<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): JANUARY 14, 2000
ISIS PHARMACEUTICALS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation)
000-19125 33-0336973
(Commission File No.) (IRS Employer Identification No.)
2292 FARADAY AVENUE
CARLSBAD, CALIFORNIA 92008
(Address of principal executive offices and zip code)
(760) 931-9200
(Registrant's telephone number, including area code)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On January 14, 2000 Isis Pharmaceuticals, Inc., a Delaware Corporation, ("Isis"
or the "Company") and Elan Corporation, plc ("Elan") formed a joint venture to
develop an antisense drug, ISIS 14803, to treat patients chronically infected
with Hepatitis C virus (HCV). The joint venture, HepaSense Ltd. ("HepaSense"), a
Bermuda limited company, is initially owned 80.1% by Isis and 19.9% by Elan
International Services Ltd. ("EIS"). Isis and Elan each contributed certain
rights to antisense oligonucleotide and ambulatory drug delivery technology to
the joint venture. In addition, Isis contributed rights to a proprietary
oligonucleotide, which will be the first designated oligonucleotide for
development by HepaSense. Isis and Elan will provide development and
manufacturing services to HepaSense and will be entitled to royalties on
milestone payments and royalties received by HepaSense for products
incorporating the first or additionally designated oligonucleotides. HepaSense
will subcontract with other parties, which may include Isis and Elan, to perform
any research and development it will require.
In conjunction with the joint venture, EIS purchased 12,015 shares of Isis'
Series B Convertible Exchangeable Preferred Stock for $12,015,000. The preferred
stock bears a 5% dividend payable in preferred stock and is convertible into
Isis Common Stock at an agreed premium or is exchangeable for preferred shares
of HepaSense owned by Isis which represent 30.1% of the outstanding capital
stock of HepaSense.
At any time after June 30, 2002, the preferred stock (including accrued
dividends) will be convertible at EIS' option into shares of Isis' common stock
at 125% of the 60-trading day average closing price of Isis' common stock. In
the event of a liquidation of Isis or certain transactions involving a change of
control of Isis, the agreement provides for automatic conversion of the
preferred stock on terms similar to those set forth above.
Isis is not obligated to issue shares representing more than 19.99% of it's then
outstanding common stock upon conversion of the preferred stock if it would
result in a violation of the rules of any securities market or exchange upon
which the common stock is traded.
At any time the holders of the preferred stock may exchange their preferred
stock with Isis for preferred shares of HepaSense held by Isis that represent
30.1% of the total outstanding capital stock of HepaSense. The exchange right
will terminate if any of the preferred stock is converted into Isis' common
stock, unless such conversion occurs as a result of a liquidation or certain
transactions involving a change of control of Isis.
EIS will purchase $7.5 million of Isis Common Stock in the first quarter of 2000
and potentially an additional $7.5 million of common stock upon completion of a
mutually agreed milestone. Both tranches of common stock will be priced at a
premium to Isis
2.
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market price. Isis will issue 5 year warrants to EIS upon the purchase of each
tranche in an amount equal to 5% of the shares of Isis Common Stock purchased by
EIS in the respective tranche. The warrants will be priced at an agreed premium
to Isis market price.
Isis contributed $12.015 million to HepaSense as the purchase price for 6,001
shares of HepaSense Common Stock and 3,612 shares of HepaSense Preferred Stock
together representing 80.1% of the outstanding capital stock of HepaSense.
Until June 30, 2002, EIS will, at Isis request, purchase convertible debt of
Isis in an amount equal to Isis' share of the budgeted funding for HepaSense.
The convertible debt will have a term of 6 years, bear interest at the rate of
12% and be convertible into Isis Common Stock at a premium. Isis may repay the
convertible debt in cash or Isis stock. Isis will use the proceeds of the sale
of the convertible debt to provide additional development funding to HepaSense.
EIS will have certain registration rights with respect to the Isis Common Stock
and the Isis Common Stock issuable upon conversion of the Isis Preferred Stock,
the warrants and the convertible debt.
3.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Businesses Acquired.
Not applicable.
(b) Pro Forma Financial Information.
Not applicable.
(c) Exhibits.
<TABLE>
<CAPTION>
Exhibit No. Description
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<S> <C>
10.1* Subscription, Joint Development and Operating Agreement,
dated January 14, 2000, by and among Registrant, Elan
Corporation, plc ("Elan"), Elan International Services,
Ltd. ("EIS"), Elan Pharma International Ltd. ("Elan
Pharma") and HepaSense, Ltd. ("HepaSense") (with certain
confidential information deleted).
10.2* Securities Purchase Agreement, dated January 14, 2000, by
and between Registrant and EIS.
10.3 Convertible Promissory Note, dated January 14, 2000, by
and between Registrant and EIS.
10.4 Form of Warrants to Purchase Shares of Common Stock, of
contingent date, by and between Registrant and EIS.
10.5 Registration Rights Agreement, dated January 14, 2000, by
and between Registrant and EIS.
10.6 Registration Rights Agreement, dated January 14, 2000, by
and among Registrant, EIS and HepaSense.
10.7* License Agreement, dated January 14, 2000, by and between
Elan and HepaSense.
10.8* License Agreement, dated January 14, 2000, by and between
Registrant and HepaSense.
</TABLE>
- ----------
* Confidential treatment has been requested with respect to certain
portions of this exhibit. Omitted portions have been filed separately with the
Securities and Exchange Commission.
4.
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SIGNATURE
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.
ISIS PHARMACEUTICALS, INC.
Dated: January 27, 2000 By: /s/ B. LYNNE PARSHALL
---------------------------------
B. Lynne Parshall
Executive Vice President
5.
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INDEX TO EXHIBITS
<TABLE>
<S> <C>
10.1* Subscription, Joint Development and Operating Agreement,
dated January 14, 2000, by and among Registrant, Elan
Corporation, plc ("Elan"), Elan International Services,
Ltd. ("EIS"),Elan Pharma International Limited ("Elan
Pharma") and HepaSense, Ltd. ("HepaSense").
10.2* Securities Purchase Agreement, dated January 14, 2000, by
and between Registrant and EIS.
10.3 Convertible Promissory Note, dated January 14, 2000, by
and between Registrant and EIS.
10.4 Form of Warrant to Purchase Shares of Common Stock, of
contingent date, by and between Registrant and EIS.
10.5 Registration Rights Agreement, dated January 14, 2000, by
and between Registrant and EIS.
10.6 Registration Rights Agreement, dated January 14, 2000, by
and among Registrant, EIS and HepaSense.
10.7* License Agreement, dated January 14, 2000, by and between
Elan and HepaSense.
10.8* License Agreement, dated January 14, 2000, by and between
Registrant and HepaSense.
</TABLE>
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* Confidential treatment has been requested with respect to certain portions
of this exhibit. Omitted portions have been filed separately with the
Securities and Exchange Commission.
<PAGE> 1
EXHIBIT 10.1
TEXT OMITTED AND FILED SEPARATELY
"CONFIDENTIAL TREATMENT REQUESTED
UNDER 17 C.F.R. SECTIONS 200.80(B)(4),
200.83 AND 240.24B-2."
SUBSCRIPTION, JOINT DEVELOPMENT AND OPERATING AGREEMENT
ELAN CORPORATION, PLC
(ACTING THROUGH ITS DIVISION ELAN PHARMACEUTICAL TECHNOLOGIES)
AND
ELAN INTERNATIONAL SERVICES, LTD.
AND
ELAN PHARMA INTERNATIONAL LIMITED
AND
ISIS PHARMACEUTICALS, INC.
AND
HEPASENSE LTD.
JANUARY 14, 2000
1
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INDEX
<TABLE>
<S> <C>
CLAUSE 1 DEFINITIONS
CLAUSE 2 HEPASENSE'S BUSINESS
CLAUSE 3 REPRESENTATIONS AND WARRANTIES
CLAUSE 4 AUTHORIZATION AND CLOSING
CLAUSE 5 DIRECTORS; MANAGEMENT AND R&D COMMITTEES
CLAUSE 6 THE BUSINESS PLAN AND REVIEWS
CLAUSE 7 RESEARCH AND DEVELOPMENT
CLAUSE 8 COMMERCIALIZATION
CLAUSE 9 OWNERSHIP OF INTELLECTUAL PROPERTY RIGHTS/NONCOMPETITION
CLAUSE 10 SUBLICENSE AND ASSIGNMENT RIGHTS
CLAUSE 11 INTELLECTUAL PROPERTY RIGHTS
CLAUSE 12 CROSS LICENSING/EXPLOITATION OF PRODUCTS OUTSIDE FIELD
CLAUSE 13 REGULATORY
CLAUSE 14 MANUFACTURING
CLAUSE 15 TECHNICAL SERVICES AND ASSISTANCE
CLAUSE 16 AUDITORS, BANKERS, REGISTERED OFFICE,
ACCOUNTING REFERENCE DATE; SECRETARY; COUNSEL
CLAUSE 17 TRANSFER OF SHARES; RIGHTS OF FIRST OFFER; TAG ALONG RIGHTS
CLAUSE 18 MATTERS REQUIRING STOCKHOLDERS' APPROVAL
</TABLE>
2
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<TABLE>
<S> <C>
CLAUSE 19 DISPUTES
CLAUSE 20 TERMINATION
CLAUSE 21 SHARE RIGHTS
CLAUSE 22 CONFIDENTIALITY
CLAUSE 23 COSTS
CLAUSE 24 GENERAL
</TABLE>
3
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THIS SUBSCRIPTION, JOINT DEVELOPMENT AND OPERATING AGREEMENT made this 14th day
of January, 2000
BETWEEN:
(1) ELAN CORPORATION, PLC, a public limited company incorporated under the laws
of Ireland, acting through its division ELAN PHARMACEUTICAL TECHNOLOGIES
and having its registered office at Lincoln House, Lincoln Place, Dublin 2,
Ireland ("ELAN, PLC");
(2) ELAN INTERNATIONAL SERVICES, LTD., a Bermuda exempted limited liability
company incorporated under the laws of Bermuda, and having its registered
office at Clarendon House, 2 Church St., Hamilton, Bermuda ("EIS");
(3) ELAN PHARMA INTERNATIONAL LIMITED, a private limited company incorporated
under the laws of Ireland, and having its registered office at WIL House,
Shannon Business Park, Shannon, County Clare, Ireland ("EPIL");
(4) ISIS PHARMACEUTICALS, INC. a corporation duly incorporated and validly
existing under the laws of Delaware and having its principal place of
business at 2292 Faraday Avenue, Carlsbad, CA 92008, United States of
America ("ISIS"); and
(5) HEPASENSE LTD., a Bermuda exempted limited liability company incorporated
under the laws of Bermuda, and having its registered office at Clarendon
House, 2 Church St., Hamilton, Bermuda ("HEPASENSE").
RECITALS:
A. HepaSense desires to issue and sell to the Shareholders (as defined below),
and the Shareholders desire to purchase from HepaSense, for aggregate
consideration of fifteen million United States Dollars (US$15,000,000),
apportioned between them as set forth herein, shares of HepaSense's common
shares, par value $1.00 per share (the "COMMON SHARES") and shares of
HepaSense's preferred shares, par value $1.00 per share (the "PREFERRED
SHARES").
B. As of the date hereof, Elan Pharmaceutical Technologies, a division of Elan
("EPT") and EPIL have entered into a license agreement with HepaSense, and
Isis has entered into a license agreement with HepaSense, in connection
with the license to HepaSense of the Elan Intellectual Property and the
Isis Intellectual Property, respectively (each as defined below).
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C. Elan and Isis have agreed to co-operate in the research, development and
commercialization of the Products (as defined below) based on their
respective technologies.
D. Elan and Isis have agreed to enter into this Agreement for the purpose of
recording the terms and conditions regulating their relationship with each
other, with respect to the Licensed Technologies and with HepaSense.
NOW IT IS HEREBY AGREED AS FOLLOWS:
CLAUSE 1
DEFINITIONS
1.1 In this Agreement, the following terms shall, where not inconsistent
with the context, have the following meanings respectively.
"ADDITIONAL PRODUCTS" shall mean the pharmaceutical formulation
incorporating an Additional Oligonucleotide and incorporated within or
packaged with the System.
"ADDITIONAL OLIGONUCLEOTIDES" shall mean another Oligonucleotide from
the Isis portfolio of Oligonucleotides nominated by Isis and accepted by
Elan to be incorporated within or packaged with the System for
commercialization. For the avoidance of doubt, the Parties acknowledge
that any Additional Oligonucleotide shall be at least at the same stage
of development as the Designated Oligonucleotide, i.e., shall be ready
for clinical testing.
"AFFILIATE" of any Person (in the case of a legal entity) shall mean any
other Person controlling, controlled or under the common control of such
first Person, as the case may be. For the purposes of this definition,
"control" shall mean direct or indirect ownership of fifty percent (50%)
or more of the stock or shares entitled to vote for the election of
directors or capital interests representing at least 50% of the equity
thereof and "controlling" and "controlled" shall be construed
accordingly. HepaSense is not an Affiliate of Elan or EIS.
"AGREEMENT" shall mean this agreement (which expression shall be deemed
to include the Recitals and the Schedules hereto).
"BOARD" shall mean the board of directors of HepaSense.
"BUSINESS" shall mean the business specified in the Business Plan.
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"BUSINESS PLAN" shall mean the business plan and program of development
to be agreed by Elan and Isis pursuant to Clause 6, with respect to the
research, development, and commercialization of the Products that shall
contain, among other things, to the extent practicable, the research and
development objectives, desired Product specifications, clinical
indications, preliminary clinical trial designs (Phase I/II),
development timelines, budgeted costs and the relative responsibilities
of Isis and Elan as it relates to the implementation of the Business
Plan.
"CLOSING DATE" shall mean the date upon which the Definitive Documents
are executed and delivered by the Parties and the transactions effected
thereby are closed.
"COMMON SHARES EQUIVALENTS" shall mean any options, warrants, rights or
any other securities convertible, exercisable or exchangeable, in whole
or in part, for or into Common Shares.
"CERTIFICATE OF DESIGNATIONS" shall mean that certain certificate of
designations, preferences and rights of Series B Preferred Shares of
Isis issued on the date hereof.
"CHANGE OF CONTROL" shall mean, with respect to a Party, the acquisition
of fifty percent (50%) or more of its voting securities, the ability, by
contract or otherwise, to control the board of directors or management
of any such entity, or a sale of all or substantially all of the
business of such Party to which the Transaction Documents relate,
whether by merger, sale of stock, sale of assets or otherwise.
"CONVERTIBLE NOTE" shall mean that certain convertible promissory note,
of even date herewith, by and between Isis and EIS.
"DEFINITIVE DOCUMENTS" shall mean this Agreement, the Funding Agreement,
the Elan License Agreement, the Isis License Agreement, the Convertible
Note, the Isis Securities Purchase Agreement, the Registration Rights
Agreements, the Certificate of Designations and associated documentation
of even date herewith, by and between Isis, Elan, EIS and HepaSense, as
applicable.
"DESIGNATED OLIGONUCLEOTIDE" shall mean Isis 14803.
"DIRECTORS" shall mean, at any time, the directors of HepaSense.
"EIS DIRECTOR" has the meaning set forth in Clause 5.
"ELAN" shall mean Elan, plc and EPIL.
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"ELAN IMPROVEMENTS" has the meaning assigned thereto in the Elan License
Agreement.
"ELAN INTELLECTUAL PROPERTY" has the meaning assigned thereto in the
Elan License Agreement.
"ELAN KNOW-HOW" has the meaning assigned thereto in the Elan License
Agreement.
"ELAN LICENSE AGREEMENT" shall mean the license agreement between Elan
and HepaSense, of even date herewith, attached hereto in Schedule 1.
"ELAN PATENT RIGHTS" has the meaning assigned thereto in the Elan
License Agreement.
"ELAN RIGHT OF FIRST NEGOTIATION" shall have the meaning provided in
Clause 8.3 hereof.
"ENCUMBRANCE" shall mean any liens, charges, encumbrances, equities,
claims, options, proxies, pledges, security interests, or other similar
rights of any nature.
"EXCHANGE RIGHT" has the meaning assigned to such term in the
Certificate of Designations in effect on the date hereof.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
"FDA" shall mean the United States Food and Drug Administration or any
successors or agency the approval of which is necessary to market a
product in the United States of America.
"FIELD" shall mean the administration of the Designated Oligonucleotide
by all routes of administration. Upon nomination by Isis and acceptance
by Elan of an Additional Oligonucleotide, the parties shall amend the
definition of the Field to include the administration of the Additional
Oligonucleotide by such means of administration as agreed to by the
parties.
Notwithstanding the foregoing, the Parties acknowledge and agree that,
pursuant to existing agreement among Elan, Isis and Orasense Ltd, both
Isis and Elan and their Affiliates may be subject to certain
restrictions concerning the development and commercialization of
products comprised upon the Oral administration of any Oligonucleotide.
"FINANCIAL YEAR" shall mean each year commencing on January 1 (or in the
case of the first Financial Year, the date hereof) and expiring on
December 31 of each year.
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"FULLY DILUTED COMMON SHARES" shall mean all of the issued and
outstanding Common Shares, assuming the conversion, exercise or exchange
of all outstanding Common Shares Equivalents.
"FUNDING AGREEMENT" shall mean the Funding Agreement, dated as of the
date hereof, between EIS and Isis.
"HCV" shall mean the hepatitis C virus.
"HEPASENSE BYE-LAWS" shall mean the Memorandum of Association and
Bye-Laws of HepaSense Ltd.
"HEPASENSE INTELLECTUAL PROPERTY" shall mean HepaSense Patents and
HepaSense Know How. In addition to the foregoing, any enhancement or
improvement relating to both the System and the Isis Know-How or Isis
Patents developed by any of the Parties individually or jointly pursuant
to the Project or by a third party (under contract with HepaSense)
pursuant to the Project shall, except as limited by agreements with
third parties, be deemed to be HepaSense Intellectual Property.
"HEPASENSE KNOW-HOW" shall mean any and all rights owned, licensed or
controlled by HepaSense to any scientific, pharmaceutical or technical
information, data, discovery, invention (whether patentable or not),
technique, process, procedure, system, formulation or design that is not
generally known to the public arising out of the conduct of the Project
by any person that does not constitute Elan Improvements or Isis
Improvements.
"HEPASENSE PATENTS" shall mean any and all patents and patent
applications arising out of the conduct of the Project by any person
that does not constitute Elan Improvements or Isis Improvements and all
rights therein, and including all extensions, continuations,
continuations-in-part, divisionals, patents-of-additions,
re-examinations, re-issues, supplementary protection certificates and
foreign counterparts thereto owned or licensed to HepaSense.
"ISIS DIRECTORS" has the meaning set forth in Clause 5.
"ISIS FIELD" has the meaning assigned thereto in the Isis License
Agreement.
"ISIS IMPROVEMENTS" has the meaning assigned thereto in the Isis License
Agreement.
"ISIS INTELLECTUAL PROPERTY" has the meaning assigned thereto in the
Isis License Agreement.
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"ISIS KNOW-HOW" has the meaning assigned thereto in the Isis License
Agreement.
"ISIS LICENSE AGREEMENT" shall mean the license agreement between Isis
and HepaSense, of even date herewith, attached hereto in Schedule 2.
"ISIS PATENT RIGHTS" has the meaning assigned thereto in the Isis
License Agreement.
"ISIS SECURITIES PURCHASE AGREEMENT" shall mean that certain securities
purchase agreement, of even date herewith, by and between Isis and EIS.
"ISIS 14803" shall mean the Oligonucleotide described in Exhibit A to
the Isis License Agreement.
"LICENSE AGREEMENTS" shall mean the Elan License Agreement and the Isis
License Agreement.
"LICENSED TECHNOLOGIES" shall mean, collectively, the Elan Intellectual
Property and the Isis Intellectual Property.
"OLIGONUCLEOTIDE" shall mean any single stranded, [ * ] oligonucleotide
including those [ * ] used as a human therapeutic and/or prophylactic
compound containing between [ * ] nucleotides and/or nucleosides
including oligonucleotide analogs which may include [ * ]. For purposes
of this agreement, Oligonucleotide shall specifically exclude
oligonucleotides used in gene therapy except [ * ] an oligonucleotide,
oligonucleotides used as [ * ] or oligonucleotides used as adjuvants.
Oligonucleotide shall also specifically exclude polymers in which the
linkages are amide based, such as peptides and proteins and shall also
exclude [ * ].
"ORAL" shall mean administration by way of the mouth for the purpose of
topical or systemic delivery by way of the alimentary canal.
"PARTICIPANT" shall mean Isis or Elan, as the case may be, and
"PARTICIPANTS" shall mean both of the Participants together.
"PARTY" shall mean Elan, Isis, or HepaSense, as the case may be, and
"PARTIES" shall mean all three together.
*CONFIDENTIAL TREATMENT REQUESTED
9
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"PERSON" shall mean an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust,
unincorporated association, joint venture, governmental entity or
authority or other entity of whatever nature.
"PERMITTED TRANSFEREE" shall mean any Affiliate or subsidiary of Elan,
EIS or Isis, to whom this Agreement may be assigned, in whole or in
part, pursuant to the terms hereof or in the case of Elan/EIS, a special
purpose financing entity created by Elan or EIS or their respective
affiliates.
"PRODUCT" shall mean the pharmaceutical formulation incorporating the
Designated Oligonucleotide for [ * ] within the Field, including,
without limitation, the incorporation of the Designated Oligonucleotide
within or packaged with the System.
"PROJECT" shall mean all activity as undertaken by or on behalf of
HepaSense in order to develop the Products in accordance with the
Business Plan.
"REGISTRATION RIGHTS AGREEMENTS" shall mean the Registration Rights
Agreements of even date herewith relating to HepaSense and Isis,
respectively.
"REGULATORY APPLICATION" shall mean any regulatory application or any
other application for marketing approval for a Product, which HepaSense
will file in any country of the Territory, including any supplements or
amendments thereto.
"REGULATORY APPROVAL" shall mean the final approval to market a Product
in any country of the Territory, and any other approval which is
required to launch the Product in the normal course of business. "RHA"
shall mean any relevant government health authority (or successor agency
thereof) in any country of the Territory whose approval is necessary to
market a Product in the relevant country of the Territory.
"RESEARCH AND DEVELOPMENT TERM" shall mean shall mean the period
commencing on the Closing Date and continuing for a period of [ * ]
thereafter.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
"SHARES" shall mean the shares of Common Shares and shares of Preferred
Shares of HepaSense.
"SHAREHOLDER" shall mean any of EIS, Isis, any Permitted Transferee or
any other Person who subsequently becomes bound by this Agreement as a
holder of the Shares, and "SHAREHOLDERS" shall mean all of the
Shareholders together.
*CONFIDENTIAL TREATMENT REQUESTED
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"SUBSIDIARY" shall mean any company that is a subsidiary of HepaSense
within the meaning of applicable laws.
"SUBSTITUTE OLIGONUCLEOTIDE" shall have the meaning set forth in Clause
8 hereof.
"SYSTEM" shall mean an ambulatory drug delivery system for direct
attachment to the body of a patient having a flexible diaphragm drug
reservoir, which is capable of delivering factory pre-programmed
continuous amounts of drug upon activation as disclosed and described in
the Elan Patents set forth in Schedule 1 to the Elan License Agreement.
"TECHNOLOGICAL COMPETITOR OF ELAN" shall mean any entity which has a
significant program for the development of drug delivery systems and
which is active in promoting and contracting the use of such drug
delivery systems to third parties, a listing of which is contained on
Schedule 2B to the Elan License Agreement, as the same shall be updated
and revised on an annual basis by mutual consent of the Parties.
"TECHNOLOGICAL COMPETITOR OF ISIS" shall mean any entity which has a
significant program for the discovery and development of antisense
drugs, a listing of which is contained on Schedule 2 to the Elan License
Agreement, as the same shall be updated and revised on an annual basis
by mutual consent of the Parties.
"TERM" shall mean the term of this Agreement.
"TERRITORY" shall mean all of the countries of the world.
"UNITED STATES DOLLAR" and "US$" and "$" shall mean the lawful currency
of the United States of America.
1.2 In addition, the following definitions have the meanings in the Clauses
corresponding thereto, as set forth below.
<TABLE>
<CAPTION>
DEFINITION CLAUSE
---------- ------
<S> <C>
"AAA" 20.6
"Buyout Option" 20.7
"Closing" 4.2
"Common Shares" Recital
"Confidential Information" 22.1
"Co-sale Notice" 17.4
"Elan Valuation" 20.8
</TABLE>
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<TABLE>
<S> <C>
"Expert" 19.3
"Isis Employee Director" 5.1.4
"Isis Valuation" 20.8
"Management Committee" 5.2.1
"Notice of Exercise" 17.3
"Notice of Intention" 17.3
"Offered Shares" 17.3
"Offering Price" 17.3
"Preferred Shares" Recital
"Purchase Price" 20.8
"R&D Committee" 5.2.2
"Remaining Shareholders" 17.4
"Relevant Event" 20.2
"Selling Shareholder" 17.3
"Tag-Along Right" 17.4
"Transaction Proposal" 17.3
"Transfer" 17.1
"Transferee Terms" 17.4
"Transferring Shareholder" 17.4
</TABLE>
1.3 Words importing the singular shall include the plural and vice versa.
1.4 Unless the context otherwise requires, reference to a recital, article,
paragraph, provision, clause or schedule is to a recital, article,
paragraph, provision, clause or schedule of or to this Agreement.
1.5 Reference to a statute or statutory provision includes a reference to it
as from time to time amended, extended or re-enacted.
1.6 The headings in this Agreement are inserted for convenience only and do
not affect its construction.
1.7 Unless the context or subject otherwise requires, references to words in
one gender include references to the other genders.
1.8 Capitalized terms used but not defined herein shall have the meanings
ascribed in the Definitive Documents, if defined therein.
CLAUSE 2
BUSINESS
2.1 The primary objective of the Agreement is to regulate the business of
the development, testing, registration, manufacture, commercialization
and licensing of Products in the Territory and to achieve the other
objectives set out in this
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Agreement. The focus of the Business will be to develop the Products
using the Elan Intellectual Property, the Isis Intellectual Property and
the HepaSense Intellectual Property to agreed-upon specifications and
timelines.
2.2 The central management and control of HepaSense shall be exercised in
Bermuda and shall be vested in the Directors and such Persons as they
may delegate the exercise of their powers in accordance with the
HepaSense Bye-Laws. The Participants agree to conduct the Business in
such a manner as to ensure that HepaSense is liable to taxation in
Bermuda and not in any other jurisdiction. The Participants shall use
their best endeavours to ensure that to the extent required the sole
residence of HepaSense in Bermuda, all meetings of the Directors are
held in Bermuda or other jurisdictions outside the United States and
generally to ensure that HepaSense is treated as resident for taxation
purposes in Bermuda.
CLAUSE 3
REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF HEPASENSE: HepaSense hereby represents
and warrants to each of the Shareholders as follows, as of the date
hereof:
3.1.1 ORGANIZATION: HepaSense is an exempted company duly organized,
validly existing and in good standing under the laws of Bermuda,
and has all the requisite corporate power and authority to own
and lease its properties, to carry on its business as presently
conducted and as proposed to be conducted.
3.1.2 CAPITALIZATION: As of the date hereof, the authorized capital
stock of HepaSense consists of 6,001 Common Shares and 6,000
Preferred Shares. Prior to the date hereof, no shares of capital
stock of HepaSense have been issued.
3.1.3 AUTHORIZATION: The execution, delivery and performance by
HepaSense of this Agreement, including the issuance of the
Shares, have been duly authorized by all requisite corporate
actions; this Agreement has been duly executed and delivered by
HepaSense and is the valid and binding obligation of HepaSense,
enforceable against it in accordance with its terms except as
limited by applicable bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting the
enforcement of creditors' rights generally, and except as
enforcement of rights to indemnity and contribution hereunder
may be limited by United States federal or state securities laws
or principles of public policy. The Shares, when issued as
contemplated hereby, will be validly issued and outstanding,
fully paid and non-assessable and not subject to preemptive or
any other similar rights of the Shareholders or others.
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3.1.4 NO CONFLICTS: The execution, delivery and performance by
HepaSense of this Agreement, the issuance, sale and delivery of
the Shares, and compliance with the provisions hereof by
HepaSense, will not:
(i) violate any provision of applicable law, statute, rule
or regulation applicable to HepaSense or any ruling,
writ, injunction, order, judgement or decree of any
court, arbitrator, administrative agency or other
governmental body applicable to HepaSense or any of its
properties or assets;
(ii) conflict with or result in any breach of any of the
terms, conditions or provisions of, or constitute (with
notice or lapse of time or both) a default (or give rise
to any right of termination, cancellation or
acceleration) under its charter or organizational
documents or any material contract to which HepaSense is
a party, except where such violation, conflict or breach
would not, individually or in the aggregate, have a
material adverse effect on HepaSense; or
(iii) result in the creation of, any Encumbrance upon any of
the properties or assets of HepaSense.
3.1.5 APPROVALS: As of the date hereof, no permit, authorization,
consent or approval of or by, or any notification of or filing
with, any Person is required in connection with the execution,
delivery or performance of this Agreement by HepaSense.
HepaSense has full authority to conduct its business as
contemplated in the Business Plan and the Definitive Documents.
3.1.6 DISCLOSURE: This Agreement does not contain any untrue statement
of a material fact or omit to state any material fact necessary
to make the statements contained herein not misleading.
HepaSense is not aware of any material contingency, event or
circumstance relating to its business or prospects, which could
have a material adverse effect thereon, in order for the
disclosure herein relating to HepaSense not to be misleading in
any material respect.
3.1.7 NO BUSINESS; NO LIABILITIES: HepaSense has not conducted any
business or incurred any liabilities or obligations prior to the
date hereof, except solely in connection with its organization
and formation.
3.2 REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS: Each of the
Shareholders hereby severally represents and warrants to HepaSense as
follows as of the date hereof:
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3.2.1 ORGANIZATION: Such Shareholder is a corporation duly organized
and validly existing under the laws of its jurisdiction of
organization and has all the requisite corporate power and
authority to own and lease its respective properties, to carry
on its respective business as presently conducted and as
proposed to be conducted and to carry out the transactions
contemplated hereby.
3.2.2 AUTHORITY: Such Shareholder has full legal right, power and
authority to enter into this Agreement and to perform its
obligations hereunder, which have been duly authorized by all
requisite corporate action. This Agreement is the valid and
binding obligation of such Shareholder, enforceable against it
in accordance with its terms except as limited by applicable
bankruptcy, insolvency, reorganization, moratorium and other
laws of general application affecting the enforcement of
creditors' rights generally, and except as enforcement of rights
to indemnity and contribution hereunder may be limited by United
States federal or state securities laws or principles of public
policy.
3.2.3 NO CONFLICTS: The execution, delivery and performance by such
Shareholder of this Agreement, purchase of the Shares, and
compliance with the provisions hereof by such Shareholder will
not:
(i) violate any provision of applicable law, statute, rule
or regulation known by and applicable to such
Shareholder or any ruling, writ, injunction, order,
judgement or decree of any court, arbitrator,
administrative agency or other governmental body
applicable to such Shareholder or any of its properties
or assets;
(ii) conflict with or result in any breach of any of the
terms, conditions or provisions of, or constitute (with
notice or lapse of time or both) a default (or give rise
to any right of termination, cancellation or
acceleration) under the charter or organizational
documents of such Shareholder or any material contract
to which such Shareholder is a party, except where such
violation, conflict or breach would not, individually or
in the aggregate, have a material adverse effect on such
Shareholder; or
(iii) result in the creation of, any Encumbrance upon any of
the properties or assets of such Shareholder.
3.2.4 APPROVALS: As of the date hereof, no permit, authorization,
consent or approval of or by, or any notification of or filing
with, any Person is required in connection with the execution,
delivery or performance of this Agreement by such Shareholder.
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3.2.5 INVESTMENT REPRESENTATIONS: Such Shareholder is sophisticated in
transactions of this type and capable of evaluating the merits
and risks of its investment in HepaSense. Such Shareholder has
not been formed solely for the purpose of making this investment
and such Shareholder is acquiring the Common Shares and
Preferred Shares for investment for its own account, not as a
nominee or agent, and not with the view to, or for resale in
connection with, any distribution of any part thereof. Such
Shareholder understands that the Shares have not been registered
under the Securities Act or applicable state and foreign
securities laws by reason of a specific exemption from the
registration provisions of the Securities Act and applicable
state and foreign securities laws, the availability of which
depends upon, among other things, the bona fide nature of the
investment intent and the accuracy of such Shareholders'
representations as expressed herein. Such Shareholder
understands that no public market now exists for any of the
Shares and that there is no assurance that a public market will
ever exist for such Shares.
CLAUSE 4
AUTHORIZATION AND CLOSING
4.1 HepaSense has authorized the issuance to (i) EIS of 2,388 Preferred
Shares and (ii) Isis of 6,001 Common Shares and 3,612 Preferred Shares,
issuable as provided in Clause 4.3 hereof.
4.2 Isis and EIS hereby subscribe for the number of Shares set forth in
Clause 4.1 and shall pay to HepaSense in consideration therefore, by
wire transfer of immediately available funds (to a bank account
established by HepaSense in connection with Completion) the subscription
amounts each as provided in Clause 4.4.1.
4.3 The closing (the "CLOSING") shall take place at the offices of Brock
Silverstein LLC at 800 Third Avenue, New York, New York 10022 on the
date hereof or such other places if any, as the Parties may agree and
shall occur contemporaneously with the closing under the Isis Securities
Purchase Agreement.
4.4 At the Closing, each of the Shareholders shall take or (to the extent
within its powers) cause to be taken the following steps at directors
and shareholder meetings of HepaSense, or such other meetings or
locations, as appropriate:
4.4.1 HepaSense shall issue and sell to EIS, and EIS shall purchase
from HepaSense, upon the terms and subject to the conditions set
forth herein, 2,388 Preferred Shares for an aggregate purchase
price of US$2,985,000.
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HepaSense shall issue and sell to Isis, and Isis shall purchase
from HepaSense, upon the terms and conditions set forth herein,
(i) 6,001 Common Shares for an aggregate purchase price of
US$7,500,000 and (ii) 3,612 Preferred Shares for an aggregate
purchase price of US$4,515,000;
4.4.2 the Parties shall execute and deliver to each other, as
applicable, certificates in respect of the Common Shares and
Preferred Shares described above and any other certificates,
resolutions or documents which the Parties shall reasonably
require;
4.4.3 the adoption by HepaSense of HepaSense Bye-Laws;
4.4.4 the appointment of Kevin Insley, B. Lynne Parshall, F. Andrew
Dorr, M.D., Dawn Griffiths and Stephen Rossiter as Directors of
HepaSense;
4.4.5 the resignation of all directors and the secretary of HepaSense
holding office prior to the execution of this Agreement and
delivery of written confirmation under seal by each Person so
resigning that he has no claim or right of action against
HepaSense and that HepaSense is not in any way obligated or
indebted to him; and
4.4.6 the transfer to HepaSense of the share register.
4.5 EXEMPTION FROM REGISTRATION:
The Shares will be issued under an exemption or exemptions from
registration under the Securities Act. Accordingly, the certificates
evidencing the Shares shall, upon issuance, contain the following
legend:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY SECURITIES LAWS OF A STATE OR
OTHER JURISDICTION AND MAY NOT UNDER ANY CIRCUMSTANCES BE SOLD,
TRANSFERRED, OR OTHERWISE DISPOSED OF (OTHER THAN TO AN AFFILIATE OF THE
ORIGINAL HOLDER OR AS OTHERWISE PERMITTED IN THE AGREEMENT PURSUANT TO
WHICH THEY WERE ISSUED) EXCEPT PURSUANT TO (i) AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES
OR BLUE SKY LAWS, OR (ii) TO THE EXTENT APPLICABLE, RULE 144 UNDER THE
SECURITIES ACT (OR ANY SIMILAR RULE UNDER THE SECURITIES ACT RELATING TO
THE DISPOSITION OF SECURITIES) TOGETHER WITH AN OPINION OF COUNSEL
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REASONABLY SATISFACTORY TO THE CORPORATION THAT REGISTRATION IS NOT
REQUIRED UNDER SUCH ACT OR APPLICABLE STATE SECURITIES LAWS.
4.6 HepaSense shall use reasonable efforts to file any documents that
require filing with the Registrar of Companies in Bermuda within the
prescribed time limits. EIS and Isis shall provide all reasonable
co-operation to HepaSense in relation to the matters set forth in this
Clause 4.6.
4.7. In the event that EIS exercises the Exchange Right, HepaSense shall,
immediately upon such exercise, take all necessary steps to ensure that
EIS is duly and validly issued and has full legal right, title and
interest in and to the Preferred Shares exchanged therefor. The Parties
acknowledge that such Preferred Shares have been pledged to EIS pursuant
to the Isis Securities Purchase Agreement and that EIS has physical
possession of such Preferred Shares; upon such exercise, EIS shall be
entitled to keep and retain such Preferred Shares, which shall be owned
by EIS as provided above. In connection with the foregoing, HepaSense
and the Participants shall take all necessary or appropriate steps to
ensure such ownership by EIS.
CLAUSE 5
DIRECTORS; MANAGEMENT AND R&D COMMITTEES
5.1. DIRECTORS:
5.1.1 Prior to the exercise of the Exchange Right, the Board shall be
composed of five Directors.
Isis shall have the right to nominate four directors of
HepaSense, provided that two such directors are residents of
Bermuda, ("ISIS DIRECTORS") and EIS shall have the right to
nominate one Director of HepaSense ("EIS DIRECTOR") which
Director, save as further provided herein, shall only be
entitled to 15% of the votes of the Board.
In the event that the Exchange Right is exercised by EIS within
2 years following the Closing Date, the EIS Director shall only
be entitled to 15% of the votes of the Board until the expiry of
2 years from the Closing Date.
In the event that the Exchange Right is exercised by EIS at any
time after two years following the Closing Date or upon the
expiry of 2 years following the Closing Date where the Exchange
Right has been exercised by EIS within 2 years following the
Closing Date, each of Isis, and EIS shall cause the Board to be
reconfigured so that an equal number of Directors are designated
by EIS and Isis and that each of the Directors has equal voting
power.
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5.1.2 If EIS removes the EIS Director, or Isis removes any of the Isis
Directors, EIS or Isis, as the case may be, shall indemnify the
other Shareholder against any claim by such removed Director
arising from such removal.
5.1.3 The Directors shall meet not less than three times in each
Financial Year and all Board meetings shall be held in Bermuda
or otherwise by teleconference in accordance with the HepaSense
Bye Laws or as otherwise required by to the laws of Bermuda and
to ensure the sole residence of HepaSense in Bermuda.
5.1.4 At any such meeting, the presence of the EIS Director and at
least one Isis Director who at the time of the meeting is an
employee of Isis (an "Isis Employee Director") shall be required
to constitute a quorum and, subject to Clause 17 hereof, the
affirmative vote of a majority of the Directors present at a
meeting at which such a quorum is present shall constitute an
action of the Directors; provided, however, that the EIS
Director and Isis Employee Director also vote in favor of such
action. In the event of any meeting being inquorate, the meeting
shall be adjourned for a period of seven days. A notice shall be
sent to the EIS Director and the Isis Directors specifying the
date, time and place where such adjourned meeting is to be held
and reconvened.
5.1.5 On the Closing Date, Isis may appoint one of the Isis Directors
to be the chairman of HepaSense. The chairman of HepaSense shall
hold office until:
(i) the first meeting of the Board following the exercise by
EIS of the Exchange Right, where the Exchange Right has
been exercised by EIS after two years following the
Closing Date; or
(ii) the first meeting of the Board following the expiry of 2
years following the Closing Date where the Exchange
Right has been exercised by EIS within 2 years following
the Closing Date
(in each case the "CHAIRMAN STATUS BOARD MEETING")
After the Chairman Status Board Meeting, each of EIS and Isis,
beginning with EIS at the Chairman Status Board Meeting, shall
have the right, exercisable alternatively, of nominating one
Director to be chairman of HepaSense for a term of one year.
If the chairman is unable to attend any meeting of the Board
held prior to the Chairman Status Board Meeting, the Isis
Directors shall be entitled to appoint another Isis Director to
act as chairman in his place at the meeting.
If the chairman of HepaSense is unable to attend any meeting of
the Board
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held after the Chairman Status Board Meeting, the Directors
shall be entitled to appoint another Director to act as chairman
of HepaSense in his place at the meeting.
5.1.6 In case of an equality of votes at a meeting of the Board, the
chairman of HepaSense shall not be entitled to a second or
casting vote. In the event of continued deadlock, the Board
shall resolve the deadlock pursuant to the provisions set forth
in Clause 18.
5.2 MANAGEMENT AND R&D COMMITTEES:
5.2.1 The Directors shall appoint a management committee (the
"MANAGEMENT COMMITTEE") to perform certain operational
functions, such delegation to be consistent with the Directors'
right to delegate powers pursuant to the HepaSense Memorandum of
Association of Bye-Laws. The Management Committee shall
initially consist of four members, two of whom will be nominated
by EIS and two of whom will be nominated by Isis, and each of
whom shall be entitled to one vote, whether or not present at
any Management Committee meeting during which such operational
functions are discussed. Except as otherwise provided herein or
in the License Agreements, decisions of the Management Committee
shall require approval by at least one EIS nominee on the
Management Committee and one Isis nominee on the Management
Committee. Each of EIS and Isis shall be entitled to remove any
of their nominees to the Management Committee and appoint a
replacement in place of any nominees so removed.
5.2.2 The Management Committee shall appoint a research and
development committee (the "R&D COMMITTEE") which shall
initially be comprised of four members, two of whom will be
nominated by Elan and two of whom will be nominated by Isis, and
each of whom shall have one vote, whether or not present at an
R&D Committee meeting during which research and development
issues are discussed. Decisions of the R&D Committee shall
require approval by at least one Elan nominee on the R&D
Committee and one Isis nominee on the R&D Committee. Each of
Elan and Isis shall be entitled to remove any of their nominees
to the R&D Committee and appoint a replacement in place of any
nominees so removed.
5.2.3 The Management Committee shall be responsible for, inter alia,
devising, implementing and reviewing strategy for the business
of HepaSense, and the operation of HepaSense, and in particular,
devising HepaSense's strategy for research and development and
to monitor and supervise the implementation of HepaSense's
strategy for research and development.
5.2.4 The R&D Committee shall be responsible for:
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5.2.4.1 designing that portion of the Business Plan that relates
to the Project for consideration by the Management
Committee;
5.2.4.2 establishing a joint Project team consisting of an equal
number of team members from Elan and Isis, including one
Project leader from each of Elan and Isis; and
5.2.4.3 implementing such portion of the Business Plan that
relates to the Project, as approved by the Management
Committee.
5.2.5 In the event of any dispute amongst the R&D Committee, the R&D
Committee shall refer such dispute to the Management Committee
whose decision on the dispute shall be binding on the R&D
Committee. If the Management Committee cannot resolve the matter
after 15 days or such other period as may be agreed by the
Management Committee, the dispute will be referred to a
designated senior officer of each of Elan and Isis, and
thereafter, in the event of continued deadlock, pursuant to the
deadlock provisions to be set forth in Clause 19, involving
inter alia, the referral of the dispute to an expert, whose
decision, however, will ultimately be non-binding on the
Participants. This process shall also apply to any dispute
within the Management Committee.
CLAUSE 6
THE BUSINESS PLAN AND REVIEWS
6.1 The Directors shall meet together as soon as reasonably practicable
after the Closing Date hereof and shall agree upon and approve the
Business Plan for the current Financial Year within 60 days of the
Closing Date.
6.2. The Business Plan shall be subject to ongoing review by the Directors
and the approval of the EIS Director and the Isis Directors on a
quarterly basis.
6.3. Neither Participant shall be obliged to provide funding to HepaSense in
the absence of quarterly approval of the Business Plan and a
determination by each Participant, in its sole discretion, that
Subsequent Funding (as such term is defined in the Funding Agreement)
shall be provided for the development of the Products.
CLAUSE 7
RESEARCH AND DEVELOPMENT WORK
7.1 During the Research Term, HepaSense will diligently pursue the research
and development of the Elan Intellectual Property, Isis Intellectual
Property and
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HepaSense Intellectual in accordance with the Research and Development
Program. The "RESEARCH AND DEVELOPMENT PROGRAM" will be the program the
development of the Product in the Field, including without limitation,
in vivo toxicology, stability, formulation, optimization, clinical and
regulatory activities. Such work shall be agreed to and conducted by
Elan, Isis and/or a third party Isis under contract with HepaSense as
provided in the Business Plan.
7.2 Subject to the provisions of Clause 6.3, Isis and Elan shall provide at
their discretion respective such research and development services as is
requested by HepaSense in accordance with the provisions in the License
Agreements; provided, however, that HepaSense shall not perform any
pre-clinical research or development work. HepaSense shall pay Isis and
Elan for any development work carried out by them on behalf of HepaSense
at the end of each month during the Research and Development Program,
subject to the proper vouching of research and development work and
expenses. An invoice shall be issued to HepaSense by Isis or Elan, as
applicable, by the 15th day of the month following the month in which
work was performed. The payments by HepaSense to Isis or Elan shall be
calculated by reference to the fully burdened actual costs incurred by
Isis and Elan [ * ] in carrying out such research and development work,
on a fully allocated basis. Research and development activities that are
outsourced to third party providers shall be charged to HepaSense at [ *
].
7.3 Elan and Isis shall permit HepaSense or its duly authorized
representative on reasonable notice and at any reasonable time during
normal business hours to have access to inspect and audit the accounts
and records of Elan or Isis and any other book, record, voucher, receipt
or invoice relating to the calculation or the cost of the Research and
Development Program and to the accuracy of the reports which accompanied
them. Any such inspection of Elan's or Isis's records, as the case may
be, shall be at the expense of HepaSense, except that if such inspection
reveals an overpayment in the amount paid to Elan or Isis, as the case
may be, for the Research and Development Program hereunder in any
Financial Year of 5% or more of the amount due to Elan or Isis, as the
case may be, then the expense of such inspection shall be borne solely
by Elan or Isis, as the case may be, instead of by HepaSense. Any
surplus over the sum properly payable by HepaSense to Elan or Isis, as
the case may be, shall be paid promptly by Elan or Isis, as the case may
be, to HepaSense. If such inspection reveals a deficit in the amount of
the sum properly payable to Elan or Isis, as the case may be, by
HepaSense, HepaSense shall pay the deficit to Elan or Isis, as the case
may be.
7.4 Should HepaSense determine that the Designated Oligonucleotide is not
suitable for administration via the System, HepaSense, at its option may
either (i) further develop and commercialize the Designated
Oligonucleotide in a Product via another route of administration within
the Field or (ii) request Isis to designate a substitute
Oligonucleotide. In the event HepaSense requests that Isis designate a
*CONFIDENTIAL TREATMENT REQUESTED
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substitute Oligonucleotide, the Parties shall review in good faith and
designate for in-licensing to HepaSense, subject to then existing
contractual obligations, another Oligonucleotide from the Isis portfolio
of Oligonucleotides with comparable commercial potential, or designate
an Oligonucleotide for in-licensing or acquisition of the rights from
one or more third parties to such Oligonucleotide (the "SUBSTITUTE
OLIGONUCLEOTIDE"). In either case, the Parties shall promptly negotiate
in good faith such amendments as are required to this Agreement, such as
amending the provisions regulating non-competition under Clause 4 of the
License Agreements, and to the research and development budgeted costs
for the Project.
7.5 Except as otherwise provided herein and as provided in the Isis License
Agreement, upon designation of an Isis Oligonucleotide as a Substitute
Oligonucleotide, (i) all rights to ISIS 14803 shall revert to Isis and
(ii) all provisions contained herein and in the Isis License Agreement
other than in the preceding clause (i) relating to the ISIS 14803 shall
be deemed to apply to the Substitute Oligonucleotide as if it were the
Designated Oligonucleotide, unless otherwise amended in accordance with
Clause 7.4.
CLAUSE 8
COMMERCIALIZATION
8.1 HepaSense shall diligently pursue the research, development, prosecution
and commercialization of the Product as provided in the Business Plan.
During the Research Term, Elan and Isis shall meet to discuss the
commercial strategy for HepaSense commercialization of the Product and
the further exploitation of the HepaSense Intellectual Property. For
example, Isis and Elan shall discuss strategy and terms relating to
product and clinical development, corporate partnering, licensing and
supply agreements. It is contemplated that Isis, through its
representatives on the Management Committee, shall locate and negotiate
with independent third party marketing partners for Product. In the
course of such representation, Isis shall keep HepaSense and Elan fully
informed of its efforts and progress with respect to the foregoing.
8.2 In the event HepaSense successfully commercializes the Product, Isis
may, from time to time nominate, subject to Elan's consent, from the
Isis portfolio of Oligonucleotides additional Oligonucleotides to be
designated as Additional Oligonucleotides for incorporation in
Additional Products. It is contemplated that Isis shall locate and
negotiate with independent third party marketing partners for Isis
Products. Isis shall keep HepaSense and Elan apprised of its efforts
and progress with respect to the foregoing; provided, however, that any
such information shall be kept confidential and shall not be disclosed
to the Elan
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Pharmaceuticals division of Elan, plc (excluding senior executive
personnel of Elan).
8.3 Notwithstanding anything set forth herein, at such time as HepaSense
intends to commercialize the Product, Elan shall have the right of first
negotiation with respect to the world-wide commercialization of the
Product (the "ELAN FIRST RIGHT OF NEGOTIATION"). Such right of first
negotiation shall be exercised as follows:
8.3.1 If HepaSense intends to commercialize or enter into an agreement
with an independent third party to commercialize the Product,
then HepaSense immediately shall notify Elan in writing that
Elan may elect to enter into negotiations referred to in this
Clause 8.3. Elan shall indicate its desire to enter into such
negotiations pursuant to this Clause 8.3 by delivering written
notice to HepaSense within forty-five (45) days of Elan's
receipt of the written notification from HepaSense to Elan. If
Elan elects to enter into such negotiations, the Parties shall
negotiate in good faith the terms of an applicable agreement.
8.3.2 If, despite such good faith negotiations, Elan and HepaSense do
not reach agreement on the terms of such an agreement within six
(6) months from the notification in writing by HepaSense to
Elan, then HepaSense shall be free to offer a third party (other
than a Technological Competitor of Elan unless consented to by
Elan which consent may be withheld for any reason and otherwise
subject to the terms and conditions of this Agreement) terms to
commercialize the Product in the Territory, which terms when
taken as a whole, are more favorable to HepaSense than the
principal terms of the last written proposal offered to
HepaSense by Elan, or by HepaSense to Elan, as the case may be;
provided, however, that in the event the stage of development or
data available in connection with the Product shall change
materially, the Elan Right of First Negotiation shall be
revived.
8.4 Subject to the rights of Elan with respect to the Product, HepaSense
shall not be permitted to contract the commercialization of the Product
or any other Product without the prior written consent of Elan and Isis,
which consent will not be unreasonably withheld or delayed; provided
that such reasonableness standard, in the case of Elan, shall not be
applicable in the case of a proposed sublicense to any Technological
Competitor of Elan and in the case of Isis, shall not be applicable in
the case of a proposed sublicense to any Technological Competitor of
Isis.
CLAUSE 9
OWNERSHIP OF INTELLECTUAL PROPERTY RIGHTS/NON-COMPETITION
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9.1 The Parties acknowledge and agree to be bound by the provisions of
Clause 3 of the Elan License Agreement and Clause 3 of the Isis License
Agreement set forth the agreement between the parties thereto in
relation to the ownership of the Elan Intellectual Property, the Isis
Intellectual Property and the HepaSense Intellectual property
respectively.
9.2 The Parties acknowledge and agree to be bound by the provisions the
provisions of Clause 4 of the Elan License Agreement and the provisions
of Clause 4 of the Isis License Agreement which set forth the agreement
between the parties thereto in relation to the non-competition
obligations of Elan and Isis, respectively.
CLAUSE 10
SUBLICENSE AND ASSIGNMENT RIGHTS
10.1 HepaSense shall not assign any of its rights under the HepaSense
Intellectual Property without the prior written consent of Elan and
Isis.
10.2 HepaSense shall not sublicense any of its rights under the License
Agreements for the Licensed Technologies and/or the HepaSense
Intellectual Property without the prior written consent of Elan and
Isis, which consent shall not be unreasonably withheld or delayed;
provided, however, that the consent of Elan may be withheld in Elan's
sole discretion in the case of a proposed sublicense of such rights to a
Technological Competitor of Elan.
CLAUSE 11
INTELLECTUAL PROPERTY RIGHTS
11.1 Elan, at its expense and sole discretion may (i) secure the grant of any
patent applications within the Elan Patents that relate to the Field;
(ii) file and prosecute patent applications on patentable inventions and
discoveries within the Elan Improvements that relate to the Field; (iii)
defend all such applications against third party oppositions; and (iv)
maintain in force any issued letters patent within the Elan Patents that
relate to the Field (including any letters patent that may issue
covering any such Elan Improvements that relate to the Field). Elan
shall have the right in its sole discretion to control such filing,
prosecution, defense and maintenance provided that HepaSense and Isis at
their request shall be provided with copies of all documents relating to
such filing, prosecution, defense and maintenance in sufficient time to
review such documents and comment thereon prior to filing.
11.2 Isis, at its expense and sole discretion, may (i) secure the grant of
any patent applications within the Isis Patents that relate to the
Field; (ii) file and prosecute
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patent applications on patentable inventions and discoveries within the
Isis Improvements that relate to the Field; (iii) defend all such
applications against third party oppositions; and (iv) maintain in force
any issued letters patent within the Isis Patents that relate to the
Field (including any letters patent that may issue covering any such
Isis Improvements that relate to the Field). Isis shall have the right
in its sole discretion to control such filing, prosecution, defense and
maintenance provided that Elan and HepaSense at their request shall be
provided with copies of all documents relating to such filing,
prosecution, defense and maintenance in sufficient time to review such
documents and comment thereon prior to filing.
11.3 In the event that Elan does not intend to file for patent protection on
patentable inventions or discoveries within the Elan Intellectual
Property that relates to the Field in one or more countries in the
Territory after providing written notice to HepaSense and Isis,
HepaSense shall have the option at HepaSense's expense, upon the prior
written approval of Elan which approval shall not be unreasonably
withheld, to request Elan to file and prosecute such patent
application(s). Upon such written request from HepaSense, Elan shall be
responsible for preparing and prosecuting and otherwise seeking patent
protection for such Elan Intellectual Property described in this Clause
11.3. Any such Elan Intellectual Property shall be owned by Elan but
Elan shall grant a royalty free exclusive license to HepaSense for such
Elan Intellectual Property in the Field. Such license shall be subject
to the other terms and conditions set forth in this Agreement and the
Elan License Agreement to HepaSense. The Parties shall have the right to
remove their confidential information from any such patent application.
11.4 In the event that Isis does not intend to file for patent protection on
patentable inventions or discoveries within the Isis Intellectual
Property that relates to the Field in one or more countries in the
Territory after providing written notice to HepaSense and Elan,
HepaSense shall have the option at HepaSense's expense, upon the prior
written approval of Isis which approval shall not be unreasonably
withheld, to request Isis to file and prosecute such patent
application(s). Upon such written request from HepaSense, Isis shall be
responsible for preparing and prosecuting and otherwise seeking patent
protection for such Isis Intellectual Property described in this Clause
11.4. Any such Isis Intellectual Property shall be owned by Isis but
Isis shall grant a royalty free exclusive license to HepaSense such Isis
Intellectual Property in the Field. Such license shall be subject to the
other terms and conditions set forth in this Agreement and the Isis
License Agreement to HepaSense. The Parties shall have the right to
remove their confidential information from any such patent application.
11.5 HepaSense at its expense shall have the right but shall not be obligated
(i) to file and prosecute patent applications on patentable inventions
and discoveries within the HepaSense Intellectual Property; (ii) to
defend all such applications against third party oppositions; and (iii)
to maintain in force any issued letters patent within the HepaSense
Patents (including any patents that issue on patentable
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inventions and discoveries within the HepaSense Intellectual Property).
HepaSense shall have the right to control such filing, prosecution,
defense and maintenance provided that the other Parties shall be
provided with copies of all documents relating to such filing,
prosecution, defense, and maintenance in sufficient time to review such
documents and comment thereon prior to filing. The Parties shall have
the right to remove their confidential information from any such patent
application.
11.6 In the event that HepaSense informs both Elan and Isis that it does not
intend to file an application on the HepaSense Intellectual Property in
or outside the Field, Elan shall have the right to file and prosecute
such patent applications on inventions that Elan invents solely or which
relate predominantly to the Elan Intellectual Property, and Isis shall
have the right to file and prosecute such patent applications on
inventions which Isis invents solely or which relate predominantly to
the Isis Intellectual Property, and Elan and Isis agree to negotiate in
good faith on the course of action to be taken with respect to HepaSense
inventions that relate to both the Elan Intellectual Property and Isis
Intellectual Property. The Parties shall have the right to remove their
confidential information from any such patent application.
11.7 The Parties shall promptly inform each other in writing of any actual or
alleged unauthorized use of any Elan Intellectual Property, the Isis
Intellectual Property or the HepaSense Intellectual Property by a third
party of which it becomes aware and provide the others with any
available evidence of such unauthorized use.
11.8 At its option, as the case may be, Elan or Isis shall have the first
option to enforce at its own expense and for its own benefit any
unauthorized use of its respective Intellectual Property (the Elan
Intellectual Property or the Isis Intellectual Property as the case may
be) in the Field. At the enforcing party's request, the other Parties
shall cooperate with such action. Should Elan or Isis decide not to
enforce the Elan Intellectual Property or the Isis Intellectual Property
respectively, against such unauthorized use in the Field, within a
reasonable period but in any event within twenty (20) days after
receiving written notice of such actual or alleged unauthorized use,
HepaSense may in its discretion initiate such proceedings in its own
name, at its expense and for its own benefit, and at such Party's
request, Elan and Isis shall cooperate with such action. Any recovery
remaining after the deduction by HepaSense of the reasonable expenses
(including attorney's fees and expenses) incurred in relation to such
enforcement proceeding shall belong to HepaSense. Alternatively, the
Parties may agree to institute such proceedings in their joint names and
shall reach agreement as to the proportion in which they shall share the
proceeds of any such proceedings, and the expense of any costs not
recovered, or the costs or damages payable to the third party. If the
enforcement of the Elan Intellectual Property or the Isis Intellectual
Property affects both the Field as well as other products being
developed or commercialized by Isis or Elan or its commercial partners
outside the Field, Isis or Elan shall endeavour to agree as to the
manner in which the
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proceedings should be instituted and as to the proportion in which they
shall share the proceeds of any such proceedings, and the expense of any
costs not recovered, or the costs or damages payable to the third party.
11.9 HepaSense shall have the first right but not the obligation to bring
suit or otherwise take action against any unauthorized use of the
HepaSense Intellectual Property. If any such alleged use occurs that
gives rise to a cause of action both inside and outside the Field,
HepaSense, in consultation with the other Parties, shall determine the
course of action to be taken. In the event that HepaSense takes such
action, HepaSense shall do so at its own cost and expense and all
damages and monetary award recovered in or with respect to such action
shall be the property of HepaSense. HepaSense shall keep Elan and Isis
informed of any action in a timely manner so as to enable Isis and Elan
to provide input in any such action and HepaSense shall reasonably take
into consideration any such input. At HepaSense's request, the Parties
shall cooperate with any such action at HepaSense's cost and expense.
11.10 In the event that HepaSense does not bring suit or otherwise take action
against any unauthorized use of the HepaSense Intellectual Property (i)
if only one Party determines to pursue such suit or take such action at
its own cost and expense, it shall be entitled to all damages and
monetary award recovered in or with respect to such action and (ii) if
the other Parties pursue such suit or action outside of HepaSense, they
shall negotiate in good faith an appropriate allocation of costs,
expenses and recovery amounts. At the Party's request, HepaSense shall
cooperate with any such action at the Party's cost and expense.
11.11 In the event that a claim or proceeding is brought against HepaSense by
a third party alleging that the sale, distribution or use of a Product
in the Territory constitutes the unauthorized use of the intellectual
property rights of such Party, HepaSense shall promptly advise the other
Parties of such threat or suit.
11.12 Save in respect of claims by HepaSense against either Party, or by an
Independent Third Party against HepaSense, where Elan is in breach of a
representation or warranty under Clause 7 of the Elan License Agreement
or where Isis is in breach of a representation or warranty under Clause
7 of the Isis License Agreement, HepaSense shall indemnify, defend and
hold harmless Elan or Isis, as the case may be, against all actions,
losses, claims, demands, damages, costs and liabilities (including
reasonable attorneys fees) relating directly or indirectly to all such
claims or proceedings referred to in Clause 11.11, provided that Elan or
Isis, as the case may be, shall not acknowledge to the third party or to
any other person the validity of any claims of such a third party, and
shall not compromise or settle any claim or proceedings relating thereto
without the prior written consent to HepaSense, not to be unreasonably
withheld or delayed. At its option, Elan or Isis, as the case may be,
may elect to take over the conduct of such proceedings from HepaSense
provided that HepaSense's indemnification obligations shall continue;
the costs of defending such claim shall be borne by Elan or Isis, as the
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case may be and such Party shall not compromise or settle any such claim
or proceeding without the prior written consent of HepaSense, such
consent not to be unreasonably withheld or delayed.
CLAUSE 12
CROSS LICENSING/EXPLOITATION OF PRODUCTS OUTSIDE THE FIELD
12.1 Solely for the purpose of and insofar as is necessary, in each case, for
Elan to perform research and development work on behalf of HepaSense,
HepaSense shall grant to Elan a non-exclusive, worldwide, royalty-free,
fully paid-up license for the term of the Licenses:
12.1.1 to exploit the HepaSense Intellectual Property in the Field, and
12.1.2 subject to the terms and conditions of the Isis License, a
sublicense to exploit the Isis Intellectual Property in the
Field.
12.2 Solely for the purpose of and insofar as is necessary, in each case, for
Isis to perform to conduct research and development work on behalf of
HepaSense, HepaSense shall grant to Isis a non-exclusive, worldwide,
royalty-free, fully paid-up license for the term of the Licenses:
12.2.1 to exploit the HepaSense Intellectual Property in the Field, and
12.2.2 subject to the terms and conditions of the Elan License, a
sublicense to exploit the Elan Intellectual Property in the
Field.
12.3 Subject to the provisions of this Clause 12, HepaSense hereby grants to
each of Elan and Isis a license to the HepaSense Intellectual Property
as follows:
12.3.1 HepaSense hereby grants to Elan a worldwide, perpetual,
fully-paid and royalty-free license, with the right to
sublicense, to the HepaSense Intellectual Property in all fields
other than the Field or in connection with Isis proprietary
Oligonucleotides on an as-is basis without recourse,
representation or warranty whether express or implied, including
warranties of merchantability or fitness for a particular
purpose, or infringement of third party rights, and all such
warranties are expressly disclaimed.
12.3.2 Subject to the rights of Elan pursuant to Clause 8.4 hereof,
HepaSense hereby grants to Isis a worldwide, perpetual,
fully-paid and royalty-free license, with the right to
sublicense, to the HepaSense Intellectual Property as it relates
to the Designated Oligonucleotide or any other Oligonucleotide
for use outside the Field on an as-is basis without recourse,
representation or warranty whether express or implied, including
warranties of merchantability or fitness for
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a particular purpose, or infringement of third party rights, and all
such warranties are expressly disclaimed.
CLAUSE 13
REGULATORY
13.1 HepaSense shall keep the other Parties promptly and fully advised of
HepaSense's regulatory activities, progress and procedures. HepaSense
shall inform the other Parties of any dealings it shall have with an
RHA, and shall furnish the other Parties with copies of all
correspondence relating to the Products. The Parties shall collaborate
to obtain any required regulatory approval of the RHA to market the
Products.
13.2 HepaSense shall, at its own cost, file, prosecute and maintain any and
all Regulatory Applications for the Product in the Territory in
accordance with the Business Plan.
13.3 Any and all Regulatory Approvals obtained hereunder for any Product
shall including without limitation, the DMF, shall be processed by and
remain the property of HepaSense, provided that HepaSense shall allow
Elan and Isis access thereto to enable Elan and Isis to fulfil their
respective obligations and exercise their respective rights under this
Agreement. HepaSense shall maintain such Regulatory Approvals at its own
cost. All regulatory approvals and submissions relating to the System,
including without limitation, the MAF, shall be processed by and be the
property of Elan and at all times held in Elan's sole name; provided,
however, that Elan will authorize HepaSense to reference its regulatory
approval and submission, as described herein, with the FDA and such
foreign agency to the extent necessary for HepaSense's regulatory
purposes.
13.4 It is hereby acknowledged that there are inherent uncertainties involved
in the registration of pharmaceutical products with the RHA's insofar as
obtaining approval is concerned and such uncertainties form part of the
business risk involved in undertaking the form of commercial
collaboration as set forth in this Agreement.
CLAUSE 14
MANUFACTURING
14.1 Subject to the provisions of Clause 14.2, HepaSense shall be responsible
for manufacturing, or having manufactured, all quantities of Products
required for the development and commercialization of Products for use
in the Field.
14.2 Elan shall, at its option, manufacture the System for HepaSense and meet
its requirements, on standard commercial terms negotiated in good faith
by
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HepaSense and Elan or to subcontract the manufacture and supply of the
System and HepaSense shall agree to utilize Elan as its sole supplier,
subject to the customary terms and conditions contained in a supply
agreement to be executed by the parties. Isis shall have the right to
manufacture and supply of the Designated Oligonucleotide with respect to
the Product, on standard commercial terms negotiated in good faith by
HepaSense and Isis or subcontract the manufacture and supply of the
Designated Oligonucleotide. In the event Elan or Isis subcontract such
manufacture and supply, the amount charged to HepaSense shall be [ * ].
Any such supply agreement shall be negotiated and agreed by the Parties
not later than the date of completion of Phase III (as such term is
commonly used in connection with FDA applications) of the R&D Plan.
CLAUSE 15
TECHNICAL SERVICES AND ASSISTANCE
15.1 Whenever commercially and technically feasible, HepaSense shall contract
with Isis or Elan, as the case may be, to perform such other services as
HepaSense may require, other than those specifically dealt with
hereunder or in the License Agreements. In determining which Party
should provide such services, the Management Committee shall take into
account the respective infrastructure, capabilities and experience of
Elan and Isis. There shall be no obligation upon either of Isis or Elan
to perform such services.
15.2 HepaSense shall, if the Participants so agree, conclude an
administrative support agreement with Elan and/or Isis on such terms as
the Parties thereto shall in good faith negotiate. The administrative
services shall include one or more of the following administrative
services as requested by HepaSense:
15.2.1 accounting, financial and other services;
15.2.2 tax services;
15.2.3 insurance services;
15.2.4 human resources services;
15.2.5 legal and company secretarial services;
15.2.6 patent and related intellectual property services; and
15.2.7 all such other services consistent with and of the same type as
those services to be provided pursuant to this Agreement, as may
be required.
*CONFIDENTIAL TREATMENT REQUESTED
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The foregoing list of services shall not be deemed exhaustive and may be
changed from time to time upon written request by HepaSense.
15.3 The Parties agree that each Party shall effect and maintain
comprehensive general liability insurance in respect of all clinical
trials and other activities performed by them on behalf of HepaSense.
The Participants and HepaSense shall ensure that the industry standard
insurance policies shall be in place for all activities to be carried
out by HepaSense.
15.4 If Elan or Isis so requires, Isis or Elan, as the case may be, shall
receive, at times and for periods mutually acceptable to the Parties,
employees of the other Party (such employees to be acceptable to the
receiving Party in the matter of qualification and competence) for
instruction in respect of the Elan Intellectual Property or the Isis
Intellectual Property, as the case may be, as necessary to further the
Project.
15.5 The employees received by Elan or Isis, as the case may be, shall be
subject to obligations of confidentiality no less stringent than those
set out in Clause 20 and such employees shall observe the rules,
regulations and systems adopted by the Party receiving the said
employees for its own employees or visitors.
CLAUSE 16
AUDITORS, BANKERS, REGISTERED OFFICE,
ACCOUNTING REFERENCE DATE; SECRETARY; COUNSEL
Unless otherwise agreed by the Participants and save as may be provided to the
contrary herein:
16.1 the auditors of HepaSense shall be KMPG Peat Marwick of Vallis Building,
Hamilton, Bermuda;
16.2 the bankers of HepaSense shall be Bank of Bermuda or such other bank as
may be mutually agreed from time to time;
16.3 the accounting reference date of HepaSense shall be December 31st in
each Financial Year; and
16.4 the secretary of HepaSense shall be I.S. Outerbridge or such other
Person as may be appointed by the Directors from time to time.
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CLAUSE 17
TRANSFERS OF SHARES;
RIGHT OF FIRST OFFER; TAG ALONG RIGHTS
GENERAL:
17.1 No Shareholder shall, directly or indirectly, sell or otherwise transfer
(each, a "TRANSFER") any Shares held by it except as expressly permitted
by and in accordance with the terms of this Agreement. HepaSense shall
not, and shall not permit any transfer agent or registrar for any Shares
to, transfer upon the books of HepaSense any Shares from any Shareholder
to any transferee, in any manner, except in accordance with this
Agreement, and any purported transfer not in compliance with this
Agreement shall be void.
During the Research and Development Term, no Shareholder shall, directly
or indirectly, sell or otherwise Transfer any of its legal and/or
beneficial interest in the Shares held by it to any other Person. After
completion of the Research and Development Term, a Shareholder may
Transfer Shares provided such Shareholder complies with the provisions
of Clauses 17.2 and 17.3.
Notwithstanding anything contained herein to the contrary, at all times,
EIS and/or Isis shall have the right to Transfer any Shares to their
Affiliates provided, however, that such assignment does not result in
adverse tax consequences for any other Parties. EIS shall have the right
to Transfer any Shares to a special purpose financing or similar entity
established by Elan or EIS; provided, that such Affiliates or other
Permitted Transferee to which such legal and/or beneficial interest in
the Shares have been transferred shall agree to be expressly subject to
and bound by all the limitations and provisions which are embodied in
this Agreement.
17.2 No Shareholder shall, except with the prior written consent of the other
Shareholder, create or permit to subsist any Encumbrance over or in, all
or any of the Shares held by it (other than by a Transfer of such Shares
in accordance with the provisions of this Agreement).
17.3 RIGHTS OF FIRST OFFER:
If at any time after the end of the Research and Development Term a
Shareholder shall desire to Transfer any Shares owned by it (a "SELLING
SHAREHOLDER"), in any transaction or series of related transactions
(other than a Transfer to an Affiliate or subsidiary or in the case of
EIS to a special purpose financing or similar entity established by
EIS), then such Selling Shareholder shall deliver prior written notice
of its desire to Transfer (a "NOTICE OF INTENTION") (i) to HepaSense and
(ii) to the Shareholders who are not the Selling Shareholder (and any
transferee thereof permitted hereunder, if any), as applicable, setting
forth such Selling Shareholder's desire to make such Transfer, the
number of Shares proposed to be
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transferred (the "OFFERED SHARES") and the proposed form of transaction
(the "TRANSACTION PROPOSAL"), together with any available documentation
relating thereto, if any, and the price at which such Selling
Shareholder proposes to Transfer the Offered Shares (the "OFFER PRICE").
The "Right of First Offer" provided for in this Clause 16 shall be
subject to any "Tag Along Right" benefiting a Shareholder which may be
provided for by Clause 16, subject to the exceptions set forth therein.
Upon receipt of the Notice of Intention, the Shareholders who are not
the Selling Shareholder shall have the right to purchase at the Offer
Price the Offered Shares, exercisable by the delivery of notice to the
Selling Shareholder (the "NOTICE OF EXERCISE"), with a copy to
HepaSense, within 10 business days from the date of receipt of the
Notice of Intention. If no such Notice of Exercise has been delivered by
the Shareholders who are not the Selling Shareholder within such
10-business day period, or such Notice of Exercise does not relate to
all of the Offered Shares covered by the Notice of Intention, then the
Selling Shareholder shall be entitled to Transfer all of the Offered
Shares to the intended transferee. In the event that all of the Offered
Shares are not purchased by the non-selling Shareholders, the Selling
Shareholder shall sell the available Offered Shares within 30 days after
the delivery of such Notice of Intention on terms no more favorable to a
third party than those presented to the non-selling Shareholders. If
such sale does not occur, the Offered Shares shall again be subject to
the Right of First Offer set forth in Clause 17.3.
In the event that any of the Shareholders who are not the Selling
Shareholder exercises their right to purchase all of the Offered Shares
(in accordance with this Clause 16), then the Selling Shareholder shall
sell all of the Offered Shares to such Shareholder(s), in the amounts
set forth in the Notice of Intention, after not less than 10 business
days and not more than 25 business days from the date of the delivery of
the Notice of Exercise. In the event that more than one of the
Shareholders who are not the Selling Shareholders wish to purchase the
Offered Shares, the Offered Shares shall be allocated to such
Shareholders on the basis of their pro rata equity interests in
HepaSense.
The rights and obligations of each of the Shareholders pursuant to the
Right of First Offer provided herein shall terminate upon the date that
the Common Shares are registered under Section 12(b) or 12(g) of the
Exchange Act.
At the closing of the purchase of all of the Offered Shares by the
Shareholders who are not the Selling Shareholder (scheduled in
accordance with Clause 16), the Selling Shareholder shall deliver
certificates evidencing the Offered Shares being sold, duly endorsed, or
accompanied by written instruments of transfer in form reasonably
satisfactory to the Shareholders who are not the Selling Shareholder,
duly executed by the Selling Shareholder, free and clear of any adverse
claims, against payment of the purchase price therefor in cash, and such
other customary documents as shall be necessary in connection therewith.
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Notwithstanding any other provision of this Clause 17.3, a Change in
Control of any Stockholder shall not trigger a "Right of First Offer" in
favor of any other Stockholder.
17.4 TAG ALONG RIGHTS:
Subject to Clause 17.3, a Shareholder (the "TRANSFERRING SHAREHOLDER")
shall not Transfer (either directly or indirectly), in any one
transaction or series of related transactions, to any Person or group of
Persons, any Shares, unless the terms and conditions of such Transfer
shall include an offer to the other Shareholders (the "REMAINING
SHAREHOLDERS"), to sell Shares at the same price and on the same terms
and conditions as the Transferring Shareholder has agreed to sell its
Shares (the "TAG ALONG RIGHT").
In the event a Transferring Shareholder proposes to Transfer any Shares
in a transaction subject to this Clause 16.4, it shall notify, or cause
to be notified, the Remaining Shareholders in writing of each such
proposed Transfer. Such notice shall set forth: (i) the name of the
transferee and the amount of Shares proposed to be transferred, (ii) the
proposed amount and form of consideration and terms and conditions of
payment offered by the transferee (the "TRANSFEREE TERMS") and (iii)
that the transferee has been informed of the Tag Along Right provided
for in this Clause 16, if such right is applicable, and the total number
of Shares the transferee has agreed to purchase from the Shareholders in
accordance with the terms hereof.
The Tag Along Right may be exercised by each of the Remaining
Shareholders by delivery of a written notice to the Transferring
Shareholder (the "CO-SALE NOTICE") within 10 business days following
receipt of the notice specified in the preceding subsection. The Co-sale
Notice shall state the number of Shares owned by such Remaining
Shareholder which the Remaining Shareholder wishes to include in such
Transfer; provided, however, that without the written consent of the
Transferring Shareholder, the amount of such securities belonging to the
Remaining Shareholder included in such Transfer may not be greater than
such Remaining Shareholder's percentage beneficial ownership of Fully
Diluted Common Shares multiplied by the total number of Fully Diluted
Common Shares to be sold by both the Transferring Shareholder and all
Remaining Shareholders. Upon receipt of a Co-sale Notice, the
Transferring Shareholder shall be obligated to transfer at least the
entire number of Shares set forth in the Co-sale Notice to the
transferee on the Transferee Terms; provided, however, that the
Transferring Shareholder shall not consummate the purchase and sale of
any Shares hereunder if the transferee does not purchase all such Shares
specified in all Co-sale Notices. If no Co-sale Notice has been
delivered to the Transferring Shareholder prior to the expiration of the
10 business day period referred to above and if the provisions of this
Section have been complied with in all respects, the Transferring
Shareholder shall have the right for a 45 day calendar day period to
Transfer
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Shares to the transferee on the Transferee Terms without further notice
to any other party, but after such 45-day period, no such Transfer may
be made without again giving notice to the Remaining Shareholders of the
proposed Transfer and complying with the requirements of this Clause 17.
At the closing of any Transfer of Shares subject to this Clause 17, the
Transferring Shareholder, and the Remaining Shareholder, in the event
such Tag Along Right is exercised, shall deliver certificates evidencing
such securities as have been Transferred by each, duly endorsed, or
accompanied by written instruments of transfer in form reasonably
satisfactory to the transferee, free and clear of any adverse claim,
against payment of the purchase price therefor.
Notwithstanding the foregoing, this Clause 17 shall not apply to any
sale of Common Shares pursuant to an effective registration statement
under the Securities Act in a bona fide public offering.
The rights and obligations of each of the Stockholders pursuant to the
"Tag Along Right" provided herein shall terminate upon the date that the
Common Shares are registered under Section 12(b) or 12(g) of the
Exchange Act.
Notwithstanding any other provision of this Clause 17.4, a Change in
Control of any Stockholder shall not trigger a "Tag Along Right" in
favor of any other Stockholder.
CLAUSE 18
MATTERS REQUIRING STOCKHOLDERS' APPROVAL
18.1 In consideration of Isis and Elan agreeing to enter into the License
Agreements, the Parties hereby agree that HepaSense shall not without
the prior approval of the EIS Director and the Isis Employee Directors:
18.1.1. make a material determination outside the ordinary course of
business, including, among other things, acquisitions or
dispositions of intellectual property and licenses or
sublicenses, change the domicile of, HepaSense from or
discontinue jurisdiction HepaSense out of Bermuda, changes in
the Business or the HepaSense budget as they relate to the
Licensed Technologies; enter into joint ventures and similar
arrangements as they relate to the Licensed Technologies and
changes to the Business Plan as they relate to the Licensed
Technologies;
18.1.2. issue any unissued Preferred Shares or unissued Common Shares,
or create or issue any new shares (including a split of the
Shares) or Common Shares Equivalents, except as expressly
permitted by the HepaSense Memorandum of Association or
Bye-Laws;
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18.1.3. alter any rights attaching to any class of share in the capital
of HepaSense or alter the HepaSense Memorandum of Association or
Bye-Laws;
18.1.4. consolidate, sub-divide or convert any of HepaSense's share
capital or in any way alter the rights attaching thereto;
18.1.5. dispose of all or substantially all of the assets of HepaSense;
18.1.6. do or permit or suffer to be done any act or thing whereby
HepaSense may be wound up (whether voluntarily or compulsorily),
save as otherwise expressly provided for in this Agreement;
18.1.7. enter into any contract or transaction except in the ordinary
and proper course of the Business on arm's length terms;
18.1.8. subject to Clause 24.13, assign, license or sub-license any of
the Elan Intellectual Property, Isis Intellectual Property or
HepaSense Intellectual Property;
18.1.9. amend or vary the terms of the Isis License Agreement or the
Elan License Agreement;
18.1.10. permit a person other than HepaSense to own a regulatory
approval relating to the Product(s);
18.1.11. amend or vary the Business Plan or the HepaSense budget as they
relate to the Licensed Technologies;
18.1.12. alter the number of Directors;
18.1.13. register any Shares of the Company for public trading with any
governmental authority for public trading in any securities
market; and
18.1.14. declare or pay any dividend or make any distribution, directly
or indirectly, with respect to its capital stock; or issue,
sell, exchange, deliver, redeem, purchase or otherwise acquire
or dispose of any shares of its capital stock or other
securities.
CLAUSE 19
DISPUTES
19.1 Should any dispute or difference arise between Elan and Isis, or between
Elan or Isis and HepaSense, during the period that this Agreement is in
force, other than a dispute or difference relating to (i) the
interpretation of any provision of this
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Agreement, (ii) the interpretation or application of law, or (iii) the
ownership of any intellectual property, then any Party may forthwith
give notice to the other Parties that it wishes such dispute or
difference to be referred to the Chief Executive Officer of Isis and the
President of EPT.
19.2 In any event of a notice being served in accordance with Clause 19.1,
each of the Participants shall within 14 days of the service of such
notice prepare and circulate to the designated senior officer of each of
Elan and Isis a memorandum or other form of statement setting out its
position on the matter in dispute and its reasons for adopting that
position. Each memorandum or statement shall be considered by the
designated senior officers of each of Elan and Isis who shall endeavour
to resolve the dispute. If designated senior officers of each of Elan
and Isis agree upon a resolution or disposition of the matter, they
shall each sign a statement which sets out the terms of their agreement.
The Participants agree that they shall exercise the voting rights and
other powers available to them in relation to HepaSense to procure that
the agreed terms are fully and promptly carried into effect.
CLAUSE 20
TERMINATION/CERTAIN CHANGES OF CONTROL
20.1 This Agreement shall govern the operation and existence of HepaSense
until
20.1.1 terminated by written agreement of all Parties hereto; or
20.1.2 otherwise terminated in accordance with this Clause 20.
20.2 For the purpose of this Clause 20, a "RELEVANT EVENT" is committed or
suffered by a Participant if:
20.2.1 it commits a breach of its material obligations under this
Agreement or the applicable License Agreement and fails to
remedy it within 60 days of being specifically required in
writing to do so by the other Participant; provided, however,
that if the breaching Participant has proposed a course of
action to rectify the breach and is acting in good faith to
rectify same but has not cured the breach by the 60th day, such
period shall be extended by such period as is reasonably
necessary to permit the breach to be rectified; or
20.2.2 a distress, execution, sequestration or other process is levied
or enforced upon or sued out against a material part of its
property which is not discharged or challenged within 30 days;
or
20.2.3 it is unable to pay its debts in the normal course of business;
or
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20.2.4 it ceases wholly or substantially to carry on its business,
otherwise than for the purpose of a reconstruction or
amalgamation, without the prior written consent of the other
Participant (such consent not to be unreasonably withheld); or
20.2.5 the appointment of a liquidator, receiver, administrator,
examiner, trustee or similar officer of such Participant or over
all or substantially all of its assets under the law of any
applicable jurisdiction, including without limitation, the
United States of America, Bermuda or Ireland; or
20.2.6 an application or petition for bankruptcy, corporate
re-organization, composition, administration, examination,
arrangement or any other procedure similar to any of the
foregoing under the law of any applicable jurisdiction,
including without limitation, the United States of America,
Bermuda or Ireland, is filed, and is not discharged within 60
days, or a Participant applies for or consents to the
appointment of a receiver, administrator, examiner or similar
officer of it or of all or a material part of its assets, rights
or revenues or the assets and/or the business of a Participant
are for any reason seized, confiscated or condemned.
20.4 If either Participant commits a Relevant Event, the other Shareholder
shall have in addition to all other legal and equitable rights and
remedies hereunder, the right to terminate this Agreement upon 30 days'
written notice.
20.5 In the event of a termination of the Elan License Agreement and/or the
Isis License Agreement, both parties will negotiate in good faith to
determine whether this Agreement should be terminated and if so, which
provisions should survive termination.
20.6 The provisions of Clauses 1.1, 3, 5.1, 9, 10, 11.11, 11.12,12.3, 13.3,
18, 19, 20, 22, 23 and 24 shall survive the termination of this
Agreement under Clause 20.5 or by mutual consent pursuant to Clause 20.1
in accordance with their terms; all other terms and provisions of this
Agreement shall cease to have effect and be null and void upon the
termination of this Agreement under Clause 20.5 or by mutual consent
pursuant to Clause 20.1; provided, however, that so long as the License
Agreements remain in effect Clauses 11.1 through 11.10 shall also
survive.
20.7 [ * * ].
*CONFIDENTIAL TREATMENT REQUESTED
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20.8 In the event that [ * ] pursuant to Clause 20.7 above, the Participants
shall jointly select a nationally recognised investment banking firm as
arbitrator to make such determination. In the event the Participants do
not agree upon the selection of such investment banking firm, Elan may
contact the presiding justice of the Supreme Court of the State of New
York sitting in the City, County, and State of New York (the "PRESIDING
JUSTICE") and request that an independent US-based nationally recognised
investment banking firm which is knowledgeable of the
pharmaceutical/biotechnology industry be appointed within 10 Business
Days. The Presiding Justice shall endeavor to select an investment
banking firm as arbitrator which is technically knowledgeable in the
pharmaceutical/biotechnology industry (and which directly and through
its Affiliates, has no business relationship with, or shareholding in,
either of the Participants). Promptly upon being notified of the
arbitrator's appointment, the Participants shall submit to the
arbitrator details of their assessment of the [ * ] together with such
information as they think necessary to validate their assessment. The
arbitrator shall notify Isis of the fair market value assessed by Elan
(the "ELAN VALUATION") and shall notify Elan of the fair market value
assessed by Isis (the "ISIS VALUATION"). The Participants shall then be
entitled to make further submissions to the arbitrator within five
Business Days explaining [ * ], as the case may be, are unjustified. The
arbitrator shall thereafter meet with Isis and Elan and shall thereafter
choose either the [ * ] on the basis of [ * ]. The arbitrator shall use
its best efforts to determine [ * ] within 30 Business Days of his
appointment. The Participants shall bear the costs of the arbitrator
equally provided that the arbitrator may, in its discretion, allocate
all or a portion of such costs to one Party. Any decision of the
arbitrator shall be final and binding.
20.9 Elan shall purchase the Shares beneficially owned by Isis by delivery of
the Purchase Price in cash no later than the 15th Business Day following
determination of the Purchase Price by the arbitrator.
20.10 The Shares so transferred shall be sold by Isis with effect from the
date of such transfer free from any lien, charge or encumbrance, but
with all rights and restrictions attaching thereto.
20.11 If Elan exercises the Buyout Option pursuant to Clause 20.7, above,
HepaSense shall continue to develop Isis Products on terms which are
substantially the same as those which would be provided to an third
party negotiating on an arm's length basis.
*CONFIDENTIAL TREATMENT REQUESTED
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20.12 If Elan exercises the Buyout Option pursuant to Clause 20.7, above, both
parties will negotiate in good faith to agree to additional reasonable
provisions and/or amendments to the License Agreements to protect the
intellectual property rights of the Participants.
20.13 If Elan exercises the Buyout Option pursuant to Clause 20.7, above, the
provisions of Clauses 1, 3, 10.2.6, 11.2 through 11.12, 12.3, 20.11,
20.12, 20.13, 22, 23 and 24 shall survive the termination of this
Agreement under this Clause 20.13; all other terms and provisions of
this Agreement shall cease to have effect and be null and void.
CLAUSE 21
SHARE RIGHTS
21.1 The provisions regulating the rights and obligations attaching to the
Common Shares and the Preferred Shares are set out in the HepaSense
Bye-Laws.
CLAUSE 22
CONFIDENTIALITY
22.1 The Parties and/or HepaSense acknowledge and agree that it may be
necessary, from time to time, to disclose to each other confidential
and/or proprietary information, including without limitation,
inventions, works of authorship, trade secrets, specifications, designs,
data, know-how and other information, relating to the Field, the
Products, present or future products, the HepaSense Intellectual
Property, the Elan Intellectual Property or the Isis Intellectual
Property, as the case may be, methods, compounds, research projects,
work in process, services, sales suppliers, customers, employees and/or
business of the disclosing Party, whether in oral, written, graphic or
electronic form (collectively "CONFIDENTIAL INFORMATION").
22.2 Any Confidential Information revealed by a Party to another Party shall
be maintained as confidential and shall be used by the receiving Party
exclusively for the purposes of fulfilling the receiving Party's rights
and obligations under this Agreement, and for no other purpose.
Confidential Information shall not include:
22.2.1 information that is generally available to the public;
22.2.2 information that is made public by the disclosing Party;
22.2.3 information that is independently developed by the receiving
Party, as evidenced by such Party's records, without the aid,
application or use of the disclosing Party's Confidential
Information;
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22.2.4 information that is published or otherwise becomes part of the
public domain without any disclosure by the receiving Party, or
on the part of the receiving Party's directors, officers,
agents, representatives or employees;
22.2.5 information that becomes available to the receiving Party on a
non-confidential basis, whether directly or indirectly, from a
source other than the disclosing Party, which source did not
acquire this information on a confidential basis; or
22.2.6 information which the receiving Party is required to disclose
pursuant to:
(i) a valid order of a court or other governmental body or
any political subdivision thereof or as otherwise
required by law, rule or regulation; or
(ii) other requirement of law;
provided, however, that if the receiving Party becomes legally
required to disclose any Confidential Information, the receiving
Party shall give the disclosing Party prompt notice of such fact
so that the disclosing Party may obtain a protective order or
confidential treatment or other appropriate remedy concerning
any such disclosure. The receiving Party shall fully co-operate
with the disclosing Party in connection with the disclosing
Party's efforts to obtain any such order or other remedy. If any
such order or other remedy does not fully preclude disclosure,
the receiving Party shall make such disclosure only to the
extent that such disclosure is legally required; or
22.2.7 information which was already in the possession of the receiving
Party at the time of receiving such information, as evidenced by
its records, provided such information was not previously
provided to the receiving party from a source which was under an
obligation to keep such information confidential; or
22.2.8 information that is the subject of a written permission to
disclose, without restriction or limitation, by the disclosing
Party.
22.3 Each Party agrees to disclose Confidential Information of another Party
only to those employees, representatives and agents requiring knowledge
thereof in connection with their duties directly related to the
fulfilling of the Party's obligations under this Agreement, so long as
such persons are under an obligation of confidentiality no less
stringent than as set forth herein. Each Party further agrees to inform
all such employees, representatives and agents of the terms and
provisions of this Clause and their duties hereunder and to obtain their
consent hereto as a condition of receiving Confidential Information.
Each Party agrees
42
<PAGE> 43
that it will exercise the same degree of care and protection to preserve
the proprietary and confidential nature of the Confidential Information
disclosed by a Party, as the receiving Party would exercise to preserve
its own Confidential Information. Each Party agrees that it will, upon
request of another Party, return all documents and any copies thereof
containing Confidential Information belonging to or disclosed by such
other Party. Each Party shall promptly notify the other Parties upon
discovery of any unauthorized use or disclosure of the other Parties'
Confidential Information.
22.4 Notwithstanding the above, each Party may use or disclose Confidential
Information disclosed to it by another Party to the extent such use or
disclosure is reasonably necessary in filing or prosecuting patent
applications, prosecuting or defending litigation, complying with patent
applications, prosecuting or defending litigation, complying with
applicable governmental regulations or otherwise submitting information
to tax or other governmental authorities, conducting clinical trials, or
granting a permitted sub-license or otherwise exercising its rights
hereunder; provided, that if a Party is required to make any such
disclosure of the other Party's Confidential Information, other than
pursuant to a confidentiality agreement, such Party shall inform the
third party recipient of the terms and provisions of this Agreement and
their duties hereunder and shall obtain their consent hereto as a
condition of releasing to the third party recipient the Confidential
Information.
22.5 Any breach of this Clause 22 by any employee, representative or agent of
a Party is considered a breach by the Party itself.
22.6 The provisions relating to confidentiality in this Clause 22 shall
remain in effect during the Term and for a period of seven years
following the termination of this Agreement.
22.7 The Parties agree that the obligations of this Clause 22 are necessary
and reasonable in order to protect the Parties' respective businesses,
and each Party expressly agrees that monetary damages would be
inadequate to compensate a Party for any breach by the other Party of
its covenants and agreements set forth herein. Accordingly, the Parties
agree and acknowledge that any such violation or threatened violation
will cause irreparable injury to a Party and that, in addition to any
other remedies that may be available, in law or in equity or otherwise,
any Party shall be entitled to obtain injunctive relief against the
threatened breach of the provisions of this Clause 22, or a continuation
of any such breach by the other Party, specific performance and other
equitable relief to redress such breach together with its damages and
reasonable counsel fees and expenses to enforce its rights hereunder,
without the necessity of proving actual or express damages.
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CLAUSE 23
COSTS
23.1 Each Shareholder shall bear its own legal and other costs incurred in
relation to preparing and concluding this Agreement and the Definitive
Documents.
23.2 All other costs, legal fees, registration fees and other expenses
relating to the transactions contemplated hereby, including the costs
and expenses incurred in relation to the incorporation of HepaSense,
shall be borne by HepaSense.
CLAUSE 24
GENERAL
24.1 GOOD FAITH:
Each of the Parties hereto undertakes with the others to do all things
reasonably within its power that are necessary or desirable to give
effect to the spirit and intent of this Agreement.
24.2 FURTHER ASSURANCE:
At the request of any of the Parties, the other Party or Parties shall
(and shall use reasonable efforts to procure that any other necessary
parties shall) execute and perform all such documents, acts and things
as may reasonably be required subsequent to the signing of this
Agreement for assuring to or vesting in the requesting Party the full
benefit of the terms hereof.
24.3 NO REPRESENTATION:
Each of the Parties hereto hereby acknowledges that in entering into
this Agreement it has not relied on any representation or warranty
except as expressly set forth herein or in any document referred to
herein.
24.4 FORCE MAJEURE:
Neither Party to this Agreement shall be liable for delay in the
performance of any of its obligations hereunder if such delay is caused
by or results from causes beyond its reasonable control, including
without limitation, acts of God, fires, strikes, acts of war (whether
war be declared or not), insurrections, riots, civil commotions,
strikes, lockouts or other labor disturbances or intervention of any
relevant government authority, but any such delay or failure shall be
remedied by such Party as soon as practicable.
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<PAGE> 45
24.5 RELATIONSHIP OF THE PARTIES:
Nothing contained in this Agreement is intended or is to be construed to
constitute Elan/EIS and Isis as partners, or Elan/EIS as an employee or
agent of Isis, or Isis as an employee or agent of Elan/EIS.
No Party hereto shall have any express or implied right or authority to
assume or create any obligations on behalf of or in the name of another
Party or to bind another Party to any contract, agreement or undertaking
with any third party.
24.6 COUNTERPARTS:
This Agreement may be executed in any number of counterparts, each of
which when so executed shall be deemed to be an original and all of
which when taken together shall constitute this Agreement.
24.7 NOTICES:
Any notice to be given under this Agreement shall be sent in writing by
registered or recorded delivery post or reputable overnight courier such
as Federal Express or telecopied to:
Elan at:
Lincoln House, Lincoln Place, Dublin 2, Ireland
Attention: Vice President & General Counsel
Elan Pharmaceutical Technologies,
a division of Elan Corporation, plc
Telephone: 353-1-709-4000
Fax: 353-1-709-4124
and
Elan International Services, Ltd.
102 St. James Court
Flatts, Smiths FL04
Bermuda
Attention: President
Telephone: 441-292-9169
Fax: 441-292-2224
45
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Isis at:
2292 Faraday Avenue
Carlsbad, CA 92008
Attention: B. Lynne Parshall, Esq.
Telephone: 760-603-2460
Fax: 760-931-9639
HepaSense Ltd. at:
102 St. James Court
Clarendon House
Church St.
Hamilton, Bermuda
Attention: Secretary
Telephone: 441-295-1422
Fax: 441-292-4720
or to such other address(es) as may from time to time be notified by any
Party to the others hereunder. A copy of any notice served by a
Participant on HepaSense shall also be delivered to the other
Participant.
Any notice sent by mail shall be deemed to have been delivered within
three Business Days after dispatch or delivery to the relevant courier
and any notice sent by telecopy shall be deemed to have been delivered
upon confirmation of receipt. Notices of change of address shall be
effective upon receipt. Notices by telecopy shall also be sent by
another method permitted hereunder.
24.8 GOVERNING LAW; ARBITRATION
24.8.1 This Agreement shall be governed by and construed in accordance
with the laws of the State of New York.
24.8.2 Any dispute under this Agreement or the other Transaction
Documents which is not settled by mutual consent (whether
pursuant to the provisions in Clause 19 hereof or otherwise)
shall be finally settled by binding arbitration, conducted in
accordance with the Commercial Arbitration Rules of the American
Arbitration Association by one (1) arbitrator appointed in
accordance with said rules. Such arbitrator shall be reasonably
satisfactory to each of the Parties; provided, that if the
Parties are unable to agree upon the identity of such arbitrator
within 15 days of demand by either Party, then either Party
shall have the right to petition the Presiding Justice to
appoint an arbitrator.
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<PAGE> 47
The arbitration shall be held in New York, New York and the arbitrator
shall be an independent expert in pharmaceutical product development and
marketing (including clinical development and regulatory affairs).
The arbitrator shall determine what discovery will be permitted,
consistent with the goal of limiting the cost and time which the Parties
must expend for discovery; provided the arbitrator shall permit such
discovery as they deem necessary to permit an equitable resolution of
the dispute.
Any written evidence originally in a language other than English shall
be submitted in English translation accompanied by the original or a
true copy thereof.
The costs of the arbitration, including administrative and arbitrators'
fees, shall be shared equally by the Parties and each Party shall bear
its own costs and attorneys' and witness' fees incurred in connection
with the arbitration.
In rendering judgement, the arbitrator shall be instructed by the
Parties that he shall be permitted to select solely from between the
proposals for resolution of the relevant issue presented by each Party,
and not any other proposal.
A disputed performance or suspended performances pending the resolution
of the arbitration must be completed within thirty (30) days following
the final decision of the arbitrators or such other reasonable period as
the arbitrators determine in a written opinion.
Any arbitration under the Transaction Documents shall be completed
within one year from the filing of notice of a request for such
arbitration.
The arbitration proceedings and the decision shall not be made public
without the joint consent of the Parties and each Party shall maintain
the confidentiality of such proceedings and decision unless otherwise
permitted by the other Party.
The Parties agree that the decision shall be the sole, exclusive and
binding remedy between them regarding any and all disputes,
controversies, claims and counterclaims presented to the arbitrators.
Application may be made to any court having jurisdiction over the Party
(or its assets) against whom the decision is rendered for a judicial
recognition of the decision and an order of enforcement.
24.9 SEVERABILITY:
If any provision in this Agreement is agreed by the Parties to be,
deemed to be or becomes invalid, illegal, void or unenforceable under
any law that is applicable hereto, such provision will be deemed amended
to conform to applicable laws so as to be valid and enforceable or, if
it cannot be so amended without materially altering the intention of the
Parties, it will be deleted, with effect from the date of
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<PAGE> 48
such agreement or such earlier date as the Parties may agree, and the
validity, legality and enforceability of the remaining provisions of
this Agreement shall not be impaired or affected in any way.
24.10 AMENDMENTS:
No amendment, modification or addition hereto shall be effective or
binding on any Party unless set forth in writing and executed by a duly
authorized representative of all Parties.
24.11 WAIVER:
No waiver of any right under this Agreement shall be deemed effective
unless contained in a written document signed by the Party charged with
such waiver, and no waiver of any breach or failure to perform shall be
deemed to be a waiver of any future breach or failure to perform or of
any other right arising under this Agreement.
24.12 ASSIGNMENT:
None of the Parties shall be permitted to assign its rights or
obligations hereunder without the prior written consent of the other
Parties except as follows:
24.12.1 Elan, EIS and/or Isis shall have the right to assign their
rights and obligations hereunder to their Affiliates provided,
however, that such assignment does not result in adverse tax
consequences for any other Parties.
24.12.2 Elan and EIS shall have the right to assign their rights and
obligations hereunder to a special purpose financing or similar
entity established by Elan or EIS.
24.13 ASSIGNMENT OF HEPASENSE INTELLECTUAL PROPERTY:
Upon one month's prior notice in writing from Elan to HepaSense and
Isis, HepaSense shall assign the HepaSense Intellectual Property from
HepaSense to a wholly-owned subsidiary of HepaSense to be incorporated
in Ireland, which company shall be newly incorporated by Elan to
facilitate such assignment.
24.14 WHOLE AGREEMENT/NO EFFECT ON OTHER AGREEMENTS:
This Agreement (including the Schedules attached hereto) and the
Definitive Documents set forth all of the agreements and understandings
between the Parties with respect to the subject matter hereof, and
supersedes and terminates all prior agreements and understandings
between the Parties with respect to the subject matter hereof. There are
no agreements or understandings with respect to the
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subject matter hereof, either oral or written, between the Parties other
than as set forth in this Agreement and the Definitive Documents.
In the event of any ambiguity or conflict arising between the terms of
this Agreement and those of the HepaSense Bye-Laws, except with respect
to the rights and obligations attaching to the Common Shares and the
Preferred Shares in which respect the HepaSense Bye-Laws shall prevail,
the terms of this Agreement.
No provision of this Agreement shall be construed so as to negate,
modify or affect in any way the provisions of any other agreement
between any of the Parties unless specifically referred to, and solely
to the extent provided herein. In the event of a conflict between the
provisions of this Agreement and the provisions of the License
Agreements, the terms of this Agreement shall prevail unless this
Agreement specifically provide otherwise.
24.15 SUCCESSORS:
This Agreement shall be binding upon and inure to the benefit of the
Parties hereto, their successors and permitted assigns.
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<PAGE> 50
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on the day
first set forth above.
SIGNED
BY:
-------------------------------------
for and on behalf of
ELAN CORPORATION, PLC
in the presence of:
-------------------------------------
SIGNED
BY:
-------------------------------------
for and on behalf of
ELAN INTERNATIONAL SERVICES, LTD.
in the presence of:
-------------------------------------
SIGNED
BY:
-------------------------------------
for and on behalf of
ELAN PHARMA INTERNATIONAL LIMITED
in the presence of:
-------------------------------------
SIGNED
BY:
-------------------------------------
for and on behalf of
ISIS PHARMACEUTICALS, INC.
in the presence of:
-------------------------------------
SIGNED
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<PAGE> 51
BY:
-------------------------------------
for and on behalf of
HEPASENSE LTD.
in the presence of:
-------------------------------------
51
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SCHEDULE 1
ELAN LICENSE AGREEMENT
52
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SCHEDULE 2
ISIS LICENSE AGREEMENT
53
<PAGE> 54
SCHEDULE 3
SUBSCRIPTIONS
ISIS 6,001 Common Shares
3,612 Preferred Shares
EIS 2,388 Preferred Shares
54
<PAGE> 1
EXHIBIT 10.2
TEXT OMITTED AND FILED SEPARATELY
"CONFIDENTIAL TREATMENT REQUESTED
UNDER 17 C.F.R. SECTIONS 200.80(B)(4),
200.83 AND 240.24b-2."
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated as of
January 14, 2000, between ISIS PHARMACEUTICALS, INC., a Delaware corporation
(the "Company"), and ELAN INTERNATIONAL SERVICES, LTD., a Bermuda exempted
limited liability company ("EIS") and a wholly-owned subsidiary of Elan
Corporation, plc, an Irish public limited company ("Elan").
R E C I T A L S:
A. The Company desires to issue and sell to EIS, and EIS desires
to purchase from the Company, (i) 12,015 shares of a newly-created series of the
Company's Preferred Stock, par value $.001 per share, designated "Series B
Convertible Exchangeable Preferred Stock" (the "Series B Preferred Stock"), (ii)
shares of the Company's Common Stock, par value $.001 per share (the "Common
Stock"), in amounts and at the times determined pursuant to Section 1(b)(ii) and
(iii) hereof (the "Common Shares" and together with all shares of the Series B
Preferred Stock, the "Shares"), and (iii) warrants to purchase shares of Common
Stock in amounts and at the times determined pursuant to Section 1(b)(ii) and
(iii) hereof (the "Warrants"). In addition, EIS has agreed to lend certain funds
to the Company pursuant to a convertible promissory note in the form attached
hereto as Exhibit A (as may be amended at any time, the "Note" and, together
with the Series B Preferred Stock, the Common Shares, and the Warrants, the
"Securities"), with a maximum aggregate principal amount of U.S.$12,015,000,
amounts in respect of which shall be disbursed in accordance with its terms and
subject to the conditions contained herein and therein and in the Funding
Agreement. The rights, preferences and privileges of the Series B Preferred
Stock are as set forth in the Certificate of Designation of the Series B
Convertible Preferred Stock, (the "Certificate of Designation"), the form of
which is attached hereto as Exhibit B.
B. The Company and EIS have formed HepaSense Ltd., a Bermuda
exempted limited liability company ("HepaSense"), and pursuant to the terms of a
Subscription, Joint Development and Operating Agreement, dated as of the date
hereof (as may be amended at any time, the "JDOA"), simultaneously with the
transactions contemplated by this Agreement, the Company shall acquire from
HepaSense, for an aggregate purchase price of $12,015,000, (i) 6,001 shares of
HepaSense's voting common stock, par value US$1.00 per share (the "HepaSense
Common Shares"), representing 100% of the outstanding shares of such class of
stock, and (ii) 3,612 shares of HepaSense's non-voting, convertible preferred
stock, par value US$1.00 per share (the "HepaSense Preferred Shares" and
together with the HepaSense Common Shares, the "HepaSense Capital Shares"),
representing 60.20% of the aggregate outstanding HepaSense Preferred Shares and,
on a fully diluted basis, 30.097% of the outstanding HepaSense Capital Shares.
EIS will acquire from HepaSense, for an aggregate purchase price of $2,985,000,
2,388 HepaSense Preferred Shares, representing 39.80% of the aggregate
outstanding HepaSense Preferred Shares and, on a fully diluted basis, 19.898% of
the outstanding HepaSense Capital Shares. Additionally, as of the date hereof,
HepaSense has entered into license agreements with (i) Elan and its subsidiary,
Elan Pharma International Limited (such agreement, as may be amended at any
time, the "Elan License
<PAGE> 2
Agreement"), and (ii) the Company (such agreement, as may be amended at any
time, the "Company License Agreement" and, together with the Elan License
Agreement, the "License Agreements").
C. The Company and EIS are executing and delivering on the date
hereof a Registration Rights Agreement, in the form attached hereto as Exhibit C
(as amended at any time, the "Company Registration Rights Agreement"), in
respect of the Common Stock issued or issuable upon (i) conversion of the Series
B Preferred Stock and/or the Note and exercise of the Warrants, and (ii) the
Common Shares to be issued and purchased hereunder, and any other Common Stock
issued to EIS or any of its affiliates or permitted transferees upon any stock
split, stock dividend, recapitalization or similar event affecting the
Securities. The Company, EIS and HepaSense are also executing and delivering on
the date hereof a Registration Rights Agreement in the form attached hereto as
Exhibit D (as amended at any time, the "HepaSense Registration Rights
Agreement"), in respect of the purchase of HepaSense Common Shares and HepaSense
Preferred Shares by the Company and EIS. Additionally, the Company and EIS are
executing and delivering on the date hereof a Funding Agreement in the form
attached hereto as Exhibit E (the "Funding Agreement;" and, together with this
Agreement, the Certificate of Designation, the JDOA, the Company Registration
Rights Agreement, the HepaSense Registration Rights Agreement, the License
Agreements and each other document or instrument executed and delivered in
connection with the transactions contemplated hereby and by the JDOA, the
"Transactions Documents").
A G R E E M E N T:
The parties hereto agree as follows:
SECTION 1. Closing.
(a) Time and Place. The closing of the transactions contemplated
hereby (the "Closing") shall occur on the date hereof (the "Closing Date"), at
the offices of Brock Silverstein LLC, 800 Third Avenue, 21st Floor, New York, NY
10022.
(b) Issuance of Securities.
(i) At the Closing, the Company shall issue and sell to
EIS, and EIS shall purchase from the Company, for an aggregate purchase
price of US$12,015,000 (the "Preferred Stock Purchase Price"), 12,015
shares of Series B Preferred Stock.
(ii) On the sixtieth (60th) trading day after the Closing
(the "First Subsequent Purchase Date"), the Company shall issue and sell
to EIS, and EIS shall purchase from the Company, for an aggregate
purchase price of US$7,500,000 ("First Common Stock Purchase Price"),
(A) the number of shares of Common Stock determined by dividing the
First Common Stock Purchase Price by [ * ] of the average closing price
of the Common Stock for the [ * ] trading days ending two days prior
such [ * ] trading day and (B) a Warrant to purchase a number of shares
of Common Stock equal to [ * ] of the aggregate number of shares of
Common Stock to be purchased by EIS pursuant to clause (ii)(A) above,
pursuant to a warrant certificate in the form attached hereto as Exhibit
F. The purchase by
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*CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 3
EIS of the securities to be issued on the First Subsequent Purchase Date
is conditioned upon EIS' obtaining requisite approval, if any, pursuant
to the Mergers and Takeover (Control) Act 1978-1996 (Ireland) (the
"Mergers Act").
(iii) On any day within 5 trading days after the receipt
by EIS from the Company of notification of the occurrence of the
Completion Date (the "Second Subsequent Purchase Date"), the Company
shall issue and sell to EIS, and EIS shall purchase from the Company,
for an aggregate purchase price of US$7,500,000 (the "Second Common
Stock Purchase Price"), (A) the number of shares of Common Stock
determined by dividing the Second Common Stock Purchase Price by [ * ]
of the average closing price of the Common Stock for the 60 trading days
ending two days prior to the Completion Date and (B) a Warrant to
purchase a number of shares of Common Stock equal to 5% of the aggregate
number of shares of Common Stock to be purchased by EIS pursuant to
clause (iii)(A) above, pursuant to a warrant certificate in the form
attached hereto as Exhibit G. "Completion Date" shall mean the date upon
which a nine month toxicity study, with results sufficient to support a
decision that ISIS 14803 has [ * ], has been completed. The purchase by
EIS of the securities to be issued on the Second Subsequent Purchase
Date is conditioned upon EIS' obtaining requisite approval, if any,
pursuant to the Mergers Act.
(c) Convertible Note Facility. EIS shall lend the Company up to
US$12,015,000, pursuant to the terms and conditions of the Note.
(d) Delivery.
(i) At the Closing:
(A) EIS shall pay the Preferred Stock Purchase
Price by wire transfer to an account designated by the Company and the
parties hereto shall execute and deliver to each other, as applicable:
(I) a certificate or certificates for the Series B Preferred Stock; (II)
the Note; (III) the Company Registration Rights Agreement; (IV) the
HepaSense Registration Rights Agreement; (V) the JDOA; (VI) the
Certificate of Designation, as filed with the Secretary of State of the
State of Delaware; (VII) the License Agreements; (VIII) the Funding
Agreement; (IX) a secretary certificate, in substantially the form of
Exhibit H attached hereto; and (X) any other documents or instruments
reasonably requested by a party hereto; and
(B) The Company shall cause to be delivered to EIS
an opinion of counsel in the form attached hereto as Exhibit I;
(C) There shall have been delivered to EIS and the
Company a legal opinion of Bermuda counsel to HepaSense with respect to
the due organization of HepaSense and the valid issuance by HepaSense of
shares of HepaSense Capital Shares to EIS and the Company.
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<PAGE> 4
(ii) On the First Subsequent Purchase Date, EIS shall pay
the First Common Stock Purchase Price by wire transfer to an account
designated by the Company and the parties hereto shall execute and
deliver to each other, as applicable: (A) a certificate or certificates
for the Common Stock to be purchased on the First Subsequent Purchase
Date, as determined pursuant to Section 1(b)(ii) hereof; (B) the Warrant
to be issued pursuant to Section 1(b)(ii) hereof; (C) a secretary
certificate of the Company, in substantially the form of Exhibit H; and
(D) any other documents or instruments reasonably requested by a party
hereto;
(iii) On the Second Subsequent Purchase Date, EIS shall
pay the Second Common Stock Purchase Price by wire transfer to an
account designated by the Company and the parties hereto shall execute
and deliver to each other, as applicable: (A) a certificate or
certificates for the Common Stock to be purchased on the Second
Subsequent Purchase Date, as determined pursuant to Section 1(b)(iii)
hereof; (B) the Warrant to be issued pursuant to Section 1(b)(iii)
hereof; (C) a secretary certificate of the Company, in substantially the
form of Exhibit H; and (D) any other documents or instruments reasonably
requested by a party hereto.
(e) Exemption from Registration. The Securities and any
underlying shares of Common Stock will be issued under an exemption or
exemptions from registration under the Securities Act of 1933, as amended (the
"Securities Act"). Accordingly, the certificates evidencing the Series B
Preferred Stock and the Common Shares, the Warrants, the Note and any shares of
Common Stock or other securities issuable upon the exercise, conversion or
exchange of any of the Securities shall, upon issuance, contain legends,
substantially in the forms as follows:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT UNDER ANY
CIRCUMSTANCES BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF
WITHOUT AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND ANY APPLICABLE
STATE SECURITIES LAWS OR AN OPINION OF COUNSEL SATISFACTORY TO
THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER SUCH ACT OR
APPLICABLE STATE SECURITIES LAWS.
THE TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS
ALSO SUBJECT TO THE RESTRICTIONS CONTAINED IN THAT CERTAIN
SECURITIES PURCHASE AGREEMENT, DATED AS OF JANUARY 14, 2000, BY
AND BETWEEN ISIS PHARMACEUTICALS, INC. AND ELAN INTERNATIONAL
SERVICES, LTD.
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<PAGE> 5
SECTION 2. Representations and Warranties of the Company. The
Company hereby represents and warrants to EIS, as of the date hereof, as
follows:
(a) Organization. The Company is duly organized, validly existing
and in good standing under the laws of the State of Delaware and has all
requisite corporate power and authority to own and lease its properties, to
carry on its business as presently conducted and as proposed to be conducted and
to consummate the transactions contemplated hereby. The Company is duly
qualified as a foreign corporation and in good standing to do business in each
jurisdiction in which the nature of the business conducted or the property owned
by it requires such qualification, except where the failure to be so qualified
would not, individually or in the aggregate, have a material adverse effect on
the business, assets, liabilities (contingent or otherwise), operations,
condition (financial or otherwise), or prospects of the Company (a "Company
Material Adverse Effect").
(b) Capitalization. As of the Closing Date, the Company has
reserved a sufficient number of shares of Common Stock: (i) for issuance upon
conversion of the Series B Preferred Stock being purchased hereunder by EIS
(including dividends in-kind thereon), (ii) for issuance upon exercise of the
Warrants, and (iii) for issuance upon conversion of the Note (including interest
payable thereon). The Shares, when issued against payment therefor in accordance
with this Agreement, will be duly and validly issued, fully paid and
nonassessable, will not be issued in violation of any preemptive or similar
rights. The shares of Common Stock underlying the Series B Preferred Stock, the
Note and the Warrants (the "Underlying Shares"), when issued upon conversion or
exercise in accordance with the terms thereof, will be duly and validly issued,
fully paid and nonassessable, and will not be issued in violation of any
preemptive or similar rights.
(c) Authorization of Transactions Documents. The Company has full
corporate power and authority to execute and deliver this Agreement and each of
the other Transactions Documents to which it is a party, and to perform its
obligations hereunder and thereunder. The execution, delivery and performance by
the Company of this Agreement and each of the other Transactions Documents to
which it is a party, including the issuance and sale of the Securities, have
been duly authorized by all requisite corporate action by the Company and, when
executed and delivered by the Company, this Agreement and each of the other
Transactions Documents to which it is a party will be the valid and binding
obligations of the Company, enforceable against the Company in accordance with
their respective terms, except (A) that enforcement may be limited by (i)
applicable bankruptcy, insolvency, reorganization, arrangement, moratorium or
other similar laws affecting creditors' rights, and (ii) general equity
principles and limitations on the availability of equitable relief, including
specific performance, and (B) that any rights to indemnity or contribution
hereunder or thereunder may be limited by state and federal securities laws and
by public policy considerations.
(d) No Violation. The execution, delivery and performance by the
Company of this Agreement and each other Transactions Document to which it is a
party, including the issuance and sale of the Securities, and compliance with
the provisions hereof and thereof by the Company, does not conflict with or
constitute or result in a breach of or default under (or an event which with
notice or passage of time or both would constitute a default) or give rise to
any right of termination, cancellation or acceleration under (i) the Certificate
of Incorporation, as amended, or by-laws, of the
5
<PAGE> 6
Company, (ii) applicable law, statute, rule or regulation, or any ruling, writ,
injunction, order, judgment or decree of any court, arbitrator, administrative
agency or other governmental body applicable to the Company or any of its
properties or assets, or (iii) any material contract or agreement affecting the
Company, including any contract filed as an exhibit to the Company's Annual
Report on Form 10-K for the year ended December 31, 1998 (the "1998 Form 10-K")
or any subsequent interim quarterly report, except where such breach, default,
termination, cancellation or acceleration would not, individually or in the
aggregate, have a Company Material Adverse Effect.
(e) Approvals. Other than as may be necessary pursuant to the
Mergers Act or applicable Bermuda Securities laws, no material permit,
authorization, consent, approval, or order of or by, or any notification of or
filing with, any person or entity (governmental or otherwise) is required in
connection with the execution, delivery or performance of this Agreement or the
Transactions Documents, including the issuance and sale of the Securities, by
the Company, other than the filing of a Form D by the Company pursuant to
Regulation D under the Securities Act ("Regulation D").
(f) SEC Filings. The Company has filed with the Securities and
Exchange Commission (the "SEC") all forms, reports, schedules, statements,
exhibits and other documents (collectively, the "SEC Filings") required to be
filed by the Company on or before the date hereof. At the time filed, the SEC
Filings, including without limitation, any financial statements, exhibits and
schedules included therein or documents incorporated therein by reference (i)
did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading and (ii) complied in all material respects with the applicable
requirements of the Securities Act or the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), as the case may be.
(g) Financial Statements. The audited financial statements of the
Company for the years ending December 31, 1997 and December 31, 1998, together
with the related statements of operations, stockholders' equity (deficit) and
cash flows for each of the two years then ended and the reports and opinions
thereon of Ernst & Young LLP, contained in the Company's 1997 Form 10-K and 1998
Form 10-K and the Company's unaudited balance sheet for the period ending
September 30, 1999, together with the related statements of operations,
stockholders' equity (deficit) and cash flows for the quarter then ended (as set
forth in the Company's Form 10-Q, for the quarterly period ending September 30,
1999), comply as to form in all material respects with applicable accounting
requirements and the published rules and regulation of the SEC with respect
thereto, and fairly present, in all material respects, the financial position of
the Company and the results of its operations and its cash flows at such dates
and for the periods then ended and were prepared in conformity in all material
respects with generally accepted accounting principles applied on a consistent
basis, subject, in the case of the unaudited financial statements for the
quarterly period ending September 30, 1999, to normal year-end audit adjustments
(which shall not be material in the aggregate) and the absence of footnote
disclosures.
(h) Litigation. There is no legal, administrative, arbitration or
other action or proceeding or to the Company's knowledge governmental
investigation pending, or to the
6
<PAGE> 7
Company's knowledge, threatened in writing against the Company, or any director,
officer or employee of the Company that challenges the validity or performance
of this Agreement or the other Transactions Documents to which the Company is a
party.
(i) Absence of Certain Events. Since December 29, 1999, except as
contemplated by the Transactions Documents, (A) the Company has not (i) made,
paid or declared any dividend or distribution to any equity holder (in such
capacity) or redeemed any of its capital stock, (ii) varied its business plan or
practices, in any material respect, from past practices, (iii) entered into any
financing, joint venture, license or similar arrangement that would limit or
restrict its ability to perform its obligations hereunder and under each of the
other Transactions Documents to which it is a party, or (iv) suffered or
permitted to be incurred any liability or obligation or any lien or encumbrance
against any of its properties or assets that would limit or restrict its ability
to perform its obligations hereunder and under each of the other Transactions
Documents to which it is a party, and (B) there has not been any change or
development which has had, or in the Company's reasonable judgment is likely to
have, a Company Material Adverse Effect.
(j) Disclosure. The representations and warranties set forth
herein and in the other Transactions Documents, when viewed collectively, do not
contain any untrue statement of a material fact or omit to state any material
fact necessary to make the statements contained herein or therein not misleading
in light of the circumstances in which they were made.
(k) Brokers or Finders. There have been no investment bankers,
brokers or finders used by the Company in connection with the transactions
contemplated by the Transactions Documents and no such persons or entities are
entitled to a fee or compensation in respect thereof.
SECTION 3. Representation and Warranties of EIS. EIS hereby
represents and warrants to the Company, as of the date hereof, as follows:
(a) Organization. EIS is duly organized, validly existing and in
good standing under the laws of Bermuda and has all requisite corporate power
and authority to own and lease its properties, to carry on its business as
presently conducted and as proposed to be conducted and to consummate the
transactions contemplated hereby. EIS is duly qualified as a foreign corporation
and in good standing to do business in each jurisdiction in which the nature of
the business conducted or the property owned by it requires such qualification,
except where the failure to be so qualified would not, individually or in the
aggregate, have a material adverse effect on the business, assets, liabilities
(contingent or otherwise), operations, condition (financial or otherwise), or
prospects of EIS (an "EIS Material Adverse Effect").
(b) Authorization of Transactions Documents. EIS has full
corporate power and authority to execute and deliver this Agreement and each of
the other Transactions Documents to which it is a party, and to perform its
obligations hereunder and thereunder. The execution, delivery, and performance
by EIS of this Agreement and each other Transactions Document to which it is a
party, including the purchase and acceptance of the Securities, have been duly
authorized by all requisite corporate action by EIS and, when executed and
delivered by EIS, this Agreement and each of the other Transactions Documents to
which it is a party, will be the valid and binding obligations
7
<PAGE> 8
of EIS, enforceable against it in accordance with their respective terms, except
(A) that enforcement may be limited by (i) applicable bankruptcy, insolvency,
reorganization, arrangement, moratorium or other similar laws affecting
creditors' rights, and (ii) general equity principles and limitations on the
availability of equitable relief, including specific performance, and (B) that
any rights to indemnity or contribution hereunder or thereunder may be limited
by state and federal securities laws and by public policy considerations.
(c) No Violation. The execution, delivery and performance by EIS
of this Agreement and each other Transactions Document to which it is a party,
including the purchase and acceptance of the Securities, and compliance with
provisions hereof and thereof by EIS, will not conflict with or constitute or
result in a breach of or default under (or an event which with notice or passage
of time or both would constitute a default) or give rise to any right of
termination, cancellation or acceleration under (i) the Memorandum and Articles
of Association of EIS, (ii) any applicable law, statute, rule or regulation, or
any ruling, writ, injunction, order, judgment or decree of any court,
arbitrator, administrative agency or other governmental body applicable to EIS
or any of its properties or assets, or (iii) any material contract to which EIS
is party, except where such breach, default, termination, cancellation or
acceleration would not, individually or in the aggregate, have an EIS Material
Adverse Effect.
(d) Approvals. Except for consent required under the Mergers Act,
no material permit, authorization, consent, approval or order of or by, or any
notification of or filing with, any person or entity (governmental or otherwise)
is required in connection with the execution, delivery or performance of this
Agreement or the Transactions Documents by EIS.
(e) Investment Representations.
(i) EIS is sophisticated in transactions of this type and
capable of evaluating the merits and risks of the transactions described
herein and in the other Transactions Documents to which it is a party,
and has the capacity to protect its own interests. EIS has not been
formed solely for the purpose of entering into the transactions
described herein and therein and is acquiring the Securities (and the
Underlying Shares) for investment for its own account, not as a nominee
or agent, and not with the view to, or for resale, distribution or
fractionalization thereof, in whole or in part, and no other person
(other than Elan) has a direct or indirect interest, beneficial or
otherwise in the Securities (or the Underlying Shares); provided,
however, that EIS shall be permitted to convert or exchange such
Securities in accordance with their terms.
(ii) EIS has not and does not intend to enter into any
contract, undertaking, agreement or arrangement with any person or
entity to sell, transfer or pledge the Securities (or the Underlying
Shares), other than a transfer to a current affiliate or subsidiary or a
special purpose financing or similar vehicle established by EIS or one
of its affiliates.
8
<PAGE> 9
(iii) EIS acknowledges its understanding that the private
placement and sale of the Securities (and the Underlying Shares) is
exempt from registration under the Securities Act by virtue of the
provisions of Regulation D. In furtherance thereof, EIS represents and
warrants that it is an "accredited investor" as that term is defined in
Regulation D, has the financial ability to bear the economic risk of its
investment, has adequate means for providing for its current needs and
personal contingencies and has no need for liquidity with respect to its
investment in the Company.
(iv) EIS agrees that it shall not sell or otherwise
transfer any of the Securities (or the Underlying Shares) without
registration under the Securities Act or pursuant to an opinion of
counsel reasonably satisfactory to the Company that an exemption from
registration is available, and fully understands and agrees that it must
bear the total economic risk of its purchase for an indefinite period of
time because, among other reasons, none of the Securities (or the
Underlying Shares) have been registered under the Securities Act or
under the securities laws of any applicable state or other jurisdiction
and, therefore, cannot be resold, pledged, assigned or otherwise
disposed of unless subsequently registered under the Securities Act and
under the applicable securities laws of such states or jurisdictions or
an exemption from such registration is available. EIS understands that
the Company is under no obligation to register the Securities (or the
Underlying Shares) on its behalf with the exception of certain
registration rights with respect to certain of the Securities (and the
Underlying Shares), as provided in the Company Registration Rights
Agreement. EIS understands the lack of liquidity and restrictions on
transfer of the Securities (and the Underlying Shares) and that this
investment is suitable only for a person or entity of adequate financial
means that has no need for liquidity of this investment and that can
afford a total loss of its investment.
(f) Litigation. There is no legal, administrative, arbitration or
other action or proceeding or governmental investigation pending, or to EIS's
knowledge threatened, against EIS that challenges the validity or performance of
this Agreement or the other Transactions Documents to which EIS is a party.
(g) Brokers or Finders. There have been no investment bankers,
brokers or finders used by EIS in connection with the transactions contemplated
by the Transactions Documents and no such persons or entities are entitled to a
fee or compensation in respect thereof.
SECTION 4. Covenants of the Parties.
(a) Operating Covenants. From and after the Closing Date for so
long as the Note is outstanding and until the earlier to occur of the exercise
or expiration of the EIS Exchange Right (as such term is defined in Section 5
hereof), the Company shall not without the prior written consent of EIS: (i)
sell, transfer, encumber, pledge or otherwise affect, in any respect, (A) any
HepaSense Capital Shares owned by the Company, including, without limitation,
those HepaSense Preferred Shares transferable to EIS upon exercise by EIS of the
EIS Exchange Right, or (B) its ability to permit EIS to exercise the EIS
Exchange Right in full, as provided herein or (ii) enter into any material
transaction with a director, officer or beneficial owner of more than 20% of
Common
9
<PAGE> 10
Stock on other than an arm's length basis. From and after the Closing Date and
until the earlier to occur of the exercise or expiration of the EIS Exchange
Right, EIS shall not without the prior written consent of the Company encumber,
pledge or otherwise affect, in any respect, any HepaSense Capital Shares owned
by EIS.
(b) Fully-diluted Stock Ownership. Notwithstanding any other
provision of this Agreement, in the event that EIS shall have determined that at
any time it (together with its affiliates, if applicable) holds or has the right
to receive Common Stock (or securities or rights, options or warrants
exercisable, exchangeable or convertible for or into Common Stock) representing
in the aggregate in excess of [ * ] of the Company's outstanding Common Stock on
a fully diluted basis (assuming the exercise, exchange or conversion of such
securities beneficially owned by EIS or its affiliates, but not the exercise,
exchange or conversion of any other similar securities), EIS shall have the
right to convert the Series B Preferred Stock and the shares issuable upon
conversion of the Note into non-voting, convertible liquidation preferred stock
of the Company such that EIS and its affiliates will not directly or indirectly
own more than [ * ] of the Common Stock for a period of at least two years from
the election of the conversions of the Series B Preferred Stock or the Note. In
the event that EIS shall undertake to exercise such right, EIS shall retain the
additional right to exchange such new class of equity security for Common Stock,
in its discretion at any time after two years from the issuance date of the new
securities pursuant to the terms of the underlying security. Each of the Company
and EIS shall use commercially reasonable efforts to effect such transactions
and any required subsequent conversions or adjustments to EIS's securities
position, on a quarterly basis, within 10 business days of the end of each of
EIS's fiscal quarters. The Company shall bear the fees and expenses in
connection with the foregoing for the first such conversion by EIS; thereafter,
EIS shall reimburse the Company for its reasonable legal fees and expenses,
filing fees and other reasonable and documented costs and fees in connection
with carrying out the foregoing.
(c) Use of Proceeds. The Company shall use the proceeds of (i)
the issuance and sale of the Series B Preferred Stock solely to fund its initial
capital contributions to, and funding of, HepaSense as described in the JDOA,
and (ii) the issuance and funding of the Note solely to fund development amounts
in connection with the business of HepaSense, as described in the Funding
Agreement and, in each case, for no other purpose.
(d) Confidentiality; Non-Disclosure.
(i) Subject to clauses (ii) and (iii) below, from and
after the date hereof, neither the Company nor EIS (nor their respective
affiliates) shall disclose to any person or entity this Agreement or the
other Transactions Documents or the contents thereof or the parties
thereto, except that such parties may make such disclosure (x) to their
directors, officers, employees and advisors, so long as they shall have
advised such persons of the obligation of confidentiality herein and for
whose breach or default the disclosing party shall be responsible, or
(y) as required by applicable law, rule, regulation or judicial or
administrative process, provided that the disclosing party uses
reasonable efforts to obtain an order or ruling protecting the
confidentiality of confidential information of the other party contained
herein or therein. The parties shall be entitled to seek injunctive or
other equitable
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<PAGE> 11
relief in respect of any breach or threatened breach of the foregoing
covenant without the requirement of posting a bond or other collateral.
(ii) Prior to issuing any press release or public
disclosure in respect of this Agreement or the transactions contemplated
hereby, the party proposing such issuance shall obtain the consent of
the other party to the contents thereof, which consent shall not be
unreasonably withheld or delayed; it being understood that if such
second party shall not have responded to such consent request within
five business days, such consent shall be deemed given.
(iii) This Section 4(d) shall not be construed to prohibit
disclosure by the receiving party of any information which has not been
previously determined to be confidential by the disclosing party, or
which shall have become publicly disclosed (other than by breach of the
receiving party's obligations hereunder).
(e) Further Assurances. From and after the date hereof, each of
the parties hereto agree to do or cause to be done such further acts and things
and deliver or cause to be delivered to each other such additional assignments,
agreements, powers and instruments, as each may reasonably require or deem
advisable to carry into effect the purposes of this Agreement and the other
Transactions Documents.
SECTION 5. Conversion and Exchange Rights. The Certificate of
Designation sets forth certain rights of the holders of shares of Series B
Preferred Stock to convert such shares of preferred stock into newly issued
shares of Common Stock, or to exchange such shares of Series B Preferred Stock
into (i) the shares of HepaSense Preferred Shares owned by the Company or (ii)
if the HepaSense Preferred Shares issued to the Company on the date hereof are
converted into HepaSense Common Shares, the HepaSense Common Shares received
upon such conversion (the "EIS Exchange Right"), both on the terms and
conditions set forth therein.
SECTION 6. Pledge of HepaSense Preferred Shares.
(a) In order to secure the Company's obligations pursuant to the
EIS Exchange Right, except as provided in Section 6(e) hereof, the Company
hereby pledges, assigns, grants and sets over to EIS, all of the Company's
right, title and interest in and to all HepaSense Preferred Shares deliverable
by the Company upon exercise of the EIS Exchange Right (including share
distributions and dividends thereon, any security into which such HepaSense
Preferred Shares shall be converted and all certificates representing such
shares of capital stock and, issued as an addition to, in substitution or in
exchange for, or on account of any such shares, now or hereafter acquired by the
Company, the "Pledged Shares").
(b) The Company shall cause to be delivered to EIS all of the
certificates evidencing the Pledged Shares together with duly executed stock
power in favor of EIS, and cause to be filed with the Secretary of State of
California an appropriate UCC-1 financing statement in respect of such pledge,
assignment or setting over, and take all other necessary, appropriate and
customary actions in connection therewith.
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<PAGE> 12
(c) During the term of this pledge, in the event the Company
shall be entitled to receive by reason of its ownership of any of the Pledged
Shares any:
(i) Stock certificates issued in connection with
any increase or reduction in capital, reclassification, merger,
consolidation, sale of assets, combination of shares, stock
split, spin-off or split-off; or
(ii) Option, warrant or right, whether as an
addition to or in substitution or exchange for any of the Pledged
Shares or otherwise;
then, in each such case, the Company shall accept the same as agent of EIS or
its permitted assign, in trust for EIS or its permitted assign and shall deliver
the same immediately to EIS or its permitted assign in the exact form received
with the Company's endorsement, to the extent necessary, or appropriate stock
powers duly executed by the Company, to be held by EIS or its permitted assign
as part of the Pledged Shares in accordance with the terms and conditions
contained in this Section 6.
(d) The obligations of the Company under this Section 6 shall
commence upon the date hereof and shall terminate and be of no further force and
effect upon the expiration of the EIS Exchange Right. Upon the termination of
the pledge of the Pledged Shares, (i) the security interests granted hereby
shall terminate and all rights to the Pledged Shares shall revert to the
Company, (ii) EIS or its permitted assignee shall (x) deliver to the Company all
of the certificates evidencing the Pledged Shares (including the securities
delivered pursuant to Section 6(c)(i) and 6(c)(ii) hereof) and (y) execute and
deliver to the Company such documents as the Company shall reasonably request to
evidence the termination of the security interest granted in this Section 6,
including, without limitation, a UCC Form 3 termination statement.
(e) Such pledge shall be governed by the applicable provisions of
the New York Uniform Commercial Code. Upon exercise of the EIS Exchange Right,
EIS shall be entitled to keep and retain such share certificates, which shall
then be owned by EIS in accordance with the terms thereof. Except as
specifically provided in Section 6(c) hereof, until EIS exercises the EIS
Exchange Right, the Company shall retain all rights in and to the Pledged Shares
(including without limitation all voting, dividend, liquidation and other
rights), subject only to this pledge and the JDOA.
SECTION 7. Survival Period. The representations and warranties of
the Company and EIS contained herein shall survive for a period of two years
from and after the date hereof.
SECTION 8. Notices. All notices, demands and requests of any kind
to be delivered to any party in connection with this Agreement shall be in
writing and shall be deemed to have been duly given if personally or hand
delivered or if sent by an internationally-recognized overnight delivery or by
registered or certified mail, return receipt requested and postage prepaid, or
by facsimile transmission (with receipt confirmed by telephone) addressed as
follows:
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(i) if to the Company, to:
Isis Pharmaceuticals, Inc.
2292 Faraday Avenue
Carlsbad, CA 92008
Attn: B. Lynne Parshall
Tel.: 760-603-2460
Fax: 760-931-9639
with a copy to:
Cooley Godward LLP
4365 Executive Drive
San Diego, CA 92121
Attn: Julie Robinson, Esq.
Tel.: 619-550-6000
Fax: 619-453-3555
(ii) if to EIS, to:
Elan International Services, Ltd.
Flatts, Smiths Parish
Bermuda, FL 04
Attention: Director
Tel.: 441-292-9169
Fax: 441-292-2224
with a copy to:
Brock Silverstein LLC
800 Third Avenue
New York, New York 10022
Attention: Scott Rosenblatt, Esq.
Tel.: 212-371-2000
Fax: 212-371-5500
or to such other address as the party to whom notice is to be given may have
furnished to the other party hereto in writing in accordance with provisions of
this Section 8. Any such notice or communication shall be deemed to have been
effectively given (i) in the case of personal or hand delivery, on the date of
such delivery, (ii) in the case of an internationally-recognized overnight
delivery service, on the second business day after the date when sent, (iii) in
the case of mailing, on the fifth business day following that day on which the
piece of mail containing such communication is posted, and (iv) in the case of
facsimile transmission, on the date of telephone confirmation of receipt.
13
<PAGE> 14
SECTION 9. Entire Agreement. This Agreement and the other
Transactions Documents contain the entire understanding of the parties with
respect to the subject matter hereof and thereof and supersede all prior
agreements and understandings among the parties with respect thereto.
SECTION 10. Amendments. This Agreement may not be modified or
amended, or any of the provisions hereof waived, except by written agreement of
the Company and EIS dated after the date hereof.
SECTION 11. Counterparts and Facsimile. The Transactions
Documents may be executed in any number of counterparts, and each such
counterpart hereof shall be deemed to be an original instrument, but all such
counterparts together shall constitute one agreement. Each of the Transactions
Documents may be signed and delivered to the other party by facsimile
transmission; such transmission shall be deemed a valid signature.
SECTION 12. Headings. The section and paragraph headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement.
SECTION 13. Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York, without
giving effect to principles of conflicts of laws, except that all issues
concerning the relative rights of the Company and its stockholders shall be
governed by the Delaware General Corporation Law, without giving effect to the
principles of conflicts of laws.
SECTION 14. Arbitration.
(a) Any dispute under the Transactions Documents which is not
settled by mutual consent shall be finally settled by binding arbitration,
conducted in accordance with the Commercial Arbitration Rules of the American
Arbitration Association by one arbitrator appointed in accordance with said
rules. Such arbitrator shall be reasonably satisfactory to each of the parties;
provided, that if the parties are unable to agree upon the identity of such
arbitrator within 15 days of demand by either party, then either party shall
have the right to petition a presiding justice of the Supreme Court of New York,
New York County, to appoint an arbitrator. The arbitration shall be held in New
York, New York and the arbitrator shall be an independent expert in
pharmaceutical product development and marketing (including clinical development
and regulatory affairs).
(b) The arbitrator shall determine what discovery will be
permitted, consistent with the goal of limiting the cost and time which the
parties must expend for discovery; provided the arbitrator shall permit such
discovery as he or she deems necessary to permit an equitable resolution of the
dispute. Any written evidence originally in a language other than English shall
be submitted in English translation accompanied by the original or a true copy
thereof. The costs of the arbitration, including administrative and arbitrators'
fees, shall be shared equally by the parties and each party shall bear its own
costs and attorneys' and witness' fees incurred in connection with the
arbitration.
14
<PAGE> 15
(c) In rendering judgment, the arbitrator shall be instructed by
the parties that he or she shall be permitted to select solely from between the
proposals for resolution of the relevant issue presented by each party, and not
any other proposal. A disputed performance or suspended performances pending the
resolution of the arbitration must be completed within 30 days following the
final decision of the arbitrators or such other reasonable period as the
arbitrators determine in a written opinion.
(d) Any arbitration under the Transactions Documents shall be
completed within one year from the filing of notice of a request for such
arbitration. The arbitration proceedings and the decision shall not be made
public without the joint consent of the parties and each party shall maintain
the confidentiality of such proceedings and decision unless otherwise permitted
by the other party.
(e) The parties agree that the decision shall be the sole,
exclusive and binding remedy between them regarding any and all disputes,
controversies, claims and counterclaims presented to the arbitrators.
Application may be made to any court having jurisdiction over the party (or its
assets) against whom the decision is rendered for a judicial recognition of the
decision and an order of enforcement.
SECTION 15. Expenses. Each of the parties shall be responsible
for its own costs and expenses incurred in connection with the transactions
contemplated hereby and by the other Transactions Documents.
SECTION 16. Schedules, etc. All statements contained in any
exhibit or schedule delivered by the parties hereto, or in connection with the
transactions contemplated hereby, are an integral part of this Agreement and
shall be deemed representations and warranties hereunder.
SECTION 17. Assignments and Transfers. This Agreement and all of
the provisions hereof shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns. This
Agreement, the shares of Series B Preferred Stock and the shares of Common Stock
being purchased hereunder by EIS, the Note, the Warrants, and the shares of
Common Stock underlying the Series B Preferred Stock, the Note and the Warrants
may be transferred by EIS to its affiliates and subsidiaries, as well as any
special purpose financing or similar vehicle established by EIS or its
affiliates, provided, however, that EIS shall remain liable for its obligations
hereunder after any such assignment. Other than as set forth above, no party
shall transfer or assign this Agreement, the shares of Series B Preferred Stock
and Common Shares being purchased hereunder by EIS, the Note, the Warrants, and
the shares of Common Stock underlying the Series B Preferred Stock, the Note and
the Warrants, or any interest therein, without the prior written consent of the
other party; provided, however, that no consent shall be required in connection
with any such transfer or assignment by a party pursuant to a sale of all or
substantially all of the business of such party whether by merger, sale of
stock, sale of assets or otherwise.
15
<PAGE> 16
SECTION 18. Severability. In case any provision of this Agreement
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not be in any way affected or
impaired thereby.
[Signature Page Follows.]
16
<PAGE> 17
IN WITNESS WHEREOF, each of the undersigned has duly executed
this Agreement as of the date first written above.
ISIS PHARMACEUTICALS, INC.
By:
-----------------------------------
B. Lynne Parshall
Executive Vice President
ELAN INTERNATIONAL SERVICES, LTD.
By:
-----------------------------------
Kevin Insley
President
17
<PAGE> 18
EXHIBIT A
CONVERTIBLE PROMISSORY NOTE
18
<PAGE> 19
EXHIBIT B
CERTIFICATE OF DESIGNATION
19
<PAGE> 20
EXHIBIT C
COMPANY REGISTRATION RIGHTS AGREEMENT
20
<PAGE> 21
EXHIBIT D
HEPASENSE REGISTRATION RIGHTS AGREEMENT
21
<PAGE> 22
EXHIBIT E
FUNDING AGREEMENT
22
<PAGE> 23
EXHIBIT F
WARRANT CERTIFICATE
(FIRST SUBSEQUENT COMMON STOCK PURCHASE)
23
<PAGE> 24
EXHIBIT G
WARRANT CERTIFICATE
(SECOND SUBSEQUENT COMMON STOCK PURCHASE)
24
<PAGE> 25
EXHIBIT H
FORM OF SECRETARY'S CERTIFICATE
25
<PAGE> 26
EXHIBIT I
OPINION OF COUNSEL TO ISIS
26
<PAGE> 1
EXHIBIT 10.3
THIS CONVERTIBLE PROMISSORY NOTE AND THE SHARES OF COMMON STOCK ISSUABLE UPON
CONVERSION HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT UNDER ANY CIRCUMSTANCES BE SOLD, TRANSFERRED OR OTHERWISE
DISPOSED OF WITHOUT AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND ANY APPLICABLE STATE
SECURITIES LAWS OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT
REGISTRATION IS NOT REQUIRED UNDER SUCH ACT OR APPLICABLE STATE SECURITIES LAWS.
THE TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS ALSO SUBJECT
TO THE RESTRICTIONS CONTAINED IN THAT CERTAIN SECURITIES PURCHASE AGREEMENT,
DATED JANUARY 14, 2000, BY AND BETWEEN ISIS PHARMACEUTICALS, INC. AND ELAN
INTERNATIONAL SERVICES, LTD.
ISIS PHARMACEUTICALS, INC.
CONVERTIBLE PROMISSORY NOTE
U.S. $12,015,000 JANUARY 14, 2000
The undersigned, ISIS PHARMACEUTICALS, INC., a Delaware
corporation with offices at 2292 Faraday Avenue, Carlsbad, California 92008 (the
"Company"), unconditionally promises to pay to ELAN INTERNATIONAL SERVICES,
LTD., a Bermuda private limited company ("EIS"), or its permitted assigns,
transferees and successors as provided herein (collectively, the "Holder"), on
January 14, 2006 (the "Maturity Date"), at such place as may be designated by
the Holder to the Company, the principal amount outstanding hereunder (not to
exceed U.S.$12,015,000), together with interest thereon accrued at a rate per
annum equal to the lesser of (i) 12.0%, and (ii) the maximum rate of interest
permissible by applicable law, from and after the date of the initial
disbursement of funds hereunder (the "Original Issue Date"), compounded on a
semi-annual basis, the initial such compounding to commence on the date that is
180 days from and after the Original Issue Date and thereafter on each 180 day
anniversary (each such date, a "Compounding Date").
SECTION 1. SECURITIES PURCHASE AGREEMENT AND FUNDING AGREEMENT.
This Note is issued pursuant to a Securities Purchase Agreement
dated as of the date hereof, by and between the Company and EIS (as amended at
any time, the "Securities Purchase Agreement"), and the Holder hereof is
intended to be afforded the benefits thereof, including the representations and
warranties set forth therein. The Company shall use the proceeds of the issuance
<PAGE> 2
and sale of this Note solely in accordance with the provisions set forth therein
and as required therein and in a certain Funding Agreement, dated as of the date
hereof (as amended at any time, the "Funding Agreement"), by and among Elan
Corporation, plc, an Irish public limited company and the parent corporation of
EIS, Elan Pharma International Limited, EIS and the Company, and as described in
Section 6 below. Capitalized terms used but not otherwise defined herein shall,
unless otherwise indicated, have the meanings given such terms in the Securities
Purchase Agreement.
SECTION 2. DISBURSEMENTS.
(a) From and after the date hereof and until July 14, 2002,
disbursements shall be made by the Holder to the Company hereunder in minimum
tranches of U.S.$500,000 (except in the event that an amount less than
U.S.$500,000 shall be remaining and available for funding hereunder, in which
case such lesser amount may be funded hereunder); provided, that the Company
shall have, prior to each such disbursement, delivered a written request
therefor to the Holder in the form attached hereto as Exhibit A (the
"Disbursement Notice"), together with an Officer's Certificate confirming that
as of such date no Event of Default exists hereunder; the Holder shall, subject
to the terms and conditions hereof, fund the applicable amount within 10
business days of the receipt of the Disbursement Notice, subject to the receipt
by the Holder of any required approvals under the Mergers and Takeovers
(Control) Acts 1978-1996 and the terms of the development plan to be mutually
agreed upon by the Company and EIS. A "business day" is any day that commercial
banks are open for the transaction of business in the City of New York.
(b) The Holder shall not be required to (i) disburse more than the
maximum principal amount hereunder, excluding accruals of interest, of
U.S.$12,015,000 or (ii) make more than five disbursements to the Company within
any 12 month period.
(c) Each disbursement shall accrue interest at the rate set forth in
Section 1 from the date of each such disbursement through the date of payment.
SECTION 3. PAYMENTS AND COVENANTS.
(a) Unless earlier converted in accordance with the terms of Section 4
below, or prepaid in accordance with the terms hereof, the entire outstanding
principal amount of this Note, together with any accrued and unpaid interest
thereon, shall be due and payable on the Maturity Date.
(b) Accrued interest hereon shall not be paid in cash, but shall be
capitalized and added to the principal amount outstanding hereunder on each
Compounding Date and will be convertible into Common Stock pursuant to Section
4.
(c) This Note may be prepaid by the Company at its option, in whole or
in part,
(i) in cash, upon not less than 30 days' prior written notice to
EIS; or
(ii) in shares of the Company's Common Stock, par value $.001
per share (the "Common Stock"), at any time, at a price equal to 95% of
the average of the closing prices
2
<PAGE> 3
of the Common Stock for the 60 trading days ending two business days
prior to the date of repayment; provided that no more than 50% of any
prepayment amount shall be payable by the Company in the Company's
Common Stock.
SECTION 4. CONVERSION.
(a) Conversion Right.
(i) From and after the Original Issue Date and until this Note
is repaid in full, the Holder shall have the right from time to time, in
its sole discretion, to convert all or any portion of the outstanding
principal amount and accrued and unpaid interest then-outstanding
hereunder, on a per tranche basis (each, a "Conversion Right"), into
such number of shares of Common Stock that shall be obtained by dividing
the sum of the outstanding principal amount of such tranche and all
accrued and unpaid interest thereon by a per share price calculated as
140% of the average of the closing price of the Common Stock for the 60
trading days ending two business days prior to the date of disbursement
of such tranche (each, a "Conversion Price").
(ii) The Holder shall be entitled to exercise a Conversion Right
upon at least five days' prior written notice to the Company, such
notice to be in the form attached hereto as Exhibit B. Within 10 days of
the conversion date specified in such notice, the Company shall cause
its transfer agent to issue stock certificates to EIS representing the
aggregate number of shares of Common Stock due to EIS as a result of
such conversion.
(b) Reclassification, Etc. In case of (i) any reclassification,
reorganization, change or conversion of securities of the class issuable upon
conversion of the outstanding principal amount and accrued and unpaid interest
then-outstanding hereunder (other than a change in par value, or from par value
to no par value), or (ii) any consolidation of the Company with or into another
entity (other than a merger or consolidation with another entity in which the
Company is the surviving entity and that does not result in any reclassification
or change of the class of securities issuable upon the conversion of the
outstanding principal amount and accrued and unpaid interest then-outstanding
hereunder), or (iii) any sale of all or substantially all the assets of the
Company (excluding the transactions contemplated by the Transaction Documents),
then the Company, or such successor or purchasing entity, as the case may be,
shall duly execute and deliver to the Holder a new Note or a supplement hereto
(in form and substance reasonably satisfactory to the Holder of this Note), so
that the Holder shall have the right to receive, at a total purchase price not
to exceed the outstanding principal amount and accrued and unpaid interest
then-outstanding hereunder, and in lieu of the shares of Common Stock
theretofore issuable upon the conversion of such outstanding principal amount
and accrued and unpaid interest then-outstanding hereunder, the kind and amount
of shares of stock and other securities, money and property receivable upon such
reclassification, reorganization, change, merger, consolidation or conversion by
a holder of the number of shares of Common Stock then issuable under this Note.
Such new Note shall provide for adjustments that shall be as nearly equivalent
as may be practicable to the adjustments provided for in this Section 4. The
provisions of this Section 4(b) shall similarly attach to successive
reclassifications, reorganizations, changes, mergers, consolidations, transfers
or conversions.
3
<PAGE> 4
(c) No Impairment. The Company will not, by amendment of its Certificate
of Incorporation or by-laws or through any reorganization, recapitalization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed hereunder by the
Company, but will at all times in good faith assist in the carrying out of all
the provisions of this Section 4 and in the taking of all such action as may be
necessary or appropriate in order to protect the rights of EIS against
impairment. This provision shall not restrict the Company from otherwise
amending and/or restating its Certificate of Incorporation in accordance with
Delaware General Corporation Law.
(d) Notice of Adjustments. Whenever the consideration issuable upon a
conversion hereunder shall be changed pursuant to this Section 4, the Company
shall prepare a certificate setting forth, in reasonable detail, the event
requiring the change and the kind and amount of shares of stock and other
securities, money and property subsequently issuable upon a conversion hereof.
Such certificate shall be signed by the Company's chief financial officer and
shall be delivered to EIS.
(e) No Fractional Shares; Rounding. No fractional shares of Common Stock
will be issued in connection with any exercise hereunder, but in lieu of such
fractional shares the Company shall make a cash payment therefor based on the
applicable Conversion Price. All calculations under this Section 4 shall be made
to the nearest cent or to the nearest one-hundredth of a share, as the case may
be.
SECTION 5. EXCHANGE RIGHT.
(a) In the event that EIS shall exercise the EIS Exchange Right, EIS
shall, at its option, (i) cause to be paid to the Company, within 30 days of
such exercise, an amount equal to 30.097% of the aggregate amount (but not
including any accrued and unpaid interest thereon) of the Development Funding
(as such term is defined in the Funding Agreement) through the date of such
exercise provided by each of the parties to HepaSense, in accordance with the
terms of the Funding Agreement, from and after the date hereof and until the
date of such exercise, and/or (ii) offset against the amount then outstanding
and payable under this Note an amount equal to 30.097% of the total amount (but
not including any accrued and unpaid interest in respect of any debt, including
the Note thereon) of Development Funding provided by each of the parties to
HepaSense, in accordance with the terms of the Funding Agreement, from and after
the date hereof and until the date of the exercise of the Exchange Right,
against the principal amount outstanding hereunder, if any, or (iii) effect a
combination of the provisions described in clauses (i) and (ii) above, if
applicable.
(b)In no event shall the amount determined in accordance with subsection
(a) above exceed the aggregate principal amount issued hereunder and accrued
interest thereon.
SECTION 6. USE OF PROCEEDS.
The Company shall use the proceeds of this Note solely for
developmental funding of HepaSense; provided, that the Board of Directors of
HepaSense shall have determined that such
4
<PAGE> 5
developmental funding is necessary (which approval shall in all events include
the consent of at least one director designated by the Company that is an
employee of the Company and at least one director designated by EIS) and that
the parties thereto are in continuing agreement as to the Business Plan.
Accordingly, total disbursements hereunder shall not in any event exceed the
amount of Development Funding funded by the Company to HepaSense pursuant to the
Funding Agreement.
SECTION 7. EVENTS OF DEFAULT.
The occurrence of any of the following events shall constitute an
event of default (an "Event of Default"):
(a) a default in the payment of the principal amount of this Note, when
and as the same shall become due and payable;
(b) a default in the payment of any accrued and unpaid interest on this
Note, when and as the same shall become due and payable;
(c) a material breach by the Company of its obligations under any of the
Transaction Documents, which breach remains uncured 30 days after written notice
thereof by EIS; provided, however, that (x) if the Company has proposed a course
of action to rectify the breach and is acting in good faith to rectify same but
has not cured the breach by the 30th day, such period shall be extended by such
period as is reasonably necessary to permit the breach to be rectified and (y)
if such default involves a good faith dispute regarding the amount of any
required payment, provided any undisputed amount is paid, such default shall be
stayed and the remainder may be withheld for a reasonable period during which a
good faith resolution of the amount owed is being pursued;
(d) a distress, execution, sequestration or other process is levied or
enforced upon the Company or sued out against a material part of its property
which is not discharged or challenged within 30 days;
(e) the Company is unable to pay its debts in the normal course of
business;
(f) the Company ceases wholly or substantially to carry on its business,
otherwise than for the purpose of a reconstruction or amalgamation, without the
prior written consent of the EIS (such consent not to be unreasonably withheld);
(g) the appointment of a liquidator, receiver, administrator, examiner,
trustee or similar officer of the Company or over all or substantially all of
its assets under the law; or
(h) any other termination of the JDOA.
SECTION 8. REMEDIES IN THE EVENT OF DEFAULT.
5
<PAGE> 6
(a) In the case of any Event of Default by the Company, the Holder, may
in its sole discretion, demand that the aggregate amount of funds advanced to
the Company under this Note and outstanding hereunder and accrued and unpaid
interest thereon shall, in addition to all other rights and remedies of the
Holder hereunder and under applicable law, be and become immediately due and
payable upon written notice delivered by the Holder to the Company.
Notwithstanding the preceding sentence, the rights of the Holder as set forth in
Sections 4 and 5 hereunder shall survive any such acceleration and payment. If
the Holder shall accelerate this Note after the occurrence of any Event of
Default set forth in Section 7(a), 7(b) or 7(c) hereof and be paid and, prior to
the earlier of (i) second anniversary of the date of such acceleration and (ii)
the Maturity Date, the Holder elects to exercise the Conversion Right, the
Holder shall reimburse to the Company an amount in respect of the shares of
Common Stock issued under such Conversion Right equal to the principal amount of
this Note attributable thereto as calculated in accordance with Section 4 above.
(b) The Company hereby waives demand and presentment for payment, notice
of nonpayment, protest and notice of protest, diligence, filing suit, and all
other notice and promises to pay the Holder its costs of collection of all
amounts due hereunder, including reasonable attorneys' fees.
(c) In the case of any Event of Default under this Note by the Company
this Note shall continue to bear interest after such default at the interest
rate otherwise in effect hereunder plus 3% per annum (but in any event not in
excess of the maximum rate of interest permitted by applicable law).
SECTION 9. VOTING RIGHTS.
This Note shall not entitle the holder hereof to any voting
rights or other rights as a stockholder of the Company prior to its conversion.
SECTION 10. SENIORITY.
(a) The Holder acknowledges and agrees that the obligations evidenced
hereby are subordinate in right to payment in full of interest and principal
relating to the Company's $40,000,000 aggregate principal amount of 14% Senior
Subordinated Discount Notes due November 2007 (the "Discount Notes") and
therefore the obligations evidenced hereby are "Subordinated Indebtedness" as
defined in that certain Purchase Agreement, dated October 24, 1997, between the
Company and the purchasers listed on Schedule I thereto (the "Purchase
Agreement"); it being understood that in the event there is any event of default
in respect of the Purchase Agreement, the Company shall not pay to the Holder
hereof in cash any amounts due hereunder until such event of default is cured or
waived pursuant to the terms of such indenture.
(b) The Company shall not incur any indebtedness for money borrowed
which shall rank senior to this Note without the prior written consent of the
Holder; provided, however, that the Company may incur additional indebtedness
which ranks pari passu with the obligations evidenced hereby.
6
<PAGE> 7
SECTION 11. MISCELLANEOUS.
(a) EIS may assign this Note to its affiliates and subsidiaries, as well
as any special purpose financing or similar vehicle entity established by EIS or
its affiliates. Upon any such assignment, EIS shall promptly provide the Company
with Notice in reasonable detail of such assignment and assignee (provided, that
the failure to provide such notice shall not affect the rights of EIS
hereunder). This Note and all of the provisions hereof shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns; provided, however, that EIS and the Company shall remain
liable for their respective obligations hereunder after any such assignment.
(b) All notices, demands and requests of any kind to be delivered to any
party in connection with this Agreement shall be in writing and shall be deemed
to have been duly given if personally delivered or if sent by
nationally-recognized overnight courier or by registered or certified mail,
return receipt requested and postage prepaid, or by facsimile transmission,
addressed as follows:
(i) if to the Company:
Isis Pharmaceuticals, Inc.
2292 Faraday Avenue
Carlsbad, CA 92008
Attn: B. Lynne Parshall
Tel.: 760-603-2460
Fax: 760-931-9639
with a copy to:
Cooley Godward LLP
4365 Executive Drive
San Diego, CA 92121
Attention: Julie Robinson, Esq.
Tel: 619-550-6000
Fax: 619-453-3555
(ii) if to EIS, to:
Elan International Services, Ltd.
102 St. James Court
Flatts, Smiths Parish
Bermuda SL04
Attention: President
Tel: 441-292-9169
Fax: 441-292-2224
7
<PAGE> 8
with a copy to:
Brock Silverstein LLC
800 Third Avenue
New York, New York 10022
Attention: Scott Rosenblatt, Esq.
Tel: 212-371-2000
Fax: 212-371-5500
Each party, by written notice given to the other in accordance with this Section
11(b) may change the address to which notices, other communication or documents
are to be sent to such party. All notices, other communications or documents
shall be deemed to have been duly given when received. Any such notice or
communication shall be deemed to have been effectively received, (a) in the case
of personal delivery, on the date of such delivery, (b) in the case of
nationally-recognized overnight courier, on the second business day after the
date when sent, (c) in the case of mailing, on the fifth business day following
that day on which the piece of mail containing such communication is posted, and
(d) in the case of facsimile transmission, on the date of transmission.
(c) This Note may not be modified or amended, or any of the provisions
hereof waived, except by written agreement of the Company and EIS.
(d) This Note shall be governed by and construed in accordance with the
laws of the State of New York, without giving effect to principles thereof
relating to conflicts of laws, except that all issues concerning the relative
rights of the Company and its stockholders shall be governed by the Delaware
General Corporation Law, without giving effect to the principles thereof
relating to conflicts of laws.
(e) This Note may be executed in any number of counterparts, and each
such counterpart hereof shall be deemed to be an original instrument, but all
such counterparts together shall constitute one note. The Note may be signed and
delivered to the other party by a facsimile transmission; such transmission
shall be deemed a valid signature; provided that any signature delivered by
facsimile transmission shall be replaced by an original signature within five
days.
(f) Each of the parties shall be responsible for its own costs and
expenses incurred in connection with the transactions contemplated hereby.
[Signature page follows]
8
<PAGE> 9
IN WITNESS WHEREOF, the Company and EIS have executed this Note
on the date first above written.
ISIS PHARMACEUTICALS, INC.
By:___________________________
B. Lynne Parshall
Executive Vice President
ELAN INTERNATIONAL SERVICES, LTD.
By:___________________________
Kevin Insley
President
<PAGE> 10
EXHIBIT A
NOTICE OF REQUEST FOR DISBURSEMENT
Date:
To: Elan International Services, Ltd.
From: Isis Pharmaceuticals, Inc.
Re: Disbursement Request
Pursuant to the terms of the Convertible Promissory Note (the "Note")
issued by Isis Pharmaceuticals, Inc. (the "Company") to Elan International
Services, Ltd. ("EIS"), dated January 14, 2000, the Company hereby notifies EIS
of its request for a disbursement thereunder in the amount of $_________. Please
provide funding in the requested amount to the Company in accordance with the
following wire instructions
[
]
Sincerely,
ISIS PHARMACEUTICALS, INC.
By: ___________________________
Name:
Title:
<PAGE> 11
EXHIBIT B
NOTICE OF ELECTION TO EXERCISE A CONVERSION RIGHT
Date:
To: Isis Pharmaceuticals, Inc.
From: Elan International Services, Ltd.
Re: Exercise of a Conversion Right
- --------------------------------------------------------------------------------
Pursuant to the terms of the Convertible Promissory Note (the "Note")
issued by Isis Pharmaceuticals, Inc. (the "Company") to Elan International
Services, Ltd. ("EIS"), dated January 14, 2000, specifically Section 4 thereof,
EIS hereby notifies the Company of its intention to exercise a right of
conversion.
Pursuant to Section 4 of the Note, EIS hereby elects to convert
[$__________]* in aggregate principal amount and all accrued and unpaid interest
thereon for shares of the Company's Common Stock, par value $.001 per share,
effective [__________, ____]
We have instructed our attorneys to contact the Company to discuss the
timing and documentation of the conversion.
Sincerely,
ELAN INTERNATIONAL SERVICES, LTD.
By: ___________________________
Name:
Title:
- -----------
* Amount must represent one or more tranches drawn down by the Company under the
Note.
<PAGE> 1
EXHIBIT 10.4
Exhibit F to Securities Purchase Agreement
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT
UNDER ANY CIRCUMSTANCES BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER SUCH
ACT OR APPLICABLE STATE SECURITIES LAWS.
THE TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS ALSO SUBJECT
TO THE RESTRICTIONS CONTAINED IN THAT CERTAIN SECURITIES PURCHASE AGREEMENT,
DATED JANUARY 14, 2000, BY AND BETWEEN ISIS PHARMACEUTICALS, INC. AND ELAN
INTERNATIONAL SERVICES, LTD.
[__________], 2000
ISIS PHARMACEUTICALS, INC.
WARRANT TO PURCHASE SHARES
OF COMMON STOCK
THIS CERTIFIES THAT for value received, Elan International Services, Ltd., a
Bermuda exempted limited liability company ("EIS"), or its permitted transferees
and successors as provided herein (each, a "Holder"), is entitled to subscribe
for and purchase the Determined Number (as defined below) of shares (the
"Shares") of the fully paid and nonassessable common stock, par value $.001 per
share (the "Common Stock"), of Isis Pharmaceuticals, Inc., a Delaware
corporation (the "Company"), with offices located at 2292 Faraday Avenue,
Carlsbad, CA 92008, at the price per share equal to 200% of the price per share
paid by EIS to purchase shares of Common Stock on the First Subsequent Purchase
Date (such price, and such other prices that shall result from time to time,
from the adjustments specified in Section 4, the "Warrant Price"), subject to
the provisions and upon the terms and conditions hereinafter set forth.
"Determined Number" shall mean 5% of the aggregate number of shares of Common
Stock purchased by EIS, or its successors or permitted assigns, on the First
Subsequent Purchase Date, pursuant to Section 1(b)(ii) of the Securities
Purchase Agreement, dated as of January 14, 2000, by and between the Company and
EIS (the "Securities Purchase Agreement"). Capitalized terms used but not
otherwise defined herein shall, unless otherwise indicated, have the meanings
given such terms in the Securities Purchase Agreement.
<PAGE> 2
1. Term. The purchase right represented by this Warrant is exercisable,
in whole or in part, at any time, and from time to time, from and after the date
hereof and until 5:00 p.m. Eastern Standard Time on [________], 2005 (the fifth
anniversary of the First Subsequent Purchase Date). To the extent not exercised
at 5:00 p.m. Eastern Standard Time on [________], 2005, (the fifth anniversary
of the First Subsequent Purchase Date) this Warrant shall completely and
automatically terminate and expire, and thereafter it shall be of no force or
effect.
2. Method of Exercise; Payment; Issuance of New Warrant.
(a) The purchase right represented by this Warrant may be
exercised by the Holder, in whole or in part and from time to time, by the
surrender of this Warrant (with the notice of exercise form attached hereto as
Annex A duly executed) at the principal office of the Company and by the payment
to the Company of an amount, in cash or other immediately available funds, equal
to the then-applicable Warrant Price per Share multiplied by the number of
Shares then being purchased or pursuant to the cashless exercise procedure
described below.
(b) In lieu of delivering cash or other immediately available
funds, the Holder may instruct the Company in writing to deduct from the number
of Shares that would otherwise be issued upon such exercise, a number of shares
of Common Stock equal to the quotient obtained from dividing (x) the product
obtained by multiplying (A) the number of Shares for which the Warrant is being
exercised and (B) the Warrant Price then in effect by (y) a price equal to the
average of the closing price of the Common Stock for the 60 trading days ending
two business days prior to the date of exercise.
(c) The persons or entities in whose name(s) any certificate(s)
representing Shares shall be issuable upon exercise of this Warrant shall be
deemed to have become the holder(s) of record of, and shall be treated for all
purposes as the record holder(s) of, the Shares represented thereby (and such
Shares shall be deemed to have been issued) immediately prior to the close of
business on the date or dates upon which this Warrant is properly exercised and
full payment for the Shares acquired pursuant to such exercise is made. Upon any
exercise of the rights represented by this Warrant, certificates for the Shares
purchased shall be delivered to the Holder hereof as soon as possible and in any
event within 15 days of receipt of such notice and payment, and unless this
Warrant has been fully exercised or expired, a new Warrant representing the
portion of Shares, if any, with respect to which this Warrant shall not then
have been exercised shall also be issued to the Holder hereof as soon as
possible and in any event within such 15-day period.
3. Stock Fully Paid, Reservation of Shares. All Shares that may be
issued upon the exercise of this Warrant shall, upon issuance, be duly and
validly authorized and issued, fully paid and nonassessable, and will not be
subject to any liens or charges imposed on the Company or issued in violation of
any preemptive or similar rights. During the period within which this Warrant
may be exercised, the Company will at all times have authorized and reserved for
the purpose of the issue upon the exercise of the purchase rights evidenced by
this Warrant a sufficient number of shares of its Common Stock to provide for
the exercise of the rights represented by this Warrant.
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<PAGE> 3
4. Adjustment of Warrant Price and Number of Shares. The number and kind
of securities purchasable upon the exercise of this Warrant and the Warrant
Price shall be subject to adjustment from time to time upon the occurrence of
certain events, as follows:
(a) Reclassification, Etc. In case of (i) any reclassification,
reorganization, change or conversion of securities of the class issuable upon
exercise of this Warrant (other than a change in par value, or from par value to
no par value), or (ii) any consolidation of the Company with or into another
entity (other than a merger or consolidation with another entity in which the
Company is the surviving entity and that does not result in any reclassification
or change of outstanding securities issuable upon exercise of this Warrant), or
(iii) any sale of all or substantially all the assets of the Company, then, in
any event, (x) the Company, or such successor or purchasing entity, as the case
may be, shall duly execute and deliver to the Holder of this Warrant a new
Warrant or a supplement hereto (in form and substance reasonably satisfactory to
the Holder of this Warrant), and (y) the Holder shall have the right to receive,
at a total purchase price not to exceed that payable upon the exercise of the
unexercised portion of this Warrant, and in lieu of the shares of Common Stock
theretofore issuable upon the exercise of this Warrant, the kind and amount of
shares of stock and other securities, receivable upon such reclassification,
reorganization, change or conversion by a holder of the number of shares of
Common Stock then purchasable under this Warrant. Such new Warrant shall provide
for adjustments that shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Section 4. The provisions of this Section 4(a)
shall similarly attach to successive reclassifications, reorganizations,
changes, and conversions.
(b) Subdivision or Combination of Shares. If the Company at any
time during which this Warrant remains outstanding and unexpired shall subdivide
or combine its Common Stock, (i) in the case of a subdivision, the Warrant Price
shall be proportionately decreased and the number of Shares purchasable
hereunder shall be proportionately increased, and (ii) in the case of a
combination, the Warrant Price shall be proportionately increased and the number
of Shares purchasable hereunder shall be proportionately decreased.
(c) No Impairment. The Company will not, by amendment of its
Certificate of Incorporation or by-laws or through any reorganization,
recapitalization, transfer of assets, consolidation, merger, dissolution, issue
or sale of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be observed or performed
hereunder by the Company, but will at all times in good faith assist in the
carrying out of all the provisions of this Section 4 and in the taking of all
such action as may be necessary or appropriate in order to protect the rights of
the Holder against impairment.
(d) Notice of Adjustments. Whenever the Warrant Price or the
number of Shares purchasable hereunder shall be adjusted pursuant to this
Section 4, the Company shall prepare a certificate setting forth, in reasonable
detail, the event requiring the adjustment, the amount of the adjustment, the
method by which such adjustment was calculated. Such certificate shall be signed
by the Company's chief financial officer and shall be delivered to the Holder.
(e) Fractional Shares. No fractional shares of Common Stock will
be issued in connection with any exercise hereunder, but in lieu of such
fractional shares the Company
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<PAGE> 4
shall make a cash payment therefor based on the average of the closing price of
the Common Stock for the 60 trading days ending two business days prior to date
of exercise.
(f) Cumulative Adjustments. No adjustment in the Warrant Price or
the number of Shares purchasable hereunder shall be required under this Section
4 until cumulative adjustments result in a concomitant change of 1% or more of
the Warrant Price or in the number of shares of Common Stock purchasable upon
exercise of this Warrant as in effect prior to the last such adjustment;
provided, however, that any adjustments that by reason of this Section 4 are not
required to be made shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this Section 4 shall be made to
the nearest cent or to the nearest one-hundredth of a share, as the case may be.
5. Compliance with Securities Act; Disposition of Warrant or Shares of
Common Stock.
(a) The Holder, by acceptance hereof, agrees that this Warrant
and the Shares to be issued upon exercise hereof and, without limiting the
foregoing, agrees that this Warrant and the Shares to be issued upon exercise
hereof are being acquired for investment and that such Holder will not offer,
sell or otherwise dispose of this Warrant or any Shares to be issued upon
exercise hereof except under circumstances which will not result in a violation
of applicable securities laws. Upon exercise of this Warrant, unless the Shares
being acquired are registered under the Securities Act of 1933, as amended (the
"Act"), or an exemption from the registration requirements of such Act is
available, the Holder shall confirm in writing, by executing an instrument in
form reasonably satisfactory to the Company, that the Shares so purchased are
being acquired for investment and not with a view toward distribution or resale.
This Warrant and all Shares issued upon exercise of this Warrant (unless
registered under the Securities Act) shall be stamped or imprinted with legends
in substantially the following forms:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT UNDER ANY
CIRCUMSTANCES BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF
WITHOUT AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND ANY APPLICABLE
STATE SECURITIES LAWS OR AN OPINION OF COUNSEL SATISFACTORY TO
THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER SUCH ACT OR
APPLICABLE STATE SECURITIES LAWS.
THE TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE
IS ALSO SUBJECT TO THE RESTRICTIONS CONTAINED IN THAT CERTAIN
SECURITIES PURCHASE AGREEMENT, DATED JANUARY 14, 2000, BY AND
BETWEEN ISIS
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<PAGE> 5
PHARMACEUTICALS, INC. AND ELAN INTERNATIONAL SERVICES, LTD.
(b) (i) This Warrant may be transferred or assigned, in whole or
in part, by EIS to its affiliates and/or subsidiaries, as well as any
special purpose financing or similar vehicle established by EIS or its
affiliates; provided, that the transferor shall continue to be liable
and obligated for its obligations hereunder. Subject to the foregoing,
this Warrant and all of the provisions hereof shall be binding upon and
inure to the benefit of the parties hereto and their respective
successors and permitted assigns. Other than as set forth above, this
Warrant may not be transferred or assigned by either party without the
prior written consent of the other; provided, however, that no consent
shall be required in connection with any transfer or assignment by a
party pursuant to a sale of all or substantially all of the business of
such party to which the Transaction Documents relate, whether by merger,
sale of stock, sale of assets or otherwise.
(ii) With respect to any offer, sale or other disposition of
this Warrant or any Shares acquired pursuant to the exercise of this
Warrant prior to registration of such Shares, the Holder shall give
written notice to the Company prior thereto, describing briefly the
manner thereof, together with a written opinion of such Holder's
counsel, if requested by the Company, to the effect that such offer,
sale or other disposition may be effected without registration or
qualification (under the Securities Act as then in effect or any other
applicable federal or state securities law then in effect) of this
Warrant or such Shares and indicating whether or not under the
Securities Act certificates for this Warrant or such Shares to be sold
or otherwise disposed of require any restrictive legend as to applicable
restrictions on transferability in order to ensure compliance with the
Securities Act. Promptly upon receiving such written notice and
reasonably satisfactory opinion, if so requested, the Company, as
promptly as practicable, shall notify such Holder that such Holder may
sell or otherwise dispose of this Warrant or such Shares, all in
accordance with the terms of the notice delivered to the Company. Each
certificate representing this Warrant or the Shares thus transferred
shall bear a legend as to the applicable restrictions on transferability
in order to insure compliance with the Securities Act, unless in the
aforesaid opinion of counsel for the Holder such legend is not required
in order to insure compliance with the Securities Act. The Company may
issue stop transfer instructions to its transfer agent in connection
with such restrictions.
(iii) The shares of Common Stock underlying this Warrant are
entitled to the benefit of certain registration rights as set forth in a
Registration Rights Agreement dated as of the date hereof between the
Company and the initial Holder named herein.
6. No Rights as Stockholders. No Holder, as such, shall be entitled to
vote or receive dividends or be deemed the holder of Shares or any other
securities of the Company which may at any time be issuable upon the exercise
hereof for any purpose, nor shall anything contained herein be construed to
confer upon the Holder, as such, any right to vote for the election of directors
or upon any matter submitted to stockholders at any meeting thereof, or to
receive notice of meetings, or to receive dividends or subscription rights or
otherwise until this
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<PAGE> 6
Warrant is exercised and the Shares purchasable upon the exercise hereof shall
have become deliverable, as provided herein.
7. Representations and Warranties. The Company represents and warrants
to the Holder as follows:
(a) The Company has all requisite corporate power and authority
to authorize and execute this Warrant and the certificates evidencing the Shares
and to perform all obligations and undertakings under this Warrant and the
certificates evidencing the Shares;
(b) This Warrant has been duly authorized and executed by the
Company and is a valid and binding obligation of the Company enforceable in
accordance with its terms; except that enforcement may be limited by (i)
applicable bankruptcy, insolvency, reorganization, arrangement, moratorium or
other similar laws affecting creditors' rights, and (ii) general equity
principles and limitations on the availability of equitable relief, including
specific performance.
(c) The Shares have been duly authorized and reserved for
issuance by the Company and, when issued in accordance with the terms hereof,
will be validly issued, fully paid and nonassessable; and
(d) The execution and delivery of this Warrant are not, and the
issuance of the Shares upon exercise of this Warrant in accordance with the
terms hereof will not be, inconsistent with the Company's Certificate of
Incorporation or bylaws, as amended, and do not and will not constitute a
default under, any indenture, mortgage, material contract or other material
instrument to which the Company is a party or by which it is bound.
8. Miscellaneous.
(a) This Warrant may not be modified or amended, or any
provisions hereof waived, except by written agreement of the Company and the
Holder.
(b) Any notice, request or other document required or permitted
to be given or delivered to the Holder or the Company shall (i) be in writing,
(ii) be delivered personally or sent by mail or overnight courier to the
intended recipient to Holder at its address as shown on the books of the
Company, or to the Company at the address indicated therefor on the signature
page of this Warrant, and (iii) be effective on receipt if delivered personally,
two business days after dispatch if mailed, and one business day after dispatch
if sent by overnight courier service.
(c) The Company covenants to the Holder that upon receipt of
evidence reasonably satisfactory to the Company of the loss, theft, destruction
or mutilation of this Warrant and, in the case of any such loss, theft or
destruction, upon receipt of a bond or indemnity reasonably satisfactory to the
Company, or in the case of any such mutilation upon surrender and cancellation
of such Warrant, the Company will prepare and deliver a new Warrant, of like
tenor, in lieu of the lost, stolen, destroyed or mutilated Warrant.
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<PAGE> 7
(d) The descriptive headings of the several sections and
paragraphs of this Warrant are inserted for convenience only and do not
constitute a part of this Warrant.
(e) This Warrant shall be governed by and construed in accordance
with the laws of the State of New York without giving effect to the principles
thereof relating to conflicts of laws, except that all issues concerning the
relative rights of the Company and its stockholders shall be governed by the
Delaware General Corporation Law, without giving effect to the principles
thereof relating to conflicts of laws.
(f) This Warrant may be executed in any number of counterparts,
and each such counterpart hereof shall be deemed to be an original instrument,
but all such counterparts together shall constitute one Warrant. This Warrant
may be signed and delivered to the other party by a facsimile transmission; such
transmission shall be deemed a valid signature; provided that any signature
delivered by facsimile transmission shall be replaced by an original signature
within five days.
(g) Each of the parties shall be responsible for its own costs
and expenses incurred in connection with the transactions contemplated hereby.
[Signature page follows]
7
<PAGE> 8
IN WITNESS WHEREOF, Isis Pharmaceuticals, Inc. has caused this
Warrant to be executed and delivered by its duly authorized corporate officers
on the date first above written.
ISIS PHARMACEUTICALS, INC.
By:___________________________
B. Lynne Parshall
Executive Vice President
Attest:
By:___________________________
Name:
Title:
Agreed and accepted by:
ELAN INTERNATIONAL SERVICES, LTD.
By:___________________________
Kevin Insley
President
<PAGE> 9
ANNEX A
NOTICE OF EXERCISE
To: Isis Pharmaceuticals, Inc.
1. The undersigned hereby elects to purchase __________ shares of Common
Stock of Isis Pharmaceuticals, Inc. pursuant to the terms of the
attached Warrant, and
[ ] (a) tenders herewith full payment of the purchase price of such
shares, in cash or other immediately available funds.
[ ] (b) instructs and agrees that pursuant to paragraph 2(b) of the
attached Warrant, __________ shares of Common Stock be withheld
in payment therefor.
2. Please issue a certificate or certificates representing said shares in
the name of the undersigned or in such other name or names as are
specified below:
_____________________________________(Name)
_____________________________________(Address)
3. The undersigned represents that the aforesaid shares are being acquired
for the account of the undersigned for investment and not with a view
to, or for resale in connection with, the distribution thereof and that
the undersigned has no present intention of distributing or reselling
such shares and otherwise confirms the investment representations made
in Section 5 of the Warrant with regard to the shares of Common Stock
being acquired.
Signature:__________________________
Name:_____________________________
Address:___________________________
Social Security or taxpayer identification number:
___________________________________
<PAGE> 1
EXHIBIT 10.5
ISIS PHARMACEUTICALS, INC.
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made as
of January 14, 2000 by and between ISIS PHARMACEUTICALS, INC., a Delaware
corporation (the "Company"), and ELAN INTERNATIONAL SERVICES, LTD., a Bermuda
exempted limited liability company ("EIS").
R E C I T A L S:
A. Pursuant to a Securities Purchase Agreement, dated as of the
date hereof by and between the Company and EIS (the "Purchase Agreement"), EIS
has acquired, or may acquire in the future, (i) certain shares of common stock,
par value $.001 per share, of the Company (the "Common Stock"), (ii) certain
shares of Series B Convertible Exchangeable Preferred Stock, par value $.001 per
share, of the Company (the "Series B Preferred Stock"), (iii) a convertible
promissory note (the "Note"), which Series B Preferred Stock and Note are
convertible into shares of Common Stock, and (iv) warrants to be issued pursuant
to the Purchase Agreement (the "Warrants", together with the Series B Preferred
Stock and the Note, the "Securities") exercisable for shares of Common Stock.
B. The execution of the Purchase Agreement has occurred on the
date hereof and it is a condition to the closing of the transactions
contemplated thereby that the parties execute and deliver this Agreement.
C. The parties desire to set forth herein their agreement as to
the terms and subject to the conditions set forth herein related to the granting
of certain registration rights to the Holders (as defined below) relating to the
Common Stock held by such Holders and the Common Stock underlying the
Securities.
A G R E E M E N T:
The parties hereto agree as follows:
1. Certain Definitions. As used in this Agreement, the following
terms shall have the following respective meanings:
"Commission" shall mean the U.S. Securities and Exchange
Commission.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission thereunder, all as the
same shall be in effect from time to time.
"Holders" or "Holders of Registrable Securities" shall mean EIS
and any Person who shall have acquired Registrable Securities from EIS as
permitted herein, either individually
<PAGE> 2
or jointly, as the case may be, in a transaction pursuant to which registration
rights are transferred pursuant to Section 11 hereof.
"Person" shall mean an individual, a partnership, a company, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization and a governmental or quasi-governmental entity, or any department,
agency or political subdivision thereof.
"Registrable Securities" means (i) any shares of Common Stock
purchased pursuant to the Purchase Agreement, any shares of Common Stock issued
or issuable upon conversion of shares of Series B Preferred Stock (or issued as
dividends thereon) or the Note, and any shares of Common Stock issued or
issuable upon exercise of any Warrant, and (ii) any Common Stock issued or
issuable in respect of the securities referred to in clause (i) above upon any
stock split, stock dividend, recapitalization or similar event; excluding in all
cases, however, any Registrable Securities sold by a Person in a transaction
(including a transaction pursuant to a registration statement under this
Agreement and a transaction pursuant to Rule 144 promulgated under the
Securities Act) in which registration rights are not transferred pursuant to
Section 11 hereof.
The terms "register," "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or order of the
effectiveness of such registration statement.
"Registration Expenses" shall mean all expenses, other than
Selling Expenses, incurred by the Company in complying with Sections 2, 3 or 4
hereof, including without limitation, all registration, qualification and filing
fees, exchange listing fees, printing expenses, escrow fees, fees and
disbursements of counsel for the Company, blue sky fees and expenses, the
expense of any special audits incident to or required by any such registration
and the reasonable fees and disbursements, not to exceed $10,000, of one counsel
for the Holders, such counsel to be selected by Holders holding a majority of
the Registrable Securities included in such registration.
"Securities Act" shall mean the Securities Act of 1933, as
amended, and the rules and regulations of the Commission thereunder, all as the
same shall be in effect from time to time.
"Selling Expenses" shall mean all underwriting discounts, selling
commissions and stock transfer taxes applicable to the securities registered by
the Holders and the costs of any accountants, attorneys or other experts
retained by the Holders, except as expressly included in Registration Expenses.
2. Demand Registration.
(a) Requests for Registration. From and after the date hereof
until the date of filing of the Shelf Registration Statement (as defined
herein), any Holder or Holders who collectively hold Registrable Securities
representing at least 50% of the Registrable Securities then outstanding shall
have the right at any time from time to time, to request one registration
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<PAGE> 3
under the Securities Act of a minimum of 500,000 shares of Common Stock (as
adjusted for any combinations, consolidations, stock distributions, stock
dividends or other recapitalizations with respect to such shares) on Form S-1,
S-2 or S-3 (if available) or any similar registration statement (a "Demand
Registration"), such form to be selected by the Company as appropriate. The
request for the Demand Registration shall specify the approximate number of
Registrable Securities requested to be registered. Within 20 days after receipt
of any such request, the Company will give written notice of such requested
registration to all other Holders of Registrable Securities. The Company shall
include such other Holders' Registrable Securities in such offering if they have
responded affirmatively within 20 days after the receipt of the Company's
notice. The Holders in aggregate will be entitled to request only one Demand
Registration hereunder. A registration will not count as the permitted Demand
Registration until it has become effective (unless such Demand Registration has
not become effective due solely to the fault of the Holders requesting such
registration, including a request by such Holders that such registration be
withdrawn). The Company shall pay all Registration Expenses in connection with
any Demand Registration whether or not such Demand Registration has become
effective and the Holders requesting registration shall pay all Selling Expenses
in connection therewith.
(b) Priority on Demand Registration. If a Demand Registration is
an underwritten offering and the managing underwriters advise the Company in
writing that in their opinion the number of Registrable Securities requested to
be included in such offering exceeds the number of Registrable Securities which
can be sold in such offering without adversely affecting the marketability of
the offering, the Company will include in such registration such number of
Registrable Securities allocated pro rata among the Holders thereof based upon
the number of Registrable Securities owned by each such Holder. Other than the
securities issued by the Company to Reliance Insurance Company, no securities
other than Registrable Securities hereunder shall be included in such Demand
Registration without the prior written consent of Holders who collectively hold
Registrable Securities representing at least 50% of the Registrable Securities
then outstanding.
(c) Restrictions on Demand Registration. The Company may postpone
the filing or the effectiveness of a registration statement for a Demand
Registration one time in any 12 month period for up to 90 days if the Company
determines in good faith that such Demand Registration would reasonably be
expected to have a material adverse effect on any proposal or plan by the
Company or would require disclosure of any information that the board of
directors of the Company determines in good faith the disclosure of which would
be detrimental to the Company; provided, however, that in such event, the
Holders initially requesting such Demand Registration will be entitled to
withdraw such request and, if such request is withdrawn, such Demand
Registration will not count as the permitted Demand Registration hereunder and
the Company will pay any Registration Expenses in connection with such
registration.
(d) Selection of Underwriters. The Holders will have the right to
select the investment banker(s) and manager(s) to administer an offering
pursuant to the Demand Registration, subject to the Company's prior written
approval, which will not be unreasonably withheld or delayed.
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<PAGE> 4
(e) Other Registration Rights. Except as provided in this
Agreement, so long as any Holder owns any Registrable Securities, the Company
will not grant to any Persons the right to request the Company to register any
equity securities of the Company, or any securities convertible or exchangeable
into or exercisable for such securities, which conflicts with the rights granted
to the Holders hereunder, without the prior written consent of the Holders of at
least 50% of the Registrable Securities.
3. Shelf Registration Statement.
(a) The Company will cause, by June 30, 2002 (the "S-3 Filing
Date"), to be prepared and filed, and will use commercially reasonable efforts
to have declared effective with the Commission within 60 days after filing, a
Registration Statement on Form S-3 (or such other form of registration statement
that the Company shall determine and that is reasonably satisfactory to the
Holders) for an offering to be made on a continuous basis pursuant to Rule 415
(or any similar rule that may be adopted by the Commission) under the Securities
Act covering the Registrable Securities (the "Shelf Registration Statement" and
such registration, the "Shelf Registration"); provided, however, that if the
Company shall furnish to the Holders a certificate signed by any executive
officer of the Company stating that in the good faith judgment of the Board of
Directors of the Company it would be seriously detrimental to the Company to
file the Shelf Registration Statement at such time and it is therefore essential
to defer the filing of the Shelf Registration Statement, the Company shall have
the right to defer such filing one time in any 12 month period for a reasonable
period, not to exceed 60 days; provided further that, if the Completion Date (as
defined in the Securities Purchase Agreement) is later than June 30, 2002, the
S-3 Filing Date shall be 90 days after the Completion Date with respect to the
Shares of Common Stock purchased on the Completion Date and the shares of Common
Stock issuable upon exercise of the Warrant granted to any Holder on the
Completion Date. The Shelf Registration Statement may be terminated (and the
Company shall have no obligation to update the Shelf Registration Statement and
may suspend sales thereunder) at such time as all Registrable Securities can be
sold by their Holders within a three-month period without compliance with the
registration requirements of the Securities Act pursuant to Rule 144 (including
Rule 144(k)) promulgated thereunder (the "Termination Date"). The Holders shall
furnish to the Company such information regarding themselves, the Registrable
Securities held by them, and the intended method of distribution of such
securities as shall be required to effect the Shelf Registration Statement. In
that connection, each Holder shall be required to represent that all such
information which is given is both complete and accurate in all material
respects.
(b) So long as the Shelf Registration Statement is effective, the
Company will furnish to the Purchaser as soon as practicable after available
(but in the case of the Company's Annual Report to Stockholders, within 120 days
after the end of each fiscal year of the Company), (i) one copy of (A) its
Annual Report to Stockholders (which Annual Report shall contain financial
statements audited in accordance with generally accepted auditing standards
certified by a national firm of certified public accountants), (B) if not
included in substance in the Annual Report to Stockholders, its Annual Report on
Form 10-K, (C) if not included in substance in its Quarterly Reports to
Stockholders, its quarterly reports on Form 10-Q during such fiscal year, and
(D) a full copy of the particular Registration Statement covering the
Registrable Securities (the foregoing, in each case, excluding exhibits), (ii)
upon the reasonable
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<PAGE> 5
request of any Holder, all exhibits excluded by the parenthetical in clause (i)
of this paragraph, in the form generally available to the public, and (c) upon
the reasonable request of any Holder, an adequate number of copies of the
prospectuses and supplements to supply to any other party requiring such
prospectuses.
4. Piggyback Registrations. (a) Right to Piggyback. At any time
that the Company shall propose to register Common Stock under the Securities Act
(other than in a registration on Form S-3 relating to sales of securities to
participants in a Company dividend reinvestment plan, S-4 or S-8 or any
successor form or in connection with an acquisition or exchange offer or an
offering of securities solely to the existing shareholders or employees of the
Company), the Company shall give prompt written notice to all Holders of
Registrable Securities of its intention to effect such a registration and,
subject to Section 4(b) and the other terms of this Agreement, shall include in
such registration all Registrable Securities that are permitted under applicable
securities laws to be included in such registration and with respect to which
the Company has received written requests for inclusion therein by the Holders
within 20 days after the receipt of the Company's notice (each, a "Piggyback
Registration"; together with a Demand Registration and the Shelf Registration, a
"Registration").
(b) Priority on Piggyback Registrations. If a Piggyback
Registration is an underwritten registration on behalf of the Company, and the
managing underwriters advise the Company in writing that in their opinion the
number of securities requested to be included in such registration exceeds the
number that can be sold in such offering without adversely affecting the
marketability of the offering, the Company shall include in such registration,
only as may be permitted in the reasonable business judgment of the managing
underwriters for such registration:
(i) first, up to that number of securities the Company proposes
to sell;
(ii) second, up to that number of Registrable Securities
requested to be included in such registration by the Holders and that
number of securities requested to be included in such registration by
any other Person, pro rata among the Holders of such Registrable
Securities and such other Persons, on the basis of the number of
Registrable Securities and other securities of the Company requested to
be included by each such Holder and other Persons; and
(iii) third, up to that number of other securities requested to
be included in such registration.
The Holders of any Registrable Securities included in such a registration shall
execute an underwriting agreement and customary accompanying documents in form
and substance satisfactory to the managing underwriters.
(c) Right to Terminate Registration. If, at any time after giving
written notice of its intention to register any of its securities as set forth
in Section 4(a) and prior to the effective date of the registration statement
filed in connection with such registration, the Company shall determine for any
reason not to register such securities, the Company may, at its
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<PAGE> 6
election, give written notice of such determination to each Holder of
Registrable Securities and thereupon be relieved of its obligation to register
any Registrable Securities in connection with such registration (but not from
its obligation to pay the Registration Expenses in connection therewith as
provided herein).
(d) Selection of Underwriters. The Company shall have the right
to select the investment banker(s) and manager(s) to administer an offering
pursuant to a Piggyback Registration.
5. Expenses of Registration. Except as otherwise provided herein,
all Registration Expenses incurred in connection with all registrations pursuant
to Sections 2, 3 and 4 shall be borne by the Company and all Selling Expenses
relating to securities registered on behalf of the Holders of Registrable
Securities shall be borne by such Holders.
6. Holdback Agreements.
(a) The Company agrees, unless the underwriters managing the
registered public offering otherwise agree, (i) not to effect any public sale or
distribution of its equity securities, or any securities convertible into or
exchangeable or exercisable for such securities, for its own account during the
seven days prior to and during the 90-day period beginning on the effective date
of any underwritten Demand Registration (except (A) as part of such underwritten
registration, (B) pursuant to registration statements on Form S-4 or Form S-8 or
any successor form, (C) pursuant to a registration statement then in effect or
(D) as required under any existing contractual obligation of the Company), and
(ii) to cause its officers and directors and to use reasonable efforts to cause
each holder of at least 5% (on a fully-diluted basis) of its outstanding Common
Stock, or any securities convertible into or exchangeable or exercisable for
Common Stock, purchased from the Company at any time after the date of this
Agreement (other than in a registered public offering) to agree not to effect
any public sale or distribution (including sales pursuant to Rule 144) of any
such securities during such periods (except as part of such underwritten
registration, if otherwise permitted).
(b) Each Holder agrees, if requested by the managing underwriter
or underwriters in an underwritten offering of securities of the Company, not to
effect any offer, sale, distribution or transfer, including a sale pursuant to
Rule 144 (or any similar provision then effect) under the Securities Act (except
as part of such underwritten registration), during the seven-day period prior
to, and during the 180-day period (or such shorter period as may be agreed to in
writing by the Company and the Holders of at least 50% of the Registrable
Securities) following the effective date of such Registration Statement to the
extent timely notified in writing by the managing underwriter or underwriters.
7. Registration Procedures. Whenever the Company is under the
obligation to register Registrable Securities hereunder, the Company will use
all reasonable efforts to effect the Registration and the sale of such
Registrable Securities, and pursuant thereto the Company will as expeditiously
as possible:
(a) subject to Section 2(c) and 3(a) hereof, prepare and file
with the Commission a registration statement on any form for which the Company
qualifies with respect
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<PAGE> 7
to such Registrable Securities and use all reasonable efforts to cause such
registration statement to become effective (provided that before filing a
registration statement or prospectus or any amendments or supplements thereto,
the Company will (i) furnish to the counsel selected by the Holders copies of
all such documents proposed to be filed, which documents will be subject to the
prompt review of such counsel, and (ii) notify each Holder of Registrable
Securities covered by such registration of any stop order issued or threatened
in writing by the Commission);
(b) subject to Section 2(c), 3(b) and 7(e) hereof, prepare and
file with the Commission such amendments and supplements to such registration
statement and the prospectus used in connection therewith as may be necessary to
keep such registration statement effective for, in the case of a Demand
Registration, a period equal to the shorter of (i) six months and (ii) the time
by which all securities covered by such registration statement have been sold,
and in the case of the Shelf Registration Statement, a period equal to the
shorter of (x) one year and (y) the date upon which the Termination Date occurs,
and comply with the provisions of the Securities Act with respect to the
disposition of all securities covered by such registration statement during such
period in accordance with the intended methods of disposition by the sellers
thereof set forth in such registration statement;
(c) furnish to each seller of Registrable Securities such number
of copies of such registration statement, each amendment and supplement thereto,
the prospectus included in such registration statement (including each
preliminary prospectus) and such other documents as such seller may reasonably
request in order to facilitate the disposition of the Registrable Securities
owned by such seller;
(d) use all reasonable efforts to register or qualify such
Registrable Securities under the securities or blue sky laws of such
jurisdictions as any seller reasonably requests and do any and all other acts
and things which may be reasonably necessary or advisable to enable such seller
to consummate the disposition in such jurisdictions of the Registrable
Securities owned by such seller (provided that the Company will not be required
to (i) qualify generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this Section 7(d), or (ii) subject
itself to taxation in any jurisdiction;
(e) notify each seller of such Registrable Securities, at any
time when a prospectus relating thereto is required to be delivered under the
Securities Act, of the occurrence 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 any material fact necessary to make the statements
therein in light of the circumstances under which they were made were not
misleading, and, at the request of any such seller, the Company will prepare a
supplement or amendment to such prospectus so that, as thereafter delivered to
the purchasers of such Registrable Securities, such prospectus will not contain
an untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein in light of the circumstances under
which they were made not misleading; provided, however, that the Company shall
not be required to amend the registration statement or supplement the Prospectus
for a period of up to six months if the board of directors of the Company
determines in good faith that to do so would reasonably be expected to have a
material adverse effect on any proposal or plan by the Company to engage in any
financing, acquisition or disposition of assets (other than in the ordinary
course of business)
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<PAGE> 8
or any merger, consolidation, tender offer or similar transaction or would
require the disclosure of any information that the board of directors of the
Company determines in good faith the disclosure of which would be detrimental to
the Company, it being understood that the period for which the Company is
obligated to keep the Registration Statement effective shall be extended for a
number of days equal to the number of days the Company delays amendments or
supplements pursuant to this provision. Upon receipt of any notice pursuant to
this Section 7(e), the Holders shall suspend all offers and sales of securities
of the Company and all use of any prospectus until advised by the Company that
offers and sales may resume, and shall keep confidential the fact and content of
any notice given by the Company pursuant to this Section 7(e);
(f) cause all such Registrable Securities to be listed on each
securities exchange on which similar securities issued by the Company are then
listed;
(g) provide a transfer agent and registrar for all such
Registrable Securities not later than the effective date of such registration
statement;
(h) enter into such customary agreements (including underwriting
agreements in customary form) and take all such other actions as the Holders of
a majority of the Registrable Securities being sold or the underwriters, if any,
reasonably request in order to expedite or facilitate the disposition of such
Registrable Securities;
(i) at reasonable times and as reasonably requested make
available for inspection by a representative of the Holders of Registrable
Securities included in the registration statement, any underwriter participating
in any disposition pursuant to such registration statement and any attorney,
accountant or other agent retained by any such seller or underwriter, all
pertinent financial and other records, pertinent corporate documents and
properties of the Company, and use commercially reasonable efforts to cause the
Company's officers, directors, employees and independent accountants to supply
all information reasonably requested by any such seller, underwriter, attorney,
accountant or agent in connection with such registration statement;
(j) otherwise use its reasonable efforts to comply with all
applicable rules and regulations of the Commission, and make available to its
security holders, as soon as reasonably practicable, an earnings statement
covering the period of at least 12 months beginning with the first day of the
Company's first full calendar quarter after the effective date of the
registration statement, which earnings statement shall satisfy the provisions of
Section 12(a) of the Securities Act and Rule 158 thereunder;
(k) in the event of the issuance of any stop order suspending the
effectiveness of a registration statement, or of any order suspending or
preventing the use of any related prospectus or suspending the qualification of
any Common Stock included in such registration statement for sale in any
jurisdiction, use all reasonable efforts promptly to obtain the withdrawal of
such order; and
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<PAGE> 9
(l) if the registration is an underwritten offering, use all
reasonable efforts to obtain a so-called "cold comfort" letter from the
Company's independent public accountants in customary form and covering such
matters of the type customarily covered by cold comfort letters.
8. Obligations of Holders. Whenever the Holders of Registrable
Securities sell any Registrable Securities pursuant to a Registration, such
Holders shall be obligated to comply with the applicable provisions of the
Securities Act, including the prospectus delivery requirements thereunder, and
any applicable state securities or blue sky laws.
9. Indemnification. (a) In connection with any registration
statement for any Registration in which a Holder of Registrable Securities is
participating, the Company agrees to indemnify, to the fullest extent permitted
by applicable law, each such Holder of Registrable Securities, its officers and
directors and each Person who controls such Holder (within the meaning of the
Securities Act) against all losses, claims, damages, liabilities, reasonable and
documented expenses or any amounts paid in settlement of any litigation,
investigation or proceeding commenced or threatened to which each such
indemnified party may become subject under the Securities Act including, without
limitation, reasonable attorneys fees and disbursements (collectively, "Claims")
insofar as such Claim arose out of (i) any untrue or alleged untrue statement of
material fact contained, on the effective date thereof, in any such registration
statement, prospectus or preliminary prospectus or any amendment thereof or
supplement thereto or (ii) any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as the same are caused by or contained in
any information furnished in writing to the Company by such Holder expressly for
use therein or by such Holder's failure to deliver a copy of the registration
statement or prospectus or any amendments or supplements thereto after the
Company has furnished such Holder with a sufficient number of copies of the
same. In connection with an underwritten offering, the Company will indemnify
the underwriters, their officers and directors and each Person who controls the
underwriters (within the meaning of the Securities Act) to the same extent as
provided above with respect to the indemnification of the Holders of Registrable
Securities.
(b) In connection with any registration statements for any
Registration in which a Holder of Registrable Securities is participating, each
such Holder will furnish to the Company in writing such customary information as
the Company reasonably requests for use in connection with any such registration
statement or prospectus (the "Seller's Information") and, to the fullest extent
permitted by applicable law, will indemnify the Company, its directors and
officers and each Person who controls the Company (within the meaning of the
Securities Act) against any and all Claims to which each such indemnified party
may become subject under the Securities Act insofar as such Claim arose out of
(i) any untrue or alleged untrue statement of material fact contained, on the
effective date thereof, in any such registration statement, prospectus or
preliminary prospectus or any amendment thereof or supplement thereto or (ii)
any omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading;
provided that with respect to a Claim arising pursuant to clause (i) or (ii)
above, the material misstatement or omission is contained in such Seller's
Information; provided, further, that the obligation to indemnify will be
individual to
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<PAGE> 10
each Holder and will be limited to the amount of proceeds received by such
Holder from the sale of Registrable Securities pursuant to such registration
statement.
(c) Any Person entitled to indemnification hereunder will (i)
give prompt written notice to the indemnifying party of any claim with respect
to which it seeks indemnification (but the failure to provide such notice shall
not release the indemnifying party of its obligation under paragraphs (a) and
(b), unless and then only to the extent that, the indemnifying party has been
prejudiced by such failure to provide such notice) and (ii) 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. 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.
(d) The indemnifying party shall not be liable to indemnify an
indemnified party for any settlement, or consent to judgment of any such action
effected without the indemnifying party's written consent (but such consent will
not be unreasonably withheld). Furthermore, the indemnifying party shall not,
except with the prior written approval of each indemnified party, consent to
entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to each
indemnified party of a release from all liability in respect of such claim or
litigation without any payment or consideration provided by each such
indemnified party.
(e) If the indemnification provided for in this Section 9 is
unavailable to an indemnified party under clauses (a) and (b) above in respect
of any losses, claims, damages or liabilities referred to therein, then each
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities in such proportion as is
appropriate to reflect not only the relative benefits received by the Company
(if any), the underwriters, the sellers of Registrable Securities and any other
sellers participating in the registration statement from the sale of shares
pursuant to the registered offering of securities for which indemnity is sought
but also the relative fault of the Company, the underwriters, the sellers of
Registrable Securities and any other sellers participating in the registration
statement in connection with the statement or omission which resulted in such
losses, claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Company (if any), the
underwriters, the sellers of Registrable Securities and any other sellers
participating in the registration statement shall be deemed to be based on the
relative relationship of the total net proceeds from the offering (before
deducting expenses) to the Company (if any), the total underwriting commissions
and fees from the offering (before deducting expenses) to the underwriters and
the total net proceeds from the offering (before deducting expenses) to the
sellers of Registrable Securities and any other sellers participating in the
registration statement. The relative fault of the Company, the underwriters, the
sellers of Registrable Securities and any other sellers participating in the
registration statement shall be determined by reference to,
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<PAGE> 11
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Company or by the sellers of Registrable Securities
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
(f) The indemnification provided for under this Agreement 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 the Registrable
Securities.
10. Participation in Underwritten Registrations. No Holder may
participate in any registration hereunder which is underwritten unless such
Holder (a) agrees to sell such Holder's securities on the basis provided in any
underwriting arrangements approved by the Holder or Holders entitled hereunder
to approve such arrangements, (b) as expeditiously as possible notifies the
Company of the occurrence of any event as a result of which any prospectus
contains an untrue statement of material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading and (c) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements.
11. Transfer of Registration Rights. The rights granted to any
Holder under this Agreement may be assigned to any permitted transferee of
Registrable Securities, in connection with any transfer or assignment of
Registrable Securities by a Holder; provided, however, that: (a) such transfer
is otherwise effected in accordance with applicable securities laws, (b) if not
already a party hereto, the assignee or transferee agrees in writing prior to
such transfer to be bound by the provisions of this Agreement applicable to the
transferor, (c) such transferee shall own, after giving effect to such transfer,
Registrable Securities representing at least 200,000 shares of Common Stock (as
adjusted for any combinations, consolidations, stock distributions, stock
dividends or other recapitalizations with respect to such shares), and (d) EIS
shall act as agent and representative for such Holder for the giving and
receiving of notices hereunder.
12. Information by Holder. Each Holder shall furnish to the
Company such written information regarding such Holder and any distribution
proposed by such Holder as the Company may reasonably request in writing and as
shall be reasonably required in connection with any registration, qualification
or compliance referred to in this Agreement and shall promptly notify the
Company of any changes or updates in such information.
13. Exchange Act Compliance. The Company shall comply with all of
the reporting requirements of the Exchange Act then applicable to it and shall
comply with all other public information reporting requirements of the
Commission which are conditions to the availability of Rule 144 for the sale of
the Registrable Securities. The Company shall cooperate with each Holder in
supplying such information as may be necessary for such Holder to complete and
file any information reporting forms presently or hereafter required by the
Commission as a condition to the availability of Rule 144.
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<PAGE> 12
14. Termination of Registration Rights. All registration rights
granted under this Agreement shall terminate and be of no further force and
effect, as to any particular Holder, at such time as all Registrable Securities
held by such Holder can be sold within a three-month period without compliance
with the registration requirements of the Securities Act pursuant to Rule 144
(including Rule 144(k)) promulgated thereunder.
15. Miscellaneous.
(a) No Inconsistent Agreements. The Company will not hereafter
enter into any agreement with respect to its securities which is inconsistent
with or violates the rights granted to the Holders of Registrable Securities in
this Agreement without the prior written consent of a majority in interest of
such Registrable Securities.
(b) Remedies. Any Person having rights under any provision of
this Agreement will be entitled to enforce such rights specifically to recover
damages caused by reason of any breach of any provision of this Agreement and to
exercise all other rights granted by law. The parties hereto agree and
acknowledge that money damages may not be an adequate remedy for any breach of
the provisions of this Agreement and that any party may in its sole discretion
apply to any court of law or equity of competent jurisdiction (without posting
any bond or other security) for specific performance and for other injunctive
relief in order to enforce or prevent violation of the provisions of this
Agreement; provided, however, that in no event shall any Holder have the right
to enjoin, delay or interfere with any offering of securities by the Company.
(c) Amendments and Waivers. Except as otherwise provided herein,
the provisions of this Agreement may be amended or waived only with the prior
written consent of the Company and Holders of at least 50% of the Registrable
Securities; provided, however, that without the prior written consent of all the
Holders, no such amendment or waiver shall reduce the foregoing percentage
required to amend or waive any provision of this Agreement.
(d) Successors and Assigns. All covenants and agreements in this
Agreement by or on behalf of any of the parties hereto will bind and inure to
the benefit of the respective successors and assigns of the parties hereto, and
shall inure to the benefit and be enforceable by each Holder of Registrable
Securities from time to time. In addition, whether or not any express assignment
has been made, the provisions of this Agreement which are for the benefit of
Holders of Registrable Securities are also for the benefit of, and enforceable
by, any permitted transferee of Registrable Securities in accordance with
Section 11 hereof.
(e) Severability. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision will be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.
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(f) Counterparts. This Agreement may be executed simultaneously
in two or more counterparts, any one of which need not contain the signatures of
more than one party, but all such counterparts taken together will constitute
one and the same Agreement.
(g) Descriptive Headings. The descriptive headings of this
Agreement are inserted for convenience only and do not constitute a part of this
Agreement.
(h) Governing Law. All questions concerning the construction,
validity and interpretation of this Agreement will be governed by the laws of
the State of New York without regard to principles of conflicts of laws, except
that all issues concerning the relative rights of the Company and its
stockholders shall be governed by the Delaware General Corporation Law, without
giving effect to the principles thereof relating to conflicts of laws.
(i) Notices. All notices, demands and requests of any kind to be
delivered to any party in connection with this Agreement shall be in writing and
shall be deemed to have been duly given if personally delivered or if sent by
nationally-recognized overnight courier or by registered or certified airmail,
return receipt requested and postage prepaid or by facsimile transmission (with
receipt confirmed by telephone), addressed as follows:
(i) if to the Company, to:
Isis Pharmaceuticals, Inc.
2292 Faraday Avenue
Carlsbad, CA 92008
Facsimile: (760) 931-9639
telephone confirmation required at (760) 603-2460
Attention: B. Lynne Parshall
with a copy to:
Cooley Godward LLP
4365 Executive Drive
San Diego, CA 92121
Facsimile: (619) 453-3555
telephone confirmation required at (619) 550-6000
Attention: Julie Robinson, Esq.
(ii) if to EIS, to:
Elan International Services, Ltd.
Flatts, Smiths Parish
Bermuda, FL 04
Facsimile: (441) 292-2224
telephone confirmation required at (441) 292-9169
Attention: President
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with a copy to:
Brock Silverstein LLC
800 Third Avenue, 21st Floor
New York, New York 10022
Facsimile: (212) 371-5500
telephone confirmation required at (212) 371-2000
Attention: Scott Rosenblatt, Esq.
(j) Entire Agreement. This Agreement constitutes the full and
entire understanding and agreement between the parties with regard to the
subject matter hereof.
[Signature page follows]
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IN WITNESS WHEREOF, the parties have executed this Registration
Rights Agreement as of the date first written above.
ISIS PHARMACEUTICALS, INC.
By: ________________________
Name:B. Lynne Parshall
Title: Executive Vice President
ELAN INTERNATIONAL SERVICES, LTD.
By: ________________________
Name:Kevin Insley
Title: President
<PAGE> 1
EXHIBIT 10.6
HEPASENSE LTD.
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made as
of January 14, 2000, by and among HEPASENSE LTD., a Bermuda exempted limited
liability company (the "Company"), ISIS PHARMACEUTICALS, INC., a Delaware
corporation ("Isis"), and ELAN INTERNATIONAL SERVICES, LTD., a Bermuda exempted
limited liability company ("EIS").
R E C I T A L S:
A. Pursuant to a Subscription, Joint Development and Operating
Agreement, dated as of the date hereof, by and among the Company, Isis, ELAN
CORPORATION, PLC, an Irish public limited company, ELAN PHARMA INTERNATIONAL
LIMITED, a company incorporated under the laws of Ireland ("EPIL"), and EIS (the
"JDOA"), Isis has acquired certain common shares, par value $1.00 per share (the
"Common Shares"), of the Company, and certain non-voting convertible preferred
shares, par value $1.00 per share (the "Preferred Shares"; together with Common
Shares, the "Securities"), of the Company and EIS has acquired certain Preferred
Shares, which Preferred Shares are convertible into Common Shares.
B. The execution of the JDOA has occurred on the date hereof and
it is a condition to the closing of the transactions contemplated thereby that
the parties execute and deliver this Agreement.
C. The parties desire to set forth herein their agreement as to
the terms and conditions related to the granting of certain registration rights
to the Holders (as defined below) relating to the Common Shares held by such
Holders and the Common Shares underlying the Securities.
A G R E E M E N T:
The parties hereto agree as follows:
1. Certain Definitions. As used in this Agreement, the following
terms shall have the following respective meanings:
"Commission" shall mean the U.S. Securities and Exchange
Commission.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission thereunder, all as the
same shall be in effect from time to time.
"Holders" or "Holders of Registrable Securities" shall mean Isis,
EIS and any Person who shall have acquired Registrable Securities from either
Isis or EIS as permitted herein, either individually or jointly, as the case may
be, in a transaction pursuant to which registration rights are transferred
pursuant to Section 10 hereof.
<PAGE> 2
"Person" shall mean an individual, a partnership, a company, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization and a governmental or quasi-governmental entity, or any department,
agency or political subdivision thereof.
"Registrable Securities" means (i) any Common Shares subscribed
for pursuant to the JDOA (ii) any Common Shares issuable upon conversion of the
Preferred Shares and (iii) any Common Shares issued or issuable in respect of
the securities referred to in clause (i) and (ii) above upon any stock split,
stock dividend, recapitalization or similar event; excluding in all cases,
however, any Registrable Securities sold by a Person in a transaction (including
a transaction pursuant to a registration statement under this Agreement and a
transaction pursuant to Rule 144 promulgated under the Securities Act) in which
registration rights are not transferred pursuant to Section 10 hereof.
The terms "register," "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or order of the
effectiveness of such registration statement.
"Registration Expenses" shall mean all expenses, other than
Selling Expenses, incurred by the Company in complying with Sections 2 or 3
hereof, including without limitation, all registration, qualification and filing
fees, exchange listing fees, printing expenses, escrow fees, fees and
disbursements of counsel for the Company, blue sky fees and expenses, the
expense of any special audits including without limitation reconciliation to US
GAAP incident to or required by any such registration and the reasonable fees
and disbursements, not to exceed $10,000, of one counsel for the Holders, such
counsel to be selected by Holders holding a majority of the Registrable
Securities included in such registration.
"Securities Act" shall mean the Securities Act of 1933, as
amended, and the rules and regulations of the Commission thereunder, all as the
same shall be in effect from time to time.
"Selling Expenses" shall mean all underwriting discounts, selling
commissions and stock transfer taxes applicable to the securities registered by
the Holders and the costs and fees of any accountants, attorneys or other
experts retained by any Holder or the Holders.
2. Demand Registrations.
(a) Requests for Registration. From and after the occurrence of
the initial public offering of the Company's Common Shares under the Securities
Act, any Holder or Holders who collectively hold Registrable Securities
representing at least 33% of the Registrable Securities then outstanding shall
have the right at any time from time to time, to request three registrations
under the Securities Act of all or part of their Registrable Securities on Form
F-1, F-2 or F-3 (or other analogous forms applicable to foreign private issuers
such as the Corporation if available) or any similar registration statement
(each, a "Demand Registration"), such form to be selected by the Company as
appropriate. The request for the Demand Registration shall specify the
approximate number of Registrable Securities requested to be registered, which
must have a
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<PAGE> 3
minimum expected aggregate offering price to the public of at least $1,000,000.
Within 20 days after receipt of any such request, the Company will give written
notice of such requested registration to all other Holders of Registrable
Securities. The Company shall include such other Holders' Registrable Securities
in such offering if they have responded affirmatively within 20 days after the
receipt of the Company's notice. Each of EIS and Isis shall be permitted at
least one Demand Registration; provided, however, that the Holders in aggregate
will be entitled to request only one Demand Registration hereunder within any
12-month period. A registration will not count as a permitted Demand
Registration until it has become effective (unless such Demand Registration has
not become effective due solely to the fault of the Holders requesting such
registration, including a request by such Holders that such registration be
withdrawn). The Company shall pay all Registration Expenses in connection with
any Demand Registration whether or not such Demand Registration has become
effective.
(b) Priority on Demand Registrations. If a Demand Registration is
an underwritten offering and the managing underwriters advise the Company in
writing that in their opinion the number of Registrable Securities and, if
permitted hereunder, other securities requested to be included in such offering,
exceeds the number of Registrable Securities and other securities, if any, which
can be sold in such offering without adversely affecting the marketability of
the offering, the Company will include in such registration:
(i) first, the Registrable Securities requested to be
included in such registration by the Holders (or, if necessary,
such Registrable Securities pro rata among the Holders thereof
based upon the number of Registrable Securities owned by each
such Holder) together with any securities held by third parties
holding a similar, previously granted right to be included in
such registration; and
(ii) thereafter, other securities requested to be
included in such registration, as determined by the Company.
(c) Restrictions on Demand Registration. The Company may postpone
for up to 90 days in any 12-month period, the filing or the effectiveness of a
registration statement for a Demand Registration if the Company determines in
good faith that such Demand Registration would reasonably be expected to have a
material adverse effect on any proposal or plan by the Company to engage in any
financing, acquisition or disposition of assets (other than in the ordinary
course of business) or any merger, consolidation, tender offer or similar
transaction or would require disclosure of any information that the board of
directors of the Company determines in good faith the disclosure of which would
be detrimental to the Company; provided, that in such event, the Holders
initially requesting such Demand Registration will be entitled to withdraw such
request and, if such request is withdrawn, such Demand Registration will not
count as a permitted Demand Registration hereunder and the Company will pay any
Registration Expenses in connection with such registration.
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<PAGE> 4
(d) Selection of Underwriters. The Holders will have the right to
select the investment banker(s) and manager(s) to administer an offering
pursuant to the Demand Registration, subject to the Company's prior written
approval, which will not be unreasonably withheld or delayed.
(e) Other Registration Rights. Except as provided in this
Agreement, so long as any Holder owns any Registrable Securities, the Company
will not grant to any Persons the right to request the Company to register any
equity securities of the Company, or any securities convertible or exchangeable
into or exercisable for such securities, pari passu with or which conflicts with
the rights granted to the Holders hereunder, without the prior written consent
of the Holders of at least 50% of the Registrable Securities; provided, however,
that the Company may grant rights to other Persons to demand and piggyback
registrations so long as the Holders of Registrable Securities are entitled to
participate in any such registrations with such Persons pro rata on the basis of
the number of shares owned by each such Holder.
3. Piggyback Registrations.
(a) Right to Piggyback. At any time the Company shall propose to
register Common Shares under the Securities Act (other than in a registration
statement on Form S-3 relating to sales of securities to participants in a
Company dividend reinvestment plan, or Form S-4 or S-8 or any successor form or
in connection with an acquisition or exchange offer or an offering of securities
solely to the existing shareholders or employees of the Company) (each, a
"Piggyback Registration", together with a Demand Registration, a
"Registration"), the Company will give prompt written notice to all Holders of
Registrable Securities of its intention to effect such a registration and,
subject to Section 3(b) and the other terms of this Agreement, will include in
such registration all Registrable Securities which are permitted under
applicable securities laws to be included in the form of registration statement
selected by the Company and with respect to which the Company has received
written requests for inclusion therein within 20 days after the receipt of the
Company's notice.
(b) Priority on Piggyback Registrations. If a Piggyback
Registration is to be 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 registration exceeds the number which can be
sold in such offering without adversely affecting the marketability of the
offering, the Company will include in such registration:
(i) first, the securities the Company proposes to sell;
(ii) the Registrable Securities requested to be included
in such registration by the Holders and any securities requested
to be included in such registration by any other Person having
equal priority to registration with the Holders, pro rata among
the Holders of such Registrable Securities and such other
Persons, on the basis of the number of shares owned by each of
such Holders; and
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<PAGE> 5
(iii) thereafter, other securities requested to be
included in such registration.
The Holders of any Registrable Securities included in such an
underwritten offering must execute an underwriting agreement, in customary form
and in form and substance satisfactory to the managing underwriters.
(c) Right to Terminate Registration. If, at any time after giving
written notice of its intention to register any of its securities as set forth
in Section 3(a) and prior to the effective date of the registration statement
filed in connection with such registration, the Company shall determine for any
reason not to register such securities, the Company may, at its election, give
written notice of such determination to each Holder of Registrable Securities
and thereupon be relieved of its obligation to register any Registrable
Securities in connection with such registration (but not from its obligation to
pay the Registration Expenses in connection therewith as provided herein).
(d) Selection of Underwriters. The Company will have the right to
select the investment banker(s) and manager(s) to administer an offering
pursuant to a Piggyback Registration.
4. Expenses of Registration. Except as otherwise provided herein
or as may otherwise be prohibited by applicable law, all Registration Expenses
incurred in connection with Registrations pursuant to Sections 2 and 3 shall be
borne by the Company and all Selling Expenses relating to securities registered
on behalf of the Holders of Registrable Securities shall be borne by such
Holders; provided that, and notwithstanding anything herein contained to the
contrary, the Company shall not have any obligation pursuant to the provisions
hereof unless and until the Company is able to satisfy (after taking into
account such obligations) the requirements of Section 39A (2A) of the Bermuda
Companies Act of 1981 (or any successor legislation).
5. Holdback Agreements.
(a) The Company agrees (i) not to effect any public sale or
distribution of its equity securities, or any securities convertible into or
exchangeable or exercisable for such securities, during the seven days prior to
and during the 180-day period beginning on the effective date of any
underwritten Demand Registration or any underwritten Piggyback Registration
(except as part of such underwritten registration or pursuant to registration
statements on Form S-4 or Form S-8 or any successor form), unless the
underwriters managing the registered public offering otherwise agree, and (ii)
to cause its officers and directors and to use reasonable efforts to cause each
holder of at least 5% (on a fully-diluted basis) of its outstanding Common
Shares, or any securities convertible into or exchangeable or exercisable for
Common Shares, purchased from the Company at any time after the date of this
Agreement (other than in a registered public offering) to agree not to effect
any public sale or distribution (including sales pursuant to Rule 144) of any
such securities during such periods (except as part of such underwritten
registration, if otherwise permitted), unless the underwriters managing the
registered public offering otherwise agree.
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<PAGE> 6
(b) Each Holder agrees, if requested by the managing underwriter
or underwriters in an underwritten offering of securities of the Company, not to
effect any offer, sale, distribution or transfer, including a sale pursuant to
Rule 144 (or any similar provision then effect) under the Securities Act (except
as part of such underwritten registration), during the seven-day period prior
to, and during the 180-day period (or such shorter period as may be agreed to in
writing by the Company and the Holders of at least 50% of the Registrable
Securities) following the effective date of such Registration Statement to the
extent timely notified in writing by the managing underwriter or underwriters;
provided, that each of the Persons described in Section 5(a)(ii) shall also have
agreed to such restriction on sale.
6. Registration Procedures. Whenever the Holders of Registrable
Securities have requested that any Registrable Securities be registered pursuant
to this Agreement, the Company will use all reasonable efforts to effect the
registration and the sale of such Registrable Securities in accordance with the
intended method of distribution thereof, and pursuant thereto the Company will
as expeditiously as possible:
(a) subject to Section 2(c) hereof, prepare and file with the
Commission a registration statement on any form for which the Company qualifies
with respect to such Registrable Securities and use all reasonable efforts to
cause such registration statement to become effective (provided that before
filing a registration statement or prospectus or any amendments or supplements
thereto, the Company will (i) furnish to the counsel selected by the Holders
copies of all such documents proposed to be filed, which documents will be
subject to the review of such counsel, and (ii) notify each Holder of
Registrable Securities covered by such registration of any stop order issued or
threatened by the Commission);
(b) subject to Section 2(c) hereof, prepare and file with the
Commission such amendments and supplements to such registration statement and
the prospectus used in connection therewith as may be necessary to keep such
registration statement effective for a period equal to the shorter of (i) six
months and (ii) the time by which all securities covered by such registration
statement have been sold, and comply with the provisions of the Securities Act
with respect to the disposition of all securities covered by such registration
statement during such period in accordance with the intended methods of
disposition by the sellers thereof set forth in such registration statement;
(c) furnish to each seller of Registrable Securities such number
of copies of such registration statement, each amendment and supplement thereto,
the prospectus included in such registration statement (including each
preliminary prospectus) and such other documents as such seller may reasonably
request in order to facilitate the disposition of the Registrable Securities
owned by such seller;
(d) use all reasonable efforts to register or qualify such
Registrable Securities under the securities or blue sky laws of such
jurisdictions as any seller reasonably requests and do any and all other acts
and things which may be reasonably necessary or advisable to enable such seller
to consummate the disposition in such jurisdictions of the Registrable
Securities owned by such seller (provided that the Company will not be required
to (i) qualify generally to
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<PAGE> 7
do business in any jurisdiction where it would not otherwise be required to
qualify but for this Section 6(d) or (ii) subject itself to taxation in any
jurisdiction;
(e) notify each seller of such Registrable Securities, at any
time when a prospectus relating thereto is required to be delivered under the
Securities Act, of the occurrence 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 any fact necessary to make the statements therein
not misleading, and, at the request of any such seller, the Company will prepare
a supplement or amendment to such prospectus so that, as thereafter delivered to
the purchasers of such Registrable Securities, such prospectus will not contain
an untrue statement of a material fact or omit to state any fact necessary to
make the statements therein not misleading; provided, however, that the Company
shall not be required to amend the registration statement or supplement the
Prospectus for a period of up to six months if the board of directors of the
Company determines in good faith that to do so would reasonably be expected to
have a material adverse effect on any proposal or plan by the Company to engage
in any financing, acquisition or disposition of assets (other than in the
ordinary course of business) or any merger, consolidation, tender offer or
similar transaction or would require the disclosure of any information that the
board of directors of the Company determines in good faith the disclosure of
which would be detrimental to the Company, it being understood that the period
for which the Company is obligated to keep the Registration Statement effective
shall be extended for a number of days equal to the number of days the Company
delays amendments or supplements pursuant to this provision. Upon receipt of any
notice pursuant to this Section 6(e), the Holders shall suspend all offers and
sales of securities of the Company and all use of any prospectus until advised
by the Company that offers and sales may resume, and shall keep confidential the
fact and content of any notice given by the Company pursuant to this Section
6(e);
(f) cause all such Registrable Securities to be listed on each
securities exchange on which similar securities issued by the Company are then
listed;
(g) provide a transfer agent and registrar for all such
Registrable Securities not later than the effective date of such registration
statement;
(h) enter into such customary agreements (including underwriting
agreements in customary form) and take all such other actions as the Holders of
a majority of the Registrable Securities being sold or the underwriters, if any,
reasonably request in order to expedite or facilitate the disposition of such
Registrable Securities;
(i) make available for inspection by a representative of the
Holders of Registrable Securities included in the registration statement, any
underwriter participating in any disposition pursuant to such registration
statement and any attorney, accountant or other agent retained by any such
seller or underwriter, all pertinent financial and other records, pertinent
corporate documents and properties of the Company, and cause the Company's
officers, directors, employees and independent accountants to supply all
information reasonably requested by any such seller, underwriter, attorney,
accountant or agent in connection with such registration statement;
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<PAGE> 8
(j) otherwise use its reasonable efforts to comply with all
applicable rules and regulations of the Commission, and make available to its
security holders, as soon as reasonably practicable, an earnings statement
covering the period of at least 12 months beginning with the first day of the
Company's first full calendar quarter after the effective date of the
registration statement, which earnings statement shall satisfy the provisions of
Section 11(a) of the Securities Act and Rule 158 thereunder;
(k) in the event of the issuance of any stop order suspending the
effectiveness of a registration statement, or of any order suspending or
preventing the use of any related prospectus or suspending the qualification of
any Common Shares included in such registration statement for sale in any
jurisdiction, use all reasonable efforts promptly to obtain the withdrawal of
such order; and
(l) if the registration is an underwritten offering, use all
reasonable efforts to obtain a so-called "cold comfort" letter from the
Company's independent public accountants in customary form and covering such
matters of the type customarily covered by cold comfort letters.
7. Obligations of Holders. Whenever the Holders of Registrable
Securities sell any Registrable Securities pursuant to a Registration, such
Holders shall be obligated to comply with the applicable provisions of the
Securities Act, including the prospectus delivery requirements thereunder, and
any applicable state securities or blue sky laws.
8. Indemnification. (a) The Company agrees to indemnify, to the
fullest extent permitted by applicable law, each Holder of Registrable
Securities, its officers and directors and each Person who controls such Holder
(within the meaning of the Securities Act) against all losses, claims, damages,
liabilities, expenses or any amounts paid in settlement of any litigation,
investigation or proceeding commenced or threatened, including, without
limitation, attorneys fees and disbursements (collectively, "Claims") to which
each such indemnified party may become subject under the Securities Act insofar
as such Claim arose out of (i) any untrue or alleged untrue statement of
material fact contained, on the effective date thereof, in any registration
statement, prospectus or preliminary prospectus or any amendment thereof or
supplement thereto or (ii) any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as the same are caused by or contained in
any information furnished in writing to the Company by such Holder expressly for
use therein or by such Holder's failure to deliver a copy of the registration
statement or prospectus or any amendments or supplements thereto after the
Company has furnished such Holder with a sufficient number of copies of the
same. In connection with an underwritten offering, the Company will indemnify
the underwriters, their officers and directors and each Person who controls the
underwriters (within the meaning of the Securities Act) to the same extent as
provided above with respect to the indemnification of the Holders of Registrable
Securities.
(b) In connection with any registration statements in which a
Holder of Registrable Securities is participating, each such Holder will furnish
to the Company in writing such customary information as the Company reasonably
requests for use in connection with any
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<PAGE> 9
such registration statement or prospectus (the "Seller's Information") and, to
the fullest extent permitted by applicable law, will indemnify the Company, its
directors and officers and each Person who controls the Company (within the
meaning of the Securities Act) against any and all Claims to which each such
indemnified party may become subject under the Securities Act insofar as such
Claim arose out of (i) any untrue or alleged untrue statement of material fact
contained, on the effective date thereof, in any registration statement,
prospectus or preliminary prospectus or any amendment thereof or supplement
thereto regarding Seller's Information or (ii) any omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein regarding Seller's Information not misleading;
provided that with respect to a Claim arising pursuant to clause (i) or (ii)
above, the material misstatement or omission is contained in such Seller's
Information; provided, further, that the obligation to indemnify will be
individual to each Holder and will be limited to the amount of proceeds received
by such Holder from the sale of Registrable Securities pursuant to such
registration statement.
(c) Any Person entitled to indemnification hereunder will (i)
give prompt written notice to the indemnifying party of any claim with respect
to which it seeks indemnification (but the failure to provide such notice shall
not release the indemnifying party of its obligation under paragraphs (a) and
(b), unless and then only to the extent that, the indemnifying party has been
prejudiced by such failure to provide such notice) and (ii) 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. 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.
(d) The indemnifying party shall not be liable to indemnify an
indemnified party for any settlement, or consent to judgment of any such action
effected without the indemnifying party's written consent (but such consent will
not be unreasonably withheld). Furthermore, the indemnifying party shall not,
except with the prior written approval of each indemnified party, consent to
entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to each
indemnified party of a release from all liability in respect of such claim or
litigation without any payment or consideration provided by each such
indemnified party.
(e) If the indemnification provided for in this Section 8 is
unavailable to an indemnified party under clauses (a) and (b) above in respect
of any losses, claims, damages or liabilities referred to therein, then each
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities in such proportion as is
appropriate to reflect not only the relative benefits received by the Company,
the underwriters, the sellers of Registrable Securities and any other sellers
participating in the registration statement from the sale of shares pursuant to
the registered offering of securities for which indemnity is sought but
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<PAGE> 10
also the relative fault of the Company, the underwriters, the sellers of
Registrable Securities and any other sellers participating in the registration
statement in connection with the statement or omission which resulted in such
losses, claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Company, the underwriters,
the sellers of Registrable Securities and any other sellers participating in the
registration statement shall be deemed to be based on the relative relationship
of the total net proceeds from the offering (before deducting expenses) to the
Company, the total underwriting commissions and fees from the offering (before
deducting expenses) to the underwriters and the total net proceeds from the
offering (before deducting expenses) to the sellers of Registrable Securities
and any other sellers participating in the registration statement. The relative
fault of the Company, the underwriters, the sellers of Registrable Securities
and any other sellers participating in the registration statement shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company or by the sellers
of Registrable Securities and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
(f) The indemnification provided for under this Agreement 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 the Registrable
Securities.
9. Participation in Underwritten Registrations. No Holder may
participate in any registration hereunder which is underwritten unless such
Holder (a) agrees to sell such Holder's securities on the basis provided in any
underwriting arrangements approved by the Holder or Holders entitled hereunder
to approve such arrangements, (b) as expeditiously as possible notifies the
Company of the occurrence of any event as a result of which any prospectus
contains an untrue statement of material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading and (c) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements.
10. Transfer of Registration Rights. The rights granted to any
Holder under this Agreement may be assigned to any permitted transferee of
Registrable Securities, in connection with any transfer or assignment of
Registrable Securities by a Holder; provided, however, that: (a) such transfer
is otherwise effected in accordance with applicable securities laws, (b) if not
already a party hereto, the assignee or transferee agrees in writing prior to
such transfer to be bound by the provisions of this Agreement applicable to the
transferor, (c) such transferee shall own Registrable Securities representing at
least 3,000 Common Shares (as adjusted for any combinations, consolidations,
stock distributions, stock dividends or other recapitalizations with respect to
such shares), and (d) Isis or EIS, as applicable, shall act as agent and
representative for such Holder for the giving and receiving of notices
hereunder.
11. Information by Holder. Each Holder shall furnish to the
Company such written information regarding such Holder and any distribution
proposed by such Holder as the Company may reasonably request in writing and as
shall be reasonably required in connection
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<PAGE> 11
with any registration, qualification or compliance referred to in this Agreement
and shall promptly notify the Company of any changes in such information.
12. Exchange Act Compliance. The Company shall comply with all of
the reporting requirements of the Exchange Act then applicable to it and shall
comply with all other public information reporting requirements of the
Commission which are conditions to the availability of Rule 144 for the sale of
the Registrable Securities. The Company shall cooperate with each Holder in
supplying such information as may be necessary for such Holder to complete and
file any information reporting forms presently or hereafter required by the
Commission as a condition to the availability of Rule 144.
13. Termination of Registration Rights. All registration rights
granted under this Agreement shall terminate and be of no further force and
effect, as to any particular Holder, at such time as all Registrable Securities
held by such Holder can be sold within a three-month period without compliance
with the registration requirements of the Securities Act pursuant to Rule 144
(including Rule 144(k)) promulgated thereunder or have been resold pursuant to a
registration statement hereunder.
14. Miscellaneous.
(a) No Inconsistent Agreements. The Company will not hereafter
enter into any agreement with respect to its securities which is inconsistent
with or violates the rights granted to the Holders of Registrable Securities in
this Agreement without the prior written consent of a majority in interest of
such Registrable Securities.
(b) Remedies. Any Person having rights under any provision of
this Agreement will be entitled to enforce such rights specifically to recover
damages caused by reason of any breach of any provision of this Agreement and to
exercise all other rights granted by law. The parties hereto agree and
acknowledge that money damages may not be an adequate remedy for any breach of
the provisions of this Agreement and that any party may in its sole discretion
apply to any court of law or equity of competent jurisdiction (without posting
any bond or other security) for specific performance and for other injunctive
relief in order to enforce or prevent violation of the provisions of this
Agreement; provided, however, that in no event shall any Holder have the right
to enjoin, delay or interfere with any offering of securities by the Company.
(c) Amendments and Waivers. Except as otherwise provided herein,
the provisions of this Agreement may be amended or waived only with the prior
written consent of the Company and Holders of at least 50% of the Registrable
Securities; provided, however, that without the prior written consent of all the
Holders, no such amendment or waiver shall reduce the foregoing percentage
required to amend or waive any provision of this Agreement.
(d) Successors and Assigns. All covenants and agreements in this
Agreement by or on behalf of any of the parties hereto will bind and inure to
the benefit of the respective successors and assigns of the parties hereto, and
shall inure to the benefit and be enforceable by each Holder of Registrable
Securities from time to time. In addition, whether or not any express
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<PAGE> 12
assignment has been made, the provisions of this Agreement which are for the
benefit of Holders of Registrable Securities are also for the benefit of, and
enforceable by, any permitted transferee of Registrable Securities, in
accordance with Section 10 hereof.
(e) Severability. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision will be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.
(f) Counterparts. This Agreement may be executed simultaneously
in two or more counterparts, any one of which need not contain the signatures of
more than one party, but all such counterparts taken together will constitute
one and the same Agreement.
(g) Descriptive Headings. The descriptive headings of this
Agreement are inserted for convenience only and do not constitute a part of this
Agreement.
(h) Governing Law. All questions concerning the construction,
validity and interpretation of this Agreement will be governed by the laws of
the State of New York without regard to principles of conflicts of laws.
(i) Notices. All notices, demands and requests of any kind to be
delivered to any party in connection with this Agreement shall be in writing and
shall be deemed to have been duly given if personally delivered or if sent by
nationally-recognized overnight courier or by registered or certified airmail,
return receipt requested and postage prepaid or by facsimile transmission (with
receipt confirmed by telephone), addressed as follows:
(i) if to the Company, to:
HepaSense Ltd.
c/o Conyers Dill & Pearman
Clarendon House
Church Street, P.O. Box HM 666
Hamilton HM CX, Bermuda
Attention: David J. Doyle
Facsimile: (441) 292-4720
with a copy to each of Isis, EIS and their respective
counsel at the addresses indicated below
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(ii) if to Isis, to:
Isis Pharmaceuticals, Inc.
2292 Faraday Avenue
Carlsbad, CA 92008
Facsimile: (760) 931-9639
telephone confirmation required at (760) 603-2460
Attention: B. Lynne Parshall
with a copy to:
Cooley Godward LLP
4365 Executive Drive
San Diego, CA 92121
Facsimile: (619) 453-3555
telephone confirmation required at (619) 550-6000
Attention: Julie Robinson, Esq.
(iii) if to EIS, to:
Elan International Services, Ltd.
Flatts, Smiths Parish
Bermuda, FL 04
Facsimile: (441) 292-2224
telephone confirmation required at (441) 292-9169
Attention: President
with a copy to:
Brock Silverstein LLC
800 Third Avenue, 21st Floor
New York, New York 10022
Facsimile: (212) 371-5500
telephone confirmation required at (212) 371-2000
Attention: Scott Rosenblatt, Esq.
(j) Entire Agreement. This Agreement constitutes the full and
entire understanding and agreement between the parties with regard to the
subject matter hereof.
[Signature page follows]
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<PAGE> 14
IN WITNESS WHEREOF, the parties have executed this Registration
Rights Agreement as of the date first written above.
HEPASENSE LTD.
By: ___________________________
Name:
Title:
ISIS PHARMACEUTICALS, INC.
By: ___________________________
Name: B. Lynne Parshall
Title: Executive Vice President
ELAN INTERNATIONAL SERVICES, LTD.
By: ___________________________
Name: Kevin Insley
Title: President
<PAGE> 1
EXHIBIT 10.7
TEXT OMITTED AND FILED SEPARATELY
"CONFIDENTIAL TREATMENT REQUESTED
UNDER 17 C.F.R. SECTIONS 200.80(B)(4),
200.83 AND 240.24b-2."
LICENSE AGREEMENT
BETWEEN
ELAN CORPORATION, PLC
(ACTING THROUGH ITS DIVISION ELAN PHARMACEUTICAL TECHNOLOGIES)
AND
ELAN PHARMA INTERNATIONAL LIMITED
AND
HEPASENSE LTD.
JANUARY 14, 2000
<PAGE> 2
TABLE OF CONTENTS
1 DEFINITIONS
2 ELAN LICENSE TO HEPASENSE
3 INTELLECTUAL PROPERTY
4 NON-COMPETITION/AFTER ACQUIRED TECHNOLOGY
5 FINANCIAL PROVISIONS
6 RIGHT OF INSPECTION AND AUDIT
7 REPRESENTATIONS AND WARRANTIES
8 TERM AND TERMINATION
9 CONFIDENTIAL INFORMATION
10 GOVERNING LAW AND DISPUTE RESOLUTION
11 IMPOSSIBILITY OF PERFORMANCE - FORCE MAJEURE
12 ASSIGNMENT
13 NOTICES
14 MISCELLANEOUS
2
<PAGE> 3
THIS AGREEMENT made this 14th January 2000
BETWEEN:
(1) ELAN CORPORATION, PLC, a public limited company incorporated under the
laws of Ireland, acting through its division ELAN PHARMACEUTICAL
TECHNOLOGIES and having its registered office at Lincoln House, Lincoln
Place, Dublin 2, Ireland and ELAN PHARMA INTERNATIONAL LIMITED, a
private limited company and having its registered office at WIL House,
Shannon Business Park, Shannon, County Clare, Ireland;
(2) HEPASENSE LTD., a private limited company incorporated under the laws of
Bermuda and having its registered office at 102 St. James Court,
Clarendon House, Church St., Hamilton, Bermuda; and
(3) ISIS PHARMACEUTICALS, INC., a corporation duly incorporated and validly
existing under the laws of the state of Delaware and having its
principal place of business at 2292 Faraday Avenue, Carlsbad, California
92008, United States of America.
RECITALS:
A. Simultaneously herewith, Isis, Elan, EIS, and HepaSense (capitalized
terms used herein are defined below) are entering into the JDOA for the
purpose of recording the terms and conditions of the joint venture and
of regulating their relationship with each other and certain aspects of
the affairs of, and their dealings with HepaSense.
B. HepaSense desires to enter into this Agreement with Elan so as to permit
HepaSense to utilize the Elan Intellectual Property in making, having
made, importing, using, offering for sale and selling the Products in
the Field in the Territory.
C. Simultaneously herewith HepaSense and Isis are entering into the Isis
License Agreement relating to HepaSense's use of the Isis Intellectual
Property.
1 DEFINITIONS
1.1 In this Agreement unless the context otherwise requires:
"ADDITIONAL OLIGONUCLEOTIDES" shall mean another Oligonucleotide from
the Isis portfolio of Oligonucleotides nominated by Isis and accepted by
Elan to be incorporated within or packaged with the System for
commercialization. For the avoidance of doubt, the Parties acknowledge
that any Additional Oligonucleotide shall be at least at the same stage
of development as the Designated Oligonucleotide, i.e., shall be ready
for clinical testing;
"ADDITIONAL PRODUCTS" shall mean the pharmaceutical formulation
incorporating an
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<PAGE> 4
Additional Oligonucleotide and incorporated within or packaged with the
System.
"AFFILIATE" shall mean any corporation or entity controlling, controlled
or under the common control of Elan or Isis, as the case may be. For the
purpose of this definition, "control" shall mean direct or indirect
ownership of fifty percent (50%) or more of the stock or shares entitled
to vote for the election of directors. HepaSense is not an Affiliate of
Elan or EIS.
"AGREEMENT" shall mean this license agreement (which expression shall be
deemed to include the Recitals and Schedules hereto).
"BUSINESS PLAN" shall have the meaning, as such term is defined in the
JDOA.
"COMPETITIVE CHANGE OF CONTROL EVENT" shall mean that a Primary
Technological Competitor of Elan acquires directly or indirectly voting
stock or equivalent securities in Isis or HepaSense representing [ * ]
percent or more of the stock which carries entitlement to vote, or a
Primary Technological Competitor of Elan acquires by all or
substantially all of the business of Isis or HepaSense to which the
Definitive Documents relate, whether by merger, sale of stock, sale of
assets or otherwise;
"CONFIDENTIAL INFORMATION" shall have the meaning, as such term is
defined in Clause 9.
"DEFINITIVE DOCUMENTS" shall mean the definitive agreements relating to
the transaction including finance, stock purchase, research and license
agreements.
"DESIGNATED OLIGONUCLEOTIDE" shall mean Isis 14803.
"EFFECTIVE DATE" shall mean the date of this Agreement.
"ELAN" shall mean Elan, plc and EPIL, and their respective successors
and permitted assigns.
"ELAN, PLC" shall mean Elan Corporation, plc, a public limited company
incorporated under the laws of Ireland acting through its division Elan
Pharmaceutical Technologies.
"EIS" shall mean Elan International Services, Ltd., a private limited
company incorporated under the laws of Bermuda and having its registered
office at St James Court, Flatts, Smiths, FL04 Bermuda.
"ELAN IMPROVEMENTS" shall mean any enhancement or improvement relating
to the System, developed (i) by Elan whether or not pursuant to the
Project, (ii) by HepaSense or Isis or by a third party (under contract
with HepaSense) pursuant to the Project, and/or (iii) jointly by any
combination of Elan, Isis or HepaSense pursuant to the Project, except
as limited by agreements with third parties.
Subject to third party agreements, Elan Improvements shall constitute
part of Elan
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*CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 5
Intellectual Property and be included in the license of the Elan
Intellectual Property pursuant to Clause 2.1 solely for the purposes set
forth therein; provided, however, that an enhancement or improvement
relating to the System which modifies the System in a manner for
delivery of a drug other than delivery of factory pre-programmed
continuous amounts of the drug shall remain the property of Elan but
shall not be included in the license of the Elan Intellectual Property
pursuant to Clause 2.1. If the inclusion of a Elan Improvement in the
license of Elan Intellectual Property is restricted or limited by a
third party agreement, Elan shall use reasonable commercial efforts to
minimize any such restriction or limitation.
For the avoidance of doubt, any enhancement or improvement relating to
both the System and the Isis Know-How or Isis Patents developed by any
of the parties individually or jointly pursuant to the Project or by a
third party (under contract with HepaSense) pursuant to the Project
shall, except as limited by agreements with third parties, be deemed to
be HepaSense Intellectual Property.
"ELAN INTELLECTUAL PROPERTY" shall mean the Elan Know-How, the Elan
Patents and the Elan Improvements. For the avoidance of doubt, Elan
Intellectual Property shall exclude inventions, patents and know-how
owned, licensed or controlled by Targon Corporation, Axogen Limited and
Neuralab Limited and by all Affiliates or subsidiaries (present or
future) of Elan, plc. within the division of Elan, plc carrying on
business as Elan Pharmaceuticals which incorporates, inter alia, EPIL
(to the extent that EPIL is the owner of patents, know-how or other
intellectual property or technology invented and/or developed within the
division of Elan, plc carrying on business as Elan Pharmaceuticals),
Athena Neurosciences, Inc., Elan Pharmaceuticals, Inc., Elan
Diagnostics, Carnrick Laboratories, and Elan Europe Limited.
"ELAN KNOW-HOW" shall mean any and all rights owned, licensed or
controlled by Elan to any scientific, pharmaceutical or technical
information, data, discovery, invention (whether patentable or not),
technique, process, procedure, system, formulation or design relating to
the System that is not generally known to the public.
"ELAN LICENSE" shall have the meaning set forth in Clause 2.1 hereof.
"ELAN PATENTS" shall mean any and all patents and patent applications as
set forth in Schedule 1, and all rights therein, and including all
extensions, continuations, continuations-in-part, divisionals,
patents-of-additions, re-examinations, re-issues, supplementary
protection certificates and foreign counterparts thereto owned by or
licensed to Elan containing claims relating to the System.
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<PAGE> 6
"EPIL" shall mean Elan Pharma International Limited, a private limited
company incorporated under the laws of Ireland, that is wholly owned by
Elan, plc.
"FIELD" shall mean the administration of the Designated Oligonucleotide
by all routes of administration. Upon nomination by Isis and acceptance
by Elan of an Additional Oligonucleotide, the parties shall amend the
definition of the Field to include the administration of the Additional
Oligonucleotide by such means of administration as agreed to by the
parties.
Notwithstanding the foregoing, the Parties acknowledge and agree that,
pursuant to existing agreement among Elan, Isis and Orasense Ltd, both
Isis and Elan and their Affiliates may be subject to certain
restrictions concerning the development and commercialization of
products comprised upon the oral administration of any Oligonucleotide.
"FINANCIAL YEAR" shall mean each year commencing on 1 January (or in the
case of the first Financial Year, the Effective Date) and expiring on 31
December of each year.
"HCV" shall mean the hepatitis C virus.
"HEPASENSE INTELLECTUAL PROPERTY" shall mean HepaSense Patents and
HepaSense Know How. In addition to the foregoing, any enhancement or
improvement relating to both the System and the Isis Know-How or Isis
Patents developed by any of the Parties individually or jointly pursuant
to the Project or by a third party (under contract with HepaSense)
pursuant to the Project shall, except as limited by agreements with
third parties, be deemed to be HepaSense Intellectual Property.
"HEPASENSE KNOW-HOW" shall mean any and all rights owned, licensed or
controlled by HepaSense to any scientific, pharmaceutical or technical
information, data, discovery, invention (whether patentable or not),
technique, process, procedure, system, formulation or design that is not
generally known to the public arising out of the conduct of the Project
by any person that does not constitute Elan Improvements or Isis
Improvements.
"HEPASENSE PATENTS" shall mean any and all patents and patent
applications arising out of the conduct of the Project by any person
that does not constitute Elan Improvements or Isis Improvements and all
rights therein, and including all extensions, continuations,
continuations-in-part, divisionals, patents-of-additions,
re-examinations, re-issues, supplementary protection certificates and
foreign counterparts thereto owned or licensed to HepaSense.
"IN MARKET" shall mean the sale of the Product and Additional Products
in the Territory by HepaSense or its Affiliates, or where applicable by
a permitted sub-licensee, to an unaffiliated third party, such as (i)
the end-user consumer of the Product (ii) a wholesaler, managed care
organization, hospital or pharmacy or other third party who effects the
final commercial sale to the end-user consumer of the Product, and shall
exclude the transfer pricing of the Product(s) by Elan to an Affiliate
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<PAGE> 7
or a sub-licensee.
"ISIS" shall mean Isis Pharmaceuticals, Inc. and its Affiliates,
excluding HepaSense.
"ISIS INTELLECTUAL PROPERTY" shall mean the Isis Know-How, the Isis
Patents and the Isis Improvements, as such terms are defined in the Isis
License Agreement.
"ISIS LICENSE" shall mean have the meaning set forth in Clause 2.1 of
the Isis License Agreement.
"ISIS LICENSE AGREEMENT" shall mean that certain license agreement, of
even date herewith, entered into between Isis and HepaSense.
"ISIS PATENTS" shall have the meaning as such term is defined in the
Isis License Agreement.
"ISIS IMPROVEMENTS" shall have the meaning as such term is defined in
the Isis License Agreement.
"ISIS 14803" shall mean the Oligonucleotide described in Exhibit A to
the Isis License Agreement.
"JDOA" shall mean that certain joint development and operating
agreement, of even date herewith, by and between Elan, Isis, EIS and
HepaSense.
"LICENSED TECHNOLOGIES" shall mean the Elan Intellectual Property and
the Isis Intellectual Property.
"LICENSES" shall mean the Elan License and the Isis License.
"NET SALES" shall mean that sum determined by deducting the following
deductions from the aggregate gross In Market sales proceeds billed for
the Products by HepaSense or, its Affiliate or a permitted sub-licensee,
as the case may be:
(i) transportation charges or allowances, if any, included in such
price;
(ii) trade, quantity or cash discounts, broker's or agent's
commissions, if any, allowed or paid;
(iii) credits or allowances, if any, given or made on account of price
adjustments, returns, promotional discounts, rebates and any and
all federal, state or local government rebates whether in
existence now or enacted at any time during the term of the
Licenses;
(iv) any tax, excise or governmental charge upon or measured by the
sale, transportation, delivery or use of the Products; and
(v) reasonable samples, materials for clinical studies and reasonable
7
<PAGE> 8
compassionate programs.
Net Sales shall also include the amount or fair market value of all
other consideration received by HepaSense or its Affiliates or
sublicensees in respect of Products and Additional Products, whether
such consideration is payment in kind, exchange or another form. If a
Product or Additional Product is provided to an third party by HepaSense
or its Affiliates or sublicensees without charge or provision of invoice
and used by such third party, then HepaSense or its Affiliates or
sublicensees shall be treated as having sold such Product or Additional
Product to such third party for an amount equal to the fair market value
of such Product. Sales between or among HepaSense and its respective
Affiliates or authorized licensees shall be excluded from the
computation of Net Sales. A "sale" of a Product or Additional Product is
deemed to occur upon the earlier of invoicing, shipment or transfer of
title in the Product or the Additional Product to an third party. For
avoidance of doubt, Net Sales shall include royalties received by
HepaSense or its Affiliates from any third party in respect of Products
and Additional Products.
"OLIGONUCLEOTIDE" shall mean any single stranded, [ * ] oligonucleotide
including those [ * ] used as a human therapeutic and/or prophylactic
compound containing between [ * ] nucleotides and/or nucleosides
including oligonucleotide analogs which may include [ * ]. For purposes
of this agreement, Oligonucleotide shall specifically exclude
oligonucleotides used in gene therapy except [ * ] an oligonucleotide,
oligonucleotides used as [ * ] or oligonucleotides used as adjuvants.
Oligonucleotide shall also specifically exclude polymers in which the
linkages are amide based, such as peptides and proteins and shall also
exclude [ * ].
"ORAL" shall mean administration by way of the mouth for the purpose of
topical or systemic delivery by way of the alimentary canal.
"PARTY" shall mean Elan or HepaSense, as the case may be, and "PARTIES"
shall mean Elan and HepaSense.
"PRIMARY TECHNOLOGICAL COMPETITOR OF ELAN" shall mean those entities
listed on Schedule 2A hereto.
"PRODUCT" shall mean the pharmaceutical formulation incorporating the
Designated Oligonucleotide for [ * ] within the Field, including,
without limitation, the incorporation of the Designated Oligonucleotide
within or packaged with the System.
"PROJECT" shall mean all activities as undertaken by Elan, Isis and
HepaSense in order to develop the Products
8
*CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 9
"SUBSTITUTE OLIGONUCLEOTIDE" shall have the meaning set forth in Clause
2.2 hereof;
"SYSTEM" shall mean an ambulatory drug delivery system for direct
attachment to the body of a patient having a flexible diaphragm drug
reservoir, which is capable of delivering factory pre-programmed
continuous amounts of drug upon activation as disclosed and described in
the Elan Patents set forth in Schedule 1 attached hereto.
"TECHNOLOGICAL COMPETITOR OF ELAN" shall mean a company, corporation or
person listed in Schedule 2B and successors thereof or any additional
broad-based technological competitor of Elan added to such Schedule from
time to time upon mutual agreement of the Parties.
"TERM" shall have the meaning set forth in Clause 8.
"TERRITORY" shall mean all the countries of the world.
"UNITED STATES DOLLAR" and "US$" shall mean the lawful currency for the
time being of the United States of America.
1.2 In this Agreement:
1.2.1 The singular includes the plural and vice versa, and the
masculine includes the feminine and vice versa and the neuter
includes the masculine and the feminine.
1.2.2 Any reference to a Clause or Schedule shall, unless otherwise
specifically provided, be to a Clause or Schedule of this
Agreement.
1.2.3 The headings of this Agreement are for ease of reference only and
shall not affect its construction or interpretation.
2 ELAN LICENSE TO HEPASENSE
2.1 Elan hereby grants to HepaSense for the Term an exclusive license
(including the limited right to grant sublicenses under Clause 10 of the
JDOA) (the "Elan License") to the Elan Intellectual Property to make,
have made, import, use, offer for sale and sell the Product in the Field
in the Territory, subject to any contractual obligations that Elan has
as of the Effective Date, including but not limited to the Development
License and Supply Agreement dated 26 July 1999 between EPIL and Merck
Corporation and the License Agreement dated as of April 20, 1999 between
Orasense Ltd, and Elan Pharmaceutical Technologies, and the
Manufacturing Agreement dated June 11, 1999 among Elan Corporation plc,
EPIL and MiniMed. Upon nomination by Isis and acceptance by Elan of an
Additional Oligonucleotide, the Parties shall negotiate in good faith
how the Additional Product based upon such Additional Oligonucleotide
should be developed and commercialized, whether a license should be
granted to Isis or HepaSense or otherwise, (i) the terms of a grant of a
new license of Elan Intellectual Property for use with the Additional
Oligonucleotide or (ii) the
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<PAGE> 10
terms for amendment of the Elan License to include the license of the
Elan Intellectual Property to make, have made, import, use, offer for
sale and sell Additional Products based upon the Additional
Oligonucleotide in the Field in the Territory, subject to any
contractual obligations that Elan has as of the date of such agreement.
2.2 Elan hereby confirms that no financial or compensation obligations are
in effect on the date hereof between Elan and an unaffiliated third
party relating to the System for use in the Field.
To the extent royalty or other compensation obligations payable to third
parties with respect to the Elan Intellectual Property would be
triggered by use of such Elan Intellectual Property in connection with
the Project, Elan shall inform HepaSense and Isis of such royalty or
compensation obligations. If HepaSense and Isis agree to utilize such
Elan Intellectual Property in connection with the Project, HepaSense
will be responsible for the payment of such royalty or other
compensation obligations relating thereto.
2.3 Isis shall be a third party beneficiary under this Agreement and shall
have the right to cause HepaSense to enforce HepaSense's rights under
this Agreement against Elan.
2.4 Notwithstanding anything contained in this Agreement to the contrary,
Elan shall have the right outside the Field and subject to the
non-competition provisions of Clause 4 to exploit and grant licenses and
sublicenses of the Elan Intellectual Property.
For the avoidance of doubt, HepaSense shall have no right to use the
Elan Intellectual Property outside the Field.
2.5 Except as provided in Clause 10 in the JDOA, HepaSense shall not be
permitted to assign, license or sublicense any of its rights under the
Elan Intellectual Property and/or the HepaSense Intellectual Property
without the prior written consent of Elan.
2.6 Any agreement between HepaSense and any permitted third party for the
development or exploitation of the Elan Intellectual Property shall
require such third party to maintain the confidentiality of all
information concerning the Elan Intellectual Property and shall provide
that any Elan Improvements shall belong to Elan and shall permit an
assignment of rights by HepaSense to Elan in accordance with the terms
of this Agreement.
Insofar as the obligations owed by HepaSense to Elan are concerned,
HepaSense shall remain responsible for all acts and omissions of any
permitted sub-licensee, including Isis, as if they were acts and
omissions by HepaSense.
3 INTELLECTUAL PROPERTY
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<PAGE> 11
3.1 OWNERSHIP OF INTELLECTUAL PROPERTY:
3.1.1 HepaSense shall own the HepaSense Intellectual Property.
3.1.2 Elan shall own the Elan Intellectual Property.
4 NON-COMPETITION/AFTER ACQUIRED TECHNOLOGY
4.1 Subject to Clause 4.2 hereof and Clause 14 of the JDOA, Elan, alone or
in conjunction with a third party, shall not, for a period of [ * ]
years from the Effective Date, develop or commercialize the Designated
Oligonucleotide or any other Oligonucleotide designated towards the
treatment of HCV, subject to (a) the Development, License and Supply
Agreement dated 26 July 1999 between EPIL and Merck Corporation, (b) the
Subscription, Joint Development and Operating Agreement, dated July 21,
1999, between Elan, plc, EIS, Targeted Genetics Corporation and Targeted
Genetics HepaSense, Ltd. and (c) the License Agreement, dated as of July
20, 1999, between Targeted Genetics HepaSense, Ltd. and Elan, plc.
Notwithstanding anything to the contrary contained herein, the
provisions of Clause 4.1 shall only act as a restriction upon Affiliates
and subsidiaries of Elan, plc. carrying on business as Elan
Pharmaceutical Technologies and, except for the development and
commercialization of any Oligonucleotide designated towards the
treatment of HCV administered by the System during such [* ] year
period, shall not act as a restriction upon, nor in any way affect,
Targon Corporation, Axogen Limited, Neuralab Limited, Affiliates and
subsidiaries (present or future) within the division of Elan, plc
carrying on business as Elan Pharmaceuticals which incorporates, inter
alia, EPIL (to the extent that EPIL is the owner of patents, know-how or
other intellectual property or technology invented and/or developed
within the division of Elan, plc carrying on business as Elan
Pharmaceuticals), Athena Neurosciences, Inc., Elan Pharmaceuticals,
Inc., Elan Diagnostics, Carnrick Laboratories, and Elan Europe Limited.
4.2 If, after the Effective Date, Elan obtains or licenses from a third
party know-how or patent rights relating to the System in the Field, or
acquires or merges with a third party entity that has know-how or patent
rights relating to the System in the Field, Elan shall offer to license
such know-how and patent rights to HepaSense (subject to existing
contractual obligations), on commercially reasonable terms on an arm's
length basis for a reasonable period under the prevailing circumstances.
If HepaSense determines that HepaSense should not acquire such license,
Elan shall be free to fully exploit such know-how and patent rights with
the Elan Intellectual Property then licensed to HepaSense, whether
inside or outside the Field, and to grant to third parties licenses and
sublicenses with respect thereto.
5 FINANCIAL PROVISIONS
11
*CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 12
5.1 LICENSE FEE:
In consideration of the license by Elan to HepaSense of the Elan Patents
under Clause 2, HepaSense shall pay to Elan a non-refundable license fee
of US [ * ] (the "LICENSE FEE"), the receipt of which is hereby
acknowledged by Elan.
The License Fee shall not be subject to future performance obligations
of Elan to HepaSense or Isis and shall not be applicable against future
services provided by Elan to HepaSense or Isis. The license fee terms as
set out in Clause 5.1 of this Agreement are independent and distinct
from the other terms of this Agreement.
5.2 MILESTONE AND ROYALTY PAYMENTS RELATING TO PRODUCTS: All net proceeds
derived by HepaSense from the Product shall be allocated as additional
royalties in proportion to [ * ], as more particularly set forth below.
(a) Milestone Payments - If any third party shall make
milestone payments (e.g., for NDA filing, approvals, etc.) to
HepaSense, HepaSense shall pay to Elan and Isis an additional royalty
in the amount of such milestone payments [ * ].
(b) Royalties payable to Elan and Isis Upon sales of the
Product - Elan and Isis shall receive royalties based on In-market
Net Sales of the Product aggregating [ * ] for sales directly by
HepaSense or its sublicensees or such other royalty as the Parties
may negotiate.
5.3 MILESTONE AND ROYALTY PAYMENTS RELATING TO ADDITIONAL PRODUCTS: All net
proceeds derived by HepaSense from Additional Products shall be
allocated as additional royalties [ * ], as more particularly set forth
below. Elan, Isis and HepaSense shall negotiate separate royalty
payments for Elan (including, without limitation, participation by
HepaSense and Elan in milestone payments made by independent third
parties to Isis) for any Additional Products at commercially reasonable
rates on arms length terms between unrelated parties; provided, however,
that HepaSense or Isis, as the case may be, shall not be obligated for
the payment of an additional one-time access license fee.
5.4 Payment of royalties pursuant to Clause 5.3 shall be made quarterly in
arrears during each Financial Year within 50 days after the expiry of
the calendar quarter. The method of payment shall be by wire transfer to
an account specified by Elan. Each payment made to Elan shall be
accompanied by a true accounting of all Products sold by HepaSense's
permitted sublicensees, if any, during such quarter.
Such accounting shall show, on a country-by-country and
Product-by-Product basis, Net Sales (and the calculation thereof) and
each calculation of royalties with respect
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*CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 13
thereto, including the calculation of all adjustments and currency
conversions.
Any royalties, license fees or other payments due under this Agreement
to Elan shall be apportioned in accordance with a formula agreed between
Elan, plc and EPIL.
5.5 HepaSense shall maintain and keep clear, detailed, complete, accurate
and separate records for a period of 3 years:
5.5.1 to enable any royalties on Net Sales that shall have accrued
hereunder to be determined; and
5.5.2 to enable any deductions made in the Net Sales calculation to be
determined.
5.6 All payments due hereunder shall be made in United States Dollars.
Payments due on Net Sales of any Product for each calendar quarter made
in a currency other than United States Dollars shall first be calculated
in the foreign currency and then converted to United States Dollars on
the basis of the exchange rate in effect on the last working day for
such quarter for the purchase of United States Dollars with such foreign
currency quoted in the Wall Street Journal (or comparable publication if
not quoted in the Wall Street Journal) with respect to the currency of
the country of origin of such payment, determined by averaging the rates
so quoted on each business day of such quarter.
5.7 If, at any time, legal restrictions in the Territory prevent the prompt
payment when due of royalties or any portion thereof, the Parties shall
meet to discuss suitable and reasonable alternative methods of paying
Elan the amount of such royalties. In the event that HepaSense is
prevented from making any payment under this Agreement by virtue of the
statutes, laws, codes or government regulations of the country from
which the payment is to be made, then such payments may be paid by
depositing them in the currency in which they accrue to Elan's account
in a bank acceptable to Elan in the country the currency of which is
involved or as otherwise agreed by the Parties.
5.8 Elan and HepaSense agree to co-operate in all respects necessary to take
advantage of any double taxation agreements or similar agreements as
may, from time to time, be available.
5.9 Any taxes payable by Elan on any payment made to Elan pursuant to this
Agreement shall be for the account of Elan. If so required by applicable
law, any payment made pursuant to this Agreement shall be made by
HepaSense after deduction of the appropriate withholding tax, in which
event the Parties shall co-operate to obtain the appropriate tax
clearance as soon as is practicable. On receipt of such clearance,
HepaSense shall forthwith arrange payment to Elan of the amount so
withheld.
6 RIGHT OF INSPECTION AND AUDIT
6.1 Once during each Financial Year, or more often not to exceed quarterly
as reasonably requested by Elan, HepaSense shall permit Elan or its duly
authorised representatives,
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<PAGE> 14
upon reasonable notice and at any reasonable time during normal business
hours, to have access to inspect and audit the accounts and records of
HepaSense and any other book, record, voucher, receipt or invoice
relating to the calculation of the royalty payments on Net Sales
submitted to Elan.
Any such inspection of HepaSense's records shall be at the expense of
Elan, except that if any such inspection reveals a deficiency in the
amount of the royalty actually paid to Elan hereunder in any Financial
Year quarter of 5% or more of the amount of any royalty actually due to
Elan hereunder, then the expense of such inspection shall be borne
solely by HepaSense. Any amount of deficiency shall be paid promptly to
Elan by HepaSense.
If such inspection reveals a surplus in the amount of royalties actually
paid to Elan by HepaSense, Elan shall reimburse HepaSense the surplus
within 15 days after determination.
6.2 In the event of any unresolved dispute regarding any alleged deficiency
or overpayment of royalty payments hereunder, the matter will be
referred to an independent firm of chartered accountants chosen by
agreement of Isis and Elan for a resolution of such dispute. Any
decision by the said firm of chartered accountants shall be binding on
the Parties.
7 REPRESENTATIONS AND WARRANTIES
7.1 Elan represents and warrants to HepaSense and Isis as of the Effective
Date that, except as set forth on Schedule 3 hereto:
7.1.1 Elan has the right to grant the Elan License;
7.1.2 there are no agreements between Elan and any third party that
conflict with the Elan License;
7.1.3 the patents and patent applications included in the Elan Patents
are free and clear of encumbrances and liens;
7.1.4 to the best of Elan's knowledge, there are no proceedings
pending or threatened against Elan in connection with the Elan
Intellectual Property in relation to the Field; and
7.1.5 the Elan Intellectual Property constitutes all intellectual
property owned or licensed by Elan that is reasonably applicable
to the Project as it relates to the System.
7.2 In addition to any other indemnities provided for herein, Elan shall
indemnify and hold harmless HepaSense and its Affiliates and their
respective employees, agents, officers and directors from and against
any claims, losses, liabilities or damages
14
<PAGE> 15
(including reasonable attorney's fees and expenses) incurred or
sustained by HepaSense arising out of or in connection with any:
7.2.1 breach of any representation, covenant, warranty or obligation
by Elan hereunder; or
7.2.2 act or omission on the part of Elan or any of its respective
employees, agents, officers and directors in the performance of
this Agreement.
7.3 In addition to any other indemnities provided for herein, HepaSense
shall indemnify and hold harmless Elan and its Affiliates and their
respective employees, agents, officers and directors from and against
any claims, losses, liabilities or damages (including reasonable
attorney's fees and expenses) incurred or sustained by Elan arising out
of or in connection with any:
7.3.1 breach of any representation, covenant, warranty or obligation
by HepaSense hereunder; or
7.3.2 act or omission on the part of HepaSense or any of its agents or
employees in the performance of this Agreement.
7.4 The Party seeking an indemnity shall:
7.4.1 fully and promptly notify the other Party of any claim or
proceeding, or threatened claim or proceeding;
7.4.2 permit the indemnifying Party to take full care and control of
such claim or proceeding;
7.4.3 co-operate in the investigation and defence of such claim or
proceeding;
7.4.4 not compromise or otherwise settle any such claim or proceeding
without the prior written consent of the other Party, which
consent shall not be unreasonably withheld conditioned or
delayed; and
7.4.5 take all reasonable steps to mitigate any loss or liability in
respect of any such claim or proceeding.
7.5 EXCEPT AS SET FORTH IN THIS CLAUSE 7, ELAN IS GRANTING THE LICENSES
HEREUNDER ON AN "AS IS" BASIS WITHOUT REPRESENTATION OR WARRANTY WHETHER
EXPRESS OR IMPLIED INCLUDING WARRANTIES OF MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE, OR INFRINGEMENT OF THIRD PARTY RIGHTS, AND ALL
SUCH WARRANTIES ARE EXPRESSLY DISCLAIMED.
7.6 NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS AGREEMENT, ELAN AND
HEPASENSE SHALL NOT BE LIABLE TO THE
15
<PAGE> 16
OTHER BY REASON OF ANY REPRESENTATION OR WARRANTY, CONDITION OR OTHER
TERM OR ANY DUTY OF COMMON LAW, OR UNDER THE EXPRESS TERMS OF THIS
AGREEMENT, FOR ANY CONSEQUENTIAL, SPECIAL OR INCIDENTAL OR PUNITIVE LOSS
OR DAMAGE (WHETHER FOR LOSS OF PROFITS OR OTHERWISE) AND WHETHER
OCCASIONED BY THE NEGLIGENCE OF THE RESPECTIVE PARTIES, THEIR EMPLOYEES
OR AGENTS OR OTHERWISE.
8. TERM AND TERMINATION
8.1 On a product by product basis, subject to the provisions of Clause 10
and 11, the term of the Licenses granted hereunder with respect to a
Product and/or Additional Product in each country in the Territory (the
"TERM") shall be the greater of:
8.1.1 [ * ] years from the date of the first commercial sale of the
Product or Additional Products; or
8.1.2 the life of the patent rights utilized in the Product or
Additional Products or upon which the Product or Additional
Product is based.
8.2 If either Party commits a Relevant Event, the other Party shall have, in
addition to all other legal and equitable rights and remedies hereunder,
the right to terminate this Agreement upon 30 days' prior written notice
to the defaulting Party.
8.3 For the purpose of this Clause 8, a "RELEVANT EVENT" is committed or
suffered by a Party if:
8.3.1 it commits a material breach of its obligations under this
Agreement or the JDOA and such breach (i) is not capable of
being cured or (ii) is capable of being cured the breaching
Party fails to remedy it within 60 days of being specifically
required in writing to do so by the other Party; provided, that
if the breaching Party has proposed a course of action to
rectify the breach and is acting in good faith to rectify same
but has not cured the breach by the 60th day, such period shall
be extended by such period as is reasonably necessary to permit
the breach to be rectified;
8.3.2 a distress, execution, sequestration or other process is levied
or enforced upon or sued out against a material part of its
property which is not discharged or challenged within 30 days;
8.3.3 it is unable to pay its debts in the normal course of business;
8.3.4 it ceases wholly or substantially to carry on its business,
otherwise than for the purpose of a reconstruction or
amalgamation, without the prior written consent of the other
Party (such consent not to be unreasonably withheld);
16
*CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 17
8.3.5 the appointment of a liquidator, receiver, administrator,
examiner, trustee or similar officer of such Party or over all
or substantially all of its assets under the law of any
applicable jurisdiction, including without limitation, the
United States of America, Bermuda or Ireland;
8.3.6 an application or petition for bankruptcy, corporate
re-organisation, composition, administration, examination,
arrangement or any other procedure similar to any of the
foregoing under the law of any applicable jurisdiction,
including without limitation, the United States of America,
Bermuda or Ireland, is filed, and is not discharged within 60
days, or a Party applies for or consents to the appointment of a
receiver, administrator, examiner or similar officer of it or of
all or a material part of its assets, rights or revenues or the
assets and/or the business of a Party are for any reason seized,
confiscated or condemned.
8.4 In the event that a Competitive Change of Control Event shall occur, at
the sole option of Elan and upon written notice to Isis and HepaSense,
the Elan License shall be immediately terminated. Upon written notice
from Isis to Elan of a proposed Competitive Change of Control Event or
the occurrence of a Competitive Change of Control Event, Elan shall have
thirty (30) days from such notice to Isis to provide written notice to
Isis as to whether it intends to terminate the Elan License. In the
event Elan does not provide written notice to Isis during such thirty
(30) day period of its intention to terminate the Elan License, such
termination right shall be deemed waived with respect to such
occurrence.
8.5 Upon expiration or termination of the Agreement:
8.5.1. any sums that were due from HepaSense to Elan on Net Sales in
the Territory or in such particular country or countries in the
Territory (as the case may be) prior to the expiration or
termination of this Agreement as set forth herein shall be paid
in full within 60 days after the expiration or termination of
this Agreement for the Territory or for such particular country
or countries in the Territory (as the case may be);
8.5.2 any provisions that expressly survive termination or expiration
of this Agreement, including without limitation this Clause 8,
shall remain in full force and effect;
8.5.3 all representations, warranties and indemnities shall insofar as
are appropriate remain in full force and effect;
8.5.4 the rights of inspection and audit set out in Clause 6 shall
continue in force for a period of one year; and
8.5.5 all rights and licenses granted pursuant to this Agreement and
to the Elan Intellectual Property pursuant to the JDOA
(including the rights of HepaSense pursuant to Clause 11 of the
JDOA) shall cease for the Territory or for such particular
country or countries in the Territory (as the case may be) and
shall
17
<PAGE> 18
revert to or be transferred to Elan, and HepaSense shall not
thereafter use in the Territory or in such particular country or
countries in the Territory (as the case may be) any rights
covered by this Agreement;
8.5.6 subject to Clause 8.5.7 and to such license, if any, granted by
HepaSense to Elan pursuant to the provisions of Clause 10 of the
JDOA, all rights to HepaSense Intellectual Property shall be
transferred to and jointly owned by Isis and Elan but may not be
exploited by both Elan and Isis, unless otherwise agreed by the
unanimous vote of the Management Committee, and may only be
exploited by either Elan and Isis pursuant to written consent
from the other Party.
In the event of a dispute arising pursuant to this Clause 8.5.6,
Elan and Isis agree to negotiate in good faith on the course of
action to be taken with respect to determining their respective
entitlements pursuant to this Clause 8.5.6; and
8.5.7 the rights of permitted third party sub-licensees in and to the
Elan Intellectual Property shall survive the termination of the
license and sublicense agreements granting said intellectual
property rights to HepaSense; and HepaSense, Elan and Isis shall
in good faith agree upon the form most advantageous to Elan and
Isis in which the rights of HepaSense under any such licenses
and sublicenses are to be held (which form may include
continuation of HepaSense solely as the holder of such licenses
or assignment of such rights to a third party or parties,
including an assignment to both Elan and Isis).
Any sublicense agreement between HepaSense and such permitted
sublicensee shall permit an assignment of rights by HepaSense
and shall contain appropriate confidentiality provisions.
9 CONFIDENTIAL INFORMATION
9.1 The Parties agree that it will be necessary, from time to time, to
disclose to each other confidential and proprietary information,
including without limitation, inventions, works of authorship, trade
secrets, specifications, designs, data, know-how and other proprietary
information relating to the Field, the Products, processes, services and
business of the disclosing Party.
The foregoing shall be referred to collectively as "CONFIDENTIAL
INFORMATION".
9.2 Any Confidential Information disclosed by one Party to another Party
shall be used by the receiving Party exclusively for the purposes of
fulfilling the receiving Party's obligations under this Agreement and
the JDOA and for no other purpose.
9.3 Each Party shall disclose Confidential Information of the other Party
only to those employees, representatives and agents requiring knowledge
thereof in connection with fulfilling the Party's obligations under this
Agreement. Each Party further agrees to inform all such employees,
representatives and agents of the terms and provisions of
18
<PAGE> 19
this Agreement and their duties hereunder and to obtain their agreement
hereto as a condition of receiving Confidential Information. Each Party
shall exercise the same standard of care as it would itself exercise in
relation to its own confidential information (but in no event less than
a reasonable standard of care) to protect and preserve the proprietary
and confidential nature of the Confidential Information disclosed to it
by the other Party. Each Party shall, upon request of the other Party,
return all documents and any copies thereof containing Confidential
Information belonging to, or disclosed by, such other Party.
9.4 Any breach of this Clause 9 by any person informed by one of the Parties
is considered a breach by the Party itself.
9.5 Confidential Information shall not be deemed to include:
9.5.1 information that is in the public domain;
9.5.2 information which is made public through no breach of this
Agreement;
9.5.3 information which is independently developed by a Party as
evidenced by such Party's records;
9.5.4 information that becomes available to a Party on a
non-confidential basis, whether directly or indirectly, from a
source other than a Party, which source did not acquire this
information on a confidential basis; or
9.5.5 information which the receiving Party is required to disclose
pursuant to:
(i) a valid order of a court or other governmental body; or
(ii) any other requirement of law;
provided that if the receiving Party becomes legally required to
disclose any Confidential Information, the receiving Party shall
give the disclosing Party prompt notice of such fact so that the
disclosing Party may obtain a protective order or other
appropriate remedy concerning any such disclosure. The receiving
Party shall fully co-operate with the disclosing Party in
connection with the disclosing Party's efforts to obtain any
such order or other remedy. If any such order or other remedy
does not fully preclude disclosure, the receiving Party shall
make such disclosure only to the extent that such disclosure is
legally required.
9.6 The provisions relating to confidentiality in this Clause 9 shall remain
in effect during the term of this Agreement, and for a period of 7 years
following the expiration or earlier termination of this Agreement.
9.7 The Parties agree that the obligations of this Clause 9 are necessary
and reasonable in order to protect the Parties' respective businesses,
and each Party agrees that monetary damages would be inadequate to
compensate a Party for any breach by the
19
<PAGE> 20
other Party of its covenants and agreements set forth herein.
Accordingly, the Parties agree that any such violation or threatened
violation shall cause irreparable injury to a Party and that, in
addition to any other remedies that may be available, in law and equity
or otherwise, each Party shall be entitled to obtain injunctive relief
against the threatened breach of the provisions of this Clause 9, or a
continuation of any such breach by the other Party, specific performance
and other equitable relief to redress such breach together with its
damages and reasonable counsel fees and expenses to enforce its rights
hereunder, without the necessity of proving actual or express damages.
9.8 For the avoidance of doubt, all Confidential Information of HepaSense
received by Elan hereunder shall not be disclosed by Elan to its
Affiliates and/or subsidiaries (present or future) within the division
of Elan Pharmaceuticals Corporation, plc. carrying on business as Elan
Pharmaceuticals (which incorporates, inter alia, Athena Neurosciences,
Inc., Elan Pharmaceuticals, Inc., Elan Diagnostics, Carnrick
Laboratories, and Elan Europe Limited) and Targon Corporation.
10 GOVERNING LAW AND DISPUTE RESOLUTION
10.1 This Agreement shall be governed by and construed in accordance with the
laws of the State of New York without regard to principles relating to
conflicts of laws.
10.2 The Parties will attempt in good faith to resolve any dispute arising
out of or relating to this Agreement promptly by negotiation between
executives of the Parties. In the event that such negotiations do not
result in a mutually acceptable resolution, the Parties agree to
consider other dispute resolution mechanisms including mediation.
10.3 Any dispute under this Agreement which is not settled by mutual consent
under Clause 10.2 will be subject to resolution in accordance with
Clauses 19 and 24.8 of the JDOA, which is incorporated by reference and
shall for such purposes survive termination of the JDOA.
11 IMPOSSIBILITY OF PERFORMANCE - FORCE MAJEURE
Neither Elan nor HepaSense shall be liable for delay in the performance
of any of its obligations hereunder if such delay results from causes
beyond its reasonable control, including, without limitation, acts of
God, fires, strikes, acts of war, intervention of a government
authority, but any such delay or failure shall be remedied by such Party
as soon as practicable.
12 ASSIGNMENT
This Agreement may not be assigned by either Party without the prior
written consent of the other, save that either Party may assign this
Agreement to its Affiliates or subsidiaries without such prior written
consent [and that Elan may assign this Agreement to any off-balance
sheet special purpose entity established by Elan or EIS without such
prior written consent;] provided that such assignment does not have any
20
<PAGE> 21
adverse tax consequences on the other Party.
13 NOTICES
13.1 Any notice to be given under this Agreement shall be sent in writing in
English by registered airmail or telefaxed to the following addresses:
If to HepaSense at:
102 St. James Court
Clarendon House
Church St.
Hamilton, Bermuda
Attention: Secretary
Telephone: 441-295-1422
Fax: 441-292-4720
with a copy to Elan, plc and EPIL at:
Elan Corporation, plc
Elan Pharma International Limited
c/o Elan International Services, Ltd.
102 St. James Court
Flatts,
Smiths FL04
Bermuda
Attention: Secretary
Telephone: 441 292 9169
Fax: 441 292 2224
with a copy to:
Isis Pharmaceuticals, Inc.
2292 Faraday Avenue
Carlsbad, California 92008
Attention: B. Lynne Parshall, Esq.
Telephone: (760) 603-2460
Telefax: (760) 931-9639
If to Isis at:
Isis Pharmaceuticals, Inc.
2292 Faraday Avenue
Carlsbad, California 92008
Attention: B. Lynne Parshall, Esq.
Telephone: (760) 603-2460
Telefax: (760) 931-9639
21
<PAGE> 22
If to Elan, plc and/or EPIL at:
Elan Corporation, plc
Elan Pharma International Limited
C/o Elan International Services, Ltd.
102 St. James Court
Flatts,
Smiths FL04
Bermuda
Attention: Secretary
Telephone: 441 292 9169
Fax: 441 292 2224
or to such other address(es) and telefax numbers as may from time to
time be notified by either Party to the other hereunder.
13.2 Any notice sent by mail shall be deemed to have been delivered within
seven 7 working days after dispatch and any notice sent by telex or
telefax shall be deemed to have been delivered within twenty 24 hours of
the time of the dispatch. Notice of change of address shall be effective
upon receipt.
14 MISCELLANEOUS
14.1 WAIVER:
No waiver of any right under this Agreement shall be deemed effective
unless contained in a written document signed by the Party charged with
such waiver, and no waiver of any breach or failure to perform shall be
deemed to be a waiver of any other breach or failure to perform or of
any other right arising under this Agreement.
14.2 SEVERABILITY:
If any provision in this Agreement is agreed by the Parties to be, or is
deemed to be, or becomes invalid, illegal, void or unenforceable under
any law that is applicable hereto:
14.2.1 such provision will be deemed amended to conform to applicable
laws so as to be valid and enforceable; or
14.2.2 if it cannot be so amended without materially altering the
intention of the Parties, it will be deleted, with effect from
the date of such agreement or such earlier date as the Parties
may agree, and the validity, legality and enforceability of the
remaining provisions of this Agreement shall not be impaired or
affected in any way.
14.3 FURTHER ASSURANCES:
22
<PAGE> 23
At the request of any of the Parties, the other Party or Parties shall
(and shall use reasonable efforts to procure that any other necessary
parties shall) execute and perform all such documents, acts and things
as may reasonably be required subsequent to the signing of this
Agreement for assuring to or vesting in the requesting Party the full
benefit of the terms hereof.
14.4 SUCCESSORS:
This Agreement shall be binding upon and enure to the benefit of the
Parties hereto, their successors and permitted assigns.
14.5 NO EFFECT ON OTHER AGREEMENTS/CONFLICT:
No provision of this Agreement shall be construed so as to negate,
modify or affect in any way the provisions of any other agreement
between the Parties unless specifically referred to, and solely to the
extent provided herein.
In the event of a conflict between the provisions of this Agreement and
the provisions of the JDOA, the terms of the JDOA shall prevail unless
this Agreement specifically provides otherwise.
14.6 AMENDMENTS:
No amendment, modification or addition hereto shall be effective or
binding on any Party unless set forth in writing and executed by a duly
authorised representative of each Party.
14.7 COUNTERPARTS:
This Agreement may be executed in any number of counterparts, each of
which when so executed shall be deemed to be an original and all of
which when taken together shall constitute this Agreement.
14.8 GOOD FAITH:
Each Party undertakes to do all things reasonably within its power which
are necessary or desirable to give effect to the spirit and intent of
this Agreement.
14.9 NO RELIANCE:
Each Party hereby acknowledges that in entering into this Agreement it
has not relied on any representation or warranty save as expressly set
out herein or in any document referred to herein.
14.10 RELATIONSHIP OF THE PARTIES:
Nothing contained in this Agreement is intended or is to be construed to
constitute
23
<PAGE> 24
Elan and HepaSense as partners, or Elan as an employee of HepaSense, or
HepaSense as an employee of Elan.
Neither Party hereto shall have any express or implied right or
authority to assume or create any obligations on behalf of or in the
name of the other Party or to bind the other Party to any contract,
agreement or undertaking with any third party.
24
<PAGE> 25
IN WITNESS WHEREOF the Parties hereto have executed this Agreement.
SIGNED BY:
-------------------------
for and on behalf of
ELAN CORPORATION, PLC ACTING
THROUGH ITS DIVISION ELAN
PHARMACEUTICAL TECHNOLOGIES
SIGNED BY:
-------------------------
for and on behalf of
ELAN PHARMA INTERNATIONAL LIMITED
SIGNED BY:
-------------------------
For and on behalf of
HEPASENSE LTD.
AGREED TO AND ACCEPTED BY
SIGNED BY:
-------------------------
For and on behalf of ISIS PHARMACEUTICAL, INC.
25
<PAGE> 26
SCHEDULE 1
ELAN PATENTS
CONTINUOUS SYSTEM
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
FILE NUMBER BRIEF DESCRIPTION COUNTRY STATUS
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
EMT 13 Original System Australia Granted (693136)
Canada Pending
EP Pending
Israel Granted (111685)
Japan Pending
New Zealand Granted (276485)
Taiwan Granted (079227)
United States 2 Granted (5,527,288;
5,848,991); 1 Pending
South Africa Granted (94/9185)
- ----------------------------------------------------------------------------------------------------------
EMT 19 Medipad-Vial on board, needle on the Australia Pending
periphery Canada Pending
EP Pending
Ireland Granted (77523)
Japan Pending
Mexico Pending
New Zealand Pending
Norway Pending
Taiwan Pending
United States Granted (5,814,020)
South Korea Pending
South Africa Granted (96/7502)
- ----------------------------------------------------------------------------------------------------------
EMT 24 Delivery Needle Australia Pending
Canada Canada
EP Pending
Ireland Granted (80772)
Israel Pending
Japan Pending
New Zealand Pending
South Africa Granted (97/5065)
South Korea Pending
Taiwan Issued (096579)
United States Pending
- ----------------------------------------------------------------------------------------------------------
EMT 29 Improved Medipad & Filling System PCT Pending
(pressure adjustmt. valve, 3-position Argentina Pending
needle) Ireland Pending
Taiwan Pending
United States Pending
- ----------------------------------------------------------------------------------------------------------
EMT 33 Improved Method of Packaging a Drug PCT Pending
- ----------------------------------------------------------------------------------------------------------
</TABLE>
26
<PAGE> 27
<TABLE>
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------
Delivery Kit Ireland Pending
South Africa Issued (98/5188)
Taiwan Pending
United States Pending
- ----------------------------------------------------------------------------------------------------------
EMT 36 Improved Adhesive System for a Medical PCT Pending
Device Taiwan Pending
United States Pending
- ----------------------------------------------------------------------------------------------------------
EMT41DES Design of Medipad Housing (3ml) United States Granted (D404482)
- ----------------------------------------------------------------------------------------------------------
EMT 45 Liquid Drug Container United States Pending
- ----------------------------------------------------------------------------------------------------------
</TABLE>
All countries are initially designated when filing in the European Patent Office
or the Patent Cooperation Treaty, and are then selected during the regional or
national phase.
27
<PAGE> 28
SCHEDULE 2A
PRIMARY TECHNOLOGICAL COMPETITORS OF ELAN(1)
[ * ]
SCHEDULE 2B
TECHNOLOGICAL COMPETITORS OF ELAN(1)
[ * ]
- ----------
1. Including any and all divisions or subsidiaries of the above.
28
*CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 29
SCHEDULE 3
ELAN EXCEPTIONS AND DISCLOSURES
[ * .]
29
*CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 1
EXHIBIT 10.8
TEXT OMITTED AND FILED SEPARATELY
"CONFIDENTIAL TREATMENT REQUESTED
UNDER 17 C.F.R. SECTIONS 200.80(B)(4),
200.83 AND 240.24B-2."
LICENSE AGREEMENT
BETWEEN
ISIS PHARMACEUTICALS, INC.
AND
HEPASENSE LTD.
JANUARY 14, 2000
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
1 DEFINITIONS
2 ISIS LICENSE TO HEPASENSE
3 INTELLECTUAL PROPERTY
4 NON-COMPETITION/AFTER ACQUIRED TECHNOLOGY
5 FINANCIAL PROVISIONS
6 RIGHT OF INSPECTION AND AUDIT
7 REPRESENTATIONS AND WARRANTIES
8 TERM AND TERMINATION
9 CONFIDENTIAL INFORMATION
10 GOVERNING LAW AND DISPUTE RESOLUTION
11 IMPOSSIBILITY OF PERFORMANCE - FORCE MAJEURE
12 ASSIGNMENT
13 NOTICES
14 MISCELLANEOUS
</TABLE>
2
<PAGE> 3
THIS AGREEMENT made this 14th day of January 2000
BETWEEN:
(1) ISIS PHARMACEUTICALS, INC., a corporation duly incorporated and validly
existing under the laws of the state of Delaware and having its
principal place of business at 2292 Faraday Avenue, Carlsbad, California
92008, United States of America; and
(2) HEPASENSE LTD., a private limited company incorporated under the laws of
Bermuda and having its registered office at 102 St. James Court,
Clarendon House Church St. Hamilton, Bermuda; and
(3) ELAN CORPORATION, PLC, a public limited company incorporated under the
laws of Ireland, acting through its division ELAN PHARMACEUTICAL
TECHNOLOGIES and having its registered office at Lincoln House, Lincoln
Place, Dublin 2, Ireland and ELAN PHARMA INTERNATIONAL LIMITED, a
private limited company and having its registered office at WIL House,
Shannon Business Park, Shannon, County Clare, Ireland;
RECITALS:
A. Simultaneously herewith, Isis, Elan, EIS, and HepaSense (capitalized
terms used herein are defined below) are entering into the JDOA for the
purpose of recording the terms and conditions of the joint venture and
of regulating their relationship with each other and certain aspects of
the affairs of, and their dealings with HepaSense.
B. HepaSense desires to enter into this Agreement with Isis so as to permit
HepaSense to utilize the Isis Intellectual Property in making, having
made, importing, using, offering for sale and selling the Products in
the Field in the Territory.
C. Simultaneously herewith HepaSense and Elan are entering into the Elan
License Agreement relating to HepaSense's use of the Elan Intellectual
Property.
1 DEFINITIONS
1.1 In this Agreement unless the context otherwise requires:
"ADDITIONAL OLIGONUCLEOTIDES" shall mean another Oligonucleotide from
the Isis portfolio of Oligonucleotides nominated by Isis and accepted by
Elan to be incorporated within or packaged with the System for
commercialization. For the avoidance of doubt, the Parties acknowledge
that any Additional Oligonucleotide shall be at least at the same stage
of development as the Designated Oligonucleotide, i.e., shall be ready
for clinical testing.
"ADDITIONAL PRODUCTS" shall mean the pharmaceutical formulation
incorporating an Additional Oligonucleotide and incorporated within or
packaged with the System.
3
<PAGE> 4
"AFFILIATE" shall mean any corporation or entity controlling, controlled
or under the common control of Elan or Isis, as the case may be. For the
purpose of this definition, "control" shall mean direct or indirect
ownership of fifty percent (50%) or more of the stock or shares entitled
to vote for the election of directors. HepaSense is not an Affiliate of
Elan or EIS.
"AGREEMENT" shall mean this license agreement (which expression shall be
deemed to include the Recitals and Schedules hereto).
"BUSINESS PLAN" shall have the meaning, as such term is defined in the
JDOA.
"CONFIDENTIAL INFORMATION" shall have the meaning, as such term is
defined in Clause 9.
"DEFINITIVE DOCUMENTS" shall mean the definitive agreements relating to
the transaction including finance, stock purchase, research and license
agreements.
"DESIGNATED OLIGONUCLEOTIDE" shall mean Isis 14803.
"EFFECTIVE DATE" shall mean the date of this Agreement.
"ELAN" shall mean Elan, plc and EPIL, and their respective successors
and permitted assigns.
"ELAN, PLC" shall mean Elan Corporation, plc, a public limited company
incorporated under the laws of Ireland acting through its division Elan
Pharmaceutical Technologies.
"EIS" shall mean Elan International Services, Ltd., a private limited
company incorporated under the laws of Bermuda and having its registered
office at St James Court, Flatts, Smiths, FL04 Bermuda.
"ELAN IMPROVEMENTS" shall have the meaning as such term is defined in
the Elan License Agreement.
"ELAN INTELLECTUAL PROPERTY" shall mean the Elan Know-How, the Elan
Patents and the Elan Improvements. For the avoidance of doubt, Elan
Intellectual Property shall exclude inventions, patents and know-how
owned, licensed or controlled by Targon Corporation, Axogen Limited and
Neuralab Limited and by all Affiliates or subsidiaries (present or
future) of Elan, plc. within the division of Elan, plc carrying on
business as Elan Pharmaceuticals which incorporates, inter alia, EPIL
(to the extent that EPIL is the owner of patents, know-how or other
intellectual property or technology invented and/or developed within the
division of Elan, plc carrying on business as Elan Pharmaceuticals),
Athena Neurosciences, Inc., Elan Pharmaceuticals, Inc., Elan
Diagnostics, Carnrick Laboratories, and Elan Europe Limited.
"ELAN KNOW-HOW" shall have the meaning as such term is defined in the
Elan
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License Agreement.
"ELAN LICENSE" shall have the meaning set forth in Clause 2.1 of the
Elan License Agreement.
"ELAN LICENSE AGREEMENT" shall mean that certain license agreement, of
even date herewith, entered into between Elan and HepaSense.
"ELAN PATENTS" shall have the meaning as such term is defined in the
Elan License Agreement.
"EPIL" shall mean Elan Pharma International Limited, a private limited
company incorporated under the laws of Ireland, that is wholly owned by
Elan, plc.
"EXISTING ISIS LICENSE AGREEMENTS" shall mean the following agreements:
(a) Amended License Agreement, between Public Health Service and
Gen-Probe, Incorporated, as amended by the Second License Agreement
between Public Health Service and Gen-Probe, Incorporated, (b) the
Settlement Agreement among Public Health Service, Gen-Probe,
Incorporated and Genta Incorporated and (c) Asset Purchase Agreement,
effective as of December 19, 1997 between Gen-Probe, Incorporated and
Isis.
Notwithstanding anything contained herein to the contrary, nothing
contained in this License Agreement shall be deemed to constitute an
admission by Isis that any of the Isis Intellectual Property is subject
to or governed by any of the Existing Isis License Agreements.
"FIELD" shall mean the administration of the Designated Oligonucleotide
by all routes of administration. Upon nomination by Isis and acceptance
by Elan of an Additional Oligonucleotide, the parties shall amend the
definition of the Field to include the administration of the Additional
Oligonucleotide by such means of administration as agreed to by the
parties.
Notwithstanding the foregoing, the Parties acknowledge and agree that,
pursuant to existing agreement among Elan, Isis and Orasense Ltd, both
Isis and Elan and their Affiliates may be subject to certain
restrictions concerning the development and commercialization of
products comprised upon the oral administration of any Oligonucleotide.
"FINANCIAL YEAR" shall mean each year commencing on 1 January (or in the
case of the first Financial Year, the Effective Date) and expiring on 31
December of each year.
"HCV" shall mean the hepatitis C virus.
"HEPASENSE INTELLECTUAL PROPERTY" shall mean HepaSense Patents and
HepaSense Know How. In addition to the foregoing, any enhancement or
improvement relating to both the System and the Isis Know-How or Isis
Patents developed by any of the
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Parties individually or jointly pursuant to the Project or by a third
party (under contract with HepaSense) pursuant to the Project shall,
except as limited by agreements with third parties, be deemed to be
HepaSense Intellectual Property.
"HEPASENSE KNOW-HOW" shall mean any and all rights owned, licensed or
controlled by HepaSense to any scientific, pharmaceutical or technical
information, data, discovery, invention (whether patentable or not),
technique, process, procedure, system, formulation or design that is not
generally known to the public arising out of the conduct of the Project
by any person that does not constitute Elan Improvements or Isis
Improvements.
"HEPASENSE PATENTS" shall mean any and all patents and patent
applications arising out of the conduct of the Project by any person
that does not constitute Elan Improvements or Isis Improvements and all
rights therein, and including all extensions, continuations,
continuations-in-part, divisionals, patents-of-additions,
re-examinations, re-issues, supplementary protection certificates and
foreign counterparts thereto owned or licensed to HepaSense.
"IN MARKET" shall mean the sale of the Product and Additional Products
in the Territory by HepaSense or its Affiliates, or where applicable by
a permitted sub-licensee, to an unaffiliated third party, such as (i)
the end-user consumer of the Product (ii) a wholesaler, managed care
organization, hospital or pharmacy or other third party who effects the
final commercial sale to the end-user consumer of the Product, and shall
exclude the transfer pricing of the Product(s) by Elan to an Affiliate
or a sub-licensee.
"ISIS" shall mean Isis Pharmaceuticals, Inc. and its Affiliates,
excluding HepaSense.
"ISIS IMPROVEMENTS" shall mean improvements to the Isis Patents and/or
the Isis Know-How developed (i) by Isis whether or not pursuant to the
Project, (ii) by HepaSense or Elan or by a third party (under contract
with HepaSense) pursuant to the Project, and/or (iii) jointly by any
combination of Isis, Elan or HepaSense pursuant to the Project, except
as limited by agreements with third parties.
Subject to third party agreements, Isis Improvements shall constitute
part of Isis Intellectual Property and be included in the license of the
Isis Intellectual Property pursuant to Clause 2.1 solely for the
purposes set forth therein. If the inclusion of a Isis Improvement in
the license of Isis Intellectual Property is restricted or limited by a
third party agreement, Isis shall use reasonable commercial efforts to
minimize any such restriction or limitation.
"ISIS INTELLECTUAL PROPERTY" shall mean the Isis Know-How, the Isis
Patents and the Isis Improvements, as such terms are defined in the Isis
License Agreement.
"ISIS KNOW-HOW" shall mean any and all rights owned, licensed or
controlled by Isis to any scientific, pharmaceutical or technical
information, data, discovery, invention (whether patentable or not),
technique, process, procedure, system, formulation or design relating to
the Designated Oligonucleotide that is not generally known to the
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public.
"ISIS LICENSE" shall mean have the meaning set forth in Clause 2.1
hereof.
"ISIS PATENTS" shall mean any and all patents and patent applications as
set forth in Schedule 1, and all rights therein, and including all
extensions, continuations, continuations-in-part, divisionals,
patents-of-additions, re-examinations, re-issues, supplementary
protection certificates and foreign counterparts thereto owned by or
licensed to Isis containing claims relating to the Designated
Oligonucleotide. Upon nomination and approval of an Additional
Oligonucleotide, Schedule 1 shall be amended to include any and all
patents and patent applications and all rights therein, and including
all extensions, continuations, continuations-in-part, divisionals,
patents-of-additions, re-examinations, re-issues, supplementary
protection certificates and foreign counterparts thereto owned by or
licensed to Isis containing claims relating to the Additional
Oligonucleotide.
"ISIS IMPROVEMENTS" shall have the meaning as such term is defined in
the Isis License Agreement.
"ISIS 14803" shall mean the Oligonucleotide described in Exhibit A
hereto.
"JDOA" shall mean that certain joint development and operating
agreement, of even date herewith, by and between Elan, Isis, EIS and
HepaSense.
"LICENSED TECHNOLOGIES" shall mean the Elan Intellectual Property and
the Isis Intellectual Property.
"LICENSES" shall mean the Elan License and the Isis License.
"NET SALES" shall mean that sum determined by deducting the following
deductions from the aggregate gross In Market sales proceeds billed for
the Products by HepaSense or, its Affiliate or a permitted sub-licensee,
as the case may be:
(i) transportation charges or allowances, if any, included in such
price;
(ii) trade, quantity or cash discounts, broker's or agent's
commissions, if any, allowed or paid;
(iii) credits or allowances, if any, given or made on account of price
adjustments, returns, promotional discounts, rebates and any and
all federal, state or local government rebates whether in
existence now or enacted at any time during the term of the
Licenses;
(iv) any tax, excise or governmental charge upon or measured by the
sale, transportation, delivery or use of the Products; and
(v) reasonable samples, materials for clinical studies and
reasonable compassionate programs
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Net Sales shall also include the amount or fair market value of all
other consideration received by HepaSense or its Affiliates or
sublicensees in respect of Products and Additional Products, whether
such consideration is payment in kind, exchange or another form. If a
Product or Additional Product is provided to an third party by HepaSense
or its Affiliates or sublicensees without charge or provision of invoice
and used by such third party, then HepaSense or its Affiliates or
sublicensees shall be treated as having sold such Product or Additional
Product to such third party for an amount equal to the fair market value
of such Product. Sales between or among HepaSense and its respective
Affiliates or authorized licensees shall be excluded from the
computation of Net Sales. A "sale" of a Product or Additional Product is
deemed to occur upon the earlier of invoicing, shipment or transfer of
title in the Product or the Additional Product to an third party. For
avoidance of doubt, Net Sales shall include royalties received by
HepaSense or its Affiliates from any third party in respect of Products
and Additional Products.
"OLIGONUCLEOTIDE" shall mean any single stranded, [ * ] oligonucleotide
including those [ * ] used as a human therapeutic and/or prophylactic
compound containing between [ * ] nucleotides and/or nucleosides
including oligonucleotide analogs which may include [ * ]. For purposes
of this agreement, Oligonucleotide shall specifically exclude
oligonucleotides used in gene therapy except [ * ] an oligonucleotide,
oligonucleotides used as [ * ] or oligonucleotides used as adjuvants.
Oligonucleotide shall also specifically exclude polymers in which the
linkages are amide based, such as peptides and proteins and shall also
exclude [ * ].
"ORAL" shall mean administration by way of the mouth for the purpose of
topical or systemic delivery by way of the alimentary canal.
"PARTY" shall mean Isis or HepaSense, as the case may be, and "PARTIES"
shall mean Isis and HepaSense.
"PRODUCT" shall mean the pharmaceutical formulation incorporating the
Designated Oligonucleotide for [ * ] within the Field, including,
without limitation, the incorporation of the Designated Oligonucleotide
within or packaged with the System.
"PROJECT" shall mean all activities as undertaken by Elan, Isis and
HepaSense in order to develop the Products.
"SUBSTITUTE OLIGONUCLEOTIDE" shall have the meaning set forth in Clause
2.2 hereof;
"SYSTEM" shall have the meaning as such term is defined in the Elan
License Agreement.
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"TECHNOLOGICAL COMPETITOR OF ISIS" shall mean a company, corporation or
person listed in Schedule 2 and successors thereof or any additional
broad-based technological competitor of Isis added to such Schedule from
time to time upon mutual agreement of the Parties.
"TERM" shall have the meaning set forth in Clause 8.
"TERRITORY" shall mean all the countries of the world.
"UNITED STATES DOLLAR" and "US$" shall mean the lawful currency for the
time being of the United States of America.
1.2 In this Agreement:
1.2.1 The singular includes the plural and vice versa, and the
masculine includes the feminine and vice versa and the neuter
includes the masculine and the feminine.
1.2.2 Any reference to a Clause or Schedule shall, unless otherwise
specifically provided, be to a Clause or Schedule of this
Agreement.
1.2.3 The headings of this Agreement are for ease of reference only and
shall not affect its construction or interpretation.
2 ISIS LICENSE TO HEPASENSE
2.1 Isis hereby grants to Newco for the Term an exclusive license (including
the limited right to grant sublicenses under Clause 10 of the JDOA) (the
"ISIS License") to the Isis Intellectual Property to make, have made,
import, use, offer for sale and sell the Product in the Field in the
Territory, subject to any contractual obligations that Isis has as of
the Effective Date. Upon nomination by Isis and acceptance by Elan of an
Additional Oligonucleotide, the Parties shall negotiate in good faith
how the Additional Product based upon such Additional Oligonucleotide
should be developed and commercialized, whether a license should be
granted to Isis or HepaSense or otherwise, (i) the terms of a grant of a
new license of Isis Intellectual Property for use with the Additional
Oligonucleotide or (ii) the terms for amendment of the Isis License to
include the license of the Isis Intellectual Property to make, have
made, import, use, offer for sale and sell Additional Products based
upon the Additional Oligonucleotide in the Field in the Territory,
subject to any contractual obligations that Isis has as of the date of
such agreement.
2.2 Isis hereby confirms that no obligations are in effect on the date
hereof between Isis and an unaffiliated third party relating to the
Designated Oligonucleotide for use in the Field, other than the Existing
Isis License Agreements.
Isis shall be responsible for payments related to the financial
provisions and
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obligations under the Existing Isis License Agreements (including
amendments thereto), including, without limitation, any royalty or other
compensation obligations.
2.3 Subject to the provisions of Clause 2.2, to the extent royalty or other
compensation obligations are payable to third parties with respect to
Isis Intellectual Property would be triggered by use of such Isis
Intellectual Property in connection with the Project, Isis shall inform
Elan of such royalty or compensation obligation. If HepaSense and Elan
agree to utilize such Isis Intellectual Property in connection with the
Project, HepaSense shall be responsible for the payment of such royalty
or other compensation obligations relating thereto.
2.4 Elan shall have the right to cause HepaSense to enforce HepaSense's
rights under this Agreement against Isis.
2.5 Notwithstanding anything contained in this Agreement to the contrary,
Isis shall have the right outside the Field and subject to the
non-competition provisions of Clause 4 to exploit and grant licenses and
sublicenses of the Isis Intellectual Property.
For the avoidance of doubt, HepaSense shall have no right to use the
Isis Intellectual Property outside the Field.
2.6 Except as provided in Clause 11 in the JDOA, HepaSense shall not be
permitted to assign, license or sublicense any of its rights under the
Isis Intellectual Property and/or the HepaSense Intellectual Property
without the prior written consent of Isis.
2.7 Any agreement between HepaSense and any permitted third party for the
development or exploitation of the Isis Intellectual Property shall
require such third party to maintain the confidentiality of all
information concerning the Isis Intellectual Property and shall provide
that any Isis Improvements shall belong to Isis and shall permit an
assignment of rights by HepaSense to Isis in accordance with the terms
of this Agreement.
Insofar as the obligations owed by HepaSense to Isis are concerned,
HepaSense shall remain responsible for all acts and omissions of any
permitted sub-licensee, including Isis, as if they were acts and
omissions by HepaSense.
3 INTELLECTUAL PROPERTY
3.1 OWNERSHIP OF INTELLECTUAL PROPERTY:
3.1.1 HepaSense shall own the HepaSense Intellectual Property.
3.1.2 Isis shall own the Isis Intellectual Property.
4 NON-COMPETITION/AFTER ACQUIRED TECHNOLOGY
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4.1 Subject to Clause 4.2 hereof and Clause 13 of the JDOA, during the [ * ]
year period commencing on the effective date, Isis, alone or in
conjunction with a third party, shall not develop or commercialize (i)
any Oligonucleotide for the treatment of HCV or (ii) the Designated
Oligonucleotide for the treatment of HCV or any other indication.
4.2 If after the Effective Date Isis acquires know-how or patent rights from
a third party relating to the Isis Intellectual Property, or if Isis
acquires or merges with a third party entity that owns or has license
rights to know-how or patent rights relating to the Isis Intellectual
Property, then Isis shall offer to license such know-how and patent
rights to HepaSense (subject to existing contractual obligations) solely
for HepaSense to research, develop and otherwise engage in the
commercialization of the Product solely for use in the Field on such
terms as would be offered to an independent third party negotiating in
good faith on an arms-length basis.
If HepaSense determines that HepaSense should not acquire such license,
Isis shall be free to fully exploit such know-how and patent rights with
the Isis Intellectual Property then licensed to HepaSense, whether
inside or outside the Field, and to grant to third parties licenses and
sublicenses with respect thereto.
5 FINANCIAL PROVISIONS
5.1 MILESTONE AND ROYALTY PAYMENTS RELATING TO PRODUCTS: All net proceeds
derived by HepaSense from the Product shall be allocated as additional
royalties in proportion to [ * ], as more particularly set forth below.
(a) Milestone Payments - If any third party shall make milestone
payments (e.g., for NDA filing, approvals, etc.) to HepaSense, HepaSense
shall pay to Elan and Isis an additional royalty in the amount of such
milestone payments [ * ].
(b) Royalties payable to Elan and Isis Upon sales of the Product
- Elan and Isis shall receive royalties based on In-market Net Sales of
the Product aggregating [ * ] for sales directly by HepaSense or its
sublicensees or such other royalty as the Parties may negotiate.
5.2 MILESTONE AND ROYALTY PAYMENTS RELATING TO ADDITIONAL PRODUCTS: All net
proceeds derived by HepaSense from Additional Products shall be
allocated as additional royalties [ * ], as more particularly set forth
below. Elan, Isis and HepaSense shall negotiate separate royalty
payments for Elan (including, without limitation, participation by
HepaSense and Elan in milestone payments made by independent third
parties to Isis) for any Additional Products at commercially reasonable
rates on arms length terms between unrelated parties; provided, however,
that HepaSense or Isis, as the case may be, shall not be obligated for
the payment of
* CONFIDENTIAL TREATMENT REQUESTED
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an additional one-time access license fee.
5.3 Payment of royalties pursuant to Clause 5.3 shall be made quarterly in
arrears during each Financial Year within 50 days after the expiry of
the calendar quarter. The method of payment shall be by wire transfer to
an account specified by Isis. Each payment made to Isis shall be
accompanied by a true accounting of all Products sold by HepaSense's
permitted sublicensees, if any, during such quarter.
Such accounting shall show, on a country-by-country and
Product-by-Product basis, Net Sales (and the calculation thereof) and
each calculation of royalties with respect thereto, including the
calculation of all adjustments and currency conversions.
5.5 HepaSense shall maintain and keep clear, detailed, complete, accurate
and separate records for a period of 3 years:
5.5.1 to enable any royalties on Net Sales that shall have accrued
hereunder to be determined; and
5.5.2 to enable any deductions made in the Net Sales calculation to be
determined.
5.6 All payments due hereunder shall be made in United States Dollars.
Payments due on Net Sales of any Product for each calendar quarter made
in a currency other than United States Dollars shall first be calculated
in the foreign currency and then converted to United States Dollars on
the basis of the exchange rate in effect on the last working day for
such quarter for the purchase of United States Dollars with such foreign
currency quoted in the Wall Street Journal (or comparable publication if
not quoted in the Wall Street Journal) with respect to the currency of
the country of origin of such payment, determined by averaging the rates
so quoted on each business day of such quarter.
5.7 If, at any time, legal restrictions in the Territory prevent the prompt
payment when due of royalties or any portion thereof, the Parties shall
meet to discuss suitable and reasonable alternative methods of paying
Isis the amount of such royalties. In the event that HepaSense is
prevented from making any payment under this Agreement by virtue of the
statutes, laws, codes or government regulations of the country from
which the payment is to be made, then such payments may be paid by
depositing them in the currency in which they accrue to Isis's account
in a bank acceptable to Isis in the country the currency of which is
involved or as otherwise agreed by the Parties.
5.8 Isis and HepaSense agree to co-operate in all respects necessary to take
advantage of any double taxation agreements or similar agreements as
may, from time to time, be available.
5.9 Any taxes payable by Isis on any payment made to Isis pursuant to this
Agreement shall be for the account of Isis. If so required by applicable
law, any payment made pursuant to this Agreement shall be made by
HepaSense after deduction of the appropriate withholding tax, in which
event the Parties shall co-operate to obtain the appropriate tax
clearance as soon as is practicable. On receipt of such clearance,
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HepaSense shall forthwith arrange payment to Isis of the amount so
withheld.
6 RIGHT OF INSPECTION AND AUDIT
6.1 Once during each Financial Year, or more often not to exceed quarterly
as reasonably requested by Isis, HepaSense shall permit Isis or its duly
authorised representatives, upon reasonable notice and at any reasonable
time during normal business hours, to have access to inspect and audit
the accounts and records of HepaSense and any other book, record,
voucher, receipt or invoice relating to the calculation of the royalty
payments on Net Sales submitted to Isis.
Any such inspection of HepaSense's records shall be at the expense of
Isis, except that if any such inspection reveals a deficiency in the
amount of the royalty actually paid to Isis hereunder in any Financial
Year quarter of 5% or more of the amount of any royalty actually due to
Isis hereunder, then the expense of such inspection shall be borne
solely by HepaSense. Any amount of deficiency shall be paid promptly to
Isis by HepaSense.
If such inspection reveals a surplus in the amount of royalties actually
paid to Isis by HepaSense, Elan shall reimburse HepaSense the surplus
within 15 days after determination.
6.2 In the event of any unresolved dispute regarding any alleged deficiency
or overpayment of royalty payments hereunder, the matter will be
referred to an independent firm of chartered accountants chosen by
agreement of Isis and Elan for a resolution of such dispute. Any
decision by the said firm of chartered accountants shall be binding on
the Parties.
7 REPRESENTATIONS AND WARRANTIES
7.1 Isis represents and warrants to HepaSense and Elan as of the Effective
Date that:
7.1.1 Isis has the right to grant the Isis License;
7.1.2 there are no agreements between Isis and any third party that
conflict with the Isis License;
7.1.3 the patents and patent applications included in the Isis Patents
are free and clear of encumbrances and liens except for any
license which would not preclude Isis from granting the licenses
granted hereunder;
7.1.4 to the best of Isis's knowledge, there are no proceedings
pending or threatened against Isis in connection with the Isis
Intellectual Property in relation to the Field; and
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7.1.5 the Isis Intellectual Property constitutes all intellectual
property owned or licensed by Isis that is reasonably applicable
to the Project as it relates to the Designated Oligonucleotide.
7.2 Isis shall not amend, modify, waive or terminate any of its rights under
any Existing Isis License Agreement without the prior written consent of
the Management Committee (by the unanimous vote of its members);
provided, however, that such consent will be required only if such
amendment, modification, waiver or termination would have an adverse
effect, individually or in the aggregate, on the financial condition,
prospects, results of operation, business, and/or assets (including,
without limitation, the Licensed Technologies, and/or the HepaSense
Intellectual Property) of HepaSense.
7.3 Isis agrees and represents and warrants to HepaSense and Elan as
follows: (i) the Existing Isis License Agreements are valid and in full
force and effect, (ii) there are no existing or claimed defaults by
Isis, and to Isis's knowledge by any other party, under the Existing
Isis License Agreements; and no event, act or omission has occurred
which (with or without notice, lapse of time or the happening or
occurrence of any other event) would result in a default under the
Existing Isis License Agreements by Isis, or to Isis's knowledge by any
other party, and (iii) Isis shall during the term of the Licenses, fully
comply with all terms and conditions of the Existing Isis License
Agreements; Isis will enforce its rights under the Existing Isis License
Agreements, as they relate to the Designated Oligonucleotide; and Isis
will not assign its rights under the Existing Isis License Agreements,
as they relate the Designated Oligonucleotide. Isis will keep HepaSense
and Elan fully informed with respect to Isis's arrangements under the
Existing Isis License Agreements that relate to HepaSense and/or the
transactions contemplated hereunder. Isis shall provide HepaSense and
Elan with any written notices delivered by any party under the Existing
Isis License Agreements, which written notices relate to or could affect
HepaSense and/or the transactions contemplated hereunder.
7.4 In addition to any other indemnities provided for herein, Isis shall
indemnify and hold harmless HepaSense and its Affiliates and their
respective employees, agents, officers and directors from and against
any claims, losses, liabilities or damages (including reasonable
attorney's fees and expenses) incurred or sustained by HepaSense arising
out of or in connection with any:
7.4.1 breach of any representation, covenant, warranty or obligation
by Isis hereunder; or
7.4.2 act or omission on the part of Isis or any of its respective
employees, agents, officers and directors in the performance of
this Agreement.
7.5 In addition to any other indemnities provided for herein, HepaSense
shall indemnify and hold harmless Isis and its Affiliates and their
respective employees, agents, officers and directors from and against
any claims, losses, liabilities or damages (including reasonable
attorney's fees and expenses) incurred or sustained by Isis arising out
of or in connection with any:
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7.5.1 breach of any representation, covenant, warranty or obligation
by HepaSense hereunder; or
7.5.2 act or omission on the part of HepaSense or any of its agents or
employees in the performance of this Agreement.
7.6 The Party seeking an indemnity shall:
7.6.1 fully and promptly notify the other Party of any claim or
proceeding, or threatened claim or proceeding;
7.6.2 permit the indemnifying Party to take full care and control of
such claim or proceeding;
7.6.3 co-operate in the investigation and defence of such claim or
proceeding;
7.6.4 not compromise or otherwise settle any such claim or proceeding
without the prior written consent of the other Party, which
consent shall not be unreasonably withheld conditioned or
delayed; and
7.6.5 take all reasonable steps to mitigate any loss or liability in
respect of any such claim or proceeding.
7.7 EXCEPT AS SET FORTH IN THIS CLAUSE 7, ISIS IS GRANTING THE LICENSES
HEREUNDER ON AN "AS IS" BASIS WITHOUT REPRESENTATION OR WARRANTY WHETHER
EXPRESS OR IMPLIED INCLUDING WARRANTIES OF MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE, OR INFRINGEMENT OF THIRD PARTY RIGHTS, AND ALL
SUCH WARRANTIES ARE EXPRESSLY DISCLAIMED.
7.8 NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS AGREEMENT, ISIS AND
HEPASENSE SHALL NOT BE LIABLE TO THE OTHER BY REASON OF ANY
REPRESENTATION OR WARRANTY, CONDITION OR OTHER TERM OR ANY DUTY OF
COMMON LAW, OR UNDER THE EXPRESS TERMS OF THIS AGREEMENT, FOR ANY
CONSEQUENTIAL, SPECIAL OR INCIDENTAL OR PUNITIVE LOSS OR DAMAGE (WHETHER
FOR LOSS OF PROFITS OR OTHERWISE) AND WHETHER OCCASIONED BY THE
NEGLIGENCE OF THE RESPECTIVE PARTIES, THEIR EMPLOYEES OR AGENTS OR
OTHERWISE.
8. TERM AND TERMINATION
8.1 On a product by product basis, subject to the provisions of Clause 10
and 11, the term of the Licenses granted hereunder with respect to a
Product and/or Additional Product in each country in the Territory (the
"TERM") shall be the
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greater of:
8.1.1 [ * ] years from the date of the first commercial sale of the
Product or Additional Products; or
8.1.2 the life of the patent rights utilized in the Product or
Additional Products or upon which the Product or Additional
Product is based.
8.2 If either Party commits a Relevant Event, the other Party shall have, in
addition to all other legal and equitable rights and remedies hereunder,
the right to terminate this Agreement upon 30 days' prior written notice
to the defaulting Party.
8.3 For the purpose of this Clause 8, a "RELEVANT EVENT" is committed or
suffered by a Party if:
8.3.1 it commits a material breach of its obligations under this
Agreement or the JDOA and such breach (i) is not capable of
being cured or (ii) is capable of being cured the breaching
Party fails to remedy it within 60 days of being specifically
required in writing to do so by the other Party; provided, that
if the breaching Party has proposed a course of action to
rectify the breach and is acting in good faith to rectify same
but has not cured the breach by the 60th day, such period shall
be extended by such period as is reasonably necessary to permit
the breach to be rectified;
8.3.2 a distress, execution, sequestration or other process is levied
or enforced upon or sued out against a material part of its
property which is not discharged or challenged within 30 days;
8.3.3 it is unable to pay its debts in the normal course of business;
8.3.4 it ceases wholly or substantially to carry on its business,
otherwise than for the purpose of a reconstruction or
amalgamation, without the prior written consent of the other
Party (such consent not to be unreasonably withheld);
8.3.5 the appointment of a liquidator, receiver, administrator,
examiner, trustee or similar officer of such Party or over all
or substantially all of its assets under the law of any
applicable jurisdiction, including without limitation, the
United States of America or Bermuda; or
8.3.6 an application or petition for bankruptcy, corporate
re-organisation, composition, administration, examination,
arrangement or any other procedure similar to any of the
foregoing under the law of any applicable jurisdiction,
including without limitation, the United States of America,
Bermuda or Ireland, is filed, and is not discharged within 60
days, or a Party applies for or consents to the appointment of a
receiver, administrator, examiner or similar officer of it or of
all or a material part of its assets, rights or revenues or the
assets and/or the business of a Party are for any reason seized,
confiscated or condemned.
* CONFIDENTIAL TREATMENT REQUESTED
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8.4 Upon expiration or termination of the Agreement:
8.4.1 any sums that were due from HepaSense to Isis on Net Sales in
the Territory or in such particular country or countries in the
Territory (as the case may be) prior to the expiration or
termination of this Agreement as set forth herein shall be paid
in full within 60 days after the expiration or termination of
this Agreement for the Territory or for such particular country
or countries in the Territory (as the case may be);
8.4.2 any provisions that expressly survive termination or expiration
of this Agreement, including without limitation this Clause 8,
shall remain in full force and effect;
8.4.3 all representations, warranties and indemnities shall insofar as
are appropriate remain in full force and effect;
8.4.4 the rights of inspection and audit set out in Clause 6 shall
continue in force for a period of one year; and
8.4.5 all rights and licenses granted pursuant to this Agreement and
to the Isis Intellectual Property pursuant to the JDOA
(including the rights of HepaSense pursuant to Clause 11 of the
JDOA) shall cease for the Territory or for such particular
country or countries in the Territory (as the case may be) and
shall revert to or be transferred to Isis, and HepaSense shall
not thereafter use in the Territory or in such particular
country or countries in the Territory (as the case may be) any
rights covered by this Agreement;
8.4.6 subject to Clause 8.4.7 and to such license, if any, granted by
HepaSense to Isis pursuant to the provisions of Clause 10 of the
JDOA, all rights to HepaSense Intellectual Property shall be
transferred to and jointly owned by Isis and Elan but may not be
exploited by both Elan and Isis, unless otherwise agreed by the
unanimous vote of the Management Committee, and may only be
exploited by either Elan and Isis pursuant to written consent
from the other Party;
In the event of a dispute arising pursuant to this Clause 8.4.6,
Elan and Isis agree to negotiate in good faith on the course of
action to be taken with respect to determining their respective
entitlements pursuant to this Clause 8.4.6.
8.4.7 the rights of permitted third party sub-licensees in and to the
Isis Intellectual Property shall survive the termination of the
license and sublicense agreements granting said intellectual
property rights to HepaSense; and HepaSense, Elan and Isis shall
in good faith agree upon the form most advantageous to Elan and
Isis in which the rights of HepaSense under any such licenses
and sublicenses are to be held (which form may include
continuation of HepaSense solely as the holder of such licenses
or assignment of such rights to a third party or parties,
including an assignment to both Elan
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and Isis).
Any sublicense agreement between HepaSense and such permitted
sublicensee shall permit an assignment of rights by HepaSense
and shall contain appropriate confidentiality provisions.
9 CONFIDENTIAL INFORMATION
9.1 The Parties agree that it will be necessary, from time to time, to
disclose to each other confidential and proprietary information,
including without limitation, inventions, works of authorship, trade
secrets, specifications, designs, data, know-how and other proprietary
information relating to the Field, the Products, processes, services and
business of the disclosing Party.
The foregoing shall be referred to collectively as "CONFIDENTIAL
INFORMATION".
9.2 Any Confidential Information disclosed by one Party to another Party
shall be used by the receiving Party exclusively for the purposes of
fulfilling the receiving Party's obligations under this Agreement and
the JDOA and for no other purpose.
9.3 Each Party shall disclose Confidential Information of the other Party
only to those employees, representatives and agents requiring knowledge
thereof in connection with fulfilling the Party's obligations under this
Agreement. Each Party further agrees to inform all such employees,
representatives and agents of the terms and provisions of this Clause 9
and their duties hereunder and to obtain their agreement hereto as a
condition of receiving Confidential Information. Each Party shall
exercise the same standard of care as it would itself exercise in
relation to its own confidential information (but in no event less than
a reasonable standard of care) to protect and preserve the proprietary
and confidential nature of the Confidential Information disclosed to it
by the other Party. Each Party shall, upon request of the other Party,
return all documents and any copies thereof containing Confidential
Information belonging to, or disclosed by, such other Party.
9.4 Any breach of this Clause 9 by any person informed by one of the Parties
is considered a breach by the Party itself.
9.5 Confidential Information shall not be deemed to include:
9.5.1 information that is in the public domain;
9.5.2 information which is made public through no breach of this
Agreement;
9.5.3 information which is independently developed by a Party as
evidenced by such Party's records;
9.5.4 information that becomes available to a Party on a
non-confidential basis, whether directly or indirectly, from a
source other than a Party, which source did not acquire this
information on a confidential basis; or
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9.5.5 information which the receiving Party is required to disclose
pursuant to:
(i) a valid order of a court or other governmental body; or
(ii) any other requirement of law;
provided that if the receiving Party becomes legally required to
disclose any Confidential Information, the receiving Party shall
give the disclosing Party prompt notice of such fact so that the
disclosing Party may obtain a protective order or other
appropriate remedy concerning any such disclosure. The receiving
Party shall fully co-operate with the disclosing Party in
connection with the disclosing Party's efforts to obtain any
such order or other remedy. If any such order or other remedy
does not fully preclude disclosure, the receiving Party shall
make such disclosure only to the extent that such disclosure is
legally required.
9.6 The provisions relating to confidentiality in this Clause 9 shall remain
in effect during the term of this Agreement, and for a period of 7 years
following the expiration or earlier termination of this Agreement.
9.7 The Parties agree that the obligations of this Clause 9 are necessary
and reasonable in order to protect the Parties' respective businesses,
and each Party agrees that monetary damages would be inadequate to
compensate a Party for any breach by the other Party of its covenants
and agreements set forth herein.
Accordingly, the Parties agree that any such violation or threatened
violation shall cause irreparable injury to a Party and that, in
addition to any other remedies that may be available, in law and equity
or otherwise, each Party shall be entitled to obtain injunctive relief
against the threatened breach of the provisions of this Clause 9, or a
continuation of any such breach by the other Party, specific performance
and other equitable relief to redress such breach together with its
damages and reasonable counsel fees and expenses to enforce its rights
hereunder, without the necessity of proving actual or express damages.
10 GOVERNING LAW AND DISPUTE RESOLUTION
10.1 This Agreement shall be governed by and construed in accordance with the
laws of the State of New York without regard to principles relating to
conflicts of laws.
10.2 The Parties will attempt in good faith to resolve any dispute arising
out of or relating to this Agreement promptly by negotiation between
executives of the Parties. In the event that such negotiations do not
result in a mutually acceptable resolution, the Parties agree to
consider other dispute resolution mechanisms including mediation.
10.3 Any dispute under this Agreement which is not settled by mutual consent
under Clause 10.2 will be subject to resolution in accordance with
Clauses 19 and 24.8 of the JDOA, which are incorporated by reference and
shall for such purposes survive
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termination of the JDOA
11 IMPOSSIBILITY OF PERFORMANCE - FORCE MAJEURE
Neither Isis nor HepaSense shall be liable for delay in the performance
of any of its obligations hereunder if such delay results from causes
beyond its reasonable control, including, without limitation, acts of
God, fires, strikes, acts of war, intervention of a government
authority, but any such delay or failure shall be remedied by such Party
as soon as practicable.
12 ASSIGNMENT
This Agreement may not be assigned by either Party without the prior
written consent of the other, save that either Party may assign this
Agreement to its Affiliates or subsidiaries without such prior written
consent; provided that such assignment does not have any adverse tax
consequences on the other Party.
13 NOTICES
13.1 Any notice to be given under this Agreement shall be sent in writing in
English by registered airmail or telefaxed to the following addresses:
If to HepaSense at:
102 St. James Court
Clarendon House
Church St.
Hamilton, Bermuda
Attention: Secretary
Telephone: 441-295-1422
Fax: 441-292-4720
with a copy to Elan, plc and EPIL at:
Elan Corporation, plc
Elan Pharma International Limited
c/o Elan International Services, Ltd.
102 St. James Court
Flatts,
Smiths FL04
Bermuda
Attention: Secretary
Telephone: 441 292 9169
Fax: 441 292 2224
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with a copy to:
Isis Pharmaceuticals, Inc.
2292 Faraday Avenue
Carlsbad, California 92008
Attention: B. Lynne Parshall, Esq.
Telephone: (760) 603-2460
Telefax: (760) 931-9639
If to Isis at:
Isis Pharmaceuticals, Inc.
2292 Faraday Avenue
Carlsbad, California 92008
Attention: B. Lynne Parshall, Esq.
Telephone: (760) 603-2460
Telefax: (760) 931-9639
If to Elan, plc and/or EPIL at:
Elan Corporation, plc
Elan Pharma International Limited
C/o Elan International Services, Ltd.
102 St. James Court
Flatts,
Smiths FL04
Bermuda
Attention: Secretary
Telephone: 441 292 9169
Fax: 441 292 2224
or to such other address(es) and telefax numbers as may from time to
time be notified by either Party to the other hereunder.
13.2 Any notice sent by mail shall be deemed to have been delivered within
seven 7 working days after dispatch and any notice sent by telex or
telefax shall be deemed to have been delivered within twenty 24 hours of
the time of the dispatch. Notice of change of address shall be effective
upon receipt.
14 MISCELLANEOUS
14.1 WAIVER:
No waiver of any right under this Agreement shall be deemed effective
unless contained in a written document signed by the Party charged with
such waiver, and no waiver of any breach or failure to perform shall be
deemed to be a waiver of any other breach or failure to perform or of
any other right arising under this Agreement.
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14.2 SEVERABILITY:
If any provision in this Agreement is agreed by the Parties to be, or is
deemed to be, or becomes invalid, illegal, void or unenforceable under
any law that is applicable hereto:
14.2.1 such provision will be deemed amended to conform to applicable
laws so as to be valid and enforceable; or
14.2.2 if it cannot be so amended without materially altering the
intention of the Parties, it will be deleted, with effect from
the date of such agreement or such earlier date as the Parties
may agree, and the validity, legality and enforceability of the
remaining provisions of this Agreement shall not be impaired or
affected in any way.
14.3 FURTHER ASSURANCES:
At the request of any of the Parties, the other Party or Parties shall
(and shall use reasonable efforts to procure that any other necessary
parties shall) execute and perform all such documents, acts and things
as may reasonably be required subsequent to the signing of this
Agreement for assuring to or vesting in the requesting Party the full
benefit of the terms hereof.
14.4 SUCCESSORS:
This Agreement shall be binding upon and enure to the benefit of the
Parties hereto, their successors and permitted assigns.
14.5 NO EFFECT ON OTHER AGREEMENTS/CONFLICT:
No provision of this Agreement shall be construed so as to negate,
modify or affect in any way the provisions of any other agreement
between the Parties unless specifically referred to, and solely to the
extent provided herein.
In the event of a conflict between the provisions of this Agreement and
the provisions of the JDOA, the terms of the JDOA shall prevail unless
this Agreement specifically provides otherwise.
14.6 AMENDMENTS:
No amendment, modification or addition hereto shall be effective or
binding on any Party unless set forth in writing and executed by a duly
authorised representative of each Party.
14.7 COUNTERPARTS:
This Agreement may be executed in any number of counterparts, each of
which when
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so executed shall be deemed to be an original and all of which when
taken together shall constitute this Agreement.
14.8 GOOD FAITH:
Each Party undertakes to do all things reasonably within its power which
are necessary or desirable to give effect to the spirit and intent of
this Agreement.
14.9 NO RELIANCE:
Each Party hereby acknowledges that in entering into this Agreement it
has not relied on any representation or warranty save as expressly set
out herein or in any document referred to herein.
14.10 RELATIONSHIP OF THE PARTIES:
Nothing contained in this Agreement is intended or is to be construed to
constitute Isis and HepaSense as partners, or Isis as an employee of
HepaSense, or HepaSense as an employee of Isis.
Neither Party hereto shall have any express or implied right or
authority to assume or create any obligations on behalf of or in the
name of the other Party or to bind the other Party to any contract,
agreement or undertaking with any third party.
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IN WITNESS WHEREOF the Parties hereto have executed this Agreement.
SIGNED BY:____________________
For and on behalf of
ISIS PHARMACEUTICAL, INC.
SIGNED BY:____________________
For and on behalf of
HEPASENSE LTD.
AGREED TO AND ACCEPTED BY
SIGNED BY:____________________
for and on behalf of
ELAN CORPORATION, PLC ACTING
THROUGH ITS DIVISION ELAN
PHARMACEUTICAL TECHNOLOGIES
SIGNED BY: ____________________
for and on behalf of
ELAN PHARMA INTERNATIONAL LIMITED
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EXHIBIT A
DESCRIPTION OF ISIS 14803
[ * ].
25
* CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 26
SCHEDULE 1
ISIS PATENTS
The following US patent applications are directed to antisense inhibition of
Hepatitis C virus and have claims whose scope includes the ISIS 14803 compound,
either broadly or specifically:
<TABLE>
<CAPTION>
DOCKET NO. APPL. NO. FILE DATE STATUS
<S> <C> <C> <C>
DOC-0002 PCT/JP 93/01293 entered national phase
ISPH-0031 US 08/397,220 pending
ISPH-0136 US 08/452,841 pending
ISPH-0138 US 08/453,085 abandoned
ISPH-0145 US 08/650,093 pending
ISPH-0203 US 08/823,895 pending
ISPH-0245 US 08/988,321 pending
ISPH-0335 PCT/US 98/26040 international phase
ISIS Manufacturing US Patents Applications covering 14803:
Isis-2710 09/032,972 2/26/98 Pending
Isis-2585 08/950,779 10/15/97 Notice of allowance
Isis-3294 09167,165 10/06/98 Pending
Isis-3380 09/288,679 4/09/99 Pending
Isis-3349 09/271,220 3/17/99 Pending
</TABLE>
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SCHEDULE 2
TECHNOLOGICAL COMPETITORS OF ISIS(1)
[ * ]
1. Including any and all divisions or subsidiaries
27
* CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 28
[ISIS PHARMACEUTICALS, INC. LOGO]
Patent Group Use Only
Record of Invention
Docket No. __________
[Illegible}__________
<TABLE>
<S> <C>
1. ROI TITLE: Folate Conjuated Novel Oligonucleotide Carriers
2. POTENTIAL INVENTORS: Mano Manoharan
---------------------------------------------------------
Signature Date
---------------------------------------------------------
Signature Date
---------------------------------------------------------
Signature Date
---------------------------------------------------------
Signature Date
---------------------------------------------------------
Signature Date
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Signature Date
---------------------------------------------------------
Signature Date
---------------------------------------------------------
Signature Date
3. COLLABORATION, SUPPORT: 4. DISCLOSURE:
Is there any corporate collaboration? [ ] Due Date (if applicable): 01/26/2001
If so, who? Reason for Due Date:
5. DATES OF INVENTION:
Conception, on or about (Date): 01/01/1999 By: M. Manoharan & B. Bh
First Written Record (Date): By:
Disclosure to Others (Date): 10/04/1999 By: W/N. Dean, S. Cooper
First Preparation Work begun (Date): By:
Indicate relevant Lab/Conception Notebook No. and Page No.
5. REVIEWED, READ, UNDERSTOOD, DISCUSSED WITH AND APPROVED BY:
Department Head:
- --------------------------------------------------------- ---------------------------------------------------------
Print Name Signature Date
Vice President of Research (appropriate department only): [ ] approved [ ] prior invention/filing [ ] trade secret
- --------------------------------------------------------- ---------------------------------------------------------
Print Name Signature Date
Member of Patent Group:
- --------------------------------------------------------- ----------------------------------------------------------
Print Name Signature Date
</TABLE>
Printed on: 01/26/2000
