMENT
BETWEEN
ABBOTT LABORATORIES
AND
ARONEX PHARMACEUTICALS, INC.
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TABLE OF CONTENTS
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1. DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . .1
1.1 "Affiliate". . . . . . . . . . . . . . . . . . . .1
1.2 "Annual Net Sales" . . . . . . . . . . . . . . . .2
1.3 "API Intellectual Property Rights" . . . . . . . .2
1.4 "API Know-How" . . . . . . . . . . . . . . . . . .2
1.5 "API Patents". . . . . . . . . . . . . . . . . . .2
1.6 "API Patent Applications". . . . . . . . . . . . .2
1.7 "API Patent Rights". . . . . . . . . . . . . . . .3
1.8 "API Trademarks" . . . . . . . . . . . . . . . . .3
1.9 "Calendar Quarter" . . . . . . . . . . . . . . . .3
1.10 "Calendar Year". . . . . . . . . . . . . . . . . .3
1.11 "EMEA" . . . . . . . . . . . . . . . . . . . . . .3
1.12 "Empiric Claim". . . . . . . . . . . . . . . . . .3
1.13 "Factory Cost" . . . . . . . . . . . . . . . . . .3
1.14 "First Commercial Sale". . . . . . . . . . . . . .3
1.15 "Generic Competition". . . . . . . . . . . . . . .3
1.16 "LBU Countries". . . . . . . . . . . . . . . . . .4
1.17 "Major Subterritories" . . . . . . . . . . . . . .4
1.18 "Net Sales". . . . . . . . . . . . . . . . . . . .4
1.19 "Party" (and "Parties"). . . . . . . . . . . . . .5
1.20 "Product". . . . . . . . . . . . . . . . . . . . .5
1.21 "Regulatory Approval". . . . . . . . . . . . . . .5
1.22 "Term" . . . . . . . . . . . . . . . . . . . . . .5
1.23 "Territory". . . . . . . . . . . . . . . . . . . .5
1.24 "Unaffiliated Sublicensee" . . . . . . . . . . . .5
1.25 "U.S. FDA" . . . . . . . . . . . . . . . . . . . .5
1.26 "U.S. FD&C Act". . . . . . . . . . . . . . . . . .5
1.27 "U.S. NDA" . . . . . . . . . . . . . . . . . . . .5
1.28 "U.S. Product Development Plan". . . . . . . . . .6
1.29 "Valid Claim". . . . . . . . . . . . . . . . . . .6
2. GRANT AND SCOPE OF RIGHTS GRANTED. . . . . . . . . . . . . .6
2.1 Exclusive License. . . . . . . . . . . . . . . . .6
2.2 Sublicensing.. . . . . . . . . . . . . . . . . . .6
2.3 No Implied Licenses. . . . . . . . . . . . . . . .7
2.4 Extension of the Territory to Spain and Portugal..7
3. MILESTONE AND RESEARCH & DEVELOPMENT FUNDING PAYMENTS. . . .7
3.1 Milestone Payments.. . . . . . . . . . . . . . . .7
(a) Effective Date . . . . . . . . . . . . .7
(b) United States Regulatory Approval. . . .7
3.2 Research & Development Funding Payments. . . . . .7
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3.3 Non-Refundability. . . . . . . . . . . . . . . . 10
3.4 Reimbursement of Payment Reductions. . . . . . . 10
3.6 Equity Investment. . . . . . . . . . . . . . . . 11
4. ROYALTY RATES AND PAYMENTS. . . . . . . . . . . . . . . . 11
4.1 Royalty Rates. . . . . . . . . . . . . . . . . . . . 11
(a) * . . . . . . . . . . . . . . . . . . . . . 12
(b) * . . . . . . . . . . . . . . . . . . . . . 12
(c) * . . . . . . . . . . . . . . . . . . . . . 12
(d) * . . . . . . . . . . . . . . . . . . . . . 12
(e) * . . . . . . . . . . . . . . . . . . . . . 12
4.2 Lump Sum Royalty Payments. . . . . . . . . . . . . . 13
4.3 Royalty Reports and Payments.. . . . . . . . . . . . 14
4.4 Currency . . . . . . . . . . . . . . . . . . . . . . 14
4.5 No Royalties Payable Between Affiliates. . . . . . . 15
4.6 No Multiple Royalties. . . . . . . . . . . . . . . . 15
5. PAYMENT, RECORD KEEPING AND AUDIT RIGHTS. . . . . . . . . 15
5.1 Method of Payment. . . . . . . . . . . . . . . . . . 15
5.2 Record Keeping and Audit Rights. . . . . . . . . . . 15
6. PRODUCT DEVELOPMENT AND REGISTRATIONS . . . . . . . . . . 16
6.1 Development and Registration Activities. . . . . . . 16
(a) United States.. . . . . . . . . . . . . . . . 16
(b) European Union. . . . . . . . . . . . . . . . 16
(c) Japan.. . . . . . . . . . . . . . . . . . . . 17
(d) Other Countries.. . . . . . . . . . . . . . . 17
(e) Mutual Assistance.. . . . . . . . . . . . . . 18
6.2 Development Costs. . . . . . . . . . . . . . . . . . 18
6.3 Modifications. . . . . . . . . . . . . . . . . . . . 18
(a) Material Changes. . . . . . . . . . . . . . . 18
(b) Other Changes . . . . . . . . . . . . . . . . 18
6.4 Reciprocal Access to Documentation and Data. . . . . 18
7. ABBOTT PRODUCT MARKETING AND SALES ACTIVITIES . . . . . . 19
7.1 Commercially Reasonable Efforts. . . . . . . . . . . 19
7.2 Marketing Costs and Expenses.. . . . . . . . . . . . 19
8. API CO-PROMOTION ACTIVITIES . . . . . . . . . . . . . . . 19
8.1 Co-Promotion Territory.. . . . . . . . . . . . . . . 19
8.2 Allocation of Sales Representatives. . . . . . . . . 19
8.3 Co-Promotion Period. . . . . . . . . . . . . . . . . 19
8.4 Compensation to API. . . . . . . . . . . . . . . . . 20
8.5 Scope of Co-Promotion Collaboration. . . . . . . . . 20
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9. CONFIDENTIALITY AND PUBLICITY . . . . . . . . . . . . . . 20
9.1 Confidentiality Obligation.. . . . . . . . . . . . . 20
9.2 Permitted Disclosures. . . . . . . . . . . . . . . . 20
9.3 Confidential Information.. . . . . . . . . . . . . . 21
(a) Publicly Available Information. . . . . . . . 21
(b) Previously Known Information. . . . . . . . . 21
(c) Subsequently Received Information . . . . . . 21
(d) Independently Developed Information . . . . . 21
(e) Legally Required Disclosures of Information . 21
9.4 Duration of Confidentiality Obligation.. . . . . . . 22
9.5 Publicity and Announcements. . . . . . . . . . . . . 22
10. TRADEMARKS. . . . . . . . . . . . . . . . . . . . . . . . 22
10.1 Assignment of API Trademarks.. . . . . . . . . . . . 22
10.2 Alternate Trademarks.. . . . . . . . . . . . . . . . 23
11. PATENT OWNERSHIP AND WARRANTIES . . . . . . . . . . . . . 23
11.1 Patent Ownership.. . . . . . . . . . . . . . . . . . 23
11.2 Joint Inventions.. . . . . . . . . . . . . . . . . . 23
11.3 API Patent Warranties. . . . . . . . . . . . . . . . 23
12. PATENT PROSECUTION AND INTELLECTUAL PROPERTY INFRINGEMENT 24
12.1 Patent Filing and Prosecution. . . . . . . . . . . . 24
12.2 Notification of Infringement.. . . . . . . . . . . . 24
12.3 Infringement of Third Party Rights.. . . . . . . . . 24
12.4 Infringement Indemnification.. . . . . . . . . . . . 25
12.5 Termination for Infringement.. . . . . . . . . . . . 26
12.6 Third Party Infringement of API
Intellectual Property Rights. . . . . . . . . . . . 26
(a) API Enforcement . . . . . . . . . . . . . . . 26
(b) Abbott Enforcement. . . . . . . . . . . . . . 26
12.7 Allocation of Recoveries.. . . . . . . . . . . . . . 27
12.8 Mutual Cooperation.. . . . . . . . . . . . . . . . . 27
12.9 Labeling.. . . . . . . . . . . . . . . . . . . . . . 27
12.10 Notification.. . . . . . . . . . . . . . . . . . . 28
13. INDEMNIFICATION AND INSURANCE . . . . . . . . . . . . . . 28
13.1 Reciprocal Indemnification Provisions. . . . . . . . 28
(a) API Indemnification . . . . . . . . . . . . . 28
(b) Abbott Indemnification. . . . . . . . . . . . 28
13.2 Conditions of Indemnification. . . . . . . . . . . . 28
13.3 Insurance. . . . . . . . . . . . . . . . . . . . . . 29
14. ADVERSE DRUG EXPERIENCES. . . . . . . . . . . . . . . . . 29
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15. REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . 30
(a) Corporate Status. . . . . . . . . . . . . . . 30
(b) Authority . . . . . . . . . . . . . . . . . . 31
(c) No Conflicts. . . . . . . . . . . . . . . . . 31
(d) No Approvals. . . . . . . . . . . . . . . . . 31
(e) Enforceability. . . . . . . . . . . . . . . . 31
(f) Compliance With Laws. . . . . . . . . . . . . 31
(g) Year 2000 Compliance. . . . . . . . . . . . . 31
16. TERM AND EARLY TERMINATION RIGHTS . . . . . . . . . . . . 32
16.1 Term.. . . . . . . . . . . . . . . . . . . . . . . . 32
16.2 Termination for Cause. . . . . . . . . . . . . . . . 32
(a) Bankruptcy. . . . . . . . . . . . . . . . . . 32
(b) Material Breach . . . . . . . . . . . . . . . 32
16.3 Termination by Mutual Agreement. . . . . . . . . . . 32
16.4 Termination by Abbott. . . . . . . . . . . . . . . . 32
(a) Safety or Efficacy. . . . . . . . . . . . . . 32
(b) Limited Commercial Viability. . . . . . . . . 33
17. CONSEQUENCES OF TERMINATION . . . . . . . . . . . . . . . 33
17.1 Effect of Termination. . . . . . . . . . . . . . . . 33
17.2 License Rights.. . . . . . . . . . . . . . . . . . . 33
17.3 Fully Paid-Up License. . . . . . . . . . . . . . . . 34
17.4 Mutual Agreement.. . . . . . . . . . . . . . . . . . 34
17.5 Regulatory Approvals.. . . . . . . . . . . . . . . . 34
18. GOVERNING LAW AND DISPUTE RESOLUTION. . . . . . . . . . . 34
18.1 Governing Law. . . . . . . . . . . . . . . . . . . . 34
18.2 Dispute Resolution.. . . . . . . . . . . . . . . . . 34
(a) Attempted Amicable Resolution . . . . . . . . 35
(b) ADR Procedure . . . . . . . . . . . . . . . . 35
(c) ADR Ruling. . . . . . . . . . . . . . . . . . 35
(d) Remedies. . . . . . . . . . . . . . . . . . . 36
(e) Dispute Resolution for Section 7.1. . . . . . 36
18.3 Effect of Commencing Dispute Resolution. . . . . . . 37
19. NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . 37
19.1 Manner of Giving Notices.. . . . . . . . . . . . . . 37
19.2 Addresses for Notices. . . . . . . . . . . . . . . . 38
20. INTEGRATION . . . . . . . . . . . . . . . . . . . . . . . 39
21. ASSIGNMENT. . . . . . . . . . . . . . . . . . . . . . . . 39
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22. LIMITATION OF DAMAGES . . . . . . . . . . . . . . . . . . 39
23. FORCE MAJEURE . . . . . . . . . . . . . . . . . . . . . . 40
24. RELATIONSHIP OF PARTIES . . . . . . . . . . . . . . . . . 40
25. SEVERABILITY OF CLAUSES . . . . . . . . . . . . . . . . . 41
26. NON-WAIVER. . . . . . . . . . . . . . . . . . . . . . . . 41
27. HEADINGS. . . . . . . . . . . . . . . . . . . . . . . . . 41
28. EXECUTION . . . . . . . . . . . . . . . . . . . . . . . . 41
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LICENSE AGREEMENT
This License Agreement ("Agreement") is made and entered into as of the day
of November, 1998 ("Effective Date"), by and between ARONEX PHARMACEUTICALS,
INC., a Delaware corporation having its principal office at 8707 Technology
Forest Place, the Woodlands, Texas 77381-1191 ("API"), and ABBOTT LABORATORIES,
an Illinois corporation having its principal office at 100 Abbott Park Road,
Abbott Park, Illinois, 60064-3500 ("Abbott").
WHEREAS, API has developed a new, proprietary injectable formulation of the
compound nystatin presently being developed under the name Nyotran for treatment
of systemic fungal infections; and
WHEREAS, Abbott and API desire to enter into this Agreement under which
Abbott shall acquire the exclusive world-wide rights to manufacture, distribute,
market and sell the above-referenced product.
NOW, THEREFORE, for and in consideration of the mutual covenants contained
herein and intending to be legally bound, the parties hereto agree as follows:
1. DEFINITIONS
For purposes of this Agreement, the following terms shall be defined as set
forth below. Additional terms used in specific Sections of this Agreement shall
be defined in such Sections.
1.1 "Affiliate" shall mean any business entity controlled by a Party (as
defined below), or which controls a Party, or which is under common control with
a Party. "Control" herein means the direct or indirect ownership of at least
fifty percent (50%) of the authorized issued voting shares in such entity, or
such other relationship
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as in fact legally results in effective control over the management, business
and affairs of such entity or Party, as the case may be. For purposes of this
Agreement, Abbott Affiliates shall also include Abbott Laboratories Nigeria
Limited.
1.2 "Annual Net Sales" shall mean Net Sales (as defined below) in any
Calendar Year.
1.3 "API Intellectual Property Rights" shall mean API Patents (as defined
below) and API Know-How (as defined below).
1.4 "API Know-How" shall mean all non-patented and unpublished
non-clinical, pre-clinical and clinical documentation, information, and data
relating to the Product owned or controlled by API and its Affiliates as of the
Effective Date or at any time during the Term (as defined below), including but
not limited to all registration materials for the Product (as defined below)
developed, acquired or compiled by API and its Affiliates as of the Effective
Date or at any time during the Term, and all documentation, information and data
relating to the formulation, manufacture and/or quality control of the Product
as API and its Affiliates have available as of the Effective Date or at any time
during the Term.
1.5 "API Patents" shall mean all issued patents owned by or licensed to API
and its Affiliates in the Territory as of the Effective Date and other patents
owned by or licensed to API and its Affiliates in the Territory issued at any
time during the Term which have claims covering the manufacture, sale or use of
the Product or its active ingredient (including any divisions, continuations,
continuations-in-part, reexaminations, reissues, additions, renewals and
extensions thereof). API Patents in existence as of the Effective Date are set
forth in Part I of Exhibit A and such Exhibit shall be amended by API from time
to time during the Term to include API Patents issued after the Effective Date.
1.6 "API Patent Applications" shall mean patent applications owned by or
licensed to API and its Affiliates in the Territory pending as of the Effective
Date and patent applications owned by or licensed to API and its Affiliates in
the Territory filed at any time during the Term which have claims covering the
manufacture, sale or use of the Product or its active ingredient (including any
divisions, continuations,
2
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continuations-in-part, reexaminations, reissues, additions, renewals and
extensions thereof). API Patent Applications in existence as of the Effective
Date are set forth in Part II of Exhibit A and such Exhibit shall be amended by
API from time to time during the Term to include API Patent Applications filed
after the Effective Date.
1.7 "API Patent Rights" shall mean API Patents and API Patent Applications.
1.8 "API Trademarks" shall mean Nyotran , NystatinLF and any other mutually
agreed upon trademark owned by API used with the Product.
1.9 "Calendar Quarter" shall mean each of the three (3) month periods
beginning on January 1, April 1, July 1 and October 1 of each Calendar Year (as
defined below) during the Term.
1.10 "Calendar Year" shall mean any consecutive twelve (12) month period
from January 1 to December 31 during the Term.
1.11 "EMEA" shall mean the European Medicines Evaluation Agency or any
successor agency thereto.
1.12 "Empiric Claim" shall mean Regulatory Approval (as defined below) for
the Product with an approved claim for empirical therapy for presumed fungal
infection in febrile, neutropenic patients.
1.13 "Factory Cost" shall mean Abbott's cost of manufacturing the Product
calculated in accordance with the attached Exhibit B.
1.14 "First Commercial Sale" shall mean the first sale of the Product by
Abbott, any Abbott Affiliate or Unaffiliated Sublicensee (as defined below) to
any end-user customer, excluding any sales or transfers of the Product to any
party in connection with clinical trials or regulatory or safety testing.
1.15 "Generic Competition" shall mean competition from another supplier of
nystatin liposome for injection in a country in the Territory in which no Valid
Claim exists such that Abbott or an Abbott Affiliate or Unaffiliated Sublicensee
is forced to lower the price of the Product by * ( * ) or more in such country,
where such discount is in addition to the reasonable and customary discounts
offered to customers in such country.
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1.16 "LBU Countries" shall mean the following countries in Europe,
individually or collectively, as applicable: France, Germany, the United
Kingdom, Italy and Spain.
1.17 "Major Subterritories" shall mean the following countries or areas of
the Territory, individually or collectively, as applicable: the United States,
the LBU Countries and Japan.
1.18 "Net Sales" shall mean the gross sales of the Product in the Territory
actually billed and collected by Abbott, its Affiliates, or Unaffiliated
Sublicensees from any national or local governments, hospitals, drug wholesalers
or brokers, and other third party customers which are not Abbott Affiliates or
Unaffiliated Sublicensees (such as surgicenters and other institutions, the
primary business of which is providing medical care), less reasonable and
customary: (a) credits and allowances or adjustments actually granted to such
customers on account of retroactive price reductions, governmental or other
rebates, and rejections, recalls or returns of the Product previously sold; (b)
any trade and cash discounts, rebates, charge-backs granted to customers in the
case of sales to drug wholesalers or brokers where there are no direct shipments
by Abbott, its Affiliates or Unaffiliated Sublicensees to such customers, and
management fees paid during the relevant time period to group purchasing
organizations and relating specifically to the Product (which discounts,
rebates, charge-backs and fees shall be in the same proportion of the invoice
price as that borne by other products sold by Abbott or an Abbott Affiliate or
Unaffiliated Sublicensee to customers such that the portion of such discounts,
rebates, chargebacks and fees allocated to the Product does not exceed the
portion allocated to any other such product as a percentage of the invoice price
of the Product and such other product), and (c) any sales or other taxes imposed
upon the sale of the Product to the extent included in the gross sales price, as
adjusted (as applicable) for any credits, allowances, rebates and chargebacks.
1.19 "Party" (and "Parties") shall mean either API or Abbott (or both), as
the context requires.
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1.20 "Product" shall mean API's proprietary formulation of the compound
nystatin, presently being developed under the name Nyotran(R).
1.21 "Regulatory Approval" shall mean all governmental approvals required
to market and sell the Product in any given country in the Territory (as defined
below), including but not limited to, product registrations, medical approvals,
price, reimbursement and marketing approvals.
1.22 "Term" shall mean the period commencing on the Effective Date and
continuing until the later of (a) ten (10) years after the date of Regulatory
Approval in the United States and (b) the date of expiration or invalidation of
the last to expire or be invalidated of the API Patents containing a Valid Claim
(as defined below), subject to earlier termination as provided herein.
1.23 "Territory" shall mean all countries and territories of the world;
provided that the Territory shall include Spain and Portugal only if, and to the
extent that, in accordance with Section 2.4, Abbott and/or API enter into one or
more agreements with Grupo Ferrer Internacional, S.A. ("Ferrer") modifying,
replacing or terminating that certain Supply and Distribution Agreement dated
May 2, 1997 between API and Ferrer (the "Ferrer Agreement") to permit the
inclusion of such countries within the Territory without any breach or violation
of the rights of Ferrer.
1.24 "Unaffiliated Sublicensee" shall mean any sublicensee of Abbott under
this Agreement other than an Abbott Affiliate.
1.25 "U.S. FDA" shall mean the United States Food and Drug Administration
and any successor regulatory agency.
1.26 "U.S. FD&C Act" shall mean the United States Food, Drug and Cosmetic
Act, including any amendments thereto and all regulations promulgated
thereunder.
1.27 "U.S. NDA" shall mean a New Drug Application filed with the U.S. FDA.
1.28 "U.S. Product Development Plan" shall mean the Plan attached hereto as
Exhibit C setting forth API's Product development and registration activities in
the United States, as the same may be amended from time to time during the Term
in accordance with Section 6.3.
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1.29 "Valid Claim" shall mean one (1) or more claim of an issued and
unexpired API Patent which neither has been held unenforceable, unpatentable or
invalid by a decision of a court or governmental agency of competent
jurisdiction, unappealable or unappealed within the time allowed for appeal, nor
has been admitted by the holder of the API Patent to be invalid or unenforceable
through reissue, disclaimer, abandonment or otherwise.
2. GRANT AND SCOPE OF RIGHTS GRANTED
2.1 Exclusive License. API hereby grants to Abbott an exclusive license (or
sublicense, as applicable) under API Intellectual Property Rights to make, have
made, use, import, offer for sale and sell the Product in the Territory, which
license shall be exclusive even as to API and its Affiliates, except as provided
in Section 6 and 8. The Parties acknowledge and agree that the foregoing license
shall apply to API Intellectual Property Rights developed or acquired (whether
by license, assignment or otherwise) by API after the Effective Date only to the
extent API has the right to grant such license to Abbott. Notwithstanding the
foregoing sentence, API, in developing or acquiring such API Intellectual
Property Rights, shall use its reasonable best efforts to ensure that Abbott's
rights under this Agreement extend thereto.
2.2 Sublicensing. Abbott shall have the right to sublicense its rights
under this Agreement in the Territory to any Abbott Affiliates, provided that
Abbott guarantees the performance of any Abbott Affiliates to which such rights
are sublicensed. Abbott shall also have the right to sublicense its rights under
this Agreement to Unaffiliated Sublicensees, provided that such sublicensing of
Abbott's rights shall not relieve Abbott of any obligations hereunder, and
provided further that Abbott has obtained API's prior written consent for any
sublicense of its rights in Japan, which consent shall not be unreasonably
withheld or delayed.
2.3 No Implied Licenses. Any rights not expressly granted by either Party
to the other Party in this Agreement are expressly reserved by the Party owning
or controlling such rights and, accordingly, no licenses other than those
specified herein shall be deemed granted by this Agreement by implication,
estoppel or otherwise.
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2.4 Extension of the Territory to Spain and Portugal. Abbott and API shall
use their respective reasonable best efforts to enter into one or more
agreements with Ferrer as soon as practical after the Effective Date (with
discussions with Ferrer to be initiated within ninety (90) days after the
Effective Date) modifying, replacing or terminating the Ferrer Agreement to
permit the inclusion of Spain and Portugal within the Territory without any
breach or violation of the rights of Ferrer.
3. MILESTONE AND RESEARCH & DEVELOPMENT FUNDING PAYMENTS
3.1 Milestone Payments. In consideration of API's entering into this
Agreement and the rights and licenses granted to Abbott hereunder, during the
Term Abbott shall pay API milestone payments according to the following payment
schedule:
(a) Effective Date - Within ten (10) business days after the Effective
Date, Abbott shall pay API * ( * );
(b) United States Regulatory Approval - Within twenty (20) business days
after * , Abbott shall pay API * ( * ).
3.2 Research & Development Funding Payments. In further consideration of
API's entering into this Agreement and performing continued research and
development activities for the Product, during the Term Abbott shall make
research and development funding payments to API in accordance with the
following schedule, contingent on completion of the research and development
tasks referenced below:
7
<PAGE> 14
<TABLE>
<CAPTION>
R&D Funding Payment Payment Date
------------------- ------------
<S> <C>
(a) * *
(b) * *
(c) * *
(d) * *
(e) * *
</TABLE>
8
<PAGE> 15
<TABLE>
<CAPTION>
R&D Funding Payment Payment Date
------------------- ------------
<S> <C>
(f) * *
(g) * *
(h) * *
(i) * *
</TABLE>
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<PAGE> 16
3.3 Non-Refundability. All milestone payments and research and development
funding payments Abbott makes to API pursuant to Section 3.1 or 3.2 shall be
non-refundable once paid. However, if this Agreement is terminated for any
reason prior to a given milestone or research and development funding payment
becoming due or if the events specified for a given milestone or research and
development funding payment do not occur, then Abbott shall have no obligation
to make such milestone or research and development funding payment; provided,
however, that if API terminates this Agreement due to Abbott's Material Breach
pursuant to Section 16.2(b), the foregoing shall not relieve Abbott of liability
for damages, if any, that API may recover from Abbott in an ADR proceeding
pursuant to Section 18.2(b).
3.4 Reimbursement of Payment Reductions. The Parties acknowledge their
mutual goal to * on or before * . If Abbott * on or before * , Abbott shall pay
API * within * of * . Abbott acknowledges that * will also become due if *.
3.5 Notice of Achievement of Milestones; Payment. API shall deliver written
notice to Abbott of API's achievement of the milestone referenced in Section
3.1(b) and of API's satisfaction of the condition(s) to the research and
development funding payments referenced in Section 3.2. Abbott shall pay such
milestone payment and research and development payments within thirty (30)
calendar days of the delivery of the notice relating thereto.
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<PAGE> 17
3.6 Equity Investment. The Parties further acknowledge that Abbott is
making an equity investment in API in the aggregate amount of up to * ( * )
under a Stock Purchase Agreement bearing even date herewith.
4. ROYALTY RATES AND PAYMENTS
4.1 Royalty Rates. In further consideration of the rights and licenses
granted to Abbott hereunder in API Intellectual Property Rights during the Term
Abbott shall pay API royalties on Abbott's, its Affiliates' and Unaffiliated
Sublicensees' Annual Net Sales at the following aggregate total royalty rates:
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<PAGE> 18
(a) Up to * in Annual Net Sales - If Annual Net Sales are less than or
equal to * ( * ), the aggregate total royalty payable to API shall be * ( * ) of
all Annual Net Sales.
(b) Over * up to * in Annual Net Sales - If Annual Net Sales exceed * (* )
but are less than or equal to * ( * ), the aggregate total royalty payable to
API shall be * ( * ) of all Annual Net Sales.
(c) Over * up to * in Annual Net Sales - If Annual Net Sales exceed * ( * )
but are less than or equal to * ( * ), the aggregate total royalty payable to
API shall be * ( * ) of all Annual Net Sales.
(d) Over * up to * in Annual Net Sales - If Annual Net Sales exceed * ( * )
but are less than or equal to * ( * ), the aggregate total royalty payable to
API shall be * ( * ) of all Annual Net Sales.
(e) Over * in Annual Net Sales - If Annual Net Sales exceed * ( * ), the
aggregate total royalty payable to API shall be * ( * ) of all Annual Net Sales.
If Generic Competition exists in any country of the Territory in which no
Valid Claim exists, royalties payable by Abbott for Net Sales in such country
shall be reduced by * ( * ) during the period in which Generic Competition
exists.
The aggregate total royalty payable to API shall be determined by total
Annual Net Sales during each applicable Calendar Year. On or before December 1
of each Calendar Year during the Term, the Parties shall mutually agree on an
Annual Net Sales forecast ("Net Sales Forecast") for the following Calendar Year
and Abbott shall pay estimated royalties based on the Net Sales Forecasts. If
the Factory Cost for a Calendar Year exceeds * ( * ) of the Net Average Selling
Price (as defined below) of the Product for such Calendar Year, the portion of
the Factory Cost above * ( * ) shall be prorated to the Parties in an amount
equal to the proration of
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royalty payments to Net Sales. On or before December 1 of each Calendar Year
during the Term, the Parties shall mutually agree on a Net Average Selling Price
forecast ("ASP Forecast") and Factory Cost estimate ("Factory Cost Estimate")
for the following Calendar Year and, if applicable, adjust royalties based on
the ASP Forecast and Factory Cost Estimate. The Parties shall reconcile actual
royalties payable for each Calendar Year on or before April 1 of the following
Calendar Year. As used in this Section, "Net Average Selling Price" shall mean
Net Sales divided by Net Units and "Net Units" shall mean units of the Product
actually sold, less returns in accordance with Section 1.17.
The Annual Net Sales thresholds set forth in subsections (a) through (e) of
this Section 4.1 shall be proportionately reduced: (i) in the Calendar Year in
which the First Commercial Sale occurs, by multiplying such Annual Net Sales
thresholds by a fraction, (A) the numerator of which shall be the number of days
remaining in such Calendar Year as of the First Commercial Sale and (B) the
denominator of which shall be 365; and (ii) in the Calendar Year in which the
Term expires, by multiplying such Annual Net Sales thresholds by a fraction, (X)
the numerator of which shall be the number of days in such Calendar Year prior
to the expiration of the Term and (Y) the denominator of which shall be 365.
4.2 Lump Sum Royalty Payments. In addition to the royalty payments pursuant
to Section 4.1 and research and development funding payments pursuant to
Sections 3.1 and 3.2, Abbott shall make lump sum royalty payments to API if any
or all of the following Net Sales thresholds are attained during the time
periods referenced below:
<TABLE>
<CAPTION>
Payment Net Sales Applicable Time Period
Amount Level ----------------------
- ------ -----
<S> <C> <C>
(a) * * *
(b) * * *
(c) * * *
(d) * * *
</TABLE>
13
<PAGE> 20
Each lump sum royalty payment referenced above shall be payable only once
during the Term within ten (10) business days after the end of the applicable
time period and shall be payable only if the applicable Net Sales level is
attained during the applicable time period.
4.3 Royalty Reports and Payments. Commencing with the first Calendar
Quarter in which Abbott, its Affiliates or Unaffiliated Sublicensees make the
First Commercial Sale of the Product in the Territory, Abbott shall provide API
with a written report of Net Sales on a country-by-country basis within
forty-five (45) days after the last day of March, June, September and December
for royalties accruing on Net Sales in the United States during the three (3)
preceding calendar months and within seventy-five (75) days after the last day
of February, May, August and November for royalties accruing on Net Sales in the
Territory outside of the United States during the three (3) preceding calendar
months. Concurrently with the submission of each such written report, Abbott
shall pay or cause to be paid to API the total amount of royalties shown to be
due thereon.
4.4 Currency. Abbott shall make all royalty payments to API pursuant to
Section 4.2 in U.S. Dollars. Royalty payments earned shall be first determined
by Abbott in the currency of the country where the Net Sales were made and then
converted by Abbott directly to its equivalent in U.S. Dollars. The rates of
exchange for converting the currencies involved to U.S. Dollars as quoted by the
Wall Street Journal, Midwest Edition, as Foreign Exchange Rates quoted in New
York as market rate (bid) on the last business day of the quarterly period in
which the royalty payments were earned shall be used by Abbott to determine such
conversion rates.
4.5 No Royalties Payable Between Affiliates. No royalties shall be payable
to API on sales between Abbott, its Affiliates or Unaffiliated Sublicensees, or
between Abbott Affiliates and Unaffiliated Sublicensees.
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<PAGE> 21
4.6 No Multiple Royalties. No multiple royalties shall be payable because
the Product, its manufacture, use or sale is or shall be covered by multiple API
Patents.
5. PAYMENT, RECORD KEEPING AND AUDIT RIGHTS
5.1 Method of Payment. All payments by either Party to the other Party
hereunder (including, but not limited to, Abbott's milestone and research and
development payments under Sections 3.1 and 3.2 and royalty payments under
Sections 4.1 and 4.2) shall be made without deduction of any withholdings for
any purposes other than taxes, if applicable, to the extent required by law. In
the event of any tax withholding, the paying Party will provide the receiving
Party with the best available evidence of the taxes withheld as well as any
relevant certificates or documents required for national, state or local tax
credit and reporting purposes. Payments hereunder shall not be creditable
against any other amounts payable by the other Party under this Agreement,
except as otherwise expressly stated herein. Payments may be made by check or
wire transfer to an account designated by the receiving Party.
5.2 Record Keeping and Audit Rights. Each Party shall keep or cause to be
kept accurate records relating to Net Sales, royalties, and any other costs and
expenses subject to payment or reimbursement by either Party to the other Party
in sufficient detail to enable the amounts payable hereunder to be determined.
Upon the written request of either Party (but not more frequently than once in
any calendar year), the requesting Party may retain an independent certified
public accountant, subject to approval by the other Party (which approval shall
not be unreasonably withheld), to review such records to verify the accuracy of
the payments made or payable hereunder. Such accountant shall be required to
execute a confidentiality agreement in a form reasonably acceptable to the
audited Party and shall report to the auditing Party only the amount of any
underpayment or overcharge. Within ten (10) business days after completion of
such review, the Parties shall reconcile any underpayment or overcharge. The
auditing Party shall pay the cost of any review of records conducted at its
request under this Section. However, if the review establishes underpayment or
overcharge by
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<PAGE> 22
the audited Party of over five percent (5%) during the period of the review, the
audited Party shall promptly reimburse the auditing Party for the fees and
expenses of the accountant. Such audit rights may be exercised by the Parties
only with respect to records for the current calendar year and the preceding two
(2) calendar years.
6. PRODUCT DEVELOPMENT AND REGISTRATIONS
6.1 Development and Registration Activities.
(a) United States. In accordance with the U.S. Product Development Plan
attached hereto as Exhibit C, API shall undertake development and registration
activities for the Product in the United States, including but not limited to
conducting or sponsoring, and completing or having completed, all clinical
studies and other activities required for Regulatory Approval in the United
States. API shall use its commercially reasonable efforts to pursue such
development and registration activities under the U.S. Product Development Plan
with the objective of filing a U.S. NDA for the Product with an Empiric Claim
with the U.S. FDA on or before * . Unless otherwise agreed by the Parties, API
shall file the U.S. NDA for the Product and any other applications for
Regulatory Approval in the United States in its own name, and, promptly after
receipt of Regulatory Approval in the United States, API shall assign the U.S.
NDA for the Product and any other Regulatory Approvals in the United States to
Abbott.
(b) European Union. Abbott shall undertake development and registration
activities for the Product in European Union member countries, provided that API
shall provide Abbott with all such documentation, data, clinical trial data and
other scientific information developed by API in connection with the U.S. NDA
for the Product as may be necessary for completing the registration package for
submission to
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<PAGE> 23
the EMEA or a reference European Union member state for a mutual recognition
procedure. Abbott shall use its commercially reasonable efforts to file the
registration package with the EMEA or a reference European Union member state
for a mutual recognition procedure or other appropriate regulatory authorities
within the European Union * . If additional clinical trials are required for
registration by the appropriate European Union regulatory authorities, then API
and Abbott will jointly agree to a revised registration filing schedule, taking
into account the time required for such clinical trials. API shall have the
right to consult with Abbott concerning Abbott's regulatory dossier prior to
submission to the EMEA or a reference EMEA member state. Upon API's request,
Abbott shall give API a reasonable opportunity to review and comment on the
documentation included within such regulatory dossier.
(c) Japan. * , Abbott will provide API with a plan for the development and
registration of the Product in Japan. Following submission of such a plan,
Abbott shall use its commercially reasonable efforts to undertake development
and registration activities for the Product in Japan in accordance with such
plan. If Abbott elects not to develop the Product in Japan, Abbott shall notify
API in writing within * , following which time the Territory shall exclude Japan
and rights to the Product in Japan will revert to API. If Abbott makes such
election and notifies API in accordance with the preceding sentence, Abbott
shall have no obligations or liabilities to API with respect to development and
registration activities in Japan.
(d) Other Countries. * , Abbott will provide API with a plan for the
development and registration of the Product in countries and territories outside
of the United States, Japan and European Union member countries. Following
submission of such a plan, Abbott shall use its commercially reasonable efforts
to undertake development and
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<PAGE> 24
registration activities for the Product in such countries and territories in
accordance with the plan.
(e) Mutual Assistance. The Parties shall use their commercially reasonable
efforts to assist each other with their respective development and registration
activities under Sections 6.1(a), (b), (c) and (d).
6.2 Development Costs. Abbott shall fund API's research and development
activities for the Product during the Term in accordance with the payment
amounts and schedule set forth in Section 3.2, provided that the Parties shall
renegotiate the payment amounts and schedule of payments in good faith in the
event of any material changes to the U.S. Product Development Plan, as described
below. Abbott shall be responsible for its own research and development costs
for the Product during the Term.
6.3 Modifications.
(a) Material Changes - API may not make any material changes to the U.S.
Product Development Plan unless Abbott has given its written consent thereto,
which consent shall not be unreasonably withheld or delayed. As used in this
Section, "material changes" shall mean any changes having a material effect on
the U.S. Product Development Plan timetable for United States regulatory filings
or on the Product claims referenced in the U.S. Product Development Plan.
(b) Other Changes - API may make any changes to the U.S. Product
Development Plan other than material changes as API deems necessary or
appropriate, provided Abbott has been given a reasonable opportunity to review
and consult with API as to any such changes.
6.4 Reciprocal Access to Documentation and Data. During the Term each Party
shall provide the other Party, within a reasonable time, with reasonable access
to all clinical documentation, information and data resulting from the Party's
Product research and development activities which either Party may reasonably
request, including but not limited to, case report forms, monitoring documents,
patient informed consents, institutional review board approvals, medical and
statistical study reports for individual studies, clinical data summaries, and
expert reports. Upon either Party's
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<PAGE> 25
request, the other Party shall provide the requesting Party with copies of such
documentation and data, provided that, upon the providing Party's request, the
requesting Party shall reimburse the providing Party for the cost of making such
copies.
7. ABBOTT PRODUCT MARKETING AND SALES ACTIVITIES
7.1 Commercially Reasonable Efforts. Abbott shall use commercially
reasonable efforts to promote and sell the Product throughout the Territory in
all countries in which (a) Regulatory Approval has been obtained and (b) a Valid
Claim exists.
7.2 Marketing Costs and Expenses. Except as otherwise provided herein or as
otherwise mutually agreed by the Parties, Abbott shall bear all costs and
expenses connected with its marketing and sales activities for the Product and
its performance under this Agreement.
8. API CO-PROMOTION ACTIVITIES
8.1 Co-Promotion Territory. API shall have the right to co-promote the
Product with Abbott and its Affiliates in the United States and Canada in
accordance with the terms of this Section 8.
8.2 Allocation of Sales Representatives. API shall have the right to
allocate up to * ( * ) API professional sales representatives to assist Abbott
and its Affiliates in detailing the Product to physicians, hospitals and others
in the United States and Canada as directed by Abbott in accordance with
Abbott's United States and Canada marketing plan(s) for the Product.
8.3 Co-Promotion Period. The initial period of API's co-promotion shall be
two (2) years commencing with the date of launch of the Product in the United
States and shall be renewed for consecutive one (1) year periods, unless
terminated by either Party upon no less than twelve (12) months prior written
notice to the other Party effective at the earliest upon the end of the initial
two (2) year period.
8.4 Compensation to API. During the period of co-promotion, Abbott will pay
to API, on a quarterly basis, an amount up to * ( * ) of API's fully-burdened
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<PAGE> 26
cost of each API professional sales representative, which costs shall be
determined in accordance with the scope of co-promotion collaboration and API
normal accounting policies, both of which shall be consistent in all material
respects with industry custom and practice for retaining contract sales
resources. The aggregate amount payable by Abbott to API under this Section 8.4
shall not exceed * ( * ) per Calendar Year.
8.5 Scope of Co-Promotion Collaboration. The Parties shall agree upon
coordinated performance benchmarks for the API professional sales
representatives which shall be consistent/complimentary with those of the Abbott
sales force and the Abbott United States and Canada marketing plan(s) for the
Product. Abbott shall provide reasonable Product sales training for up to twenty
(20) API professional sales representatives and shall design and provide all
Product sales literature and materials. API shall have the right to provide
supplemental training and Product sales literature and materials to the API
professional sales representatives with Abbott's prior written consent, which
consent shall not be unreasonably withheld.
9. CONFIDENTIALITY AND PUBLICITY
9.1 Confidentiality Obligation. Each Party shall hold the other Party's
Confidential Information (as defined below) of which it becomes informed in
connection with this Agreement in strictest confidence and shall not disclose
such Confidential Information to third parties or otherwise use it, except to
the extent such use or disclosure is expressly permitted by the terms of this
Agreement or is reasonably necessary for the performance of this Agreement.
9.2 Permitted Disclosures. Permitted disclosures of Confidential
Information hereunder include, but are not limited to: (a) disclosures to
regulatory agencies to the extent required for Regulatory Approval, including
but not limited to, Product registrations and applications in the Territory, and
(b) disclosures to the Parties'
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<PAGE> 27
Affiliates, employees, agents and independent contractors (including clinical
investigators, consultants and contract research organizations) who have a bona
fide "need to know", and Unaffiliated Sublicensees (in the case of Abbott),
provided that for disclosures to parties other than Affiliates under Section
9.2(b) the disclosing Party shall obligate the recipients to maintain the
confidentiality of Confidential Information under terms substantially similar to
those contained in this Section 9.
9.3 Confidential Information. "Confidential Information" includes, but is
not limited to, any information relating to the terms of this Agreement, the
Product, API Know-How, the U.S. Product Development Plan, clinical and
non-clinical studies involving the Product, and all sales and marketing plans
for the Product, as well as information concerning all other products and the
business affairs, manufacturing processes and other activities of the disclosing
Party. However, Confidential Information shall not include any information:
(a) Publicly Available Information - Which at the time of disclosure is or
later comes into public domain by publication or otherwise through no fault of
the receiving Party;
(b) Previously Known Information - Which can be demonstrated by
documentation or other competent proof to have been in the receiving Party's
possession prior to disclosure hereunder;
(c) Subsequently Received Information - Which is subsequently received by
the receiving Party from a third party who is not bound by any confidentiality
undertaking to the disclosing Party or to any of its Affiliates with respect to
said information;
(d) Independently Developed Information - Which is independently developed
by or for the receiving Party without reference to the disclosing Party's
Confidential Information; or
(e) Legally Required Disclosures of Information - Which is legally required
to be disclosed pursuant to any statute or regulation or any judicial or
administrative order, provided that the receiving Party promptly notifies the
disclosing
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<PAGE> 28
Party of such required disclosure in order to provide an opportunity to seek a
protective order or other similar order with respect to such Confidential
Information and thereafter the receiving Party discloses to the requesting
entity only the minimum Confidential Information required to be disclosed in
order to comply with the request, whether or not a protective order or other
similar order is obtained by the disclosing Party.
9.4 Duration of Confidentiality Obligation. The confidentiality obligations
of the Parties hereunder shall remain in effect during the Term and for seven
(7) years thereafter.
9.5 Publicity and Announcements. Unless agreed upon in writing by the
Parties, neither Party shall originate any publicity, news release or other
public announcement, written or oral, whether to the public press, stockholders
or otherwise, relating to this Agreement, any amendment hereto, performance by
the Parties hereunder, or the Product, except for such announcement as in the
opinion of legal counsel to the Party making such announcement is legally
required, in which event such Party shall give the other Party a reasonable
opportunity to review the form and content of the announcement before such
legally required disclosure is made.
10. TRADEMARKS
10.1 Assignment of API Trademarks. API hereby assigns to Abbott all of
API's right, title and interest in and to the API Trademarks Nyotran and
NystatinLF , including the trademark applications and registrations set forth in
the attached Exhibit E. API shall execute such documents and take such further
actions as Abbott may reasonably request to effectuate such assignment,
including the execution of a Trademark Assignment document in the form of the
attached Exhibit F. Following such assignment, Abbott shall be responsible for
filing and maintaining the API Trademarks at Abbott's sole expense, provided
that API shall be responsible for any costs of filing and maintaining such API
Trademarks incurred prior to the effective date of the assignment.
10.2 Alternate Trademarks. If Abbott does not wish to use an API Trademark
for the Product in any country of the Territory or if Abbott is legally
prevented from using
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<PAGE> 29
any API Trademark originally registered in any country in the Territory due to
trademark infringement litigation or otherwise, Abbott may use one or more
alternate trademarks selected by Abbott for use in such country ("Alternate
Trademarks"). Abbott shall own the Alternate Trademarks and shall be responsible
for filing and maintaining the Alternate Trademarks at Abbott's sole expense.
11. PATENT OWNERSHIP AND WARRANTIES
11.1 Patent Ownership. Subject to the license rights granted to Abbott
hereunder, API retains its ownership rights and/or licenses in all of all API
Patent Rights and shall be responsible for filing, prosecuting, maintaining and
defending API Patent Rights pursuant to Section 12.1.
11.2 Joint Inventions. For all inventions (if any), made jointly by the
Parties according to the named inventors therefor, the Parties shall apply for
patent protection therefor upon the written request of either Party. Patent
protection for such invention(s) shall be applied for jointly in the name of the
Parties as co-assignees and co-owners of such invention(s) and all patent
application preparation, filing, maintenance and prosecution responsibilities
and costs thereof in the Territory shall be shared equally by the Parties. If
one of the Parties does not wish to share equally in the patent application and
related costs and expenses in any country of the Territory, then the other Party
may seek, obtain and maintain such patent(s) solely in its own name and at its
sole expense and shall have sole and exclusive rights to use the inventions
covered by such patent(s) without payment of any royalties or compensation to
the non-paying Party.
11.3 API Patent Warranties. API warrants and represents that: (a) Exhibit A
sets forth all of the API Patent Rights as of the Effective Date; (b) API has
not granted any licenses or other rights to any third party inconsistent with
the licenses and other rights granted to Abbott hereunder; (c) with respect to
any API Patent Rights in existence as of the Effective Date that are being
sublicensed to Abbott hereunder, the terms of this Agreement are not in conflict
with or in violation of any agreements to which API is a party; and (d) to the
best of its knowledge as of the Effective Date based
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upon API's reasonably diligent investigation, the API Patent Rights are valid
and enforceable and there are no existing valid third party patents or other
proprietary rights in the Territory that might be infringed by the manufacture,
marketing, sale or use of the Product in the Territory by Abbott, its Affiliates
and Unaffiliated Sublicensees.
12. PATENT PROSECUTION AND INTELLECTUAL PROPERTY INFRINGEMENT
12.1 Patent Filing and Prosecution. During the Term, except as otherwise
provided in Section 12.6(b), API shall, at its sole expense, file, prosecute,
maintain, and defend API Patent Rights in the Territory and API shall control
all API Patent Rights filings and actions. API shall use commercially reasonable
efforts to obtain API Patent extensions in any countries in the Territory in
which such extensions are available.
12.2 Notification of Infringement. The Parties shall promptly inform each
other of any information that comes to their attention involving actual or
apparent infringements or misappropriations of API Intellectual Property Rights,
by any third party, or claims of alleged infringement made by any third party in
the Territory against API, API Affiliates, Abbott, Abbott Affiliates, or any
Unaffiliated Sublicensees resulting from the manufacture, sale, or use of the
Product.
12.3 Infringement of Third Party Rights. Abbott shall have the right to
direct or defend, in its own name and at its own expense, any legal or other
action or proceeding, including any settlement or negotiation, with respect to
any alleged infringement of a third party patent or other proprietary right as a
result of Abbott, its Affiliates or Unaffiliated Sublicensees making, having
made, using, importing, offering for sale or selling the Product in the
Territory. During the pendency of any such proceeding or any appeal thereof,
Abbott shall have a right to reduce royalties otherwise payable to API in an
amount equal to * ( * ) of Abbott's out-of-pocket litigation expenses in the
quarter in which such royalties are payable; provided, however, that in no event
shall Abbott have a right to reduce royalty payments by more than * ( * ) in any
quarter. In the event that * ( * ) of Abbott's out-of-pocket litigation expenses
exceeds * ( * ) of the
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royalties otherwise payable to API in such quarter, Abbott shall have the right
to offset such unpaid amounts against future royalties payable to API, but in no
event shall Abbott have a right to reduce royalty payments by more than * ( * )
in any quarter. In the event that a final judgment is entered against Abbott
pursuant to which Abbott is required to pay to a third party any monetary
damages and/or attorneys' fees, Abbott shall have a right to reduce royalties
otherwise payable to API in an amount equal to * ( * ) of such judgment in the
quarter in which such royalties are payable; provided, however, that in no event
shall Abbott have a right to reduce royalty payments by more than * ( * ) in any
quarter. In the event that * ( * ) of such judgment exceeds * ( * ) of the
royalties otherwise payable to API in such quarter, Abbott shall have the right
to offset such unpaid amounts against future royalties payable to API, but in no
event shall Abbott have a right to reduce royalty payments by more than * ( * )
in any quarter. In the event that such final judgment entered against Abbott
includes an order that precludes Abbott from manufacturing, marketing, and/or
selling the Product in any country or countries in the Territory, API shall pay
to Abbott * ( * ) of such final judgment within ninety (90) days after entry of
such judgment or upon completion of such appeal, whichever is later.
12.4 Infringement Indemnification. In the event that it is necessary to
obtain a license under any third party proprietary right in order to continue
commercialization of the Product in any country in the Territory, Abbott and API
shall use commercially reasonable efforts to obtain such a license naming Abbott
as the licensee. Abbott shall have the right to reduce royalty payments to API
by * ( * ) of all licensing fees and royalties payable by Abbott to the third
party licensor, such reductions to be taken in the quarter in which such
licensing fees and royalties are paid by Abbott to the third party; provided,
however, that in no event shall Abbott have a right to reduce royalty payments
by more than * ( * ) in any quarter.
12.5 Termination for Infringement. Should Abbott be prevented by reason of
an adverse, non-appealable court or administrative proceeding, order or judgment
or arbitral award against it from making, using, or selling the Product in any
Major
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<PAGE> 32
Subterritory, then, as to that part of the Territory so affected, Abbott may
terminate this Agreement upon written notice to API, and the Parties shall make
a final transition accounting and settlement in such Major Subterritory for
outstanding bona fide costs, payments, and expenses to which each Party is
entitled hereunder.
12.6 Third Party Infringement of API Intellectual Property Rights.
(a) API Enforcement - API shall have the right, but not the obligation, at
its own expense, to commence appropriate measures to enforce the API
Intellectual Property Rights against third party infringements within thirty
(30) days after the date API becomes aware of such infringement (including, but
not limited to, notifying the infringing third party of such infringement and
demanding that such third party cease and desist from such infringement) and, if
such infringement does not cease, commence a legal proceeding to enforce the API
Intellectual Property Rights against third party infringements within sixty (60)
days of the date API becomes aware of such infringement.
(b) Abbott Enforcement - If within sixty (60) days after the date API
becomes aware of any alleged third party infringement, either directly or by
notice from Abbott, API fails to commence a legal proceeding pursuant to Section
12.6(a), or if at any time API discontinues such proceeding, Abbott may, at its
sole option, commence, continue, or intervene, as the case may be, in such
proceeding. During the pendency of any such proceeding or any appeal thereof,
Abbott shall have the right to reduce royalties payable to API by the lesser of
(i) * ( * ) of Abbott's out-of-pocket litigation expenses in such legal
proceeding or (ii) * ( * ) of royalties payable in such country.
12.7 Allocation of Recoveries. In any action brought by or against a third
party infringer by either Party, any monetary damages or judgments obtained by
either Party in connection with such action shall be allocated as follows: (a)
the Party prosecuting such action shall recover its unreimbursed, out-of-pocket
litigation expenses in such action; (b) to the extent that any monies remain,
API and Abbott shall divide such monies to compensate API for its lost royalties
and Abbott for its lost profits;
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and (c) to the extent that any monies remain, API and Abbott shall share equally
such remaining monies.
12.8 Mutual Cooperation. In the event of any patent infringement litigation
in the Territory involving the Product and any API Intellectual Property Rights,
the non-prosecuting or non-defending Party shall render such reasonable
assistance as may be requested by the prosecuting or defending Party in
connection with such infringement actions. If API requests Abbott's assistance
in connection with such infringement claims or actions, API shall reimburse
Abbott for such direct, documented out-of-pocket expenses as are reasonably
incurred by Abbott during the course of its providing such requested assistance.
Before incurring such expenses, the Parties shall in good faith agree in writing
on the nature and extent of assistance to be rendered, and an estimate of the
total expenses, which expenses shall be monitored periodically.
12.9 Labeling. Abbott shall be responsible for all labeling, inserts,
promotional materials and any other materials which accompany, are distributed,
used or referred to in any way by Abbott, its Affiliates or Unaffiliated
Sublicensees in connection with the Product. Such materials shall conform to all
legal requirements in each country of the Territory in which the Product is
sold. Subject to applicable legal requirements and space limitations, all
Product labeling, inserts and promotional materials shall indicate that the
Product is sold by Abbott under license from API. Upon API's request, Abbott
shall provide API with copies of representative samples of materials which
Abbott, its Affiliates and Unaffiliated Sublicensees intend to use in connection
with the marketing, promotion and sale of the Product prior to their first use
thereof. Abbott shall manufacture, register, promote, market and sell the
Product in the Territory only for the indications for which relevant Regulatory
Approvals have been obtained.
12.10 Notification. Abbott shall also be responsible for notifying,
reporting or registering this Agreement or the business relationship created
hereby with any government authorities in the Territory to the extent legally
required. API shall provide Abbott with such assistance as Abbott may reasonably
request in connection therewith.
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<PAGE> 34
13. INDEMNIFICATION AND INSURANCE
13.1 Reciprocal Indemnification Provisions.
(a) API Indemnification - API shall defend, indemnify and hold Abbott, its
Affiliates, Unaffiliated Sublicensees, and the officers, directors, employees
and agents of each, harmless from and against any and all liabilities, damages,
claims, demands, costs, or expenses (including reasonable attorneys' fees)
claimed by any third party for any property or other economic loss or damage or
injury or death suffered by it to the extent the same is determined to have been
caused by API's negligence or wilful misconduct or any material breach of this
Agreement by API, subject to the conditions of indemnification set forth in
Section 13.2.
(b) Abbott Indemnification - Abbott shall defend, indemnify and hold API,
and its Affiliates, and the officers, directors and employees and agents of each
harmless from and against any and all liabilities, damages, claims, demands or
costs, or expenses (including reasonable attorneys' fees) claimed by any third
party for any property or other economic loss or damage, injury or death
suffered by it to the extent the same is determined to have been caused by
Abbott's negligence or wilful misconduct or any material breach of this
Agreement by Abbott, subject to the conditions of indemnification set forth in
Section 13.2.
13.2 Conditions of Indemnification. With respect to any indemnification
obligations of either Party to the other Party under this Agreement, including
but not limited to the indemnification obligations of the Parties under Sections
13.1(a) and 13.1(b) , the following conditions must be met for such
indemnification obligations to become applicable: (a) the indemnified Party
shall notify the indemnifying Party promptly in writing of any claim which may
give rise to an obligation on the part of the indemnifying Party hereunder; (b)
the indemnifying Party shall be allowed to timely undertake the sole control of
the defense of any such action and claim, including all negotiations for the
settlement, or compromise of such claim or action at its sole expense; and (c)
the indemnified Party shall render reasonable assistance, information,
co-operation and authority to permit the indemnifying Party to defend such
action, it being agreed that any out-of-pocket expenses or other expenses
incurred by the
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<PAGE> 35
indemnified Party in rendering the same shall be borne or reimbursed promptly by
the indemnifying Party.
13.3 Insurance. API shall at all times during the Term and for a period of
five (5) years thereafter maintain product liability insurance covering the
Product with minimum annual limits of $1,000,000 per occurrence and $1,000,000
in the aggregate. Upon Abbott's request at any time during the Term or in the
five (5) year period thereafter, API shall deliver to Abbott a certificate of
insurance evidencing such insurance and stating that the policy will not be
canceled or modified without at least thirty (30) days prior written notice to
Abbott.
14. ADVERSE DRUG EXPERIENCES
During the relevant Reporting Period (as defined below), each Party shall
promptly inform the other Party of any information it obtains or develops
regarding the safety of the Product anywhere in the world and shall promptly
report to the other Party any information regarding serious adverse reactions or
side effects related to the use of the Product. To allow the Parties to comply
with the adverse drug experience reporting requirements for the Product to the
U.S. FDA and its counterpart regulatory agencies around the world, each Party
shall notify the other Party in writing of any "adverse drug experience" that is
considered "serious" as defined in U.S. FDA regulations (21 CFR 314.80) or the
comparable regulations of other regulatory agencies, regardless of source, so
that the other Party will receive such notice within three (3) business days of
a Party's first having "obtained or otherwise received" such "adverse drug
experience" from "any source", as those terms are defined in U.S. FDA
regulations (21 CFR 314.80). Such information shall be communicated by the
Parties to each other at the following addresses:
To Abbott: Abbott Laboratories
Hospital Products Division
Attn: Vice President, Medical and Regulatory Affairs
Dept. 970, Bldg. AP30
200 Abbott Park Road
Abbott Park, Illinois, U.S.A. 60064-3500
Telephone: (847) 937-8190
Facsimile: (847) 938-6590
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<PAGE> 36
To API: API Pharmaceuticals, Inc.
Attn: Senior Vice President, Medical and Regulatory Affairs
8707 Technology Forest Place
The Woodlands, Texas 77381-1191
Phone: (281) 367-1666
Facsimile: (281) 367-1676
Each Party shall provide the other with copies of all adverse drug experience
reports on the Product filed with the U.S. FDA or other regulatory agencies in
the Territory. As used in this Section 14, the "Reporting Period" shall mean (a)
the Term with respect to API's reporting obligation to Abbott and (b) the period
from the Effective Date until the effective date of API's assignment of the U.S.
NDA for the Product to Abbott with respect to Abbott's reporting obligation to
API.
15. REPRESENTATIONS AND WARRANTIES
Each Party hereby represents and warrants to the other Party as follows:
(a) Corporate Status - It is a corporation duly organized and validly
existing under the laws of its state or other jurisdiction of incorporation or
formation;
(b) Authority - It has the power and authority to execute and deliver this
Agreement, and to perform its obligations hereunder;
(c) No Conflicts - The execution, delivery and performance by it of this
Agreement and its compliance with the terms and provisions hereof does not and
will not conflict with or result in a breach of any of the terms and provisions
of or constitute a default under (i) any loan agreement, guaranty, financing
agreement, agreement affecting a product or other agreement or instrument
binding or affecting it or its property; (ii) the provisions of its charter
documents or by-laws; or (iii) any order, writ, injunction or decree of any
court or governmental authority entered against it or by which any of its
property is bound;
(d) No Approvals - Except for the regulatory filings and approvals for the
Product referenced herein, no authorization, consent or approval of any
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<PAGE> 37
governmental authority or third party is required for the execution, delivery or
performance by it of this Agreement, and the execution, delivery or performance
of this Agreement will not violate any law, rule or regulation applicable to
such Party;
(e) Enforceability - This Agreement has been duly authorized, executed and
delivered and constitutes its legal, valid and binding obligation enforceable
against it in accordance with its terms subject, as to enforcement, to
bankruptcy, insolvency, reorganization and other laws of general applicability
relating to or affecting creditors' rights and to the availability of particular
remedies under general equity principles;
(f) Compliance With Laws - It shall comply with all applicable laws and
regulations relating to its activities under this Agreement; and
(g) Year 2000 Compliance - All computer hardware and software used by
either Party in its business relationship with the other Party will have no
lesser functionality with respect to records containing dates before or after
January 1, 2000 than previously with respect to dates prior to January 1, 2000.
16. TERM AND EARLY TERMINATION RIGHTS
16.1 Term. The Term shall be as stated in Section 1.21.
16.2 Termination for Cause. Either Party shall have the right, without
prejudice to any other rights or remedies available to it, to terminate this
Agreement for cause by written notice to the other Party in any of the following
events:
(a) Bankruptcy - If the other Party becomes insolvent, is adjudged
bankrupt, applies for judicial or extra-judicial settlement with its creditors,
makes an assignment for the benefit of its creditors, voluntarily files for
bankruptcy or has a receiver or trustee (or the like) in bankruptcy appointed by
reason of its insolvency, or in the event an involuntary bankruptcy action is
filed against the other Party and not dismissed within ninety (90) days, or if
the other Party becomes the subject of liquidation or dissolution proceedings or
otherwise discontinues business.
(b) Material Breach - If the other Party commits a Material Breach of
this Agreement (as defined in Section 18.2(c)) and the Party alleged to be in
breach
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fails to (i) cure such breach or (ii) commence dispute resolution proceedings
under Section 18.2 contesting whether a breach has occurred and/or whether such
breach is a Material Breach within sixty (60) days after receipt of written
notice from the Party asserting the breach.
16.3 Termination by Mutual Agreement. This Agreement may be terminated at
any time by written agreement of the Parties.
16.4 Termination by Abbott.
(a) Safety or Efficacy - If at any time during the Term: (i) the Party with
responsibility for filing an application for Regulatory Approval hereunder
("Filing Party") decides not to file an application for Regulatory Approval in
any Major Subterritory or decides to withdraw such application due to documented
adverse reactions or other safety issues with the Product or the Product's lack
of efficacy or limited efficacy (collectively, "Safety or Efficacy Issues");
(ii) the Filing Party's application(s) for Regulatory Approval in any Major
Subterritory is rejected due to Safety or Efficacy Issues; (iii) the Filing
Party's application(s) for Regulatory Approval in any Major Subterritory is
subsequently withdrawn because of Safety or Efficacy Issues; (iv) the Product is
withdrawn or recalled from the market in any Major Subterritory because of
Safety or Efficacy Issues; or (v) at any time during the period from the
Effective Date to the effective date of API's assignment of the U.S. NDA for the
Product to Abbott, Abbott reasonably believes documented Safety or Efficacy
Issues exist and Abbott has so notified API in writing, then Abbott may, at its
option, terminate this Agreement upon thirty (30) days prior written notice to
API. Abbott may, at its option, exercise its right of termination under this
Section 16.4(a) on a country-by-country basis, and, if Abbott does so, Abbott's
termination notice shall specify the country or countries of the Territory
affected.
(b) Limited Commercial Viability - At any time during the Term after the
Filing Party has obtained Regulatory Approval in any country of the Territory,
Abbott shall have the right to terminate this Agreement upon one hundred eighty
(180) days prior written notice to API for reasons of the Product's limited
commercial viability
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and/or due to competition, limited customer acceptance, regulatory limitations
and/or market dynamics, as determined by Abbott.
17. CONSEQUENCES OF TERMINATION
17.1 Effect of Termination. Termination or expiration of this Agreement
through any means and for any reason shall not relieve the Parties of any
obligations accruing prior thereto and shall be without prejudice to the rights
and remedies of either Party with respect to any prior breach of any of the
provisions of this Agreement.
17.2 License Rights. If Abbott terminates this Agreement pursuant to
Section 16.2(a) or Section 16.4 or if API terminates this Agreement pursuant to
Section 16.2, then: (a) Abbott's license rights in API Intellectual Property
Rights hereunder shall terminate, (b) Abbott shall assign to API all of its
right, title and interest in and to the API Trademarks, with API assuming
responsibility for filing and maintaining the API Trademarks as of the effective
date of the assignment, including all recordal and future costs associated
therewith; and (c) upon API's request, the Parties shall negotiate in good faith
for the assignment of any Alternate Trademarks from Abbott to API.
17.3 Fully Paid-Up License. Upon expiration of the Term or earlier
termination of this Agreement for any reason other than by API pursuant to
Section 16.2 or by Abbott pursuant to Section 16.2(a) or Section 16.4 or by the
Parties jointly pursuant to Section 16.3, Abbott's license rights in API
Intellectual Property Rights hereunder shall become fully paid-up and
irrevocable.
17.4 Mutual Agreement. If the Parties terminate this Agreement by mutual
written agreement pursuant to Section 16.3, the Parties shall specify the
consequences of such termination in such written agreement.
17.5 Regulatory Approvals. Upon expiration of the Term, or upon earlier
termination of this Agreement other than by API pursuant to Section 16.2 or by
Abbott pursuant to Section 16.2(a) or Section 16.4, Abbott's right to
manufacture, market, and sell the Product in the United States pursuant to the
U.S. NDA for the Product shall become fully paid-up and irrevocable, and, if API
has not previously done so, API shall
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promptly assign such U.S. NDA to Abbott. Upon termination of this Agreement by
API pursuant to Section 16.2 or by Abbott pursuant to Section 16.2(a) or Section
16.4, Abbott shall grant to API a fully paid-up, irrevocable right to
manufacture, market, and sell the Product outside the United States pursuant to
Abbott's Regulatory Approvals for the Product, and Abbott shall promptly assign
such Regulatory Approvals to API.
18. GOVERNING LAW AND DISPUTE RESOLUTION
18.1 Governing Law. This Agreement, including the validity, construction,
interpretation and performance thereof, shall be governed entirely by the laws
of the State of Illinois, without regard to its conflict of laws provisions. It
is the specific intent and agreement of the Parties that the United Nations
Convention on the International Sale of Goods shall not apply to this Agreement.
18.2 Dispute Resolution. All disputes arising out of or in connection with
this Agreement (except those involving actions commenced by or involving third
parties and affecting or involving only one of the Parties) shall be resolved
with the following mechanism:
(a) Attempted Amicable Resolution - The Parties shall promptly give
each other written notice of any disputes requiring resolution hereunder, which
written notice shall specify the Section(s) of this Agreement the other Party is
alleged to have breached and shall briefly state the initiating Party's claims,
and the Parties shall use reasonable efforts to resolve any such disputes in an
amicable manner.
Any disputes arising in connection with this Agreement which cannot be
resolved in an amicable manner by representatives of the Parties shall be
referred, not later than thirty (30) days after initiation of dispute resolution
proceedings under this Section 18.2, to the following corporate officers of the
Parties for resolution:
For Abbott:
President, Hospital Products Division (or his or her designee)
For Aronex:
Chairman and CEO (or his or her designee)
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<PAGE> 41
Such officers (or their designees) shall attempt to resolve the dispute
and shall communicate with each other by facsimile or telephone or in personal
meetings in an effort to resolve the dispute.
(b) ADR Procedure - Any disputes arising in connection with this
Agreement which cannot be resolved by the Parties within forty-five (45) days
after initiation of dispute resolution proceedings under Section 18.2(a) shall
be finally settled by binding Alternate Dispute Resolution ("ADR") in accordance
with the procedures set forth in the attached Exhibit D.
(c) ADR Ruling - The neutral in any ADR proceeding under Section
24.2(b) shall determine and advise the Parties in writing:
(i) Whether either Party has committed a breach of any of its
obligations under this Agreement; and
(ii) If either Party has committed a breach,
(A) Whether such breach is a Material Breach or a breach
other than a Material Breach, and
(B) The appropriate remedy for any such breach pursuant to
Section 18.2(d).
As used herein "Material Breach" shall mean either a failure by Abbott
to pay any milestone payments pursuant to Section 3.1, any research and
development funding payments pursuant to Section 3.2, or any royalty payments
pursuant to Sections 4.1 or 4.2 within sixty (60) days after written notice from
API ("Material Payment Breach"), provided that Abbott may in good faith contest
whether a given payment is due or the amount due and pay the amount the neutral
determines to be due without being deemed to have committed a Material Payment
Breach, or any other breach which involves willful disregard of the other
Party's rights under this Agreement or which materially and adversely affects
the rights of the other Party in at least one (1) Major Subterritory ("Other
Material Breach").
(d) Remedies - The neutral in any proceeding under Section 18.2(b)
shall have the authority to award the non-breaching Party the following relief
(except as otherwise provided in Section 18.2(e) and (f)):
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(i) For a Material Payment Breach, an order to pay the amount
due and termination of this Agreement;
(ii) For any Other Material Breach, an award of damages and/or
equitable relief and/or termination of this Agreement in whole or in part
(including the termination of any licenses granted to the breaching Party,
whether in whole or in part, on a worldwide or country-by-country basis); and
(iii) For a breach other than a Material Breach, an award of
damages and/or equitable relief.
(e) Dispute Resolution for Section 7.1 - API shall be entitled to
commence dispute resolution proceedings pursuant to Section 18.2 to challenge
Abbott's compliance with its commercially reasonable efforts obligations in the
Territory pursuant to Section 7.1 not more than once every twelve (12) months
for each respective country. The determination of whether Abbott has used its
commercially reasonable efforts in each respective country shall be based on the
totality of circumstances. If API successfully establishes that Abbott has
failed to use its commercially reasonable efforts, (i) for the first such
violation, the neutral shall have the authority to award damages or equitable
relief to API (but not termination of Abbott's license rights) and (ii) for any
subsequent violations in the same country, the neutral shall have the authority
to award damages, equitable relief or termination of Abbott's license rights in
the country where such breach occurs.
18.3 Effect of Commencing Dispute Resolution. If either Party in good faith
commences dispute resolution proceedings under Section 18.2, (a) any applicable
notice periods or cure periods hereunder (including but not limited to the
period referenced in Section 16.2(b)) shall be temporarily suspended pending the
outcome of such dispute resolution proceedings and (b) the non-breaching Party
may, at its option, pay any amounts payable to the other Party that are in
dispute into an interest-bearing escrow account pending the outcome of such
dispute resolution proceedings.
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19. NOTICES
19.1 Manner of Giving Notices. All notices required or permitted in
connection with this Agreement shall be writing and may be given by personal
delivery, prepaid registered or certified mail, or telecopier, addressed to the
Party to receive the same at its address set forth below, or to such other
address as it shall later designate by like notice to the other Party. Notice of
termination of this Agreement if given by telecopier shall be confirmed by
prepaid registered or certified mail dated and posted within twenty-four (24)
hours. The effective date of receipt of any notice if served by telecopier shall
be deemed the first business day in the city of destination following the
dispatch thereof and if given by letter only, it shall, unless earlier received,
be deemed effective not later than seven (7) days after the date of posting.
Notice by personal delivery shall be effective as of the date of such delivery.
19.2 Addresses for Notices.
Notices to API shall be sent to:
Aronex Pharmaceuticals, Inc.
Attn: Chief Executive Officer
8707 Technology Forest Place
The Woodlands, Texas 77381-1191
Facsimile: (281) 367-1676
With a copy to:
Andrews & Kurth, L.L.P.
Attn: Jeffrey L. Wade
2170 Buckthorne Place, Suite 150
The Woodlands, Texas 77380
Facsimile: (713) 238-7131
Notices to Abbott shall be sent to:
Abbott Laboratories
Hospital Products Division
Attn: President
Dept. 0960, Bldg. AP30
200 Abbott Park Road
Abbott Park, Illinois U.S.A. 60064-3500
Facsimile: (847) 937-0805
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and
Abbott Laboratories
Abbott International
Attn: President
Dept. 06WP, Bldg. AP30
200 Abbott Park Road
Abbott Park, Illinois U.S.A. 60064-3500
Facsimile: (847) 938-8325
With a copy to:
Abbott Laboratories
Attn: Div. V.P. - Domestic Legal Operations
Legal Division, Dept. 322, Bldg. AP6D
100 Abbott Park Road
Abbott Park, Illinois U.S.A. 60064-3500
Facsimile: (847) 938-1206
20. INTEGRATION
This Agreement represents the entire Agreement between the Parties relating
to the subject matter hereof and supersedes all prior arrangements,
understandings, correspondence, notes, minutes and agreements between the
Parties (or their predecessors in interest) whether written or oral. No
supplement, modification or amendment of this Agreement shall be binding unless
executed by the Parties in writing and signed by the duly authorized
representatives of both Parties.
21. ASSIGNMENT
Neither Party may assign this Agreement or any of its rights hereunder, nor
delegate any of its duties or obligations hereunder, to any third party without
the prior written consent of the other Party; subject to Abbott's right to grant
sublicenses of its rights under this Agreement to an Abbott Affiliate or
Unaffiliated Sublicensee in accordance with Section 2.2. Neither Party shall
unreasonably withhold its consent to such contemplated assignment if such
contemplated assignment is in connection with
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the sale by either Party of all or substantially all of its assets to a third
party which is not a direct competitor of the other Party in the hospital or
pharmaceutical products area.
22. LIMITATION OF DAMAGES
In no event shall either Party be liable to the other Party for any
indirect, incidental or consequential damages in connection with the performance
of this Agreement or any breach of this Agreement.
23. FORCE MAJEURE
Neither Party shall be held in breach of this Agreement for failure to
perform any of its obligations hereunder to the extent and for the time period
such performance is prevented in whole or in part by reason of any Force Majeure
event, including but not limited to industrial disputes, strikes, lockouts,
riots, mobs, fires, floods, and other natural disasters and Acts of God, wars
declared or undeclared, civil strife, embargo, delays in delivery or defects or
shortages of raw materials from suppliers, loss or breakdown of any production
equipment, losses or shortage of power, damage to or loss of goods in transit,
currency restrictions, or events caused by reason of laws, regulations or orders
by any government, governmental agency or instrumentality or by any other
supervening unforeseeable circumstances whatsoever beyond the control of the
Party so affected. The Party so affected shall (a) give prompt written notice to
the other Party of the nature and date of commencement of the Force Majeure
event and its expected duration and (b) use its commercially reasonable efforts
to avoid or remove the Force Majeure event as soon as possible to the extent it
is so able to do.
24. RELATIONSHIP OF PARTIES
The relationship of the Parties under this Agreement is that of independent
contractors. Nothing contained in this Agreement shall be construed so as to
constitute the Parties as partners, joint venturers or agents of the other.
Neither Party has any express or implied right or authority under this Agreement
to assume or create any obligations or make any warranties and representations
on behalf of or in the name of
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<PAGE> 46
the other Party, or to bind the other Party to any contract, agreement or
undertaking with any third party, and no conduct of the Parties pursuant to the
terms of this Agreement shall be deemed to establish such right or authority.
Neither Party shall make any representation to third parties that the
relationship created hereby constitutes a partnership, joint venture or agency
relationship.
25. SEVERABILITY OF CLAUSES
In case one or more of the provisions contained in this Agreement shall,
for any reason, be held invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provisions
of this Agreement, but this Agreement shall be construed by limiting such
invalid, illegal or unenforceable provision, if such is not possible, by
deleting such provision from this Agreement.
26. NON-WAIVER
The failure by either Party at any time to enforce any of the terms or
provisions or conditions of this Agreement or exercise any right hereunder shall
not constitute a waiver of the same or affect that Party's rights thereafter to
enforce or exercise the same. No waiver of any of the provisions of this
Agreement shall be deemed binding unless executed in writing by the Party to be
bound by it.
27. HEADINGS
The headings in this Agreement are for convenience of reference only and
shall not be used in the interpretation of any provisions hereof.
28. EXECUTION
This Agreement shall be executed by the Parties in two (2) original
counterparts, one (1) original counterpart being retained by each Party and
either of which shall be deemed sufficient to prove the existence and terms and
conditions hereof. This Agreement may be executed by the Parties by the exchange
of facsimile signature pages, with signed original counterparts of the Agreement
to be exchanged by the Parties promptly thereafter.
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IN WITNESS WHEREOF, the Parties' duly authorized representatives hereto
have executed this Agreement as of the Effective Date.
ARONEX PHARMACEUTICALS, INC. ABBOTT LABORATORIES
By: By:
------------------------------ --------------------------------
Title: Title:
---------------------------- ------------------------------
Date: Date:
---------------------------- -------------------------------
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LIST OF EXHIBITS
----------------
<TABLE>
<CAPTION>
<S> <C>
EXHIBIT A API PATENTS
EXHIBIT B FACTORY COST
EXHIBIT C U.S. PRODUCT DEVELOPMENT PLAN
EXHIBIT D ALTERNATIVE DISPUTE RESOLUTION
EXHIBIT E API TRADEMARK APPLICATIONS AND
REGISTRATIONS
EXHIBIT F FORM OF TRADEMARK ASSIGNMENT
</TABLE>
<PAGE> 49
EXHIBIT A
API PATENT RIGHTS
Part I API Patents
<TABLE>
<CAPTION>
<S> <C> <C>
1. US 4,812,312
Lopez-Berestein et al. "Liposome-Incorporated Nystatin"
Japan: 2703594 granted 10/3/97
EPO: 0348431 granted 8/5/92
Austria: E79028 "
Belgium: 0348431 "
Switzerland: 0348431 "
Germany: p3873528.8 "
France: 0348431 "
UK: 0348431 "
Italy: 0348431 "
Netherlands: 0348431 "
Sweden: 0348431 "
2. US 4,950,432
Reeta Mahte et al. "Polyene Microlide Pre-Liposomal Powders"
3. US 5,178,875
Lenk at al. "Liposomal-Polyene Preliposomal Powder and Method of Its
Preparation"
Australia: 663074 granted 2/6/96
EPO: 0567582 granted 5/17/95
Austria: E1 22559 "
Belgium: 0567582 "
Switzerland 0567582 "
Germany: 69202569 "
Denmark: 0567582 "
Spain: 0567582 "
France: 0567582 "
UK: 0567582 "
Greece: 0567582 "
Italy: 0567582 "
Luxembourg: 0567582 "
Monaco 0567582 "
Netherlands: 0567582 "
Sweden: 0348431 "
4. USSN: 08/535,885 (allowed, Issue Fee paid 7/31/98)
Lenk el al. "Liposomal-Polyene Preliposomal Powder and Method of Its
Preparation"
</TABLE>
<PAGE> 50
PART II *
1. *
*
*
*
*
2. *
*
<PAGE> 51
EXHIBIT B
FACTORY COST
------------
Direct material cost:
Direct material cost includes all raw material used in the manufacturing
process as contained in the bill of material to manufacture Product. Direct
material is identified by specific lot numbers. Items normally included are;
Raw drug.
Diluting material such as the alcohol.
Vial.
Vial stopper.
Vial seal
Inline solution filters and compounding filters.
Vial label
Single unit carton.
Shipper
Any other specialized packaging material.
Direct labor cost.
Includes the cost of employees directly involved in the manufacture of the
Product. Our direct labor employees are classified as Assistants, Operators,
Attendants, Technicians, Senior Production Operators, Productions Equipment
Specialists, and Group Leaders. The rate per hour includes the average base rate
for all direct employees plus a fringe rate that includes vacations, holidays,
insurance costs, pension, 401K, bonuses and legally mandated employer taxes.
Standard product cost uses an Industrial Engineering estimate of the hours to
perform each step of the production process. Additional procedures or employees
required to handle explosive material would be added as a direct labor
operation. Direct labor operations are normally considered to be:
Drug dispensing.
Drug mixing.
Preparation of the filling equipment.
Preparation of components such as washing vial stoppers.
Preparation of printed materials, primarily labels.
Filling of the vial.
Post filling light inspection.
Lyophilization
Labeling.
Packing.
Variable overhead cost.
Includes the costs of operating the plant which change as the volume of
production in the plant changes. The major components of variable overhead are
related to the production operator and include their overtime, time spent for
training and plant meetings, and their uniforms and gowns. Any specialized
employee safety equipment such as used in an explosion proof environment would
be included in this category. Cost included in this category are assigned to
standard product cost as a rate per hour applied to direct labor hours
identified above.
<PAGE> 52
Fixed overhead costs.
Includes the other costs associated with operating a manufacturing plant.
The key components are the cost of the quality assurance organization, material
planning, purchasing, receiving, and warehousing, plant maintenance, utilities
and engineering, the health and safety group, production supervision, and fixed
costs such as depreciation taxes, and insurance. Investment in explosive proof
equipment and changes to the facility required to handle explosive material
would be included in this category. These costs are assigned to standard product
cost based on fully utilized plant capacity.
The standard product cost development process occurs once per year in the
mid-summer time period. At that time, assumptions are made regarding inflation
rates for raw material and wages, productivity improvements, and plant
utilization levels.
<PAGE> 53
EXHIBIT C
U.S. PRODUCT DEVELOPMENT PLAN
API shall conduct all clinical studies required to obtain Regulatory
Approval in the United States, including but not limited to the studies
referenced below, with the objective of obtaining U.S. NDA approval for the
Product in injectable dosage form with an Empiric Claim on or before * .
<TABLE>
<CAPTION>
STUDY NO. STUDY TITLE BRIEF DESCRIPTION
<S> <C> <C>
AR-90-01-002 Pharmacokinetics of NystatinLF,"*, I.V. in Phase 1, Single dose,
Patients with Acquired Immunodeficiency Syndrome dose-escalating up to 1 mg/kg
(AIDS)-Related Complex ARC
AR-91-35,606-004 A Phase I-ii Clinical Study of Nystatin , I.V. in Phase I-II, Multiple dose,
Patients with HIV Infection dose-escalating up to 7 mg/kg
AR-41,356-93-002 Phase I Study to Determine the Maximum Tolerated Phase I, Multiple dose,
Dose of Liposomal NystatinLF in Patients with dose-escalating up to 8 mg/kg
Presumed or Proven Fungal infection Due to
Aspergillus or Candida Species and Other
Opportunistic Fungi
AR-92-41,356-005 A Multicenter Study to Evaluate the Safety and Phase II, Multiple dose at 2
Efficacy of Various Doses of Nyotran in or 4 mg/kg, in patients with
Non-Neutropenic Patients with Candidemia systemic Candida infections
AR-94-41,356-006 A Prospectively Randomized, Double-Blind, Phase III, Multiple dose
Comparative Multicenter Study to Evaluate Efficacy blinded comparative study in
and Safety of Nyotran and Amphotericin B or patients with presumed fungal
Empiric Antifungal Treatment in Neutropenic infections, conducted in US
Patients
AR-95-41,356-009 A Prospectively Randomized, Double-Blind, Phase III, Multiple dose
Comparative Multicenter Study to Evaluate Efficacy blinded comparative study in
and Safety of Nyotran and Amphotericin B for patients with presumed fungal
Empiric Antifungal Treatment in Neutropenic infections, conducted in
Patients Europe
AR-94-41,356-007 An Open-Label, Non-Comparative, Multicenter Study Phase II, Multiple dose
to Evaluate the Clinical Efficacy and Safety of salvage therapy trial in
Nyotran (Liposomal Nystatin) in the Treatment of aspergillosis conducted
Patients with Proven or Probable Aspergillus primarily in Europe, South
Infection Who Are Failing Standard Parenteral Africa, and Australia
Antifungal Therapy Due to Lack of Response or
Intolerance to Amphotericin B or Liposomal
Amphotericin
</TABLE>
<PAGE> 54
<TABLE>
<CAPTION>
STUDY NO. STUDY TITLE BRIEF DESCRIPTION
<S> <C> <C>
AR-96-41,356-008 An Open-Label, Non-Comparative, Multicenter Study Phase II, Multiple dose
to Evaluate the Clinical Efficacy and Safety of salvage therapy trial in
Nyotran (Liposomal Nystatin) in the Treatment of aspergillosis conducted
Patients with Proven or Probable Aspergillus primarily in the US
Infection Who Are Failing Standard Parenteral
Antifungal Therapy Due to Lack of Response or
Intolerance to Amphotericin B or Liposomal
Amphotericin
AR-97-41,356-013 A PhaseII/III Randomized, Multicenter Study to
Determine the Optimal Dose of Nyotran (Liposomal *
Nystatin) for the Treatment of Patients with
Cryptococcal Meningitis by Comparing the Safety
and Efficacy of the 2 mg/kg/day, 3 mg/kg/day and 4
mg/kg/day Doses of Nyotran and To Compare the
Safety and Efficacy of the Resulting Optimal Dose
of Nyotran versus Fungizone (Amphotericin B) in
Patients with Cryptococcal Meningitis
* *
</TABLE>
<PAGE> 55
EXHIBIT D
Alternative Dispute Resolution
The parties recognize that a bona fide dispute as to certain matters may
arise from time to time during the term of this Agreement which relates to
either party's rights and/or obligations. To have such a dispute resolved by
this Alternative Dispute Resolution ("ADR") provision, a party first must send
written notice of the dispute to the other party for attempted resolution by
good faith negotiations between their respective representatives of the affected
subsidiaries, divisions, or business units within twenty-eight (28) days after
such notice is received (all references to "days" in this ADR provision are to
calendar days).
If the matter has not been resolved within twenty-eight (28) days of he
notice of dispute, or if the parties fail to meet within such twenty-eight (28)
days, either party may initiate an ADR proceeding as provided herein. The
parties shall have the right to be represented by counsel in such a proceeding.
1. To begin an ADR proceeding, a party shall provide written notice to the
other party of the issues to be resolved by ADR. Within fourteen (14) days after
its receipt of such notice, the other party may, by written notice to the party
initiating the ADR, add additional issues to be resolved within the same ADR.
2. Within twenty-one (21) days following receipt of the original ADR
notice, the parties shall select a mutually acceptable neutral to preside in the
resolution of any disputes in this ADR proceeding. If the parties are unable to
agree on a mutually acceptable neutral within such period, the parties shall
request the President of the Center for Public Resources ("CPR"), 366 Madison
Avenue, New York, New York 10017 to select a neutral pursuant to the following
procedures:
(a) The CPR shall submit to the parties a list of not less than five
(5) candidates within fourteen (14) days after receipt of the request from the
parties, along with a Curriculum Vitae for each candidate. No candidate shall be
an employee, director, or shareholder of either party or any of their
subsidiaries or affiliates.
(b) Such list shall include a statement of disclosure by each candidate
of any circumstances likely to affect his or her impartiality.
(c) Each party shall number the candidates in order of preference (with
the number one (1) signifying the greatest preference) and shall deliver the
list to the CPR within seven (7) days following receipt of the list of
candidates. If a party believes a conflict of interest exists regarding any of
the candidates that party shall provide a written explanation of the conflict to
the CPR along with its list showing its order of preference for the candidates.
Any party failing to return a list of preferences on time shall be deemed to
have no order of preference.
(d) If the parties collectively have identified fewer than three (3)
candidates deemed to have conflicts, the CPR immediately shall designate as the
neutral the candidate for whom the parties collectively have indicated the
greatest preference. If a tie should result between two candidates, the CPR may
designate either candidate. If the parties collectively have identified three
(3) or more candidates deemed to have conflicts, the CPR shall review the
explanations regarding conflicts and, in its sole discretion, may either (i)
immediately designate as the neutral the candidate for whom the parties
collectively have indicated the
1
<PAGE> 56
greatest preference, or (ii) issue a new list of not less than five (5)
candidates, in which case the procedures set for in subparagraphs 2(a) - 2(d)
above shall be repeated.
3. No earlier than twenty-eight (28) days or later than fifty-six (56) days
after selection, the neutral shall hold a hearing to resolve each of the issues
identified by the parties. The ADR proceeding shall take place at a location
agreed upon by the parties. If the parties cannot agree, the neutral shall
designate a location other than the principal place of business of either party
or any of their subsidiaries or affiliates.
4. At least seven (7) days prior to the hearing, each party shall submit
the following to the other party and the neutral:
(a) a copy of all exhibits on which such party intends to rely in any
oral or written presentation to the neutral;
(b) a list of any witnesses such party intends to call at the hearing,
and a short summary of the anticipated testimony of each witness;
(c) a proposed ruling on each issue to be resolved, together with a
request for a specific damage award or other remedy for each issue. The proposed
rulings and remedies shall not contain any recitation of the facts or any legal
arguments and shall not exceed one (1) page per issue.
(d) a brief in support of such party's proposed rulings and remedies,
provided that the brief shall not exceed twenty (20) pages. This page limitation
shall apply regardless of the number of issues raised in the ADR proceeding.
Except as expressly set forth in subparagraphs 4(a) - 4(d) above, no
discovery shall be required or permitted by any means, including depositions,
interrogatories, requests for admissions, or production of documents.
5. The hearing shall be conducted on two (2) consecutive days and shall be
governed by the following rules:
(a) Each party shall be entitled to five (5) hours of hearing time to
present its case. The neutral shall determine whether each party has had the
five (5) hours to which it is entitled.
(b) Each party shall be entitled, but not required, to make an opening
statement, to present regular and rebuttal testimony, documents or other
evidence, to cross-examine witnesses, and to make a closing argument.
Cross-examination of witnesses shall occur immediately after their direct
testimony, and cross-examination time shall be charged against the party
conducting the cross-examination.
(c) The party initiating the ADR shall begin the hearing and, if it
chooses to make an opening statement, shall address not only issues it has
raised but also any issues raised by the responding party. The responding party,
if it chooses to make an opening statement, also shall address all issues raised
in the ADR. Thereafter, the presentation of regular and rebuttal testimony and
documents, other evidence, and closing arguments shall proceed in the same
sequence.
2
<PAGE> 57
(d) Witnesses shall be excluded from the hearing until closing
arguments.
(e) Neither affidavits nor settlement negotiations shall be admissible
under any circumstances. As to all other matters, the neutral shall have sole
discretion regarding the admissibility of any evidence.
6. Within seven (7) days following completion of the hearing, each party
may submit to the other party and the neutral a post-hearing brief in support of
its proposed rulings and remedies, provided that such brief shall not contain or
discuss any new evidence and shall not exceed ten (10) pages. This page
limitation shall apply regardless of the number of issues raised in the ADR
proceeding.
7. The neutral shall rule on each disputed issue within fourteen (14) days
following completion of the hearing. Such ruling shall adopt in its entirety the
proposed ruling and remedy of one of the parties on each disputed issue but may
adopt one party's proposed rulings and remedies on some issues and the other
party's proposed rulings and remedies on other issues. The neutral shall not
issue any written opinion or otherwise explain the basis of the ruling.
8. The neutral shall be paid a reasonable fee plus expenses. These fees and
expenses, along with the reasonable legal fees and expenses of the prevailing
party (including all expert witness fees and expenses), the fees and expenses of
a court reporter, and any expenses for a hearing room, shall be paid as follows:
(a) If the neutral rules in favor of one party on all disputed issues
in the ADR, the losing party shall pay 100% of such fees and expenses.
(b) If the neutral rules in favor of one party on some issues and the
other party on other issues, the neutral shall issue with the rulings a written
determination as to how such fees and expenses shall be allocated between the
parties. The neutral shall allocate fees and expenses in a way that bears a
reasonable relationship to the outcome of the ADR, with the party prevailing on
more issues, or on issues of greater value or gravity, recovering a relatively
larger share of its legal fees and expenses.
9. The rulings of the neutral and the allocation of fees and expenses shall
be binding, non-reviewable, and non-appealable, and may be entered as a final
judgment in any court having jurisdiction.
10. Except as provided in paragraph 9 of this Exhibit D or as required by
law, the existence of the dispute, any settlement negotiations, the ADR hearing,
any submissions (including exhibits, testimony, proposed rulings, and briefs),
and the rulings shall be deemed Confidential Information. The neutral shall have
the authority to impose sanctions for unauthorized disclosure of Confidential
Information.
3
<PAGE> 58
EXHIBIT E
API TRADEMARK APPLICATIONS AND REGISTRATIONS
API Trademarks Registered
<TABLE>
<CAPTION>
Case Number Mark Registration No. Next Renewal Date
- ----------- ---- ---------------- -----------------
<S> <C> <C> <C>
ARG-106
United States LF 1,785,153 08/03/03
ARG-701
United States Nyotran 2,173,459 07/14/08
</TABLE>
<PAGE> 59
EXHIBIT F
FORM OF TRADEMARK ASSIGNMENT
ASSIGNMENT
WHEREAS, Aronex Pharmaceuticals, Inc., a corporation existing under the
laws of the State of Delaware, having its principal place of business at 8707
Technology Forest Place, The Woodlands, Texas 77381-1191 is the owner of the
United States Trademark Registrations as depicted on Schedule 1 attached hereto;
and
WHEREAS, Abbott Laboratories, a corporation existing under the laws of the
State of Illinois, having its principal place of business at Abbott Park,
Illinois 60064 is desirous of acquiring all right, title and interest in and to
said Trademark Registrations, and
WHEREAS, Aronex Pharmaceuticals, Inc. is willing to assign any and all of
its right to the said Trademark Registrations,
NOW, THEREFORE, for good and valuable consideration, receipt of which is
hereby acknowledged, Aronex Pharmaceuticals, Inc. does hereby sell, transfer,
convey and assign to Abbott Laboratories any and all of its right, title and
interest in and to the trademarks and the Trademark Registrations associated
therewith, including the goodwill of the business symbolized by the trademark.
Dated this ____ day of ____________ , 1998.
Aronex Pharmaceuticals, Inc. Abbott Laboratories
- ---------------------------- -----------------------------
By: By:
------------------------- --------------------------
Title: Title:
---------------------- -----------------------
<PAGE> 60
Schedule I
<TABLE>
<CAPTION>
Trademark Country Registration Number
<S> <C> <C>
LF United States 1,785,153
NYOTRAN United States 2,173,459
</TABLE>
-i-
<PAGE> 1
EXHIBIT 10.2
Portions of this Exhibit have been omitted pursuant to a request for
confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act
of 1934, as amended, and Rule 406 under the Securities Act of 1933, as amended.
These omitted portions have been marked with "*" and have been filed separately
with the Securities and Exchange Commission.
- --------------------------------------------------------------------------------
STOCK PURCHASE AGREEMENT
BETWEEN
ABBOTT LABORATORIES
AND
ARONEX PHARMACEUTICALS, INC.
DATED AS OF NOVEMBER 12, 1998
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C> <C> <C>
1. Purchase and Sale of Common Stock........................................................1
1.1 Initial Purchase................................................................1
1.2 Additional Purchase.............................................................2
2. Interpretation of Agreement; Definitions.................................................2
2.1 Definitions.....................................................................2
2.2 Accounting Principles...........................................................6
2.3 Directly or Indirectly..........................................................6
3. Representations and Warranties of the Company and its Subsidiaries.......................6
3.1 Corporate Organization and Authority............................................6
3.2 Capital Structure...............................................................6
3.3 Equity Investments; Subsidiaries................................................7
3.4 Authority.......................................................................7
3.5 Financial Statements............................................................7
3.6 Securities and Exchange Commission Documents....................................8
3.7 Business Changes................................................................8
3.8 Litigation.....................................................................10
3.9 Compliance with Law............................................................10
3.10 Title to Properties............................................................10
3.11 Licenses, etc..................................................................10
3.12 No Default.....................................................................11
3.13 Proprietary Rights.............................................................11
3.14 Taxes..........................................................................12
3.15 Use of Proceeds................................................................12
3.16 Private Offering...............................................................12
3.17 Employee Plans and Relations...................................................12
3.18 Environmental Matters..........................................................13
3.19 Brokers or Finders.............................................................13
3.20 Full Disclosure................................................................13
4. Representations and Warranties of Abbott................................................14
4.1 Corporate Organization.........................................................14
4.2 Authority......................................................................14
4.3 Restricted Shares..............................................................14
4.4 No Conflict....................................................................15
4.5 Brokers or Finders.............................................................15
5. Covenants of the Company................................................................15
5.1 Rule 144 Reporting.............................................................15
</TABLE>
-i-
<PAGE> 3
<TABLE>
<S> <C> <C> <C>
5.2 Listing of Shares..............................................................16
5.3 Press Releases.................................................................16
6. Conditions Precedent....................................................................16
6.1 Conditions to Obligations of Abbott to Purchase the Initial Shares.............16
6.2 Conditions to Obligations of the Company for the Initial Shares................17
6.3 Conditions to Obligations of Abbott to Purchase the Additional Shares..........18
6.4 Conditions to Obligations of the Company for the Additional Shares.............19
7. Registration Rights.....................................................................19
7.1 Piggyback Registration.........................................................19
7.2 Demand Registration............................................................20
7.3 Payment of Expenses............................................................20
7.4 Additional Covenants of the Company............................................21
7.5 Indemnification................................................................22
7.6 Limitations on Registration Rights.............................................23
8. Indemnification.........................................................................24
8.1 Indemnification by the Company.................................................24
8.2 Indemnification by Abbott......................................................24
8.3 Indemnification Procedure......................................................25
9. Miscellaneous...........................................................................25
9.1 Powers and Rights Not Waived; Remedies Cumulative..............................25
9.2 Notice.........................................................................25
9.3 Successors and Assigns.........................................................26
9.4 Survival of Covenants and Representations......................................27
9.5 Severability...................................................................27
9.6 Waiver of Conditions...........................................................27
9.7 Counterparts...................................................................27
9.8 Governing Law..................................................................27
9.9 Captions.......................................................................27
9.10 Dispute Resolution.............................................................27
</TABLE>
EXHIBITS
Exhibit A -- License Agreement
Exhibit B -- Form of Opinion of Counsel
Exhibit C -- Dispute Resolution
-ii-
<PAGE> 4
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT (the "Agreement"), entered into as of the 12th day of
November, 1998, by and between ABBOTT LABORATORIES, an Illinois corporation
("Abbott"), and ARONEX PHARMACEUTICALS, INC., a Delaware corporation (the
"Company").
RECITALS
A. Abbott desires to purchase from the Company, and the Company desires to
sell to Abbott, shares of common stock, par value $0.001 per share, of the
Company (the "Common Stock"), all as more fully described below, on the terms
and conditions set forth herein.
B. The Company and Abbott desire to enter into a License Agreement (the
"License Agreement") in the form attached hereto as Exhibit A.
C. The Company and Abbott desire to make certain representations, warranties,
covenants and agreements in connection with the purchase and sale of the Common
Stock and desire to prescribe certain conditions precedent to such purchase and
sale.
AGREEMENT
NOW, THEREFORE, in consideration of the promises and of the mutual provisions,
agreements and covenants contained herein, the Company and Abbott hereby agree
as follows:
1. Purchase and Sale of Common Stock.
1.1 Initial Purchase. Subject to the terms and conditions hereof and on
the basis of the representations, warranties, covenants and agreements set forth
herein, the Company agrees to sell to Abbott, and Abbott agrees to purchase from
the Company, on the Initial Closing Date (as defined below), 837,989 shares of
Common Stock (the "Initial Shares") for an aggregate purchase price of
$3,000,000.
The closing of the purchase and sale of the Initial Shares will occur at
Abbott's principal executive offices, against payment of the purchase price
therefor by wire transfer in immediately available funds, at 10:00 a.m., local
time, on November 30, 1998, or such later date as shall mutually be agreed upon
by the Company and Abbott (the "Initial Closing Date"). The Company shall
deliver to Abbott written wire transfer instructions for the payment of the
purchase price of the Initial Shares at least 48 hours prior to the Initial
Closing Date, which instructions shall include the Company's bank name and
address, ABA routing number and the Company's account number.
-1-
<PAGE> 5
1.2 Additional Purchase.
(a) At any time beginning on the * , the Company shall have the
right (the "Put Right") to require Abbott to purchase additional shares of
Common Stock (the "Additional Shares") for an aggregate purchase price of up to
* ; provided, however, that the Put Right shall terminate if * . The Company
shall be entitled to exercise the Put Right on only one occasion.
(b) To exercise the Put Right, the Company shall deliver to Abbott a
written notice (the "Exercise Notice"), which shall be dated as of the date the
Exercise Notice is transmitted by facsimile transmission to Abbott (with a
confirmation copy sent by mail or personal delivery), and which shall set forth
(i) the number of shares of Common Stock to be sold to and purchased by Abbott
in connection with the exercise of the Put Right (the "Additional Shares"), (ii)
the aggregate purchase price for the Additional Shares (the "Additional Purchase
Price"), and (iii) the date on which the closing of the purchase and sale of the
Additional Shares shall take place (the "Additional Closing Date"), which shall
be the tenth Business Day after the date of the Exercise Notice or such other
date as shall be agreed to in writing by Abbott and the Company. The Company
shall deliver to Abbott written wire transfer instructions (setting forth the
information specified in Section 1.1 hereof) for the payment of the Additional
Purchase Price at least 48 hours prior to the Additional Closing Date.
(c) The number of Additional Shares to be sold to and purchased by
Abbott pursuant to the Put Right shall be determined by dividing the Additional
Purchase Price by the lesser of (i) * (as adjusted to reflect any stock splits,
reverse stock splits, stock dividends, subdivisions, combinations or similar
transactions the record date for which shall occur after the date hereof), or
(ii) the Fair Market Value on the date of the Exercise Notice.
(d) Notwithstanding any other provision of this agreement to the
contrary, (i) the Company shall not be entitled to exercise the Put Right at any
time that the Fair Market Value of the Common Stock is less than * (as adjusted
to reflect any stock splits, reverse stock splits, stock dividends,
subdivisions, combinations or similar transactions the record date for which
shall occur after the date hereof), which is the Fair Market Value of the Common
Stock on the date hereof; and (ii) the number of Additional Shares subject to
the Put Right shall be reduced to the extent that the Initial Shares and the
Additional Shares shall, in the aggregate, equal or exceed * of the outstanding
Common Stock on the Additional Closing Date (after giving effect to the exercise
of the Put Right).
-2-
<PAGE> 6
2. Interpretation of Agreement; Definitions.
2.1 Definitions. Unless the context otherwise requires, the terms
hereinafter set forth when used herein shall have the following meanings, and
the following definitions shall be equally applicable to both the singular and
plural forms of any of the terms herein defined:
"Additional Closing Date" shall have the meaning specified in Section 1.2
hereof.
"Additional Purchase Price" shall have the meaning specified in Section 1.2
hereof.
"Additional Shares" shall have the meaning specified in Section 1.2 hereof.
"Affiliate" shall mean any Person (other than a Subsidiary) (i) which directly
or indirectly through one or more intermediaries controls, or is controlled by,
or is under common control with, the Company, (ii) which beneficially owns or
holds ten percent (10%) or more of any class of the Voting Stock of the Company
or (iii) ten percent (10%) or more of the Voting Stock (or in the case of a
Person which is not a corporation, ten percent (10%) or more of the equity
interest) of which is beneficially owned or held by the Company or a Subsidiary.
The term "control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person,
whether through the ownership of Voting Stock, by contract or otherwise.
"Agreement" shall mean this Stock Purchase Agreement.
"Board of Directors" shall mean either the board of directors of the Company
or any duly authorized committee thereof.
"Board Resolution" shall mean a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted by
the Board of Directors and to be in full force and effect on the date of such
certification.
"Business Day" shall mean any day other than a Saturday, Sunday, legal holiday
or other day on which commercial banks located in Houston, Texas or Chicago,
Illinois are authorized or required by law to be closed.
"Change of Control" shall mean any change in control of the Company which
includes any consolidation of the Company with, or merger of the Company into,
any other Person, any merger of another Person into the Company (other than a
merger which does not result in any reclassification, conversion, exchange or
cancellation of outstanding shares of Common Stock), any acquisition of at least
a majority of the Voting Stock of the Company or any sale or transfer of all or
substantially all of the business or assets of the Company.
"Commission" shall mean the Securities and Exchange Commission or any
successor regulatory entity.
-3-
<PAGE> 7
"Common Stock" shall mean the Common Stock, par value $0.001 per share, of the
Company.
"Company" shall mean Aronex Pharmaceuticals, Inc., a Delaware corporation, and
any Person that, in accordance with the terms of this Agreement, succeeds to all
or substantially all of the assets or the business of Aronex Pharmaceuticals,
Inc.
"Company Balance Sheet" shall have the meaning specified in Section 3.5
hereof.
"Company Balance Sheet Date" shall have the meaning specified in Section 3.5
hereof.
"Company Financial Statements" shall have the meaning specified in Section 3.5
hereof.
"Company SEC Documents" shall have the meaning specified in Section 3.6
hereof.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute of similar import, together with the
regulations thereunder, in each case as in effect from time to time. References
to sections of ERISA shall be construed to also refer to any successor sections.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"Exercise Notice" shall have the meaning specified in Section 1.2 hereof.
"Fair Market Value of the Common Stock" as of any day shall mean (i) the
average last sale price (or average closing bid and asked price if no sales were
reported) of the Common Stock on the Nasdaq National Market for the preceding 10
Business Days; or (ii) if the Common Stock is not included in the Nasdaq
National Market, the average closing price of the Common Stock on the principal
national securities exchange on which the Common Stock is listed for the
preceding 10 Business Days; or (iii) if the Common Stock is not listed on a
national securities exchange, the average of the high bid and the low asked
price of the Common Stock in the over-the-counter market as reported for the
preceding 10 Business Days; or (iv) if no such quotations are available, the
fair market value per share on such date as determined by an independent
investment banker or appraiser, nationally recognized to be an expert in making
such valuations, selected by mutual agreement of the Company and Abbott.
"FDA" shall mean the United States Food and Drug Administration or any
successor regulatory entity.
"GAAP" shall mean generally accepted accounting principles in effect at the
applicable time in the United States.
"Governmental Entity" shall have the meaning specified in Section 3.4 hereof.
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"Holder" shall mean the registered holder of the Shares.
"Initial Closing Date" shall have the meaning specified in Section 1.1 hereof.
"Initial Shares" shall have the meaning specified in Section 1.2 hereof.
"Lien" shall mean any interest in property securing an obligation owed to, or
a claim by, a Person other than the owner of the property, whether such interest
is based on the common law, statute or contract, and including but not limited
to the security interest lien arising from a mortgage, encumbrance, pledge,
conditional sale or trust receipt or a lease, consignment or bailment for
security purposes. The term "Lien" shall include reservations, exceptions,
encroachments, easements, rights-of-way, covenants, conditions, restrictions,
leases and other title exceptions and encumbrances (including, with respect to
stock, stockholder agreements, voting trust agreements, buy-back agreements and
all similar arrangements) affecting property. For the purposes of this
Agreement, the Company or a Subsidiary shall be deemed to be the owner of any
property which it has acquired or holds subject to a conditional sale agreement,
capitalized lease or other arrangement pursuant to which title to the property
has been retained by or vested in some other Person for security purposes and
such retention or vesting shall constitute a Lien.
"NDA" shall mean an FDA New Drug Application with respect to the Company's
proprietary formulation of the compound nystatin, which as of the date hereof is
being developed under the name Nyotran(R).
"NDA Acceptance Date" shall * .
"Permits" shall have the meaning specified in Section 3.9 hereof.
"Person" shall mean an individual, partnership, corporation, limited liability
company, trust or unincorporated organization, and a government or agency or
political subdivision thereof.
"Preferred Stock" shall mean stock of the Company or a Subsidiary of any class
or series ranking prior to any other class or series of stock of the Company or
the Subsidiary with respect to the payment of dividends or the distribution of
assets upon the liquidation, dissolution or winding up of the Company or the
Subsidiary.
"Proprietary Rights" shall have the meaning specified in Section 3.13 hereof.
"Put Right" shall have the meaning specified in Section 1.2 hereof.
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"Securities Act" shall mean the Securities Act of 1933, as amended.
"Shares" shall mean the Initial Shares and the Additional Shares.
"Subsidiary" shall mean a corporation, partnership or other entity at least a
majority of whose Voting Stock is owned directly or indirectly by the Company.
"Voting Stock" shall mean securities of any class or classes, the holders of
which are ordinarily, in the absence of contingencies, entitled to elect a
majority of the corporate directors (or Persons performing similar functions).
2.2 Accounting Principles. Where the character or amount of any asset or
liability or item of income or expense is required to be determined or any
consolidation or other accounting computation is required to be made for the
purposes of this Agreement, the same shall be done in accordance with GAAP, to
the extent applicable, except where such principles are inconsistent with the
requirements of this Agreement.
2.3 Directly or Indirectly. Where any provision in this Agreement refers
to action to be taken by any Person, or which such Person is prohibited from
taking, such provision shall be applicable whether the action in question is
taken directly or indirectly by such Person.
3. Representations and Warranties of the Company and its Subsidiaries.
Except as otherwise described or set forth in the Company SEC Documents, the
Company and its Subsidiaries represent and warrant to Abbott as of the date
hereof, as of the Initial Closing Date and as of the Additional Closing Date as
follows:
3.1 Corporate Organization and Authority. The Company and each of its
Subsidiaries: (a) is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation; (b) has all
requisite power and authority to own and operate its properties and to carry on
its business as now conducted and as presently proposed to be conducted; and (c)
is duly licensed or qualified and is in good standing as a foreign corporation
in each jurisdiction wherein the nature of the business transacted by it or the
nature of the property owned or leased by it makes such licensing or
qualification necessary.
3.2 Capital Structure. The authorized capital stock of the Company
consists of 30,000,000 shares of Common Stock and 5,000,000 shares of Preferred
Stock, par value $0.001 per share. As of the date hereof, 15,503,745 shares of
Common Stock were issued and outstanding and no shares of the Company's
Preferred Stock were issued and outstanding. Except as described in the Company
SEC Documents, there are no outstanding options, warrants, rights or other
securities convertible into or exchangeable for shares of Common Stock, other
than stock options granted to employees and directors of the Company in the
ordinary course and consistent with past practice.
All of the outstanding Common Stock was issued in compliance with applicable
federal and state securities laws and regulations. All of the outstanding shares
of the Common Stock are, and
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when issued in accordance with this Agreement the Shares will be, duly
authorized, validly issued, fully paid and nonassessable, free and clear of any
Liens or encumbrances created by the Company, and not subject to preemptive
rights created by statute, the Company's Certificate of Incorporation or Bylaws,
or any agreement to which the Company is a party or by which it is bound.
3.3 Equity Investments; Subsidiaries. The Company does not own any
equity stock or interest, directly or indirectly, in any corporation,
partnership, joint venture, firm or other entity other than (i) its
Subsidiaries, which are Triplex Pharmaceutical Corporation, a Delaware
corporation, Oncologix, Inc., a Delaware corporation and Aronex Europe Limited,
a company limited by shares organized under the laws of England, and (ii) a
minority interest in Targeted Genetics, Incorporated, a Delaware corporation.
The Company owns all of the outstanding capital stock of each of its
Subsidiaries, free and clear in each case of any Lien.
3.4 Authority. The Company has all requisite corporate power and
authority to enter into this Agreement and to execute, issue, sell and deliver
the Shares and, subject to satisfaction of the conditions set forth herein, to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the certificates representing the Shares and the consummation
of the transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of the Company. This Agreement has been
duly executed and delivered by the Company and constitutes the valid and binding
obligation of the Company, enforceable in accordance with its terms, subject to
the effect of applicable bankruptcy, insolvency, reorganization or other similar
laws affecting the rights of creditors and the effect or availability of rules
of law governing specific performance, injunctive relief or other equitable
remedies. Provided the conditions set forth in Section 6 hereof are satisfied,
the execution and delivery of this Agreement and the certificates representing
the Shares does not or will not, and the consummation of the transactions
contemplated hereby will not, conflict with, or result in any violation of or
default (with or without notice or lapse of time, or both) under, or give rise
to a right of termination, cancellation or acceleration of any obligation under
(a) any provision of the Certificate of Incorporation or Bylaws of the Company,
or (b) any material agreement or instrument, permit, franchise, license,
judgment or order applicable to the Company or its respective properties or
assets.
No consent, approval, order or authorization of, or registration, declaration
or filing with, any court, administrative agency or commission or other
governmental authority (a "Governmental Entity") or other Person, is required
by, or with respect to, the Company in connection with the execution and
delivery of this Agreement or the certificates representing the Shares or the
consummation by the Company of the transactions contemplated hereby, except for
such consents, approvals, orders, authorizations, registrations, declarations
and filings as may be required under applicable federal and state securities
laws and the laws of any foreign country.
3.5 Financial Statements. The Company has furnished to Abbott its audited
consolidated statements of operations, statements of stockholders' equity and
statements of cash flows for the fiscal year ended December 31, 1997 and the
Company's audited consolidated balance sheet at December 31, 1997; and the
unaudited consolidated statement of operations and statement
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of cash flows for the nine months ended September 30, 1998 and the unaudited
consolidated balance sheet at September 30, 1998. The balance sheet at September
30, 1998 is hereinafter referred to as the "Company Balance Sheet," and all such
financial statements are hereinafter referred to collectively as the "Company
Financial Statements." The Company Financial Statements have been prepared in
accordance with GAAP applied on a consistent basis, except for any change due to
the adoption of an accounting principle established by the FASB, AICPA,
Commission or any other accounting standard setting board, during the periods
involved, and fairly present the consolidated financial position of the Company
and the results of its operations as of the date and for the periods indicated
thereon. At the date of the Company Balance Sheet (the "Company Balance Sheet
Date"), neither the Company nor its consolidated Subsidiaries had any
liabilities or obligations, secured or unsecured (whether accrued, absolute,
contingent or otherwise) required to be reflected on the Company Balance Sheet
or in the accompanying notes thereto that were not so reflected.
3.6 Securities and Exchange Commission Documents. The Company has
furnished to Abbott a true and complete copy of the Company's Proxy Statement
relating to the Company's 1998 annual meeting of shareholders, the Company's
Annual Report on Form 10-K for the year ended December 31, 1997, the Company's
Quarterly Reports on Form 10-Q for the quarters ended March 31, 1998 and June
30, 1998, and the Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1998 in the form delivered to Abbott on October 23, 1998 (the
"Company SEC Documents"). As of their respective filing dates and, in the case
of the Company's Quarterly Report on Form 10-Q for the quarter ended September
30, 1998, as of the date delivered to Abbott, the Company SEC Documents comply
in all material respects with the requirements of the Exchange Act and none of
the Company SEC Documents contains any untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary in
order to make the statements made therein, in light of the circumstances under
which they were made, not misleading, except to the extent corrected by a
subsequently filed Company SEC Document.
3.7 Business Changes. Since September 30, 1998, except as otherwise
contemplated by this Agreement or as described in the Company SEC Documents, the
Company has conducted its business only in the ordinary and usual course and,
without limiting the generality of the foregoing:
(a) There have been no changes in the condition (financial or
otherwise), business, net worth, assets, properties, employees, operations,
obligations or liabilities of the Company which, in the aggregate, have had or
may be reasonably expected to have a materially adverse effect on the condition,
business, net worth, assets, prospects, properties or operations of the Company.
(b) The Company has not issued, or authorized for issuance, or
entered into any commitment to issue, any equity security, bond, note or other
security of the Company other than stock options granted to employees and
directors of the Company in the ordinary course and consistent with past
practice.
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<PAGE> 12
(c) The Company has not incurred debt for borrowed money, nor
incurred any obligation or liability except in the ordinary and usual course of
business and in any event not in excess of $250,000 for any single occurrence.
(d) The Company has not paid any obligation or liability, or
discharged, settled or satisfied any claim, lien or encumbrance, except for
current liabilities in the ordinary and usual course of business and in any
event not in excess of $250,000 for any single occurrence.
(e) The Company has not declared or made any dividend, payment or
other distribution on or with respect to any share of capital stock of the
Company.
(f) The Company has not purchased, redeemed or otherwise acquired or
committed itself to acquire, directly or indirectly, any share or shares of
capital stock of the Company.
(g) The Company has not mortgaged, pledged or otherwise encumbered
any of its assets or properties, other than leasehold improvements and equipment
acquired with purchase money financing or under a capital lease, inventory sold
in the normal course of business or accounts receivable.
(h) The Company has not disposed of, or agreed to dispose of, by
sale, lease, license or otherwise, any asset or property, tangible or
intangible, except in the ordinary and usual course of business, and in each
case for a consideration believed to be at least equal to the fair value of such
asset or property and in any event not in excess of $250,000 for any single item
or $500,000 in the aggregate other than inventory sold or returned in the normal
course of business.
(i) The Company has not purchased or agreed to purchase or otherwise
acquire any securities of any corporation, partnership, joint venture, firm or
other entity; the Company has not made any expenditure or commitment for the
purchase, acquisition, construction or improvement of a capital asset, except in
the ordinary and usual course of business and in any event not in excess of
$250,000 for any single item or $500,000 in the aggregate.
(j) The Company has not entered into any material transaction or
contract, or made any commitment to do the same, except in the ordinary and
usual course of business.
(k) The Company has not sold, assigned, transferred or conveyed, or
committed itself to sell, assign, transfer or convey, any material Proprietary
Rights (as defined in Section 3.13 hereof).
(l) The Company has not adopted or amended any material bonus,
incentive, profit-sharing, stock option, stock purchase, pension, retirement,
deferred-compensation, severance, life insurance, medical or other benefit plan,
agreement, trust, fund or arrangement for the benefit of employees of any kind
whatsoever, nor entered into or amended any material
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agreement relating to employment, services as an independent contractor or
consultant, or severance or termination pay, nor agreed to do any of the
foregoing.
(m) The Company has not effected or agreed to effect any change in
its officers or key employees.
(n) The Company has not effected or committed itself to effect any
amendment or modification in its Certificate of Incorporation or Bylaws.
(o) The Company has not modified its accounting principles in any
material respect, except for those changes required by the adoption of an
accounting principle promulgated by the FASB, the AICPA, the Commission or any
other accounting standards setting bodies.
3.8 Litigation. There is no material claim, dispute, action, proceeding,
notice, order, suit, appeal or investigation, at law or in equity, pending
against the Company, or involving any of its assets or properties, before any
court, agency, authority, arbitration panel or other tribunal (other than those,
if any, with respect to which service of process or similar notice has not yet
been made on the Company), and none have been threatened. The Company is aware
of no facts which, if known to stockholders, customers, governmental authorities
or other Persons, would result in any such claim, dispute, action, proceeding,
suit or appeal or investigation which would have a material adverse effect on
the condition (financial or otherwise), business, net worth, assets, prospects,
properties or operations of the Company. The Company is not subject to any
order, writ, injunction or decree of any court, agency, authority, arbitration
panel or other tribunal, nor is it in default with respect to any order, writ,
injunction or decree.
3.9 Compliance with Law. All material licenses, franchises, permits,
clearances, consents, certificates and other evidences of authority of the
Company which are necessary to the conduct of the Company's business ("Permits")
are in full force and effect and the Company is not in violation of any Permit
in any material respect. Except for possible exceptions, the curing or
non-curing of which would not have a material adverse effect on the condition
(financial or otherwise), business, net worth, assets, prospects, properties or
operations of the Company, the business of the Company has been conducted in
accordance with all applicable laws, regulations, orders and other requirements
of governmental authorities.
3.10 Title to Properties. The Company and each of its Subsidiaries has
good title to all material items of property it purports to own, except for
items of property sold or otherwise disposed of in the ordinary course of
business.
3.11 Licenses, etc. The Company and each of its Subsidiaries owns or
possesses all material trade names, service marks, licenses, governmental
approvals, and rights with respect to the foregoing necessary for the present
conduct of its business, without any known conflict with the rights of others.
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3.12 No Default.
(a) Each of the Company's material agreements or contracts is a
legal, binding and enforceable obligation by or against the Company, subject to
the effect of applicable bankruptcy, insolvency, reorganization, moratorium or
other similar federal or state laws affecting the rights of creditors and the
effect or availability of rules of law governing specific performance,
injunctive relief or other equitable remedies (regardless of whether any such
remedy is considered in a proceeding at law or in equity). To the Company's
knowledge, no party with whom the Company has an agreement or contract is in
default thereunder or has breached any term or provision thereof which is
material to the conduct of the Company's business.
(b) The Company has performed, or is now performing, the obligations
of, and the Company is not in material default (or would by the lapse of time
and/or the giving of notice be in material default) in respect of, any contract,
agreement or commitment binding upon it or its assets or properties and material
to the conduct of its business. No third party has raised any claim, dispute or
controversy with respect to any material contract of the Company, whether fully
performed or currently being performed, nor has the Company received written
notice or warning of alleged nonperformance, delay in delivery or other
noncompliance by the Company with respect to its obligations under any such
contract, nor to the Company's knowledge are there any facts (other than
contractual provisions allowing parties to terminate such contract without
cause) which exist indicating that any such contract may be totally or partially
terminated or suspended by the other parties thereto.
3.13 Proprietary Rights.
(a) The Company has entered into agreements with each officer,
employee or consultant of the Company necessary to provide the Company with
title and ownership to all material patents, patent applications, trade secrets
and inventions developed or used by the Company in its business, and all of such
agreements are valid, enforceable and legally binding, subject to the effect of
applicable bankruptcy, insolvency, reorganization or other similar laws
affecting the rights of creditors or availability of rules of law governing
specific performance, injunctive relief or other equitable remedies (regardless
of whether any such remedy is considered in a proceeding at law or in equity).
(b) The Company owns or possesses licenses or other rights to use
all material patents, patent applications, trademarks, trademark applications,
trade secrets, service marks, trade names, copyrights, inventions, drawings,
designs, customer lists, proprietary know-how or information, or other rights
with respect thereto (collectively referred to as "Proprietary Rights"), used in
the business of the Company, and the same are sufficient to conduct the
Company's business as it has been and is now being conducted.
(c) To the Company's knowledge, the operations of the Company do not
violate or infringe, and no one has asserted to the Company that such operations
violate or infringe,
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<PAGE> 15
on any Proprietary Rights, owned, possessed or used by any third party. There
are no claims, disputes, actions, proceedings, suits or appeals pending against
the Company with respect to any Proprietary Rights (other than those, if any,
with respect to which service of process or similar notice may not yet have been
made on the Company), and none has been threatened against the Company. To the
knowledge of the Company, there are no facts which would reasonably serve as a
basis for any claim that the Company does not have the right to use, free of any
rights or claims of others, all Proprietary Rights in the development,
manufacture, use, sale or other disposition of any or all products or services
presently being used, furnished or sold in the conduct of the business of the
Company as it has been and is now being conducted.
(d) To the Company's knowledge, no employee of the Company is in
violation of any term of any employment contract, proprietary information and
inventions agreement, non-competition agreement, or any other contract or
agreement relating to the relationship of any such employee with the Company or
any previous employer.
3.14 Taxes. All tax returns required to be filed by the Company or its
Subsidiaries in any jurisdiction have been filed, and all taxes, assessments,
fees and other governmental charges upon the Company or its Subsidiaries or upon
any of their respective properties, income or franchises, which are shown to be
due and payable in such returns have been paid. For all taxable years ending on
or before December 31, 1997, the federal income tax liability of the Company and
its Subsidiaries has been satisfied. The Company does not know of any proposed
additional tax assessment against it for which adequate reserves have not been
made on its balance sheet, and no material controversy in respect of additional
federal or state income taxes due since such date is pending or, to the
knowledge of the Company, threatened. The reserves for taxes on the books of the
Company and each of its Subsidiaries are adequate in all material respects for
all open years, and for its current fiscal period.
3.15 Use of Proceeds. The net proceeds from the sale of the Shares will
be used to make an infusion of capital into the Company and for other corporate
purposes.
3.16 Private Offering. The offering and sale of the Shares is and will be
exempt from the registration requirements of the Securities Act and applicable
state securities and blue sky laws. Neither the Company nor any agent on its
behalf has made or will make any offers to sell or solicited or will solicit any
offers to buy the Shares to any Person so as to bring the offer or sale thereof
within the registration requirements of the Securities Act.
3.17 Employee Plans and Relations.
(a) Except as disclosed in the Company SEC Documents, the Company
does not have any: (i) employee benefit plans, multi-employer plans and employee
benefit plans (as defined in section 3(2) or section 3(3) of ERISA); (ii)
material bonus, deferred compensation, incentive, restricted stock, stock
purchase, stock option, stock appreciation right, phantom stock, debenture,
supplemental pension, profit-sharing, royalty pool, commission or similar plans
or
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<PAGE> 16
arrangements; (iii) material employment, consulting, termination or severance
agreements; or (iv) other material plans, programs, agreements, procedures,
policies, commitments, understandings or other arrangements relating to employee
benefits, executive compensation, fringe benefits, severance pay, terms of
employment or services as a director, officer, employee or independent
contractor.
(b) The Company has not been and is not a party to, or subject to,
or affected by, any collective bargaining agreement or other labor contract. The
Company has complied in all material respects with all laws, rules and
regulations relating to employment, equal employment opportunity,
nondiscrimination, immigration, wages, hours, benefits, collective bargaining,
the payment of social security and similar taxes, occupational safety and health
and plant closing.
3.18 Environmental Matters. The Company is, and at all times during the
period prior to the date hereof the Company has been, in material compliance
with all applicable local, state and federal statutes, orders, rules, ordinances
and regulations relating to pollution or protection of the environment,
including, without limitation, laws relating to zoning and land use and to
emissions, discharges, releases or threatened releases of pollutants,
contaminants, hazardous or toxic materials or wastes into or on land, ambient
air, surface water, ground water, personal property or structures (including the
protection, cleanup, removal, remediation or damage thereof), or otherwise
related to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport, discharge or handling of pollutants, contaminants or
hazardous or toxic substances, materials or wastes.
3.19 Brokers or Finders. The Company has not dealt with any broker or
finder in connection with the transactions contemplated by this Agreement. The
Company has not incurred, and shall not incur, directly or indirectly, any
liability for any brokerage or finders' fees or agents' commissions or any
similar charges in connection with this Agreement or any transaction
contemplated hereby.
3.20 Full Disclosure. Neither the Company Financial Statements referred
to in Section 3.6 hereof, nor this Agreement or any other written statements
furnished by the Company to Abbott in connection with the negotiation of the
sale of the Shares, contains any untrue statement of a material fact or omits a
material fact necessary to make the statements contained herein or therein,
taken as a whole, not misleading. There is no fact peculiar to the Company or
the Subsidiaries which the Company has not disclosed to Abbott in writing which
materially adversely affects nor, so far as the Company can now reasonably
foresee, will materially adversely affect, the properties, business, profits or
condition (financial or otherwise) of the Company and the Subsidiaries, taken as
a whole.
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4. Representations and Warranties of Abbott. Except as contemplated by this
Agreement, Abbott represents and warrants to the Company as of the date hereof
as follows:
4.1 Corporate Organization. Abbott is a corporation duly incorporated,
validly existing and in good standing under the laws of Illinois. Abbott is duly
qualified to do business and is in good standing in its state of incorporation
and in each other jurisdiction in which it owns or leases property or conducts
business, except where the failure to be so qualified would not have a material
adverse effect on the business of Abbott. Abbott has all requisite power and
authority to own, lease and operate its properties and to carry on its business
as now being conducted, and possesses all licenses, franchises, rights and
privileges material to the conduct of its business.
4.2 Authority. Abbott has all requisite corporate power and authority to
enter into this Agreement and, subject to satisfaction of the conditions set
forth herein, to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of Abbott. This Agreement has been duly executed and delivered by
Abbott and constitutes the valid and binding obligation of Abbott enforceable in
accordance with its terms, subject to the effect of applicable bankruptcy,
insolvency, reorganization or other similar federal or state laws affecting the
rights of creditors and the effect or availability of rules of law governing
specific performance, injunctive relief or other equitable remedies. Provided
the conditions set forth in Section 6 are satisfied, the execution and delivery
of this Agreement does not, and the consummation of the transactions
contemplated hereby will not, conflict with, or result in any violation of or
default (with or without notice or lapse of time, or both) under, or give rise
to a right of termination, cancellation or acceleration of any obligation under
(a) any provision of the Articles of Incorporation or Bylaws of Abbott, or (b)
any material agreement or instrument, permit, license, judgment, order, statute,
law, ordinance, rule or regulation applicable to Abbott or its properties or
assets, other than any such conflicts, violations, defaults, terminations,
cancellations or accelerations which individually or in the aggregate would not
have a material adverse effect on Abbott.
No consent, approval, order or authorization of, or registration, declaration
or filing with, any Governmental Entity or other Person is required by or with
respect to Abbott in connection with the execution and delivery of this
Agreement by Abbott or the consummation by Abbott of the transactions
contemplated hereby.
4.3 Restricted Shares. Abbott represents and agrees, and in entering into
this Agreement the Company understands, that (a) Abbott is acquiring the Shares
for Abbott's own account, and for the purpose of investment and not with a view
to the distribution thereof, and that Abbott has no present intention of
selling, negotiating or otherwise disposing of the Shares, it being understood,
however, that the disposition of Abbott's property shall at all times be and
remain within its control, and (b) the Shares have not been registered under
Section 5 of the Securities Act and that Abbott will only re-offer or resell the
Shares purchased by Abbott under this Agreement pursuant
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<PAGE> 18
to an effective registration statement under the Securities Act or in accordance
with an available exemption from the requirements of Section 5 of the Securities
Act.
4.4 No Conflict. The execution and delivery of this Agreement by Abbott
and the performance of Abbott's obligations hereunder, (a) are not in violation
or breach of, and will not conflict with or constitute a default under, any of
the terms of the Articles of Incorporation or Bylaws of Abbott or any of its
Subsidiaries, or any material contract, agreement or commitment binding upon
Abbott or any of its assets or properties; (b) will not result in the creation
or imposition of any Lien, encumbrance, equity or restriction in favor of any
third party upon any of the assets or properties of Abbott; and (c) will not
conflict with or violate any applicable law, rule, regulation, judgment, order
or decree of any government, governmental instrumentality or court having
jurisdiction over Abbott or any of its assets or properties.
4.5 Brokers or Finders. Abbott has not dealt with any broker or finder in
connection with the transactions contemplated by this Agreement. Abbott has not
incurred, and shall not incur, directly or indirectly, any liability for any
brokerage or finders' fees or agents commissions or any similar charges in
connection with this Agreement or any transaction contemplated hereby.
5. Covenants of the Company. From and after the Initial Closing Date and
continuing so long as any Shares remain outstanding, the Company covenants and
agrees with Abbott that:
5.1 Rule 144 Reporting. With a view to making available the benefits of
certain rules and regulations of the Commission which may permit the sale of the
restricted Common Stock to the public without registration, as long as a public
market exists for the Common Stock, the Company shall use its best efforts to:
(a) Make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act;
(b) File with the Commission in a timely manner all reports and
other documents required of the Company under the Securities Act and the
Exchange Act;
(c) So long as a Holder owns any restricted Common Stock, furnish to
the Holder forthwith upon request a written statement by the Company as to its
compliance with the reporting requirements of Rule 144, and of the Securities
Act and the Exchange Act, a copy of the most recent annual or quarterly report
of the Company, and such other reports and documents of the Company and other
information in the possession of or reasonably obtainable by the Company as a
Holder may reasonably request in availing itself of any rule or regulation of
the Commission allowing a Holder to sell any such securities without
registration.
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<PAGE> 19
5.2 Listing of Shares.
(a) The Company shall (i) promptly following the Initial Closing
Date prepare and file with The Nasdaq Stock Market, Inc. (as well as any
national securities exchange on which the Common Stock is then listed) an
application for listing of the Initial Shares and, concurrently with the
delivery of the Exercise Notice, prepare and file with The Nasdaq Stock Market,
Inc. (as well as any national securities exchange on which the Common Stock is
then listed) an application for listing of the Additional Shares, and (ii) take
all reasonable steps necessary to cause all Shares to be approved for listing on
the Nasdaq National Market (as well as any national securities exchange on which
the Common Stock is then listed) as soon as practicable thereafter.
(b) The Company shall use its best efforts to keep effective the
registration of the Common Stock under the Exchange Act and maintain the listing
of the Common Stock on the Nasdaq National Market or a national securities
exchange.
5.3 Press Releases. Any press release or other public announcement
concerning this Agreement or the transactions contemplated hereby shall be
mutually satisfactory to the Company and Abbott, except that the Company may
issue such press releases or make such public statements as it reasonably
believes to be required by law or the rules of The Nasdaq Stock Market.
6. Conditions Precedent.
6.1 Conditions to Obligations of Abbott to Purchase the Initial Shares.
The obligations of Abbott to consummate this Agreement and purchase the Initial
Shares are subject to the satisfaction on or prior to the Initial Closing Date
of all of the following conditions, unless waived by Abbott:
(a) Representations and Warranties. The representations and
warranties of the Company set forth in this Agreement shall be true and correct
in all material respects as of the date of this Agreement and as if made at and
as of the Initial Closing Date, and Abbott shall have received a certificate or
certificates signed by the Chief Executive Officer of the Company to such
effect.
(b) Performance of Obligations. The Company shall have performed
all obligations required to be performed by it under this Agreement prior to the
Initial Closing Date, and Abbott shall have received a certificate signed by the
Chief Executive Officer of the Company to such effect.
(c) No Material Adverse Change. There shall have been no changes in
the condition (financial or otherwise), business, prospects, employees,
operations, obligations or liabilities of the Company which, in the aggregate,
have had or may be reasonably expected to have a materially adverse effect on
the financial condition, business, or operations of the Company on a
consolidated basis.
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<PAGE> 20
(d) License Agreement. The Company and Abbott shall have entered
into a License Agreement in the form attached hereto as Exhibit A.
(e) Other Documents. The Company shall have delivered to Abbott (i)
a copy of the Certificate of Incorporation of the Company, as in effect on the
Initial Closing Date, certified by the Secretary of State of the State of
Delaware, (ii) a certificate of the Secretary of State of the State of Delaware
and of the State of Texas, as of the most recent practicable date, as to the
good standing of the Company, (iii) a certificate of the Secretary of the
Company dated as of the Initial Closing Date, certifying as to (A) the Board
Resolutions authorizing the execution and delivery of this Agreement, the
Licencing Agreement and the other transactions contemplated hereby (with a copy
attached), (B) the Bylaws of the Company as in effect on the Initial Closing
Date (with a copy attached), and (C) the incumbency of the officers executing
the Agreement and the License Agreement; and (iv) a copy of the Company
Financial Statements, certified by the Chief Executive Officer or the Chief
Financial Officer of the Company.
(f) Opinion of Counsel. The Company shall have delivered an opinion
of its counsel substantially in the form of Exhibit B.
(g) Certificates for Initial Shares. The Company shall have
delivered to Abbott valid certificates for the Initial Shares, registered in
Abbott's name.
6.2 Conditions to Obligations of the Company for the Initial Shares. The
obligations of the Company to consummate the transactions contemplated hereby
are subject to the satisfaction on or prior to the Initial Closing Date of all
of the following conditions, unless waived by the Company:
(a) Representations and Warranties. The representations and
warranties of Abbott set forth in this Agreement shall be true and correct in
all material respects as of the date of this Agreement and as if made at and as
of the Initial Closing Date.
(b) Performance of Obligations of Abbott. Abbott shall have
performed in all material respects all obligations required to be performed by
it under this Agreement prior to the Initial Closing Date.
(c) License Agreement. The Company and Abbott shall have entered
into a License Agreement in the form attached hereto as Exhibit A.
(d) Payment. Abbott shall have tendered to the Company $3,000,000 in
payment for the Initial Shares.
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<PAGE> 21
6.3 Conditions to Obligations of Abbott to Purchase the Additional
Shares. The obligations of Abbott to purchase the Additional Shares are subject
to the satisfaction on or prior to the Additional Closing Date of all of the
following conditions, unless waived by Abbott:
(a) Representations and Warranties. The representations and
warranties of the Company set forth in this Agreement shall be true and correct
in all material respects as of the date of this Agreement and as if made at and
as of the Additional Closing Date, except for such changes as are disclosed in
the Company's filings with the Commission after the date of this Agreement, and
Abbott shall have received a certificate or certificates signed by the Chief
Executive Officer of the Company to such effect.
(b) Performance of Obligations. The Company shall have performed
all obligations required to be performed by it under this Agreement prior to the
Additional Closing Date, and Abbott shall have received a certificate signed by
the Chief Executive Officer of the Company to such effect.
(c) No Material Adverse Change. There shall have been no changes in
the condition (financial or otherwise), business, prospects, employees,
operations, obligations or liabilities of the Company which, in the aggregate,
have had or may be reasonably expected to have a materially adverse effect on
the financial condition, business or operations of the Company on a consolidated
basis, except for any such changes that have been publicly disclosed for a
period of at least 15 Business Days prior to the Additional Closing Date. For
purposes of this Section 6.3(c), a change shall not be deemed to have been
publicly disclosed unless it shall have been disclosed in a press release issued
by the Company and transmitted for immediate release to at least five of the
following news sources: the Associated Press; Business Wire; Dow Jones &
Company, Inc.; Moody's Investors Service, Inc.; PR Newswire; Reuters Economic
Services; Standard & Poor's Corporation; and United Press International.
(d) Other Documents. The Company shall have delivered to Abbott (i)
a copy of the Certificate of Incorporation of the Company, as in effect on the
Additional Closing Date, certified by the Secretary of State of the State of
Delaware, (ii) a certificate of the Secretary of State of the State of Delaware
and of the State of Texas, as of the most recent practicable date, as to the
good standing of the Company, and (iii) a certificate of the Secretary of the
Company dated as of the Additional Closing Date, certifying as to the Board
Resolutions authorizing the execution and delivery of this Agreement and the
other transactions contemplated hereby.
(e) Registration and Listing of Common Stock. The Common Stock
shall be registered under the Exchange Act and listed on the Nasdaq National
Market or a national securities exchange.
(f) Change of Control. There shall not have occurred or be pending a
Change of Control other than a Change of Control to which Abbott has consented
in writing, which consent shall not be unreasonably withheld or delayed. Without
limiting the foregoing, Abbott's
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<PAGE> 22
refusal to consent to a Change of Control shall not be deemed to be unreasonable
where the Change of Control involves a Person that is a competitor of Abbott
(g) Opinion of Counsel. The Company shall have delivered an opinion
of its counsel substantially in the form of Exhibit B.
(h) Certificates for the Additional Shares. The Company shall have
delivered to Abbott valid certificates for the Additional Shares, registered in
Abbott's name.
(i) License Agreement. The Company shall have complied in all
material respects with terms and conditions of the License Agreement, and the
License Agreement shall be in full force and effect and no notice of termination
shall have been given thereunder.
6.4 Conditions to Obligations of the Company for the Additional Shares.
The obligations of the Company to consummate the transactions contemplated
hereby in connection with the Additional Shares are subject to the satisfaction
on or prior to the Additional Closing Date of all of the following conditions,
unless waived by the Company:
(a) Representations and Warranties. The representations and
warranties of Abbott set forth in this Agreement shall be true and correct in
all material respects as of the date of this Agreement and as if made at and as
of the Additional Closing Date.
(b) Performance of Obligations of Abbott. Abbott shall have
performed in all material respects all obligations required to be performed by
it under this Agreement prior to the Additional Closing Date.
(c) Payment. Abbott shall have tendered to the Company the
Additional Purchase Price in payment for the Additional Shares.
7. Registration Rights. The Holder shall have registration rights as provided
in this Section 7 with respect to the Shares (the "Registrable Shares").
7.1 Piggyback Registration.
(a) Whenever securities of the Company are to be registered under
the Securities Act, other than pursuant to a registration statement on Form S-4
or Form S-8, and the registration form to be used may be used for the
registration of the Registrable Shares (a "Piggyback Registration"), the Company
will give prompt written notice to the Holder of its intention to effect such a
registration and will include in such registration all Registrable Shares with
respect to which the Company has received written requests for inclusion therein
within 21 days after the Company's notice has been given.
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<PAGE> 23
(b) If a Piggyback Registration relates to an underwritten offering
and the managing underwriters advise the Company in writing that in their
opinion the number of securities requested to be included in such offering will
have an adverse effect on the offering (including the price at which the shares
of Common Stock can be sold), the Company will include in such registration (i)
first, the securities the Company proposes to sell for its own account, if any,
and (ii) second, the Registrable Shares requested to be included in such
registration and the securities requested to be included therein by any other
holders of the Company's securities that have been granted piggyback
registration rights prior to the date of this Agreement and which are applicable
to such registration (all such Registrable Shares and other securities being
collectively referred to as the "Secondary Shares") which in the opinion of such
underwriters can be sold in such offering without creating such an adverse
effect, allocated pro rata among the holders of such Secondary Shares on the
basis of the number of Secondary Shares owned or deemed to be owned by such
holders.
7.2 Demand Registration.
(a) The Holder may request at any time the registration under the
Securities Act of all or part of their Registrable Shares on Form S-3 or any
similar short-form registration ("Short-Form Registration"), if available, so as
to permit the resale thereof (a "Demand Registration"). The Holder will be
entitled to request one Short-Form Registration for the Initial Shares and one
Short-Form Registration for the Additional Shares. The Company will use its best
efforts to make the Short-Form Registration available for the sale of
Registrable Shares. If the Company is unable to make the Short-Form Registration
available for the sale of the Registrable Shares within 90 days of the Holder's
request, the Company shall cause the registration of the Registrable Shares on
Form S-1 or S-2 or any similar long-form registration so as to permit the resale
thereof. The Company shall keep such registration effective for at least 12
months or for such shorter period of time as is necessary for the distribution
of the Registrable Shares thereunder to be completed in accordance with the
Holder's intended method of distribution.
(b) The Company may postpone for a reasonable period not to exceed
90 days the filing or the effectiveness of a registration statement for a Demand
Registration if the Board of Directors determines reasonably and in good faith
that such filing would require disclosure of a material fact that would have a
material adverse effect on the Company or any plan by the Company or any of its
Subsidiaries to engage in any acquisition of assets (other than in the ordinary
course of business) or any merger, consolidation, tender offer or other material
transaction.
7.3 Payment of Expenses. The Company will pay all registration expenses
incurred in connection with the filing of the registration statements provided
for in this Section 7, including all registration and filing fees, fees and
expenses of compliance with federal, state and foreign securities laws, printing
expenses, and fees and disbursements of counsel for the Company and its
independent certified public accountants, underwriters, and other Persons
retained by the Company, but excluding discounts and commission attributable to
the Registrable Shares. The Holder will be responsible for the fees and expenses
of its own counsel.
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<PAGE> 24
7.4 Additional Covenants of the Company. The Company agrees to use its
reasonable best efforts to effect the registration of the Registrable Shares in
accordance with the intended method of disposition thereof, and pursuant
thereto, the Company agrees to:
(a) prepare and file with the Commission such amendments and
supplements to any registration statement filed pursuant hereof and the
prospectus used in connection therewith as may be necessary to keep any such
registration statement effective and available for resale of the Registrable
Shares, and to comply with the provisions of the Securities Act with respect to
the disposition of all securities covered by any such registration statement
during such effective period in accordance with the intended methods of
disposition by the Holder set forth in any such registration statement;
(b) furnish to the Holder such number of copies of any registration
statement filed pursuant to this Section 7, each amendment and supplement
thereto, the prospectus included in such registration statement (including each
preliminary prospectus) and such other documents as the Holder may reasonably
request in order to facilitate the disposition of the Registrable Shares;
(c) use its reasonable best efforts to register or qualify the
Registrable Shares under such other securities or blue sky laws of such states
of the United States as the Holder reasonably requests and of any and all other
things which may be reasonably necessary or advisable to enable the Holder to
consummate the disposition in such jurisdictions of the Registrable Shares owned
by the Holder; provided, however, that the Company will not be required (A) to
qualify generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this Section 7.4, (B) to subject itself
to taxation in any such jurisdiction or (C) to consent to general service of
process in any such jurisdiction;
(d) notify the Holder, at any time when a prospectus relating to any
registration statement filed pursuant to this Section 7 is required to be
delivered under the Securities Act, of the happening of any event as a result of
which the prospectus included in such registration statement contains an untrue
statement of a material fact or omits to state any material fact necessary to
make the statements therein not misleading, and, at the request of the Holder,
the Company will promptly prepare (and, when completed, give notice to each
seller of Registrable Shares) a supplement or amendment to such prospectus so
that, as thereafter delivered to the purchasers of such Registrable Shares, such
prospectus will not contain an untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein not misleading;
provided, however, that upon such notification by the Company, the Holder will
not offer or sell Registrable Shares until the Company has notified the Holder
that it has prepared a supplement or amendment to such prospectus and delivered
copies of such supplement or amendment to each such seller;
(e) in the event of the issuance of any stop order suspending the
effectiveness or any registration statement filed pursuant to this Section 7, or
of any order suspending or preventing the use of any related prospectus or
suspending the qualification of any
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<PAGE> 25
Registrable Shares included in such registration statement for sale in any
jurisdiction, the Company will use its reasonable best efforts promptly to
obtain the withdrawal of such order;
(f) in the event of any underwritten public offering in which
Registrable Shares are to be offered and sold, enter into and perform its
obligations under an underwriting agreement, in usual and customary form, with
the underwriters of such offering; and
(g) use its best efforts to furnish, on the date that such
Registrable Shares are delivered to the underwriters for sale in connection with
a registration pursuant to this Section 7 and, in the case of the letter of the
independent public accountants referred to in clause (ii) below, on the
effective date of the registration statement, if such Registrable Shares are
being sold through underwriters, or, if such Registrable Shares are not being
sold through underwriters, on the effective date of the registration statement,
(i) an opinion, dated such date, of counsel to the Company, in form and
substance as is customarily given to the underwriters in an underwritten public
offering, addressed to the underwriters, if any, and to the Holder, and (ii) a
letter, dated such date, from the Company's independent public accountants in
form and substance as is customarily given to the underwriters in an
underwritten public offering, addressed to the underwriters, if any, and to the
Holder.
7.5 Indemnification.
(a) The Company agrees to indemnify the Holder, its officers and
directors and each Person who controls the Holder (within the meaning of the
Securities Act) against all losses, claims, damages and liabilities caused by
any untrue or alleged untrue statement of material fact contained in any
registration statement filed pursuant to this Section 7, prospectus or
preliminary prospectus or any amendment thereof or supplement thereto, or any
omission or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as the
same are (A) caused by or contained in any information furnished in writing to
the Company by the Holder for use therein, (B) caused by the Holders' failure to
deliver a copy of any such registration statement or prospectus or any
amendments or supplements thereto after the Company has furnished the Holder
with a sufficient number of companies of the same, or (C) caused by the Holder's
sale of Registrable Shares in violation of the proviso to Section 7.4(d) hereof.
(b) In connection with any registration statement filed pursuant to
this Section 7, the Holder will furnish to the Company in writing such
information and affidavits as the Company reasonable requests for use in
connection with any registration statement or prospectus and will indemnify the
Company, its directors and officers and each Person who controls the Company
(within the meaning of the Securities Act) against any losses, claims, damages
and liabilities resulting from any untrue or alleged untrue statement of
material fact contained in any such registration statement, prospectus or
preliminary prospectus or any amendment thereof or supplement thereto, or any
omission or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein not misleading, but only to the extent
that such
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<PAGE> 26
untrue or alleged untrue statement or omission or alleged omission is
attributable to the information furnished by the Holder to the Company in
writing expressly for use in such registration statement or prospectus or
supplement thereto.
(c) Any Person entitled to indemnification hereunder will (A) give
prompt written notice to the indemnifying party of any claim with respect to
which it seeks indemnification and (B) unless in such indemnified party's
reasonable judgment a conflict of interest between such indemnified and
indemnifying parties may exist with respect to such claim permit such
indemnifying party to assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party. If such defense is assumed, the
indemnifying party will not be subject to any liability for any settlement made
by the indemnified party without its consent (but such consent will 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 reasonable judgment
of any indemnified party a conflict of interest may exist between such
indemnified party and any other of such indemnified parties with respect to such
claim. Subject to the foregoing terms and provisions of this Section 7.5(c),
each indemnifying party hereunder will reimburse the person entitled to
indemnification hereunder for all legal and other expenses reasonably incurred
in connection with investigating and defending the action or claim for which
such indemnified party seeks indemnification, as such expenses are incurred.
(d) The indemnification provided for under this Section 7.5 will
remain in full force and effect regardless of any investigation made by or on
behalf of the indemnified party or any officer, director or controlling Person
of such indemnified party and will survive the transfer of securities.
7.6 Limitations on Registration Rights. The Company shall not be
obligated to register the Registrable Shares under the Securities Act (or
deliver any notice with respect to a Piggyback Registration) if, in an opinion
of counsel to the Company addressed to the Holder and the Company, reasonably
satisfactory to the Holder and its counsel, the Registrable Shares may be
offered and sold by the Holder without registration under the Securities Act
pursuant to Rule 144(k) and that following such offer and sale, such Registrable
Shares shall not be "restricted securities" within the meaning of the Securities
Act and the rules thereunder. The Company shall defend and indemnify the Holder
and its respective Affiliates, directors, officers, employees and shareholders
and their respective successors and assigns against and hold each of them
harmless from any and all losses, liabilities, claims, suits, proceedings,
demands, judgments. damages, expenses and costs, including, without limitation,
reasonable counsel fees, costs and expenses incurred in the investigation,
defense or settlement of any claims, arising out of or relating the offer and
sale of Registrable Shares in reliance on such opinion of counsel.
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<PAGE> 27
8. Indemnification.
8.1 Indemnification by the Company.
(a) The Company agrees to defend and indemnify Abbott, its
Subsidiaries and their respective Affiliates, directors, officers, employees and
shareholders, and their respective successors and assigns (collectively, the
"Abbott Indemnitees"), against and hold each of them harmless from any and all
losses, liabilities, taxes, claims, suits, proceedings, demands, judgments.
damages, expenses and costs, including, without limitation, reasonable counsel
fees, costs and expenses incurred in the investigation, defense or settlement of
any claims covered by this indemnity (in this Section 8 collectively, the
"Indemnifiable Damages") which any such indemnified person may suffer or incur
by reason of the inaccuracy or breach of any of the representations, warranties
and covenants of the Company contained in this Agreement or any documents,
certificate or agreement delivered pursuant hereto; provided, however, that the
total indemnity shall not exceed the consideration received by the Company.
Nothing herein shall limit in any way Abbott's remedies in the event of breach
by the Company of any of its covenants or agreements hereunder which are not
also a representation or warranty or for willful fraud or intentionally
deceptive material misrepresentation or omission by the Company in connection
herewith or with the transactions contemplated hereby.
(b) No Abbott Indemnitee shall be entitled to recovery under the
indemnities set forth herein unless and until the Indemnifiable Damages of all
Abbott Indemnitees exceed $25,000, at which point such indemnity shall apply to
all Indemnifiable Damages.
(c) No claim for indemnification may be brought by an Abbott
Indemnitee under this Section 8.1 more than 18 months (540 days) following the
later of the Initial Closing Date or, if the Put Right has been exercised, the
Additional Closing Date.
8.2 Indemnification by Abbott. After the Initial Closing Date, Abbott
shall indemnify and hold harmless the Company and its officers and directors
from and against:
(a) any damage, deficiency, losses or costs incurred by the Company
resulting from any material misrepresentation or breach of warranty or any
non-fulfillment of any covenant or agreement on the part of Abbott under this
Agreement; and
(b) any claim, action, suit, proceeding, demand, judgment,
assessment, cost and expense, including reasonable counsel fees, incident to the
foregoing; provided that the total indemnity shall not exceed the purchase price
paid by Abbott for the Shares pursuant to this Agreement.
No claim for indemnification may be brought under this Section 8.2 more than
18 months (540 days) following the later of the Initial Closing Date or, if the
Put Right has been exercised, the Additional Closing Date.
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<PAGE> 28
8.3 Indemnification Procedure. A party seeking indemnification (the
"Indemnitee") shall use its commercially reasonable best efforts to minimize any
liabilities, damages, deficiencies, claims, judgments, assessments, costs and
expenses in respect of which indemnity may be sought under this Agreement. The
Indemnitee shall give prompt written notice to the party from whom
indemnification is sought (the "Indemnitor") of the assertion of a claim for
indemnification; provided, however, that the Indemnitee's failure to notify the
Indemnitor shall not excuse the Indemnitor's obligation to indemnify the
Indemnitee except to the extent that such failure prejudices the Indemnitor's
defense of any such claim. No such notice of assertion of a claim shall satisfy
the requirements of this Section 8.3 unless it describes in reasonable detail
and in good faith the facts and circumstances upon which the asserted claim for
indemnification is based. If any action or proceeding shall be brought in
connection with any liability or claim to be indemnified hereunder, the
Indemnitee shall provide the Indemnitor 20 calendar days to decide whether to
defend such liability or claim. During such period, the Indemnitee shall take
all necessary steps to protect the interests of itself and the Indemnitor,
including the filing of any necessary responsive pleadings, the seeking of
emergency relief or other action necessary to maintain the status quo, subject
to reimbursement from the Indemnitor of its expenses in doing so. The Indemnitor
shall (with, if necessary, reservation of rights) defend such action or
proceeding at its expense, using counsel selected by the insurance company
insuring against any such claim and undertaking to defend such claim, or by
other counsel selected by it and approved by the Indemnitee, which approval
shall not be unreasonably withheld or delayed. The Indemnitor shall keep the
Indemnitee fully apprised at all times of the status of the defense and shall
consult with the Indemnitee prior to the settlement of any indemnified matter.
The Indemnitee agrees to use its reasonable best efforts to cooperate with the
Indemnitor in connection with its defense of indemnifiable claims. In the event
the Indemnitee has a claim or claims against any third party growing out of or
connected with the indemnified matter, then upon receipt of indemnification, the
Indemnitee shall fully assign to the Indemnitor the entire claim or claims to
the extent of the indemnification actually paid by the Indemnitor and the
Indemnitor shall thereupon be subrogated with respect to such claim or claims of
the Indemnitee.
9. Miscellaneous.
9.1 Powers and Rights Not Waived; Remedies Cumulative. No delay or
failure on the part of Abbott in the exercise of any power or right shall
operate as a waiver thereof; nor shall any single or partial exercise of the
same preclude any other or further exercise thereof, or the exercise of any
other power or right, and the rights and remedies of Abbott are cumulative to,
and are not exclusive of, any rights or remedies Abbott would otherwise have.
9.2 Notice. Except as otherwise expressly provided herein, any notice,
consent or document required or permitted hereunder shall be given in writing
and it or any certificates or other documents delivered hereunder shall be
deemed effectively given or delivered (as the case may be) upon personal
delivery (professional courier permissible) or upon facsimile transmission (with
receipt confirmed by telephone), or on the third Business Day after being sent
by United States certified or registered mail (postage prepaid, return receipt
requested). Such certificates, documents or notice may be personally delivered
to an authorized representative of the Company or Abbott (as
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<PAGE> 29
the case may be) at any address where such authorized representative is present
and otherwise shall be sent to the following address:
If to the Company: Aronex Pharmaceuticals, Inc.
8707 Technology Forest Place
The Woodlands, TX 77381-1191
Attention: Chief Executive Officer
Telecopy No.: (281) 367-1676
With a copy to: Andrews & Kurth L.L.P.
2170 Buckthorne Place, Suite 150
The Woodlands, TX 77380
Attention: Jeffrey L. Wade
Telecopy No.: (713) 220-4815
If to Abbott: Abbott Laboratories
D-960, AP30
200 Abbott Park Road
Abbott Park, IL 60064-3500
Attention: President, Hospital Products Division
Telecopy No.: (847) 937-0805
With a copy to: Abbott Laboratories
Legal Division
D-322, AP6D
100 Abbott Park Road
Abbott Park, IL 60064-3500
Attn: Divisional Vice President,
Domestic Legal Operations
Telecopy No.: (847) 938-1206
9.3 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the Company and its successors and assigns and shall be
binding upon and inure to the benefit of Abbott and its successors and assigns;
provided, however, that the Company shall not assign this Agreement or any of
its rights, duties or obligations hereunder without the prior written consent of
Abbott, which consent shall not be unreasonably withheld.
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<PAGE> 30
9.4 Survival of Covenants and Representations. All covenants,
representations and warranties made by the Company herein and in any
certificates delivered pursuant hereto, whether or not in connection with the
Initial Closing Date or the Additional Closing Date, shall survive the closing
and the delivery of this Agreement and the Shares.
9.5 Severability. Should any part of this Agreement for any reason be
declared invalid or unenforceable, such decision shall not affect the validity
or enforceability of any remaining portion, which remaining portion shall remain
in force and effect as if this Agreement had been executed with the invalid or
unenforceable portion thereof eliminated and it is hereby declared the intention
of the parties hereto that they would have executed the remaining portion of
this Agreement without including therein any such part, parts or portion which
may, for any reason, be hereafter declared invalid or unenforceable.
9.6 Waiver of Conditions. If on the Initial Closing Date or the
Additional Closing Date, either party hereto fails to fulfill each of the
conditions specified in Section 6 hereof, the other party may thereupon elect to
be relieved of all further obligations under this Agreement. Without limiting
the foregoing, if the conditions specified in Section 6 have not been fulfilled,
the other party may waive compliance by such party with any such condition to
such extent as such party may in its sole discretion determine. Nothing in this
Section 9.6 shall operate to relieve either party of any obligations hereunder
or to waive any of the other party's rights against such party.
9.7 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument.
9.8 Governing Law. This Agreement shall be governed by and construed in
accordance with Delaware law, without regard to the conflict of laws provisions
thereof.
9.9 Captions. The descriptive headings of the various sections or parts
of this Agreement are for convenience only and shall not affect the meaning or
construction of any of the provisions hereof.
9.10 Dispute Resolution. Disputes between the parties relating to this
Agreement shall be resolved by binding Alternative Dispute Resolution as
provided in Exhibit C hereto.
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<PAGE> 31
IN WITNESS WHEREOF, the Company and Abbott by their duly authorized officers,
have each caused this Agreement to be executed as of the date first written
above.
ABBOTT LABORATORIES
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
ARONEX PHARMACEUTICALS, INC.
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
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<PAGE> 32
EXHIBIT A
EXHIBIT A TO THE STOCK PURCHASE AGREEMENT IS THE LICENSE
AGREEMENT
<PAGE> 33
EXHIBIT B
FORM OF OPINION OF COUNSEL
1. The Company (a) is a corporation duly incorporated, validly existing and
in good standing under the laws of its jurisdiction of incorporation, (b)
has all requisite power and authority to own and operate its properties
and to carry on its business as now conducted, and (c) is duly licensed
or qualified and is in good standing as a foreign corporation in each
jurisdiction wherein the nature of the business transacted by it or the
nature of the property owned or leased by it makes such licensing or
qualification necessary.
2. The Company has all requisite corporate power and authority to enter into
the Agreement and the License Agreement and to execute, issue, sell and
deliver the Shares and, subject to satisfaction of the conditions set
forth therein, to consummate the transactions contemplated thereby. The
execution and delivery of the Agreement, the License Agreement and the
certificates representing the Shares and the consummation of the
transactions contemplated thereby have been duly authorized by all
necessary corporate action on the part of the Company. The Agreement and
the License Agreement have been duly executed and delivered by the
Company and constitute the valid and binding obligation of the Company,
enforceable in accordance with their terms, subject to (a) the effect of
applicable bankruptcy, insolvency, reorganization or other similar laws
affecting the rights of creditors, (b) the effect or availability of
rules of law governing specific performance, injunctive relief or other
equitable remedies, and (c) considerations of public policy, including,
without limitation, public policy that may limit rights to indemnity or
contribution for liabilities arising under federal and state securities
laws and regulations thereunder.
3. To our knowledge, no consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity or
other Person is required by, or with respect to, the Company in
connection with the execution and delivery of the Agreement, the License
Agreement or the certificates representing the Shares or the consummation
by the Company of the transactions contemplated thereby, except for such
consents, approvals, orders, authorizations, registrations, declarations
and filings as may be required under applicable federal and state
securities laws and the laws of any foreign country.
4. The execution and delivery of the Agreement, the License Agreement and
the certificates representing the Shares does not or will not, and the
consummation of the transactions contemplated thereby will not, conflict
with, or result in any violation of or default (with or without notice or
lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation under (a) any provision of
the Certificate of Incorporation or Bylaws of the Company, or (b) any
material agreement or instrument, permit, franchise, license, judgment or
order applicable to the Company or its properties or assets that is
listed as an exhibit to the Company SEC Documents.
<PAGE> 34
5. The total number of shares of capital stock the Company is authorized to
issue is 35,000,000 shares, consisting of 30,000,000 shares of Common
Stock and 5,000,000 shares of Preferred Stock.
6. Except as described in the Company SEC Documents, to our knowledge there
are no outstanding options, warrants, rights or other securities
convertible into or exchangeable for shares of capital stock of the
Company or any Subsidiary, other than options to purchase shares of
Common Stock reserved for issuance under the Company's stock option plans
described in the Company SEC Documents.
7. The Shares have been duly authorized and, when issued in accordance with
the Agreement, will be validly issued, fully paid and non-assessable, and
the issuance of the Shares is not subject to any preemptive or similar
rights created by statute, the Company's Certificate of Incorporation or
Bylaws or, to our knowledge, any agreement to which the Company is a
party or by which it is bound.
8. The offering and sale of the Shares in accordance with the terms of the
Agreement is exempt from the registration requirements of the Securities
Act.
9. The Company is not an "investment company" or a person "controlled" by an
"investment company" within the meaning of the Investment Company Act of
1940, as amended.
<PAGE> 35
EXHIBIT C
Alternative Dispute Resolution
The parties recognize that a bona fide dispute as to certain matters may
arise from time to time during the term of this Agreement which relates to
either party's rights and/or obligations. To have such a dispute resolved by
this Alternative Dispute Resolution ("ADR") provision, a party first must send
written notice of the dispute to the other party for attempted resolution by
good faith negotiations between their respective representatives of the affected
subsidiaries, divisions, or business units within twenty-eight (28) days after
such notice is received (all references to "days" in this ADR provision are to
calendar days).
If the matter has not been resolved within twenty-eight (28) days of he
notice of dispute, or if the parties fail to meet within such twenty-eight (28)
days, either party may initiate an ADR proceeding as provided herein. The
parties shall have the right to be represented by counsel in such a proceeding.
1. To begin an ADR proceeding, a party shall provide written notice to
the other party of the issues to be resolved by ADR. Within fourteen (14) days
after its receipt of such notice, the other party may, by written notice to the
party initiating the ADR, add additional issues to be resolved within the same
ADR.
2. Within twenty-one (21) days following receipt of the original ADR
notice, the parties shall select a mutually acceptable neutral to preside in the
resolution of any disputes in this ADR proceeding. If the parties are unable to
agree on a mutually acceptable neutral within such period, the parties shall
request the President of the Center for Public Resources ("CPR"), 366 Madison
Avenue, New York, New York 10017 to select a neutral pursuant to the following
procedures:
(a) The CPR shall submit to the parties a list of not less than
five (5) candidates within fourteen (14) days after receipt of the request from
the parties, along with a Curriculum Vitae for each candidate. No candidate
shall be an employee, director, or shareholder of either party or any of their
subsidiaries or affiliates.
(b) Such list shall include a statement of disclosure by each
candidate of any circumstances likely to affect his or her impartiality.
(c) Each party shall number the candidates in order of preference
(with the number one (1) signifying the greatest preference) and shall deliver
the list to the CPR within seven (7) days following receipt of the list of
candidates. If a party believes a conflict of interest exists regarding any of
the candidates that party shall provide a written explanation of the conflict to
the CPR along with its list showing its order of preference for the candidates.
Any party failing to return a list of preferences on time shall be deemed to
have no order of preference.
-30-
<PAGE> 36
(d) If the parties collectively have identified fewer than three
(3) candidates deemed to have conflicts, the CPR immediately shall designate as
the neutral the candidate for whom the parties collectively have indicated the
greatest preference. If a tie should result between two candidates, the CPR may
designate either candidate. If the parties collectively have identified three
(3) or more candidates deemed to have conflicts, the CPR shall review the
explanations regarding conflicts and, in its sole discretion, may either (i)
immediately designate as the neutral the candidate for whom the parties
collectively have indicated the greatest preference, or (ii) issue a new list of
not less than five (5) candidates, in which case the procedures set for in
subparagraphs 2(a) - 2(d) above shall be repeated.
3. No earlier than twenty-eight (28) days or later than fifty-six (56)
days after selection, the neutral shall hold a hearing to resolve each of the
issues identified by the parties. The ADR proceeding shall take place at a
location agreed upon by the parties. If the parties cannot agree, the neutral
shall designate a location other than the principal place of business of either
party or any of their subsidiaries or affiliates.
4. At least seven (7) days prior to the hearing, each party shall
submit the following to the other party and the neutral:
(a) a copy of all exhibits on which such party intends to rely in
any oral or written presentation to the neutral;
(b) a list of any witnesses such party intends to call at the
hearing, and a short summary of the anticipated testimony of each witness;
(c) a proposed ruling on each issue to be resolved, together with
a request for a specific damage award or other remedy for each issue. The
proposed rulings and remedies shall not contain any recitation of the facts or
any legal arguments and shall not exceed one (1) page per issue.
(d) a brief in support of such party's proposed rulings and
remedies, provided that the brief shall not exceed twenty (20) pages. This page
limitation shall apply regardless of the number of issues raised in the ADR
proceeding.
Except as expressly set forth in subparagraphs 4(a) - 4(d) above, no
discovery shall be required or permitted by any means, including depositions,
interrogatories, requests for admissions, or production of documents.
5. The hearing shall be conducted on two (2) consecutive days and shall
be governed by the following rules:
(a) Each party shall be entitled to five (5) hours of hearing time
to present its case. The neutral shall determine whether each party has had the
five (5) hours to which it is entitled.
<PAGE> 37
(b) Each party shall be entitled, but not required, to make an
opening statement, to present regular and rebuttal testimony, documents or other
evidence, to cross-examine witnesses, and to make a closing argument.
Cross-examination of witnesses shall occur immediately after their direct
testimony, and cross-examination time shall be charged against the party
conducting the cross-examination.
(c) The party initiating the ADR shall begin the hearing and, if
it chooses to make an opening statement, shall address not only issues it has
raised but also any issues raised by the responding party. The responding party,
if it chooses to make an opening statement, also shall address all issues raised
in the ADR. Thereafter, the presentation of regular and rebuttal testimony and
documents, other evidence, and closing arguments shall proceed in the same
sequence.
(d) Witnesses shall be excluded from the hearing until closing
arguments.
(e) Neither affidavits nor settlement negotiations shall be
admissible under any circumstances. As to all other matters, the neutral shall
have sole discretion regarding the admissibility of any evidence.
6. Within seven (7) days following completion of the hearing, each
party may submit to the other party and the neutral a post-hearing brief in
support of its proposed rulings and remedies, provided that such brief shall not
contain or discuss any new evidence and shall not exceed ten (10) pages. This
page limitation shall apply regardless of the number of issues raised in the ADR
proceeding.
7. The neutral shall rule on each disputed issue within fourteen (14)
days following completion of the hearing. Such ruling shall adopt in its
entirety the proposed ruling and remedy of one of the parties on each disputed
issue but may adopt one party's proposed rulings and remedies on some issues and
the other party's proposed rulings and remedies on other issues. The neutral
shall not issue any written opinion or otherwise explain the basis of the
ruling.
8. The neutral shall be paid a reasonable fee plus expenses. These fees
and expenses, along with the reasonable legal fees and expenses of the
prevailing party (including all expert witness fees and expenses), the fees and
expenses of a court reporter, and any expenses for a hearing room, shall be paid
as follows:
(a) If the neutral rules in favor of one party on all disputed
issues in the ADR, the losing party shall pay 100% of such fees and expenses.
(b) If the neutral rules in favor of one party on some issues and
the other party on other issues, the neutral shall issue with the rulings a
written determination as to how such fees and expenses shall be allocated
between the parties. The neutral shall allocate fees and expenses in a way that
bears a reasonable relationship to the outcome of the ADR, with the party
prevailing on more issues, or on issues of greater value or gravity, recovering
a relatively larger share of its legal fees and expenses.
<PAGE> 38
9. The rulings of the neutral and the allocation of fees and expenses
shall be binding, non-reviewable, and non-appealable, and may be entered as a
final judgment in any court having jurisdiction.
10. Except as provided in paragraph 9 of this Exhibit D or as required
by law, the existence of the dispute, any settlement negotiations, the ADR
hearing, any submissions (including exhibits, testimony, proposed rulings, and
briefs), and the rulings shall be deemed Confidential Information. The neutral
shall have the authority to impose sanctions for unauthorized disclosure of
Confidential Information.
