<PAGE>
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 7, 2000
---------------
RIBOZYME PHARMACEUTICALS, INC.
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
Colorado 0-27914 34-1697351
- --------------------------------------------------------------------------------
(State or other (Commission (IRS employer
jurisdiction of file number) identification no.)
incorporation
or organization)
2950 Wilderness Place, Boulder, Colorado 80301
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (303) 449-6500
--------------
N/A
- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report.)
<PAGE>
5. Other Events
On January 7, 2000, Ribozyme Pharmaceuticals, Inc. ("Company"), entered
into a joint venture with Elan Corporation, plc and various of its affiliates
(collectively, "Elan") to develop and commercialize the Company's ribozyme
Herzyme(TM) against Human Epidermal Growth Factor Receptor Type 2 ("HER-2") for
treatment of breast and other cancers using Elan's proprietary MEDIPAD(R) Drug
Delivery system. This joint venture was accomplished through the formation of
Medizyme Pharmaceuticals Ltd.(TM), a Bermuda limited liability company
("Medizyme"), which is owned initially 80.1% by the Company and 19.9% by Elan.
The Company, Elan and Medizyme entered into the following agreements
related to their joint venture: (1) License Agreements; (2) Warrants for shares
of the Company's common stock; (3) Convertible Promissory Note; (4) Securities
Purchase Agreement; (5) Subscription, Joint Development and Operating Agreement;
(6) Funding Agreement; and (7) Registration Rights Agreements. Under the terms
of these agreements, the Company licensed Herzyme to Medizyme, along with
certain other of its intellectual property related to ribozymes directed against
HER-2, and contributed $12.015 million in initial funding to Medizyme in
exchange for 80.1% of Medizyme's capital stock. The funds used by the Company
to provide this initial funding were received from the Company's sale to Elan of
12,015 shares of its newly authorized Series A convertible exchangeable
preferred stock ($12.015 million in liquidation amount). Elan has the right to
exchange the Series A preferred stock for 30.1% of the capital stock of Medizyme
owned by the Company or convert it into up to approximately 1,435,000 shares of
the Company's common stock in the future.
Under the terms of the Convertible Promissory Note, Elan has created a
credit facility available on a draw-down basis for the Company to use to borrow
up to $12.015 million if desired to fund the Company's portion of Medizyme
operating costs over a 2.5 year period. Elan may convert this note and accrued
interest thereon into up to 12,015 shares of the Company's Series B convertible
exchangeable preferred stock in the future.
The Series B preferred stock shall be entitled to receive mandatory
dividends for six years equal to 12.0% per year of the Original Issue Price of
$1,000.00 per share payable by issuing additional shares of Series B preferred
stock. The Series B preferred stock and accrued dividends thereon may be
converted at any time into shares of the Company's common stock in an amount
determined by dividing (x) the sum of the Original Issue Price of such share of
Series B preferred stock and all accrued and unpaid dividends thereon by (y) the
Series B Conversion Price, which is a price equal to 150% of the average closing
price of the common stock for the 60 trading days prior to the date of written
notice of the purchase request to the Company.
-2-
<PAGE>
As part of the transaction, Elan purchased 641,026 shares of the Company's
common stock for a purchase price of $5.0 million and committed to purchase
additional shares of common stock at a premium of up to 30% of the then Market
Price (as defined in the Securities Purchase Agreement and subject to adjustment
as provided therein) for a purchase price of $5.0 million in 15 months. In
addition, Elan received two warrants to purchase shares of the Company's common
stock: (i) a warrant to purchase 200,000 shares at an exercise price of $15.00
per share, and (ii) a warrant to purchase 300,000 shares at an exercise price of
$20.00 per share.
On January 7, 2000, the Company filed with the Delaware Secretary of State
a Certificate of Designations, Preferences and Rights of Series A Preferred
Stock and Series B Preferred Stock as provided by the Securities Purchase
Agreement.
On January 31, 2000, the Company entered into a ribozyme manufacturing
agreement with Avecia Limited, acting through its LifeScience Molecules business
("Avecia"). Pursuant to the agreement, the Company transferred proprietary
manufacturing processes and intellectual property to Avecia. Avecia is expected
to produce certain products for the Company, including Angiozyme(TM), Anti-HCV
ribozyme or other ribozyme products agreed to by the parties.
EXHIBITS
1. Securities Purchase Agreement dated January 7, 2000, among the
Company, Elan International Services, Ltd. and Elan Corporation, plc
2* License Agreement dated January 7, 2000, among Elan Pharmaceutical
Technologies (a division of Elan Corporation, plc), Elan Pharma
International Limited and Medizyme Pharmaceuticals Ltd.
3. Warrant dated January 7, 2000, issued to Elan International Services,
Ltd. to purchase up to 200,000 shares of the Company's common stock
4. Warrant dated January 7, 2000, issued to Elan International Services,
Ltd. to purchase up to 300,000 shares of the Company's common stock
5. Convertible Promissory Note dated January 7, 2000, from the Company to
Elan International Services, Ltd.
6* Subscription, Joint Development and Operating Agreement dated January
7, 2000, among the Company, Elan Corporation, plc, Elan Pharma
International Limited, Elan International Services, Ltd. and Medizyme
Pharmaceuticals Ltd.
-3-
<PAGE>
7. Funding Agreement dated January 7, 2000, among the Company, Elan
Pharmaceutical Technologies (a division of Elan Corporation, plc),
Elan Pharma International Limited and Elan International Services,
Ltd.
8* License Agreement dated January 7, 2000, between the Company and
Medizyme Pharmaceuticals Ltd.
9. Registration Rights Agreement dated January 7, 2000, between the
Company and Elan International Services, Ltd.
10. Registration Rights Agreement dated January 7, 2000, among the
Company, Elan International Services, Ltd. and Medizyme
Pharmaceuticals Ltd.
11. Certificate of Designations, Preferences and Rights of Series A
Preferred Stock and Series B Preferred Stock of the Company
12.* Agreement dated January 31, 2000, between the Company and Avecia
Limited.
*Confidential treatment has been requested for portions of these agreements.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
RIBOZYME PHARMACEUTICALS, INC.
DATE: February 8, 2000 By: /s/ Dr. Ralph E. Christoffersen
-------------------------------------------
Dr. Ralph E. Christoffersen, President
-4-
<PAGE>
EXHIBIT 1
Execution Copy
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated as of January
---------
7th, 2000, among Ribozyme 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) initially 12,015 shares of a newly-created series
of the Company's preferred stock, par value U.S.$.01 per share, captioned
"Series A Convertible Exchangeable Preferred Stock" (the "Series A Preferred
------------------
Stock"), (ii) a warrant (as amended at any time, the "A Warrant") to purchase up
- ----- ---------
to 200,000 shares of the Company's common stock, par value U.S.$.01 per share
(the "Common Stock"), as provided therein, in the form attached hereto as
------------
Exhibit A, and (iii) a warrant (as amended at any time, the "B Warrant";
- --------- ---------
together with the A Warrant, the "Warrants") to purchase up to 300,000 shares of
--------
Common Stock as provided therein, in the form attached hereto as Exhibit B. The
---------
Company also desires to issue and sell to EIS, and EIS desires to purchase from
the Company, within 60 days of the date hereof 641,026 shares of the Company's
Common Stock. The Company also desires to issue and sell to EIS, and EIS
desires to purchase from the Company, a convertible promissory note in the
maximum outstanding principal amount of $12,015 million in the form attached
hereto as Exhibit C (the "Note"), which shall be exchangeable, as provided
--------- ----
herein, for initially up to 12,015 shares of a newly-created series of the
Company's preferred stock, par value U.S.$.01 per share, captioned "the Series B
Convertible Preferred Stock" (the "Series B Preferred Stock"; together with the
------------------------
Series A Preferred Stock and the Common Stock, the "Shares"; and together with
------
the Warrants and the Note, the "Securities"), which Securities shall be issued
----------
to EIS pursuant to this Agreement, in accordance with its terms and subject to
the conditions contained herein. The rights, preferences and privileges of the
Series A Preferred Stock and, when issued, the Series B Preferred Stock, are as
set forth in the Certificate of Designations, Preferences and Rights (the
"Certificate of Designations"), in the form attached hereto as Exhibit D.
--------------------------- ---------
B. The Company and EIS have formed Medizyme Pharmaceutical Ltd., an
exempted limited liability company incorporated under the laws of Bermuda
("Newco"), and pursuant to the terms of a Subscription, Joint Development and
-----
Operating Agreement, dated as of the date hereof (as amended at any time, the
"JDOA"), simultaneously with the transactions contemplated by this Agreement,
----
(i) the Company shall acquire 6,000 voting common shares of Newco, par value
U.S.$1.00 per share (the "Newco Common Shares"), representing 100% of the issued
-------------------
and outstanding shares of such class of stock, and 3,612 non-voting convertible
preference shares of Newco, par value of U.S.$1.00 (the "Newco Preferred
---------------
Shares"; together with the Newco Common Shares, the "Newco Shares"),
- ------ ------------
representing 60.2% of the aggregate outstanding Newco Preferred Shares and, on a
fully diluted basis, 30.1% of the aggregate outstanding Newco Shares, and (ii)
EIS shall acquire 2,388 Newco Preferred Shares, representing 39.8% of the
aggregate outstanding Newco Preferred Shares, and, on a fully diluted
<PAGE>
basis, 19.9% of the Newco Shares. Additionally, as of the date hereof, Newco has
entered into license agreements with (i) Elan and its subsidiary Elan Pharma
International Limited (such agreements, as amended at any time, collectively,
the "Elan License Agreement"), and (ii) the Company (such agreement, as amended
----------------------
at any time, the "Company License Agreement"; 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 E
---------
(as amended at any time, the "Company Registration Rights Agreement"), in
-------------------------------------
respect of (i) the Common Stock issued or issuable upon conversion of the Series
A Preferred Stock or Series B Preferred Stock or exercise of all or any portion
of the Warrants and/or (ii) the Common Stock being 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 Newco are also
executing and delivering on the date hereof a Registration Rights Agreement in
the form attached hereto as Exhibit F (as amended at any time, the "Newco
--------- -----
Registration Rights Agreement"). Additionally, the Company and EIS are
- -----------------------------
executing and delivering on the date hereof a Funding Agreement in the form
attached hereto as Exhibit G (the "Funding Agreement"; together with this
--------- -----------------
Agreement, the Certificate of Designations, the JDOA, the Company Registration
Rights Agreement, the Newco 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
"Transaction Documents").
---------------------
A G R E E M E N T:
The parties hereto agree as follows:
SECTION 1. Closing.
-------
(a) Time and Place. The closings of the transactions contemplated
--------------
hereby shall occur (i) on the date hereof (the "Initial Closing; the date
---------------
thereof, the "Initial Closing Date"), (ii) on the date that is 60 days after the
--------------------
date hereof (the "Stock Purchase Closing"; the date thereof, the "Stock Purchase
---------------------- --------------
Closing Date") and (iii) the date that is 15 months after the date hereof (the
- ------------
"Subsequent Closing"; the date thereof, the "Subsequent Closing Date"; together
------------------ -----------------------
with the Initial Closing Date and the Stock Purchase Closing Date, a "Closing
-------
Date"), in each case at the offices of Brock Silverstein LLC, 800 Third Avenue,
- ----
21/st/ Floor, New York, New York 10022.
(b) Issuance of Securities. At the Initial Closing, subject to the
----------------------
terms and conditions hereof, the Company shall issue and sell to EIS, and EIS
shall purchase from the Company: (i) 12,015 shares of Series A Preferred Stock
and (ii) the Warrants. At the Stock Purchase Closing, subject to the terms and
conditions hereof, the Company shall issue and sell to EIS, and EIS shall
purchase from the Company, 641,026 shares of Common Stock. At the Subsequent
Closing, subject to the terms and conditions hereof, the Company shall issue and
sell to EIS, and EIS shall purchase from the Company a number of shares of
Common Stock set forth below.
2
<PAGE>
(c) Purchase Price. The purchase price for (i) the 12,015 shares
--------------
Series A Preferred Stock and the Warrants shall be U.S.$12,015,000 (the
"Initial Purchase Price"), (ii) the 641,026 shares of Common Stock shall be
----------------------
$5,000,000 (the "Common Stock Purchase Price") and (iii) the shares of Common
---------------------------
Stock at the Subsequent Closing shall be $5,000,000 (the "Subsequent Purchase
-------------------
Price"; together with Initial Purchase Price and the Common Stock Purchase
- -----
Price, the "Purchase Price").
--------------
(d) Initial Closing Delivery. On the Initial Closing Date, subject to
------------------------
the terms and conditions hereof and applicable regulatory approvals, (i) EIS
shall pay the Initial Purchase Price by wire transfer to an account designated
by the Company, (ii) the parties hereto shall execute and deliver to each other,
as applicable: (A) certificates for the Series A Preferred Stock; (B) the
Warrants; (C) the Company Registration Rights Agreement; (D) the Newco
Registration Rights Agreement; (E) the JDOA; (F) the Certificate of
Designations, as filed with the Secretary of State of the State of Delaware; (G)
the License Agreements; (H) the Funding Agreement; (I) certificates as to the
incumbency of the officers of the Company executing any of the Transaction
Documents; and (J) any other documents or instruments reasonably requested by a
party hereto and (iii) the Company shall cause to be delivered to EIS an opinion
of counsel in the form attached hereto as Exhibit H.
---------
(e) Common Stock Closing Delivery. On the Stock Purchase Closing Date,
-----------------------------
subject to the terms and conditions hereof and applicable regulatory approvals,
EIS shall pay the Common Stock Purchase Price by wire transfer to an account
designated by the Company and the Company shall execute and deliver to EIS: (A)
certificates for the Common Stock and (B) any other documents or instruments
reasonably requested by EIS, including updates of the documents referred to in
clauses 1(d)(ii)(I) and 1(d)(iii) above as well as a certification that the
representations in Section 2 hereof are, as of such date, true and correct in
all material respects.
(f) Subsequent Closing Delivery. On the Subsequent Closing Date,
---------------------------
subject to the terms and conditions hereof, the Company shall issue and sell to
EIS, and EIS shall purchase from the Company additional shares of Common Stock,
in accordance with the following terms and conditions:
(i) The purchase price per share shall be a price equal to 30%
premium over the Market Price Per Share of such Common Stock. The Market
Price Per Share shall be the average closing price for the 45 trading days
preceding the day that is two business days prior to the Subsequent Closing
Date. If Newco shall have determined not to file and investigational new
drug application (an "IND") with the U.S. Food and Drug Administration in
---
respect of a compound or compounds mutually reasonably determined by EIS
and the Company or no such determination shall have been made by the
Subsequent Closing Date, then, in such event, the Purchase Price Per Share
shall be recalculated to reduce the premium of the Market Price Per Share
of such Common Stock by 5% for each full calendar month following the
Subsequent Closing Date that an affirmative determination to file an IND
shall not have been made (as reasonably determined by Newco upon the
reasonable and good faith agreement of Newco's management committee or,
failing such agreement, agreement of senior management of each of RPI and
Elan); provided, that such premium to the Market Price Per Share shall
3
<PAGE>
not be reduced below zero. If the purchase price is so adjusted, additional
shares of Common Stock shall be issued to EIS within 10 business days of
the earlier of (x) the date of such affirmative determination to file an
IND, as described above, and (y) the date that is six months after the
Subsequent Closing Date to reflect such adjustment;
(ii) EIS shall pay the Subsequent Purchase Price by wire
transfer to an account designated by the Company; and
(iii) The Company shall deliver to EIS (A) a certificate or
certificates representing such Common Stock and (B) any other documents or
instruments reasonably requested by EIS, including updates of the documents
referred to in clauses 1(d)(ii)(I) and 1(d)(iii) above as well as a
certification that the representations in Section 2 hereof are, as of such
date, true and correct in all material respects.
(g) Note and Series B Preferred Stock. The Company shall issue and
---------------------------------
sell to EIS, and EIS shall purchase from the Company, the Note. Drawdowns
thereunder shall be made as provided in the Note, upon at least 10 days' written
notice from the Company to EIS, which notices shall set forth a closing date; on
each such closing date, (x) EIS shall fund the amount requested, as provided
herein, and (y) the Company shall cause to be delivered to EIS a certificate or
certificates in respect thereof and a confirmation that the conditions described
in clause (iii) above have been satisfied and the Company shall furnish such
documents and instruments that EIS shall reasonably request, including updates
of the documents referred to in clauses 1(d)(ii)(I) and 1(d)(iii) above as well
as a certification that the representations in Section 2 hereof are, as of such
date, true and correct in all material respects.
The Company presently has outstanding a class of preferred stock
captioned Series L Preferred Stock (the "Series L Preferred Stock"). At such
------------------------
time, if any, during the term of the Note that the Series L Preferred Stock has
been redeemed, converted or otherwise paid in full (and EIS is otherwise
satisfied that the holder(s) thereof do not have any right of seniority over the
Series B Preferred Stock, as contemplated to be issued hereunder), then, in such
event, upon at least 10 business days' written request of the Company, the Note
shall be exchanged for shares of Series B Preferred Stock, as follows. In such
event, the Note shall be marked canceled and returned to the Company,
simultaneously with the delivery of shares of Series B Preferred Stock to EIS by
the Company; the initial number of shares shall be equal to aggregate amount
funded under the Note and accrued and unpaid interest thereon, divided by
$1,000. Thereafter, additional shares of Preferred Stock (having up to a
maximum aggregate Original Issue Price, including those previously issued, of
$12.015 million) shall be issued, at the request of the Company, as follows:
(i) Each purchase and sale of shares shall be made at such
time that Newco's board of directors shall have determined that funding is
required under the JDOA, in accordance with and as permitted by the terms
thereof, and Newco shall have provided written notice thereof to EIS and to
the Company; the proceeds of the Series B Preferred Stock shall be used
solely to satisfy the Company's obligation to provide such funding;
4
<PAGE>
(ii) The price per share shall be U.S.$1,000.00, and shares
shall be issued only in 250-share or greater increments;
(iii) A condition to each such purchase shall be (A) that such
purchase shall occur during the Development Period (as such term is
defined in the JDOA) and (B) that there is no material breach or default by
the Company hereunder or under the JDOA or the Funding Agreement and the
representations herein shall be true and correct in all material respects
as of the date made and as of the proposed funding date (updated as to SEC
Filings and similar matters) and (c) all appropriate and applicable
regulatory approvals shall have been obtained; and
(iv) Purchases and sales of shares of Series B Preferred Stock
shall be made upon at least 10 days' written notice from the Company to
EIS, which notices shall set forth a closing date; on each such closing
date, (x) EIS shall fund the amount required to purchase such shares, as
provided herein, and (y) the Company shall cause to be delivered to EIS a
certificate or certificates in respect thereof and a confirmation that the
conditions described in clause (iii) above have been satisfied and the
Company shall furnish such documents and instruments that EIS shall
reasonably request, including updates of the documents referred to in
clauses 1(d)(ii)(I) and 1(d)(iii) above as well as a certification that the
representations in Section 2 hereof are, as of such date, true and correct
in all material respects.
(f) 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 A Preferred Stock,
- ---
the Series B Preferred Stock, the Common Stock, the Warrants 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 a legend,
substantially in the form as follows:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE
STATE SECURITIES LAWS AND NO INTEREST MAY BE SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS THERE IS AN
EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND ANY APPLICABLE
STATE SECURITIES LAWS OR THIS CORPORATION RECEIVES AN
OPINION OF COUNSEL FOR THE HOLDER OF THESE SECURITIES
SATISFACTORY TO THIS CORPORATION 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
5
<PAGE>
RESTRICTIONS CONTAINED IN THAT CERTAIN SECURITIES PURCHASE
AGREEMENT, DATED AS OF JANUARY 7th, 2000, BY AND BETWEEN
RIBOZYME PHARMACEUTICALS, INC. AND ELAN INTERNATIONAL
SERVICES, LTD.
SECTION 2. Representations and Warranties of the Company. The
---------------------------------------------
Company hereby represents and warrants to EIS, as of each Closing Date, as
follows:
(a) Organization. The Company is a corporation duly organized, and
------------
validly existing 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 A Preferred Stock and the Series B Preferred Stock being purchased
hereunder by EIS (including dividends thereon), and (ii) for issuance upon
exercise of the Warrants. The Securities, when issued against payment therefor
in accordance with this Agreement, will be duly and validly issued, fully paid
and nonassessable, and will not be issued in violation of any preemptive or
similar rights. The shares of Common Stock underlying the Series A Preferred
Stock, the Series B Preferred Stock 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.
(b) Authorization of Transaction Documents. The Company has full
--------------------------------------
corporate power and authority to execute and deliver this Agreement and each of
the other Transaction 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 Transaction 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
Transaction 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.
(c) No Violation. The execution, delivery and performance by the
------------
Company of this Agreement and each other Transaction 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
6
<PAGE>
amended, or by-laws, of the 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 or
required by applicable law to be 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. Except as set forth on Schedule 2(e), no 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
Transaction Documents, including the issuance and sale of the Securities, by the
Company.
(f) SEC Filings. The Company has timely 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 balance sheet of the Company
--------------------
at December 31, 1998 and 1997 and unaudited balance sheet September 30, 1999,
together with the related statements of operations, stockholders' equity
(deficit) and cash flows for each of the two years ended December 31, 1998 and
1997 and the nine months ended September 30, 1999, together with the reports and
opinions thereon of Ernst & Young, contained in the Company's 1998 and 1997 Form
10-K, 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 years then ended and were prepared in conformity in all material
respects with generally accepted accounting principles applied on a consistent
basis.
(h) Litigation. There is no legal, administrative, arbitration or
----------
other action or proceeding or governmental or investigation pending, or to the
Company's knowledge, threatened against the Company, or any director, officer or
employee of the Company that challenges the validity or performance of this
Agreement or the other Transaction Documents to which the Company is a party.
7
<PAGE>
(i) Absence of Certain Events. Since September 30, 1999, except as
--------------------------
contemplated by the Transaction Documents or as set forth on Schedule 2(i)
-------------
hereto, (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 Transaction
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 Transaction 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 judgement is likely to have, a Company
Material Adverse Effect except as disclosed on Schedule 2 (i) hereto.
(j) Disclosure. The representations and warranties set forth
----------
herein and in the other Transaction 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 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 Transaction Documents and no 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 each Closing Date, as follows:
(a) Organization. EIS is an exempted company 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 Transaction Documents. EIS has full corporate
--------------------------------------
power and authority to execute and deliver this Agreement and each of the other
Transaction 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 Transaction 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 Transaction Documents to
which it is a party, will be the valid and binding obligations of EIS,
enforceable against it in accordance with their respective terms.
8
<PAGE>
(c) No Violation. The execution, delivery and performance by EIS
------------
of this Agreement and each other Transaction 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 by-laws of EIS, (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 EIS or any of its properties or assets, or
(iii) any material contract to which EIS is a 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 and
---------
Takeovers (Control) Acts 1978-1996 (Ireland), 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 Transaction
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 Transaction 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).
(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. In furtherance thereof, EIS
represents and warrants that it is an "accredited investor" as that term is
defined in the regulations under the Securities Act, 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
9
<PAGE>
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 Transaction 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 Transaction Documents and no persons or entities are entitled to a fee or
compensation in respect thereof.
SECTION 4. Covenants of the Parties.
------------------------
(a) Certain Covenants. From and after the Closing Date and until the
-----------------
earlier to occur of the exercise or expiration of the EIS Exchange Right (as
such term is defined in Section 5(c) 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 Newco Preferred Shares owned by the Company,
including, without limitation, those Newco Preferred Shares transferable to EIS
upon exercise by EIS of the EIS Exchange Right, or (B) affect, in any respect,
the Company's 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 more than 20% beneficial owner of Common Stock on other than an arm's
length basis.
(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 9.9% of the Company's outstanding Common Stock on
a fully diluted basis, EIS shall have the right to convert the Series A
Preferred Stock, the Note, the Series B Preferred Stock, and the Warrants into
other junior, non-voting securities of the Company (to be specified by EIS and
reasonably agreed to by the Company and not having superior rights to the rights
attendant to the Common Stock) such that EIS and its affiliates will
10
<PAGE>
not directly or indirectly own more than 9.9% of the Common Stock for a period
of at least two years from the election to convert any of the Series A Preferred
Stock, the Note, Series B Preferred Stock or the Warrants. 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 15 business days of the end of each of
Elan's fiscal quarters.
(c) Use of Proceeds. The Company shall use the proceeds of (i) the
---------------
issuance and sale of the Series A Preferred Stock solely to fund its initial
capital contribution to and funding of Newco as described in the JDOA, and (ii)
the issuance and sale of the Note and the Series B Preferred Stock solely to
fund development amounts in connection with the business of Newco, 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 Transaction 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 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 two business days, such consent
shall be deemed given.
(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
Transaction Documents.
SECTION 5. Certain Rights of EIS. (a) Preemptive Right. Until
--------------------- ----------------
the fourth anniversary of the Initial Closing Date, EIS shall have the right
(but not the obligation) to participate in any equity, warrant, or convertible
or exchangeable for equity financing consummated by the Company, in order for
EIS to maintain its pro rata interest in the Company, based on the number of
shares of Common Stock owned by EIS and its affiliates, assuring the conversion
or exercise of all Securities and the actual number of shares of Common Stock
11
<PAGE>
outstanding on the date such financing is consummated; provided, that such right
shall not apply to any public offering under the Securities Act, offering under
an option plan, or asset or company acquisition paid for, in whole or in part,
in shares of Common Stock. Such right shall be exercised by EIS within 10 days
of receipt of notice of such financing from the Company, which notice shall be
provided by the Company at least 15 days prior to such financing. Such
participation by EIS shall be on the same terms and conditions offered to any
other potential investor in such offering.
(b) Company Board of Directors. For so long as (i) EIS and/or its
--------------------------
affiliates or subsidiaries collectively own Securities that represent ownership
of at least 10% of the Common Stock (or Securities convertible, exchangeable or
exercisable for or into the Common Stock) on a fully diluted basis (assuming the
exercise, conversion or exchange by EIS and its affiliates but no other Common
Stock equivalents), or (ii) until the date that is five years after the date
hereof, EIS shall be entitled to nominate one director (the "EIS Director") for
------------
election to the Company's Board. In connection with the foregoing, the Company
will take all necessary and/or appropriate steps to effect such appointment,
including the inclusion of the designated EIS Director on the recommended slate
of directors presented at any regular or special meeting of the stockholders of
the Company at which directors of the Company are to be elected. Prior to such
election, the designated EIS Director shall be entitled to be an observer at the
meetings of the Company's board of directors.
(c) Conversion and Exchange Rights; Etc. (i) The Certificate of
-----------------------------------
Designations sets forth certain rights of the holders of shares of Series A
Preferred Stock to convert such shares of preferred stock into newly issued
shares of Common Stock, or to exchange such shares of Series A Preferred Stock,
subject to the provisions in Section 5 of the Certificate of Designations, for
certain shares of Newco Stock (the "EIS Exchange Right"), both on the terms and
------------------
conditions set forth therein.
(ii) In the event that all or any portion of the issued and
outstanding shares of Series A Preferred Stock are converted into shares of
Common Stock on or prior to the last day permitted to exercise the EIS Exchange
Right, as permitted by the Certificate of Designations, as a result of a merger,
consolidation or similar transaction involving the Company (each, a "Merger
------
Conversion"), then, in such event, the EIS Exchange Right shall not be
- ----------
terminated, as otherwise provided in the Certificate of Designations, but
rather, EIS and the holders of the Series A Preferred Stock shall retain the EIS
Exchange Right until the Exchange Right Termination Date (as defined in the
Certificate of Designations); provided, that the consideration payable to the
Company to exercise the EIS Exchange Right shall be the shares of Common Stock
issued to the holders of the Series A Preferred Stock in connection with a
Merger Conversion rather than the shares of Series A Preferred Stock as
originally provided for in the Certificate of Designations.
SECTION 6. [intentionally omitted]
SECTION 7. Survival and Indemnification. (a) Survival. The
----------------------------- --------
representations and warranties of the Company and EIS contained herein and the
other Transaction Documents shall survive for a period of 24 months from and
after the date hereof.
12
<PAGE>
(b) Indemnification. In addition to all rights and remedies
---------------
available to the parties hereto at law or in equity, the Company (in such
capacity, "Indemnifying Party") shall indemnify EIS, its stockholders, officers,
------------------
directors and assigns, their affiliates, and its affiliates' stockholders,
officers, directors, employees, agents, representatives, successors and assigns
(collectively, the "Indemnified Person"), and save and hold each Indemnified
------------------
Person harmless from and against and pay on behalf of or reimburse each such
Indemnified Person, as and when incurred, for any and all loss, liability,
demand, claim, action, cause of action, cost, damage, deficiency, tax, penalty,
fine or expense, whether or not arising out of any claims by or on behalf of
such Indemnified Person or any third party, including interest, penalties,
reasonable attorneys' fees and expenses and all amounts paid in investigation,
defense or settlement of any of the foregoing (collectively, "Losses"), that any
------
such Indemnified Person may suffer, sustain incur or become subject to, as a
result of, in connection with, relating or incidental to or by virtue of:
(i) any misrepresentation or breach of warranty on the part of
the Indemnifying Party in the case of the Company under Section 2 of this
Agreement or in the case of EIS under Section 3 of this Agreement or, in
each case, under any of the other Transaction Documents; or
(ii) any nonfulfillment, default or breach of any covenant or
agreement on the part of the Indemnifying Party under Section 4 of this
Agreement or any of the other Transaction Documents.
(c) Maximum Recovery. Notwithstanding anything in this Agreement
----------------
to the contrary, in no event shall the Indemnifying Parties be liable, in the
case of the Company, for indemnification under this Section 7 in an amount in
excess of the aggregate of the purchase price paid for the Securities, including
the amounts advanced and not repaid under the Note, or, in the case of EIS, for
indemnification hereunder in an amount in excess the Company's costs and
expenses incurred in connection with the transactions contemplated hereby. No
Indemnified Person shall assert any such claim unless Losses in respect thereof
incurred by any Indemnified Person, when aggregated with all previous Losses
hereunder, equal or exceed U.S.$50,000, but at such time that an Indemnified
Person is entitled to assert a claim, such claim shall include all Losses
covered by this Section 7.
(d) Exception. Notwithstanding the foregoing, upon judicial
---------
determination that is final and no longer appealable, that the act or omission
giving rise to the indemnification set forth above resulted primarily out of or
was based primarily upon the Indemnified Person's negligence (unless such
Indemnified Person's negligence was based upon the Indemnified Person's reliance
in good faith upon any of the representations, warranties, covenants or promises
made by the Indemnifying Party herein) the Indemnifying Party shall not be
responsible for any Losses sought to be indemnified in connection therewith, and
the Indemnifying Party shall be entitled to recover from the Indemnified Person
all amounts previously paid in full or partial satisfaction of such indemnity,
together with all costs and expenses (including reasonable attorneys fees) of
the Indemnifying Party reasonably incurred in connection with the Indemnified
Persons claim for indemnity, together with interest at the rate per annum
publicly announced by
13
<PAGE>
Morgan Guaranty Trust Company as its prime rate from the time of payment of such
amounts to the Indemnified Person until repayment to the Indemnifying Party.
(e) Investigation. All indemnification rights hereunder shall
-------------
survive the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby, to the extent provided in Section 7(g) below,
irrespective of any investigation, inquiry or examination made for or on behalf
of, or any knowledge of the Indemnified Person or the acceptance of any
certificate or opinion.
(f) Contribution. If the indemnity provided for in this Section 7
------------
shall be, in whole or in part, unavailable to any Indemnified Person, due to
Section 7(b) being declared unenforceable by a court of competent jurisdiction
based upon reasons of public policy, so that Section 7(b) shall be insufficient
to hold each such Indemnified Person harmless from Losses which would otherwise
be indemnified hereunder, then the Indemnifying Party and the Indemnified Person
shall each contribute to the amount paid or payable for such Loss in such
proportion as is appropriate to reflect not only the relative benefits received
by the Indemnifying Party on the one hand and the Indemnified Person on the
other, but also the relative fault of the Indemnifying Party and be in addition
to any liability that the Indemnifying Party may otherwise have. The indemnity,
contribution and expense reimbursement obligations that the Indemnifying Party
has under this Section 7 shall survive the expiration of the Transaction
Documents. The parties hereto further agree that the indemnification and
reimbursement commitments set forth in this Agreement shall apply whether or not
the Indemnified Person is a formal party to any such lawsuit, claims or other
proceedings.
(g) Limitation. No claim shall be brought by an Indemnified Person
----------
in respect of any misrepresentation or breach of warranty under this Agreement
after 24 months from the date hereof; and any claim for nonfulfillment, default
or breach of any covenant or any misrepresentation shall be brought within one
year of the date of that such Indemnified Person became aware or should have
become aware of the nonfulfillment, default or breach. Except as set forth in
the previous sentence and in Section 7(c) above, this Section 7 is not intended
to limit the rights or remedies otherwise available to any party hereto with
respect to this Agreement or the Transaction Documents.
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 addressed as follows:
(i) if to the Company, to:
Ribozyme Pharmaceuticals, Inc.
2950 Wilderness Place
Boulder, Colorado 80301
Attention: Chief Executive Officer
Facsimile: 303-449-6995
14
<PAGE>
with a copy to:
Rothgerber Johnson & Lyons LLC
1200 17/th/ Street, Suite 3000
Denver, Colorado 80202
Attention: Woody Davis
Facsimile: (303) 623-9222
(ii) if to EIS, to:
Elan International Services, Ltd.
102 St. James Court
Flatts, Smiths Parish
Bermuda, FL 04
Attention: Director
Facsimile: 441-292-2224
with a copy to:
Brock Silverstein LLC
800 Third Avenue, 21/st/ Floor
New York, New York 10022
Attention: David Robbins
Facsimile: 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.
SECTION 9. Entire Agreement. This Agreement and the other
----------------
Transaction 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 Transaction Documents
--------------------------
may be executed in any number of counterparts, and each such counterpart hereof
shall be deemed to be
15
<PAGE>
an original instrument, but all such counterparts together shall constitute one
agreement. Each of the Transaction 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 the Agreement.
SECTION 13. Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the internal laws of the State of Delaware, without
giving effect to principles of conflicts of laws. Any dispute hereunder may be
adjudicated, on a non-exclusive basis, in any federal or state court sitting in
the County, City and State of New York.
SECTION 14. 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 Transaction Documents.
SECTION 15. 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 A Preferred Stock, the Series B Preferred Stock and Common
Stock being purchased hereunder by EIS, the Warrants, the Note and the shares of
Common Stock underlying the Series A Preferred Stock, 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 or such
securities without the prior written consent of the other party, which will not
be unreasonably withheld.
SECTION 16. 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.
16
<PAGE>
IN WITNESS WHEREOF, each of the undersigned has duly executed this
Agreement as of the date first written above.
RIBOZYME PHARMACEUTICALS, INC.
By: /s/ Alene A. Holzman
------------------------------------
Name: Alene A. Holzman
Title: VP, Corporate Development
ELAN INTERNATIONAL SERVICES, LTD.
By: ___________________________________
Name:
Title:
<PAGE>
EXHIBIT 2
CONFIDENTIAL PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED PURSUANT TO REGULATION
240.25B-2B OF THE SECURITIES EXCHANGE ACT OF 1934. [*] INDICATES OMITTED
MATERIAL THAT IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST AND IS FILED
SEPARATELY WITH THE COMMISSION.
Execution Copy 2
LICENSE AGREEMENT
BETWEEN
ELAN PHARMACEUTICAL TECHNOLOGIES
(a division of Elan Corporation, plc)
AND
ELAN PHARMA INTERNATIONAL LIMITED
AND
MEDIZYME PHARMACEUTICALS LTD.
<PAGE>
TABLE OF CONTENTS
1. DEFINITIONS........................................................... 1
2. ELAN LICENSE TO NEWCO................................................. 7
3. INTELLECTUAL PROPERTY................................................. 9
4. NON-COMPETITION/AFTER ACQUIRED TECHNOLOGY............................. 9
5. FINANCIAL PROVISIONS.................................................. 10
6. RIGHT OF INSPECTION AND AUDIT......................................... 12
7. REPRESENTATIONS AND WARRANTIES........................................ 13
8. TERM AND TERMINATION.................................................. 15
9. CONFIDENTIAL INFORMATION.............................................. 17
10. GOVERNING LAW AND JURISDICTION; ARBITRATION........................... 19
11. IMPOSSIBILITY OF PERFORMANCE - FORCE MAJEURE.......................... 21
12. ASSIGNMENT............................................................ 21
13. NOTICES............................................................... 21
14. MISCELLANEOUS......................................................... 23
<PAGE>
THIS AGREEMENT made this ___ day of January 2000
between:
(1) Elan Corporation, plc, a public limited company, 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 incorporated under the laws
of Ireland, and having its registered office at WIL House, Shannon Business
Park, Shannon, County Clare, Ireland; and
(2) Medizyme Pharmaceuticals Ltd., a Bermuda exempted limited liability company
incorporated under the laws of Bermuda and having its registered office at
Clarendon House, Church St., Hamilton, Bermuda.
.
RECITALS:
---------
A. Simultaneously herewith, RPI, Elan, EIS, and Newco (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 Newco.
B. Newco desires to enter into this Agreement with Elan so as to permit Newco
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 Newco and RPI are entering into the RPI License
Agreement relating to Newco's use of the RPI Intellectual Property.
Now, Therefore, the Parties agree as follows:
1. DEFINITIONS
1.1. In this Agreement unless the context otherwise requires:
"Affiliate" shall mean any corporation or entity controlling, controlled or
under the common control of Elan or RPI, 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. For purposes of this Agreement, Newco
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).
<PAGE>
[ * ]shall mean a Ribozyme targeted against [ * ]
"Business Plan" shall have the meaning, as such term is defined in the
JDOA.
"Change of Control of RPI/Newco" shall mean circumstances where:
(i) a Technological Competitor of Elan shall, directly or indirectly,
acquire [ * ] or more of the voting stock of RPI or Newco, or
otherwise control or influence in any material respect their
management or business or otherwise have entered into any joint
venture, collaborative, license or other arrangement with RPI or
Newco, as the case may be, to such an extent that such a
Technological Competitor of Elan is materially engaged or involved
with the business or development of RPI or Newco, as the case may
be; or
(ii) a Strategic Investor shall, directly or indirectly, acquire [ * ] or
more of the voting stock of RPI or Newco, or otherwise control or
influence in any material respect their management or business, or
(iii) any person or entity other than a Strategic Investor shall, directly
or indirectly, acquire [ * ] or more of the then voting stock of RPI
or Newco, or otherwise merge, consolidate or enter into any similar
transaction (or binding agreement in respect thereof) with RPI or
Newco,
"Clause 4.1 System" shall mean the (a) the System, (b) Elan's bolus drug
delivery system having a drug reservoir volume of up to 1 ml. and a
delivery rate of between 1 second and 1 hour, and (c) Elan's basal drug
delivery system, which is an ambulatory subcutaneous infusion drug delivery
system and is capable of delivering factory pre-programmed continuous
amounts combined with incremental amounts of drug upon activation, either
manually or automatically, as set forth in Schedule 1A of this Agreement.
"Confidential Information" shall have the meaning, as such term is defined
in Clause 9.
"Definitive Documents" shall mean the definitive agreements relating to the
transactions including finance, stock purchase, research and license
agreements.
"EIS" shall mean Elan International Services, Limited, a Bermuda exempted
limited liability company incorporated under the laws of Bermuda and having
its registered office at St James Court, Flatts, Smiths, FL04 Bermuda.
"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
<PAGE>
under the laws of Ireland acting through its division Elan Pharmaceutical
Technologies.
"Effective Date" shall mean the date of this Agreement.
"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 Newco or RPI or by a third party (under contract with Newco)
pursuant to the Project, and/or (iii) jointly by any combination of Elan,
RPI or Newco pursuant to the Project, except as limited by agreements with
third parties.
Subject to third party agreements, Elan Improvements shall constitute part
of Elan 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. 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.
"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 [ * ], 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), [ * }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.
"Elan Research License" shall have the meaning set forth in Clause 2.2
hereof.
"EPIL" shall mean Elan Pharma International Limited a private limited
company incorporated under the laws of Ireland.
<PAGE>
"Existing RPI License Agreements" shall have the meaning as such term is
defined in the RPI License Agreement.
"Field" shall mean the [ * ]the Target Ribozyme using the System for the
down regulation of HER-2.
"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.
"HER-2" shall mean Human Epidermal Growth Factor Receptor Type 2.
"In Market" shall mean the sale of the Product in the Territory by Newco 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
Newco to an Affiliate or a sub-licensee.
"JDOA" shall mean that certain Joint Development and Operating Agreement,
of even date herewith, by and between Elan, RPI, EIS and Newco.
"Licensed Technologies" shall mean the Elan Intellectual Property and the
RPI Intellectual Property.
"Licenses" shall mean the Elan License, the Elan Research License and the
RPI License.
"Management Committee" shall have the meaning, as such term is defined in
the JDOA.
"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 Newco 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; and
<PAGE>
(iv) any tax, excise or governmental charge upon or measured by the
sale, transportation, delivery or use of the Products.
"Newco" shall mean Medizyme Pharmaceuticals Ltd., Bermuda exempted limited
liability company incorporated under the laws of Bermuda.
"Newco Intellectual Property" shall mean the Newco Patents and the Newco
Know- How.
"Newco Know-How" shall mean any and all rights owned, licensed or
controlled by Newco 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 RPI Improvements.
"Newco 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 RPI 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 Newco.
"Oligonucleotide" shall mean a [ * ] non-protein, non-peptide encoding
nucleic acid molecule including those with stem loop structures used as a
human therapeutic and/or prophylactic compound comprising between [ * ]
including oligonucleotide analogs which may include natural or non-natural
heterocycles, sugars and/or backbone linkage modifications, capable of
specifically inhibiting the function, activity or expression of a gene. For
the purposes hereof Oligonucleotide (a) shall include [ * ], and (b) shall
exclude polymers in which the linkages are [ * ] but shall not exclude
[ * ]
"Party" shall mean Elan or Newco, as the case may be, and "Parties" shall
mean Elan and Newco.
"Product(s)" shall mean the pharmaceutical formulation incorporating the
Target Ribozyme and incorporated within or packaged with the System.
"Project" shall mean all activities as undertaken by Elan, RPI and Newco in
order to develop the Products.
"R&D Committee" shall have the meaning, as such term is defined in the
JDOA.
"R&D Plan" shall have the meaning, as such term is defined in the JDOA.
<PAGE>
"R&D Program" shall mean any research and development program commenced by
Newco pursuant to the Project.
"Ribozyme" shall mean an [ * ] which is directed to inhibit, by catalytic
cleavage, the translation of mRNA coding for a gene. For the avoidance of
doubt, Ribozyme does not include [ * ]
"RPI" shall mean Ribozyme Pharmaceuticals, Inc., a Delaware corporation and
its Affiliates, excluding Newco.
"RPI Improvements" shall have the meaning, as such term is defined in the
RPI License Agreement.
"RPI Intellectual Property" shall mean the RPI Know-How, the RPI Patents
and the RPI Improvements, as such terms are defined in the RPI License
Agreement.
"RPI Know-How" shall have the meaning, as such term is defined in the RPI
License Agreement.
"RPI License" shall mean have the meaning set forth in Clause 2.1 of the
RPI License Agreement.
"RPI License Agreement" shall mean that certain license agreement, of even
date herewith, entered into between RPI and Newco.
"RPI Patents" shall have the meaning, as such term is defined in the RPI
License Agreement.
"Strategic Investor" shall mean a company, corporation or person investing
in RPI or Newco for strategic purposes as evidenced by, inter alia, and
shall exclude financial institutions but not any of their direct or
indirect assignees or transferees that are not financial institutions.
"Substitute Ribozyme" shall have the meaning set forth in Clause 2.2 of the
JDOA.
"Substitute Target" shall have the meaning set forth in Clause 2.2 of the
JDOA.
"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.
"Target Ribozyme" shall mean a Ribozyme directed to HER-2 unless and until
a [ * ] directed to a [ * ] is designated to be the subject of the Project
pursuant to the
<PAGE>
designation of a [ * ] and [ * ] under the provisions of Clause 2.2 of the
JDOA, in which case the term [ * ] shall mean such designated [ * ]
directed to the [ * ]
"Technological Competitor of Elan" shall mean a company, corporation or
person listed in Schedule 2 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 NEWCO
2.1. Elan hereby grants to Newco for the Term an exclusive license (including
the limited right to grant sublicenses under Clause 2.6 below) (the "Elan
License") to the Elan Intellectual Property to make, have made, import,
use, offer for sale and sell the Products 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 [ * ], and the Manufacturing Agreement dated [ * ] among
[ * ]
2.2 Elan hereby grants to Newco for a period of [ * ] from the Effective Date a
nonexclusive license (including the limited right to grant sublicenses
under Clause 2.6 below) (the "Elan Research License") to the Elan
Intellectual Property solely to use the System for research and to perform
clinical investigations to determine the commercial viability of the
continuous subcutaneous administration of [ * ] using the System, 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 [ * ] and the Manufacturing Agreement dated [ * ]. Newco shall
provide to
<PAGE>
the R&D Committee periodic reports not less frequently than quarterly with
respect to the progress of the research and clinical investigations set
forth herein. If Newco or its permitted sublicensee is not actively engaged
in the performance of such research and clinical investigations and such
failure is not cured within ninety (90) days written notice thereof from
Elan to Newco, or if Elan in its reasonable good faith judgement after
consultation with RPI determines that the continuous subcutaneous
administration of [ * ] using the System is not commercially viable, then
Elan may terminate the Elan Research License upon thirty (30) days written
notice to Newco.
The Parties acknowledge that the provisions relating to the
commercialization of the continuous subcutaneous administration of [ * ]
using the System are set forth in Clause 7.2 of the JDOA.
2.3 [ * ] shall be responsible for payments related to the financial provisions
and obligations of any third party agreement with respect to the Elan
Intellectual Property to which it is a party on the Effective Date
(including amendments thereto) (the "Elan Effective Date Agreements"),
including without limitation, any royalty or other compensation obligations
triggered thereunder on the Effective Date, or triggered thereunder after
the Effective Date. Elan hereby confirms that no obligations are in effect
on the date hereof between Elan and an unaffiliated third party relating to
the System for use in the Field.
For the avoidance of doubt, royalties, milestones or other payments which
arise from the process of the commercialization or exploitation of products
under the Elan Effective Date Agreements (for example, a milestone payment
payable upon successful completion of Phase II clinical trials, the filing
of an NDA application, obtaining NDA approval, or first commercial sale)
shall be payments for which Elan will be responsible under this Clause 2.3.
2.4 To the extent royalty or other compensation obligations that are payable to
third parties with respect to the Elan Intellectual Property would be
triggered after the Effective Date, under any third party agreement entered
into by Elan after the Effective Date (the "Elan Post-Effective Date
Agreements"), by a proposed use of such Elan Intellectual Property in
connection with the Project, Elan will inform Newco of such royalty or
compensation obligations. If Newco agrees to utilize such Elan
Intellectual Property in connection with the Project, Newco will be
responsible for the payment of such royalty or other compensation
obligations relating thereto.
For the avoidance of doubt, royalties, milestones or other payments which
arise from the process of the commercialization or exploitation of products
under the Elan Post-Effective Date Agreements (for example, a milestone
payment payable upon successful completion of Phase II clinical trials, the
filing of an NDA application, obtaining NDA approval, or first commercial
sale) shall be payments for which Newco will be responsible under this
Clause 2.4.
<PAGE>
RPI shall be a third party beneficiary under this Agreement and shall have
the right to cause Newco to enforce Newco's rights under this Agreement
against Elan.
2.5 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, Newco shall have no right to use the Elan
Intellectual Property outside the Field.
2.6 Newco shall not assign any of its rights under the Elan License and Elan
Research License relating to the Elan Intellectual Property without the
prior written consent of Elan and RPI.
Newco shall not sublicense any of its rights under the Elan License and
Elan Research License relating to the Elan Intellectual Property without
the prior written consent of Elan and RPI, 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.
2.7 Any agreement between Newco 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.
Insofar as the obligations owed by Newco to Elan are concerned, Newco shall
remain responsible for all acts and omissions of any permitted sub-
licensee, including RPI, as if they were acts and omissions by Newco.
3. INTELLECTUAL PROPERTY
3.1 Ownership of Intellectual Property:
-----------------------------------
3.1.1 Newco shall own the Newco Intellectual Property.
3.1.2 Elan shall own the Elan Intellectual Property.
4. NON-COMPETITION/AFTER ACQUIRED TECHNOLOGY
4.1 Subject to Clause 4.4, during the Term, Elan, alone or in conjunction with
a third party, shall not develop or commercialize the [ * ], subject to the
current provisions of (a) the Development, License and Supply Agreement
dated [ * ], (b) the Subscription, Joint Development and Operating
Agreement, dated [ * ],
<PAGE>
between Elan, plc, EIS, [ * ], (c) the License Agreement, dated [ * ], (d)
the Subscription, Joint Development and Operating Agreement, dated [ * ].,
and (e) the License Agreement, dated as of [ * ] and the transactions
currently contemplated thereby.
4.2 Notwithstanding anything to the contrary contained herein,
(a) the provisions of Clause 4.1 shall not restrict or prohibit Elan from
developing and commercializing the subcutaneous administration of the
following using the Clause 4.1 System:
(i) [ * ], and
(ii) [ * ]
(b) 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 shall not act as a restriction upon,
nor in any way affect, 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.
4.3. If after the Effective Date Elan acquires know-how or patent rights from a
third party relating to the System, or if Elan acquires or merges with a
third party entity that owns or has license rights to know-how or patent
rights relating to the System, then Elan shall offer to license such know-
how and patent rights to Newco (subject to existing contractual
obligations) solely for Newco 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.
4.4. If Newco determines that Newco should not acquire such license as is
referred to in Clause 4.3, then Elan shall be free to fully exploit such
know-how and patent rights, with the Elan Intellectual Property licensed to
Newco, whether inside or outside the Field and to grant to third parties
licenses and sublicenses with respect thereto.
5. FINANCIAL PROVISIONS
5.1 License Fee:
------------
<PAGE>
In consideration of the license granted by Elan to Newco of the Elan Patent
Rights under Clause 2, Newco shall pay to Elan a non-refundable license fee
of [ * ] in cash, the receipt of which is hereby acknowledged by Elan (the
"License Fee"). The License Fee shall not be subject to future performance
obligations of Elan to Newco or RPI and shall not be applicable against
future services provided by Elan to Newco or RPI. The license fee terms as
set out in this Agreement are independent and distinct from the other terms
of this Agreement.
5.2 Royalties:
----------
The intent of the Parties is to provide for equivalent economic benefit to
each of RPI and Elan, except in respect of the License Fee. Accordingly,
the Management Committee shall decide by unanimous consent on the royalties
which shall be payable by Newco to RPI and Elan on Net Sales. When
determining such royalties, the Management Committee shall consider the
royalty obligations of RPI under the Existing RPI License Agreements,
provided that any royalties payable by Newco to RPI and Elan hereunder
shall be distributed in equal amount to each of RPI and Elan. RPI
represents and warrants to Newco and Elan that RPI's royalty obligations
under the Existing RPI License Agreements do not exceed an aggregate of
[ * ] percent of Net Sales.
5.3 Any license fees, royalties or other payments due under this Agreement to
Elan shall be apportioned in accordance with a formula agreed between
Elan, plc and EPIL.
5.4 Payment of royalties pursuant to Clause 5.2 shall be made quarterly in
arrears during each Financial Year within 30 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 Newco'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 Newco 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
<PAGE>
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 Newco 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 Newco 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 Newco
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, Newco 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, Newco shall permit Elan or its duly
authorized 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 Newco 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 Newco'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 Newco. Any
amount of deficiency shall be paid promptly to Elan by Newco.
<PAGE>
If such inspection reveals a surplus in the amount of royalties actually
paid to Elan by Newco, Elan shall reimburse Newco 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 RPI 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 Newco and RPI as follows:
7.1.1 Elan has the right to grant the Elan License and the Elan Research
License;
7.1.2 there are no agreements between Elan and any third party that
conflict with the Elan License and Elan Research 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 proceedings 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 are 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 Newco 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 Newco 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, Newco 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
<PAGE>
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
Newco hereunder; or
7.3.2 act or omission on the part of Newco 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 defense 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 NEWCO
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.
<PAGE>
8. TERM AND TERMINATION
8.1 The term of this Agreement shall commence as of the Effective Date and
shall, subject to the rights of termination outlined in this Clause 8,
expire on a Product-by-Product basis and on a country-by-country basis on
the last to occur of:
8.1.1 [ * ] starting from the date of the first commercial sale of the
Product in the country concerned; or
8.1.2 the date of expiration of the last to expire of the patents included
in the Elan Patents and the Elan Improvements and/or the RPI Patents
and the RPI Improvements
("the Term")
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 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, Bermuda or Ireland;
<PAGE>
8.3.6 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 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 Elan shall be entitled to terminate this Agreement in the event of a Change
of Control of RPI/Newco, upon which termination the RPI License shall
terminate, provided that the foregoing shall not apply in relation to any
exercise of any options by Elan granted by the Definitive Documents.
8.5 Upon expiration or termination of the Agreement:
8.5.1. any sums that were due from Newco 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;
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 Newco pursuant to Clause 11 of the JDOA with respect to
patent prosecution and maintenance; and the rights of Newco to the
Elan Intellectual Property pursuant to Clause 7.2 of the JDOA with
respect to the development and commercialization of [ * ] using the
System) 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 Elan, and Newco 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;
<PAGE>
8.5.6 subject to Clause 8.5.7 and to such license, if any, granted by
Newco to Elan pursuant to the provisions of Clause 12 of the JDOA
(entitled "Cross Licensing/Exploitation of Products Outside the
Field"), all rights to Newco Intellectual Property shall be
transferred to and jointly owned by RPI and Elan and may be
exploited by both Elan and RPI separately, provided that Elan and
RPI will cooperate reasonably in the prosecution and maintenance of
patents claiming such technology and rights and provided further
that nothing hereunder shall grant, or be construed to grant, the
right (a) to Elan to make, have made, import, use, offer for sale or
sell the Target Ribozyme, and (b) to RPI to make, have made, import,
use, offer for sale or sell the System;
In the event of a dispute arising pursuant to this Clause 8.5.6,
Elan and RPI 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; 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 Newco; and Newco, Elan and RPI shall in good faith agree upon the
form most advantageous to Elan and RPI in which the rights of Newco
under any such licenses and sublicenses are to be held (which form
may include continuation of Newco 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 RPI).
Any sublicense agreement between Newco and such permitted
sublicensee shall permit an assignment of rights by Newco 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
<PAGE>
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 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
<PAGE>
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.
9.8 For the avoidance of doubt, all Confidential Information of Newco received
by Elan hereunder shall not be disclosed by Elan to Affiliates and/or
subsidiaries of Elan, plc within the division of Elan, plc carrying on
business as Elan Pharmaceuticals (excluding disclosure of such
Confidential Information to senior personnel of Elan who are bound by
confidentiality provisions but such persons shall have no right to further
disclose such confidential information) which division incorporates, inter
alia, EPIL (to the extent that it 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.
10. GOVERNING LAW AND JURISDICTION; ARBITRATION
10.1. This Agreement shall be governed by and construed in accordance with the
laws of the State of New York, without giving effect to the provisions
thereof relating to the conflict 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.
In the event that the Parties fail to agree on a mutually acceptable
dispute resolution mechanism, any such dispute shall be finally settled by
arbitration pursuant to Clause 10.3.
10.3 Any dispute under this Agreement which is not settled by mutual consent
under
<PAGE>
Clause 10.2 and which relates to (i) the interpretation or enforcement of
any provision of this Agreement, (ii) the interpretation or application of
law, or (iii) the ownership of any intellectual property shall be finally
settled by binding arbitration, conducted in accordance with the Commercial
Arbitration Rules of the American Arbitration Association ("AAA") by one
arbitrator appointed in accordance with said rules. Such arbitrator shall
be an independent expert in pharmaceutical product development and
marketing (including clinical development and regulatory affairs) and 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 AAA to appoint an arbitrator.
The arbitration shall be held in New York, New York.
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 judgment, the arbitrators may not provide for punitive or
similar exemplary damages.
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.
Any arbitration under this Agreement 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
<PAGE>
judicial recognition of the decision and an order of enforcement.
11. IMPOSSIBILITY OF PERFORMANCE - FORCE MAJEURE
Neither Elan nor Newco 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 or their respective
Affiliates 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 Newco at:
Medizyme Pharmaceuticals Ltd.
102 St. James Court
Clarendon House
Church St.
Hamilton, Bermuda
Attention: Secretary
Telephone: 441-295-1422
Fax: 441-292-4720
with a copy to RPI at:
Ribozyme Pharmaceuticals Incorporated
2950 Wilderness Place
Boulder, Colorado 80301
Attention: Chief Executive Officer
Telephone: 303-449-6500
<PAGE>
Fax: 303-449-6995
If to RPI at:
Ribozyme Pharmaceuticals Incorporated
2950 Wilderness Place
Boulder, Colorado 80301
Attention: Chief Executive Officer
Telephone 303-449-6500
Fax: 303-449-6995
with a copy to:
Rothgerber Johnson & Lyons LLP
One Tabor Center, Suite 3000
1200 Seventeenth Street
Denver, Colorado 80202
Attention: Woody Davis, Esq.
Telephone 303-623-9000
Fax: 303-623-9222
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.
<PAGE>
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:
-------------------
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 inure 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
<PAGE>
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
authorized 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 Elan and Newco as partners, or Elan as an employee of Newco, or
Newco 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.
<PAGE>
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
Medizyme Pharmaceuticals Ltd.
CONSENTED AND AGREED TO:
SIGNED
BY_______________________
For and on behalf of
Ribozyme Pharmaceuticals, Inc.
<PAGE>
SCHEDULE 1
----------
ELAN PATENTS
[ * ]
- --------------------------------------------------------------------------------
File Number Brief Description Country Status
- --------------------------------------------------------------------------------
[ * ] [ * ] Australia Granted [ * ]
Canada Pending
EP Pending
Israel Granted [ * ]
Japan Pending
New Zealand Granted [ * ]
Taiwan Granted [ * ]
United States 2 Granted [ * ]
South Africa
- --------------------------------------------------------------------------------
[ * ] [ * ] Australia Pending
Canada Pending
EP Pending
Ireland Granted [ * ]
Japan Pending
Mexico Pending
New Zealand Pending
Norway Pending
Taiwan Pending
United States Granted [ * ]
South Korea Pending
South Africa Granted [ * ]
- --------------------------------------------------------------------------------
[ * ] [ * ] Australia Pending
Canada Canada
EP Pending
Ireland Granted [ * ]
Israel Pending
Japan Pending
New Zealand Pending
South Africa Granted [ * ]
South Korea Pending
Taiwan Issued [ * ]
United States Pending
- --------------------------------------------------------------------------------
[ * ] [ * ] PCT Pending
Argentina Pending
Ireland Pending
<PAGE>
- --------------------------------------------------------------------------------
Taiwan Pending
United States Pending
- --------------------------------------------------------------------------------
[ * ] [ * ] PCT Pending
Ireland Pending
South Africa Issued [ * ]
Taiwan pending
United States Pending
- --------------------------------------------------------------------------------
[ * ] [ * ] PCT Pending
Taiwan Pending
United States Pending
- --------------------------------------------------------------------------------
[ * ] [ * ] United States Granted [ * ]
- --------------------------------------------------------------------------------
[ * ] [ * ] United States Pending
- --------------------------------------------------------------------------------
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.
<PAGE>
SCHEDULE 1A
CLAUSE 4.1 SYSTEM PATENTS
[ * ]
- --------------------------------------------------------------------------------
File Number Brief Description Country Status
- --------------------------------------------------------------------------------
[ * ] [ * ] Ireland Pending
Philippines Pending
Taiwan Pending
United States Pending
PCT Pending
- --------------------------------------------------------------------------------
[ * ]
- --------------------------------------------------------------------------------
Elan File No. Technology Description Country Status
- --------------------------------------------------------------------------------
[ * ] [ * ] Europe Published
Israel Pending
Japan Pending
New Zealand Pending
South Africa Granted [ * ]
Taiwan Granted [ * ]
United States Granted [ * ]
- --------------------------------------------------------------------------------
[ * ] [ * ] South Africa Granted [ * ]
Taiwan Pending
United States Pending
International Published
- --------------------------------------------------------------------------------
[ * ] [ * ] United States Granted [ * ]
- --------------------------------------------------------------------------------
<PAGE>
SCHEDULE 2/1/
-------------
TECHNOLOGICAL COMPETITORS OF ELAN
[ * ]
1. Including any and all divisions or subsidiaries of such entities and
successor entities.
<PAGE>
EXHIBIT 3
THIS WARRANT CERTIFICATE AND THE SECURITIES REPRESENTED BY THIS WARRANT
CERTIFICATE AND THE SHARES OF STOCK ISSUABLE UPON EXERCISE HEREOF HAVE BEEN
ACQUIRED FOR INVESTMENT AND 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 OR AS OTHERWISE PERMITTED BY THIS WARRANT
CERTIFICATE 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 SKYLAWS, 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
SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER SUCH ACT OR
APPLICABLE STATE SECURITIES LAWS.
RIBOZYME 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, or its permitted transferees
and successors as provided herein (each, a "Holder"), is entitled to subscribe
------
for and purchase up to 300,000 shares, as adjusted pursuant to Section 4 (the
"Shares"), of the fully paid and nonassessable common stock, par value $.01 (the
- -------
"Common Stock"), of Ribozyme Pharmaceuticals, Inc., a Delaware corporation (the
------------
"Company"), at the price of U.S.$20.00 per share (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.
1. Term. Subject to the limitations set forth in Sections 3 and 4,
----
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, January 7/th/, 2007. To the extent not
exercised at 5:00 p.m. Eastern Standard Time on January 7/th/, 2007, this
Warrant shall terminate and expire, and thereafter it shall be of no force or
effect.
<PAGE>
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.
(b) 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 30 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 30-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 be free
from all transfer taxes, liens and charges with respect to the issue thereof and
assuming payment of the Warrant Price for all Shares so purchased, legally and
validly owned by the Holder. 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.
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 the 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 other shares or securities of the Company, 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 acquiring and
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),
2
<PAGE>
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 and appropriately decreased and the number of Shares
purchasable hereunder shall be proportionately and appropriately increased, and
(ii) in the case of a combination, the Warrant Price shall be proportionately
and appropriately increased and the number of Shares purchasable hereunder shall
be proportionately and appropriately decreased.
(c) No Impairment. The Company will not, by amendment of its
-------------
Articles of Incorporation or bylaws 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 its
chief financial officer and shall be delivered to the Holder.
(e) Fractional Shares. No fractional Shares 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 fair market value of
the Common Stock on the date of exercise as reasonably determined in good faith
by the Company's Board of Directors.
(f) Cumulative Adjustments. No adjustment in the Warrant Price 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 adjustment that by reason
of this Section 4 are not required to be made shall be carried
3
<PAGE>
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 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
Act) shall be stamped or imprinted with a legend in substantially the following
form:
THIS WARRANT CERTIFICATE AND THE SECURITIES REPRESENTED BY THIS WARRANT
CERTIFICATE AND THE SHARES OF STOCK ISSUABLE UPON EXERCISE HEREOF HAVE BEEN
ACQUIRED FOR INVESTMENT AND 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 OR AS OTHERWISE PERMITTED BY THIS WARRANT
CERTIFICATE 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 SKYLAWS, 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
SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER SUCH ACT OR
APPLICABLE STATE SECURITIES LAWS.
(b)(i) This Warrant may be transferred or assigned, in whole or in
part, (a) by EIS to its affiliates and subsidiaries, as well as any special
purpose financing or similar vehicle established by EIS or its affiliates.
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. 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; provided, however that the transferor and the Company
shall continue to be liable and obligated for their respective obligations
hereunder after any such assignment.
4
<PAGE>
(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 holders 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 Act as then in effect or any federal or state law then
in effect) of this Warrant or such Shares and indicating whether or not under
the 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 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. Rights as Shareholders. 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 on 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 shareholders at any meeting thereof, or to
receive notice of meetings, or to receive dividends or subscription rights or
otherwise until this 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;
5
<PAGE>
(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, contract or other instrument of 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, unless the recipient has given notice of another address, 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 make and deliver a new Warrant, of like tenor,
in lieu of the lost, stolen, destroyed or mutilated Warrant.
(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 substantive (as opposed to procedural) laws of the State of Delaware,
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.
(g) Each of the parties shall be responsible for its own costs and
expenses incurred in connection with the transactions contemplated hereby.
6
<PAGE>
[Signature page follows]
7
<PAGE>
IN WITNESS WHEREOF, the Company has executed this Warrant as of the
7/th/ day of January, 2000.
RIBOZYME PHARMACEUTICALS, INC.
By:/s/ Ralph E. Christoffersen
---------------------------
Name: RALPH E. CHRISTOFFERSEN
Title: Chief Executive Officer
8
<PAGE>
Annex A
- -------
NOTICE OF EXERCISE
To: Ribozyme Pharmaceuticals, Inc.
1. The undersigned hereby elects to purchase _____ shares of Common Stock of
Ribozyme Pharmaceuticals, Inc. pursuant to the terms of the attached Warrant,
and tenders herewith full payment of the purchase price of such shares, in cash
or other immediately available funds.
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.
Signature:_____________________________________
Name:__________________________________________
Address:_______________________________________
_______________________________________
_______________________________________
Social Security or taxpayer identification
number:
_______________________________________________
9
<PAGE>
EXHIBIT 4
Execution Copy
THIS WARRANT CERTIFICATE AND THE SECURITIES REPRESENTED BY THIS WARRANT
CERTIFICATE AND THE SHARES OF STOCK ISSUABLE UPON EXERCISE HEREOF HAVE BEEN
ACQUIRED FOR INVESTMENT AND 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 OR AS OTHERWISE PERMITTED BY THIS WARRANT
CERTIFICATE 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 SKYLAWS, 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
SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER SUCH ACT OR
APPLICABLE STATE SECURITIES LAWS.
RIBOZYME 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, or its permitted transferees
and successors as provided herein (each, a "Holder"), is entitled to subscribe
------
for and purchase up to 200,000 shares, as adjusted pursuant to Section 4 (the
"Shares"), of the fully paid and nonassessable common stock, par value $.01 (the
------
"Common Stock"), of Ribozyme Pharmaceuticals, Inc., a Delaware corporation (the
------------
"Company"), at the price of U.S.$15.00 per share (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.
1. Term. Subject to the limitations set forth in Sections 3 and 4,
----
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, January 7/th/, 2002. To the extent not
exercised at 5:00 p.m. Eastern Standard Time on January 7/th/, 2002, this
Warrant shall terminate and expire, and thereafter it shall be of no force or
effect.
<PAGE>
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.
(b) 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 30 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 30-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 be free
from all transfer taxes, liens and charges with respect to the issue thereof and
assuming payment of the Warrant Price for all Shares so purchased, legally and
validly owned by the Holder. 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.
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 the adjustment from time to time upon the occurrence
of certain events, as follows:
(a) Reclassification, Etc. In case of 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) of other shares or securities of the Company, 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 acquiring and
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 such
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
2
<PAGE>
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 and appropriately decreased and the number of Shares
purchasable hereunder shall be proportionately and appropriately increased, and
(ii) in the case of a combination, the Warrant Price shall be proportionately
and appropriately increased and the number of Shares purchasable hereunder shall
be proportionately and appropriately decreased.
(c) No Impairment. The Company will not, by amendment of its
-------------
Articles of Incorporation or bylaws 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 its
chief financial officer and shall be delivered to the Holder.
(e) Fractional Shares. No fractional Shares 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 fair market value of
the Common Stock on the date of exercise as reasonably determined in good faith
by the Company's Board of Directors.
(f) Cumulative Adjustments. No adjustment in the Warrant Price 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 adjustment 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
3
<PAGE>
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 Act) shall be stamped or imprinted with a
legend in substantially the following form:
THIS WARRANT CERTIFICATE AND THE SECURITIES REPRESENTED BY THIS WARRANT
CERTIFICATE AND THE SHARES OF STOCK ISSUABLE UPON EXERCISE HEREOF HAVE BEEN
ACQUIRED FOR INVESTMENT AND 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 OR AS OTHERWISE PERMITTED BY THIS WARRANT
CERTIFICATE 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 SKYLAWS, 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
SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER SUCH ACT OR
APPLICABLE STATE SECURITIES LAWS.
(b)(i) This Warrant may be transferred or assigned, in whole or in
part, (a) by EIS to its affiliates and subsidiaries, as well as any special
purpose financing or similar vehicle established by EIS or its affiliates.
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. 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; provided, however that the transferor and the Company
shall continue to be liable and obligated for their respective obligations
hereunder after any such assignment.
(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 holders 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 Act as then in effect or any federal or state law then
in effect) of this Warrant or such Shares and indicating whether or not under
the Act certificates for this Warrant or such Shares to be sold or otherwise
disposed of require any restrictive legend as to applicable
4
<PAGE>
restrictions on transferability in order to ensure compliance with the 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. Rights as Shareholders. 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 on 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 shareholders at any meeting thereof, or to
receive notice of meetings, or to receive dividends or subscription rights or
otherwise until this 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;
(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, contract or other instrument of 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.
5
<PAGE>
(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, unless the recipient has given notice of another address, 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 make and deliver a new Warrant, of like tenor,
in lieu of the lost, stolen, destroyed or mutilated Warrant.
(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 substantive (as opposed to procedural) laws of the State of Delaware,
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.
(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]
6
<PAGE>
IN WITNESS WHEREOF, the Company has executed this Warrant as of the
7/th/ day of January, 2000.
RIBOZYME PHARMACEUTICALS, INC.
By:_________________________________
Name:
Title: Chief Executive Officer
7
<PAGE>
Annex A
- -------
NOTICE OF EXERCISE
To: Ribozyme Pharmaceuticals, Inc.
1. The undersigned hereby elects to purchase _____ shares of Common Stock of
Ribozyme Pharmaceuticals, Inc. pursuant to the terms of the attached Warrant,
and tenders herewith full payment of the purchase price of such shares, in cash
or other immediately available funds.
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.
Signature:__________________________________
Name:_______________________________________
Address:____________________________________
____________________________________
____________________________________
Social Security or taxpayer identification
number:
__________________________________
8
<PAGE>
EXHIBIT 5
THIS CONVERTIBLE PROMISSORY NOTE AND THE SHARES OF SERIES B PREFERRED 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 7/th/, 2000, BY AND BETWEEN RIBOZYME PHARMACEUTICALS, INC. AND
ELAN INTERNATIONAL SERVICES, LTD.
RIBOZYME PHARMACEUTICALS, INC.
CONVERTIBLE PROMISSORY NOTE
U.S. $12,015,000
January 7/th/, 2000
New York, New York
The undersigned, Ribozyme Pharmaceuticals, Inc., a Delaware
corporation with offices at 2950 Wilderness Place, Boulder, Colorado 80301 (the
"Company"), unconditionally promises to pay to Elan International Services,
-------
Ltd., a Bermuda exempted limited liability company ("EIS"), or its permitted
---
assigns, transferees and successors as provided herein (collectively with EIS,
the "Holder"), on January 7/th/, 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 12%, from and after the date of the initial
disbursement of funds hereunder (the "Original Issue Date"), compounded on a
-------------------
semi-annual basis, the first compounding to commence six months from the date
hereof (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,
<PAGE>
including the representations and warranties set forth therein. The Company
shall use the proceeds of the issuance 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, 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 time to time after the Initial Closing Date (as defined in the
Securities Purchase Agreement), disbursements shall be made by EIS to the
Company, at the Company's request and as provided for in the Securities Purchase
Agreement and the Funding Agreement, in accordance with the following terms and
conditions:
(i) Disbursements shall not exceed the aggregate amount of funding
provided by the Company to Newco that shall have been determined by Newco's
shareholders to be required under the JDOA (as defined in the Securities
Purchase Agreement), in accordance with and as permitted by the terms
thereof, including funding requirements for Newco shall have provided
written notice thereof to EIS and to the Company; 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.
---------
(ii) Disbursements shall be made by EIS to the Company hereunder in
minimum increments of U.S.$250,000 (except in the event that an amount less
than $250,000 shall be remaining and available for funding hereunder, in
which case such lesser amount may be funded hereunder.
(iii) A condition to each such disbursement shall be (A) that such
disbursement shall occur during the Development Period (as defined in the
JDOA) and (B) that there is no material breach or default by the Company
hereunder or under the JDOA or the Funding Agreement and the
representations in the Securities Purchase Agreement shall be true and
correct in all material respects as of the date made and as of the proposed
funding date (updated as to SEC Filings and similar matters) and (c) all
appropriate and applicable regulatory approvals shall have been obtained;
and
(b) The Holder shall not be required to disburse more than the maximum
principal amount hereunder, excluding accruals of interest, of U.S.$12,015,000.
(c) Each disbursement shall accrue interest at the rate set forth in
Section 1 from the date of disbursement through the date of payment.
2
<PAGE>
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.
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, (the "Conversion
----------
Right"), into such number of shares of Series B Preferred Stock that shall be
- -----
obtained by dividing the sum of the outstanding principal amount and all accrued
and unpaid interest by $1,000, subject to adjustment as provided below in this
Section (the "Conversion Price").
----------------
(ii) The Holder shall be entitled to exercise the Conversion Right
from time to time as to the uncoverted portion of this Note 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 issue appropriate stock certificates to EIS
representing the aggregate number of shares of Series B Preferred 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, 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, in lieu of the shares
of Series B Preferred Stock otherwise 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
3
<PAGE>
property receivable upon such reclassification, reorganization, change, merger,
consolidation or conversion by a holder of the number of shares of Series B
Preferred 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.
(c) No Impairment. The Company will not, by amendment of its Certificate
-------------
of Incorporation or bylaws 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
the laws of the State of Delaware.
(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 its chief financial officer and shall be
delivered to EIS.
(e) Fractional Shares; Rounding. No fractional shares of Series B
---------------------------
Preferred 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.
In the event that EIS shall exercise the EIS Exchange Right during the
period during which this Note is outstanding, EIS shall, at its option, (i)
cause to be paid to the Company, within 30 days of such exercise, an amount
equal to 30.1% of the aggregate amount (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 Newco, 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 payable under this Note an amount equal to 30.1% of
the total amount (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 Newco, 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
4
<PAGE>
hereunder, if any, or (iii) effect a combination of the provisions described in
clauses (i) and (ii) above, if applicable.
SECTION 6. USE OF PROCEEDS.
The Company shall use the proceeds of this Note solely for
developmental funding of Newco; provided, that Newco's shareholders (as provided
for in the JDOA) shall have determined that such developmental funding is
necessary 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 Newco
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 breach by the Company of its obligations under any of the
Transaction Documents, which breach remains uncured 10 days after written notice
thereof by EIS;
(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 60 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>
(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 and be paid and thereafter elect to exercise the
Conversion Right, the Holder shall reimburse to the Company an amount in respect
of the shares of Series B Preferred Stock issued under such Conversion Right
equal to the principal amount of this Note attributable thereto as calculated in
accordance with Section 4 above. If the Holder shall accelerate and be paid and
thereafter elect to exercise the Exchange Right, the Holder shall cause to be
paid to the Company an amount as calculated in accordance with Section 5(i)
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. MISCELLANEOUS.
(a) EIS may assign this Note to its affiliates and subsidiaries, as well
as any special purpose financing or similar vehicle established by EIS or its
affiliates. 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:
Ribozyme Pharmaceuticals, Inc.
2950 Wilderness Place
Boulder, Colorado 80301
6
<PAGE>
Attention: Chief Executive Officer
Facsimile: (303) 449-6995
with a copy to:
Rothgerber Johnson & Lyons LLC
1200 17/th/ Street, Suite 3000
Denver, Colorado 80202
Attention: Woody Davis
Facsimile: (303) 623-9222
(ii) if to EIS, to:
Elan International Services, Ltd.
102 St. James Court
Flatts, Smiths Parish
Bermuda FL04
Attention: President
Fax: (441) 292-2224
with a copy to:
Brock Silverstein LLC
800 Third Avenue
New York, New York 10022
Attention: David Robbins, Esq.
Fax: (212) 371-5500
Each party, by written notice given to the other in accordance with this Section
9(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 given, (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.
(a) This Note may not be modified or amended, or any of the provisions
hereof waived, except by written agreement of the Company and EIS.
(b) 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.
7
<PAGE>
(c) 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.
(d) Each of the parties shall be responsible for its own costs and
expenses incurred in connection with the transactions contemplated hereby.
8
<PAGE>
EXHIBIT A
NOTICE OF REQUEST FOR DISBURSEMENT
----------------------------------
Date:
To: Elan International Services, Ltd.
From: Ribozyme Pharmaceuticals, Inc.
Re: Disbursement Request
- --------------------------------------------------------------------------------
Pursuant to the terms of the Convertible Promissory Note (the "Note")
issued by Ribozyme Pharmaceuticals, Inc. (the "Company") to Elan International
Services, Ltd. ("EIS"), dated ______, ______, the Company hereby notifies EIS of
its request for a disbursement thereunder in the amount of $_________. Please
provide funding in the requested amount to the Company in accordance with the
following wire instructions
[
]
Sincerely,
RIBOZYME PHARMACEUTICALS, INC.
By: ___________________________
Name:
Title:
9
<PAGE>
EXHIBIT B
NOTICE OF ELECTION TO EXERCISE A CONVERSION RIGHT
-------------------------------------------------
Date:
To: Ribozyme Pharmaceuticals, Inc.
From: Elan International Services, Ltd.
Re: Exercise of a Conversion Right
- --------------------------------------------------------------------------------
Pursuant to the terms of the Convertible Promissory Note (the "Note")
issued by Ribozyme Pharmaceuticals, Inc. (the "Company") to Elan International
Services, Ltd. ("EIS"), dated ___________, _____, specifically Section 4
thereof, EIS hereby notifies the Company of its intention to exercise a right of
conversion.
Pursuant to Section 4 of the Note, EIS hereby elects to convert
[$__________]/*/ in aggregate principal amount and all accrued and unpaid
interest thereon for shares of the Company's Series B Preferred Stock, 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>
IN WITNESS WHEREOF, the Company and EIS have executed this Note on the
date first above written.
RIBOZYME PHARMACEUTICALS, INC.
By:/s/ Ralph E. Christoffersen
___________________________
Name:Ralph E. Christoffersen
Title: Chief Executive Officer
ELAN INTERNATIONAL SERVICES, LTD.
By:___________________________
Name:
Title:
11
<PAGE>
EXHIBIT 6
CONFIDENTIAL PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED PURSUANT TO REGULATION
240.25B-2B OF THE SECURITIES EXCHANGE ACT OF 1934. [*] INDICATES OMITTED
MATERIAL THAT IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST AND IS FILED
SEPARATELY WITH THE COMMISSION.
Execution Copy 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
RIBOZYME PHARMACEUTICALS, INC.
AND
MEDIZYME PHARMACEUTICALS LTD.
<PAGE>
INDEX
-----
CLAUSE 1 DEFINITIONS
CLAUSE 2 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 WORK
CLAUSE 8 COMMERCIALIZATION
CLAUSE 9 SUBLICENSE AND ASSIGNMENT RIGHTS
CLAUSE 10 OWNERSHIP OF INTELLECTUAL PROPERTY RIGHTS/NONCOMPETITION
CLAUSE 11 INTELLECTUAL PROPERTY RIGHTS
CLAUSE 12 CROSS LICENSING/EXPLOITATION OF PRODUCTS OUTSIDE THE FIELD
CLAUSE 13 REGULATORY
CLAUSE 14 MANUFACTURING
CLAUSE 15 TECHNICAL SERVICES AND ASSISTANCE
CLAUSE 16 AUDITORS, BANKERS, REGISTERED OFFICE,
ACCOUNTING REFERENCE DATE; SECRETARY
CLAUSE 17 TRANSFER OF SHARES; RIGHTS OF FIRST OFFER; TAG ALONG RIGHTS
CLAUSE 18 MATTERS REQUIRING PARTICIPANTS' APPROVAL
<PAGE>
CLAUSE 19 DISPUTES
CLAUSE 20 TERMINATION
CLAUSE 21 SHARE RIGHTS
CLAUSE 22 CONFIDENTIALITY
CLAUSE 23 COSTS
CLAUSE 24 GENERAL
<PAGE>
THIS SUBSCRIPTION, JOINT DEVELOPMENT AND OPERATING AGREEMENT made this __ 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, 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) RIBOZYME PHARMACEUTICALS, INC. a corporation duly incorporated and validly
existing under the laws of Delaware and having its principal place of
business at 2950 Wilderness Place, Boulder, Colorado 80301 ("RPI"); and
(5) MEDIZYME PHARMACEUTICALS 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 ("Newco").
RECITALS:
A. Newco desires to issue and sell to the Shareholders (as defined below), and
the Shareholders desire to purchase from Newco, for aggregate consideration
of $15,000,000, apportioned between them as set forth herein, (i) 6,000
shares of Newco's common shares, par value $1.00 per share (the "Common
Shares") to RPI, and (ii) 6,000 shares of Newco's preferred shares, par
value $1.00 per share (the "Preferred Shares") allocated 3,612 shares to
RPI and 2,388 shares to EIS.
B. As of the date hereof, Elan, plc and EPIL have entered into a license
agreement with Newco, and RPI has entered into a license agreement with
Newco, in connection with the license to Newco of the Elan Intellectual
Property and the RPI Intellectual Property, respectively (each as defined
below).
C. Elan, plc, EPIL and RPI have agreed to co-operate in the research,
development and commercialization of the Products (as defined below) based
on their respective technologies.
<PAGE>
D. Elan, plc, EPIL and RPI 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 Newco.
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.
"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
and "controlling" and "controlled" shall be construed accordingly. For
purposes of this Agreement, Newco 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).
[ * ]shall mean a Ribozyme targeted against [ * ]
"Board" shall mean the board of directors of Newco.
"Business" shall mean the business specified in the Business Plan.
"Business Plan" has the meaning set forth in Clause 6 below.
"Certificate of Designations" shall mean that certain certificate of
designations, preferences and rights of Series A Preferred Stock and Series
B Preferred Stock of RPI issued on the date hereof.
"Closing Date" shall mean the date upon which the Substantive Documents are
executed and delivered by the Parties and the transactions effected thereby
are closed.
"Common Share 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.
"Convertible Note" shall mean that certain Convertible Promissory Note, of
even date herewith, by and between RPI and EIS.
5
<PAGE>
"Directors" shall mean, at any time, the directors of Newco.
"EIS Director" has the meaning set forth in Clause 5.
"Elan" shall mean Elan, plc and EPIL.
"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" has the meaning assigned thereto in the Elan License
Agreement.
"Elan License Agreement" shall mean the license agreement between Elan and
Newco, of even date herewith, attached hereto in Schedule 1.
"Elan Patents" has the meaning assigned thereto in the Elan License
Agreement.
"Elan Research License" has the meaning assigned thereto in the Elan
License Agreement.
"Encumbrance" shall mean any liens, charges, encumbrances, equities,
claims, options, proxies, pledges, security interests, or other similar
rights of any nature.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"Exchange Right" has the meaning assigned to such term in the RPI
Securities Purchase Agreement in effect on the date hereof.
"Field" shall mean the [ * ] of the Target Ribozyme using the System for
the down regulation of HER-2.
"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.
"Fully Diluted Common Shares" shall mean all of the issued and outstanding
Common Shares, assuming the conversion, exercise or exchange of all
outstanding Common Share Equivalents.
"Funding Agreement" shall mean the Funding Agreement, of even date
herewith, between EIS, RPI, and Elan.
"HER-2" shall mean Human Epidermal Growth Factor Receptor Type 2.
6
<PAGE>
"License Agreements" shall mean the Elan License Agreement and the RPI
License Agreement.
"Licensed Technologies" shall mean, collectively, the Elan Intellectual
Property and the RPI Intellectual Property.
"Licenses" shall mean the Elan License, the Elan Research License and RPI
License.
"Management Committee" shall have the meaning set forth in Clause 5.2
hereof.
"Newco Intellectual Property" shall mean Newco Patents and Newco Know How.
"Newco Know-How" shall mean any and all rights owned, licensed or
controlled by Newco 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 RPI Improvements.
"Newco 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 RPI 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 Newco.
"Newco Memorandum of Association and Bye-Laws" shall mean the Memorandum of
Association and Bye-Laws of Newco Limited.
"Oligonucleotide" shall mean a [ * ] non-protein, non-peptide encoding
nucleic acid molecule including those with [ * ] used as a human
therapeutic and/or prophylactic compound comprising between [ * ] including
oligonucleotide analogs which may include natural or non-natural
heterocycles, sugars and/or backbone linkage modifications, capable of
specifically inhibiting the function, activity or expression of a gene. For
the purposes hereof Oligonucleotide (a) shall include [ * ]
oligonucleotides, and (b) shall exclude polymers in which the linkages are
[ * ] but shall not exclude [ * ]
"Participant" shall mean RPI or Elan, as the case may be, and
"Participants" shall mean both of the Participants together.
"Party" shall mean Elan, plc, EPIL, RPI, or Newco, as the case may be, and
"Parties" shall mean all four together;
"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.
7
<PAGE>
"Permitted Transferee" shall mean any Affiliate or subsidiary of Elan, EIS
or RPI, to whom this Agreement may be assigned, in whole or in part,
pursuant to the terms hereof or in the case of Elan and EIS, a special
purpose financing entity created by Elan or EIS or their respective
affiliates.
"Product(s)" shall mean the pharmaceutical formulation incorporating the
Target Ribozyme and incorporated within or packaged with the System.
"Project" shall mean all activity as undertaken by or on behalf of Newco 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 Newco and RPI, respectively.
"R&D Committee" shall have the meaning set forth in Clause 5.2 hereof.
"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.
"Research and Development Term" shall mean the research and development
stage of the Business Plan, which stage shall be deemed terminated upon the
first commercial launch of a Product by Newco.
"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.
"Ribozyme" shall mean an [ * ] directed to inhibit, by catalytic cleavage,
the translation of mRNA coding for a gene. For the avoidance of doubt,
Ribozyme does not include a gene that encodes a [ * ].
"RPI Directors" has the meaning set forth in Clause 5 hereof.
"RPI Improvements" has the meaning assigned thereto in the RPI License
Agreement.
"RPI Intellectual Property" has the meaning assigned thereto in the RPI
License Agreement.
"RPI Know-How" has the meaning assigned thereto in the RPI License
Agreement.
"RPI License" has the meaning assigned thereto in the RPI License
Agreement.
"RPI License Agreement" shall mean the license agreement between RPI and
Newco, of even date herewith, attached hereto in Schedule 2.
8
<PAGE>
"RPI Patent Rights" has the meaning assigned thereto in the RPI License
Agreement.
"RPI Securities Purchase Agreement" shall mean that certain securities
purchase agreement, of even date herewith, by and between RPI and EIS.
"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 Newco.
"Shareholder" shall mean any of EIS, RPI, 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.
"Substantive Documents" shall mean this Agreement, the Funding Agreement,
the Elan License Agreement, the RPI License Agreement, the Convertible
Note, the RPI Securities Purchase Agreement, the Registration Rights
Agreements, the Certificate of Designations and associated documentation of
even date herewith, by and between RPI, Elan, EIS and Newco, as applicable.
"Substitute Ribozyme" shall have the meaning set forth in Clause 2.2
hereof.
"Substitute Target" shall have the meaning set forth in Clause 2.2 hereof.
"System" shall mean the 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 of the Elan License Agreement.
"Target Ribozyme" shall mean a Ribozyme directed to HER-2 unless and until
a [ * ] directed to a [ * ] is designated to be the subject of the Project
pursuant to the designation of a [ * ] and [ * ] under the provisions of
Clause 2.2 hereof, in which case the term [ * ]shall mean such designated
[ * ] directed to the [ * ]
"Technological Competitor of Elan" has the meaning assigned thereto in the
Elan License Agreement.
"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.
9
<PAGE>
1.2 In addition, the following definitions have the meanings in the Clauses
corresponding thereto, as set forth below.
Definition Clause
"AAA" 19.3
"Buyout Option" 20.4
"Closing" 4.3
"Common Shares" Recital
"Confidential Information" 22.1
"Co-sale Notice" 17.4
"Expert" 19.3
"Notice of Exercise" 17.3
"Notice of Intention" 17.3
"Offered Shares" 17.3
"Offering Price" 17.3
"Preferred Shares" Recital
"Proposing Participant" 20.4
"Proposing Participant Price: 20.6
"Purchase Price" 20.6
"R&D Committee" 5.2.2
"Recipient Participant Price" 20.6
"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
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.
10
<PAGE>
1.8 Capitalized terms used but not defined herein shall have the meanings
ascribed in the Substantive 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 for use in the Field in the Territory and to achieve
the other objectives set out in this Agreement. The focus of the Business
will be to develop the Products using the Elan Intellectual Property, the
RPI Intellectual Property and the Newco Intellectual Property in accordance
with the Business Plan.
2.2. Should the Target Ribozyme [ * ] in accordance with the Business Plan, the
Parties shall promptly review in good faith [ * ], for the treatment of an
indication(s) to be determined in good faith by the Parties (the
"Substitute Target"). In either case, the Parties shall promptly negotiate
in good faith such amendments as are required to the License Agreements and
to this Agreement, such as amending the provisions regulating non-
competition, and to the research and development budgeted costs for the
Project.
2.3 The central management and control of Newco 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 Newco Memorandum of
Association and Bye-Laws. Subject to Clause 9.2 below, the Participants
shall use their best endeavors to ensure that to the extent required
pursuant to the laws of Bermuda, and to ensure the sole residence of Newco
in Bermuda, all meetings of the Directors are held in Bermuda or other
jurisdictions outside the United States and generally to ensure that Newco
is treated as resident for taxation purposes in Bermuda.
CLAUSE 3
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of Newco: Newco hereby represents and
---------------------------------------
warrants to each of the Shareholders as follows, as of the date hereof:
3.1.1 Organization: Newco 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.
11
<PAGE>
3.1.2 Capitalization: As of the date hereof, the authorized capital
---------------
stock of Newco consists of 6,000 shares of Common Shares and 6,000
shares of Preferred Shares. Prior to the date hereof, no shares of
capital stock of Newco have been issued.
3.1.3 Authorization: The execution, delivery and performance by Newco
--------------
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 Newco and is the valid and
binding obligation of Newco, 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.
3.1.4 No Conflicts: The execution, delivery and performance by Newco of
------------
this Agreement, the issuance, sale and delivery of the Shares, and
compliance with the provisions hereof by Newco, will not:
(i) violate any provision of applicable law, statute, rule or
regulation applicable to Newco or any ruling, writ,
injunction, order, judgment or decree of any court,
arbitrator, administrative agency or other governmental body
applicable to Newco 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 Newco is a party, except where such violation,
conflict or breach would not, individually or in the
aggregate, have a material adverse effect on Newco; or
(iii) result in the creation of any Encumbrance upon any of the
properties or assets of Newco.
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 Newco. Newco has full authority to
conduct its business as contemplated in the Business Plan and the
Substantive 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. Newco is not
aware of any material contingency, event or circumstance relating to
its business or prospects, which could have a material
12
<PAGE>
adverse effect thereon, in order for the disclosure herein relating
to Newco not to be misleading in any material respect.
3.1.7 No Business; No Liabilities: Newco 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 Newco as follows
as of the date hereof:
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, judgment 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.
13
<PAGE>
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.
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 Newco.
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 Newco has authorized the issuance to (i) EIS of 2,388 shares of
Preferred Shares, and (ii) RPI of 6,000 shares of Common Shares and
3,612 shares of Preferred Shares, issuable as provided in Clause 4.4
hereof
4.2 RPI and EIS hereby subscribe for the number of Shares set forth in
Clause 4.1 and shall pay to Newco in consideration therefor, by wire
transfer of immediately available funds (to a bank account established
by Newco in connection with he Closing) 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 RPI
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 Newco, or such other meetings or
locations, as appropriate:
4.4.1 Newco shall issue and sell to EIS, and EIS shall purchase from
Newco, upon the
14
<PAGE>
terms and subject to the conditions set forth herein, 2,388
shares of Preferred Shares for an aggregate purchase price of
$2,985,000.00. Newco shall issue and sell to RPI, and RPI shall
purchase from Newco, upon the terms and conditions set forth
herein, 6,000 shares of Common Shares for an aggregate purchase
price of $7,500,000.00 and 3,612 shares of Preferred Shares for
an aggregate purchase price of $4,515,000.00. The total aggregate
purchase price for all Shares is $15,000,000.00.
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 Newco of Newco Memorandum of Association and Bye-
Laws;
4.4.4. the appointment of Kevin Insley, Kevin Butler, David Astwood,
Alene A. Holzman, and Ralph E. Christoffersen as Directors of
Newco;
4.4.5. the resignation of all directors and the secretary of Newco
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 Newco
and that Newco is not in any way obligated or indebted to him;
and
4.4.6. the transfer to Newco 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 (THE "SECURITIES ACT"), 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
15
<PAGE>
OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE CORPORATION
THAT REGISTRATION IS NOT REQUIRED UNDER SUCH ACT OR APPLICABLE
STATE SECURITIES LAWS.
4.6. EIS and RPI shall use reasonable efforts to file any documents that require
filing with the Registrar of Companies in Bermuda within the prescribed
time limits.
4.7. In the event that EIS exercises the Exchange Right, Newco 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 shares of Preferred Shares covered thereby. The Parties
acknowledge that such Preferred Shares have been pledged to EIS pursuant to
Clause 4.8 below and that EIS has physical possession of such Preferred
Shares.
4.8. In order to secure RPI's obligations pursuant to the Exchange Right, RPI
hereby pledges, assigns and sets over to EIS, all of RPI's right, title and
interest in and to all Newco Shares (as defined in the RPI Securities
Purchase Agreement) deliverable by RPI upon exercise of the Exchange Right
(including share distributions and dividends thereon). RPI shall cause to
be delivered to EIS all of the certificates together with duly executed
stock power in favor of EIS evidencing such shares, and cause to be filed
with the Secretary of State of Delaware 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. Such pledge shall be governed by the applicable provisions of
the Delaware Uniform Commercial Code. Upon exercise of the 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. In
connection with the foregoing, Newco and the Participants shall take all
necessary or appropriate steps to ensure such ownership by EIS. Until EIS
exercises the Exchange Right, RPI shall retain all rights in and to the
pledged Newco Shares (including without limitation all voting, dividend,
liquidation and other rights), subject only to this pledge and the terms of
this Agreement.
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.
RPI shall have the right to nominate four directors of Newco
("RPI Directors") and EIS shall have the right to nominate one
Director of Newco ("EIS Director")
16
<PAGE>
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
two years following the Closing Date, the EIS Director shall only
be entitled to 15% of the votes of the Board until the expiry of
two 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 two years following the Closing Date where the Exchange
Right has been exercised by EIS within two years following the
Closing Date, each of RPI, and EIS shall cause the Board to be
reconfigured so that an equal number of Directors are designated
by EIS and RPI and that each of the Directors has equal voting
power.
5.1.2 If EIS removes the EIS Director, or RPI removes any of the RPI
Directors, EIS or RPI, 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 to
the extent required pursuant to the laws of Bermuda or to ensure
the sole residence of Newco in Bermuda.
5.1.4 At any such meeting, the presence of the EIS Director and at
least two of the RPI Directors shall be required to constitute a
quorum and, subject to Clause 18 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. 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 RPI Directors specifying the date, time
and place where such adjourned meeting is to be held and
reconvened.
5.1.5 On the Closing Date, RPI may appoint one of the RPI Directors to
be the chairman of Newco. The chairman of Newco 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 two
years following the Closing Date where the Exchange Right
has been exercised by EIS within two years following the
Closing Date
(in each case the "Chairman Status Board Meeting")
After the Chairman Status Board Meeting, each of EIS and RPI,
beginning with EIS at the Chairman Status Board Meeting, shall
have the right, exercisable
17
<PAGE>
alternatively, of nominating one Director to be chairman of Newco
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 RPI Directors
shall be entitled to appoint another RPI Director to act as
chairman in his place at the meeting.
If the chairman of Newco is unable to attend any meeting of the
Board held after the Chairman Status Board Meeting, the Directors
shall be entitled to appoint another Director to act as chairman
of Newco 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 Newco 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 19.
5.2 Management and R&D Committees:
------------------------------
5.2.1 Newco's board of directors shall appoint a management committee
(the "Management Committee") to consist initially of four
members, two of whom shall be nominated by Elan and two of whom
shall be nominated by RPI, and each of whom shall be entitled to
one vote, whether or not present at any Management Committee
meeting. Decisions of the Management Committee shall require
approval of at least one Elan nominee on the Management Committee
and one RPI nominee on the Management Committee.
Each of Elan and RPI shall be entitled to remove any of their
nominees to the Management Committee and appoint a replacement in
place of any nominees so removed. The number of members of the
Management Committee may be altered if agreed to by a majority of
the directors of Newco; provided that, each of Elan and RPI shall
be entitled to appoint an equal number of members to the
Management Committee. The Management Committee shall be
responsible for, inter alia, devising, implementing and reviewing
strategy for the Project.
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 shall be nominated by Elan
and two of whom shall be nominated by RPI, 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 of at least
one Elan nominee on the R&D Committee and one RPI nominee on the
R&D Committee.
Each of Elan and RPI 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. The number of members of the R&D
Committee may be altered if agreed to by a majority of the
directors of Newco provided that each of Elan and
18
<PAGE>
RPI shall be entitled to appoint an equal number of members to
the R&D Committee.
5.2.3 The R&D Committee shall be responsible for:
5.2.3.1 designing that portion of the Business Plan that
relates to the Project for consideration by the
Management Committee;
5.2.3.2 establishing a joint Project team consisting of an
equal number of team members from Elan and RPI,
including one Project leader from each of Elan and RPI;
and
5.2.3.3 implementing such portion of the Business Plan that
relates to the Project, as approved by the Management
Committee.
5.2.4 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 the
President of Elan Pharmaceutical Technologies and the Chief
Executive Officer of RPI, 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.
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 with
respect to the research, development, and commercialization of the Product,
which Business Plan 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 RPI and Elan as it relates to the implementation of the
R&D Plan.
6.2. The Business Plan shall be subject to ongoing review by the Directors and
the unanimous approval of the Board on a quarterly basis upon mutual
written agreement.
6.3. Neither Participant shall be obliged to provide funding to Newco 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.
19
<PAGE>
CLAUSE 7
RESEARCH AND DEVELOPMENT WORK
7.1 Research and development work related to the Products and the Newco
Intellectual Property shall be conducted in accordance with the research
and development program developed by the R&D Committee and approved by the
Management Committee.
7.2 The Parties acknowledge that in addition to the Elan License, Elan granted
to Newco the Elan Research License pursuant to the Elan License Agreement
solely to use the System for research and to perform clinical
investigations to determine the commercial viability of the continuous
subcutaneous administration of [ * ] using the System. If the Parties
jointly determine that the continuous subcutaneous administration of [ * ]
using the System is commercially viable, then the Parties shall in good
faith negotiate a nonexclusive license to Newco of the Elan Intellectual
Property and of the RPI Intellectual Property to make, have made, import,
use, offer for sale and sell such product, subject to then existing
contractual obligations. Such license agreement shall contain normal
commercial terms, provided that (i) the research, development and
commercialization of such product shall be without any cost or obligation
whatsoever to Elan without Elan's prior written consent which may be
withheld in Elan's sole discretion, and (ii) [ * ]
Notwithstanding anything contained in this Clauses 7.2 to the contrary,
Newco shall not have the license or right to manufacture or have
manufactured the System with respect to the Product or to manufacture or
have manufactured [ * ] with respect to the product described in this
Clause 7.2. The Parties agree that the manufacture of the System and [ * ]
is subject to Clause 14 below.
7.3 Subject to the provisions of Clause 6.3, Elan and RPI shall undertake at
their discretion research and development work related to the development
and commercialization of the Products, at the request of Newco and as
articulated in the Business Plan, in furtherance of the development and
commercialization of the Products and cultivation of patent rights and
know-how related to the Elan Intellectual Property, RPI Intellectual
Property and Newco Intellectual Property. The cost of such development work
shall be Elan's and RPI's, as the case may be, fully-burdened actual costs
in respect thereof, plus [*] of such costs. Research and development work
that is sub-contracted by Elan or RPI to third party providers shall be
charged by Elan or RPI to Newco at the amount invoiced by the relevant
third party provider. Newco shall pay RPI and Elan for any research and
development work carried out by them on behalf of Newco 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 Newco by RPI or Elan, as applicable, by the 15/th/ day of the
month following the month in which work was performed.
20
<PAGE>
7.4 Elan and RPI shall use reasonable efforts in undertaking any such research
and development work undertaken for Newco hereunder to conduct such
research and development work in a professional and timely manner.
7.5 Elan and RPI shall permit Newco 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 RPI
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 RPI's records, as the case may be, shall be at the expense of
Newco, except that if such inspection reveals an overpayment in the amount
paid to Elan or RPI, as the case may be, for the Research and Development
Program hereunder in any Financial Year of [ * ] or more of the amount due
to Elan or RPI, as the case may be, then the expense of such inspection
shall be borne solely by Elan or RPI, as the case may be, instead of by
Newco. Any surplus over the sum properly payable by Newco to Elan or RPI,
as the case may be, shall be paid promptly by Elan or RPI, as the case may
be, to Newco. If such inspection reveals a deficit in the amount of the sum
properly payable to Elan or RPI, as the case may be, by Newco, Newco shall
pay the deficit to Elan or RPI, as the case may be.
CLAUSE 8
COMMERCIALIZATION
8.1 Newco shall diligently pursue the research, development, prosecution and
commercialization of the Products as provided in the Business Plan.
8.2 At such time as Newco notifies Elan in writing that Newco in good faith
intends to commercialize a Product, Elan shall have a [ * ] the terms of
any agreement for [ * ], which option shall be exercised within [*] days of
Elan's receipt of such written notification from Newco (the "Elan/Newco
Option"); [ * ]. If Elan elects to enter into such negotiations, the
Parties shall negotiate in good faith the terms of an applicable agreement.
If, despite good faith negotiations, Elan and Newco do not reach agreement
within [ * ] from [ * ], then Newco shall be free to enter into
negotiations and an agreement with a third party (other than a
Technological Competitor of Elan) upon which the third party would
commercialize the relevant Product in the Territory, which terms when taken
as a whole, are not more favourable to the third party than the principal
terms of the last written proposal offered by Newco to Elan or by Elan to
Newco, as the case may be. The Parties shall act in good faith and use
their reasonable commercial judgement when negotiating with such third
party for the commercialization of the Product in the Territory. For
purposes of this Clause 8.2, the term Elan shall include Elan and its
Affiliates.
21
<PAGE>
CLAUSE 9
SUBLICENSE AND ASSIGNMENT RIGHTS
9.1 Newco shall be permitted to assign or sublicense the Newco
Intellectual Property and to enter into agreements with third parties
for the development of the Newco Intellectual Property upon unanimous
approval by the Management Committee.
9.2 Upon 30 days prior notice in writing from Elan to Newco and RPI, Newco
shall assign the Newco Intellectual Property from Newco to a wholly-
owned subsidiary of Newco to be incorporated in Ireland, which company
shall be newly incorporated by Elan to facilitate such assignment.
9.3 The Parties acknowledge and agree to be bound by the provisions of
Clause 2.6 of the Elan License Agreement and the provisions of Clause
2.6 of the RPI License Agreement which set forth the agreement between
the Parties thereto in relation to the assignment and sub-licensing of
the Elan Intellectual Property and the RPI Intellectual Property
respectively.
CLAUSE 10
OWNERSHIP OF INTELLECTUAL PROPERTY RIGHTS/NON-COMPETITION
10.1. The Parties acknowledge and agree to be bound by the provisions of
Clause 3 of the Elan License Agreement and Clause 3 of the RPI License
Agreement which set forth the agreement between the parties thereto in
relation to the ownership of the Elan Intellectual Property, the RPI
Intellectual Property and the Newco Intellectual property
respectively.
10.2 The Parties acknowledge and agree to be bound by the provisions of
Clause 4 of the Elan License Agreement and the provisions of Clause 4
of the RPI License Agreement which set forth the agreement between the
parties thereto in relation to the non-competition obligations of Elan
and RPI, respectively.
CLAUSE 11
INTELLECTUAL PROPERTY RIGHTS
11.1 Elan, at its expense and sole discretion shall (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
22
<PAGE>
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 Newco and RPI 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 RPI, at its expense and sole discretion, shall (i) secure the grant of
any patent applications within the RPI Patents that relate to the
Field; (ii) file and prosecute patent applications on patentable
inventions and discoveries within the RPI 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 RPI Patents that relate to the Field (including any letters
patent that may issue covering any such RPI Improvements that relate
to the Field). RPI shall have the right in its sole discretion to
control such filing, prosecution, defense and maintenance provided
that Elan and Newco 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 Newco and RPI, Newco shall
have the option at Newco'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) jointly on
behalf of Newco and RPI. Upon such written request from Newco, 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 to Newco a royalty free
exclusive license to such Elan Intellectual Property in the Field. The
Parties shall have the right to remove their confidential information
from any such patent application.
11.4 In the event that RPI does not intend to file for patent protection on
patentable inventions or discoveries within the RPI Intellectual
Property that relates to the Field in one or more countries in the
Territory after providing written notice to Newco and Elan, Newco
shall have the option at Newco's expense, upon the prior written
approval of RPI which approval shall not be unreasonably withheld, to
request RPI to file and prosecute such patent application(s) jointly
on behalf of Newco and Elan. Upon such written request from Newco, RPI
shall be responsible for preparing and prosecuting and otherwise
seeking patent protection for such RPI Intellectual Property described
in this Clause 11.3. Any such RPI Intellectual Property shall be owned
by RPI but RPI shall grant a royalty free exclusive license to Newco
to such RPI Intellectual Property in the Field. The Parties shall have
the right to remove their confidential information from any such
patent application.
23
<PAGE>
11.5 Newco 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 Newco Intellectual Property; (ii) to defend
all such applications against third party oppositions; and (iii) to
maintain in force any issued letters patent within the Newco Patents
(including any patents that issue on patentable inventions and
discoveries within the Newco Intellectual Property). Newco 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 Newco informs both Elan and RPI that it does not
intend to file an application on the Newco 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 RPI
shall have the right to file and prosecute such patent applications on
inventions which RPI invents solely or which relate predominantly to
the RPI Intellectual Property, and Elan and RPI agree to negotiate in
good faith on the course of action to be taken with respect to Newco
inventions that relate to both the Elan and RPI 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 RPI
Intellectual Property or the Newco 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 RPI 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 RPI 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 RPI decide not to
enforce the Elan Intellectual Property or the RPI 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, Newco 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 RPI shall cooperate with such action. Any recovery
remaining after the deduction by Newco of the reasonable expenses
(including attorney's fees and expenses) incurred in relation to such
enforcement proceeding shall belong to Newco. 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 infringement of the Elan Patents or the RPI Patents
affects both the Field as well as other products being developed or
commercialized by RPI or Elan or its commercial partners outside the
Field, RPI or Elan shall endeavor to agree as to the manner in which
the proceedings should be instituted and as to the proportion in which
they shall share the proceeds of any such proceedings,
24
<PAGE>
and the expense of any costs not recovered, or the costs or damages
payable to the third party.
11.9 Newco shall have the first right but not the obligation to bring suit
or otherwise take action against any unauthorized use of the Newco
Intellectual Property. If any such alleged use occurs that gives rise
to a cause of action both inside and outside the Field, Newco, in
consultation with the other Parties, shall determine the course of
action to be taken. In the event that Newco takes such action, Newco
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 Newco. Newco shall keep Elan and RPI informed of any
action in a timely manner so as to enable RPI and Elan to provide
input in any such action and Newco shall reasonably take into
consideration any such input. At Newco's request, the Parties shall
cooperate with any such action at Newco's cost and expense.
11.10 In the event that Newco does not bring suit or otherwise take action
against any unauthorized use of the Newco 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 Newco, they
shall negotiate in good faith an appropriate allocation of costs,
expenses and recovery amounts. At the Party's request, Newco 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 Newco 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, Newco shall promptly advise the other
Parties of such threat or suit.
11.12 Save in respect of claims by Newco against either Party, or by an
Independent Third Party against Newco, where Elan is in breach of a
representation or warranty under [ * ] or where RPI is in breach of a
representation or warranty under [ * ] shall indemnify, defend and
hold harmless Elan or RPI, 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 [ * ], provided that Elan
or RPI, 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 Newco, not to be
unreasonably withheld or delayed. At its option, Elan or RPI, as the
case may be, may elect to take over the conduct of such proceedings
from Newco provided that Newco's indemnification obligations shall
continue; the costs of defending such claim shall be borne by Elan or
RPI, as the case may be and such Party shall not compromise or settle
any such claim or proceeding without the prior written consent of
Newco, such consent not to be unreasonably withheld or delayed.
25
<PAGE>
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 Newco,
Newco shall grant to Elan a non-exclusive, worldwide, royalty-free,
fully paid-up license for the term of the Licenses:
12.1.1 to use the Newco Intellectual Property in the Field, and
12.1.2 subject to the terms and conditions of the RPI License, a
sublicense to use the RPI Intellectual Property in the
Field.
12.2 Solely for the purpose of and insofar as is necessary, in each case,
for RPI to conduct research and development work on behalf of Newco,
Newco shall grant to RPI a non-exclusive, worldwide, royalty-free,
fully paid-up license for the term of the Licenses:
12.2.1 to use the Newco Intellectual Property in the Field, and
12.2.2 subject to the terms and conditions of the Elan License and
the Elan Research License, a sublicense to use the Elan
Intellectual Property in the Field.
12.3 Subject to the provisions of this Clause 12, Newco hereby grants to
each of Elan and RPI a license to the Newco Intellectual Property as
follows:
12.3.1 Newco hereby grants to Elan a worldwide, perpetual, fully-
paid and royalty-free license, with the right to sublicense,
to the Newco Intellectual Property as it relates to the
System 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 a particular purpose, or infringement of third party
rights, and all such warranties are expressly disclaimed.
12.3.2 Newco hereby grants to RPI a worldwide, perpetual, fully-
paid and royalty-free license, with the right to sublicense,
to the Newco Intellectual Property as it relates to the
Target Ribozyme 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 a particular purpose, or infringement of third
party rights, and all such warranties are expressly
disclaimed.
CLAUSE 13
REGULATORY
13.1 Newco shall keep the other Parties promptly and fully advised of
Newco's regulatory activities, progress and procedures. Newco shall
inform the other Parties of any dealings
26
<PAGE>
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 Subject to the unanimous determination of the Management Committee
that one or more regulatory approvals for permission to conduct
clinical studies and/or for commercialization should be held in the
name of Newco's commercial partner, such regulatory approvals related
to the Products and/or the Newco Intellectual Property shall be
prosecuted and owned by Newco in accordance with the Business Plan.
All regulatory approvals and submissions relating to the Target
Ribozyme, including without limitation, the DMF, shall be processed by
and be the property of RPI and at all times held in RPI's sole name.
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. Each
of Elan and RPI will authorize Newco to reference such Party's
respective regulatory approval and submission, as described herein,
with the FDA and such foreign agency to the extent necessary for
Newco's regulatory purposes.
13.3 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, Newco 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 Notwithstanding the provisions of Clause 14.1, Elan shall have the
first right to manufacture and supply, and/or subcontract the
manufacture and supply, of (a) the System with respect to the Product,
and (b) the System with respect to the product relating to [ * ], on
standard commercial terms negotiated in good faith by Newco and Elan.
RPI shall have the first right to manufacture and supply, and/or
subcontract the manufacture and supply, of (1) the Target Ribozyme
with respect to the Product, and (2) [ * ], on standard commercial
terms negotiated in good faith by Newco and RPI.
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. The terms of the said supply agreements shall be on normal
commercial terms, and shall be negotiated in good faith by the Parties
thereto.
27
<PAGE>
CLAUSE 15
TECHNICAL SERVICES AND ASSISTANCE
15.1 Whenever commercially and technically feasible, Newco shall contract
with RPI or Elan, as the case may be, to perform such other services
as Newco 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 RPI. There shall be no obligation upon either of RPI or Elan
to perform such services.
15.2 Newco shall, if the Participants so agree, conclude an administrative
support agreement with Elan and/or RPI 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 Newco:
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.
The foregoing list of services shall not be deemed exhaustive and may
be changed from time to time upon written request by Newco.
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 Newco. The
Shareholders and Newco shall ensure that the industry standard
insurance policies shall be in place for all activities to be carried
out by Newco.
15.4 If Elan or RPI so requires, RPI 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 RPI
Intellectual Property, as the case may be, as necessary to further the
Project.
28
<PAGE>
15.5 The employees received by Elan or RPI, as the case may be, shall be subject
to obligations of confidentiality no less stringent than those set out in
Clause 22 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
Unless otherwise agreed by the Shareholders and save as may be provided to the
contrary herein:
16.1 the auditors of Newco shall be KPMG Peat Marwick of Vallis Building,
Hamilton, Bermuda;
16.2 the bankers of Newco 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 Newco shall be December 31st in each
Financial Year; and
16.4 the secretary of Newco shall be I.S. Outerbridge or such other Person as
may be appointed by the Directors from time to time.
CLAUSE 17
TRANSFERS OF SHARES;
RIGHT OF FIRST OFFER; TAG ALONG RIGHTS
General:
--------
17.1. Until such time as the Common Shares shall be registered pursuant to the
Exchange Act and be publicly traded in an established securities market,
no Shareholder shall, directly or indirectly, sell or otherwise transfer
(each, a "Transfer") any Shares held by it except in as expressly
permitted by and in accordance with the terms of this Agreement. Newco
shall not, and shall not permit any transfer agent or registrar for any
Shares to, transfer upon the books of Newco 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
29
<PAGE>
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 RPI 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 Newco 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 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 17 shall
be subject to any "Tag Along Right" benefiting a Shareholder which may be
provided for by Clause 17, 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 Newco, 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
30
<PAGE>
occur, the Offered Shares shall again be subject to the Right of First
Refusal 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 17), 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 Newco.
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 17), 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.
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 17.4, 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 17, 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.
31
<PAGE>
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 shares of 7 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 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.
CLAUSE 18
MATTERS REQUIRING PARTICIPANTS' APPROVAL
18.1 In consideration of RPI and Elan agreeing to enter into the License
Agreements, the Parties hereby agree that Newco shall not without the prior
approval of the EIS Director and the four RPI Directors:
32
<PAGE>
18.1.1. make a material Newco determination outside the ordinary course
of business, including, among other things, acquisitions or
dispositions of intellectual property and licenses or
sublicenses, discontinue Newco to a named country or jurisdiction
outside of Bermuda, changes in the Business or the Newco budget
as they relate to the Licensed Technologies; entry 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 Shares or unissued Common Share Equivalents,
or create or issue any new shares (including a split of the
Shares) or Common Share Equivalents, except as expressly
permitted by the Newco Memorandum of Association and Bye-Laws;
18.1.3. alter any rights attaching to any class of share in the capital
of Newco or alter the Newco Memorandum of Association and Bye-
Laws;
18.1.4. consolidate, sub-divide or convert any of Newco'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 Newco;
18.1.6. do or permit or suffer to be done any act or thing whereby Newco
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. sub-license any of the Elan Intellectual Property or RPI
Intellectual Property, or license Newco Intellectual Property;
18.1.9. amend or vary the terms of the RPI License Agreement or the Elan
License Agreement;
18.1.10. permit a person other than Newco to own a Regulatory Approval
relating to the Product(s);
18.1.11. amend or vary the Business Plan or the Newco budget as they
relate to the Licensed Technologies;
18.1.12. alter the number of Directors;
18.1.13. whether any Shares of Newco shall be registered for public
trading with any governmental authority for public trading in any
securities market; and
33
<PAGE>
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 During the Term of this Agreement, should any dispute or difference arise
amongst the members of the Management Committee, or between Elan and RPI,
or between Elan or RPI and Newco, the appropriate representatives of the
applicable Parties shall use good faith efforts to resolve such dispute or
difference promptly and to the mutual satisfaction of the affected Parties.
If with respect to any such dispute or difference (but excluding from the
remaining provisions of this Clause 19 any dispute or difference relating
to (i) the interpretation of any provision of this Agreement, (ii) the
interpretation or application of law, or (iii) the ownership of any
intellectual property, which disputes or differences shall be resolved, if
at all, by arbitration pursuant to Clause 24.8), such representatives
cannot reach a resolution to such dispute or difference within a reasonable
period, 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 RPI and the President of Elan Pharmaceutical Technologies.
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 chief executive officer of each Participant 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 chief executive officers
of the Participants who shall endeavor using good faith diligent efforts to
resolve the dispute. If the chief executive officers of the Participants
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 Newco to procure that the agreed terms are fully and
promptly carried into effect.
19.3 The chief executive officer of RPI and the President of Elan Pharmaceutical
Technologies shall, if they are unable to resolve a dispute or difference
when it is referred to them under Clause 19.1, within sixty (60) days of
such referral, refer the matter to an independent expert in pharmaceutical
product development and marketing (including clinical development and
regulatory affairs) jointly selected by the chief executive officers of the
Participants (the "Expert"). In the event the chief executive officers of
the Participants cannot agree upon the designation of the Expert, the
Participants shall request the American Arbitration Association ("AAA"),
sitting in the City of New York to select the Expert. In each case, the
Expert shall be selected having regard to his suitability to determine the
particular dispute or difference on which the Expert is being requested to
determine. Unless otherwise agreed between the chief executive officers,
34
<PAGE>
the following rules shall apply to the appointment of the Expert. The fees
of the AAA and the Expert shall be shared equally by the Participants. The
Expert shall be entitled to inspect and examine all documentation and any
other material which the Expert may consider to be relevant to the dispute.
The Expert shall afford each Party a reasonable opportunity (in writing or
orally) of stating reasons in support of such contentions as each Party may
wish to make relative to the matters under consideration. The Expert shall
give notice in writing of his determination to the Parties within such time
as may be stipulated in his terms of appointment or in the absence of such
stipulation as soon as practicable but in any event within four weeks from
the reference of the dispute or difference to him.
19.4 Any determination by the Expert of a dispute or difference shall not be
binding on the Parties.
CLAUSE 20
TERMINATION
20.1 This Agreement shall govern the operation and existence of Newco until (i)
terminated by written agreement of all Parties hereto or (ii) 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 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
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
35
<PAGE>
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 or suffers a Relevant Event, the other
Participant shall be entitled, within three months of the occurrence of the
Relevant Event, to require the defaulting Participant (the "Recipient
Participant") to sell on reasonable terms of payment to the non-defaulting
Participant (the "Proposing Participant") all (but not some only) of the
Shares, held or beneficially owned by the Recipient Participant for an
amount equal to [*] of the fair market value of the Shares of the Recipient
Participant (the "Buyout Option").
20.5 The Proposing Participant shall notify the Recipient Participant of the
exercise of the Buyout Option, no later than 30 business days prior to the
proposed exercise thereof, by delivering written notice to the Recipient
Participant stating that the Buyout Option is exercised and the price at
which the Proposing Participant is willing to purchase the Shares of the
Recipient Participant.
20.6 In the event that the Participants do not agree upon a purchase price for
the Shares within five Business Days following the receipt by the Recipient
Participant of written notice from the Proposing Participant pursuant to
Clause 20.5 above, the Proposing Participant may contact the AAA, sitting
in New York City and request that an independent US-based arbitrator who is
knowledgeable of the pharmaceutical/biotechnology industry be appointed
within 10 Business Days. The AAA shall endeavor to select an arbitrator
who is technically knowledgeable in the pharmaceutical/biotechnology
industry (and who directly and through his affiliates, has no business
relationship with, or shareholding in, either the Proposing Participant or
the Recipient Participant). Promptly upon being notified of the
arbitrator's appointment, the Proposing Participant and the Recipient
Participant shall submit to the arbitrator details of their assessment of
the fair market value for the Shares of the Recipient Participant together
with such information as they think necessary to validate their assessment.
The arbitrator shall notify the Recipient Participant of [*] of the fair
market value assessed by the Proposing Participant (the "Proposing
Participant Price") and shall notify the Proposing Participant of [*] of
the fair market value assessed by the Recipient Participant (the "Recipient
Participant Price"). The Proposing Participant and the Recipient
Participant shall then be entitled to make further submissions to the
arbitrator within five Business Days explaining why the Recipient
Participant Price or the Proposing Participant Price, as the case may be,
is unjustified. The arbitrator shall thereafter meet with the Proposing
Participant and the
36
<PAGE>
Recipient Participant and shall thereafter choose either the Recipient
Participant Price or the Proposing Participant Price (but not any other
price) as the purchase price for the Shares (the "Purchase Price") on the
basis of which price the Expert determines to be closer to [*] of the
fair market value for the Shares of the Recipient Participant. The
arbitrator shall use his best efforts to determine the Purchase Price
within 30 Business Days of his appointment. The Proposing Participant and
the Recipient Participant shall bear the costs of the arbitrator equally
provided that the arbitrator may, in his discretion, allocate all or a
portion of such costs to one Party. Any decision of the arbitrator shall
be final and binding.
20.7 The Proposing Participant shall purchase the Shares of the Recipient
Participant by delivery of the Purchase Price in cash no later than the
15th Business Day following determination of the Purchase Price by the
Expert.
20.8 The Shares of the Recipient Participant so transferred shall be sold by
the transferor as beneficial owner with effect from the date of such
transfer free from any lien, charge or encumbrance with all rights and
restrictions attaching thereto. If the Proposing Participant elects to
purchase the Shares of the Recipient Participant, the Shares of the
Recipient Participant shall be sold by the Recipient Participant as
beneficial owner for a price equal to [*] of the Purchase Price with
effect from the date specified by the Proposing Participant in its notice
of election free from any lien, charge or encumbrance together with all
rights attaching thereto.
20.9 If the Proposing Participant exercises the Buyout Option, 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 Recipient Party.
20.10 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.
20.11 In the event of a termination of the Elan License Agreement and/or the
RPI 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.
20.12 The provisions of Clauses 1, 3, 5.1, 9, 10, 11, 12, 17, 20.12, 22, 23,
and 24 shall survive the termination of this Agreement under this Clause
20.10 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 this Clause 20.10 or by mutual consent pursuant to Clause
20.1.
37
<PAGE>
CLAUSE 21
SHARE RIGHTS
21.1 The Shareholders agree that the Common Shares and the Preferred Shares
shall be separate classes of shares and shall carry the respective rights
and be subject to the restrictions on the transfer and distribution of
assets provided in the Newco Memorandum of Association and Bye-laws and
as set forth in this Agreement.
21.2 Except as otherwise provided in the Bermuda Companies Act of 1981 and in
the Newco Memorandum of Association and Bye-Laws, the Participants agree
that for a period of two years from the Closing, the Preferred Shares
issued to EIS shall not carry voting rights in Newco.
CLAUSE 22
CONFIDENTIALITY
22.1 The Parties 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 Newco Intellectual Property, the Elan Intellectual Property
or the RPI 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 the License Agreements, 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;
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;
38
<PAGE>
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 Agreement
and their duties hereunder and to obtain their consent hereto as a
condition of receiving Confidential Information. Each Party agrees 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.
39
<PAGE>
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.
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 Substantive
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 Newco, shall be borne by
Newco.
40
<PAGE>
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.
24.5 Relationship of the Parties:
---------------------------
Nothing contained in this Agreement is intended or is to be construed to
constitute Elan/EIS and RPI as partners, or Elan/EIS as an employee or
agent of RPI, or RPI 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.
41
<PAGE>
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/EIS at:
Elan Corporation, plc
C/o Elan International Services, Ltd.
102 St. James Court
Flatts, Smiths FL04
Bermuda
Attention: President
Telephone: 441-292-9169
Fax: 441-292-2224
and
Elan International Services, Ltd.
102 St. James Court
Flatts, Smiths FL04
Bermuda
Attention: President
Telephone: 441-292-9169
Fax: 441-292-2224
RPI at:
Ribozyme Pharmaceuticals Incorporated
2950 Wilderness Place
Boulder, Colorado 80301
Attention: Chief Executive Officer
Telephone 303-449-6500
Fax: 303-449-6995
with a copy to:
Rothgerber Johnson & Lyons LLP
One Tabor Center, Suite 3000
42
<PAGE>
1200 Seventeenth Street
Denver, Colorado 80202
Attention: Woody Davis, Esq.
Telephone 303-623-9000
Fax: 303-623-9222
Newco at:
Medizyme Pharmaceuticals Ltd.
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.
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, without giving effect to the
provisions thereof relating to the conflict of laws.
24.8.2. 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.
24.8.3 Any dispute under this Agreement which is not settled by mutual
consent under Clause 24.8.2 and which relates to (i) the
interpretation or enforcement of any provision of this Agreement or
the License Agreements, (ii) the interpretation or application of law,
or (iii) the ownership of any intellectual property, 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
43
<PAGE>
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 request the AAA to appoint the
arbitrator. Such arbitrator shall be an independent expert in
pharmaceutical product development and marketing (including clinical
development and regulatory affairs).
The arbitration shall be held in New York, New York.
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 judgment, the arbitrators may not provide for punitive or
similar exemplary damages.
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.
Any arbitration under this Agreement 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:
------------
44
<PAGE>
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 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 RPI 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 Whole Agreement/No Effect on Other Agreements:
---------------------------------------------
This Agreement (including the Schedules attached hereto) and the
Substantive 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
subject matter hereof, either oral or written, between the Parties
other than as set forth in this Agreement and the Substantive
Documents.
In the event of any ambiguity or conflict arising between the terms of
this Agreement and those of the Newco Memorandum of Association and
Bye-Laws, the terms of this Agreement shall prevail.
45
<PAGE>
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.
24.14 Successors:
----------
This Agreement shall be binding upon and inure to the benefit of the
Parties hereto, their successors and permitted assigns.
46
<PAGE>
IN WITNESS WHEREOF, the Parties hereto have caused their duly authorized
representatives to execute 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:__________________
47
<PAGE>
SIGNED
BY:_______________________
for and on behalf of
RIBOZYME PHARMACEUTICALS, INC.
in the presence of:__________________
SIGNED
BY:_______________________
for and on behalf of
MEDIZYME PHARMACEUTICALS LTD
in the presence of:__________________
48
<PAGE>
SCHEDULE 1
ELAN LICENSE AGREEMENT
49
<PAGE>
SCHEDULE 2
RPI LICENSE AGREEMENT
50
<PAGE>
EXHIBIT 7
Execution Copy
FUNDING AGREEMENT
FUNDING AGREEMENT made as of this 7/th/ day of January, 2000
among:
(1) ELAN PHARMACEUTICAL TECHNOLOGIES, a division of ELAN CORPORATION, PLC, a
public limited company incorporated under the laws of Ireland, and having
its registered office at Lincoln House, Lincoln Place, Dublin 2, Ireland
("Elan");
----
(2) ELAN PHARMA INTERNATIONAL LIMITED, a company incorporated under the laws of
Ireland, and having its registered office at Wil House, Shannon Business
Park, Shannon,, County Clare, Ireland ("EPIL");
----
(3) ELAN INTERNATIONAL SERVICES, LTD., an exempted limited liability company
incorporated under the laws of Bermuda, and having its registered office at
Clarendon House, 2 Church St., Hamilton, Bermuda ("EIS"); and
---
(4) RIBOZYME PHARMACEUTICALS, INC. a corporation incorporated under the laws of
Delaware and having its principal place of business at 2950 Wilderness
Place, Boulder, Colorado 80301, United States of America ("RPI").
---
RECITALS:
A. EIS and RPI have formed a Bermuda exempted limited liability company known
as Medizyme Pharmaceutical Ltd. ("Newco").
-----
B. Elan and EPIL are beneficially entitled to the use of certain patents which
have been granted or are pending in relation to the Elan Intellectual
Property.
C. RPI is beneficially entitled to the use of certain patents that have been
granted or are pending in relation to the RPI Intellectual Property.
D. As of the date hereof, Elan and EPIL have entered into license agreements
with Newco, and RPI has entered into a license agreement with Newco, in
connection with the license to Newco of the Elan Intellectual Property and
the RPI Intellectual Property, respectively.
E. Elan, EPIL and RPI have agreed to co-operate in the research and
development of a business for the research, development and
commercialization of the Products based on their respective technologies.
<PAGE>
F. As of the date hereof, Elan, EPIL, EIS, RPI and Newco have entered into a
Subscription, Joint Development and Operating Agreement, dated as of the
date hereof (the "JDOA") for the purpose of recording the terms and
----
conditions of the research, development and commercialization of the
Products and governing certain aspects of the affairs of and their dealings
with Newco. Capitalized terms when used in the Recitals hereto and in this
Agreement shall bear the same meanings as ascribed to such terms in the
JDOA.
CLAUSE 1
DEVELOPMENT FUNDING
1.1 It is estimated that Newco will require an additional U.S.$15,000,000 to
commence development of the Products based upon the RPI Intellectual
Property, the Elan Intellectual Property and/or the Newco Technology (the
"Development Funding"). Within the Development Period, EIS and RPI may
-------------------
provide to Newco, by way of an unconditional gift to Newco, as contributed
surplus or loan, as may be agreed to by EIS and RPI, up to an aggregate
maximum amount of U.S.$15,000,000, such funding to be provided by EIS and
RPI to Newco on a pro rata basis based on their respective equity
interests, on a fully-diluted basis in Newco.
1.2 The Development Funding shall be provided by EIS and RPI, each in its sole
discretion, at such times as shall be necessary for the development of the
Products as provided in the Development Plan or as otherwise approved by
the Newco Directors, including at least one Newco Director designated by
EIS and one Newco Director designated by RPI. The Development Funding
shall be funded on the following terms:
1.2.1 The minimum amount of each disbursement of the Development Funding
shall be U.S.$312,500 (except in the event that an amount less than
U.S.$312,500 remains available for funding, in which case such
lesser amount may be funded) allocated between EIS and RPI as
provided in Section 1.1 above;
1.2.2 Such funding shall be provided in accordance with the Development
Plan or as otherwise approved by the Newco Board of Directors
(including at least one Newco Director designated by EIS and at
least one Newco Director designated by RPI); and
1.2.3 Such funding shall be subject to the receipt by Elan or EIS of any
required approvals under the Mergers and Takeovers (Control) Acts
1978-1996 (the "Irish Mergers Act").
-----------------
1.3 In the event that Elan or EIS is unable to obtain approval under the Irish
Mergers Act within three months after a determination of the necessity of
such funding by the Newco Directors, the parties hereto shall work together
in good faith, each in its sole discretion, to agree on an alternative
funding mechanism.
2
<PAGE>
1.4 Each request for Development Funding shall be delivered from the Management
Committee to each of the Stockholders upon 15 business days' prior written
notice, which notice shall set forth:
(i) the amount of the Development Funding requested;
(ii) the date requested to fund such amount; and
(iii) a reasonably detailed narrative and summary of the uses and
application thereof.
CLAUSE 2
TERMINATION
2.1 This Agreement shall govern the funding methodology of EIS, Elan and RPI
with respect to Newco until terminated by written agreement of EIS and RPI.
CLAUSE 3
GENERAL
3.1 [intentionally omitted]:
3.2 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.
3.3 Reliance on Representations and Warranties:
-------------------------------------------
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.
3.4 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
3
<PAGE>
disturbances or intervention of any relevant government authority, but any
such delay or failure shall be remedied by such Party as soon as
practicable.
3.5 Relationship of the Parties:
----------------------------
Nothing contained in this Agreement is intended or is to be construed to
constitute Elan, EPIL or EIS, on one hand, and RPI, on the other hand, as
partners, or Elan, EPIL or EIS as an employee or agent of RPI, or RPI as an
employee or agent of Elan, EPIL or 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.
3.6 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.
3.7 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
with a copy to:
Brock Silverstein LLC
800 Third Avenue, 21/st/ Floor
New York, NY 10022
Attention: David Robbins
Telephone: 212-371-2000
Fax: 212-371-5500
EPIL at:
4
<PAGE>
Wil House
Shannon Business Park
Shannon, Co. Clare
Ireland
with a copy to:
Brock Silverstein LLC
800 Third Avenue, 21/st/ Floor
New York, NY 10022
Attention: David Robbins
Telephone: 212-371-2000
Fax: 212-371-5500
EIS at:
Elan International Services, Ltd.
102 St. James Court
Flatts, Smiths FL04
Bermuda
Attention: President
Telephone: 441-292-9169
Fax: 441-292-2224
with a copy to:
Brock Silverstein LLC
800 Third Avenue, 21/st/ Floor
New York, NY 10022
Attention: David Robbins
Telephone: 212-371-2000
Fax: 212-371-5500
RPI at:
2950 Wilderness Place
Boulder, Colorado 80301
Attention: Chief Executive Officer
Telephone: (303) 546-8132
Fax (303) 449-6995
5
<PAGE>
with a copy to:
Rothgerber Johnson & Lyons LLC
1200 17/th/ Street, Suite 3000
Denver, Colorado 80202
Attention: Woody Davis
Telephone: (303) 623-9000
Fax: (303) 623-9222
Or, in each case, to such other address(es) as may from time to time be
notified by any Party to the others hereunder.
Any notice sent by mail shall be deemed to have been delivered within three
working 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 by telephone. Notices of change of address shall be
effective upon receipt.
3.8 Governing Law:
--------------
This Agreement shall be governed by and construed in accordance with the
substantive (as opposed to procedural) laws of the State of Delaware,
without giving effect to principles thereof relating to conflicts of laws.
Any dispute hereunder shall be adjudicated in a forum set forth in the
Securities Purchase Agreement.
3.9 Severability:
-------------
If any provision in this Agreement is agreed by the Parties to be, deemed
to be or is 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 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.
3.10 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.
3.11 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.
6
<PAGE>
3.12 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:
3.12.1 Elan, EPIL, EIS and/or RPI shall have the right to assign their
rights and to delegate their obligations hereunder to their
Affiliates; provided, however, that such assignment does not result
in material adverse tax consequences for any other Parties and;
provided, that Elan, EPIL, EIS and/or RPI (if applicable) shall
remain obligated after such delegation.
3.12.2 Elan, EPIL, EIS and/or RPI shall have the right to assign their
rights and to delegate their obligations hereunder to a special
purpose financing or similar vehicle established by Elan, EPIL
and/or EIS or RPI, as the case may be, or in connection with 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; provided, that Elan, EPIL, EIS and/or
RPI (if applicable) shall remain obligated after such delegation.
3.13 Whole Agreement/No Effect on Other Agreements:
----------------------------------------------
This Agreement and the other Transaction 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
subject matter hereof, either oral or written, between the Parties other
than as set forth in this Agreement and the other Transaction Documents.
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.
3.14 Successors:
-----------
This Agreement shall be binding upon and inure to the benefit of the
Parties hereto, their successors and permitted assigns.
[Signature Page Follows]
7
<PAGE>
IN WITNESS WHEREOF, the Parties hereto have executed this Funding Agreement
on the day first set forth above.
SIGNED
BY:_______________________
for and on behalf of
ELAN PHARMACEUTICAL TECHNOLOGIES,
a division of ELAN CORPORATION, PLC
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
ELAN INTERNATIONAL SERVICES, LTD.
in the presence of:__________________
SIGNED
BY: /s/ [ILLEGIBLE]^^
-----------------------
for and on behalf of
RIBOZYME PHARMACEUTICALS, INC.
in the presence of: /s/ [ILLEGIBLE]^^
------------------
8
<PAGE>
EXHIBIT 8
CONFIDENTIAL PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED PURSUANT TO REGULATION
240.25B-2B OF THE SECURITIES EXCHANGE ACT OF 1934. [*] INDICATES OMITTED
MATERIAL THAT IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST AND IS FILED
SEPARATELY WITH THE COMMISSION.
Execution Copy 2A
LICENSE AGREEMENT
BETWEEN
RIBOZYME PHARMACEUTICALS, INC.
AND
MEDIZYME PHARMACEUTICALS LTD.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
1. DEFINITIONS......................................................... 1
2. RPI LICENSE TO NEWCO................................................ 6
3. INTELLECTUAL PROPERTY............................................... 8
4. NON-COMPETITION/AFTER ACQUIRED TECHNOLOGY........................... 8
5. FINANCIAL PROVISIONS................................................ 9
6. RIGHT OF INSPECTION AND AUDIT....................................... 10
7. REPRESENTATIONS AND WARRANTIES...................................... 11
8. TERM AND TERMINATION................................................ 13
9. CONFIDENTIAL INFORMATION............................................ 16
10. GOVERNING LAW AND JURISDICTION; ARBITRATION......................... 17
11. IMPOSSIBILITY OF PERFORMANCE - FORCE MAJEURE........................ 19
12. ASSIGNMENT.......................................................... 19
13. NOTICES............................................................. 19
14. MISCELLANEOUS....................................................... 21
</TABLE>
<PAGE>
THIS AGREEMENT made this ___ day of January 2000
between:
(1) Ribozyme Pharmaceuticals, Inc., a Delaware corporation having its principal
place of business at 2950 Wilderness Place, Boulder, Colorado 80301.
(2) Medizyme Pharmaceuticals Ltd., a Bermuda exempted limited liability company
incorporated under the laws of Bermuda and having its registered office at
Clarendon House, Church St., Hamilton, Bermuda.
RECITALS:
---------
A. Simultaneously herewith, RPI, Elan, EIS, and Newco (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 Newco.
B. Newco desires to enter into this Agreement with RPI so as to permit Newco
to utilize the RPI Intellectual Property in making, having made, importing,
using, offering for sale and selling the Products in the Field in the
Territory.
C. Simultaneously herewith Newco and Elan are entering into the Elan License
Agreement relating to Newco's use of the Elan Intellectual Property.
Now, Therefore, the Parties agree as follows:
1. DEFINITIONS
1.1. In this Agreement unless the context otherwise requires:
"Affiliate" shall mean any corporation or entity controlling, controlled or
under the common control of Elan or RPI, 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. For purposes of this Agreement, Newco
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).
[ ]shall mean a Ribozyme targeted against [ * ]
"Business Plan" shall have the meaning, as such term is defined in the
JDOA.
<PAGE>
"Confidential Information" shall have the meaning, as such term is defined
in Clause 9.
"Definitive Documents" shall mean the definitive agreements relating to the
transactions including finance, stock purchase, research and license
agreements.
"EIS" shall mean Elan International Services, Limited, a Bermuda exempted
limited liability company incorporated under the laws of Bermuda and having
its registered office at St James Court, Flatts, Smiths, FL04 Bermuda.
"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.
"Effective Date" shall mean the date of this Agreement.
"Elan Improvements" shall have the meaning as such term is defined in the
Elan License Agreement.
"Elan Intellectual Property" shall have the meaning as such term is defined
in the Elan License Agreement.
"Elan Know-How" shall have the meaning as such term is defined in the Elan
License Agreement.
"Elan License" shall have the meaning set forth in Clause 2.1 of the Elan
License Agreement.
"Elan Patents" shall have the meaning as such term is defined in the Elan
License Agreement.
"Elan Research License" 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.
"Existing RPI License Agreements" shall mean the following agreements: (a)
License Agreement, dated September 1993, between RPI and Competitive
Technologies Inc., as amended; (b) License Agreement, dated January 15,
1993, between RPI and Massachusetts Institute of Technology; (c) License
Agreement, dated February 7, 1992, between RPI and Garching Instruments
GmbH, as amended;
<PAGE>
and (d) License Agreement, dated November 11, 1994, between Ribonetics GmbH
and European Molecular Biological Laboratory, as assigned to RPI.
"Field" shall mean the [ * ] of the Target Ribozyme using the System
for the down regulation of HER-2.
"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.
"HER-2" shall mean Human Epidermal Growth Factor Receptor Type 2.
"In Market" shall mean the sale of the Product in the Territory by Newco 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
Newco to an Affiliate or a sub-licensee.
"JDOA" shall mean that certain Joint Development and Operating Agreement,
of even date herewith, by and between Elan, RPI, EIS and Newco.
"Licensed Technologies" shall mean the Elan Intellectual Property and the
RPI Intellectual Property.
"Licenses" shall mean the Elan License, the Elan Research License and the
RPI License.
"Management Committee" shall have the meaning, as such term is defined in
the JDOA.
"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 Newco 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; and
(iv) any tax, excise or governmental charge upon or measured by the sale,
<PAGE>
transportation, delivery or use of the Products.
"Newco" shall mean Medizyme Pharmaceuticals Ltd., Bermuda exempted limited
liability company incorporated under the laws of Bermuda.
"Newco Intellectual Property" shall mean the Newco Patents and the Newco
Know- How.
"Newco Know-How" shall mean any and all rights owned, licensed or
controlled by Newco 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 RPI Improvements.
"Newco 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 RPI 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 Newco.
"Oligonucleotide" shall mean a [ * ] non-protein, non-peptide encoding
nucleic acid molecule including those with [ * ] used as a human
therapeutic and/or prophylactic compound comprising between [ * ] including
oligonucleotide analogs which may include natural or non-natural
heterocycles, sugars and/or backbone linkage modifications, capable of
specifically inhibiting the function, activity or expression of a gene. For
the purposes hereof Oligonucleotide (a) shall include [ * ], and (b) shall
exclude polymers in which the linkages are [ ]
"Party" shall mean RPI or Newco, as the case may be, and "Parties" shall
mean RPI and Newco.
"Product(s)" shall mean the pharmaceutical formulation incorporating the
Target Ribozyme and incorporated within or packaged with the System.
"Project" shall mean all activities as undertaken by Elan, RPI and Newco in
order to develop the Products.
"R&D Committee" shall have the meaning, as such term is defined in the
JDOA.
"R&D Plan" shall have the meaning, as such term is defined in the JDOA.
"R&D Program" shall mean any research and development program commenced by
<PAGE>
Newco pursuant to the Project.
"Ribozyme" shall mean an [ * ] which is directed to inhibit, by catalytic
cleavage, the translation of mRNA coding for a gene. For the avoidance of
doubt, Ribozyme does not include [ * ]
"RPI" shall mean Ribozyme Pharmaceuticals, Inc., a Delaware corporation and
its Affiliates, excluding Newco.
"RPI Improvements" shall mean improvements to the RPI Patents and/or the
RPI Know-How developed (i) by RPI whether or not pursuant to the Project,
(ii) by Newco or Elan or by a third party (under contract with Newco)
pursuant to the Project, and/or (iii) jointly by any combination of RPI,
Elan or Newco pursuant to the Project, except as limited by agreements with
third parties.
Subject to third party agreements, RPI Improvements shall constitute part
of RPI Intellectual Property and be included in the license of the RPI
Intellectual Property pursuant to Clause 2.1 solely for the purposes set
forth therein. If the inclusion of a RPI Improvement in the license of RPI
Intellectual Property is restricted or limited by a third party agreement,
RPI shall use reasonable commercial efforts to minimize any such
restriction or limitation.
"RPI Intellectual Property" shall mean the RPI Know-How, the RPI Patents
and the RPI Improvements.
"RPI Know-How" shall mean any and all rights owned, licensed or controlled
by RPI to any scientific, pharmaceutical or technical information, data,
discovery, invention (whether patentable or not), technique, process,
procedure, system, formulation or design relating to the Ribozyme that is
not generally known to the public.
"RPI License" shall have the meaning set forth in Clause 2.1.
"RPI 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 RPI containing claims
relating to the Ribozyme.
"RPI Third Party Agreements" shall mean all agreements existing as of the
date hereof between RPI and third parties, including Affiliates, that
relate to or affect the Licenses, the Product, the Ribozyme for use in the
Field, and/or the transactions contemplated hereunder, including, without
limitation, the Existing RPI License Agreements.
"Strategic Investor" shall mean a company, corporation or person investing
in RPI
<PAGE>
or Newco for strategic purposes as evidenced by, inter alia, and shall
exclude financial institutions but not any of their direct or indirect
assignees or transferees that are not financial institutions.
"Substitute Ribozyme" shall have the meaning set forth in Clause 2.2 of the
JDOA.
"Substitute Target" shall have the meaning set forth in Clause 2.2 of the
JDOA.
"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 of the Elan License Agreement.
"Target Ribozyme" shall mean a Ribozyme directed to HER-2 unless and until
a [ * ] directed to a [ * ] is designated to be the subject of the Project
pursuant to the designation of a [ * ] and [ * ] under the provisions of
Clause 2.2 of the JDOA, in which case the term [ * ] shall mean such
designated [ * ] directed to [ * ]
"Technological Competitor of Elan" shall mean a company, corporation or
person listed in Schedule 2 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. RPI LICENSE TO NEWCO
<PAGE>
2.1. RPI hereby grants to Newco for the Term an exclusive license (including the
limited right to grant sublicenses under Clause 2.6 below) (the "RPI
License") to the RPI Intellectual Property to make, have made, import, use,
offer for sale and sell the Products in the Field in the Territory, subject
to any contractual obligations that RPI has as of the Effective Date.
2.2 RPI hereby confirms that no obligations are in effect on the date hereof
between RPI and an unaffiliated third party relating to the Ribozyme for
use in the Field, other than the Existing RPI License Agreements.
RPI shall be responsible for payments related to the financial provisions
and obligations under the RPI Third Party Agreements (including amendments
thereto), including, without limitation, any royalty or other compensation
obligations. RPI shall satisfy its responsibility to make such payments by
offsetting against such payments the royalties that are otherwise due to
RPI by Newco pursuant to Clause 5 below.
For the avoidance of doubt, royalties, milestones or other payments which
arise from the process of the commercialization or exploitation of products
under the RPI Third Party Agreements (for example, a milestone payment
payable upon successful completion of Phase II clinical trials, the filing
of an NDA application, obtaining NDA approval, or first commercial sale)
shall be payments for which RPI will be responsible under this Clause 2.2.
2.3 To the extent royalty or other compensation obligations that are payable to
third parties with respect to the RPI Intellectual Property would be
triggered after the Effective Date, under any third party agreement entered
into by RPI after the Effective Date (the "RPI Post-Effective Date
Agreements"), by a proposed use of such RPI Intellectual Property in
connection with the Project, RPI will inform Newco of such royalty or
compensation obligations. If Newco agrees to utilize such RPI Intellectual
Property in connection with the Project, Newco will be responsible for the
payment of such royalty or other compensation obligations relating thereto.
For the avoidance of doubt, royalties, milestones or other payments which
arise from the process of the commercialization or exploitation of products
under the RPI Post-Effective Date Agreements (for example, a milestone
payment payable upon successful completion of Phase II clinical trials, the
filing of an NDA application, obtaining NDA approval, or first commercial
sale) shall be payments for which Newco will be responsible under this
Clause 2.3.
2.4 Elan shall be a third party beneficiary under this Agreement and shall have
the right to cause Newco to enforce Newco's rights under this Agreement
against RPI.
2.5 Notwithstanding anything contained in this Agreement to the contrary, RPI
shall have the right outside the Field and subject to the non-competition
provisions of Clause 4
<PAGE>
to exploit and grant licenses and sublicenses of the RPI Intellectual
Property.
For the avoidance of doubt, Newco shall have no right to use the RPI
Intellectual Property outside the Field.
2.6 Newco shall not assign any of its rights under the RPI License relating to
the RPI Intellectual Property without the prior written consent of Elan and
RPI.
Newco shall not sublicense any of its rights under the RPI License relating
to the RPI Intellectual Property without the prior written consent of Elan
and RPI, 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.
2.7 Any agreement between Newco and any permitted third party for the
development or exploitation of the RPI Intellectual Property shall require
such third party to maintain the confidentiality of all information
concerning the RPI Intellectual Property.
Insofar as the obligations owed by Newco to RPI are concerned, Newco shall
remain responsible for all acts and omissions of any permitted sub-
licensee, including Elan, as if they were acts and omissions by Newco.
3. INTELLECTUAL PROPERTY
3.1 Ownership of Intellectual Property:
-----------------------------------
3.1.1 Newco shall own the Newco Intellectual Property.
3.1.2 RPI shall own the RPI Intellectual Property.
4. NON-COMPETITION/AFTER ACQUIRED TECHNOLOGY
4.1 Subject to Clause 4.3, during the Term, RPI, alone or in conjunction with a
third party, shall not develop or commercialize [ * ] to inhibit the
translation of [ * ]
4.2 If after the Effective Date RPI acquires know-how or patent rights from a
third party relating to the System, or if RPI acquires or merges with a
third party entity that owns or has license rights to know-how or patent
rights relating to the System, then RPI shall offer to license such know-
how and patent rights to Newco (subject to existing contractual
obligations) solely for Newco 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.
<PAGE>
4.3 If Newco determines that Newco should not acquire such license as is
referred to in Clause 4.2, then RPI shall be free to fully exploit such
know-how and patent rights, with the Elan Intellectual Property licensed to
Newco, whether inside or outside the Field and to grant to third parties
licenses and sublicenses with respect thereto.
5. FINANCIAL PROVISIONS
5.1 Royalties:
----------
The intent of the Parties is to provide for equivalent economic benefit to
each of RPI and Elan, except in respect of the License Fee (as defined in
the Elan License Agreement). Accordingly, the Management Committee shall
decide by unanimous consent on the royalties which shall be payable by
Newco to RPI and Elan on Net Sales. When determining such royalties, the
Management Committee shall consider the royalty obligations of RPI under
the Existing RPI License Agreements, provided that any royalties payable by
Newco to RPI and Elan hereunder shall be distributed in equal amount to
each of RPI and Elan. RPI represents and warrants to Newco and Elan that
RPI's royalty obligations under the Existing RPI License Agreements do not
exceed an aggregate of [ * ]
5.2 Payment of royalties pursuant to Clause 5.1 shall be made quarterly in
arrears during each Financial Year within 30 days after the expiry of the
calendar quarter. The method of payment shall be by wire transfer to an
account specified by RPI. Each payment made to RPI shall be accompanied by
a true accounting of all Products sold by Newco'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.
5.3 Newco shall maintain and keep clear, detailed, complete, accurate and
separate records for a period of 3 years:
5.3.1 to enable any royalties on Net Sales that shall have accrued
hereunder to be determined; and
5.3.2 to enable any deductions made in the Net Sales calculation to be
determined.
5.4 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
<PAGE>
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.
5.5 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 RPI
the amount of such royalties. In the event that Newco 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 RPI's account in a bank acceptable to RPI in the
country the currency of which is involved or as otherwise agreed by the
Parties.
5.6 RPI and Newco 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.
5.7 Any taxes payable by RPI on any payment made to RPI pursuant to this
Agreement shall be for the account of RPI. If so required by applicable
law, any payment made pursuant to this Agreement shall be made by Newco
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, Newco shall forthwith arrange
payment to RPI 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 RPI, Newco shall permit RPI or its duly authorized
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 Newco and any other book, record, voucher, receipt or invoice
relating to the calculation of the royalty payments on Net Sales submitted
to RPI.
Any such inspection of Newco's records shall be at the expense of RPI,
except that if any such inspection reveals a deficiency in the amount of
the royalty actually paid to RPI hereunder in any Financial Year quarter of
5% or more of the amount of any royalty actually due to RPI hereunder, then
the expense of such inspection shall be borne solely by Newco. Any amount
of deficiency shall be paid promptly to RPI by Newco.
If such inspection reveals a surplus in the amount of royalties actually
paid to RPI by Newco, RPI shall reimburse Newco the surplus within 15 days
after determination.
<PAGE>
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 RPI 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 RPI represents and warrants to Newco and Elan as follows:
7.1.1 RPI has the right to grant the RPI License;
7.1.2 there are no agreements between RPI and any third party that
conflict with the RPI License;
7.1.3 the patents and patent applications included in the RPI Patents are
free and clear of encumbrances and liens;
7.1.4 to the best of RPI's knowledge, there are no proceedings or
threatened proceedings against RPI in connection with the RPI
Intellectual Property in relation to the Field; and
7.1.5 the RPI Intellectual Property constitutes all intellectual property
owned or licensed by RPI that are reasonably applicable to the
Project as it relates to the Ribozyme.
7.2 RPI shall not amend, modify, waive or terminate any of its rights under any
RPI Third Party 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 Newco Intellectual
Property) of Newco.
7.3. RPI agrees and represents and warrants to Newco and Elan as follows: (i)
the RPI Third Party Agreements are valid and in full force and effect, (ii)
there are no existing or claimed defaults by RPI, and to RPI's knowledge by
any other party, under the RPI Third Party 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 RPI Third Party Agreements by RPI, or to RPI's knowledge by any other
party, and (iii) RPI shall during the term of the Licenses, fully comply
with all terms and conditions of the RPI Third Party Agreements; RPI
<PAGE>
will enforce its rights under the RPI Third Party Agreements; and RPI will
not assign its rights under the RPI Third Party Agreements. RPI will keep
Newco and Elan fully informed with respect to RPI's arrangements under the
RPI Third Party Agreements that relate to Newco and/or the transactions
contemplated hereunder. RPI shall provide Newco and Elan with any written
notices delivered by any party under the RPI Third Party Agreements, which
written notices relate to or could affect Newco and/or the transactions
contemplated hereunder.
7.4 In addition to any other indemnities provided for herein, RPI shall
indemnify and hold harmless Newco 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 Newco arising out of or in connection
with any:
7.4.1 breach of any representation, covenant, warranty or obligation by
RPI hereunder; or
7.4.2 act or omission on the part of RPI 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, Newco shall
indemnify and hold harmless RPI 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 RPI arising out of or in connection with
any:
7.5.1 breach of any representation, covenant, warranty or obligation by
Newco hereunder; or
7.5.2 act or omission on the part of Newco 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 defense 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
<PAGE>
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, RPI 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, RPI AND NEWCO
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 The term of this Agreement shall commence as of the Effective Date and
shall, subject to the rights of termination outlined in this Clause 8,
expire on a Product-by-Product basis and on a country-by-country basis on
the last to occur of:
8.1.1 [ * ] starting from the date of the first commercial sale of the
Product in the country concerned; or
8.1.2 the date of expiration of the last to expire of the patents included
in the Elan Patents and the Elan Improvements and/or the RPI Patents
and the RPI Improvements
("the Term")
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
<PAGE>
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, RPI 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, RPI AND NEWCO
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 The term of this Agreement shall commence as of the Effective Date and
shall, subject to the rights of termination outlined in this Clause 8,
expire on a Product-by-Product basis and on a country-by-country basis on
the last to occur of:
8.1.1 15 years starting from the date of the first commercial sale of the
Product in the country concerned; or
8.1.2 the date of expiration of the last to expire of the patents included
in the Elan Patents and the Elan Improvements and/or the RPI Patents
and the RPI Improvements
("the Term")
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
<PAGE>
JDOA and 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, Bermuda or Ireland;
8.3.6 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 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 Upon expiration or termination of the Agreement:
8.4.1. any sums that were due from Newco to RPI 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;
<PAGE>
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;
8.4.5 all rights and licenses granted pursuant to this Agreement and to
the RPI Intellectual Property pursuant to the JDOA (including the
rights of Newco pursuant to Clause 11 of the JDOA with respect to
patent prosecution and maintenance; and the rights of Newco to the
RPI Intellectual Property pursuant to Clause 7.2 of the JDOA with
respect to the development and commercialization of [ * ] using the
System) 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 RPI, and Newco 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
Newco to RPI pursuant to the provisions of Clause 12 of the JDOA
(entitled "Cross Licensing/Exploitation of Products Outside the
Field"), all rights to Newco Intellectual Property shall be
transferred to and jointly owned by RPI and Elan and may be
exploited by both Elan and RPI separately, provided that Elan and
RPI will cooperate reasonably in the prosecution and maintenance of
patents claiming such technology and rights and provided further
that nothing hereunder shall grant, or be construed to grant, the
right (a) to Elan to make, have made, import, use, offer for sale or
sell the Target Ribozyme, and (b) to RPI to make, have made, import,
use, offer for sale or sell the System;
In the event of a dispute arising pursuant to this Clause 8.4.6,
Elan and RPI 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; and
8.4.7 the rights of permitted third party sub-licensees in and to the RPI
Intellectual Property shall survive the termination of the license
and sublicense agreements granting said intellectual property rights
to Newco; and Newco, Elan and RPI shall in good faith agree upon the
form most advantageous to Elan and RPI in which the rights of Newco
under any such licenses and sublicenses are to be held (which form
may include continuation of Newco 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 RPI).
Any sublicense agreement between Newco and such permitted
sublicensee shall permit an assignment of rights by Newco and shall
contain appropriate confidentiality provisions.
<PAGE>
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 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:
<PAGE>
(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 JURISDICTION; ARBITRATION
10.1. This Agreement shall be governed by and construed in accordance with the
laws of the State of New York, without giving effect to the provisions
thereof relating to the conflict 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.
<PAGE>
In the event that the Parties fail to agree on a mutually acceptable
dispute resolution mechanism, any such dispute shall be finally settled
by arbitration pursuant to Clause 10.3.
10.3 Any dispute under this Agreement which is not settled by mutual consent
under Clause 10.2 and which relates to (i) the interpretation or
enforcement of any provision of this Agreement, (ii) the interpretation
or application of law, or (iii) the ownership of any intellectual
property shall be finally settled by binding arbitration, conducted in
accordance with the Commercial Arbitration Rules of the American
Arbitration Association ("AAA") by one arbitrator appointed in accordance
with said rules. Such arbitrator shall be an independent expert in
pharmaceutical product development and marketing (including clinical
development and regulatory affairs) and 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 AAA to
appoint an arbitrator.
The arbitration shall be held in New York, New York.
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 judgment, the arbitrators may not provide for punitive or
similar exemplary damages.
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.
Any arbitration under this Agreement 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.
<PAGE>
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.
11. IMPOSSIBILITY OF PERFORMANCE - FORCE MAJEURE
Neither RPI nor Newco 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 Newco at:
Medizyme Pharmaceuticals Ltd.
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
<PAGE>
C/o Elan International Services, Ltd.
102 St. James Court
Flatts,
Smiths FL04
Bermuda
Attention: Secretary
Telephone: 441 292 9169
Fax: 441 292 2224
If to RPI at:
Ribozyme Pharmaceuticals Incorporated
2950 Wilderness Place
Boulder, Colorado 80301
Attention: Chief Executive Officer
Telephone 303-449-6500
Fax: 303-449-6995
with a copy to:
Rothgerber Johnson & Lyons LLP
One Tabor Center, Suite 3000
1200 Seventeenth Street
Denver, Colorado 80202
Attention: Woody Davis, Esq.
Telephone 303-623-9000
Fax: 303-623-9222
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.
<PAGE>
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:
-------------------
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 inure to the benefit of the
Parties hereto, their successors and permitted assigns.
14.5 No Effect on Other Agreements/Conflict:
---------------------------------------
<PAGE>
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 authorized
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 Elan and Newco as partners, or Elan as an employee of Newco, or
Newco 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.
<PAGE>
IN WITNESS WHEREOF the Parties hereto have executed this Agreement.
SIGNED
BY_______________________
For and on behalf of
Ribozyme Pharmaceuticals, Inc.
SIGNED
BY: _____________________
For and on behalf of
Medizyme Pharmaceuticals Ltd.
CONSENTED AND AGREED TO:
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
<PAGE>
SCHEDULE 1
----------
RPI PATENTS
CECH PATENTS - US
<TABLE>
<CAPTION>
Title/Invention Patent No. Assignee
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1 RNA Ribozyme Polymerases, US 4,987,071 University Patents, Inc.
Dephosphorylases, Restriction
Endoribonucleases and Methods
-----------------------------------------------------------------------------------------------------
2 RNA Ribozyme Polymerases, and Methods US 5,037,746 University Patents, Inc.
- ------------------------------------------------------------------------------------------------------
3 RNA Ribozyme Polymerases, US 5,093,246 University Patents, Inc.
Dephosphorylases, Restriction
Endoribonucleases and Methods
- ------------------------------------------------------------------------------------------------------
4 RNA Ribozyme Restriction US 5,116,742 University Patents, Inc.
Endoribonucleases and Methods
- ------------------------------------------------------------------------------------------------------
5 RNA Ribozyme Which Cleaves Substrate RNA US 5,354,855 University Patents, Inc.
Without Formation of a Covalent Bond
- ------------------------------------------------------------------------------------------------------
6 RNA Ribozyme Polymerases, US 5,591,610 University Patents, Inc.
Dephosphorylases, Restriction
Endoribonucleases and Methods
- ------------------------------------------------------------------------------------------------------
</TABLE>
CECH PATENTS - FOREIGN
<TABLE>
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1 RNA Ribozyme Polymerases, European Patent No. University Patents, Inc.
Dephosphorylases, Restriction N0. 291533 B1
Endoribonucleases and Methods
- ------------------------------------------------------------------------------------------------------
2 RNA Ribozyme Polymerases, Japanese Patent No. University Patents, Inc.
Dephosphorylases, Restriction No. 2530906
Endoribonucleases and Methods
- ------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
OTHER PATENTS/1/
<TABLE>
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------
1 ErbB-2/neu Targeted Ribozymes U.S. 5,599,704 RPI
- -----------------------------------------------------------------------------------------------------
2 Method and Reagent for Inhibiting Australian Pat.
Cancer Development No. 687001 RPI
- -----------------------------------------------------------------------------------------------------
3 [ * ] [ * ] RPI
- -----------------------------------------------------------------------------------------------------
4 [ * ] US Patent Pending RPI
- -----------------------------------------------------------------------------------------------------
5 [ * ] US Patent Pending RPI
- -----------------------------------------------------------------------------------------------------
</TABLE>
________________
/1/ In addition to the patents listed in this table, RPI has rights to several
patents covering various aspects of ribozyme technology such as chemical
stabilization of ribozymes, new ribozyme motifs, and manufacture of ribozymes,
all of which provide additional coverage for the HERZYME Ribozyme Product. RPI
has rights to 102 issued/allowed patents and over 100 applications pending
worldwide covering various aspects of Ribozyme Technology
<PAGE>
SCHEDULE 2/1/
TECHNOLOGICAL COMPETITORS OF ELAN
[ * ]
1. Including any and all divisions or subsidiaries of such entities and
successor entities.
<PAGE>
EXHIBIT 9
Execution Copy
RIBOZYME PHARMACEUTICALS, INC.
REGISTRATION RIGHTS AGREEMENT
-----------------------------
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made as of
---------
January 7th, 2000 by and between Ribozyme 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, certain shares of common stock, par
value $.01, of the Company (the "Common Stock"), certain shares of Series A
------------
Convertible Exchangeable Preferred Stock par value $.01, of the Company (the
"Series A Preferred Stock"), a convertible promissory note (the "Note"), certain
- ------------------------- ----
shares of Series B Convertible Preferred Stock of the Company par value $.01,
(the "Series B Preferred Stock"), and warrants to acquire shares of Common Stock
------------------------
(the "Warrants"; together with the Series A Preferred Stock, the Note and Series
--------
B Preferred Stock, the "Securities"), which Securities are convertible or
----------
exercisable into or 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 conditions 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.
<PAGE>
"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 or jointly, as the case may be, in a transaction
pursuant to which registration rights are transferred pursuant to Section 10
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, (ii) any shares of Common Stock
issued or issuable upon conversion or exercise of any of the Securities, (iii)
any Common Stock held or acquired by Persons having registration rights as to
such Common Stock as of the date hereof, (iv) the Common Stock into which the
Company's Series L Preferred Stock is convertible, (v) any Common Stock issued
or issuable in respect of the securities referred to in clauses (i) through (iv)
above upon any stock split, stock dividend, recapitalization or similar event;
excluding in all cases, however, any Registrable Securities that have been sold
under Rule 144 promulgated under the Securities Act, and 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 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.
"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, and the expense of any
special audits incident to or required by any such registration.
"Securities Act" shall mean the Securities Act of 1933, as amended.
--------------
"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 the Holders or Holder.
2. Demand Registration.
-------------------
(a) Requests for Registration In the event that the Company receives
-------------------------
from the Holder(s) a written request that the Company file a registration
statement on Form S-1 or S-3 (or any successor form to Form S-3), or any other
short-form registration statement, for a public
<PAGE>
offering of Registrable Securities (a "Demand Registration"), the reasonably
-------------------
anticipated aggregate price to the public of which, net of underwriting
discounts and commissions, would be at least $5,000,000, within 10 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 10 days after the receipt
of the Company's notice. The Holders in aggregate will be entitled to request
one Demand Registration hereunder. A registration will not count as a 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).
(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 that
can be sold in such offering without adversely affecting the marketability of
the offering, the Company will include in such registration (x) first such
number of Registrable Securities allocated pro rata among the Holders thereof
and the other Persons holding Registrable Securities based upon the number of
Registrable Securities owned by each such Holder and other Persons holding
Registrable Securities requested to be included in such offering and (y) then
any other shares of Common Stock proposed to be sold by the Company or other
Persons. 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 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 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.
(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 any existing agreements of the
Company and to the Company's prior written approval, which will not be
unreasonably withheld or delayed.
<PAGE>
(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. 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 3(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, 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 by any
other Person, pro rata among the Holders of such Registrable Securities and
such other Persons, on the basis of the number of shares of Registrable
Securities of such Holders and other Persons requested to be included in
such offering; 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
<PAGE>
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 shall have the right to
-------------------------
select the investment banker(s) and manager(s) to administer an offering
pursuant to a Piggyback Registration and, subject to the approval of the holders
of a majority of the Registrable Securities which approval will not be
unreasonably withheld or delayed.
4. Expenses of Registration. Except as otherwise provided herein,
------------------------
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.
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, for its own account during the
seven days prior to and during the 90-day period beginning on the effective date
of any underwritten 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),
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 Stock, or any securities convertible into or exchangeable or exercisable
for Common Stock, 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.
(b) Each Holder agrees, in the event of a public offering by the
Company of Common Stock under a registration statement on Form S-1, S-3 or S-4,
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 registration), beginning on the date of receipt of a
written notice from the Company setting forth its intention to effect such
registration and ending on the earlier of (i) 180 days from the date of receipt
of such written notice or (ii) 90 days from the effective date of such
Registration Statement; provided, that each of the Persons described in Section
5(a)(ii) shall also have agreed to such restriction on sale.
<PAGE>
6. Registration Procedures. Whenever the Company is under the
-----------------------
obligation to register Registrable Securities held by the Holders 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 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) 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) 120 days 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 do business in any jurisdiction where
it would not otherwise be required to qualify but for this Section 6(d),
(ii) subject itself to taxation in any jurisdiction, or (iii) consent to
general service of process in any such 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
<PAGE>
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;
<PAGE>
(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 Stock 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) In connection with any registration
---------------
statement for a 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, 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, 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, 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 or by such
Holder's failure to comply with applicable securities laws. In connection with
an underwritten offering, the Company will indemnify the underwriters, their
officers and directors and each Person who controls the underwriters (within
<PAGE>
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 a 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, (ii) any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements regarding Seller's Information therein not
misleading or (iii) any failure on the part of the Holder to comply with
applicable securities laws; 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, based on written advice of counsel, 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, based on
written advice of counsel, 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
<PAGE>
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
(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, 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.
<PAGE>
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, and (c) EIS 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 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 have been sold under Rule 144 under the Securities Act.
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
<PAGE>
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 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 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 Delaware 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,
addressed as follows:
(i) if to the Company, to:
Ribozyme Pharmaceuticals, Inc.
<PAGE>
2950 Wilderness Place
Boulder, Colorado 80301
Attention: Chief Executive Officer
Facsimile: (303) 449-6995
with a copy to:
Rothgerber Johnson & Lyons LLC
1200 17/th/ Street, Suite 3000
Denver, Colorado 80202
Attention: Woody Davis
Facsimile: (303) 623-9222
(ii) if to EIS, to:
Elan International Services, Ltd.
102 St. James Court
Flatts, Smiths Parish
Bermuda, FL 04
Facsimile: (441) 292-2224
Attention: President
with a copy to:
Brock Silverstein LLC
800 Third Avenue
New York, New York 10022
Facsimile: (212) 371-5500
Attention: David Robbins
(j) Entire Agreement. This Agreement constitutes the full and entire
----------------
understanding and agreement between the parties with regard to the subject
matter hereof and supersedes all prior agreements relating to such subject
matter.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first written above.
RIBOZYME PHARMACEUTICALS, INC.
By: /s/ Alene A. Holzman
------------------------------
Name: Alene A. Holzman
Title:VP. Coporate Development
ELAN INTERNATIONAL SERVICES, LTD.
By: _____________________________
Name:
Title:
<PAGE>
EXHIBIT 10
Execution Copy
NEWCO
REGISTRATION RIGHTS AGREEMENT
-----------------------------
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made as of
---------
January 7/th/, 2000 by and among Medizyme Pharmaceutical Ltd., a Bermuda
exempted limited liability company (the "Company"), Ribozyme Pharmaceuticals,
-------
Inc., a Delaware corporation ("RPI"), 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, RPI, Elan
Pharmaceuticals, plc. an Irish public limited company, acting through its
division Elan Pharmaceuticals Technologies, and EIS (the "JDOA"), RPI has
----
acquired certain common shares, par value $1.00 per share (the "Common Shares"),
-------------
and certain non-voting convertible preferred shares, par value $1.00 per share
(the "Preferred Shares"; together with the 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 and the Common
Shares underlying the Securities.
A G R E A 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.
<PAGE>
"Holders" or "Holders of Registrable Securities" shall mean RPI, EIS
------- ---------------------------------
and any Person who shall have acquired Registrable Securities from either RPI 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.
"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 clauses (i) and (ii) above upon any stock split,
stock dividend, recapitalization or similar event; excluding in all cases,
however, any Registrable Securities that have been sold under Rule 144 under the
Securities Act, without being subject to the volume limitations under Rule 144,
and 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.
"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 incident to or required by any such registration.
"Securities Act" shall mean the Securities Act of 1933, as amended.
--------------
"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 the Holders or Holder.
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 5% of the Company's Common Shares on a fully-diluted basis shall have
the right at any time from time to time (subject to the limitations below), to
request registration under the Securities Act of all or part of their
Registrable Securities on Form S-1, S-3 (or any successor form to Form S-1, S-3
or any other short-form registration statement (each, a "Demand Registration").
-------------------
The request for the
2
<PAGE>
Demand Registration shall specify the approximate number of Registrable
Securities requested to be registered, which must have a minimum expected
aggregate offering price to the public of at least $2,000,000. Within 10 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 10 days after the receipt
of the Company's notice. Each of EIS and RPI shall be permitted one Demand
Registration. A registration will not count as a 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).
(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); 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 three months 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.
3
<PAGE>
(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, 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. 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 such registration 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 that 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
(iii) thereafter, other securities requested to be included in
such registration.
4
<PAGE>
The Holders of any Registrable Securities included in such an
underwritten offering must 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 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 subject to the approval of the holders of a
majority of the Registrable Securities, which approval will not be unreasonably
withheld or delayed.
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 all registrations pursuant to Sections 2 and 3 shall
be borne by the Company; 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 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 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.
(b) Each Holder agrees, if requested by the managing underwriter or
underwriters in an underwritten offering of securities by the Company, not to
effect any offer,
5
<PAGE>
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) 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) 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 do business in any jurisdiction where it would not
otherwise be required to qualify but for this
6
<PAGE>
Section 6(d), (ii) subject itself to taxation in any jurisdiction, or (iii)
consent to general service of process in any such 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
7
<PAGE>
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 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 to which each such
indemnified party may become subject under the Securities Act, including without
limitation 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 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, 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
or by such Holder's failure to comply with applicable securities laws. In
connection with an underwritten offering, the Company will indemnify the
underwriters, their officers and directors and each
8
<PAGE>
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 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, (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 or (iii) any failure to comply with applicable
securities laws; 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, based on written advice of counsel, 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, based on
written advice of counsel, 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
9
<PAGE>
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 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
<PAGE>
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 5% of the outstanding Common Shares on a fully-diluted basis, and (d) RPI
or EIS, as applicable, if a transferor, 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 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 have been sold under Rule 144 under the Securities Act.
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
11
<PAGE>
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, 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 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 Delaware 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,
addressed as follows:
(i) if to the Company, to:
12
<PAGE>
Medizyme Pharmaceutical 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 RPI, EIS and their respective counsel at the addresses
indicated below
(ii) if to RPI, to:
Ribozyme Pharmaceuticals, Inc.
2950 Wilderness Place
Boulder, Colorado 80301
Attention: Chief Executive Officer
Facsimile: (303) 449-6995
with a copy to:
Rothgerber Johnson & Lyons LLC
1200 17/th/ Street, Suite 3000
Denver, Colorado 80202
Attention: Woody Davis
Facsimile: (303) 623-9222
(iii) if to EIS, to:
Elan International Services, Ltd.
102 St. James Court
Flatts, Smiths Parish
Bermuda, FL 04
Facsimile: (441) 292-2224
Attention: President
with a copy to:
Brock Silverstein LLC
800 Third Avenue
New York, New York 10022
Facsimile: (212) 371-5500
Attention: David Robbins
13
<PAGE>
(j) Entire Agreement. This Agreement constitutes the full and entire
----------------
understanding and agreement between the parties with regard to the subject
matter hereof and supersedes all prior agreements relating to such subject
matter.
[Signature page follows]
14
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first written above.
_____________________________
By: ________________________
Name:
Title:
RIBOZYME PHARMACEUTICALS, INC.
By: /s/ Alena A. Holzman
------------------------
Name: Alena A. Holzman
Title: VP, Corporate Development
ELAN INTERNATIONAL SERVICES, LTD.
By: ________________________
Name:
Title:
<PAGE>
EXHIBIT 11
CERTIFICATE OF DESIGNATIONS, PREFERENCES, AND RIGHTS
of
SERIES A PREFERRED STOCK AND SERIES B PREFERRED STOCK
of
RIBOZYME PHARMACEUTICALS, INC.
(Pursuant to Section 151of the Delaware General Corporations Law)
We, ___________ and __________, the Chief Executive Officer and the
Secretary, respectively, of Ribozyme Pharmaceuticals, Inc., a corporation
organized and existing under the Delaware General Corporation Law (the
"Corporation"), in accordance with the provisions of 151 of the Delaware
-----------
General Corporation Law thereof, DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors of the
Corporation by the Certificate of Incorporation of the Corporation, the Board of
Directors of the Corporation on January 6th, 2000 adopted the following
resolution, pursuant to the Corporation's Certificate of Incorporation and
Section 115(g) of the Delaware General Corporation Law, creating one series of
shares of Preferred Stock designated as Series A Preferred Stock and one series
of shares of Preferred Stock designated as Series B Preferred Stock:
"RESOLVED, that pursuant to the authority vested in the Board of Directors
of the Corporation by the Certificate of Incorporation, the Board of Directors
does hereby provide for the issuance of a series of convertible exchangeable
preferred stock, $0.01 par value, of the Corporation, to be designated "Series A
---------
Preferred Stock", initially consisting of 25,000 shares, and the issuance of a
- ----------------
series of convertible preferred stock, $0.01 par value, of the Corporation, to
be designated "Series B Preferred Stock", initially consisting of 25,000 shares,
------------------------
plus in each case, such number of additional shares that may be issuable as
provided herein. To the extent that the designations, powers, preferences and
relative and other special rights and the qualifications, limitations and
restrictions of the Series A Preferred Stock and Series B Preferred Stock are
not stated and expressed in the Certificate of Incorporation, the Board of
Directors of the Corporation does hereby fix and herein state and express such
designations, powers, preferences and relative and other special rights and the
qualifications, limitations and restrictions thereof, as follows (all terms used
herein which are defined in the Certificate of Incorporation shall be deemed to
have the meanings provided therein):
I.
All cross-references in each subparagraph of this Section I refer to other
subparagraphs in this Section I unless otherwise indicated.
1. Designation. 25,000 shares of Preferred Stock shall be designated and
-----------
known as the "Series A Preferred Stock." Such number of shares may be increased
------------------------
or decreased by resolution of the Board of Directors of the Corporation after
obtaining the consent of a majority in interest of the holder(s) of the then-
outstanding shares of Series A Preferred Stock; provided, that no decrease shall
reduce the number of shares of Series A Preferred Stock to a number less
<PAGE>
than the number of shares then outstanding plus the number of such shares
issuable upon exercise of outstanding rights, options or warrants or upon
conversion of outstanding securities issued by the Corporation.
2. Dividend Provisions. Each share of Series A Preferred Stock, for a
-------------------
period of six years from the date of first issuance of the Series A Preferred
Stock, shall be entitled to receive a mandatory dividend equal to 6.0% per year
of the Original Issue Price (as defined below) thereof. Such dividend shall (1)
shall compound on a semi-annual basis, the first compounding to commence six
months from the date hereof, and (2) be payable semi-annually on each succeeding
six and 12 month anniversary of the first issuance, solely by the issuance of
additional shares of Series A Preferred Stock, at a price per share equal to the
Original Issue Price thereof, and not in cash. Fractional shares of Series A
Preferred Stock shall be issuable for purposes hereunder.
3. Seniority; Liquidation Preference.
----------------------------------
(a) The Series A Preferred Stock, as to its liquidation preference,
shall rank senior to or pari passu with any future class or series of Preferred
Stock issued by the Company; pari passu with the Series B Convertible Stock, par
value $0.01 per share (the "Series B Preferred Stock"); senior to the Company's
------------------------
Common Stock and junior to the Company's Series L Preferred Stock.
(b) In the event of any liquidation, dissolution or winding-up of
the affairs of the Corporation, whether voluntary or involuntary, (collectively,
a "Liquidation"), before any payment of cash or distribution of other property
-----------
shall be made to the holders of the Common Stock or any other class or series of
stock subordinate in liquidation preference to the Series A Preferred Stock, the
holders of the Series A Preferred Stock and the Series B Preferred Stock, on a
pro rata basis based on their aggregate liquidation preferences then
outstanding, shall be entitled to receive out of the assets of the Corporation
legally available for distribution to its shareholders, the Original Issue Price
per share (as appropriately adjusted for any combinations or divisions or
similar recapitalizations affecting the Series A Preferred Stock after issuance)
and accrued and unpaid dividends thereon (the "Series A Liquidation
--------------------
Preference"). As used herein, the "Original Issue Price" per share is $1,000.
- ---------- --------------------
(c) If, upon any Liquidation, the assets of the Corporation
available for distribution to its shareholders shall be insufficient to pay the
holders of the Series A Preferred Stock and the Series B Preferred Stock the
full amounts to which they shall be entitled, the holders of the Series A
Preferred Stock and the Series B Preferred Stock shall share ratably (based on
their respective outstanding aggregate liquidation preferences) in any
distribution of assets in proportion to the respective amounts which would be
payable to them in respect of the shares held by them if all amounts payable to
them in respect of such were paid in full pursuant to Section 3(b).
(d) After the distributions described in Section 3(c) above have
been paid, subject to the rights of other series of preferred stock that exist
or may from time to time come
2
<PAGE>
into existence, the remaining assets of the Corporation available for
distribution to shareholders shall be distributed among the holders of Common
Stock pro rata based on the number of shares of Common Stock held by each.
4. Conversion. The holders of the Series A Preferred Stock shall have
----------
conversion rights the "Series A Conversion Right"), through and including the
-------------------------
date that is six years after the first issuance of the Series A Preferred Stock
(the "Conversion Termination Date"):
---------------------------
(a) Right to Convert.
----------------
(i) Each share of Series A Preferred Stock shall be convertible,
at the option of the holder thereof, at any time that is two years
after the issuance thereof, at the office of the Corporation or any
transfer agent for such stock, into such number of fully paid and non-
assessable shares of Common Stock as is determined by dividing (x) the
sum of the Original Issue Price of such share of Series A Preferred
Stock and all accrued and unpaid dividends thereon by (y) the Series A
Conversion Price (as defined below). The "Series A Conversion Price"
-------------------------
shall be (w) $12.00; provided, that such conversion occurs on or prior
to the date that is three years after the date of issuance, (x)
$13.20; provided that such conversion occurs after the date that is
three years after the date of issuance but on or prior to the date
that is four years after the date of issuance, (y) $14.40; provided
that such conversion occurs after the date that is fours years after
the date of issuance by on or prior to the date that is five years
after the date of issuance and (z) $15.00; provided that such
conversion occurs after the date that is five years after the date of
issuance (and the Series A Conversion Price shall be subject to
adjustment as set forth below in this Section 4(a)). Notwithstanding
the above, the holder(s) of the Series A Preferred Stock shall have
the right, at the option of such holder(s), at any time within the
two-year period after the issuance thereof, to cause the Company
automatically to convert the Series A Preferred Stock into shares of
Common Stock at the Series A Conversion Price then in effect, upon the
occurrence of any of the following: (i) a merger, consolidation or
similar transaction involving the Corporation or (ii) the transactions
involving the Corporation in a share-for-share merger or similar
transaction.
(ii) Before any holder of Series A Preferred Stock shall be
entitled to convert such shares into shares of Common Stock, such
holder shall surrender the certificate or certificates therefor, duly
endorsed, at the office of the Corporation or of any transfer agent
for the Series A Preferred Stock, and shall give written notice to the
Corporation at its principal corporate office, of the election to
convert the same and shall state therein the name or names in which
the certificate or certificates for shares of Common Stock are to be
issued. The Corporation shall, as soon as practicable thereafter,
issue and deliver at such office to such holder of Series A Preferred
Stock, or to the nominee or nominees of such holder, a certificate or
certificates for the number of shares of Common Stock to which such
holder shall be entitled as set forth above. Such conversion shall be
deemed
3
<PAGE>
to have been made immediately prior to the close of business on the
date of such surrender of the shares of Series A Preferred Stock to be
converted, and the person or persons entitled to receive the shares of
Common Stock issuable upon such conversion shall be treated for all
purposes as the record holder or holders of such shares of Common
Stock as of such date.
(iii) In the event the Corporation should at any time fix a
record date for the effectuation of a split or subdivision of the
outstanding shares of Common Stock or the determination of holders of
Common Stock entitled to receive a dividend or other distribution
payable in additional shares of Common Stock or other securities or
rights convertible into, or entitling the holder thereof to receive
directly or indirectly, additional shares of Common Stock (hereinafter
referred to as "Common Stock Equivalents") without payment of any
------------------------
consideration by such holder for the additional shares of Common Stock
or the Common Stock Equivalents (including the additional shares of
Common Stock issuable upon conversion or exercise thereof) or with
payment that is less than the Series A Conversion Price then in
effect, then, as of such record date (or the date of such dividend
distribution, split or subdivision if no record date is fixed), the
Series A Conversion Price of the Series A Preferred Stock shall be
appropriately decreased so that the number of shares of Common Stock
issuable on conversion of each share of such series shall be increased
in proportion to such increase of the aggregate of (a) shares of
Common Stock outstanding and (b) those issuable with respect to such
Common Stock Equivalents, with the number of shares issuable with
respect to Common Stock Equivalents determined from time to time as
provided in Section 4(a)(v) below.
(iv) If the number of shares of Common Stock outstanding at any
time is decreased by a combination of the outstanding shares of Common
Stock, then, following the record date of such combination, the Series
A Conversion Price for the Series A Preferred Stock shall be
appropriately increased so that the number of shares of Common Stock
issuable on conversion of each share of such series shall be decreased
in proportion to such decrease in outstanding shares.
(v) The following provisions shall apply for purposes of this
Section 4(a):
(A) The aggregate maximum number of shares of Common Stock
deliverable upon conversion or exercise of Common Stock Equivalents
(assuming the satisfaction of any conditions to convertibility or
exercisability, including, without limitation, the passage of time,
but without taking into account potential antidilution adjustments)
shall be deemed to have been issued at the time such Common Stock
Equivalents were issued.
(B) In the event of any change in the number of shares of
Common Stock deliverable or in the consideration payable to the
Corporation upon
4
<PAGE>
conversion or exercise of such Common Stock Equivalents including, but
not limited to, a change resulting from the antidilution provisions
thereof, the Series A Conversion Price of the Series A Preferred
Stock, to the extent in any way affected by or computed using such
Common Stock Equivalents, shall be recomputed to reflect such change,
but no further adjustment shall be made for the actual issuance of
Common Stock or any payment of such consideration upon the exercise of
any such options or rights or the conversion or exchange of such
securities.
(C) Upon the termination or expiration of the convertibility or
exercisability of any such Common Stock Equivalents, the Series A
Conversion Price of the Series A Preferred Stock, to the extent in any
way affected by or computed using such Common Stock Equivalents, shall
be recomputed to reflect the issuance of only the number of shares of
Common Stock (and Common Stock Equivalents which remain convertible or
exercisable) actually issued upon the conversion or exercise of such
Common Stock Equivalents.
5. Exchange Right. Provided that (a) all of the shares of Series A Preferred
--------------
Stock initially issued and sold by the Corporation to Elan International
Services, Ltd., a Bermuda exempted limited liability company ("EIS"), have not
---
been converted, as provided in Section 4 above, and (b) the Exchange Termination
Date (as defined below) shall not have occurred, the holders of the Series A
Preferred Stock (acting by act of the majority holders thereof) shall have the
right to exchange all of their shares of Series A Preferred Stock (the "Exchange
--------
Right") of the Corporation for initially 3,612 shares of non-voting convertible
- -----
preferred shares (the "Preferred Shares") (as adjusted for any combinations or
----------------
divisions or similar recapitalizations) of Medizyme Pharmaceutical Ltd., a
Bermuda exempted limited liability company ("Newco"), held by the Corporation,
-----
so that, in any event, after giving effect to the exercise of the Exchange
Right, EIS and the Corporation will each hold 50% of the total outstanding share
capital of Newco, on a fully diluted basis, assuming that neither EIS nor the
Corporation has sold any shares of Newco. Upon exercise of the Exchange Right,
the Preferred Shares held by the Corporation shall be transferred legally and
beneficially to EIS.
The rights of the holders to exercise the Exchange Right shall
commence at any time after the date that is 24 months after the first issuance
of the Series A Preferred Stock and shall terminate and be of no further force
and effect on the date that is the later of (i) seven months thereafter and (ii)
the completion of Newco's development period, as agreed in the business plan of
Newco and as set forth in the Subscription, Joint Development and Operating
Agreement dated as of January 7th, 2000, among Elan Pharmaceuticals
Technologies, a division of Elan Corporation, plc, an Irish public limited
company, EIS, Elan Pharma International Limited, an Irish corporation, Newco and
the Corporation (the "Exchange Termination Date").
-------------------------
Upon exercise of the Exchange Right, the shares of Series A Preferred
Stock originally purchased from the Corporation, but not including any of the
accrued and unpaid dividends thereon (all of which shall remain outstanding),
shall be canceled and shall no longer be entitled to any rights in the
Corporation.
5
<PAGE>
If any shares of the Series A Preferred Stock (other than shares in
respect of accrued dividends) are converted pursuant to Section 4(a), to shares
of Common Stock, the Exchange Right with respect to the shares of Series A
Preferred Stock originally purchased from the Corporation, but not including any
of the accrued and unpaid dividends thereon, shall be canceled and shall no
longer be entitled to any rights in the Corporation.
In order to exercise the Exchange Right, the holders shall
provide written notice thereof to the Corporation, setting forth (a) the fact
that such holders intend to exercise the Exchange Right, and (b) the proposed
date for such exercise (the "Exercise Date"), which shall be between 10 and 30
-------------
days after the date of such notice. On the Exercise Date, (y) the holders shall
tender their shares of Series A Preferred Stock to the Corporation for
cancellation, and (z) the Corporation shall cause to be delivered to EIS, acting
on behalf of such holders, such shares of Newco. The holders and the Corporation
shall take all other necessary or appropriate actions in connection with or to
effect such closing.
Section 5(c) of the Securities Purchase Agreement, dated as of January
7th, 2000, between EIS and the Corporation contains certain additional
provisions relating to the Exchange Right.
6. Other Distributions. On or prior to the Conversion Termination Date,
-------------------
in the event the Corporation shall declare a distribution payable in securities
of other entities, evidences of indebtedness issued by the Corporation or other
entities, assets (excluding cash dividends) or options or rights not referred to
in Section 4, then, in each such case for the purpose of this Section 6, the
holders of the Series A Preferred Stock shall be entitled to a proportionate
share of any such distribution as though they were the holders of the number of
shares of Common Stock of the Corporation into which their shares of Series A
Preferred Stock would be convertible as of the record date fixed for the
determination of the holders of Common Stock of the Corporation entitled to
receive such distribution.
7. Recapitalizations. On or prior to the Conversion Termination Date, if
-----------------
at any time or from time to time there shall be a recapitalization of the Common
Stock (other than a subdivision, combination or merger or sale of assets
provided for in Section 3 or Section 4 hereof) provision shall be made so that
the holders of the Series A Preferred Stock shall thereafter be entitled to
receive upon conversion of the Series A Preferred Stock the number of shares of
stock or other securities or property of the Corporation or otherwise, to which
a holder of Common Stock deliverable upon conversion would have been entitled on
such recapitalization. In any such case, appropriate adjustment shall be made
in the application of the provisions of Section 4 with respect to the rights of
the holders of the Series A Preferred Stock after the recapitalization to the
end that the provisions of Section 4 (including adjustment of the Series A
Conversion Price then in effect and the number of shares purchasable upon
conversion of the Series A Preferred Stock) shall be applicable after that event
as nearly equivalent as may be practicable.
6
<PAGE>
8. No Impairment. The Corporation will not, by amendment of its
-------------
Certificate of Incorporation or through any reorganization, recapitalization,
transfer of assets, consolidation, merger, dissolution, issuance or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed hereunder by the
Corporation, but will at all times in good faith assist in the carrying out of
all the provisions hereof and in the taking of all such action as may be
necessary or appropriate in order to protect the Series A Conversion Right and
Exchange Right of the holders of the Series A Preferred Stock against
impairment.
9. No Fractional Shares and Certificate as to Adjustments.
------------------------------------------------------
(a) No fractional shares shall be issued upon the conversion of any
share or shares of the Series A Preferred Stock, and the number of shares of
Common Stock to be issued shall be rounded to the nearest whole share. Whether
or not fractional shares are issuable upon such conversion shall be determined
on the basis of the aggregate number of shares of Series A Preferred Stock each
holder is at the time converting into Common Stock and the aggregate number of
shares of Common Stock issuable to each such holder upon such conversion.
(b) Upon the occurrence of each adjustment or readjustment of the
Series A Conversion Price pursuant to Section 4, the Corporation, at its
expense, shall promptly compute such adjustment or readjustment in accordance
with the terms hereof and prepare and furnish to each holder of shares of Series
A Preferred Stock a certificate setting forth such adjustment or readjustment
and showing in detail the facts upon which such adjustment or readjustment is
based. The Corporation shall, upon the written request at any time of any
holder of Series A Preferred Stock, furnish or cause to be furnished to such
holder a like certificate setting forth (i) such adjustment and readjustment,
(ii) the Series A Conversion Price at the time in effect, and (iii) the number
of shares of Common Stock and the amount, if any, of other property which at the
time would be received upon the conversion of a share of Series A Preferred
Stock.
10. Reservation of Stock Issuable Upon Conversion. The Corporation shall
---------------------------------------------
at all times reserve and keep available out of its authorized but unissued
shares of Common Stock, solely for the purpose of effecting the conversion of
the shares of the Series A Preferred Stock, such number of its shares of Common
Stock that shall from time to time be sufficient to effect the conversion of all
outstanding shares of the Series A Preferred Stock; and if at any time the
number of authorized but unissued shares of Common Stock not otherwise reserved
for issuance shall not be sufficient to effect the conversion of all then
outstanding shares of the Series A Preferred Stock, in addition to such other
remedies as shall be available to the holders of such Series A Preferred Stock,
the Corporation will take such corporate action that may, in the opinion of its
counsel, be necessary to increase its authorized but unissued shares of Common
Stock to such number of shares as shall be sufficient for such purposes,
including without limitation, engaging in best efforts to obtain the requisite
shareholder approval of any necessary amendment to its Certificate of
Incorporation.
11. Notices. Any notice required by the provisions hereof to be given to
-------
the holders of shares of Series A Preferred Stock shall be deemed given on the
date of service if served
7
<PAGE>
personally on the party to whom notice is to be given, or on the date of
transmittal of services by facsimile transmission to the party to whom notice is
to be given, and addressed to each holder of record at his address appearing on
the books of the Corporation.
12. Voting Rights. Subject to Section 13 below, holders of Series A
-------------
Preferred Stock shall not be entitled to vote, including with respect to the
election of directors of the Corporation.
13. Protective Provisions. Subject to the rights of any series of
---------------------
preferred stock that exist or may from time to time come into existence, so long
as any shares of Series A Preferred Stock are outstanding, the Corporation shall
not without first obtaining the approval (by vote or written consent, as
provided by law) of the holders of at least a majority of the then-outstanding
shares of Series A Preferred Stock, voting separately as a series:
(a) amend its Certificate of Incorporation so as to affect
adversely the shares of Series A Preferred Stock or any holder thereof
(including by creating any additional classes or series of preferred stock with
a liquidation preference or other rights senior to the Series A Preferred
Stock); or
(b) change the rights of the holders of the holders of the Series
A Preferred Stock in any other respect.
14. Status of Converted Stock. In the event any shares of Series A
-------------------------
Preferred Stock shall be converted pursuant to Section 4 or exchanged pursuant
to Section 5 hereof, the shares so converted or exchanged shall be canceled and
shall not be reissuable by the Corporation. The Certificate of Incorporation of
the Corporation shall be appropriately amended to effect the corresponding
reduction in the Corporation's authorized capital stock."
15. Term. In the event that the Series A Preferred Stock shall not have
----
been converted into shares of Common Stock or exchanged, as provided in Section
5 above, on or prior to the date that is the later of (A) six years after the
date hereof and (B) the Exchange Termination Date, the Series A Preferred Stock
shall either, at the option of the Corporation, (i) remain outstanding or (ii)
be repaid in amount equal to the Series A Liquidation Preference plus accrued
dividends thereon, in cash or by the issuance of shares at the Corporation's
Common Stock based on the then-current Conversion Price.
II.
All cross-references in each subparagraph of this Section II refer to other
subparagraphs in this Section II unless otherwise indicated.
1. Designation. 25,000 shares of Preferred Stock shall be designated
-----------
and known as the "Series B Preferred Stock." Such number of shares may be
------------------------
increased or decreased by resolution of the Board of Directors of the
Corporation after obtaining the consent of a majority in interest of the
holder(s) of the then-outstanding shares of Series B Preferred Stock; provided,
that no decrease shall reduce the number of shares of Series B Preferred Stock
to a number less than the number of shares then outstanding plus the number of
such shares issuable upon
8
<PAGE>
exercise of outstanding rights, options or warrants or upon conversion of
outstanding securities issued by the Corporation.
2. Dividend Provisions.
-------------------
Each share of Series B Preferred Stock, for a period of six years from the
date of first issuance of the Series B Preferred Stock, shall be entitled to
receive a mandatory dividend equal to 12.0% per year of the Original Issue Price
(as defined below) thereof. Such dividend shall (1) shall compound on a semi-
annual basis, the first compounding to commence six months from the date hereof,
and (2) be payable semi-annually on each succeeding six and 12-month anniversary
of the first issuance, solely by the issuance of additional shares of Series B
Preferred Stock, at a price per share equal to the Original Issue Price thereof,
and not in cash. Fractional shares of Series B Preferred Stock shall be
issuable for purposes hereunder.
3. Seniority; Liquidation Preference.
----------------------------------
(a) The Series B Preferred Stock, as to its liquidation preference,
shall rank senior to or pari passu with any existing or future class or series
of Preferred Stock issued by the Company; pari passu with the Series A
Convertible Exchangeable Preferred Stock, par value $0.01 per share (the "Series
------
A Preferred Stock") and senior to the Company's Common Stock.
- -----------------
(b) In the event of any liquidation, dissolution or winding-up of
the affairs of the Corporation, whether voluntary or involuntary, (collectively,
a "Liquidation"), before any payment of cash or distribution of other property
-----------
shall be made to the holders of the Common Stock or any other class or series of
stock subordinate in liquidation preference to the Series B Preferred Stock, the
holders of the Series A Preferred Stock and Series B Preferred Stock, on a pro
rata basis based on their aggregate liquidation preferences then outstanding
shall be entitled to receive out of the assets of the Corporation legally
available for distribution to its shareholders, the Original Issue Price per
share (as appropriately adjusted for any combinations or divisions or similar
recapitalizations affecting the Series B Preferred Stock after issuance) and
accrued and unpaid dividends thereon (the "Series B Liquidation Preference").
-------------------------------
As used herein, the "Original Issue Price" per share is $1,000.
--------------------
(c) If, upon any Liquidation, the assets of the Corporation
available for distribution to its shareholders shall be insufficient to pay the
holders of the Series A Preferred Stock and Series B Preferred Stock the full
amounts to which they shall be entitled, the holders of the Series A Preferred
Stock and Series B Preferred Stock shall share ratably (based on their
respective outstanding aggregate liquidation preferences) in any distribution of
assets in proportion to the respective amounts which would be payable to them in
respect of the shares held by them if all amounts payable to them in respect of
such were paid in full pursuant to Section 3(b).
(d) After the distributions described in Section 3(c) above have
been paid, subject to the rights of other series of preferred stock that exist
or may from time to time come into existence, the remaining assets of the
Corporation available for distribution to shareholders
9
<PAGE>
shall be distributed among the holders of Common Stock pro rata based on the
number of shares of Common Stock held by each.
4. Conversion. The holders of the Series B Preferred Stock shall have
----------
conversion rights (the "Series B Conversion Right"), through and including the
-------------------------
date that is six years after the first issuance of any shares of Series B
Preferred Stock (the "Conversion Termination Date"):
---------------------------
(a) Right to Convert.
----------------
(i) Each share of Series B Preferred Stock shall be
convertible, at the option of the holder thereof, at any time, at the
office of the Corporation or any transfer agent for such stock, into
such number of fully paid and non-assessable shares of Common Stock as
is determined by dividing (x) the sum of the Original Issue Price of
such share of Series B Preferred Stock and all accrued and unpaid
dividends thereon by (y) the Series B Conversion Price (as defined
below). The "Series B Conversion Price" shall for each issue of Series
-------------------------
B Preferred Stock be a price equal to 150% of the average closing
price of the Common Stock for the 60 trading days prior to the date of
written notice of such purchase request of the Company for the
purchase of such issue of Series B Preferred Stock.
(ii) Before any holder of Series B Preferred Stock shall be
entitled to convert such shares into shares of Common Stock, such
holder shall surrender the certificate or certificates therefor, duly
endorsed, at the office of the Corporation or of any transfer agent
for the Series B Preferred Stock, and shall give written notice to the
Corporation at its principal corporate office, of the election to
convert the same and shall state therein the name or names in which
the certificate or certificates for shares of Common Stock are to be
issued. The Corporation shall, as soon as practicable thereafter,
issue and deliver at such office to such holder of Series B Preferred
Stock, or to the nominee or nominees of such holder, a certificate or
certificates for the number of shares of Common Stock to which such
holder shall be entitled as set forth above. Such conversion shall be
deemed to have been made immediately prior to the close of business on
the date of such surrender of the shares of Series B Preferred Stock
to be converted, and the person or persons entitled to receive the
shares of Common Stock issuable upon such conversion shall be treated
for all purposes as the record holder or holders of such shares of
Common Stock as of such date.
(iii) In the event the Corporation should at any time fix a
record date for the effectuation of a split or subdivision of the
outstanding shares of Common Stock or the determination of holders of
Common Stock entitled to receive a dividend or other distribution
payable in additional shares of Common Stock or Common Stock
Equivalents without payment of any consideration by such holder for
the additional shares of Common Stock or the Common Stock Equivalents
(including the additional shares of Common Stock issuable upon
conversion or exercise thereof) or with payment that is less than the
Series B Conversion Price
10
<PAGE>
then in effect, then, as of such record date (or the date of such
dividend distribution, split or subdivision if no record date is
fixed), the Series B Conversion Price of the Series B Preferred Stock
shall be appropriately decreased so that the number of shares of
Common Stock issuable on conversion of each share of such series shall
be increased in proportion to such increase of the aggregate of (a)
shares of Common Stock outstanding and (b) those issuable with respect
to such Common Stock Equivalents, with the number of shares issuable
with respect to Common Stock Equivalents determined from time to time
as provided in Section 4(a)(v) below.
(iv) If the number of shares of Common Stock outstanding at any
time is decreased by a combination of the outstanding shares of Common
Stock, then, following the record date of such combination, the Series
B Conversion Price for the Series B Preferred Stock shall be
appropriately increased so that the number of shares of Common Stock
issuable on conversion of each share of such series shall be decreased
in proportion to such decrease in outstanding shares.
(v) The following provisions shall apply for purposes of this
Section 4(a):
(A) The aggregate maximum number of shares of Common Stock
deliverable upon conversion or exercise of Common Stock Equivalents
(assuming the satisfaction of any conditions to convertibility or
exercisability, including, without limitation, the passage of time,
but without taking into account potential antidilution adjustments)
shall be deemed to have been issued at the time such Common Stock
Equivalents were issued.
(B) In the event of any change in the number of shares of
Common Stock deliverable or in the consideration payable to the
Corporation upon conversion or exercise of such Common Stock
Equivalents including, but not limited to, a change resulting from the
antidilution provisions thereof, the Series B Conversion Price of the
Series B Preferred Stock, to the extent in any way affected by or
computed using such Common Stock Equivalents, shall be recomputed to
reflect such change, but no further adjustment shall be made for the
actual issuance of Common Stock or any payment of such consideration
upon the exercise of any such options or rights or the conversion or
exchange of such securities.
(C) Upon the termination or expiration of the
convertibility or exercisability of any such Common Stock Equivalents,
the Series B Conversion Price of the Series B Preferred Stock, to the
extent in any way affected by or computed using such Common Stock
Equivalents, shall be recomputed to reflect the issuance of only the
number of shares of Common Stock (and Common Stock Equivalents which
remain convertible or exercisable) actually issued upon the conversion
or exercise of such Common Stock Equivalents.
11
<PAGE>
5. Exchange Right. In the event that EIS (as defined in Article I
--------------
hereof) shall have exercised the Exchange Right (as defined in Article I
hereof), EIS shall, at its option, within 30 days thereof, (i) cause to be paid
to the Corporation, an amount equal to 30.1% of the aggregate amount of the
Development Funding (as such term is defined in the Funding Agreement, dated as
of January 7th, 2000, among EIS, Newco, EPIL, the Corporation and Elan (as such
terms are defined in Article I hereof) to date provided by each of the parties
Newco), in accordance with the terms of the Funding Agreement, including any
accrued and unpaid interest and/or dividends paid to EIS thereon, from and after
the date hereof and until the date of such exercise, or (ii) surrender for
cancellation, including any accrued and unpaid interest and/or dividends thereon
paid to EIS, a portion of each issuance of Series B Preferred Stock having an
aggregate Original Issue Price equal to 30.1% of the total amount of Development
Funding provided by each of the parties to Newco, in accordance with the terms
of the Funding Agreement in connection with the issuance of such Series B
Preferred Stock, from and after the date hereof and until the date of the
exercise of the Exchange Right, against the outstanding Series B Preferred
Stock, if any, and/or the convertible promissory note dated as of January, 2000
by the Corporation in favor of EIS in the original principal amount of $12.015
million or (iii) effect a combination of (i) and (ii) above if applicable.
6. Other Distributions. On or prior to the Conversion Termination
-------------------
Date, in the event the Corporation shall declare a distribution payable in
securities of other persons, evidences of indebtedness issued by the Corporation
or other persons, assets (excluding cash dividends) or options or rights not
referred to in Section 4, then, in each such case for the purpose of this
Section 6, the holders of the Series B Preferred Stock shall be entitled to a
proportionate share of any such distribution as though they were the holders of
the number of shares of Common Stock of the Corporation into which their shares
of Series B Preferred Stock would be convertible as of the record date fixed for
the determination of the holders of Common Stock of the Corporation entitled to
receive such distribution.
7. Recapitalizations. On or prior to the Conversion Termination
-----------------
Date, if at any time or from time to time there shall be a recapitalization of
the Common Stock (other than a subdivision, combination or merger or sale of
assets provided for in Section 3 or Section 4 hereof) provision shall be made so
that the holders of the Series B Preferred Stock shall thereafter be entitled to
receive upon conversion of the Series B Preferred Stock the number of shares of
stock or other securities or property of the Corporation or otherwise, to which
a holder of Common Stock deliverable upon conversion would have been entitled on
such recapitalization. In any such case, appropriate adjustment shall be made in
the application of the provisions of Section 4 with respect to the rights of the
holders of the Series B Preferred Stock after the recapitalization to the end
that the provisions of Section 4 (including adjustment of the Series B
Conversion Price then in effect and the number of shares purchasable upon
conversion of the Series B Preferred Stock) shall be applicable after that event
as nearly equivalent as may be practicable.
8. No Impairment. The Corporation will not, by amendment of its
-------------
Certificate of Incorporation or through any reorganization, recapitalization,
transfer of assets, consolidation,
12
<PAGE>
merger, dissolution, issuance or sale of securities or any other voluntary
action, avoid or seek to avoid the observance or performance of any of the terms
to be observed or performed hereunder by the Corporation, but will at all times
in good faith assist in the carrying out of all the provisions hereof and in the
taking of all such action as may be necessary or appropriate in order to protect
the Series B Conversion Rights and Exchange Right of the holders of the Series B
Preferred Stock against impairment.
9. No Fractional Shares and Certificate as to Adjustments. (a) No
------------------------------------------------------
fractional shares shall be issued upon the conversion of any share or shares of
the Series B Preferred Stock, and the number of shares of Common Stock to be
issued shall be rounded to the nearest whole share. Whether or not fractional
shares are issuable upon such conversion shall be determined on the basis of the
aggregate number of shares of Series B Preferred Stock each holder is at the
time converting into Common Stock and the aggregate number of shares of Common
Stock issuable to each such holder upon such conversion.
(b) Upon the occurrence of each adjustment or readjustment of the
Series B Conversion Price pursuant to Section 4, the Corporation, at its
expense, shall promptly compute such adjustment or readjustment in accordance
with the terms hereof and prepare and furnish to each holder of shares of Series
B Preferred Stock a certificate setting forth such adjustment or readjustment
and showing in detail the facts upon which such adjustment or readjustment is
based. The Corporation shall, upon the written request at any time of any
holder of Series B Preferred Stock, furnish or cause to be furnished to such
holder a like certificate setting forth (i) such adjustment and readjustment,
(ii) the Series B Conversion Price at the time in effect, and (iii) the number
of shares of Common Stock and the amount, if any, of other property which at the
time would be received upon the conversion of a share of Series B Preferred
Stock.
10. Reservation of Stock Issuable Upon Conversion. The Corporation shall
---------------------------------------------
at all times reserve and keep available out of its authorized but unissued
shares of Common Stock, solely for the purpose of effecting the conversion of
the shares of the Series B Preferred Stock, such number of its shares of Common
Stock that shall from time to time be sufficient to effect the conversion of all
outstanding shares of the Series B Preferred Stock; and if at any time the
number of authorized but unissued shares of Common Stock not otherwise reserved
for issuance shall not be sufficient to effect the conversion of all then
outstanding shares of the Series B Preferred Stock, in addition to such other
remedies as shall be available to the holders of such Series B Preferred Stock,
the Corporation will take such corporate action that may, in the opinion of its
counsel, be necessary to increase its authorized but unissued shares of Common
Stock to such number of shares as shall be sufficient for such purposes,
including without limitation, engaging in best efforts to obtain the requisite
shareholder approval of any necessary amendment to its Certificate of
Incorporation.
11. Notices. Any notice required by the provisions hereof to be given to
-------
the holders of shares of Series B Preferred Stock shall be deemed given on the
date of service if served personally on the party to whom notice is to be given,
or on the date of transmittal of services by facsimile transmission to the party
to whom notice is to be given, and addressed to each holder of record at his
address appearing on the books of the Corporation.
13
<PAGE>
12. Repurchases or Redemptions of the Series B Preferred Stock. (a) The
----------------------------------------------------------
Series B Preferred Stock shall be redeemable, in whole or in part (in increments
of at least $250,000), at the option of the Corporation for cash at 100% of the
Original Issue Price plus accrued dividends (the "Redemption Price"), so long as
----------------
all of the amounts provided to be funded as set forth in the Securities Purchase
Agreement, dated as of January 7th, 2000, between EIS and the Corporation, have
been funded or the Corporation has waived its right to any additional funding.
Any shares of Series B Preferred Stock called for redemption shall no longer be
entitled to the Conversion Right.
(b) The Corporation shall notify the holders of the Series B Preferred
Stock in writing setting forth (a) the terms of the redemption of the Series B
Preferred Stock, and (b) the proposed date for such redemption (the "Redemption
----------
Date"), which shall be between 10 and 30 days after the date of such notice. On
- ----
the Redemption Date, (x) the Corporation shall pay in cash an amount equal to
the Redemption Price to the holders of the Series B Preferred Stock by check or
wire transfer to an account designated by such holders, and (y) the holders
shall tender their shares of Series B Preferred Stock, subject to the
redemption, to the Corporation, for cancellation. The holders and the
Corporation shall take all other necessary or appropriate actions in connection
with or to effect such closing.
13. Voting Rights. Subject to Section 14 below, holders of Series B
-------------
Preferred Stock shall not be entitled to vote, including with respect to the
election of directors of the Corporation.
14. Protective Provisions. Subject to the rights of any series of
---------------------
preferred stock that exist or may from time to time come into existence, so long
as any shares of Series B Preferred Stock are outstanding, the Corporation shall
not without first obtaining the approval (by vote or written consent, as
provided by law) of the holders of at least a majority of the then-outstanding
shares of Series B Preferred Stock, voting separately as a series:
(a) amend its Certificate of Incorporation so as to affect adversely
the shares of Series B Preferred Stock or any holder thereof (including by
creating any additional classes or series of preferred stock with a liquidation
preference or other rights senior to with the Series B Preferred Stock); or
(b) change the rights of the holders of the holders of the Series B
Preferred Stock in any other respect.
15. Status of Converted Stock. In the event any shares of Series B
-------------------------
Preferred Stock shall be converted pursuant to Section 4, the shares so
converted or exchanged shall be canceled and shall not be reissuable by the
Corporation. The Certificate of Incorporation of the Corporation shall be
appropriately amended to effect the corresponding reduction in the Corporation's
authorized capital stock."
16. Term. In the event that the Series B Preferred Stock shall not have
----
been converted into shares of Common Stock or exchanged, as provided in Section
5 above, on or
14
<PAGE>
prior to the date that is the later of (A) six years after the date hereof and
(B) the Exchange Termination Date, the Series B Preferred Stock shall either, at
the option of the Corporation, (i) remain outstanding or (ii) be repaid in
amount equal to the Series B Liquidation Preference plus accrued dividends
thereon, in cash or by the issuance of shares at the Corporation's Common Stock
based on the then-current Conversion Price.
15
<PAGE>
IN WITNESS WHEREOF, said Ribozyme Pharmaceuticals, Inc. has caused
this Certificate of Designation to be signed by its Chief Executive Officer and
its Secretary this 7th day of January, 2000.
RIBOZYME PHARMACEUTICALS, INC.
By: ___________________________
Name:
Title: Chief Executive Officer
By: ___________________________
Name:
Title: Secretary
16
<PAGE>
EXHIBIT 12
CONFIDENTIAL PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED PURSUANT TO REGULATION
240.25B-2B OF THE SECURITIES EXCHANGE ACT OF 1934. [*] INDICATES OMITTED
MATERIAL THAT IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST AND IS FILED
SEPARATELY WITH THE COMMISSION.
THIS AGREEMENT is made this day of January 2000 between:
(1) AVECIA LIMITED acting through its LifeScience Molecules business whose
registered office is at Hexagon House, Blackley, Manchester, M9 8ZS,
England ("AVECIA");
(2) RIBOZYME PHARMACEUTICALS INCORPORATED of 2950 Wilderness Place, Boulder,
Colorado 80301, USA ("RPI").
WHEREAS
(A) AVECIA has experience and knowledge with regard to the manufacture of
oligonucleotides and intermediates for preparation of oligonucleotides,
process scale-up and GMP (as defined below).
(B) RPI is carrying out research and development work in relation to certain
ribozymes.
(C) It is intended that AVECIA will carry out a development programme upon and
subject to the terms and conditions of this Agreement with a view to
scaling up the process for production of such ribozymes and carrying out
initial production of such ribozymes as set out in Part II of this
Agreement and carrying out such production on behalf of RPI as set out in
Part III of this Agreement.
NOW IT IS HEREBY AGREED AS FOLLOWS:
PART I - DEFINITIONS AND INTERPRETATION
---------------------------------------
1. Headings and Definitions
------------------------
1.1 In this Agreement, the following terms and expressions shall have the
following meanings:
Angiozyme means RPI's proprietary anti-angiogenesis ribozyme
compound being jointly developed with Chiron
Corporation. Angiozyme is also designated as
Angiozyme.(TM)
S-1
<PAGE>
Anti-HCV means RPI's proprietary anti-hepatitis c virus Ribozyme
ribozyme compound being jointly developed with Eli
Lilly & Company. Anti-HCV Ribozyme is also designated
as Heptazyme.
Collaborator means any of Chiron Corporation, Eli Lilly & Company or
other corporate partner of RPI who is collaborating
with RPI to develop and commercialise a Product
manufactured under this Agreement, or any licensee of
RPI who is developing and commercialising a Product
manufactured under this Agreement. "Collaborators"
shall mean more than one of them.
Confidential means any information disclosed by RPI to AVECIA
Information pursuant to the Technology Transfer, and any technical
and commercial information relating to the Programme
and any other information of a confidential nature
disclosed (whether disclosed in writing, verbally, by
way of sample or by any other means and whether
directly or indirectly) by either party ("the
Disclosing Party") to the other ("the Receiving
Party"), including and without limitation any
information relating to the Disclosing Party's business
affairs.
GMP means current good manufacturing practices (as provided
for, respectively, in the Rules governing Medicinal
Products in the European Community Volume 4 (Guide to
Good Manufacturing Practice for Medicinal Products) and
by the US Food and Drug Administration as set out in
21CFR210 and 21CFR211, as amended from time to time)
the responsibilities of each party in respect of which
for each Product shall be agreed and defined in the
Quality Agreement, and shall be consistent with the
interpretation for Active Pharmaceutical Intermediates
in guidance documents provided by the Federal Drug
Administration and the International Conference on
Harmonisation.
Effective Date means 13/th/ December 1999.
Intellectual means all know-how, inventions, discoveries, Property
devices, data, patents, designs, copyrights, or other
industrial or intellectual property in all applications
therefor.
S-2
<PAGE>
JRC means the joint review committee provided for in Clause
4 and Schedule 2.
<PAGE>
Nominated means a contract manufacturer nominated by RPI to
Manufacturer carry out manufacture of the Product(s) on RPI's behalf
and which has agreed to enter into confidentiality
undertakings with AVECIA pursuant to Clause 12.4 below.
Process means the process for production of the Product(s) as
developed during the Programme.
Product means, unless stated specifically, Angiozyme, Anti-HCV
Ribozyme or such other Ribozyme product agreed by the
parties. "Products" shall be a reference to such
Ribozymes taken together.
Product means the specification designated by RPI for each of
Specification the Product(s) and as set out and
determined by the analytical test methods in the
Quality Agreement.
Programme means the programme for development of the Process
(including the Technology Transfer) referred to in
Clause 2 and more specifically detailed in Schedule 1.
Quality means the agreement made between AVECIA and
Agreement RPI in respect of each Product, the terms of which
shall be agreed by the JRC prior to commencement of
manufacture and supply of each Product on a case by
case basis. A draft of the Quality Agreement is
attached as Schedule 3.
Ribozyme means a ribonucleic acid-based molecule able to cause
catalytic cleavage of itself or another molecule
independent of protein.
Technical means the agreement made between AVECIA and
Agreement RPI, the terms of which shall be agreed by the JRC,
detailing the process information and analytical
methods to be communicated to AVECIA during the
Technology Transfer. A draft of the Technical Agreement
is attached as Schedule 4.
Technology means the communication by RPI of technical
Transfer information, including processes and analytical
methods, relating to the Products to AVECIA as may be
required
S-4
<PAGE>
by AVECIA to carry out the Programme and as
further set forth in the Technical Agreement.
1.2 The headings of the several sections of this Agreement are intended
for convenience of reference only and are not intended to be a part of
or to affect the meaning or interpretation of this Agreement.
1.3 References to recitals, clauses, paragraphs and Schedules are to
recitals, clauses and paragraphs of and Schedules to this Agreement.
The Schedules and any attachments form part of this Agreement and
shall have the same force and effect as if expressly set out in the
body of the Agreement and any reference to the Agreement shall include
the Schedules and any attachments.
PART II - THE PROGRAMME
-----------------------
2. Performance of the Programme
----------------------------
2.1 The Technology Transfer shall be deemed to have commenced on the
Effective Date. During the Technology Transfer, RPI shall give all
appropriate technical assistance reasonably requested by AVECIA in
relation to the Technology Transfer.
2.2 AVECIA will carry out the work as detailed in the Programme (as may be
amended from time to time in writing by the JRC).
2.3 Subject to Clause 4.2 below, the Programme has four stages as set out
below and as more specifically detailed in Schedule 1 ("Stage(s)"),
provided that AVECIA shall, at all times during any Stage, have the
flexibility to carry out the requirements of the Programme in such
manner and at such times as AVECIA shall see fit and at its sole
discretion and subject to the overall supervision of the JRC and the
provisions of Clause 4.
Stages in Programme
Stage Description
----- -----------
1 Technology Transfer of process and analytical methods
2 Process development - deprotection and purification scale-up
of the Products as determined by the JRC
3 preparation of GMP manufacturing documentation
4 Process scale up - GMP manufacture of 1kg of a mutually
agreed Product
S-5
<PAGE>
2.4 The process information and analytical methods to be communicated to
AVECIA during the Technology Transfer shall be agreed and detailed in
the Technical Agreement. Stage 2 of the Programme shall commence when
the JRC confirms that the Technology Transfer is complete according to
the verification protocol (set forth in the Quality Agreement) to
ensure such information has been received and correctly interpreted.
2.5 Stage 3 of the Programme shall not commence until:
(a) the identity of the first Product to be produced during Stage 4
using the Process is confirmed;
(b) the analytical methods for the Products have been transferred
from RPI to AVECIA; and
(c) the JRC confirms AVECIA's ability to manufacture the Product to
be produced during Stage 4 using the Process.
2.6 For the avoidance of doubt, any time periods specified in Schedule 1
shall be indicative only unless provided for specifically in this
Clause 2.
2.7 AVECIA shall be responsible for obtaining all raw materials and
reagents in order to produce the Product, including solvents, gases,
amidites and other laboratory consumables and the solid support, to be
utilised in conjunction with synthesis of a Product during the
Programme.
2.8 For the avoidance of doubt, it shall not be considered a breach of
this Agreement by AVECIA if an objective of the Programme is not
achieved:
(a) so long as AVECIA uses reasonable commercial and technical
diligence and makes good faith efforts to perform its obligations
to the fullest extent, and any failure to meet an objective of
the Programme shall not relieve RPI of its obligations to make
payment in accordance with Clause 3; or
(b) due to delay caused or contributed to by RPI.
3. Payment for the Programme and First Kilogram of Product
-------------------------------------------------------
Subject to Clauses 4.2 and 13 below, RPI shall pay to AVECIA the following
sums at the time stated:
(a) on signature of this Agreement by both parties: [ * ]; and
(b) upon receipt of Product by RPI but subject to Clause 4.5 below: [ * ]
per gram of Product manufactured to the Product Specification during
Stage 4 of the
S-6
<PAGE>
Programme and available for delivery to RPI by AVECIA (subject to a
maximum of [ * ]for up to one kilogram of the Product manufactured
during stage 4 of the Programme unless otherwise agreed under Clause
5.3 below).
For the avoidance of doubt, a gram of Product shall mean a gram of nucleic
acid material which meets the Product Specification, net of any
accompanying salts, water or other residual solvents.
4. Reporting, Variation and Completion of the Programme
----------------------------------------------------
4.1 The Programme and the progress by AVECIA under the Programme shall be
supervised by the JRC which shall be established within the period of
30 days following the date of this Agreement. Such supervision by the
JRC shall take place in accordance with the provisions set out in
Schedule 2.
4.2 The parties may agree to alter the Programme either to extend the
projected duration of any of the Stages or to change any of the work
contained in any of the Stages provided that the parties shall first
agree in writing the terms of such extension and alteration of the
Programme including any amended payment terms.
4.3 The parties shall conduct regular information exchange on at least two
(2) weekly intervals by telephone or in a manner to be agreed by the
JRC, provided that where AVECIA considers that, for the purposes of
optimising or improving the Process, revisions or changes in methods
should be undertaken by AVECIA during the performance of the
Programme, AVECIA shall notify the JRC without delay of the reasons
therefor and the actions which it proposes to take.
4.4 Completion of the Programme will be deemed to have occurred when the
quantity of Product specified in Stage 4 has been manufactured in
accordance with the Product Specification and has been made available
for delivery to RPI pursuant to Clause 5 below.
4.5 RPI shall pay to AVECIA within thirty (30) days of the completion of
the Programme any sums required to be paid pursuant to Clause 3 above
which may remain outstanding at the completion of the Programme.
Notwithstanding the foregoing, and subject to Clause 13, in respect of
the Product held by AVECIA pursuant to Clause 5.1(a), RPI shall not be
obligated to make any payments to AVECIA pursuant to Clause 3(b) prior
to 1/st/ January 2001, unless RPI requests delivery of the Product
prior to 1/st/ January 2001, in which case RPI shall make payments to
AVECIA for the quantity of Product requested by RPI within 30 days of
the date of the invoice for the Product.
S-7
<PAGE>
5. Delivery of First Kilogram of Product under Stage 4
---------------------------------------------------
5.1(a) Manufacture of the one kilogram (1kg) of the Product specified in
Stage 4 shall take place on the date(s) agreed by the parties.
AVECIA shall hold such manufactured Product in stock at its
facilities and at its expense under the terms of the Quality
Agreement, including the storage and stability instructions
provided by RPI to AVECIA. Any Product so held by AVECIA shall be
deemed to have been delivered and any risk shall immediately pass
to RPI, except insofar as any damage occurs to the Product as a
result of the negligence of AVECIA.
(b) Avecia shall use its best endeavours to deliver one kilogram
(1kg) of Product as specified in Stage 4. However, if AVECIA
shall manufacture at least [ * ] and up to [ * ], RPI shall be
obliged to purchase all such Product from AVECIA during 2000
subject to Clause 5.3 below. Subject to the foregoing, during
2000 AVECIA shall deliver quantities of Product at RPI's request
from time to time, such request not to be for less than 250 grams
of Product.
5.2 In the event that only a portion of the Product produced during
Stage 4 is delivered to RPI, RPI shall be responsible only to pay
for the quantity of the Product delivered.. If the quantity of
the Product supplied by AVECIA is less than [ * ], then AVECIA
agrees to synthesise sufficient Product in order to supply the
shortfall quantity of Product to RPI, and the price for such
shortfall quantity shall be no more than that paid by RPI for the
initial delivered quantity. In the event that AVECIA then
produces more than the 1 kilogram (1kg) of Product specified in
Stage 4, the provisions of Clause 5.3 shall apply.
5.3 In the event that AVECIA produces more than the 1 kilogram (1kg)
of Product specified in Stage 4, RPI agrees to purchase such
additional quantity up to a maximum of [ * ] at a price to be
negotiated in good faith by the parties. Such agreed price shall
be less than [ * ] per gram and shall be determined according to
the yield and price matrix attached as Schedule 5 hereto. In the
event that AVECIA produces more than [ * ] of the Product, RPI
shall have an option, but not an obligation, to purchase such
additional quantity of the Product at its sole discretion at a
price per gram which does not exceed the price per gram paid for
the additional [ * ] of the Product.
5.4 Avecia will arrange for shipment and insurance of the Product
produced during Stage 4 of the Programme to RPI as directed by
RPI at RPI's cost and expense. The Products will be shipped and
packaged by Avecia in accordance with RPI's shipping and
packaging instructions as may be agreed from time to time.
Deliveries will be made FOB Avecia's Grangemouth facility
(Incoterms 2000) and will be shipped to RPI's address as set
forth in this Agreement, or as otherwise directed by RPI in
writing. Risk and title in respect of all Product
S-8
<PAGE>
supplied to RPI under this Agreement shall pass on delivery at
AVECIA's Grangemouth facility.
6. Intellectual Property arising during the term of this Agreement
---------------------------------------------------------------
6.1 Pre-Existing and Independently Developed Intellectual Property.
--------------------------------------------------------------
Subject to the obligations of confidentiality contained in Clause 12
below and subject to Clause 6.2 below, each party shall be entitled to
apply for registrations of its Intellectual Property provided that
nothing in this Agreement shall affect the ownership by either party
of any Intellectual Property owned or in the possession of that party
at the date of this Agreement, or Intellectual Property developed
independently of this Agreement by any employee of that party without
reference to any of the Confidential Information disclosed by the
other party.
6.2 Ownership.
---------
(a) All rights in patents, inventions, processes, discoveries,
biological samples and other research materials and any other
novel or valuable information reflected in any medium which
arises or is created during the course of this Agreement shall be
the property of the creating party. The Parties shall promptly
report to each other any inventions, discoveries, biological
samples or other research materials made to the Process or to the
Products under the Agreement.
(b) Intellectual Property, whether or not patentable, which may arise
under this Agreement and made solely by an employee or agent of
RPI shall be owned by RPI ("RPI Inventions").
(c) Intellectual Property, whether or not patentable, made jointly by
an employee or agent of RPI and AVECIA shall be jointly owned
("Joint Inventions").
(d) Intellectual Property, whether or not patentable, which may arise
under this Agreement and made solely by an employee or agent of
AVECIA shall be owned by AVECIA ("AVECIA Inventions").
(e) Inventorship will be determined according to applicable patent
law.
(f) AVECIA and RPI shall promptly disclose to each other in writing
each invention and discovery conceived and/or reduced to practice
under this Agreement.
(g) Intellectual Property arising from this Agreement and in the
possession of a party shall be treated as having been disclosed
to that party by the
S-9
<PAGE>
party owning such Intellectual Property pursuant to this Clause
6.2, and the expressions "Disclosing Party" and "Receiving Party"
defined and used in connection with the obligations of
confidentiality contained in Clause 12 shall be construed
accordingly.
(h) In the event of a Joint Invention, RPI and AVECIA, and any wholly
owned group company of either, shall each be entitled to work
under such joint invention, but otherwise no sub-licensing shall
be permitted without the written consent of the joint inventor,
such consent not to be unreasonably withheld or delayed.
6.3 Limited Licence to carry out the activities under this Agreement.
-----------------------------------------------------------------
Each party grants to the other a limited, non-exclusive, royalty-free
licence to do all things necessary in order to carry out the
obligations and responsibilities under this Agreement under its
Intellectual Property (whether pre-existing Intellectual Property
under Clause 6.1 above or Intellectual Property arising as a result of
the Agreement under Clause 6.2(b) or (d) above). Such licence shall
expire at the completion of the Agreement and shall not be
transferable or sub-licensable.
6.4 Maintenance of Patents.
----------------------
(a) Subject to Clauses 6.1 and 6.4(e), RPI shall be responsible for
filing, prosecuting and maintaining patent applications and
resulting patents, if any, on RPI Inventions and on any Joint
Inventions insofar as they do not relate to synthesis or
manufacture of oligonucleotides other than Ribozymes.
(b) Subject to Clauses 6.1 and 6.4(e), AVECIA shall be responsible
for filing, prosecuting and maintaining patent applications and
resulting patents, if any, on AVECIA Inventions or on any Joint
Inventions relating to synthesis or manufacture of
oligonucleotides other than Ribozymes.
(c) Reasonable patent expenses for any Joint Invention will be shared
equally by the Parties, and reimbursed promptly upon presentation
of an invoice by the filing party.
(d) The non-filing party shall have the right to review and comment
in a timely manner on any such patent filings (applications and
response to office actions) prior to submission to the relevant
patent offices. Each party shall be solely responsible for
filing, prosecuting and maintaining patent applications and
resulting patents on any invention owned solely by it.
S-10
<PAGE>
(e) Each of AVECIA and RPI shall solely own its respective technology
and any technology or other technology developed solely by it and
each shall be responsible for filing, prosecuting and monitoring
patent applications and resulting patents, if any, related
thereto.
6.5 Reservation of All Other Rights. Except as expressly set forth in
-------------------------------
this Agreement, nothing contained herein shall be construed as to
create any right to:
(a) AVECIA in any Intellectual Property of RPI or any other
proprietary technology (whether pre-existing Intellectual
Property under Clause 6.1 above or Intellectual Property arising
as a result of this Agreement under Clause 6.2(b)) of RPI
including, without limitation, any of RPI's patent rights
relating to the design, synthesis, delivery, development,
testing, use and sale of Ribozymes; or
(b) RPI in AVECIA Intellectual Property or any other proprietary
technology (whether pre-existing Intellectual Property under
Clause 6.1 above or Intellectual Property arising as a result of
this Agreement under Clause 6.2(d))of AVECIA.
PART III - SUBSEQUENT MANUFACTURE OF THE PRODUCT
------------------------------------------------
7. Sale and Purchase
-----------------
7.1 Minimum Order. Unless this Agreement has been terminated under
-------------
Clauses 13 or 21 below, RPI agrees that, following completion of the
Programme, it shall purchase a minimum of [ * ] of the Products in
aggregate ("the Product Minimum") from AVECIA during the calendar
years 2000 to 2002, pursuant to the pricing and delivery provisions
contained in Clauses 7.2 and 7.3 below.
7.2 Price for Product. The parties shall negotiate in good faith the
-----------------
pricing schedule for the Products, on a per gram basis, to be
manufactured by AVECIA following completion of the Programme prior to
the manufacture of each order of Product. An example of the pricing
schedule is attached as Schedule 5 hereto. The price for quantities of
Products manufactured by Avecia following completion of the Programme
shall be based on:
(a) yields achieved dependent upon usage of raw materials; and on
(b) order volume, provided that for individual orders of less than
500 grams of Product the price per gram for such Product shall
not exceed [ * ] of the per gram price for Product(s) ordered
for delivery in multiples of 500 grams or more.
S-11
<PAGE>
7.3 Delivery Schedule. The parties shall agree on a schedule for
-----------------
delivery of Products by AVECIA to RPI ("the Delivery Schedule"). The
minimum order shall be 500 grams of Product except as otherwise
agreed subject to the pricing provisions of Clause 7.2 above.
7.4 Delivery. AVECIA will arrange for shipment and insurance of the
--------
Products ordered for delivery to RPI at RPI's direction and at RPI's
cost and expense. The Products will be shipped and packaged by
AVECIA in accordance with RPI's shipping and packaging instructions
as may be agreed from time to time. Deliveries will be made FOB
Avecia's Grangemouth facility (Incoterms 2000) and will be shipped
to RPI's address as set forth in this Agreement, or as otherwise
directed by RPI in writing. Risk and title in respect of all Product
supplied to RPI under this Agreement shall pass on delivery at
AVECIA's Grangemouth facility
7.5 Delivery Quantities
-------------------
(a) In the event that AVECIA delivers less than [ * ]of the amount of
Product required to be delivered pursuant to the delivery schedule
agreed under Clause 7.3 above, RPI shall, subject to Clause 8, pay
AVECIA for the actual amount of Product delivered. Avecia shall
synthesise sufficient Product to complete the order and will supply
this to RPI and the price for such completion quantity shall be no
more, on a per gram basis, than that paid by RPI for the initial
delivered quantity under that order. For the avoidance of doubt, if
AVECIA delivers [ * ] of the amount of Product, RPI shall, subject
to Clause 8, be obligated to pay AVECIA only for the [ * ] of the
Product delivered.
(b) In the event that Avecia manufactures Product in quantities
exceeding the amount ordered for delivery under the delivery
schedule, RPI agrees to purchase upto [ * ] of the order volume at a
price to be negotiated in good faith by the parties in respect of
the additional [ * ], according to the yield and price matrix
attached as Schedule 5, but such amount shall not cost more per gram
than for the said amount ordered In the event AVECIA produces more
than [ * ] of the Product, RPI shall have an option, but no
obligation, to purchase such additional quantity of the Product at
its sole discretion at a price per gram not to exceed the price per
gram paid for the additional quantity of the Product.
7.6 Delay in Delivery. In the event that the AVECIA delivers any
-----------------
Product later than four weeks from the date of delivery set out in
the Delivery Schedule other than as a result of Force Majeure as set
out in Clause 21, RPI shall be entitled to a five per cent reduction
in the price of the Product delivered one month late and to an
additional ten per cent reduction in price for each of the next two
complete month's delay thereafter. In the event AVECIA is unable to
deliver the Product within three months from the date set out in the
Delivery Schedule, then RPI shall have the option to either
terminate the Agreement pursuant to
S-12
<PAGE>
Clause 13.3(b) or to manufacture or have manufactured by a Nominated
Manufacturer the Product. In the event RPI chooses the latter
option, then in order to satisfy RPI's requirement for that quantity
of the Product ordered, AVECIA, subject to Clause 12, agrees (i) to
make a good faith effort to provide, at no cost to RPI or to a
Nominated Manufacturer, the technical information necessary for such
manufacture of the Product; and (ii) to grant to RPI or a Nominated
Manufacturer a personal, royalty free licence under AVECIA's
relevant Intellectual Property to enable RPI or such Nominated
Manufacturer to undertake the manufacture of the Product7.7 Invoices
--------
and Payment Terms. AVECIA shall issue an invoice at the price agreed
-----------------
under Clause 7.2, as adjusted pursuant to Clause 7.6 if relevant,
above in respect of each shipment of the Product to RPI on despatch
by AVECIA of the Product for delivery to RPI. RPI shall pay all such
invoices in full within thirty days from the date of invoice,
provided that RPI shall not have rejected such delivery of Product
under Clause 8.1. In the event that payment is made by RPI before
any Product is examined by RPI pursuant to Clause 8.2, AVECIA will
reimburse RPI for the price of such Product if it is found that the
Product does not meet the Product Specification.
7.8 Responsibility for Raw Materials. AVECIA shall be responsible for
--------------------------------
obtaining all raw materials and reagents in order to produce the
Product, including solvents, gases, amidites and other laboratory
consumables and the solid support, to be utilised in conjunction
with synthesis of a Product.
7.9 Third Party Price Notice. After a period of [ * ] from signature
------------------------
of this Agreement, RPI shall be entitled to give AVECIA written
notice if a third party under a supply agreement with RPI of at
least three years duration is able to supply identical products in
identical volumes to RPI at a price which is at least ten per cent
lower than the price for the Products agreed under Clause 7.2 above
("Third Party Price Notice"). RPI and AVECIA shall meet to discuss
the position and if agreement on price is not reached within 30 days
of receipt of such Third Party Notice, then RPI may purchase the
quantity so offered from the third party and the amounts of such
Products purchased shall be construed as falling within the amounts
of Products to be delivered according to the Product Minimum
referred to in Clause 7.1. RPI shall not be obliged to divulge the
identity of such third party, but at the request of AVECIA shall in
lieu provide satisfactory evidence, signed by an independent notary
public certifying the genuineness of the competitive offer.
7.10 Non-use of RPI's Intellectual Property. Other than as provided in
--------------------------------------
this Agreement, AVECIA agrees that it will not use for its internal
purpose or for third parties any Intellectual Property of RPI
(whether pre-existing Intellectual Property under Clause 6.1 above
or Intellectual Property arising as a result of this Agreement under
Clause 6.2(b) above) or Confidential Information acquired under this
Agreement.
S-13
<PAGE>
8. Quality of the Product
----------------------
8.1 The Product manufactured and delivered by AVECIA to RPI under Clause 7
above shall conform to the Product Specification for such Product.
8.2 RPI shall examine all Product delivered to it pursuant to this
Agreement in accordance with the methods of analysis set out in the
Quality Agreement for such Product. RPI shall notify AVECIA of any
failure of the Product to meet the Product Specification within [ * ]
days of receipt of the relevant Product. RPI shall be entitled to
reject any Product which does not meet the Product Specification
("Rejected Product")
8.3 (a) RPI will return any Rejected Product to AVECIA and, if AVECIA
agrees with RPI's notification of failure, AVECIA shall replace
the Rejected Product at no additional cost to RPI within [ * ]
days of receiving notice from RPI under Clause 8.2 or on a new
delivery date as mutually agreed to in writing by the Parties.
(b) In the event AVECIA is unable to replace the Rejected Product
within such time, RPI shall be entitled to exercise its Standby
Rights (as set out in Clause 9.1 below) to enable RPI or a
Nominated Manufacturer to manufacture sufficient Product to
replace the Rejected Product, and AVECIA, subject to Clause 12,
agrees to make a good faith effort to provide, at no cost to RPI
or to a Nominated Manufacturer, the technical information
necessary for such manufacture of the Product. In addition,
AVECIA will reimburse to RPI that element of the reasonable cost
of the Product manufactured by the Nominated Manufacturer which
is in excess of the price which RPI would have had to pay to
AVECIA. The amounts of such Products manufactured by the
Nominated Manufacturer shall be construed as falling within the
amounts of Product to be purchased by RPI in accordance with the
Product Minimum in Clause 7.1 above.
(c) If AVECIA disagrees with RPI's notification of failure the JRC
shall consider the matter and in the event no agreement is then
reached, the parties shall jointly appoint an expert to determine
whether the Product is a Rejected Product, and the costs and fees
of the expert shall be borne by the losing party. During the
period of dispute resolution under this Clause 8.3(c):-
(i) If RPI requests AVECIA to resynthesise the quantity of the
Rejected Product, AVECIA shall in good faith resynthesise
the
S-14
<PAGE>
Product and deliver it to RPI within [ * ] of receiving
such a request from RPI. Subject to Clause 8, RPI will
make payment for the resynthesised quantity within [ * ]
of delivery. If the dispute is resolved in favour of
AVECIA, RPI agrees to purchase from AVECIA both batches of
the Product, and such additional quantity of the Product
resynthesised by AVECIA shall not count towards the
Product Minimum. If the dispute is resolved in favour of
RPI, RPI will make payment only for the resynthesised
Product.
(ii) In the event AVECIA is unable to replace the Rejected
Product within the time stated in Clause 8.3(c)(i) above,
RPI shall be entitled to exercise its Standby Rights (as
set out in Clause 9.1 below) to enable RPI or a Nominated
Manufacturer to manufacture sufficient Product to replace
the Rejected Product, and AVECIA, subject to Clause 12,
agrees (i) to make a good faith effort to provide to RPI
or to a Nominated Manufacturer, at RPI's cost, the
technical information necessary for such manufacture of
the Product; and (ii) to grant to RPI or a Nominated
Manufacturer a personal, royalty free licence under
AVECIA's relevant Intellectual Property to enable RPI or
such Nominated Manufacturer to undertake such manufacture.
If the dispute is resolved in favour of AVECIA, RPI agrees
to purchase from AVECIA the entire amount of the Product
in dispute and to make immediate payment, and any
additional quantity of the Product manufactured by RPI or
its Nominated Manufacturer shall not count toward the
Product Minimum. If the dispute is resolved in favour of
RPI, AVECIA will reimburse to RPI that element of the
reasonable cost of the Product manufactured by the
Nominated Manufacturer which is in excess of the price
which RPI would have had to pay to AVECIA, together with
any costs paid by RPI in respect of the transfer of the
technical information by AVECIA, and the originally
ordered quantity of the Product shall be construed as
falling within the amount of Product to be purchased by
RPI in accordance with the Product Minimum.
(iii) If RPI does not request AVECIA to resynthesise the
Rejected Product, then AVECIA shall not be required to
start the resynthesis until the dispute is resolved or
until RPI make such a request, whichever is the sooner.
For the avoidance of doubt, no act or omission of RPI
under this Sub-clause 8.3(c)(iii) shall cause the Product
Minimum to be reduced by the amount of the Rejected
Product.
S-15
<PAGE>
8.4 In the absence of notification that the Product does not meet the
Product Specification within the period set out in Clause 8.1 above,
the relevant consignment of the Product shall be deemed to have been
accepted by RPI in full compliance with the Product Specification.
9. Licence under AVECIA Intellectual Property to Manufacture the Product
---------------------------------------------------------------------
9.1 If AVECIA is unable to meet the delivery requirements set out in the
Delivery Schedule agreed under Clause 7.3 above, then subject to
Clause 12, AVECIA shall grant to RPI or a Nominated Manufacturer a
personal licence on reasonable commercial terms under AVECIA's
relevant Intellectual Property to enable RPI or such Nominated
Manufacturer to undertake the manufacture of Products, in order to
satisfy its requirements for Products ("Standby Rights"). In the
event that RPI wishes to exercise its Standby Rights, RPI will provide
Avecia with written notice thereof in advance of such exercise and,
subject to Clause 8, the volume of products manufactured under the
Standby Rights will be subtracted from the Product Minimum.
9.2 Manufacture of Products in excess of Product Minimum. In the event
----------------------------------------------------
that RPI's requirements for delivery of the Product over the period
from 1/st/ January 2000 to 31/st/ December 2002, as set out in the
Delivery Schedule, are in excess of the Product Minimum, then provided
that RPI shall purchase the greater of the Product Minimum or [ * ] of
its total requirements for delivery of the Product from AVECIA, RPI
shall have the ability to exercise its Standby Rights for manufacture
of the balance of the Product required during such period. AVECIA, at
its cost, shall have the right to have an independent third party
certify RPI's delivery requirements each twelve months within the
above said period, subject to Clause 12.
9.3 Any royalty payable under the licence granted as a result of the
exercise of the Standby Rights shall be dependent upon the volume of
Products to be manufactured by AVECIA on behalf of RPI and shall not
exceed [ * ]of the selling price of Products made by such a Nominated
Manufacturer. Neither RPI nor the Nominated Manufacturer, shall be
obligated to make any payments to AVECIA for the exercise of Standby
Rights pursuant to Clause 7.6 or pursuant to Clause 8.3 unless the
dispute is resolved in AVECIA's favour.
9.4 Without prejudice to Clause 13.5, upon the expiry or termination of
this Agreement, RPI may request a licence under AVECIA's Intellectual
Property, and the parties will negotiate in good faith the commercial
terms of such royalty bearing licence.
PART IV - GENERAL TERMS
-----------------------
S-16
<PAGE>
10. Quality Agreements
------------------
AVECIA and RPI shall enter into a quality agreement in respect of each
Product on a case by case basis, the terms of which shall be agreed by the
JRC prior to manufacture and supply of each Product.
11. Warranties, Liability and Indemnity
-----------------------------------
11.1 Intellectual Property Warranty and Indemnity
--------------------------------------------
(a) Each party warrants to the other that:
(i) it has the necessary right and authority to enter into this
Agreement and that to the best of its knowledge at the date
of this Agreement it is the rightful owner or licensee of
all of its Intellectual Property; and
(ii) to the best of its knowledge at the date of this Agreement,
the use of Intellectual Property made available by it to the
other party pursuant to this Agreement for the purposes set
out in this Agreement will not infringe the Intellectual
Property of a third party.
(b) Subject to Clause 11.5, each party ("the Indemnifying Party")
will indemnify and hold harmless the other ("the Indemnified
Party") against any and all liability, loss, damages, costs,
legal costs, professional and other expenses whatsoever incurred
or suffered by Indemnified Party in respect of any claim or
action that the use of the Indemnifying Party's Intellectual
Property by the Indemnified Party in its performance of this
Agreement infringes the Intellectual Property of any third party
(an "Intellectual Property Infringement") provided that the
Indemnified Party:
(i) gives notice to the Indemnifying Party of any Intellectual
Property Infringement forthwith on becoming aware of the
same;
(ii) gives the Indemnifying Party the sole conduct of the defence
to any claim or action in respect of Intellectual Property
Infringement and does not at any time admit liability or
otherwise settle or compromise or attempt to settle or
compromise the said claim or action except upon the express
instructions of the Indemnifying Party; and
S-17
<PAGE>
(iii) acts in accordance with the reasonable instructions of the
Indemnifying Party and gives the Indemnifying Party such
assistance as it shall reasonably require in respect of
the conduct of such defence.
11.2 Liability for the Products. Liability in respect of any Product
--------------------------
delivered to RPI and not rejected by RPI within the period set out in
Clause 8.2 above (including, without limitation, the use to which it
is put) following delivery to RPI of such Product shall rest solely
on RPI and RPI shall indemnify AVECIA against any liability, loss,
damages, costs, legal costs, professional and other expenses
whatsoever incurred or suffered by AVECIA arising out of or in
respect of such Product following its delivery to RPI including,
without limitation, RPI's use of the Product following delivery.
11.3 Liability for Manufacture of the Products. Liability in respect of
-----------------------------------------
manufacture of the Products, whether by use or operation of the
Process (or any part of the Process) or otherwise, by RPI or by a
Nominated manufacturer on behalf of RPI shall rest solely on RPI. RPI
shall indemnify AVECIA against any liability, loss, damages, costs,
legal costs, professional and other expenses whatsoever incurred or
suffered by AVECIA arising out of or in respect of manufacture of the
Products, whether use or operation of the Process (or any part of the
Process) or otherwise by RPI or by a Nominated Manufacturer on behalf
of RPI.
11.4 Limit on AVECIA's Liability. Subject to the unlimited liability
---------------------------
provisions of Clause 11.1, AVECIA's total liability (whether for
breach of contract, negligence, breach of statutory duty and/or other
tort, or otherwise):
(a) in connection with or as a result of the work carried out during
the Programme shall be limited to the aggregate amount received
by AVECIA from RPI under this Agreement at the time such
liability arises; or
(b) in connection with the manufacture of the Product pursuant to
Part III of this Agreement shall in no event exceed the purchase
price paid by RPI for the ordered quantity of Product in respect
of which the claim is made or liability has arisen.
11.5 No liability for consequential loss. Neither party shall be liable to
-----------------------------------
the other for any indirect, consequential or special loss, loss of
profits or damage howsoever arising.
11.6 No exclusion of liability for personal injury. Nothing in this
---------------------------------------------
Agreement shall remove or limit the liability of either party in
respect of death or personal
S-18
<PAGE>
injury arising out of the negligence or wilful default of that party
its servants or agents.
12. Confidentiality
---------------
12.1 In consideration of the Disclosing Party disclosing the Confidential
Information to the Receiving Party, the Receiving Party hereby
undertakes to maintain confidential all such Confidential Information
and it will accordingly not directly or indirectly disclose any of
the Confidential Information in whole or in part, other than under
Clause 12.4 below. For the purposes of this Clause 12, Intellectual
Property arising from the Programme and in the possession of a party
shall be treated as having been disclosed to that party by the party
owning such Intellectual Property pursuant to Clause 6.2 above, and
the expressions "Disclosing Party" and "Receiving Party" shall be
construed accordingly.
12.2 The foregoing restrictions on the Receiving Party shall not apply to
any Confidential Information which:
(a) the Receiving Party can prove was already in its possession and
at its free disposal before the disclosure hereunder to it;
(b) is hereafter disclosed to, purchased or otherwise legally
acquired by the Receiving Party by or from a third party who has
not derived it directly or indirectly from the Disclosing Party;
(c) is or becomes available to the public whether in printed
publications or otherwise through no act or default on the part
of the Receiving Party or its agents or employees; or
(d) the Receiving Party can prove to the reasonable satisfaction of
the Disclosing Party has been developed independently of the
Programme by any employee of the Receiving Party without
reference to any of the Confidential Information disclosed by
the Disclosing Party.
12.3 In order to secure the obligations set out in this Clause 12 the
Receiving Party agrees to exercise every reasonable precaution to
prevent and restrain the unauthorised disclosure and use of
information subject to confidentiality, including restricting access
to such information to such of its employees as are bound to keep
such information confidential and need to have such access for the
purpose of this Agreement.
12.4 The Receiving Party may disclose Confidential Information: (i) in the
case of AVECIA to Avecia Inc., 1405 Foulk Road, PO Box 15457,
Wilmington, DE 19850-5457 and to Boston Biosystems Inc. of 75A
Wiggins Avenue, Bedford,
S-19
<PAGE>
Massachusetts; and (ii) in the case of RPI to its Nominated
Manufacturer(s) (each a "Permitted Recipient"), provided that the
Receiving Party shall procure that prior to such disclosure each
Permitted Recipient to which Confidential Information is to be
disclosed is made aware of the obligations contained in this
Agreement and enters into confidentiality obligations in
substantially the same terms as those contained in this Agreement
directly with the Disclosing Party.
12.5 The provisions of this Clause 12 shall survive termination or expiry
of this Agreement and shall continue for a period of 10 years from
the date of that termination or expiry.
12.6 The parties shall remain bound by the obligations in the Mutual
Confidentiality Agreement signed by them and dated 23/rd/ December
1998, but in the event of any conflict between the terms of that
Mutual Confidentiality Agreement and the terms of this Agreement, the
latter shall prevail.
13. Duration and Termination
------------------------
13.1 Duration. This Agreement and the Programme shall be deemed to have
--------
commenced on the Effective Date and shall continue (unless terminated
in accordance with the provisions of Clauses 13.2, 13.3, 13.4 or 21)
until the expiry of the period of three years from the date of
commencement of manufacture of the Product pursuant to Part III of
this Agreement following completion of the Programme.
13.2 (A) Termination by mutual agreement. Subject to Clause 13.5 below,
-------------------------------
this Agreement may be terminated by mutual agreement at any time
prior to completion of the Programme in the event that both
parties agree that the Programme is not technically feasible.
(B) Termination for technical non-feasibility. Subject to Clause 13.5
below, this Agreement may be terminated by either party on or
after 1 January 2001 if it has not been agreed that the Programme
is technically feasible in respect of the Product Specification,
quantity and timeframe.
13.3 Termination by RPI. Subject to Clause 13.5 below, RPI may terminate
------------------
this Agreement in the following ways:
(a) by [ * ] written notice to AVECIA if RPI is unable to, or
elects not to, pursue development of any of the Products;
(b) forthwith upon written notice if Avecia has been unable to
deliver the Product within [ * ] of the date for delivery
of such Product specified in the Delivery Schedule or, in
respect of the kilogramme of the Product
S-20
<PAGE>
ordered under the Programme, on or before [ * ] for reasons
not relating to technical feasibility as referred to in
Clauses 13.2(A) and 13.2(B)
(c) forthwith if AVECIA is in breach of this Agreement (other
than under Clause 13.3(b) above) and AVECIA does not
rectify such breach within [ * ] of receipt of written
notice from RPI requiring rectification of the breach,
provided that it is intended that the parties will discuss
any alleged breach and its remediation as soon as it is
known; or
(d) forthwith upon written notice if AVECIA has a liquidator,
receiver, manager receiver or administrator appointed, or
ceases to continue trading or is unable to pay debts as
defined in Section 227 of the Insolvency Act 1986 (England
and Wales).
13.4 Termination by AVECIA. Subject to Clause 13.5 below, AVECIA may
---------------------
terminate this Agreement in the following ways:
(a) forthwith if RPI is in breach of this Agreement (other than
under Clause 13.3(b) above) and RPI does not rectify such
breach within [ * ] of receipt of written notice from
AVECIA requiring rectification of the breach, provided that
it is intended that the parties will discuss any alleged
breach and its remediation as soon as it is known; or
(b) forthwith upon written notice if RPI has a liquidator,
receiver, manager receiver or administrator appointed, or
ceases to continue trading or is unable to pay debts as
defined in Section 227 of the Insolvency Act 1986 (England
and Wales), or equivalent occurs in the USA or any other
jurisdiction in which RPI is incorporated or resident.
13.5 Consequences of Termination. Termination under Clauses 13.2 -
---------------------------
13.4 above shall have one or more of the following consequences
according to the table set out below:
A RPI shall pay to AVECIA all sums payable up to the date of
termination but not yet paid, together with all reasonable
costs already incurred by AVECIA at the date of termination
or costs incurred by AVECIA after termination which could
not reasonably be avoided.
B The parties shall agree upon a sum payable by RPI in
respect of work done by AVECIA under the Programme for
which monies have not yet become payable under Clause 3
above and in the absence of agreement upon such sum the
provisions of Clause 26 shall apply.
S-21
<PAGE>
C Any moneys paid by RPI to AVECIA up to the date of
termination shall be non-refundable, subject to D below
where applicable.
D Termination of this Agreement prior to the commencement of
Stage 3 of the Programme can only take place if agreed by
the JRC. In such event, AVECIA shall reimburse to RPI
within 30 days of the date of termination, a proportion of
the [ * ]received from RPI under Clause 3(a) as follows:
(i) termination prior to completion of Stage 1 - [ * ]
(ii) termination between Stages 1 and 2 - [ * ]; or
(iii) termination between Stages 2 and 3 - [ * ]
E AVECIA shall grant to RPI or a Nominated Manufacturer (at
RPI's option), a royalty-free, non-exclusive world-wide
licence under AVECIA's Intellectual Property including any
AVECIA Invention arising under Clause 6.2(d) above
necessary for RPI or a Nominated Manufacturer (at RPI's
option) to manufacture Products identified for manufacture
under this Agreement Any such licence granted under this
Clause 13.5(E) shall expire at such time asa quantity of
Product is manufactured which fulfills the Product Minimum
requirement in Clause 7.1, plus any amount ordered by RPI
and accepted by AVECIA, and in this respect RPI will
provide, or procure its Nominated Manufacturer to provide,
all necessary manufacturing information and records to
Avecia:
F Any licence granted under Clauses 6.3, 9.1 or 9.2 shall
terminate.
G RPI shall purchase all quantities of Product ordered by RPI
and manufactured by AVECIA but not yet delivered to RPI,
including any quantity of Product held by AVECIA pursuant
to Clause 5.1(a), at the price agreed under Clause 7.2
above.
Termination Clauses and Consequences
Clause Consequences
------ ------------
Clause 13.2 A [ * ]
Clause 13.2B [ * ]
Clause 13.3 (a) [ * ]
Clause 13.3 (b) [ * ]
Clause 13.3 (c) [ * ]
Clause 13.3 (d) [ * ]
Clause 13.4 (a) [ * ]
Clause 13.4 (b) [ * ]
* In the event of termination under Clause 13.2 , the amount to
be paid to AVECIA shall not exceed [ * ]
S-22
<PAGE>
** In the event of termination under Clause 13.2 only, the
amount to be repaid by AVECIA to RPI shall be limited to
[ * ] of the [ * ] received from RPI under Clause 3(a)
irrespective of the Stage in the Programme at which
termination takes effect.
*** In the event of termination under Clause 13.3(a) only, the
amount payable by RPI to AVECIA under Clause 13.5 A for costs
incurred by AVECIA after termination which could not
reasonably be avoided, shall not exceed [ * ]
13.6 Termination or expiry of this Agreement, for whatever reason,
shall not prejudice the acquired rights of either party.
13.7 For the avoidance of doubt, it shall not be considered a breach
of this Agreement if an objective of the Programme is not
achieved so long as AVECIA uses all reasonable commercial
endeavours to perform its obligations.
13.8 The provisions of Clauses 3, 6.2, 6.4, 6.5, 9, 11, 12, 13.7 - 26
shall survive the termination or expiry of this Agreement. In the
event that RPI or any Nominated Manufacturer breaches any of the
surviving clauses of this Agreement, any licence granted as a
result of the operation of consequence E under Clause 13.5 above
shall terminate.
14. Payment
-------
All amounts payable to AVECIA under this Agreement shall be paid in US
Dollars in accordance with the following details:-
[ * ]
S-23
<PAGE>
15. Announcements And Publicity
---------------------------
15.1 Subject to Clause 15.2, the parties agree that neither of them
will make any official press release, announcement or other
formal publicity relating to the transactions which are the
subject of this Agreement, or any ancillary matter, including
without limitation use the name of the other in any form of
advertising or public promotion, without first obtaining in each
case the prior written consent of the other party (which consent
will not be unreasonably withheld), except as required by law.
15.2 The parties agree that any publication, abstract or patent
application resulting from this Agreement will be sent to the
other at least 60 days prior to filing or submission for prior
approval. The authorship on any publication and/or abstract will
be based on mutual agreement between the parties or as deemed
scientifically appropriate. A publication resulting from this
Agreementwill be delayed or prohibited if, in the reasonable
opinion of the other party, it will be necessary to delay or
prohibit such publication in order to file or procure patent
application or rights protection in respect of any invention or
discovery arising from this Agreement.Notwithstanding the
foregoing, AVECIA shall have no right to publish or disclose to a
third party, any information relating to the Products without the
prior written permission of RPIunless such information falls
within any of the exceptions in Clause 12.2.
16. Assignment and Transfer
-----------------------
16.1 This Agreement shall inure to the benefit of, and be binding
upon, the successors and assignees of the parties. This Agreement
may not be assigned or transferred by either of the parties
hereto without the prior written consent of the other, which will
not be unreasonably withheld; provided, however, that either
party may assign or transfer its rights and obligations under
this Agreement to an affiliate of that party or a successor to
all or substantially all of its assets or business relating to
this Agreement, whether by sale, merger, operation of law or
otherwise by giving written notice to the other party.
16.2 AVECIA may transfer this Agreement to any entity which AVECIA may
establish to undertake its contract manufacturing of Product,
provided that AVECIA owns or controls at least 50% of the voting
stock of such entity and such transfer is pre-approved by RPI.
17. Variation
---------
No variation or amendment of this Agreement shall bind either party unless
made in writing in the English language and agreed to in writing by duly
authorised officers of both parties.
S-24
<PAGE>
18. Illegality
----------
If any provision of this Agreement is agreed by the parties to be illegal
void or unenforceable under any law that is applicable hereto or if any
court of competent jurisdiction in a final decision so determines, this
Agreement shall continue in force save that such provision shall be deemed
to be excised herefrom with effect from the date of such agreement or
decision or such earlier date as the parties may agree.
19. Waiver
------
A failure by either party hereto to exercise or enforce any rights
conferred upon it by this Agreement shall not be deemed to be a waiver of
any such rights or operate so as to bar the exercise or enforcement thereof
at any subsequent time or times.
20. Notices
-------
20.1 All notices, instructions and other communications given hereunder
or in connection herewith shall be in writing. Any such notice,
instruction or communication shall be sent either (i) by registered
or certified mail, return receipt requested, postage prepaid, or
(ii) via a reputable nationwide overnight courier service, in each
case to the address set forth below. Any such notice, instruction or
communication shall be deemed to have been delivered upon receipt.
If made to RPI, all notices shall be addressed to:
Ribozyme Pharmaceuticals, Inc.
2950 Wilderness Place
Boulder, CO 80301
Attention: Vice President Corporate Development
Tel: (303) 449-6500
Fax: (303) 449-6995
with a copy to:
Rothgerber, Johnson and Lyons
1200 17th Street, Suite 3000
Denver, CO 80202
Attention: Herbert H. Davis III, Esq.
Tel: (303) 623-9000
Fax: (303) 623-9222
If made to AVECIA, all notices shall be addressed to:
Avecia Limited
Hexagon House
Blackley, Manchester, M9 8ZS
Attention: Vice-President, LifeScience Molecules
Business
S-25
<PAGE>
Tel: 0161 721 2404
Fax: 0161 721 5202
with a copy to:
Legal Affairs Department
Avecia Limited
Hexagon House
Blackley, Manchester, M9 8ZS
Attention: Company Secretary
Tel: 0161 721 1217
Fax: 0161 721 1886
or, in each case, to such other address as may be specified in
writing to the other parties.
20.2 Any party may give any notice, instruction or communication in
connection with this Agreement using any other means (including
personal delivery, telecopy or ordinary mail), but no such notice,
instruction or communication shall be deemed to have been delivered
unless and until it is actually received by the party to whom it was
sent. Any party may change the address to which notices,
instructions or communications are to be delivered by giving the
other parties to this Agreement notice thereof in the manner set
forth in this Clause 20.
21. Force Majeure
-------------
Neither party shall be liable to the other party in any manner whatsoever
for any failure or delay in performing its obligations under this Agreement
if and to the extent, and for the duration, that such is due to force
majeure, which expression for the purposes of this Agreement means any
cause beyond the reasonable control of the party in question which for the
avoidance of doubt and without prejudice to the generality of the
foregoing shall include governmental actions, war, riots, civil commotion,
fire, flood, epidemic, labour disputes (excluding labour disputes involving
the work force or any part thereof of the party in question, restraints or
delays affecting shipping or carriers, inability or delay in obtaining
supplies of adequate or suitable materials and act of God. Without
prejudice to Clause 13.1, any said failure or delay shall not give either
party the right to terminate this Agreement except, and to the extent that
such force majeure continues for a period exceeding three months.
Termination as a result of Force Majeure shall give rise to consequences
[ * ] as set out in the table at Clause 13.5.
22. Good Faith and Duty to Mitigate
-------------------------------
22.1 Each of the parties shall at all times act in good faith in carrying
out the terms of this Agreement.
S-26
<PAGE>
22.2 Each of the parties shall use all reasonable endeavours to mitigate
any costs, losses or expenses due to be incurred or suffered by the
other party in connection with the performance or non-performance of
this Agreement.
23. Further Assurances
------------------
At any time or from time to time on and after the Effective Date,
each of AVECIA and RPI shall at the request, cost and expense of
the other:
(a) deliver to the other such records, data or other documents
consistent with the provisions of this Agreement;
(b) execute, and deliver or cause to be delivered, all such
assignments, consents, documents or further instruments of
transfer or licence required by this Agreement; and
(c) take or cause to be taken all such other actions, as may
reasonably be deemed necessary or desirable in order to obtain
the full benefits of this Agreement and the transactions
contemplated hereby.
24. Maintenance of Records and Right to Inspect Manufacturing
---------------------------------------------------------
24.1 AVECIA agrees to maintain good records of sufficient detail to
allow the critical examination of all the data and the analysis
documentation in a form that is Food and Drug Administration
compliant (collectively, "Records"). Records, including those
associated with lots produced, must be kept and maintained
safely for at least two (2) years by AVECIA. Prior to disposal
of these Records, AVECIA agrees to give RPI the option of
transferring the Records and their use to RPI. If AVECIA is no
longer in the contract oligonucleotide synthesis business, then
RPI shall have the right to immediately obtain and use all
Records including the Drug Master File related to the
production of the Product covered by this Agreement.
24.2 Upon RPI's written request, AVECIA will allow RPI and/or its
Collaborator(s) to review its GMP processes and procedures as
such processes relate to bulk drug and the preparation of
Product. Such audit shall be subject to the confidentiality
provisions of Clause 12. Such reviews shall occur as soon as
reasonably practical. RPI and/or its Collaborator(s) shall have
the right to inspect all manufacturing and testing facilities
and operations (including third parties) to assure compliance
with GMP requirements and regulatory commitments. AVECIA will
assure compliance with regulatory commitments and will correct
any deficiencies prior to manufacturing of any Product
contemplated under this Agreement, subject to any provisions
set out in the Technical Agreement or any Quality Agreement.
AVECIA will promptly
S-27
<PAGE>
notify RPI of any regulatory inspections and
inquiry/communications which involve a Product and give RPI an
opportunity to assist AVECIA in responding to any such
inquires.
25. Entire Agreement
----------------
25.1 This Agreement contains the entire agreement between the parties
and supersedes any previous agreements relating to this
Agreement and any understandings between the parties with
respect thereto, and may not be modified except by an instrument
in writing signed by the duly authorised representatives of the
parties.
25.2 In the event of any conflict between the Agreement and the
Schedules, then the former takes precedence .
26. Law and Jurisdiction
--------------------
26.1 This Agreement is governed by and shall be construed and
interpreted in accordance with the laws of the US State of
Delaware.
26.2 The parties shall meet as soon as possible to discuss and to
attempt to resolve all matters not specifically provided for in
this Agreement or in the constitution of the JRC and which
require a decision and all differences, disputes or
disagreements which may arise out of or in connection with this
Agreement or the JRC. If the parties are unable to resolve any
such matter or dispute then it shall be referred to the Vice-
President, Life Science Molecules business and the RPI Vice
President Corporate Development, who shall meet within thirty
(30) days of being requested to do so and shall in good faith
attempt to resolve the matter or dispute.
26.3 The parties agree to refer any matter or dispute which is not
able to be resolved pursuant to Clause 26.2 to the Centre for
Dispute Resolution ("CEDR") in London, England in an attempt to
settle the same in good faith by Alternative Dispute Resolution
("ADR"). The site for ADR shall be London, England, if initiated
by RPI and Boulder, Colorado, if initiated by Avecia.
26.4 Neither of the parties shall be deemed to be precluded from
taking such interim formal steps as may be considered necessary
to protect such party's position while the procedures referred
to in Clauses 26.2 and 26.3 are pursued.
26.5 In the event that the matter or dispute remains unresolved by
such ADR procedure within thirty days of commencement of such
procedure, then the parties shall be at liberty to take such
other proceedings (as defined below) as they think fit.
S-28
<PAGE>
26.6 Except as provided for in Clauses 26.2, 26.3 and 26.4, in
relation to any legal action or proceedings to enforce this
Agreement or arising out of in connection with this Agreement
("proceedings") each of the parties irrevocably submits to the
exclusive jurisdiction of the Delaware Courts if initiated by
RPI and Denver Courts if initiated by Avecia .
27. Counterparts
------------
This Agreement may be executed in counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and
the same instrument.
28. Independent Contractor
----------------------
Nothing in this Agreement shall create, or be deemed to create, a
partnership or the relationship of principal and agent or employer and
employee between the parties. Each party agrees to perform under this
Agreement solely as an independent contractor.
29. Representation by Counsel. The parties acknowledge that each of them
-------------------------
has been represented by counsel in connection with the negotiation and
drafting of this Agreement and that no rule of strict construction
should be applied to either of them as the drafter of all or any part
of this Agreement.
S-29
<PAGE>
IN WITNESS whereof, the authorised representatives of the parties have executed
this Agreement on the date first above written.
SIGNED for and on behalf of AVECIA LIMITED
Signature .........................
Name .........................
Position .........................
SIGNED for and on behalf of RIBOZYME PHARMACEUTICALS INCORPORATED
Signature .........................
Name Alene Holzman
Position Vice President, Corporate Development.
S-30
<PAGE>
SCHEDULE 1
----------
The Programme
-------------
PROPOSAL
PROCESS SCALE UP and GMP MANUFACTURE of OLIGONUCLEOTIDE
Angiozyme
for
Ribozyme Pharmaceutical Inc.
Date Prepared: December 1999
Proposal No: PP.050 Version 3
Author: John C. Krukiel, Commercial Development Manager
ABBREVIATIONS
If needed
S-1
<PAGE>
<TABLE>
<CAPTION>
CONTENTS
PAGE
<S> <C> <C>
1. Project Objective 4
2. Project Scope 4
3. Molecule Description 4
4. Project Plan 5
4.1 Technology Transfer of Process and Analytical Methods
4.2 Process Development - Deprotection and Purification scale up of Products
as determined by the JRC.
4.3 Preparation of GMP Manufacturing Documentation
4.4 Process Scale Up - GMP Manufacture of Kilo 1 mutually agreed
Product.
5. Summary Reports / Regulatory Submission 8
5.1 Preparation of Development Reports
5.2 of documentation
6. Packaging and Despatch 8
Appendix 1. Technology Transfer Plan including Oligo Pilot II production 9
Appendix 2. Provisional Product Specifications 10
Appendix 3. Development Quality Standard 11
Appendix 3.2 GMP Quality Standard 12
Appendix 4 Draft Quality Agreement 13
</TABLE>
S-2
<PAGE>
1. PROJECT OBJECTIVE
This proposal describes technology transfer, process development, process scale
up and manufacture of 1 kg of mutually agreed product.
The data generated from the technology transfer and scale up program is meant to
provide a degree of assurance that the process detailed in the Batch
Manufacturing Instructions will produce product suitable for use in clinical
trials.
The sequence of the oligonucleotide is described below.
2. PROJECT SCOPE
The project will consist of five stages:
* Technology Transfer of Process and Analytical Methods
* Process Development - Deprotection and Purification scale up of the ribozyme
* products as determined by the JRC
* Preparation of GMP Manufacture Documentation
* Process Scale Up - GMP Manufacture of Kilo 1 of a mutually agreed product
Prior to the start of the project and bi-weekly following initiation, a joint
review committee(JRC) composed of members from RPI and Avecia LSM will meet. A
full review of all work completed will be presented, the project plan and
specifications reviewed, and project progression agreed.
Throughout the project any changes made to the work detailed in the proposal
will be jointly agreed with RPI, managed and documented in accordance with
Avecia LSM's project management procedures.
Stability studies are not currently within the scope of this project. If
required they will be the subject of a separate quotation.
3. MOLECULE DESCRIPTION:
The oligonucleotide product is classified as Active Pharmaceutical Ingredient
"Ribozyme Sequence in Here"
Provisional Specifications listed in Appendix 2.
4. PROJECT PLAN
4.1 TECHNOLOGY TRANSFER OF PROCESS AND ANALYTICAL METHODS
RPI has generated experience in the manufacture of ribozymes and it is
recognised that this knowledge must be transferred to Avecia LSM manufacturing
personnel in order for the supply of products to commence. A Technology
transfer plan/agreement will be agreed. This document will detail the
activities, information requirement, success criteria and timetable for
technology transfer of the manufacturing process and the analytical methods.
It is anticipated that RPI will provide Avecia with the following information:
* Raw material suppliers, specifications and testing procedures
* RPI and [ * ] Process description and process equipment specifications
* Details of in-process tests and specifications
* Toxicological information on the oligonucleotide
* Analytical Methods(final product and intermediates) and supporting
documentation(reagent requirements, equipment etc.)
* Reference samples
S-3
<PAGE>
The Technology Transfer project will be conducted in four phases:
* Information transfer and definition of Initial process
* Analytical methods technical transfer at Avecia LSM
* Oligo Pilot II production of development material at Avecia LSM, utilising
RPI's current process parameters
* Technical clearance to manufacture
- --------------------------------------------------------------------------------
Time Requirement [ * ]
- --------------------------------------------------------------------------------
Quality Standard Development (Appendix 3)
- --------------------------------------------------------------------------------
Facility Multi Use Development Facility-Grangemouth
- --------------------------------------------------------------------------------
4.2 PROCESS DEVELOPMENT - DEPROTECTION AND PURIFICATION
SCALE UP OF THE PRODUCTS AS DETERMINED BY THE JRC.
Deprotection
The aim of this stage is to evaluate the deprotection process and provide a
recommended route for the large scale GMP manufacture in the form of a Process
Description.
The Deprotection process development will start with a full review and analysis
of samples and records generated during the technology transfer stage.
Conditions will be defined which provide material of the appropriate purity in a
reproducible manner.
During large scale manufacture there will be opportunities to further
investigate the cleavage mixture, time course and reaction temperature.
Purification
The aim of this stage is to evaluate the purification process and provide a
recommended route for the large scale GMP manufacture in the form of a Process
Description.
The Purification process development will start with a full review and analysis
of samples and records generated during the technology transfer stage.
Procedures to ensure consistent column loading will be defined. Chromatography
gradient and flow rate will be further investigated.
Samples obtained from the OPII production runs at Avecia LSM will be utilised
to gain full understanding of the purification parameters. The material will be
loaded on small scale Biotage rig, with a view of extrapolating the data to the
large scale Biotage rig in the Grangemouth Pharmaceutical Manufacturing
Facility.
These investigations will have the following objectives:
* Define procedures to ensure consistent column loading
* Investigate the impact of variation in column gradient and flow rate
* investigate impact of increased column loading, with a view to increasing
throughput
- --------------------------------------------------------------------------------
Time Requirement [ * ]
- --------------------------------------------------------------------------------
Quality Standard Development (Appendix 3)
- --------------------------------------------------------------------------------
Facility Multi Use Development Facility-Grangemouth
- --------------------------------------------------------------------------------
S-4
<PAGE>
4.3 PREPARATION OF GMP BATCH MANUFACTURING
DOCUMENTATION
Product specific Process Instructions (provisional Batch Manufacturing
Instructions) for oligonucleotide product will be written based on the work
carried out during the scale up studies.
- --------------------------------------------------------------------------------
Time Requirement [ * ]
- --------------------------------------------------------------------------------
4.4 PROCESS SCALE UP - GMP MANUFACTURE OF KILO 1 MUTUALLY AGREED PRODUCT.
Avecia LSM will carry out the GMP manufacture of mutually agreed Product at the
range of [ * ] on the Oligo Process. The objective of the scale up program
is to demonstrate the process described in the process description produces
material of the required quality and specification.
Avecia LSM will manufacture the scale up batches to the agreed specification
using the Process instructions, material generated from this stage will be
suitable for use in toxicology and human clinical trials.
Avecia LSM will manufacture 1kg oligonucleotide to the agreed specification
following the Process Instructions and documented analytical methods.
The manufacture program following oligonucleotide assembly will proceed only if
there is agreement by the joint review committee that the process for
deprotection and purification, as detailed in the process instructions, can
operate efficiently at scales above [ * ]. If it is deemed that this
process is insufficient to produce the quality and quantity of oligonucleotide
product RPI require, than the decision will be made to continue scale up
development work.
Note: Further development may be required in the GMP phase, this work will be
documented and all changes subject to QA approval.
The Oligonucleotide will be supplied in a form agreed upon by both parties.
A Certificate of Analysis will be supplied.
Avecia LSM will retain a sample of product (exact amount to be agreed) for use
as retention material and in further analytical studies.
- --------------------------------------------------------------------------------
Time Requirement [ * ]
- --------------------------------------------------------------------------------
Quality Standard GMP (Appendix 3.2)
- --------------------------------------------------------------------------------
Facility Pharmaceutical Manufacturing Facility-Grangemouth
- --------------------------------------------------------------------------------
5. SUMMARY REPORTS / REGULATORY SUBMISSION
5.1 Preparation of Development Reports
Avecia LSM will compile interim reports at each stage of the process development
programme and following GMP manufacture.
The reports will be retained in the Avecia LSM QA Archives.
- --------------------------------------------------------------------------------
Time Requirement Within [ * ] weeks of each stage completion
- --------------------------------------------------------------------------------
S-5
<PAGE>
5.2 Preparation of Documentation
If required Avecia LSM will provide information to support RPI's regulatory
submissions.
- --------------------------------------------------------------------------------
Time Requirement [ * ]
- --------------------------------------------------------------------------------
6. PACKAGING AND DESPATCH
Specification of primary packaging of the oligonucleotide to be agreed.
7. COSTING
8. TIMELINES
S-6
<PAGE>
SCHEDULE 2
----------
Joint Review Committee (JRC)
----------------------------
1. Purpose
-------
1.1 The purpose of the JRC is to be responsible for co-ordinating and
supervising the implementation of the Programme.
1.2 The JRC is to assist in ensuring that lines of communications are
established and maintained between the parties and to this end shall be
responsible for nominating a representative in both parties who shall be
the main but not sole point of contact for the other party.
1.3 It shall be the responsibility of the JRC to circulate copies of all
reports and information that it receives from one party to the other
without delay.
1.4 The JRC is to be the primary arena for the settlement of any disagreements
between the parties relating to the interpretation and implementation of
the Programme.
2. Period of Existence
-------------------
The JRC shall remain in being until whichever is the earlier of the
completion of the Programme or the termination of the Agreement.
3. Membership
----------
3.1 The JRC shall have four members including the Chairman. Two members
including the Chairman shall be appointed in writing by AVECIA and two
members shall be appointed in writing by RPI.
3.2 It is envisaged that the members of the JRC appointed by each party shall
vary with regard to their particular disciplines dependent on the
particular stage reached in the Programme. Either party may invite further
representatives with appropriate skills to attend meetings of the JRC in a
non-voting capacity.
3.3 Either party may at any stage change a representative member on the JRC by
giving written notice of such change to the other party.
4. Meetings
--------
4.1 The initial meeting of the JRC shall take place within the period of sixty
(60) days following the date of this Agreement at AVECIA Grangemouth,
Scotland or RPI, Boulder.
4.2 Subsequent meetings of the JRC shall be held every two (2) months
alternating between Boulder, and Grangemouth, Scotland if not otherwise
agreed by the JRC.
4.3 If for any reason following the agreement of the Programme either party
wishes a meeting of the JRC to be held between the regular two (2) monthly
meetings, it may arrange such meeting on giving at least fifteen (15) days'
notice in writing to the other party, such meeting shall be held at the
offices of the party not requesting the meeting.
5. Procedure at Meetings
---------------------
5.1 The Chairman of the JRC shall be responsible for preparing and circulating
an agenda for any meeting of the JRC at least ten (10) days prior to the
meeting (which agenda shall include any item considered important by either
party) and appointing a secretary for such meeting, who need not be a
representative member of the Committee, who shall be responsible for the
preparation and circulation of minutes of the meeting within thirty (30)
days of the conclusion of such meeting.
S-7
<PAGE>
5.2 Any resolution put to the JRC must, to be passed, be accepted by at least
three (3) members of the JRC present in person.
5.3 Each representative of the JRC shall have one vote. The Chairman shall not
have a second or casting vote.
5.4 Any dispute which cannot be resolved by the JRC shall so far as it comes
within the ambit of section 1.4 above be dealt with according to the
provisions of such section, any other dispute shall be dealt with in
accordance with clause 26 of the Agreement.
6. Amendment to JRC Constitution
-----------------------------
6.1 The JRC may amend its rules set out herein provided that a resolution
amending such rules is circulated in writing thirty (30) days prior to the
meeting and such resolution is passed in accordance with Section 5.2.
S-8
<PAGE>
SCHEDULE 3
----------
Quality Agreement
-----------------
Draft QA Agreement
The attached agreement is a draft template which has yet to be discussed with
RPI's QA representatives. It's format and content may change as a result of
these discussions. It is included as part of this proposal to define the set of
assumptions that have been made in the preparation of this proposal.
S-9
<PAGE>
Avecia LSM
Quality Assurance Agreement between Avecia LSM and RPI for the Technology
Transfer and Manufacture of Angiozyme
Issued By: _____________________________________________
Avecia LSM QA Manager
Approved By: ______________________________________________
RPI Manufacturing Director
Approved By: ______________________________________________
RPI QA Director
Approved By: ______________________________________________
Avecia Grangemouth Works QA Manager
Approved By: ______________________________________________
Avecia LSM Commercial Manager
Revision Summary
S-10
<PAGE>
Contents
1. Introduction
2. Background information on Angiozyme
3. Responsible personnel
4. Communication
5. Technology Transfer
6. Quality Assurance
7. Purchasing, supply and testing of raw materials and packaging
8. Manufacturing Facility
9. Manufacture
10. Sampling, testing and release of bulk active pharmaceutical ingredient
11. Control and supply of samples
12. Transport and Distribution
13. Complaints and recall
14. Safety, Health and Environment
15. Stability
16. Validation
17. Subcontracting
18. Deviations and Change Control
19. Documentation and Archiving
20. Regulatory
S-11
<PAGE>
1. Introduction
The purpose of this agreement is to ensure that the responsibilities of RPI
and Avecia LifeScience Molecules in the Technology Transfer and subsequent
manufacture of Angiozyme are clearly defined. This is to ensure that
misunderstandings are avoided, which could lead to a product or work of
unsatisfactory quality.
The agreement will address the following:-
* Roles and responsibilities in ensuring that Avecia LSM complies with cGMP
and other relevant legislation.
* Responsibility for the release of Angiozyme active pharmaceutical
ingredient for further processing for use in humans.
* Agreement on access to Avecia LSM facilities for RPI's personnel.
* Arrangements for changes or amendments to aspects of this agreement.
Channels of communication.
* Supply of relevant information following a regulatory inspection, which
may impact on the continued supply of the product.
The agreement addresses the initial issues surrounding the technology
transfer of RPI's manufacturing process to Avecia LSM and then focuses on
the Quality Assurance issues surrounding the ongoing supply of Angiozyme to
GMP for human use.
2. Background information on Angiozyme
Angiozyme is a........
It will be supplied to RPI as a powder in bulk form and subsequently
formulated under the control of RPI.
It is currently in Phase .. clinical trials for the treatment of ..........
As the drug product progresses through clinical trials, it is the
responsibility of RPI to inform Avecia LSM and to initiate a joint review of
the contents of this technical agreement, to ensure that the quality
standards described within it still meet the requirements of the regulators.
Responsible Personnel
S-12
<PAGE>
<TABLE>
<CAPTION>
XXX Avecia
<S> <C> <C>
Commercial [ * ]
Technology Manager [ * ] [ * ]
Manufacturing Technology [ * ]
Transfer
Production [ * ]
Analytical Technology Transfer [ * ]
Analytical [ * ]
Quality Assurance [ * ] [ * ]
[ * ]
Facility and Plant Commissioning
[ * ]
Safety, Health and Environment
Regulatory [ * ] [ * ]
Document Controller [ * ] [ * ]
</TABLE>
4. Communication
S-13
<PAGE>
The commercial representatives of each company will be informed of supply or
receipt of documents and of the occurrence of meetings or visits.
4.1 Documents
The document control representatives from each company will be responsible
for the supply or receipt of documents.
All inter-company document transfers will be logged.
The document controller in receipt of a document will formally acknowledge
receipt.
The document controller shall maintain a centralised archive of all
documents received, with copies disseminated to appropriate team members in
a controlled manner.
All documents will be numbered and, if appropriate, version controlled.
The document controller will be responsible for recalling documents that
have been replaced with new versions.
4.2 Review meetings
Meetings should be held between functional nominees as appropriate to ensure
smooth transfer of information and progress on actions.
5. Technology Transfer
The manufacturing and analytical Technology transfer activities associated
with this project are covered in more detail in the following documents:-
Manufacturing Technology Transfer Plan for Angiozyme
Analytical Technology Transfer Plan for Angiozyme
These activities will follow the general framework outlined below:-
5.1 Initiation
Agree aims of the Technology transfer and the criteria for successful
transfer.
Identify information required from each side prior to initial manufacture.
Establish review milestones to ensure transfer is proceeding smoothly.
5.2 Initial Manufacture
Agree Technical support arrangements between RPI and Avecia LSM.
5.3 Validation
S-14
<PAGE>
Establish responsibilities for all aspects of validation. See also section
17. below.
5.4 Completion
Agree documents required and who approves against pre-agreed objectives.
6. Quality Assurance
Avecia shall manufacture Angiozyme to the best of its knowledge in
compliance with GMP as detailed in the 'Guidance for Industry;
Manufacturing, Processing, or Holding Active Pharmaceutical Ingredients'
Draft Guidance, March 1998, published by the FDA.
RPI shall confirm their satisfaction with the compliance level applied by
Avecia LSM at audit.
Findings from audit(s) will be communicated in writing to Avecia LSM and any
corrective actions mutually agreed between representatives from the 2
companies. In the event of a difference in interpretation of the required
quality standard, the view taken by RPI will be accepted by Avecia, provided
this standard is not below that recommended by Avecia. If it is a
significantly higher standard than recommended by Avecia, then the 2 parties
will meet and agree by negotiation how the situation should be managed.
7. Purchasing, supply and testing of raw materials and packaging
RPI will provide Avecia LSM with a materials listing for the manufacture of
Angiozyme, together with purchasing specifications. RPI will inform Avecia
of any changes in these specifications as they occur.
Avecia LSM will purchase materials to the specifications provided by RPI.
RPI will specify the suppliers for the critical raw materials (amidites and
CPG) in agreement with Avecia. Avecia will be responsible for selecting its
own suppliers for non-critical reagents. Avecia LSM will take responsibility
for all testing and clearance of raw materials used in the manufacture of
Angiozyme, on completion of the technology transfer of appropriate test
methods from RPI.
RPI shall confirm the suitability of Avecia's vendor certification and raw
material testing and sampling procedures at audit.
8. Manufacturing Facility
Avecia LSM and RPI will jointly conduct a risk assessment of any differences
between the Avecia and RPI manufacturing facilities and how they are
operated.
S-15
<PAGE>
The process will be operated under class 100,000 conditions, with additional
protection provided for the later stages of the process, which may be
especially vulnerable to microbial contamination. Details of this additional
protection will be jointly discussed and agreed between representatives of
the 2 companies.
[ * ]
The facility and equipment will be qualified and cleaned prior to initial
manufacture in accordance with Avecia's procedures.
RPI will audit the manufacturing facility, equipment and supporting
documentation prior to initial manufacture to assess their suitability for
use.
Findings from the audit will be communicated to Avecia in writing and any
corrective actions mutually agreed.
9. Manufacturing
The manufacturing process will be the subject of a formal Technology
transfer programme between RPI and Avecia (see section 5 above)
RPI will provide Avecia with full details of the existing manufacturing
process, including, in process tests and specifications for both the
intermediates and the active pharmaceutical ingredient (if available)
Avecia will establish the existing process in the development laboratories
in PTD and then conduct an experimental program to scale the process up for
transfer to the manufacturing facility within Grangemouth Works. RPI will be
kept fully informed of the experimental program and of any proposed
modifications to the process, which will be approved by representatives from
both companies.
Avecia will prepare formal process instructions for manufacture to the
scaled up process. RPI Technical and QA representatives will review this
documentation and any comments shall be incorporated by Avecia.
All specifications will be formally accepted and agreed between RPI and
Avecia personnel and subject to change control.
In addition to the documents described above, RPI shall either provide the
following, or pre-approve proposals from Avecia LSM:-
Format and content of the Certificate of analysis
S-16
<PAGE>
Labelling requirements
Definition of a batch
Lot or batch numbering system
Sampling plans
Sampling methods
10. Sampling, testing and release of active pharmaceutical ingredient
On completion of the formal technology transfer of the analytical release
methods for Angiozyme active ingredient, Avecia LSM will take responsibility
for the release of this product for further processing for human use. RPI
will conduct some repeat verification testing, this will be pre-agreed with
Avecia.
QA release will involve the QC release testing of the active ingredient,
together with a complete review of all batch documentation by Avecia
Grangemouth Works QA.
RPI will review the Avecia test procedures, to ensure that there are no
errors in the translation from RPI documentation.
RPI will be responsible for the validation of all the release test methods
and will ensure any repeat validation considered appropriate on transfer to
Avecia's analytical sites is prescribed as part of the Analytical Technology
Transfer protocol.
RPI will initially provide any necessary analytical reference standards,
together with their characterisation data. This may be reviewed at a future
date, as it becomes necessary to qualify further reference standards.
RPI will audit Avecia's laboratories to assess their suitability for use.
Audit observations will be communicated in writing to Avecia LSM and
corrective actions mutually agreed.
RPI will be responsible for specifying packaging and shipping conditions
which have been demonstrated to preserve the product's quality and integrity
during transport.
11. Control and Supply of Samples
Avecia will take and retain samples of Angiozyme in accordance with sampling
plans pre-agreed between RPI and Avecia QA representatives. As a minimum,
Avecia LSM will retain sufficient material from each batch to allow full
repeat testing at least twice.
Retention samples will be retained for at least one year after the
expiration date of the batch, or, if Angiozyme has a defined retest period,
for 3 years after the batch is distributed. Retention samples will be
packaged and stored under conditions prescribed by RPI.
S-17
<PAGE>
RPI will provide details of any sample requirements for shipment to their
premises, prior to manufacture of the batch concerned. This is to ensure
material is manufactured at the appropriate scale to cover sample
requirements and that arrangements for sampling can be made in a timely
manner.
Responsibility for analytical reference standards is covered in section 10
above.
12. Transport and Distribution
RPI will provide Avecia LSM with formal specifications for packaging and
shipping of Angiozyme.
Avecia LSM will be responsible for ensuring the requirements of these
specifications are met.
On departure from Avecia's Grangemouth site, responsibility for the API
passes to RPI.
13. Complaints and Recall
Any complaints from RPI to Avecia LSM should be directed to the Avecia LSM
commercial representative, who will then be responsible for informing the
Avecia LSM QA representative. The Avecia LSM QA representative will assemble
a team to address the complaint and, if appropriate, carry out an
investigation. The complaint will be handled in accordance with the Avecia's
quality procedures.
Avecia shall be responsible for advising RPI immediately of any systematic
failure discovered which may cast doubt on reliability of previous
manufacture or analysis. Communication in such situations will be involve
the Commercial and QA representatives from Avecia LSM and the QA
representative at RPI. RPI will be responsible for the implementation of any
decision they might take to recall the product as a result.
14. Safety, Health and Environment
Avecia will take responsibility for ensuring that the facilities, procedures
and equipment used for manufacture are designed and operated in accordance
with relevant legislation.
RPI will be responsible for all toxicological and Eco-tox data required for
the product to gain appropriate registration for manufacture, shipment and
use within the USA and Europe.
Avecia and RPI shall advise each other of any events that give raise to
concerns about the safety profile of the process.
S-18
<PAGE>
Avecia shall take responsibility for all on site incidents and will advise
RPI of all significant events that may have an impact on product
manufacturing rate, economics, safety profile or product quality.
RPI is responsible for the API on its departure from Avecia's Grangemouth
site.
15. Stability
RPI will take responsibility for all stability studies relating to Angiozyme
active pharmaceutical ingredient and will provide Avecia LSM with the
details of appropriate storage conditions to maintain its quality and
integrity.
RPI will provide Avecia LSM with information to allow Avecia LSM to assign
an expiry or retest date to material manufactured at Avecia LSM.
16. Validation
Avecia LSM will take responsibility for the qualification of the facilities
and equipment used in the manufacture of Angiozyme at Avecia Grangemouth
Works. RPI will audit this qualification activity.
RPI is responsible for the validation of all analytical test methods used
for the release of raw materials and in in-process testing and release of
the final active pharmaceutical ingredient.
Angiozyme is currently in Phase 1 clinical trials. As the drug moves to
later stage clinical trials RPI and Avecia LSM will discuss and agree
responsibilities for further process or analytical development and process
validation activities.
17. Subcontracting
Avecia LSM will not subcontract any activity associated with the
manufacture of Angiozyme without prior notification and approval from RPI.
Avecia LSM will take responsibility for the certification of all
subcontractors to the required regulatory standards.
Avecia LSM will make any appropriate audit reports available to RPI on
request.
18. Deviations and Change Control
S-19
<PAGE>
QA representatives from RPI, Avecia Grangemouth Works and Avecia LSM shall
meet and agree a shared understanding of the definitions of changes and
deviations. Discussion will cover what changes are considered significant
and would require prior approval by RPI and similarly for deviations, what
would be considered significant and require notification of RPI.
Any significant change proposed by either RPI or Avecia shall be
communicated in writing via the QA representatives in each organisation. The
change will then be considered by a team of representatives from the
appropriate departments, in accordance with local change control procedures.
If appropriate a formal programme of work will be proposed and formally
agreed by representatives from each company.
Deviations will be handled through Avecia Grangemouth Works Deviation and
non-conformance procedure.
19. Documentation and Archiving
Avecia LSM will be responsible for the retention and storage of all batch
documentation in a secure QA archive. Documentation will be stored for a
minimum of ( whichever of those listed below is the longest):-
a) The term of the commercial agreement.
b) Five years after the expiry date of the batch manufactured.
RPI personnel may audit the batch documentation on request, given reasonable
notice.
Copies of the master batch records will be made available to RPI on request.
20. Regulatory
Avecia LSM will provide RPI with appropriate CMC information in support of
regulatory submissions.
The format and content of this information will be pre-agreed by
representatives from Avecia LSM and RPI's QA/Regulatory functions.
RPI will be responsible for submitting this information to the regulators as
part of their regulatory submission, but will allow Avecia LSM QA function
to review the information concerning Avecia prior to submission, to ensure
there are no errors in transcription which may result in Avecia being
misrepresented.
RPI will be responsible for requesting information from Avecia LSM
QA/Regulatory function as appropriate e.g. for annual updates.
S-20
<PAGE>
Avecia LSM QA representative will be responsible for informing RPI of
proposed changes to any activity associated with the manufacture of
Angiozyme, prior to implementation, to ensure that its regulatory impact can
be assessed and any necessary action agreed.
Avecia LSM will inform RPI of any corrective actions from a regulatory
inspection that may have an impact on the continued supply of Angiozyme.
S-21
<PAGE>
SCHEDULE 4
----------
Avecia LifeScience Molecules
DNA Medicines
Technology Transfer Plan
Manufacture of Angiozyme
at
Grangemouth Works
December 1999
_______________________________________________________________________________
Issued By:______________________________________ Date:_____________________
(Business Operations Manager)
_______________________________________________________________________________
Approved By:___________________________________ Date:_____________________
(Quality Assurance)
_______________________________________________________________________________
S-22
<PAGE>
CONTENTS
<TABLE>
<CAPTION>
SECTION PAGE NO.
<S> <C>
1 Introduction..................................................... 3
2 Aims............................................................. 3
3 Initiation....................................................... 4
4 Project Nominees................................................. 5
5 Communication.................................................... 6
5.1 Documentation............................................... 6
5.2 Reviews.....................................................
6 Information Transfer............................................. 6
7 Initial manufacture.............................................. 7
7.1 Commissioning support....................................... 7
7.2 Initial manufacture......................................... 7
7.3 Change control.............................................. 7
8.1 Technology transfer completion................................... 8
8.1 Criteria for successful technology transfer.................
8.2 Technology transfer review and sign-off.....................
8.3 Post technology transfer....................................
9 Appendices 9
Appendix I: Flow chart for technical transfer
Appendix II: Timetable for RPI Technology Transfer Plan
Appendix III Information required from RPI
Appendix IV: Information required form Avecia
Appendix V : Information required to complete technology transfer
Appendix VI: Technology transfer acceptance document
</TABLE>
S-23
<PAGE>
1 INTRODUCTION
This plan details the mechanism by which the RPI Angiozyme process will be
technology transferred between RPI and LifeScience Molecules Grangemouth
Works and sets out the activities, information required and timetable in
order to successfully complete the technology transfer exercise.
A well managed technology transfer is key to the establishment of a
manufacturing process which is consistent in operation and generates
Angiozyme of equivalent quality to that manufactured by RPI.
Material provided by LSM in Grangemouth will be used in a process
registered in the United States and the rest of the world. As such:
technology transfer, commissioning, validation and change control must be
undertaken to ensure that material produced in the Campaign is equivalent
to material produced by RPI for submissions to the FDA.
The material produced by this manufacture will be used for: Phase ()
Clinical Trials
Technology transfer will be conducted in three phases:
Initiation: Identification of responsible personnel
agreement on information to be transferred (protocol)
transfer of information
Commissioning: Pre manufacture Technical Transfer review
Initial manufacture
Note: The pre manufacturing technical transfer review must include
agreement of and actions to minimise the risks that may result from the
differences between the facilities at RPI and that at Grangemouth
Completion: Post manufacturing review of success of technology
transfer Sign -off of Technology transfer protocol
A flow chart outlining the process is attached as Appendix I
It is intended that sign-off will take place following the initial
campaign, subject to successfully meeting the required standards and
criteria.
2 AIMS
The purpose of technology transfer is to supply technical expertise and
associated information to enable Avecia Life Science Molecules, Grangemouth
facility, to successfully undertake manufacture of RPI Angiozyme in light
of the fact that the LSM and RPI facilities are not identical.
The agreed timetable is detailed in Appendix II.
The critical success factors for successful transfer are as follows:
. Avecia Life Science Molecules, Grangemouth Works will manufacture an
initial quantity of Angiozyme by the end of [ *. ] Future
manufacture may be carried out following the initial Campaign.
. The Grangemouth Works manufacturing process will be specified by the
current RPI process. Processing will be carried out within the scope
of the pre-determined parameters.
. An established change control mechanism should be used for any changes.
S-24
<PAGE>
. The quality of the Angiozyme supplied by Avecia Life Science Molecules
Grangemouth Works must be within specification and typical of
manufacture from RPI.
. Technology transfer, plant operation, processing and cleaning will be
carried out to Grangemouth Works Quality standards.
3 INITIATION
Technology transfer of RPI Angiozyme will be formally initiated in [ *. ]
Functional nominees are identified below and a checklist of relevant
documents is given in Appendices III and IV.
4 PROJECT NOMINEES
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
FUNCTION RPI CONTACT No LSM CONTACT No
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Technology Transfer Leader [ * ] [ * ] [ * ] [ * ]
- -------------------------------------------------------------------------------
Chemistry [ * ] [ * ] [ * ] [ *-]
- -------------------------------------------------------------------------------
Process Engineering [ * ] [ * ] [ * ] [ * ]
- -------------------------------------------------------------------------------
Quality Assurance [ * ] [ * ] [ * ] [ * ]
- -------------------------------------------------------------------------------
Engineering [ * ] [ * ] [ * ] [ * ]
- -------------------------------------------------------------------------------
Analytical Methods and [ * ] [ * ] [ * ] [ * ]
Specifications
- -------------------------------------------------------------------------------
Safety, Health and Environment [ * ] [ * ] [ * ] [ * ]
- -------------------------------------------------------------------------------
Manufacture and waste disposal [ * ] [ * ] [ * ] [ * ]
- -------------------------------------------------------------------------------
Raw Materials and purchasing [ * ] [ * ] [ * ] [ * ]
- -------------------------------------------------------------------------------
</TABLE>
5 COMMUNICATION
5.1 DOCUMENTATION
The Technology transfer managers on each site will be formally responsible
for ensuring document issue and control.
All documents must be numbered and where appropriate version controlled
The transfer of all documents will must be done within a change control
system
S-25
<PAGE>
A copy of all documents outlined in Appendices III and IV (information
required before commissioning) and Appendix V (information required before
technology transfer completion) must be supplied via the QA
representatives. This data will form the basis of the respective sites
technology transfer documentation.
5.2 REVIEWS
Meetings should be held between functional nominees as appropriate to
ensure complete transfer of information and progress on actions.
A formal pre-commissioning review will take place to ensure information
transfer is complete and that all relevant information has been
incorporated into Grangemouth Works systems.
Performance of the initial manufacture should be reviewed and documented as
early as possible after the campaign.
Following completion of the Campaign a technology transfer review will be
held prior to sign-off to ensure documentation is complete and
satisfactory.
6 INFORMATION TRANSFER
Information requirements from RPI and LifeScience Molecules are specified
in Appendices III and IV.
This data must be in place prior to the start of manufacture.
Key Elements:
Process guide and reporting ranges.
Quality Assurance.
Plant cleaning
Control of change
Analytical methods, standards and specifications
Raw material sources and specifications
Safety, Health and Environmental data
Hazard data sheets
Process Waste Streams
Pre commissioning review: Approval to manufacture
7 INITIAL MANUFACTURE
7.1 COMMISSIONING SUPPORT
Prior to commissioning, the arrangement for technical support between RPI
and LifeScience Molecules will be agreed.
Visits to each site of relevant staff of each discipline in preparation for
manufacture will be encouraged. This will include the requirements for
technical and analytical support from RPI
S-26
<PAGE>
Throughout the technical transfer process progress will be monitored via a
steering committee which will include
[ * ]
7.2 Initial Manufacture
A project Plan should be prepared for the plant before commissioning. The
following issues should be addressed:
. Engineering Validation including Installation and Operational
Qualifications carried out by LifeScience Molecules.
. Cleaning - Demonstration of appropriate levels of cleaning, between
different materials manufactured in the facilities and the manufacture
of RPI Angiozyme will be carried out to current Grangemouth Works
systems.
. Analytical technical transfer plan
. Training of Avecia personnel by RPI including recording of any training
received
7.3 CHANGE CONTROL
An agreed procedure will be issued defining requirements for change
control.
During Technology Transfer the starting point for Change Control will be
defined as the information supplied by RPI to define the technology.
Amendments to the RPI technology should be covered by the Grangemouth Works
change control procedure and should not be adopted without prior
authorisation from RPI.
8 TECHNOLOGY TRANSFER COMPLETION
On completion of Technology Transfer responsibility will pass to
Grangemouth Works to control change independently.
Elements that cannot be changed without prior authorisation should be
identified as part of the technology transfer completion review.
8.1 CRITERIA FOR SUCCESSFUL TECHNOLOGY TRANSFER
A number of criteria are outlined below which must be met before technology
transfer can be formally completed.
8.1.1 Process
S-27
<PAGE>
. Demonstrate that specified processing parameters can be operated to and
that product, which meets specification, typical of material produced
in RPI, can be manufactured.
. Demonstrate operation of an effective mechanism for control of change
opposite process technology.
. Demonstrate the ability to operate the process at the required capacity
and operational quality.
8.1.2 Raw Materials
. Demonstrate that a secure supply of raw materials and starting material
from agreed suppliers has been established.
. Demonstrate control of change procedure for raw material supplies.
8.1.3 Waste Streams
. Demonstrate that a secure suitable waste disposal routes has been
established.
8.1.4 Analytical and Specifications
. Demonstrate a complete implementation of technology.
. Demonstrate satisfactory operation of the transferred methods before
data is used for batch release.
. Operate an effective mechanism for control of change of analytical
technology.
8.1.5 Safety, Health & Environment
. Demonstrate that adequate hygiene procedures and practices are in place
to ensure that manufacture of Angiozyme does not result in adverse
occupational health effects.
. Demonstrate that adequate precautions are built into plant design and
layout and procedures to ensure the safe operation of the process.
. Demonstrate adequate environmental protection measures and secure
authorisation from relevant pollution inspectorate.
8.1.6 Regulatory Compliance
. Demonstrate that the process can be operated satisfactorily to cGMP.
. Demonstrate compliance with the agreed manufacturing process,
analytical methods and specifications.
8.1.7 Engineering
. Demonstrate that the plant has been built and validated to the
appropriate regulatory standard.
S-28
<PAGE>
8.2 TECHNOLOGY TRANSFER REVIEW AND SIGN-OFF
Following the initial manufacturing campaign there will be a review to
define whether the critical success factors listed in 8.1 have been met.
The review will comprise the preparation and approval of documents
(appendix V) and a meeting to agree a list of any outstanding actions.
In the event of Grangemouth Works conducting a second or subsequent
campaign of Angiozyme prior to sign-off of technology transfer a written
plan will be agreed between RPI and Grangemouth Works covering outstanding
issues.
After a final review to confirm that technology transfer has been
successfully concluded then the Technology Transfer Completion Document
will be issued for authorisation.
Completion is targeted for end of November 2000.
8.3 POST TECHNOLOGY TRANSFER
As part of technology transfer sign off a plan will be agreed in the event
of any future manufacturing campaigns. Routes of communications between
the two sites will be clearly identified emphasising the need for
continuity. A technical manager will be nominated from each site to act as
first line contacts for transfer of information.
S-29
<PAGE>
APPENDIX I
[FLOOR PLAN APPEARS HERE]
S-30
<PAGE>
APPENDIX II
Timetable for Angiozyme Technology Transfer Plan: Target Dates
Initiation of Technology Transfer [ * ]
Technology Transfer Plan Preparation [ * ]
Information Transfer [ * ]
Pre-commissioning Review
Commissioning/ Initial Manufacture
Equivalence Testing
Completion Review and Audit
S-31
<PAGE>
APPENDIX III
Information Required From RPI
<TABLE>
<CAPTION>
1 PROCESS
- ---------------------------------------------------------------------------------------------------------------------------
Information RPI Avecia Target Completion
Responsible Responsible Date Date
person Person
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1.1 Process Guide for Angiozyme in [ * ] [ * ]o
controlled format
- ---------------------------------------------------------------------------------------------------------------------------
1.2 RPI approval that Avecia materials of [ * ] [ * ]
construction are suitable for
manufacture of Angiozyme
- ---------------------------------------------------------------------------------------------------------------------------
1.3 Report of any know critical parameters [ * ] [ * ]
associated with the process (synthesis,
cleavage/deprotection, purification ,UF,
Lyophilisation) which may impacts on
the quality of final product
- ---------------------------------------------------------------------------------------------------------------------------
1.4 Environmental Control standards: [ * ] [ * ]
Confirmation that LSM standards for
control of the manufacturing
environment are adequate for the
manufacture of Angiozyme
- ---------------------------------------------------------------------------------------------------------------------------
1.5 RPI to define acceptable hold points [ * ] [ * ]
and conditions for storage of
in-process material and intermediates
- ---------------------------------------------------------------------------------------------------------------------------
1.6 Schedule of technical support during [ * ] [ * ]
manufacture
- ---------------------------------------------------------------------------------------------------------------------------
1.8 Report on development of manufacture [ * ] [ * ]
of Angiozyme
- ---------------------------------------------------------------------------------------------------------------------------
1.9 Requirements for Clearance of Final [ * ] [ * ]
Product
- ---------------------------------------------------------------------------------------------------------------------------
1.10 Ultra-filtration development reports [ * ] [ * ]
including summary of optimised
conditions and [ * ]
- ---------------------------------------------------------------------------------------------------------------------------
1.11 Freeze drying development report [ * ] [ * ]
including agreement on any further
characterisation of technologies
- ---------------------------------------------------------------------------------------------------------------------------
1.12 Report on assessment of risk arising [ * ] [ * ]
from differences between RPI and Avecia
facilities Scale/MOC/ Operating methods/
Process control
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
S-32
<PAGE>
<TABLE>
<CAPTION>
PROCESS
- ------------------------------------------------------------------------------------------------------------------------------
Information RPI Avecia Target Completion
Responsible Responsible Date Date
person Person
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1.13 Controlled copy of all documents [ * ]
associated with purification including
efficiency test and results, sample
strength (OD, %FLP), solvent
gradients, solvent temperatures,
fraction times and any associated
stability data.
- ------------------------------------------------------------------------------------------------------------------------------
1.14 Controlled copies of all document [ ]
associated with recycle of product
- ------------------------------------------------------------------------------------------------------------------------------
1.15 Details of lagging material used for [ * ]
insulation HPLC column.
- ------------------------------------------------------------------------------------------------------------------------------
1.16 Detailed report of any known critical [ * ]
parameters associated with the
purification of product including all
available stability data.
- ------------------------------------------------------------------------------------------------------------------------------
1.17 Synthesis method for manufacture of [ * ]
Angiozyme on APB Oligo Pilot
- ------------------------------------------------------------------------------------------------------------------------------
1.18 Details of all stability trials on raw [ * ]
materials, in-process samples and
final product for assignment of shelf
life.
- ------------------------------------------------------------------------------------------------------------------------------
1.19 Compositions of waste streams [ * ]
- ------------------------------------------------------------------------------------------------------------------------------
1.20 Details of serious deviations from [ * ]
normal operations outlining causes,
impact and preventative measures adopted.
- ------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
SCHEDULE 5 RAW MATERIALS
- ----------
- ------------------------------------------------------------------------------------------------------------------------------
Information RPI Avecia Target Completion
Responsible Responsible Date Date
person Person
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
2.1 Raw Material Master List indicating [ * ] [ * ]
critical raw materials to be purchased
from RPI named suppliers
- ------------------------------------------------------------------------------------------------------------------------------
2.2 Reports on any audits of Raw Material [ * ] [ * ]
Vendors which Avecia will use.
- ------------------------------------------------------------------------------------------------------------------------------
2.3 Raw Material Specifications including [ * ] [ * ]
packaging materials
- ------------------------------------------------------------------------------------------------------------------------------
2.4 Details of any special storage or [ * ]
handling procedures for raw materials
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULES 5 ANALYTICAL AND SPECIFICATIONS
- -----------
S-33
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
Information RPI Avecia Target Completion
Responsible Responsible Date Date
person Person
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
3.1 Analytical Technology Transfer Plan [ * ] [ * ]
- -------------------------------------------------------------------------------------------------------------------------------
3.2 Methods of analysis and Specification [ * ] [ * ]
for Angiozyme.
- -------------------------------------------------------------------------------------------------------------------------------
3.3 Specification and methods for analysis [ * ] [ * ]
of Raw Materials including
packaging materials.
- -------------------------------------------------------------------------------------------------------------------------------
3.4 Methods and specifications for [ * ] [ * ]
in-process and intermediate tests
- -------------------------------------------------------------------------------------------------------------------------------
3.5 Methods and specifications for [ * ] [ * ]
cleaning verification tests
- -------------------------------------------------------------------------------------------------------------------------------
3.6 Analytical reference standards [ * ] [ * ]
- -------------------------------------------------------------------------------------------------------------------------------
3.7 Sampling requirements [ * ] [ * ]
- -------------------------------------------------------------------------------------------------------------------------------
3.8 Analytical Technical transfer report [ * ] [ * ]
- -------------------------------------------------------------------------------------------------------------------------------
3.9 Transfer protocol for individual methods [ * ] [ * ]
- -------------------------------------------------------------------------------------------------------------------------------
3.10 Validation reports of method developed at RPI [ * ] [ * ]
- -------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
SCHEDULE 5 REGULATORY
- ----------
- -------------------------------------------------------------------------------------------------------------------------------
Information RPI Avecia Target Completion
Responsible Responsible Date Date
person Person
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
4.1 QA agreement which outlines [ * ] [ * ]
responsibilities for validation.
- -------------------------------------------------------------------------------------------------------------------------------
4.2 Format and content guidance for CMC [ * ]
information required for regulatory
submission
(This is Product Dependent)
Angiozyme [ * ]
Heptazyme
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
S-34
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE 5 HEALTH AND SAFETY
- ----------
- ------------------------------------------------------------------------------------------------------------------------------
Information RPI Avecia Target Completion
Responsible Responsible Date Date
person Person
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
5.1 Substance Information sheets (HDS) and [ * ] [ * ]
information on RPI Operating methods
used when handling Angiozyme
- ------------------------------------------------------------------------------------------------------------------------------
5.2 Substance information sheets on raw [ * ] [ * ]
materials (MSDS)
- ------------------------------------------------------------------------------------------------------------------------------
5.3 Available analytical methods for [ * ] [ * ]
Angiozyme for any occupational
hygiene monitoring undertaken by RPI
- ------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
SCHEDULE 5 CONTROL OF CHANGE
- ----------
- ------------------------------------------------------------------------------------------------------------------------------
Information Responsible Avecia Target Completion
person Responsible Date Date
Person
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
6.1 Procedure for obtaining RPI [ * ] [ * ]
authorisation for proposed
amendments
- ------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
SCHEDULE 5 TRAINING
- ----------
- ------------------------------------------------------------------------------------------------------------------------------
Information Responsible Avecia Target Completion
person Responsible Date Date
Person
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
7.1 A plan for training personnel involved [ * ] [ * ]
in the manufacture of RPI products
including method of recording any
training received
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
S-35
<PAGE>
APPENDIX IV
Information Required From LSM
<TABLE>
<CAPTION>
SCHEDULE 5 PROCESS
- ----------
- -------------------------------------------------------------------------------------------------------------------------------
Information Avecia RPI Target Completion
Responsible Responsible Date Date
person Person
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1.1 A commissioning plan for Angiozyme [ * ]
including engineering and equipment
qualification reports
- -------------------------------------------------------------------------------------------------------------------------------
1.2 Justified assurance that the plant has [ * ]
been cleaned prior to start of
manufacture of Angiozyme
- -------------------------------------------------------------------------------------------------------------------------------
1.3 Process record sheet for Angiozyme for [ * ]
RPI comments and approval
- -------------------------------------------------------------------------------------------------------------------------------
1.4 Latest "for construction" line diagrams. [ * ]
An "as-built" plant diagram will be
provided as soon as practicable For
use as reference documents for control
of change
- -------------------------------------------------------------------------------------------------------------------------------
1.5 Materials of construction for plant: [ * ] [ * ]
Avecia to generate MOC document for
RPI approval
- -------------------------------------------------------------------------------------------------------------------------------
1.6 A batch timetable for the initial Campaign [ * ]
- -------------------------------------------------------------------------------------------------------------------------------
1.7 A schedule for technical cover during [ * ]
commissioning
- -------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
SCHEDULE 5 RAW MATERIALS
- ----------
- -------------------------------------------------------------------------------------------------------------------------------
Information Avecia RPI Target Completion
Responsible Responsible Date Date
person person
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
2.1 Evidence that suppliers of raw [ * ]
materials to be used in the
Grangemouth campaign have been approved
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
S-36
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE 5 ANALYTICAL AND SPECIFICATIONS
- ----------
- -------------------------------------------------------------------------------------------------------------------------------
Information Avecia RPI Target Completion
Responsible Responsible Date Date
person Person
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
3.1 Grangemouth Works methods of analysis [ * ]
and specifications to be used for Raw
Materials, intermediates and API for
RPI to check and approve.
- -------------------------------------------------------------------------------------------------------------------------------
3.2 Analytical results from cross [ * ]
correlation studies.
. Raw materials
. Intermediates
. API
- -------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
SCHEDULE 5 HEALTH AND SAFETY
- ----------
- -------------------------------------------------------------------------------------------------------------------------------
Information Avecia RPI Target Completion
Responsible Responsible Date Date
person Person
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
2.1 Assurance that all appropriate risk [ * ]
assessments have been completed prior
to start of manufacture.
- -------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
SCHEDULE 5 ENVIRONMENTAL
- ----------
- -------------------------------------------------------------------------------------------------------------------------------
Information Avecia RPI Target Completion
Responsible Responsible Date Date
person person
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
7.1 Evidence of approval for manufacture from [ * ]
the appropriate authorities.
- -------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
SCHEDULE 5 CONTROL OF CHANGE
- ----------
- -------------------------------------------------------------------------------------------------------------------------------
Information Avecia RPI Target Completion
Responsible Responsible Date Date
person person
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
7.1 Guidelines for Grangemouth [ * ]
Works, system of pre-approval of change
control to be agreed with RPI.
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
S-37
<PAGE>
APPENDIX V
Information And Reports Required Before Technology Transfer Can Be Concluded
<TABLE>
<S> <C>
1 PROCESS SOURCE
1.1 Pre Manufacturing technology transfer review LSM
1.2 Manufacturing Report LSM
SCHEDULE 5 Control of change procedure for routine manufacture
- ----------
1.4 Summary report on suitability of Angiozyme produced at Grangemouth RPI
1.5 Summary report on the suitability of the process RPI
for future manufacture
SCHEDULE 5 RAW MATERIALS
- ----------
2.1 Report on raw material sources LSM
SCHEDULE 5 ANALYTICAL
- ----------
3.1 Summary of all results, and review of operation LSM
of methods
3.2 Cross validation reports LSM
4 HEALTH, SAFETY & ENVIRONMENT
4.1 Report on health and hygiene monitoring LSM
4.2 Confirmation of acceptable occupational health LSM
position
4.3 Waste disposal routes used LSM
5 TECHNOLOGY TRANSFER
5.1 Technology Transfer Closure Report RPI/LSM
5.2 Definition of responsibilities and routes of RPI/LSM
communication post technology transfer
</TABLE>
S-38
<PAGE>
APPENDIX VI :
TECHNOLOGY TRANSFER ACCEPTANCE DOCUMENT
The RPI Angiozyme process has been transferred from RPI to LifeScience
Molecules Grangemouth Works and the reports required by the Technology Transfer
Plan completed.
- --------------------------------------------------------------------------------
The Product Name: Number of Stages:
- --------------------------------------------------------------------------------
CAS nomenclature Stage Name:
- --------------------------------------------------------------------------------
The attached completion report provides a summary of technology transfer and any
actions outstanding.
- --------------------------------------------------------------------------------
For RPI:
Quality Assurance Manager:
_________________________________ Date: _______________________
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
For RPI:
Technology Transfer Manager:
_____________________________________ Date: ____________________
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
For Avecia:
Quality Assurance Manager:
_________________________________ Date: _______________________
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
For Avecia:
Technology Transfer Manager:
_____________________________________ Date: ____________________
- --------------------------------------------------------------------------------
S-39
<PAGE>
SCHEDULE 5
----------
Yield and Price Matrix
----------------------
Order size (Kg)
---------------
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
Raw material cost ($/g of 1 3 5
product)
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
[ * ] [ * ] [ * ] [ * ]
- --------------------------------------------------------------------------------------------------------------
[ * ] [ * ] [ * ] [ * ]
- --------------------------------------------------------------------------------------------------------------
[ * ] [ * ] [ * ] [ * ]
- --------------------------------------------------------------------------------------------------------------
</TABLE>
S-40
