<PAGE>
________________________________________________________________________________
________________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________________
FORM 10-Q
( X ) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1999.
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM __________ TO __________
COMMISSION FILE NUMBER: 0-21643
______________________________
CV THERAPEUTICS, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 43-1570294
(State of Incorporation) (I.R.S. Employer Identification No.)
3172 PORTER DRIVE, PALO ALTO, CALIFORNIA 94304
(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code: (650) 812-0585
Indicate by check whether the Registrant (1) has filed all reports to be
filed by Section 13 or 15(d) of the Securities and Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
The number of shares of Common Stock, $0.001 par value, outstanding as
of August 6, 1999 was 12,310,571.
________________________________________________________________________________
________________________________________________________________________________
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CV THERAPEUTICS, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
(unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
1999 1998
--------- ---------
(unaudited) (A)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 7,769 $ 11,954
Marketable securities 30,358 32,850
Other current assets 1,124 1,236
--------- ---------
Total current assets 39,251 46,040
Notes receivable from related parties 450 450
Property and equipment, net 3,016 2,664
Intangible and other assets 81 176
--------- ---------
Total Assets $ 42,798 $ 49,330
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 944 $ 1,001
Accrued liabilities 2,899 2,761
Current portion of long-term debt - 1,500
Current portion of capital lease obligation 83 80
--------- ---------
Total current liabilities 3,926 5,342
Long-term debt 7,500 7,500
Capital lease obligation 295 338
Deferred revenue 1,000 1,000
Other long-term liabilities 326 412
--------- ---------
Total liabilities 13,047 14,592
Commitments
Stockholders' equity:
Preferred stock, $0.001 par value, 5,000,000 shares authorized, none
issued and outstanding - -
Common stock, $0.001 par value, 30,000,000 shares authorized, 12,310,571
and 11,209,078 shares issued and outstanding at June 30, 1999 and
December 31, 1998, respectively; at amounts paid in 109,410 104,211
Warrants to purchase common stock 1,225 1,225
Notes receivable issued for stock (87) (108)
Deferred compensation (727) (1,049)
Accumulated deficit (79,971) (69,553)
Cumulative other comprehensive income (99) 12
--------- ---------
Total stockholders' equity 29,751 34,738
--------- ---------
Total Liabilities and Stockholders' Equity $ 42,798 $ 49,330
========= =========
</TABLE>
(A) Derived from the audited financial statements included in the Company's
Annual Report on Form 10-K for 1998
See accompanying notes
<PAGE>
CV THERAPEUTICS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)
<TABLE>
<CAPTION>
Three months ended June 30, Six months ended June 30,
------------------------- -------------------------
1999 1998 1999 1998
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Revenues:
Collaborative research $ - $ 299 $ - $ 4,482
Operating expenses:
Research and development 4,477 3,589 8,676 6,925
General and administrative 1,173 1,109 2,357 2,117
--------- --------- --------- ---------
Total operating expenses 5,650 4,698 11,033 9,042
--------- --------- --------- ---------
Loss from operations (5,650) (4,399) (11,033) (4,560)
Interest income 523 738 1,098 1,455
Interest and other expense (238) (185) (483) (796)
--------- --------- --------- ---------
Net loss $ (5,365) $ (3,846) $(10,418) $ (3,901)
========= ========= ========= =========
Basic and diluted net loss per share $ (0.45) $ (0.35) $ (0.90) $ (0.37)
========= ========= ========= =========
Shares used in computing basic and diluted
net loss per share 11,907 11,073 11,569 10,647
========= ========= ========= =========
</TABLE>
See accompanying notes
<PAGE>
CV THERAPEUTICS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
Six months ended June 30,
-------------------------
1999 1998
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(10,418) $ (3,901)
Adjustments to reconcile net loss to net cash used in
operating activities:
Amortization of deferred compensation 318 371
Depreciation and amortization 775 545
Change in assets and liabilities:
Other current assets 112 (104)
Intangible and other assets 95 378
Accounts payable (57) 109
Accrued and other liabilities 52 1,359
Deferred revenue - (5,009)
--------- ---------
Net cash used in operating activities (9,123) (6,252)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of investments (13,120) (19,078)
Maturities of investments 15,271 12,815
Capital expenditures (897) (224)
Notes receivable from officers and employees 21 -
--------- ---------
Net cash used in investing activities 1,275 (6,487)
CASH FLOWS FROM FINANCING ACTIVITIES
Payments on capital lease obligations (40) (1,232)
Repayments of long-term debt (1,500) (500)
Net proceeds from issuance of common stock, net of repurchases 5,203 19,852
--------- ---------
Net cash provided by financing activities 3,663 18,120
--------- ---------
Net increase (decrease) in cash and cash equivalents (4,185) 5,381
Cash and cash equivalents at beginning of period 11,954 6,286
--------- ---------
Cash and cash equivalents at end of period $ 7,769 $ 11,667
========= =========
</TABLE>
See accompanying notes
<PAGE>
CV THERAPEUTICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying consolidated financial statements of CV Therapeutics,
Inc. have been prepared in accordance with generally accepted accounting
principles, are unaudited and reflect all adjustments (consisting solely of
normal recurring adjustments) which are, in the opinion of management,
necessary to present fairly the financial position at, and the results of
operations for the interim periods presented. The results of operations for
the three- and six-month periods ended June 30, 1999 are not necessarily
indicative of the results to be expected for the entire year ending December
31, 1999 or for future operating results. The financial information
included herein should be read in conjunction with the Company's Annual
Report on Form 10-K for the year ended December 31, 1998 which includes the
audited consolidated financial statements and the notes thereto.
Revenue Recognition
Revenue under the Company's collaborative research arrangements is
recognized based on the performance requirements of the contract. Payments
received, which are still subject to future performance requirements, are
recorded as deferred revenue until earned.
Net Loss Per Share
Net loss per share is computed using the weighted average number of
common shares outstanding. Common equivalent shares have been excluded from
the computation as their effect is antidilutive.
2. COMPREHENSIVE LOSS
The components of comprehensive loss for the six months ended June 30,
1999 and 1998 are as follows:
<TABLE>
<CAPTION>
1999 1998
--------- ---------
<S> <C> <C>
(in thousands)
Net loss $(10,418) $ (3,901)
Unrealized losses on marketable securities (111) (20)
--------- ---------
Comprehensive loss $(10,529) $ (3,921)
========= =========
</TABLE>
3. LICENSE AND COLLABORATION AGREEMENTS
In May 1999, the Company entered into a commercialization agreement with
Innovex Inc for the U.S. marketing and sales of ranolazine. If the product
is approved by the FDA, Innovex will provide CVT with a dedicated sales
force and will fund other sales and marketing expenses in return for up to
one-third of U.S. ranolazine revenues. Under the terms of the agreement
Innovex's parent company, Quintiles Transnational Corp., purchased $5.0
million of the Company's common stock.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
This Management's Discussion and Analysis of Financial Condition and
Results of Operations and other parts of this Quarterly Report on Form 10-Q
contain forward-looking statements which involve risks and uncertainties.
The Company's actual results may differ materially from the results
discussed in the forward-looking statements. Factors that might cause such a
difference include, but are not limited to, those listed below and those
listed in "Risk Factors" in the Company's Annual Report on Form 10-K for the
year ended December 31, 1998.
OVERVIEW
CVT is an early stage biopharmaceutical company focused on the
application of molecular cardiology to the discovery, development and
commercialization of novel small molecule drugs for the treatment of
cardiovascular disease. Since its inception in December 1990, substantially
all of the Company's resources have been dedicated to research and
development. To date, CVT has not generated any product revenue and does not
expect to generate any such revenues for at least three years. As of June
30, 1999, the Company had an accumulated deficit of $80.0 million. The
Company expects its sources of revenue, if any, for at least the next three
years to consist of payments under corporate partnerships and interest
income. The process of developing the Company's products will require
significant additional research and development, preclinical testing and
clinical trials, as well as regulatory approval. These activities, together
with the Company's general and administrative expenses, are expected to
result in operating losses for the foreseeable future. The Company will not
receive product revenue unless it or its collaborative partners complete
clinical trials and successfully commercialize one or more of its products.
CVT is subject to risks common to biopharmaceutical companies, including
risks inherent in its research and development efforts and clinical trials,
reliance on collaborative partners, enforcement of patent and proprietary
rights, the need for future capital, potential competition and uncertainty
of regulatory approval. In order for a product to be commercialized, it will
be necessary for CVT and, in some cases, its collaborators, to conduct
preclinical tests and clinical trials, demonstrate efficacy and safety of
the Company's product candidates, obtain regulatory clearances and enter
into manufacturing, distribution and marketing arrangements, as well as
obtain market acceptance. There can be no assurance that the Company will
generate revenues or achieve and sustain profitability in the future.
RESULTS OF OPERATIONS
Collaborative Research Revenues. There were no collaborative research
revenues for the quarter ended June 30, 1999, compared to $299,000 for the
quarter ended June 30, 1998. There were also no collaborative research
revenues for the six-month period ended June 30, 1999, compared to $4.5
million for the six-month period ended June 30, 1998. The collaborative
research revenue for both the three and six-month periods ended June 30,
1998 was the result of the Company's completion of the research component of
its collaboration with Biogen during the first quarter of 1998.
Research and Development Expenses. Research and development expenses
increased to $4.5 million for the quarter ended June 30, 1999, compared to
$3.6 million for the quarter ended June 30, 1998. Research and development
expenses increased to $8.7 million for the six-month period ended June 30,
1999, compared to $6.9 million for the six-month period ended June 30, 1998.
The increases for both the three and the six-month periods ended June 30,
1999, compared to the same periods in 1998, were primarily due to hiring
additional employees to provide support for an increased level of activity
in the research, development and clinical programs. The Company expects
research and development expenses to continue to increase over the next
several years as the Company further expands product development efforts and
clinical trials.
<PAGE>
General and Administrative Expenses. General and administrative
expenses increased to $1.2 million for the quarter ended June 30, 1999,
compared to $1.1 million for the quarter ended June 30, 1998. General and
administrative expenses increased to $2.4 million for the six-month period
ended June 30, 1999, compared to $2.1 million for the six-month period ended
June 30, 1998. The increases for both the three and the six-month periods
ended June 30, 1999, compared to the same periods in 1998, were primarily
due to an increase in outside legal expenses for a variety of administrative
and corporate matters. The Company expects general and administrative
expenses to increase in the future in line with the Company's research and
development activities.
Interest Income/Interest and Other Expense. Interest income was
$523,000 for the quarter ended June 30, 1999, compared to $738,000 for the
quarter ended June 30, 1998. Interest income was $1.1 million for the
six-month period ended June 30, 1999, compared to $1.5 million for the
six-month period ended June 30, 1998. The decreases for both the three and
the six-month periods ended June 30, 1999, compared to the same periods in
1998, were due to lower average investment balances. Interest and other
expense was $238,000 for the quarter ended June 30, 1999 compared to
$185,000 for the quarter ended June 30, 1998. Interest and other expense was
$483,000 for the six-month period ended June 30, 1999 compared to $796,000
for the six-month period ended June 30, 1998. The increase for the quarter
ended June 30, 1999, compared to the same period in 1998, was primarily due
to interest expense associated with a $4.5 million addition to the loan
balance with Biogen, Inc. in December 1998. The decrease for the six-month
period ended June 30, 1999, compared to the same period in 1998, was
primarily due to a charge of $371,000 recognized during the first quarter of
1998 related to the early retirement of a capital lease obligation. The
Company expects that interest income/interest and other expense will
fluctuate with average investment and loan balances.
LIQUIDITY AND CAPITAL RESOURCES
The Company has financed its operations since inception primarily
through private placements of preferred and common stock, public offerings
of common stock, equipment and leasehold improvement financing, other debt
financing and payments under corporate collaborations. In November 1996, the
Company completed an initial public offering and raised net proceeds of
approximately $12.0 million. In March 1997, the Company entered into two
research collaboration and license agreements with Biogen that together
resulted in cash receipts of $16.0 million. In October 1997, the Company
raised net proceeds of $12.3 million in a private placement of equity
securities with BB Biotech. In January 1998, the Company completed a
follow-on public offering and raised net proceeds of approximately $19.6
million. In December 1998, the Company drew down an additional $4.5 million
under a general purpose loan facility with Biogen. As of June 30, 1999 the
outstanding balance for this note was $7,500,000. Interest on this note is
payable at prime plus one and one-half percent (1.5%) (9.25% at June 30,
1999) payable annually, in arrears, each March 10th. In May 1999, the
Company entered into a commercialization agreement with Innovex Inc.
pursuant to which Innovex's parent, Quintiles Transnational Corp., purchased
1,043,705 shares of the Company's common stock for a total investment
of $5.0 million. In addition, the Company entered into two promissory notes
with Quintiles Transnational Corp. The first promissory note in the amount of
$10.0 million may be drawn down by the Company at NDA filing of ranolazine.
The second promissory note shall be for a cash amount to be determined after
commercial launch of ranolazine. Both notes are convertible into shares of
common stock at the option of Quintiles upon certain events.
Cash, cash equivalents and marketable securities at June 30, 1999
totaled $38.1 million compared to $44.8 million at December 31, 1998. The
decrease in the first six months of 1999 was due to the funding of ongoing
operations offset by the $5.0 million received from the Quintiles
Transnational Corp. stock purchase.
Net cash used in operations for the six months ended June 30, 1999 was
$9.1 million compared to $6.3 million for the six months ended June 30,
1998. The increase in cash used in operations for the first six months of
1999, compared to the first six months of 1998, was primarily due to
increased research and development efforts.
<PAGE>
As of June 30, 1999, the Company has invested $8.2 million in property
and equipment with the rate of investment having increased last year in line
with increased research and development efforts. This trend should continue
for the foreseeable future.
The Company will require substantial additional funding in order to
complete its research and development activities and commercialize any
potential products. The Company currently estimates that its existing
resources and projected interest income will enable the Company to maintain
its current and planned operations through the end of 2000. However, there
can be no assurance that the Company will not require additional funding
prior to such time or that additional financing will be available on
acceptable terms or at all.
The Company's forecast of the period of time through which its financial
resources will be adequate to support its operations is a forward-looking
statement that involves risks and uncertainties, and actual results could
vary as a result of a number of factors. The Company's future capital
requirements will depend on many factors, including scientific progress in
its research and development programs, the size and complexity of such
programs, the scope and results of preclinical studies and clinical trials,
the ability of the Company to establish and maintain corporate partnerships,
the time and costs involved in obtaining regulatory approvals, the costs
involved in filing, prosecuting and enforcing patent claims, competing
technological and market developments, the cost of manufacturing
preclinical and clinical material and other factors not within the Company's
control. There can be no assurance that such additional financing to meet
the Company's capital requirements will be available on acceptable terms or
at all. Insufficient funds may require the Company to delay, scale back or
eliminate some or all of its research or development programs, to lose
rights under existing licenses or to relinquish greater or all rights to
product candidates at an earlier stage of development or on less favorable
terms than the Company would otherwise choose or may adversely affect the
Company's ability to operate as a going concern. If additional funds are
raised by issuing equity securities, substantial dilution to existing
stockholders may result.
YEAR 2000
Many computer systems, applications, information technologies and
equipment containing computer related components (generally "computer
systems and equipment") are unable to differentiate between the year 2000
and the year 1900 because they were programmed with two-digit, rather than
four-digit, date fields. Accordingly, older computer systems that have
time-sensitive applications may not properly recognize the year 2000 and
beyond ("Year 2000 issue"). This could cause system or equipment shut downs,
failures or miscalculations resulting in inaccuracies in computer output or
disruptions of operations, including, among other things, inaccurate
processing of financial information and/or temporary inabilities to process
transactions, manufacture products, or engage in similar normal business
activities.
The Company has formed a committee to assess the impact of the problem
on the Company's operations; however, the committee's assessment of the Year
2000 issue is not yet complete. The Company tested its key computer systems
and equipment (including financial, informational and operational systems)
and determined that these systems were largely Year 2000 compliant. The
Company has completed upgrades to the systems which it determined were not
Year 2000 compliant. The Company believes that with these upgrades, the Year
2000 issue will not pose significant operational problems for its computer
systems and equipment. The Company currently has no contingency plans to
deal with major Year 2000 failures.
In addition to risks associated with the Company's own computer systems
and equipment, the Company has relationships with, and is to varying degrees
dependent upon, a large number of third parties that provide information,
goods and services to the Company. These include financial institutions,
suppliers, vendors, research partners and governmental entities. If
significant numbers of these third parties experience failures in their
computer systems, or equipment due to the Year 2000 issue, these failures
could affect the Company's ability to process transactions, manufacture
products, or engage in similar normal business activities. While some of
these risks are outside of the Company's control, the Company has instituted
programs, including internal records review and use of external
<PAGE>
questionnaires, to identify key third parties, assess their level of Year
2000 compliance, update contracts and address any non-compliance issues. As
of June 30 1999 a majority of the key third parties have responded that they
are or will be Year 2000 compliant by December 31, 1999. The remaining key
third parties were sent a follow-up questionnaire in June 1999.
The total cost of the Year 2000 systems assessment and upgrades is
funded through operating cash flows and the Company is expensing these
costs. The financial impact of making the required systems changes is
minimal and currently expected to be approximately $30,000. The actual
financial impact could, however, exceed this estimate.
ADDITIONAL FACTORS THAT MAY AFFECT FUTURE RESULTS
The Company's business, financial condition and results of operations
are subject to various risks, including those described below and elsewhere
in this Quarterly Report on Form 10-Q.
The Company is an early stage company and must be evaluated in light of
the uncertainties and complications present in an early stage
biopharmaceutical company. All of the Company's products are at an early
stage of development, and the Company has not generated any product revenue.
In addition, the Company has only three products in clinical development,
ranolazine (phase III), CVT-124 (phase II) and CVT-510 (phase I). There can
be no assurance that clinical trials conducted by the Company or its
collaborators will demonstrate sufficient safety and efficacy to obtain the
requisite approvals or that marketable products will result. In addition,
the rate of completion of clinical trials may be delayed by many factors.
The Company's product candidates will require significant additional
development, preclinical studies, clinical trials and regulatory approval
prior to commercialization. These activities may take several years and
require the expenditure of substantial resources. In addition, these
activities, together with the Company's general and administrative expense,
are expected to result in operation losses for the foreseeable future.
The Company's strategy for the research, development and
commercialization of its product candidates has required, and will continue
to require, the Company to enter into various arrangements with corporate
and academic collaborators, licensors, licensees and others, and the Company
is dependent upon the success of these parties in performing their
responsibilities. There can be no assurance that the Company will be able
to enter into additional collaborative arrangements or license agreements on
acceptable terms, or at all, or that the contemplated benefits from any of
these agreements will be realized.
The Company's business is affected by other factors, including:
uncertainty of market acceptance, intense competition and rapid
technological change, uncertainty of patent position and proprietary rights,
dependence on key personnel and the need to attract and retain key employees
and consultants, limited manufacturing, marketing and sales experience,
significant government regulation, uncertainty of product pricing and
reimbursement, product liability exposure and the availability of insurance.
<PAGE>
PART II. OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
On May 5, 1999, the Company issued and sold 1,043,705 shares of its
common stock to Quintiles Transnational Corp. for a total purchase price of
$5.0 million. In addition, the Company entered into two promissory notes with
Quintiles Transnational Corp. The first promissory note in the amount of
$10.0 million may be drawn down by the Company at NDA filing of ranolazine.
The second promissory note shall be for a cash amount to be determined after
commercial launch of ranolazine. Both notes are convertible into shares of
common stock at the option of Quintiles upon certain events. The sale of the
shares of common stock and the promissory notes were deemed exempt form the
registration requirements of the Securities Act of 1333, as amended, by virtue
of Regulation D promulgated thereunder.
ITEM 3. MARKET RISK
The Company's exposure to market rate risk for changes in interest rates
relates primarily to the Company's investment portfolio. As of June 30, 1999
no significant changes have occurred since the Company's Annual Report on
Form 10-K for the year ended December 31, 1999.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The Annual Meeting of Stockholders of CV Therapeutics, Inc. was
held on May 11, 1999.
(b) David P. Holveck, Barbara J. McNeil, M.D., Ph.D. and J. Leighton
Read, M.D. were elected to the Board of Directors. The terms of
Louis G. Lange, M.D., Ph.D., Thomas L. Gutshall, Costa G.
Sevastopoulos, Ph.D. and Issac Stein continued after the Annual
Meeting.
Election of Directors:
Nominee For Withheld
David P. Holveck 6,137,389 800,463
Barbara A. McNeil, M.D., Ph.D. 6,137,889 799,963
J. Leighton Read, M.D. 6,137,889 799,963
Proposal to ratify the selection of Ernst & Young LLP as independent
auditors of the Company for its fiscal year ending December 31, 1999:
For Against Abstain
6,918,171 13,411 6,270
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(c) Exhibits required by Item 601 of Regulation S-K
EXHIBIT NUMBER DESCRIPTION
10.65* Stock Purchase Agreement dated
May 5, 1999 between the Company
and Quintiles Transnational Corp.
<PAGE>
10.66* Sales and Marketing Services
Agreement dated May 5, 1999
between the Company, Innovex
Inc. and Quintiles
Transnational Corp.
10.67* Loan Agreement dated May 5,
1999 between the Company and
Quintiles Transnational Corp.
10.68* Security Agreement dated May 5,
1999 between the Company and
Quintiles Transnational Corp.
10.69 Promissory Note dated May 5,
1999 to Quintiles in principal
amount of $10.0 million.
10.70 Promissory Note dated May 5,
1999 to Quintiles Transnational
in principal amount specified
therein.
10.71 Amendment to Loan Agreement
dated April 30, 1999 between
the Company and Biotech
Manufacturing Ltd.
27.1 Financial Data Schedule
* Confidential treatment is being sought for portions of this
exhibit. Brackets indicate portions of the text that have been
omitted. A separate filing of such omitted text has been made
with the Commission as part of the Company's application for
confidential treatment.
(d) Reports on Form 8-K
The Company filed a current report on Form 8-K with the
Commission on May 19, 1999, with respect to a commercial
arrangement with Quintiles Transnational Corp. to commercialize
ranolazine.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be
signed on its behalf, by the undersigned, thereunto duly authorized.
CV THERAPEUTICS, INC.
Date: August 16, 1999 By: /s/ LOUIS G. LANGE, M.D., PH.D.
Louis G. Lange, M.D., Ph.D.
Chairman of the Board & Chief Executive Officer
(Principal Executive Officer)
Date: August 16, 1999 By: /s/ DANIEL K. SPIEGELMAN
Daniel K. Spiegelman
Chief Financial Officer
(Principal Financial and Accounting Officer)
<PAGE>
Certain confidential information contained in this document,
marked by brackets, has been omitted and filed separately with
the Securities and Exchange Commission pursuant to Rule 24b-2 of
the Securities Exchange Act of 1934, as amended.
Exhibit 10.65
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "Agreement') is dated
and entered into as of May 5,1999 (the "Effective Date"), by and
between CV Therapeutics, Inc., a Delaware corporation
("Company"), and Quintiles Transnational Corp., a North Carolina
corporation ("Purchaser").
Whereas, Company and Innovex Inc., a wholly-owned subsidiary
of Purchaser ("Innovex"), are parties to a Sales and Marketing
Services Agreement (as amended, modified or supplemented from
time to time, the "Services Agreement") dated as of the same date
hereof; and
Whereas, in connection with the Services Agreement,
Purchaser desires to acquire and Company is willing to issue and
sell to Purchaser shares of common stock, $.001 par value, of
Company (the "Common Stock"), subject to the terms and conditions
specified herein;
Now, Therefore, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged by the
parties, the parties agree as follows:
ARTICLE I
Definitions
1.01 Definitions. For purposes of this Agreement, in addition to
the terms defined elsewhere herein, the following terms shall
have the meanings set forth below:
"Affiliate" shall have the meaning given such term in Rule
12b-2 of the Exchange Act.
"Business Day" shall mean any day other than a Saturday,
Sunday or legal holiday on which banks in New York, New York are
open for the conduct of their banking business.
"Closing" shall have the meaning specified in Section 2.02
herein.
"Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
"IPO Documents" shall mean Company's (a) Registration
Statement No. 333-12675 declared effective by the SEC on
November 19, 1996, and (b) Prospectus dated November 19, 1996.
"knowledge" of Company shall mean the knowledge of one or
more of the executive officers of Company.
<PAGE>
"Loan Agreement" shall mean the Loan Agreement dated as of
the date hereof between Company and Purchaser, as amended,
modified or supplemented from time to time.
"Loan Documents" shall have the meaning given such term in
the Loan Agreement.
"Per Share Fair Market Price" of the Common Stock on any
date shall mean (a) if the Common Stock is then traded on a
securities exchange or the Nasdaq National Market, the average of
the closing prices of the Common Stock on such exchange or market
over the ten (10) Trading Days ending on such date; (b) if the
Common Stock is then regularly traded over-the-counter, the
average of the sale prices or secondarily the closing bid of the
Common Stock over the ten (10) Trading Days ending on such date;
or (c) if there is no active public market for the Common Stock,
the fair market value thereof shall be determined as of such date
by a nationally recognized investment banking firm chosen in good
faith by Company's board of directors.
"Qualified Transferee" shall have the meaning specified in
Section 7.03(b) herein.
"Registrable Securities" shall mean (i) the Shares, (ii)
shares of Common Stock held by Purchaser and acquired pursuant to
the Loan Agreement, and (iii) any Common Stock issued as a
dividend or other distribution with respect to, or in exchange
for or in replacement of, such above-described securities;
provided however, that "Registrable Securities" shall not include
(a) any securities sold by a person either pursuant to a
registration statement or Rule 144 or (b) any securities referred
to in the preceding clauses (i), (ii) and (iii) which may be sold
under Rule 144 during any ninety (90) day period.
"Registration Expenses" shall mean all expenses incurred in
effecting any registration pursuant to this Agreement, including,
without limitation, all registration, qualification, and filing
fees, printing expenses, escrow fees, fees and disbursements for
counsel for the Company, blue sky fees and expenses, and expenses
of any regular or special audits incident to or required by any
such registration, but shall not include Selling Expenses.
"Rule 144" shall mean Rule 144 as promulgated by the SEC
under the Securities Act, as such Rule may be amended from time
to time, or any similar successor rule that may be promulgated by
the SEC.
"Securities Act" shall mean the Securities Act of 1933, as
amended.
"SEC" shall mean the Securities and Exchange Commission.
"Selling Expenses" shall mean all underwriting discounts,
selling commissions and stock transfer taxes applicable to the
sale of Registrable Securities and fees and disbursements of
counsel except as otherwise agreed by the parties.
"Shares" shall have the meaning specified in Section 2.01
herein.
"Trading Day" shall mean a day on which the principal
national securities exchange on which the Common Stock is listed
or admitted to trading is open for the transaction of business
<PAGE>
or, if the Common Stock is not listed or admitted to trading on
any national securities exchange, a Business Day.
ARTICLE II
Purchase and Sale of the Shares
2.01 Issuance of the Shares. Subject to the terms and conditions
of this Agreement, at the Closing (as defined below) Company
agrees to issue and sell to Purchaser, and Purchaser agrees to
purchase from Company, at an aggregate purchase price of Five
Million Dollars ($5,000,000), such number of shares (rounded to
the nearest whole share) of Common Stock (the "Shares") equal to
5,000,000 divided by the Per Share Fair Market Price as of the
date which is one Business Day prior to the Effective Date.
2.02 Closing: Delivery of the Shares.
(a) The purchase and sale of the Shares shall take place at a
closing (the "Closing") to be held at the offices of Smith,
Anderson, Blount, Dorsett, Mitchell & Jernigan, L.L.P., 2500
First Union Capitol Center, Raleigh, NC 27601 at 10:00 A.M.
(Eastern Time) on the Effective Date, or at such other location,
time and date as may be mutually agreed upon by the parties. The
Closing shall take place contemporaneously with the execution and
delivery of this Agreement by Company and Purchaser.
(b) At the Closing, subject to the terms and conditions
contained in this Agreement, Purchaser shall provide a wire
transfer of immediately available funds to an account of Company
specified to Purchaser, in an amount equal to Five Million
Dollars ($5,000,000), in payment of the full purchase price for
the Shares.
(c) Within five (5) business days after Closing, Company shall
deliver one or more stock certificates evidencing the Shares,
registered in the name of Purchaser and dated as of the date of
the Closing.
ARTICLE III
Conditions to Closing
3.01 Conditions to Purchaser's Obligations. The obligation of
Purchaser to purchase and pay for the Shares at the Closing is
subject to each of the following additional conditions precedent:
(a) Opinion of Counsel. Purchaser shall have received at the
Closing an opinion from Cooley Godward LLP, counsel to Company,
regarding this Agreement and the transactions contemplated
hereby;
<PAGE>
(b) Board Resolutions. Purchaser shall have received at the
Closing copies of the resolutions of the Board of Directors of
Company authorizing the execution and delivery of this Agreement
and the performance by Company of all transactions contemplated
hereby, certified by an appropriate officer of Company;
(c) Officer's Certificate. Purchaser shall have received at the
Closing, a certificate, executed by the appropriate officer of
Company and dated as of the date of the Closing, together with
and certifying (A) the names of the officers of Company
authorized to sign this Agreement together with the true
signatures of such officers; (B) a copy of the certificate of
incorporation of Company, as amended and in effect as of the date
of the Closing; (C) a copy of the bylaws of Company, as amended
and in effect as of the date of the Closing; and (D) that the
representations and warranties contained in Article IV hereof are
true and correct as of the date of the Closing; and
(d) Services Agreement. Purchaser shall have received at the
Closing the Services Agreement, duly executed by an authorized
officer of Company and dated as of the date of the Closing.
3.02 Conditions to Company's Obligations. The obligation of
Company to issue and sell the Shares at the Closing is subject to
the following additional conditions precedent:
(a) Board Resolutions. Company shall have received at the
Closing copies of the resolutions of the Board of Directors of
Purchaser authorizing the execution and delivery of this
Agreement and the performance by Purchaser of all transactions
contemplated hereby, certified by an appropriate officer of
Purchaser;
(b) Services Agreement. Company shall have received at the
Closing the Services Agreement, duly executed by an authorized
officer of Purchaser and dated as of the date of the Closing; and
(c) Purchase Price. Purchaser shall have delivered Five Million
Dollars ($5,000,000) in immediately available funds to Company's
specified account in accordance with Section 2.02(b) herein.
ARTICLE IV
Representations and Warranties of Company
Company represents and warrants to Purchaser as follows:
4.01 Corporate Status. Company is a corporation duly
incorporated, validly existing and in good standing under the
laws of the State of Delaware, and has all requisite corporate
power and authority to own and use its properties and assets and
to transact the business in which it is currently engaged.
<PAGE>
4.02 Corporate Power and Authority. The execution and delivery
by Company of this Agreement, the performance of the terms and
obligations herein, and the issuance, sale and delivery of the
Shares are each within Company's corporate powers, and each has
been duly authorized by all necessary corporate action on the
part of Company. This Agreement, when executed and delivered
hereunder, will constitute the valid and legally binding
obligation of Company enforceable against Company in accordance
with its terms, subject to (i) applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors'
rights generally, and (ii) the effect of general principles of
equity, regardless of whether considered in a proceeding in
equity or at law.
4.03 Government Approvals. No authorization, consent, approval
or other action by, and no notice to or filing with, any
governmental authority or regulatory body is required for the due
execution, delivery and performance by Company of this Agreement
or the issuance and sale of the Shares to Purchaser except for:
the filing by Company with the SEC or any state securities
authorities of any notices or filings required in connection with
the exemptions from the registration or qualification
requirements of the Securities Act and/or applicable state
securities law.
4.04 Capitalization. As of March 31, 1999, the authorized
capital stock of Company consists of: (i) 30,000,000 shares of
Common Stock, $.001 par value, of which 11,246,047 shares are
issued and outstanding and of which 59,479 shares are treasury
shares, and (ii) 5,000,000 shares of Preferred Stock, $.001 par
value, of which 300,000 are designated Series A Junior
Participating Preferred, none of which are issued and
outstanding. As of March 31, 1999, an aggregate of 1,721,936
shares of Company's Common Stock were reserved for future
issuance pursuant to stock options granted by Company and
outstanding on March 31, 1999 and an additional 333,139 shares of
Company's Common Stock were reserved and available for the grant
of future stock options under all of Company's stock option or
equity incentive plans. As of the day prior to Closing, the
Shares represent 8.49% of the outstanding Common Stock of the
Company. The Shares, when issued against payment of the
aggregate purchase price set forth in Section 2.01, will be duly
authorized, validly issued, fully paid, non-assessable and free
and clear of all liens and encumbrances. As of the date hereof,
except for the options described in the preceding sentence or
except as described on the Schedule of Exceptions attached
hereto, there are no options, warrants, convertible securities or
other rights to purchase shares of capital stock or other
securities of Company which are authorized, issued or
outstanding, nor is Company obligated in any other manner to
issue shares of its capital stock or other securities, and
Company has no obligation to purchase, redeem or otherwise
acquire any shares of its capital stock or any interest therein
or to pay any dividend or make any other distribution in respect
thereof, except as contemplated by this Agreement, the Services
Agreement, Loan Agreement or Loan Documents. Except as described
in the IPO Documents, the SEC Documents or the Schedule of
Exceptions, and except as otherwise contemplated by this
Agreement the Services Agreement, Loan Agreement or Loan
Documents, (i) no person is entitled to any preemptive right,
catch-up right, right of first refusal or similar right with
respect to the issuance of any capital stock of Company, (ii)
there are no restrictions on the transfer of shares of capital
stock of Company other than those imposed by relevant federal and
state securities laws and (iii) there exists no agreement between
Company's stockholders and to which Company is a party with
<PAGE>
respect to the voting or transfer of Company's capital stock or
with respect to any other aspect of Company's affairs.
4.05 Registration Rights. As of the Closing, no person has
demand or other rights to cause Company to file any registration
statement under the Securities Act relating to any securities of
Company or any right to participate in any such registration
statement, except as set forth on the Schedule of Exceptions
attached hereto.
4.06 No Violation. Neither the execution or delivery by Company
of this Agreement, nor the performance of the terms and
obligations herein, will (i) violate Company's charter or bylaws,
(ii) constitute a breach or default under any agreement or
instrument to which Company is a party or by which Company is
bound, which breach or default would have a material adverse
effect on Company, its assets or properties, or (iii) violate any
applicable law, rule or regulation, which violation would have a
material adverse effect on Company, or (iv) violate any order,
writ, injunction, decree or judgment of any court or governmental
authority applicable to or binding upon Company, which violation
would have a material adverse effect on Company.
4.07 Financial Statements: Budget and Projections.
(a) All financial statements contained in the SEC Documents (as
defined in Section 4.09) filed by Company with the SEC, have been
prepared in accordance with generally, accepted accounting
principles ("GAAP") consistently applied throughout the periods
indicated except as may be expressly stated in the notes thereto
and, as to the unaudited financial statements, subject to normal
recurring year-end audit adjustments and the absence of notes
thereto. Each balance sheet fairly presents the financial
condition of Company and its subsidiaries as at the date of such
balance sheet, and each statement of operations, of stockholders'
equity and of cash flows, fairly presents the results of
operations, the stockholders' equity and the cash flows of
Company and its subsidiaries for the periods then ended, all in
accordance with GAAP.
(b) Since the date of Company's most recent filing of financial
statements with the SEC, there has been no material adverse
change in the business, property, assets, operations or financial
condition of Company and its subsidiaries.
(c) Company has furnished Purchaser with a summary of Company's
[*] and [*] for its fiscal year ending December 31, 1999. Such
[*] and [*], taken as a whole, are reasonable.
4.08 Litigation. There is no pending, or to Company's knowledge
overtly threatened, action, suit, proceeding, arbitration, or
investigation before any court, governmental agency,
instrumentality or arbitrator, which, if determined adversely to
Company, could reasonably be expected to materially adversely
affect the business, property, assets, operations or financial
condition of Company and its subsidiaries or which purports to
affect the legality, validity or enforceability of this
Agreement.
<PAGE>
4.09 SEC Filings. Company has filed with the SEC on a timely
basis, or received a valid extension of such time of filing, all
forms, reports and documents required to be filed by it under the
Exchange Act since November 19, 1996 (such documents collectively
referred to as the "SEC Documents"). As of their respective
dates, the SEC Documents complied in all material respects with
the requirements of the Securities Act and the Exchange Act and
the rules and regulations of the SEC promulgated thereunder, and
none of the SEC Documents, when filed, contained any untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were
made, not misleading.
4.10 Compliance with Statutes, etc. Each of Company and its
subsidiaries is in compliance with all applicable laws, rules,
regulations and orders of, and all applicable restrictions
imposed by, all governmental bodies, in respect of the conduct of
its business and the ownership of its property except, where such
failure to be in compliance would not have a material adverse
effect on Company.
4.11 Securities Laws. Assuming the accuracy of the
representations and warranties of Purchaser contained in Article
V hereof, the issuance of the Shares is exempt from the
provisions of the Securities Act. All notices, filings,
registrations, or qualifications under state securities or "blue-
sky" laws which are required in connection with the offer, issue
and delivery of the Shares pursuant to this Agreement, if any,
have been or will be completed by Company on a timely basis.
4.12 Tax Returns and Payments. Each of Company and its
subsidiaries has filed all federal, state, local, foreign and
other tax returns required to be filed by it and has paid all
taxes and other assessments which have become due pursuant to
such tax returns and all other taxes and assessments which have
become due, except for those contested in good faith and for
which adequate reserves have been established. Each of Company
and its subsidiaries has made adequate provisions on its books of
account for all taxes, assessments and governmental charges with
respect to its business, properties and operations for all prior
fiscal years and for the current fiscal year to the date hereof.
No governmental authority has asserted a lien or other claim
against Company or any of its subsidiaries with respect to unpaid
taxes which has not been discharged or resolved, which would have
a material adverse effect on Company.
4.13 Insurance. Company and each of its subsidiaries maintains
insurance on all of its properties with financially sound and
reputable insurance companies against such risks and in such
amounts as are customarily maintained by companies of comparable
size engaged in a similar business.
4.14 No Infringement. To its knowledge, Company owns or
possesses rights to use all patents, patent applications,
trademarks, service marks, trade names, copyrights, trade
secrets, licenses and rights with respect to the foregoing which
are required to conduct its business without any known
infringement of the rights of others. No event has occurred
which, to the knowledge of Company, permits, or after notice or
lapse of time or both would permit, the revocation or termination
of any such rights, and, to the knowledge of Company, neither
<PAGE>
Company nor any of its subsidiaries is liable to any person or
entity for infringement under applicable law with respect to such
rights. As of the Effective Date, Company is not pursuing any
action against any third party for the infringement of Company's
patents, patent applications, trademarks, service marks, trade
names, copyrights, trade secrets, or licenses relating to its
business.
ARTICLE V
Representations and Warranties of Purchaser
Purchaser represents and warrants to Company as follows:
5.01 Corporate Status. Purchaser is a corporation duly
incorporated, validly existing and in good standing under the
laws of the State of North Carolina, and has all requisite
corporate power and authority to own and use its properties and
assets and to transact the business in which it is currently
engaged.
5.02 Corporate Power and Authorization. The execution and
delivery by Purchaser of this Agreement, the performance of the
terms and obligations therein, and the purchase of the Shares are
each within Purchaser's corporate powers, and each has been duly
authorized by all necessary corporate action on the part of
Purchaser. This Agreement, when executed and delivered
hereunder, will constitute valid and legally binding obligations
of Purchaser enforceable against Purchaser in accordance with
their terms, subject to (i) applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors'
rights generally, and (ii) the effect of general principles of
equity, regardless of whether considered in a proceeding in
equity or at law.
5.03 Investment. Purchaser is acquiring the Shares for
Purchaser's own account, not as a nominee or agent for
investment, and not with a view to, or for resale in connection
with, any distribution or public offering thereof within the
meaning of the Securities Act.
5.04 Shares Not Registered. Purchaser understands that the
Shares are not registered under the Securities Act on the ground
that the sale provided for in this Agreement and the issuance of
Shares hereunder is exempt from registration under the Securities
Act pursuant to Section 4(2) thereof, and that Company's reliance
on such exemption is predicated on Purchaser's representations
set forth herein.
5.05 Accredited Investor. Purchaser represents that it is an
"accredited investor" within the meaning of Rule 501 of
Regulation D adopted pursuant to the Securities Act.
5.06 Restricted Shares. Purchaser understands that the Shares
may not be sold, transferred, or otherwise disposed of without
registration under the Securities Act or an exemption therefrom,
and that in the absence of an effective registration statement
covering the Shares or an available exemption from registration
under the Securities Act, the Shares must be
<PAGE>
held indefinitely. Purchaser is aware that the Shares may not be sold
pursuant to Rule 144 promulgated under the Securities Act unless all of
the conditions of that Rule are met.
5.07 Legend. To the extent applicable, each certificate or other
document evidencing the Shares, whether upon initial issuance or
transfer thereof, shall be endorsed with the legends
substantially in the form set forth below:
"THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY
NOT BE SOLD, TRANSFERRED, PLEDGED, OR HYPOTHECATED
UNLESS AND UNTIL REGISTERED UNDER SUCH ACT, OR UNLESS
COMPANY HAS RECEIVED AN OPINION OF COUNSEL OR OTHER
EVIDENCE, SATISFACTORY TO COMPANY AND ITS COUNSEL, THAT
SUCH REGISTRATION IS NOT REQUIRED."
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT
TO CERTAIN RESTRICTIONS ON TRANSFER SET FORTH IN AN
AGREEMENT BETWEEN THE COMPANY AND THE HOLDER HEREOF
DATED _______________, 1999, A COPY OF WHICH IS ON FILE
AT THE COMPANY'S PRINCIPAL OFFICES AND IS AVAILABLE
UPON REQUEST."
5.08 Investment Information.
(a) Purchaser has been furnished with all the information
necessary to make an informed investment decision. Purchaser has
been given access to such information relating to Company as
Purchaser has requested.
(b) By reason of Purchaser's business or financial experience,
Purchaser has the capacity to make the decision referred to in
subsection (a) above.
ARTICLE VI
Covenants of Company
6.01 Rule 144 Reporting. With a view to making available the
benefits of certain rules and regulations of the SEC that may
permit the sale of the Shares to the public without registration,
Company agrees to use its best efforts to:
(a) make and keep public information regarding Company available
(as those terms are understood and defined in Rule 144 under the
Securities Act) at all times;
(b) file with the SEC in a timely manner all reports and other
documents required of Company under the Securities Act and the
Exchange Act at any time; and
<PAGE>
(c) so long as Purchaser owns any Shares or securities
convertible into, exchangeable for or exercisable for Common
Stock, furnish to Purchaser forthwith upon written request as to
Company's compliance with the reporting requirements of Rule 144
and of the Securities Act and the Exchange Act, a copy of the
most recent annual or quarterly report of Company.
ARTICLE VII
Covenants of Purchaser
7.01 Restriction on Short Sales. Until the [*] anniversary of
the expiration or termination of the Services Agreement,
Purchaser shall not engage, and shall ensure that none of its
Affiliates engage, (a) in any Short Sales (as defined in Rule 3b-
3 of the Exchange Act) of Common Stock or (b) any hedging
transaction in which the other party to such transaction is
reasonably likely to engage in a Short Sale as a direct result of
such transaction.
7.02 Restrictions on Purchase of Common Stock. Until the [*]
anniversary of the expiration or termination of the Services
Agreement, Purchaser shall not purchase, and shall ensure that
none of its Affiliates purchases, any Common Stock other than the
purchase or acquisition of Shares contemplated by this Agreement
or the Loan Agreement.
7.03 Restriction on Sales of Shares. (a) Until the [*]
anniversary of the Closing, during any period of ninety (90)
consecutive days, Purchaser shall not sell in excess of [*]
Shares in the aggregate (as adjusted for stock splits, stock
combinations, stock dividends and similar events).
(b) The restrictions under Section 7.03(a) shall not be
applicable to any transfer of Shares by Purchaser to an Affiliate
or to an investment fund or similar transferee of which Purchaser
or an Affiliate owns or controls at least five percent (5%)
thereof (a "Qualified Transferee"), provided that such Qualified
Transferee shall have agreed in writing to be bound by the terms
of this Agreement.
7.04 Termination of Restrictions. Upon the occurrence of an
Event of Default under Section 7.01(a) or (d) of the Loan
Agreement, all of the provisions of this Article VII shall
terminate and have no further force or effect.
ARTICLE VIII
Registration Rights
8.01 Shelf Registration. At any time after the occurrence of an
Event of Default under the Loan Agreement, or at any time after
the later to occur of three (3) years after the date of this
Agreement and four hundred fifty (450) days after the NDA Filing,
the holders of Registrable Securities who hold and propose to
sell Registrable Securities with an aggregate value of at least
$500,000 shall have the right to require Company to file
registration statements under the
<PAGE>
Securities Act, on Form S-3 or another appropriate form, covering
such shares (each a "Shelf Registration") by delivering written notice
thereof to Company;provided, however, Company shall not be obligated to
effect such a registration more than once in any rolling twelve-month
period or (b) after the occurrence of an Event of Default under the Loan
Agreement, more than twice in any rolling twelve-month period.
After delivery of such notice, Company shall prepare and file
with the SEC as promptly as practicable after delivery thereof,
and in any event within thirty (30) days thereafter, a
registration statement covering such shares and Company shall use
its best efforts to cause such Shelf Registration to be declared
effective under the Securities Act within ninety (90) days of the
delivery of such notice, and to keep such Shelf Registration
continuously effective under the Securities Act until such time
as the earlier to occur of (i) the covered securities cease to be
Registrable Securities, (ii) ninety (90) days, or (iii) until the
holders have completed the distribution described in such Shelf
Registration. All Shelf Registrations shall be non-underwritten.
Company shall use its best efforts to be and remain eligible to
use Form S-3 under the Securities Act or any successor or
comparable form.
8.02 Piggy-Back Registration
(a) Company shall notify Purchaser in writing prior to the
initial filing of any registration statement under the Securities
Act for purposes of an underwritten public offering of securities
of Company (including, but not limited to, registration
statements relating to secondary offerings of securities of
Company, but excluding registration statements relating to
employee benefit plans or with respect to corporate
reorganizations or other transactions under Rule 145 of the
Securities Act) and, subject to the conditions of this Section
8.02, Company will afford the holders of Registrable Securities
an opportunity to include in such registration statement all or
part of the Registrable Securities. If such a holder desires to
include in any such registration statement all or any part of
the Registrable Securities, it shall, within 20 days after the
above-described notice from Company, so notify Company in writing
and such notice shall state the intended disposition of the
Registrable Securities by such holder and Company shall, subject
to Section 8.02(b), cause to be registered under the Securities
Act all of the Registrable Securities that such holder has
requested to be registered. If such holder decides not to
include all of the Registrable Securities in any registration
statement thereafter filed by Company, such holder shall
nevertheless continue to have the right to include any remaining
Registrable Securities in any subsequent registration statement
or registration statements as may be filed by Company with
respect to underwritten offerings of its securities, all upon the
terms and conditions set forth herein.
(b) The right of a holder to be included in a registration
pursuant to this Section 8.02 shall be conditioned upon such
holder's participation in such underwriting and the inclusion of
the Registrable Securities in the underwriting to the extent
provided herein. If such holder proposes to distribute the
Registrable Securities through such underwriting, it shall enter
into an underwriting agreement in customary form with the
underwriter or underwriters selected for such underwriting by
Company. Notwithstanding any other provision of the Agreement,
if the underwriter determines in good faith that marketing
factors require a limitation of the number of shares to be
underwritten, then Company shall so advise the Purchaser and the
number of shares that may be included in the underwriting shall
be allocated, first, to Company; second, to
<PAGE>
the selling stockholders on a pro rata basis based on the total number of
Registrable Securities held by such stockholders. Company shall
not limit the number of Registrable Securities to be included in
a registration statement pursuant to this Section 8.02 in order
to include stockholders with no pre-existing registration rights.
(c) Company shall have the right to terminate or withdraw any
registration initiated by it under this Section 8.02 prior to the
effectiveness of such registration whether or not holders of
Registrable Securities have elected to include securities in such
registration. The Registration Expenses of such withdrawn
registration shall be borne by Company in accordance with Section
8.03 hereof.
8.03 Expenses of Registration. Except as specifically provided
herein, all Registration Expenses incurred in connection with any
registration under this Article VIII and the reasonable fees and
expenses of one counsel representing all selling holders of
Registrable Securities (not to exceed $25,000 in the aggregate)
shall be borne by Company. All Selling Expenses incurred in
connection with any registrations hereunder shall be borne by the
holders of the securities so registered, pro rata on the basis of
the number of shares so registered.
8.04 Obligations of Company. Whenever required to effect the
registration of the Registrable Securities, Company shall at its
expense, as expeditiously as reasonably possible:
(a) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus
used in connection with such registration statement as may be
necessary to comply with the provisions of the Securities Act
with respect to the disposition of all securities covered by such
registration statement.
(b) Furnish to each seller of Registrable Securities such number
of copies of a prospectus, including a preliminary prospectus, in
conformity with the requirements of the Securities Act, and such
other documents as it may reasonably request in order to
facilitate the disposition of securities covered by such
prospectus.
(c) Use all reasonable efforts to register and qualify the
securities covered by such registration statement under such
other securities or Blue Sky laws of such jurisdictions as shall
be reasonably requested by sellers of Registrable Securities,
provided that Company shall not be required in connection
therewith or as a condition thereto to qualify to do business or
to file a general consent to service of process in any such
states or jurisdictions.
(d) In the event of any underwritten public offering, enter into
and perform its obligations under an underwriting agreement, in
usual and customary form, with the managing underwriter(s) of
such offering. If a holder of Registrable Securities
participates in such underwriting, such holder shall also enter
into and perform its obligations under such an agreement.
(e) Notify each seller of Registrable Securities covered by such
registration statement, at any time when a prospectus relating
thereto is required to be delivered under the
<PAGE>
Securities Act, of the happening of any event as a result of which the
prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state
a material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the
circumstances then existing and, at the request of any such
seller, prepare and furnish to such seller a reasonable number of
copies of a supplement to or an amendment of such prospectus as
may be necessary so that such prospectus shall not contain such
an untrue statement or omission.
(f) Furnish, on the date that the Registrable Securities are
delivered to the underwriters for sale, if such securities are
being sold through underwriters, (i) an opinion, dated as of such
date, of the counsel representing Company for the purposes of
such registration, in form and substance as is customarily given
to underwriters in an underwritten public offering, addressed to
the underwriters, and (ii) a letter dated as of such date, from
the independent certified public accountants of Company, in form
and substance as is customarily given by independent certified
public accountants to underwriters in an underwritten public
offering, addressed to the underwriters.
8.05 Termination of Registration Rights. All registration rights
granted under this Article VIII shall terminate and be of no
further force and effect as to any holder of Registrable
Securities upon the earlier to occur of (a) as to any Registrable
Security, the sixth anniversary of the date of the initial
issuance to Purchaser of such Registrable Security or (b) such
time as all Registrable Securities of a holder may be sold under
Rule 144 during any ninety (90) day period, unless such holder
later becomes an affiliate of Company (as defined under Rule 144)
in which case such holder's registration rights under this
Article VIII shall be revived and reinstated until such holder's
rights otherwise terminate pursuant to this Section 8.05.
8.06 Furnishing Information. It shall be a condition precedent
to the obligations of Company to take any action pursuant to
Sections 8.02 or 8.04 that a seller of Registrable Securities
shall furnish to Company such information regarding itself, the
Registrable Securities held by it and the intended method of
disposition of such securities as shall be required to effect the
registration of its Registrable Securities.
8.07 Indemnification. In the event any Registrable Securities
are included in a registration statement pursuant to this Article
VIII:
(a) To the extent permitted by applicable law, Company will
indemnify and hold harmless each holder of Registrable
Securities, the officers, directors, employees, agents, partners,
and representatives thereof, any participating underwriter (as
defined in the Securities Act) and each person, if any, who
controls such holder or underwriter within the meaning of the
Securities Act or the Exchange Act, from and against any losses,
claims, damages, or liabilities (joint or several) to which they
may become subject under the Securities Act, the Exchange Act or
other federal or state law, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out
of or are based upon any of the following statements, omissions
or violations (collectively, a "violation") by Company: (i) any
untrue statement or alleged untrue statement of a material fact
contained in such registration statement, including any preliminary
<PAGE>
prospectus or final prospectus contained therein or
any amendments or supplements thereto, (ii) the omission or
alleged omission to state therein a material fact required to be
stated therein, or necessary to make the statements therein not
misleading, or (iii) any violation or alleged violation by
Company of the Securities Act, the Exchange Act, any state
securities law or any rule or regulation promulgated under the
Securities Act, the Exchange Act or any state securities law in
connection with the offering covered by such registration
statement; and Company will reimburse each such holder, officer,
director, employee, agent, partner, representative, underwriter
or controlling person for any legal or other expenses reasonably
incurred by them in connection with investigating or defending
any such loss, claim, damage, liability or action; provided,
however, that the indemnity agreement contained in this Section
8.07(a) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability or action if such settlement is
effected without the consent of Company, which consent shall not
be unreasonably withheld, nor shall Company be liable in any such
case for any such loss, claim, damage, liability or action to the
extent that it arises out of or is based upon a violation which
occurs in reliance upon and in conformity with written
information furnished expressly for use in connection with such
registration by such holder, officer, director, employee, agent,
partner, representative, underwriter or controlling person.
(b) To the extent permitted by applicable law, each holder of
Registrable Securities will, if Registrable Securities held by
such holder are included in such registration statement,
indemnify and hold harmless Company, each of its directors,
officers, employees, agents, and representatives, and each
person, if any, who controls Company within the meaning of the
Securities Act, any participating underwriter and any other
stockholder selling securities under such registration statement
or any of such other selling stockholder's directors, officers,
employees, agents, partners or representatives, or any person who
controls such selling stockholder, against any losses, claims,
damages or liabilities (joint or several) to which Company or any
such director, officer, employee, agent, partner, representative,
controlling person, underwriter or selling stockholder may
become subject under the Securities Act, the Exchange Act or
other federal or state law, insofar as such losses, claims,
damages or liabilities (or actions in respect thereto) arise out
of or are based upon any violation, in each case to the extent
(and only to the extent) that such violation occurs in reliance
upon and in conformity with written information furnished by such
holder under an instrument duly executed by such holder and
stated to be specifically for use in connection with such
registration; and such holder will reimburse any legal or other
expenses reasonably incurred by Company or any such director,
officer, employee, agent, partner, representative, controlling
person, underwriter or selling stockholder in connection with
investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the indemnity
agreement contained in this Section 8.07(b) shall not apply to
amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the
consent of such holder, which consent shall not be unreasonably
withheld; provided further, that in no event shall any indemnity
under this Section 8.07 exceed the proceeds from the offering
received by such holder.
(c) Promptly after receipt by an indemnified party under this
Section 8.07 of notice of the commencement of any action
(including any governmental action), such indemnified party will,
if a claim in respect thereof is to be made against any
indemnifying party
<PAGE>
under this Section 8.07, deliver to the indemnifying party a written notice
of the commencement thereof and the indemnifying party shall have the right
to participate in, and, to the extent the indemnifying party so desires,
jointly with any other indemnifying party similarly noticed, to assume
the defense thereof with counsel mutually satisfactory to the
parties; provided, however, that an indemnified party shall have
the right to retain its own counsel, with the fees and expenses
to be paid by the indemnifying party, if representation of such
indemnified party by the counsel retained by the indemnifying
party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party
represented by such counsel in such proceeding. The failure to
deliver written notice to the indemnifying party within a
reasonable time of the commencement of any such action, if
materially prejudicial to its ability to defend such action,
shall relieve such indemnifying party of any liability to the
indemnified party under this Section 8.07, but the omission so to
deliver written notice to the indemnifying party will not relieve
it of any liability that it may have to any indemnified party
otherwise than under this Section 8.07.
(d) If the indemnification provided for in this Section 8.07 is
held by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any losses, claims, damages or
liabilities referred to herein, the indemnifying party, in lieu
of indemnifying such indemnified party thereunder, shall to the
extent permitted by applicable law contribute to the amount paid
or payable by such indemnified party as a result of such loss,
claim, damage or liability in such proportion as is appropriate
to reflect the relative fault of the indemnifying party on the
one hand and of the indemnified party on the other in connection
with the violation(s) that resulted in such loss, claim, damage
or liability, as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and
of the indemnified party shall be determined by a court of law by
reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission to state a
material fact relates to information supplied by the indemnifying
party or by the indemnified party and the parties' relative
intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission; provided, that in
no event shall any contribution by a holder of Registrable
Securities hereunder exceed the proceeds from the offering
received by such holder.
The obligations of Company and Purchaser under this Section
8.07 shall survive completion of any offering of Registrable
Securities in a registration statement and the termination of
this Agreement. No indemnifying party, in the defense of any
such claim or litigation, shall, except with the consent 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 such
indemnified party of a release from all liability in respect to
such claim or litigation.
ARTICLE IX
Miscellaneous
9.01 Amendments, Etc. No amendment or waiver of any provision of
this Agreement, nor consent to any departure by Company
therefrom, shall in any event be effective
<PAGE>
unless the same shall be in writing and signed by Purchaser, and then
such waiver or consent shall be effective only in the specific instance and
for the specific purpose for which given.
9.02 Notices. All notices and other communications provided for
hereunder shall be in writing, shall specifically refer to this
Agreement, shall be addressed to the receiving party's address
set forth below or to such other address as a party may designate
by notice hereunder, and shall be deemed to have been
sufficiently given for all purposes if (i) mailed by first class
certified or registered-mail, postage prepaid, (ii) sent by
express delivery service, (iii) personally delivered, or (iv)
made by telecopy or facsimile transmission.
If to Company: CV Therapeutics, Inc.
3172 Porter Drive
Palo Alto, CA 94304
Attn: Cynthia L. Clark, General Counsel
Facsimile: 650-858-0388
with a copy to: Cooley Godward LLP
Five Palo Alto Square
3000 El Camino Real
Palo Alto, CA 94306-2155
Attn: Robert L. Jones
Facsimile: 650-857-0663
If to Purchaser: Quintiles Transnational Corp.
4709 Creekstone Drive
Suite 200 Riverbirch Bldg.
Durham, N.C. 27703
Attn: John S. Russell
Facsimile: 919-998-2759
with a copy to: Smith, Anderson, Blount, Dorsett
Mitchell & Jernigan, L.L.P.
2500 First Union Capitol Center
Raleigh, N.C. 27601
Attn: Gerald F. Roach
Facsimile: 919-821-6800
9.03 No Waiver: Remedies. No failure on the part of Purchaser to
exercise, and no delay in exercising, any right hereunder shall
operate as a waiver thereof; nor shall any single or partial
exercise of any such right preclude any other or further exercise
thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies
provided by law.
9.04 Attorneys' Fees. In the event that any dispute among the
parties to this Agreement should result in litigation, the
prevailing party in such dispute shall be entitled to
<PAGE>
recover from the losing party all fees, costs and expenses enforcing
any right of such prevailing party under or with respect to this
Agreement, including without limitation, such reasonable fees and
expenses of attorneys and accountants, which shall include,
without limitation, all fees, costs and expense of appeals.
9.05 Binding Effect: Assignment. This Agreement shall be binding
upon and inure to the benefit of Company and Purchaser and their
respective successors and assigns, provided that neither Company
nor Purchaser may assign or transfer any or all of its rights or
obligations under this Agreement without the prior written
consent of the other party; provided, however, that Purchaser may
at any time assign or transfer any or all of its rights or
obligations under this Agreement to a Qualified Transferee.
Notwithstanding any assignment by Purchaser, the provisions of
Sections 7.01 and 7.02 shall continue to be binding upon
Purchaser in accordance with the terms of this Agreement.
9.06 Governing Law; Consent to Jurisdiction . This Agreement
shall be governed by, and construed in accordance with, the laws
of the State of Delaware, without reference to the conflicts or
choice of law principles thereof. Company and Purchaser hereby
irrevocably consent to the exclusive personal jurisdiction of any
state or federal courts located in Delaware, in any action, claim
or other proceeding arising out of any dispute in connection with
this Agreement, any rights or obligations hereunder, or the
performance of such rights and obligations. Purchaser and
Company agree to waive their respective rights to a jury trial
with respect to any action, claim, or other proceeding arising
out of any dispute in connection with this Agreement, any rights
or obligations hereunder, or the performance of such rights and
obligations.
9.07 Severability. To the extent any provision of this Agreement
is prohibited by or invalid under applicable law, such provision
shall be ineffective to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Agreement.
9.08 Entire Agreement. This Agreement embodies the entire
agreement and understanding between the parties hereto with
respect to the provisions hereof and supersedes all prior oral or
written agreements and understandings relating to the provisions
hereof. No statement, representation, warranty, covenant or
agreement of any kind not expressly set forth in this Agreement
shall affect, or be used to interpret, change or restrict, the
express terms and provisions of this Agreement.
9.09 Further Action. Each party shall, without further
consideration, take such further action and execute and deliver
such further documents as may be reasonably requested by the
other party in order to carry out the provisions and purposes of
this Agreement.
9.10 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original,
but all of which, when taken together, shall constitute one and
the same instrument.
<PAGE>
9.11 Survival. The representations, warranties, covenants and
agreements made herein by Company and Purchaser shall survive the
Closing.
[THE REMAINDER OF THE PAGE INTENTIONALLY LEFT BLANK;
SIGNATURES ARE ON FOLLOWING PAGE]
[Signature Page to Stock Purchase Agreement]
In Witness Whereof, Company and Purchaser have caused this
Stock Purchase Agreement to be executed in their names by their
duly authorized officers or representatives effective as of the
date first above written.
CV Therapeutics, Inc.
By: /s/ L. Lange
Name: Louis G. Lange
Title: Chairman & CEO
Quintiles Transnational Corp.
By:
Name:
Title:
<PAGE>
[Signature Page to Stock Purchase Agreement]
In Witness Whereof, Company and Purchaser have caused this
Stock Purchase Agreement to be executed in their names by their
duly authorized officers or representatives effective as of the
date first above written.
CV Therapeutics, Inc.
By:
Name:
Title:
Quintiles Transnational Corp.
By: /s/ James L. Bierman
Name: James L. Bierman
Title: Senior Vice President,
Corporate Development
[ * ] = Certain confidential information contained in this
document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant
to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.
<PAGE>
Certain confidential information contained in this document,
marked by brackets, has been omitted and filed separately with
the Securities and Exchange Commission pursuant to Rule 24b-2 of
the Securities Exchange Act of 1934, as amended.
Exhibit 10.66
SALES AND MARKETING AGREEMENT
This Sales And Marketing Services Agreement (the
"Agreement") is made effective as of the 5th day of May, 1999
(the "Effective Date") by and between CV Therapeutics, Inc., a
Delaware corporation having its principal place of business at
3172 Porter Drive, Palo Alto, California 94304 ("CVT") and
Innovex Inc., a Delaware corporation with its principal place of
business at 10 Waterview Boulevard, Parsippany, NJ 07054
("Innovex"), each on behalf of itself and its Affiliates. CVT
and Innovex are sometimes referred to herein individually as a
"Party" and collectively as the "Parties." Quintiles
Transnational Corp., a North Carolina corporation with its
principal place of business at 4709 Creekstone Drive, Suite 300,
Riverbirch Building, Durham, North Carolina 27703 ("Quintiles"),
the parent corporation of Innovex, is a party for purposes of
Article 8.
In consideration of the following covenants, promises and
obligations, CVT, Innovex and Quintiles agree as follows.
ARTICLE 1
SERVICES OVERVIEW; INNOVEX EXCLUSIVITY
1.1 Definitions. Capitalized terms used but not defined in the
text of this Agreement shall have the meanings ascribed to them
on Exhibit A hereto.
1.2 Overview; CVT Engagement of Innovex. Pursuant to this
Agreement, the Parties will collaborate to develop and sustain a
market for and promote the CVT pharmaceutical product known as
ranolazine (as defined in Exhibit A, the "Product") in the
Territory. Quintiles shall provide financial assistance to CVT
in connection with the Product Launch of the Product pursuant to
the Stock Purchase Agreement and Loan Agreement referred to and
defined in Article 8, and CVT shall engage Innovex to provide
marketing and sales services for the Product, including the
recruiting and deployment of a dedicated sales force, all as
provided herein. In recognition of the various undertakings
provided by Quintiles and Innovex herein, CVT shall pay Innovex
the Sales and Marketing Fee and other compensation set forth in
Sections 9.1, 9.3, 9.5, 9.7 and 10.3. While the Parties have
allocated their respective responsibilities under this Agreement,
the Parties intend this program to be broadly collaborative, and
seek to achieve consensus-based decision making to the extent
practical, with the common objective of maximizing the short-term
and long-term commercial success of the Product in the Territory,
subject to the terms and conditions of this Agreement.
1.3 Innovex Exclusive Rights. During the Term, except as
provided in Section 14.5, Innovex shall have the exclusive right
to provide Sales Force services for the Product in the
<PAGE>
Territory. Other marketing, advertising and promotional activities
related to the Product in the Territory shall be conducted jointly by the
Parties in accordance with this Agreement. Innovex shall not
have any rights with respect to the Product outside of the
Territory.
1.4 Retained Rights by CVT. Except as otherwise expressly
provided in Section 1.3, CVT shall retain all right, title and
interest in and to the Product including, but not limited to,
owning all clinical trial data and designs, protocols, regulatory
filings for the Product and data in support thereof, the NDA for
the Product, the Drug Master File for the Product, and all
manufacturing, distribution, patent, copyright, trade secret and
trademark rights relating to the Product. No license is granted
to Innovex hereunder, either directly or by implication. Innovex
acknowledges that any study sponsored by or under the direction
of CVT is a proprietary program of CVT, containing trademarks,
trade secrets and other intellectual property of CVT, whether or
not such rights are utilized in the marketing, promotion or sale
of the Product.
1.5 Additional Indications. In the event CVT intends during the
Term of this Agreement to submit an NDA for ranolazine [ * ], CVT
shall provide Innovex with written notice at least [ * ] days
prior to the then current estimated filing date of the NDA
therefor, and the Parties shall negotiate in good faith the
minimum sales and marketing effort which will be required
therefor. If the Parties reach an agreement thereon within [ * ]
days after commencement of such [ * ] day period prior to the
then current estimated NDA filing date, ranolazine [ * ] shall be
added to the definition of Product under this Agreement, and the
corresponding provisions for minimum Innovex sales and marketing
efforts under this Agreement shall be revised. If the Parties do
not reach agreement within such time period, the definition of
Product shall not be expanded.
ARTICLE 2
COMMITTEES
2.1 Joint Steering Committee ("JSC").
2.1.1 Formation; Purposes and Principles. The JSC shall have
overall responsibility for the success of the matters related to
the Product in the Territory as established by this Agreement,
including without limitation: (i) to determine the overall
strategy for marketing, promotion and sales of the Product in the
Territory; (ii) to advise, provide input and determine strategy
for Phase IIIB/IV Studies; (iii) to plan and coordinate the
Parties' activities hereunder related to sales and marketing of
the Product in the Territory; (iv) to approve plans and budgets
for the services under this Agreement, including the Marketing
Plan, consistent with the maximization of long-term profits
derived from the sale of the Product in the Territory and any
other activities related to sales and marketing of the Product in
the Territory the JSC shall deem appropriate to achieve the
Parties' objectives under this Agreement; and (v) to resolve
disputes of the Parties arising under Section 2.1.1, except as
provided by Article 16. Notwithstanding the foregoing, the JSC
shall have no authority: (a) to determine the annual value of
marketing and promotional expenses to be incurred by Innovex; (b)
to determine the total size of the Sales Force to be placed in
the field by Innovex; or (c) to determine, interpret or alter the
terms and conditions or rights and obligations of the Parties
with respect to this Agreement, the Loan Agreement or the Stock
Purchase Agreement.
<PAGE>
2.1.2 Membership. The JSC will be comprised of three (3)
representatives appointed by Innovex and three (3)
representatives appointed by CVT, with at least one (1)
representative from each Party being a corporate officer of such
Party. The JSC shall be chaired by a representative of CVT.
Either Party may appoint, substitute or replace members of the
JSC to serve as their representatives upon notice to the other
Party. The Parties shall appoint the initial members of the JSC
within thirty (30) days after the Effective Date.
2.1.3 Meetings. The JSC shall meet in person on a calendar
quarter basis or more frequently as may be agreed upon, to review
the progress of the Parties in performing the functions and
obligations under this Agreement. Each Party shall bear all
travel and related costs for its representatives, without
reimbursement under this Agreement. Location of meetings shall
alternate between CVT headquarters in Palo Alto and Innovex
headquarters in New Jersey. In order for a meeting of the JSC to
be convened, such meeting must include at least one (1) committee
member of each Party who is a corporate officer of such Party.
2.1.4 Decision Making in the JSC. The JSC shall seek to
operate by consensus. The representatives of CVT shall
collectively be entitled to one (1) vote and the representatives
of Innovex shall collectively be entitled to one (1) vote on any
matter before the JSC. Notwithstanding the foregoing, the two (2)
senior representatives on the JSC, one (1) from each Party, shall
have the authority to make decisions on behalf of the JSC. CVT
shall have the right to decide any matter properly before the JSC
that the JSC cannot decide by unanimous vote of the CVT and
Innovex representatives. With respect to the total annual value
of marketing and promotional expenses to be incurred by Innovex
or the total size of the Sales Force to be placed in the field by
Innovex, Innovex shall have the final responsibility for making
such decision, provided that the requirements of Section 4.5 must
be satisfied.
2.1.5 Disputes. Disagreements within the JSC shall be
resolved as set forth in Section 2.1.4. In the event of a
dispute regarding compliance with this Agreement, the JSC shall
not have authority to resolve such dispute, which shall be
handled in the manner set forth in Article 16. In the event the
JCC refers a dispute to the JSC for resolution, the JSC shall
convene a meeting either in person or by teleconference to
resolve such dispute within five (5) days from the date upon
which the JCC notifies the matter to the JSC.
2.2 Joint Commercialization Committee ("JCC").
2.2.1 Formation; Purposes and Principles. The JCC will be
responsible for development and implementation of the Marketing
Plan as well as any other matters required for the sales and
promotion of the Product in the Territory, except to the extent
that certain matters are solely the responsibility of a single
Party under this Agreement. The JCC will additionally oversee
any other activities the JCC shall deem appropriate to achieve
its objectives consistent with this Agreement. In overseeing the
operational aspects of commercialization, the JCC shall,
consistent with Section 2.1.1, without limitation: (i) oversee
Phase IIIB marketing trials which commence after the NDA Filing
for the Product, and Phase IV marketing trials for the Product,
(ii) plan the marketing and sales of the Product in the Territory
consistent with Marketing Plans; (iii) monitor, review and
comment on costs incurred by the Parties in connection with such
activities; (iv) review and comment on other commercialization
and Launch plans for the Product in the Territory; (v) receive
and supply the Parties' sales, pricing, and financial reports
<PAGE>
pertaining to Pre- and Post-Approval Marketing Activities; (vi)
review the Marketing Plan; and (vii) facilitate the flow of
information among the Parties, including coordinating sales
activity with manufacturing schedules and distribution.
2.2.2 Membership. The size of the JCC may vary from time to
time in the reasonable discretion of the chair of the JCC,
provided that there are at least three (3) representatives
appointed by CVT and at least three (3) representatives appointed
by Innovex. The JCC shall be chaired by a representative of
Innovex. Either Party may appoint, substitute or replace members
of the JCC to serve as their representatives upon notice to the
other Party. The Parties shall appoint the initial members of
the JCC within thirty (30) days after the Effective Date.
2.2.3 Meetings. The JCC shall meet in person or by
teleconference on a monthly basis or more frequently as may be
agreed upon, to review the progress of the Parties in performing
the functions and obligations under this Agreement. Subject to
Section 2.4, each Party shall bear all travel and related costs
for its representatives. Location of meetings shall alternate
between CVT headquarters in Palo Alto and Innovex headquarters in
New Jersey.
2.2.4 Decision Making; Quorum. The JCC shall seek to operate
by consensus. The representatives of CVT shall collectively be
entitled to one vote and the representatives of Innovex shall
collectively be entitled to one vote on any matter before the
JCC. Disputes shall be referred to the JSC for resolution. In
order for a meeting of the JCC to be convened, such meeting must
include at least two (2) representatives of each Party.
2.3 Agendas and Minutes for the JSC and JCC. Unless otherwise
decided by the JSC, each Party will disclose to the other
proposed agenda items along with appropriate background or
supporting information at least ten (10) working days in advance
of a JSC meeting and five (5) working days in advance of a JCC
meeting. At each meeting of the JSC or JCC, as the case may be,
such committee shall select a secretary who will prepare, within
five (5) working days after each meeting (whether held in person
or by telecommunication), the minutes reporting in reasonable
detail the actions taken by such committee, the attendees, the
status of goals and achievements as well as issues requiring
resolution and resolutions of previously reported issues, which
minutes shall be signed by one of the members of the JSC or JCC,
as the case may be, from each of the Parties.
2.4 Innovex Attendance at JCC as a Billable Expense. Prior to
Product Launch, Innovex representatives on the JCC may invoice
for their time spent on JCC activities up to the limit approved
in the then current annual Marketing Plan budget to the extent
such activities are otherwise unrecoverable under this Agreement
as Pre-Approval Marketing Activities. Innovex representatives on
the JSC shall not invoice for their time spent on JSC matters.
2.5 No Authority to Modify Agreement. The JSC and JCC shall
have no authority to amend or waive compliance with the terms and
conditions of this Agreement, or to approve actions of the
Parties which are inconsistent with this Agreement. Any such
amendments and waivers or actions shall be implemented by means
of Section 17.6.
<PAGE>
ARTICLE 3
MARKETING PLAN; DETERMINATION OF FULLY BURDENED COST
3.1 Marketing Plan. The principal mechanism by which the
Parties coordinate their sales and marketing activities will be a
Marketing Plan, to be prepared and periodically updated as set
forth below. Within six (6) months after the Effective Date,
Innovex shall submit a draft Marketing Plan to the JCC. The
initial Marketing Plan will cover the remainder of calendar year
1999 through the period of Product Launch, and after review by
the JCC will be submitted to the JSC for review and approval.
Periodically thereafter, but no less frequently than annually,
Innovex shall be responsible for preparing or updating drafts
annually for JCC and JSC approval. Each Marketing Plan shall
include a multi-year projection of Product plans and budgets.
Innovex shall assign responsibilities for updating the Marketing
Plan and preparing annual plans, budgets and revenue forecasts,
according to a schedule and using a process that will enable the
JSC and the JCC, as the case may be, to submit comments and
supplement such Marketing Plan and budgets in a timely fashion.
The draft Marketing Plan shall be ready for presentation to JCC
not later than each [ * ], and shall be approved by the JSC by
each [ * ], of the year preceding that year to which such
Marketing Plan applies.
3.2 Plan Contents. Each Marketing Plan shall include a review
of the marketplace, marketing objectives/strategies, clinical
support plans, marketing study plans for Phase IIIB/IV Studies,
Sales Force effort, pricing, inventory requirements and
distribution plans for the Product, together with a revenue and
expense forecast for Product sales in the Territory. Such
Marketing Plan shall be in a form generally consistent with the
outline attached hereto as Exhibit B, and shall include among
other items the overall level of anticipated resource commitments
on the part of each Party in the relevant time period. Each
Marketing Plan shall set forth the overall level of Territory
Representative efforts. Each Marketing Plan shall be in
accordance with this Agreement and all applicable laws, rules and
regulations, including but not limited to those promulgated by
the FDA, the Department of Health and Human Services Office of
Inspector General (OIG), and state agencies and/or departments.
3.3 Determination of Fully Burdened Cost. Certain Innovex Post-
Approval Marketing Activities under this Agreement shall be paid
for by CVT on the basis of Innovex's Fully Burdened Cost of such
activities. Fully Burdened Cost means Innovex's usual and
customary fee charged to Third Parties under a fee for service
arrangement for the type of services rendered by it pursuant to
this Agreement (such fee to be based on services of comparable
volume and comparable quality), inclusive of Innovex's customary
profit margin for such volume and quality of service. At least
twelve (12) months prior to the anticipated NDA Filing for the
Product, the Parties shall execute an agreement setting forth the
then current Fully Burdened Cost of the foreseeable Innovex
activities under this Agreement. The Parties shall update such
agreement as needed to reflect changes in the services being
provided by Innovex and/or changes in the usual and customary
fees charged by Innovex. The Parties shall agree in advance on
any new or revised type or volume of services, or changes to the
pricing of such services.
3.3.1 Baseline for Fully Burdened Cost of Sales Force.
Innovex has provided to CVT an estimate, prepared in March 1999,
that the Fully Burdened Cost of an Innovex Sales
<PAGE>
Force consisting of [ * ] Territory Representatives, [ * ] Field Managers,
one (1) National Sales Manager and one (1) Project Administrator, would
be [ * ] for each Territory Representative day worked and [ * ]
for each Field Manager day worked. The Parties shall update such
daily rates as needed to reflect changes in the services being
provided by Innovex and/or changes in the customary Innovex
pricing schedule which provides the basis for the determination
of Fully Burdened Cost. The Parties shall agree in advance on
any new or revised type or level of services, or changes to the
pricing of such services.
ARTICLE 4
INNOVEX RESPONSIBILITIES
4.1 Covenant to Operate under the Agreement; General Diligence
Requirement. Innovex shall market and promote the Product in the
Territory only in accordance with the Marketing Plan, Promotional
Materials, this Agreement and all applicable laws, rules and
regulations, including but not limited to those promulgated by
the FDA, the Department of Health and Human Services Office of
Inspector General (OIG), and state agencies and/or departments.
Except as expressly set forth in this Agreement, the criteria for
Innovex performance shall be consistent with the Innovex
standards for sales and marketing projects of similar size and
scope.
4.2 Pre-Approval Responsibilities.
4.2.1 Hiring Sales Force. Innovex shall hire, train and
maintain a Sales Force for promotion of the Product in the
Territory on the terms and conditions of this Agreement, which
shall be completed at least [ * ] in advance of the date of the
expected Launch (as communicated by CVT to Innovex in writing at
least [ * ] in advance of the expected Launch). The costs of
establishing such Sales Force shall be borne by Innovex, in
consideration of the Sales and Marketing Fee, except as provided
in Section 9.3. The hiring standards for the members of the
Sales Force shall be established by the JCC.
4.2.2 Pre-Approval Marketing Activities. In addition,
Innovex shall also provide the Pre-Approval Marketing Activities
CVT may request pursuant to Section 5.2.2 which Innovex is
reasonably able to provide. To the extent that CVT engages
Innovex services as part of Pre-Approval Marketing Activities,
CVT shall engage such services under customary terms and
conditions applicable to agreements between Innovex and its Third
Party customers for such services. The prices paid by CVT for
such services shall be agreed from time to time by the Parties,
in writing in advance, and shall equal, as nearly as practical,
the prices charged by Innovex to Third Party customers buying
comparable services in comparable quantity, provided that the
Innovex services to CVT are of the same quality or better quality
and equivalent turnaround times as comparable Innovex services to
Third Party customers. Pre-Approval Marketing Activities shall
be conducted in accordance with all applicable laws, rules and
regulations, including but not limited to those promulgated by
the FDA, the Department of Health and Human Services Office of
Inspector General (OIG), and state agencies and/or departments.
<PAGE>
4.3 Post-Approval Responsibilities. Following Product Launch,
Innovex shall provide the Post-Approval Marketing Activities with
the minimum requirements of Section 4.5.1, with a minimum
expenditure as provided in Section 4.5.2, and shall comply with
the other terms and conditions provided in this Agreement, all in
consideration of the Sales and Marketing Fee and other
compensation provided for in Article 9.
4.4 Fully Dedicated Sales Force. During the Term, the only
activity of the Sales Force shall be the marketing and promotion
of the Product in the Territory. The Sales Force shall be
composed of full-time employees of Innovex and shall not be used
for any other purpose, product or service. The Sales Force shall
carry business cards in a form specified by CVT to identify them
as CVT territory representatives.
4.5 Minimum Requirements.
4.5.1 Innovex Sales Force Commitment. The Innovex Sales
Force shall be of at least the following size during each of the
following periods of time:
(a) The Sales Force at Launch and until the commencement of
Sales Year 2 shall be comprised of at least the following Innovex
Personnel: (i) [ * ] Territory Representatives; (ii) [ * ] Field
Managers; (iii) [ * ] National Sales Manager; and (iv) [ * ]
Project Administrator.
(b) At the commencement of Sales Year 2, and for the remainder
of such Sales Year, the Sales Force shall be comprised of at
least the following Innovex Personnel: (i) [ * ] Territory
Representatives; (ii) [ * ] Field Managers; (iii) [ * ] National
Sales Manager; and (iv) [ * ] Project Administrator.
(c) In each of Sales Years 3 through 5, the Sales Force shall be
comprised of at least the lesser of (i) the size specified in
paragraph (b) above or (ii) a sales force the Fully Burdened Cost
of which Sales Force, plus the expenditures for Post-Approval
Marketing Activities (as set forth in Section 4.5.2) incurred by
Innovex in such Sales Year is equal to at least [ * ] of the Net
Sales of the previous Sales Year. By way of example, if Net
Sales in Sales Year 2 are equal to [ * ], then the combination of
the Fully Burdened Cost of the Sales Force in Sales Year 3 plus
Innovex's expenses incurred for Post-Approval Marketing
Activities in Sales Year 3 must equal at least [ * ].
4.5.2 Innovex Post-Approval Marketing Expenditure Commitment.
Innovex shall bear all expenses of Post-Approval Marketing
Activities, except for the cost of Samples provided by CVT under
Section 5.3 and supplemental activities, if any, as otherwise
provided in the final sentence of this Section 4.5.2. The amount
of such Post-Approval Marketing Activities expenditures by
Innovex shall be at least [ * ] in each Sales Quarter and at
least [ * ] in each Sales Year. Such expenditures shall not be
reimbursed by CVT, but are included within the Post-Approval
Marketing Activities. The categories of expenditures included
within Post-Approval Marketing Activities, include without
limitation, those set forth and identified on Exhibit C. If CVT
desires to provide supplemental Post-Approval Marketing
Activities not contained in the Marketing Plan, then CVT shall
have the right, but not the
<PAGE>
obligation, to fund such supplemental activities at its own cost and
expense, provided that such supplemental activities are carried out in
consultation with the JCC.
4.6 Training Requirements. Innovex shall train all Innovex
Personnel in accordance with Article 6 hereof.
4.7 Innovex Responsibilities. Without limitation a partial list
of responsibilities of Innovex are set forth on Schedule I to
this Agreement.
4.8 Records and Reports Regarding Promotional Activities.
Innovex shall promptly provide to CVT such information regarding
ongoing sales forecasts and marketing activities as relate to the
plans and budgets hereunder as CVT may reasonably request.
Additionally, Innovex will keep reasonably complete and accurate
records of all presentations made by the Sales Force in
accordance with Innovex's customary call reporting procedures
(including names of physicians, dates of presentation and general
response to such presentations) as well as other activities
carried out pursuant to the Marketing Plan. Innovex will make
all such records available to CVT during regular business hours
and upon reasonable notice, and will, within fifteen (15) days of
the end of each month, provide CVT a monthly report on sales
activity and forecasts and a monthly report regarding all other
marketing activities undertaken by Innovex hereunder. Innovex
will maintain such records for three (3) years following the
period to which they relate. The record-keeping and access
requirements of this Section 4.8 shall survive the termination of
this Agreement for a two (2) year period.
4.9 Performance Audits. CVT shall have the right to audit
Innovex's performance of obligations as set forth in this Article
4, including other provisions regarding Pre-Approval Marketing
Activities and Post-Approval Marketing Activities and as
described in the Schedules attached hereto (generally describing
the activities of the Parties) for the purpose of evaluating and
monitoring conformance to the terms and conditions of this
Agreement. Such audits shall occur during regular business hours
and upon reasonable notice, shall not interfere with Innovex
activities, and shall be conducted at CVT's expense. In the
event an outside auditor is hired to conduct an audit pursuant to
this Section 4.9, such auditor shall be one reasonably acceptable
to Innovex and expressly subject to the same confidentiality
provisions as apply to the Parties hereunder.
4.10 Other Responsibilities. Innovex shall assist CVT in
performing CVT's obligations as set forth in Section 5.4.3.
ARTICLE 5
CVT'S RESPONSIBILITIES AND OBLIGATIONS
5.1 Regulatory Affairs. CVT shall have the responsibilities for
regulatory affairs set forth in Article 7, and shall keep the JSC
informed generally on the status and conduct of all clinical
development activities related to the Product in the Territory.
CVT shall inform Innovex of its estimated date of Product Launch,
and in particular shall provide such date for purposes of
Innovex's establishment of the Sales Force under Section 4.2.1.
<PAGE>
5.2 Pre-Approval Marketing Activities. Although the Parties
will jointly develop and implement Pre-Approval Marketing
Activities, CVT shall be responsible for funding such activities.
CVT's funding obligation for Pre-Approval Marketing Activities
shall be as follows:
5.2.1 Aggregate Expenditure. CVT's aggregate expenditure on
Pre-Approval Marketing Activities shall be at least [ * ] between
the Effective Date and the Launch. This requirement shall not
apply if Quintiles for any reason does not provide the Pre-
Approval Advances in accordance with the Loan Agreement at such
time (or times) that CVT requests such Advances. In the event of
termination of this Agreement prior to the Launch, the failure of
CVT to spend such amount shall not be considered a breach of this
Agreement.
5.2.2 Purchase of Innovex Services. CVT shall purchase, and
Innovex shall supply to CVT, between the Effective Date and the
Launch, Pre-Approval Marketing Activities (Section 4.2.2) having
an invoice value of at least [ * ] provided, however, that: (a)
such requirement shall not apply if Quintiles for any reason does
not provide the Pre-Approval Advances in accordance with the Loan
Agreement at such time (or times) that CVT requests such
Advances; (b) Innovex supplies such Pre-Approval Marketing
Activities in a timely manner, in accordance with standards in
the industry and at competitive prices; and (c) such services
shall be provided by and/or through Innovex, including Third
Party services managed by Innovex. The remainder of CVT's
aggregate expenditure pursuant to Section 5.2.1 shall be spent by
CVT on services provided by vendors mutually acceptable to CVT
and Innovex. In the event of termination of this Agreement prior
to the Launch, the failure of CVT to spend such amount shall not
be considered a breach of this Agreement.
5.3 Obligation to Provide Samples. In the first Sales Year, CVT
will provide to Innovex for distribution Samples with a cost of
goods, calculated in accordance with generally accepted
accounting principles ("GAAP"), of at least [ * ]. In each of
the subsequent Sales Years, CVT will provide a quantity of
Samples to Innovex such that the cost of goods of such Samples,
divided by the aggregate Fully Burdened Cost to be incurred by
Innovex in such Sales Year under the Marketing Plan then in
effect, is at least equal to [ * ] divided by the sum of the
Fully Burdened Cost of the Sales Force provided in Section
4.5.1(a) plus [ * ]. Such quantity of Samples shall be provided
by CVT at its own expense, without reimbursement by Innovex. CVT
estimates that the cost of each tablet manufactured at production
quantity levels, without packaging, will be [ * ] per tablet.
Actual costs may differ from the aforestated estimate; and the
actual costs shall apply to CVT's fulfillment of its commitment
under this Section 5.3. Distribution of such Samples shall be
carried out by Innovex and shall be included within Innovex Post-
Approval Marketing Activity expenditures. In the event that the
JCC determines a need for additional Samples over and above that
which CVT is obligated to provide at its own expense under this
Section 5.3, CVT will produce a commercially reasonable quantity
of additional Samples. Innovex shall reimburse CVT for its cost
of goods for producing any such additional Samples, which cost
shall be treated as a Post-Approval Marketing Expense. The JCC
may agree to reduce CVT's commitment under this Section 5.3 and
replace it with a commitment of equal dollar value for CVT to
provide other marketing activities. Innovex must account for
Samples as required by the Prescription Drug Marketing Act and
regulations.
5.4 Sales and Distribution.
<PAGE>
5.4.1 Pricing. CVT, in consultation with Innovex, shall set
all prices and commercial terms for the sale of the Product in
the Territory.
5.4.2 Booking Sales; Distribution. CVT shall be responsible
for booking sales, fulfilling orders, and shall warehouse and
distribute the Product and perform all related services.
5.4.3 Product Returns. CVT shall be responsible for handling
Product returns. The Innovex Sales Force shall provide
assistance as reasonably requested by CVT, to the extent
consistent with the normal activities of pharmaceutical sales
personnel. Product returns shall promptly be shipped to the
facility responsible for shipment of such Product lot or such
other location as may be designated by CVT in writing.
5.5 CVT Responsibilities. Without limitation, a partial list of
CVT responsibilities are set forth on Schedule II attached to
this Agreement.
ARTICLE 6
TRAINING; ADVERTISING AND PROMOTIONAL MATERIALS
6.1 Training Programs.
6.1.1 Content. The JCC will develop initial and all ongoing
training programs for the Sales Force during the Term. Each
member of the Sales Force shall be required to successfully
complete such training program before providing services under
this Agreement. The Parties shall mutually agree to a minimum
training standard and pass rate. Innovex shall maintain records
of such training for each individual. Innovex agrees to utilize
such training programs on an ongoing basis. Initial training
shall be carried out at a time which is set by the JSC and which
is prior to but reasonably near the date on which Product Launch
is expected. As additional Territory Representatives are added
under this Agreement, training will be given to groups of the
newly selected Territory Representatives. Training programs
shall include training regarding requirements of the Food, Drug
and Cosmetic Act, Medicare/Medicaid Anti-Fraud and Abuse Act, and
other applicable laws, rules, regulations and policies.
6.1.2 Cost. The cost of developing and delivering the
training to the Sales Force shall be borne by Innovex. Each
Party shall absorb the costs of transporting, housing and
maintaining their respective personnel who participate in such
training. The cost of training materials prepared and supplied
by Innovex will be borne by Innovex. CVT shall own all rights
and title in any training material developed under this Agreement
which relates to the Product or CVT. Innovex shall own all right
and title in any other training material.
6.2 Advertising and Promotional Materials.
6.2.1 Creation and Use. Innovex, with assistance and advice
from CVT, shall develop all Promotional Materials. Such
materials shall be consistent with the relevant Marketing Plan
and budgets approved by the JSC. CVT shall have the final sign-
off on all Promotional Materials and Product-related training
materials. Innovex shall disseminate only
<PAGE>
Promotional Materials having obtained prior written approval by CVT.
Innovex shall reasonably assist CVT in revising such Promotional Material in
a timely manner.
6.2.2 Ownership; FDA Approval. CVT shall own all rights and
title in the Promotional Material. Notwithstanding the
foregoing, and in accordance with the applicable laws, rules and
regulations, CVT and Innovex will not review continuing medical
education materials relating to the Product. Neither continuing
medical education materials nor other medical education materials
will be used by Innovex for purposes of marketing and selling the
Product unless Innovex obtains CVT's prior written consent. CVT
shall review all medical education materials for scientific and
clinical accuracy. The final content of all Promotional
Materials and Product-related training materials shall be the
legal responsibility of CVT, including but not limited to FDA
approval thereof.
6.2.3 CVT Logos. All written or visual materials related to
the Product shall display the CVT logos and CVT shall be
presented as the sole owner of the Product, except as required by
law.
ARTICLE 7
REGULATORY ISSUES AND COMPLAINTS
7.1 Ownership of Regulatory Filings and Compliance. CVT will
retain exclusive right, ownership, authority and responsibility
for regulatory filings, compliance with all regulatory
requirements and maintenance of all government agency contacts
relating to the Product, including, but not limited to,
maintaining and updating the NDA for ranolazine; the development
and submission of regulatory filings regarding new indications
(if any, and at its sole discretion); the reporting of any
adverse drug reactions to the FDA; the filing of Promotional
Materials with the FDA; the payment of Medicaid and other
governmental rebates which in CVT's sole judgment are due and
owing; the pricing of the Product for each customer; and
compliance with Medicaid best price law and the Department of
Veterans Affairs Act. The development of each indication and
formulation of the Product shall be determined solely by CVT. CVT
shall not be responsible for actions by Innovex that are outside
the scope of this Agreement or not in accordance with applicable
law.
7.2 Communication with the FDA and Other Regulatory Agencies.
Except as required by law, Innovex shall not communicate with the
FDA, OIG, HCFA or any state agencies ("Regulatory Agencies")
about anything relating to the Product, except through CVT.
Innovex is required by law to communicate directly with any
Regulatory Agency or if Innovex receives any communication from a
Regulatory Agency with respect to the Product, promotion of the
same, or Innovex's performance under this Agreement or that could
effect Innovex's performance under this Agreement, Innovex shall
promptly notify CVT. Innovex shall reasonably cooperate at CVT's
expense with CVT in all proper respects in all regulatory matters
relating to the Product, including but not limited to preparation
for inspections of CVT facilities and/or Innovex facilities.
Innovex will provide CVT with pertinent records in Innovex's
possession which may be necessary to implement any recall or any
other corrective action mandated by a Regulatory Agency or
implemented by CVT, including but not limited to names and
addresses for "Dear Doctor" letters.
<PAGE>
7.3 New Developments Relating to the Product. CVT will promptly
inform Innovex of the following information relating to the
Product in the Territory: (i) new approved indications; (ii) new
approved dosages or administration regimens; (iii) material new
studies by the scientific community that CVT becomes aware of
which relate to the Product or a competitive product in its
therapeutic class; and (iv) any changes in regulations affecting
the Product or CVT's obligations with respect to this Agreement.
Innovex will promptly inform CVT of information relating to
changes in regulations affecting Innovex's obligations with
respect to this Agreement. Based on such information, and
subject to any federal, state or local laws and/or regulations,
the Parties shall use commercially diligent efforts to maintain
the training materials and Promotional Materials supplied to the
Sales Force pursuant to this Agreement current with such new
developments or information.
7.4 Product Recalls. If either Party believes that a recall of
any Product in the Territory is necessary, such Party shall
notify the other Party immediately thereafter. CVT shall retain
sole authority and responsibility for determining whether a
Product recall shall occur. Any Product recall shall occur under
the direction and control of CVT, and Innovex shall reasonably
cooperate in carrying out any such recall or any regulatory
matter, at CVT's expense. CVT shall make available, at Innovex's
request, any records that Innovex might require while assisting
CVT in effecting any recall of the Product.
7.5 Adverse Event Reporting Procedures. CVT shall be
responsible for the reporting of adverse events and drug safety
issues related to the use of the Product. CVT shall advise
Innovex of its standard procedures for the reporting of adverse
events, and the Innovex Sales Force shall comply with such
procedures. The CVT procedures for the reporting of adverse
events shall be included in the training program for the Innovex
Sales Force. Innovex shall report to CVT within twenty-four (24)
hours any adverse events reported to it.
7.6 Product Inquiries; Complaints. Innovex shall promptly
notify CVT of any complaint, inquiry or (in compliance with
Section 7.5) adverse event relating to the Product in report form
providing reasonable detail of such complaint, event or inquiry.
CVT shall maintain a unified record of all complaints it
receives. CVT shall be responsible for medical affairs services
and shall respond to inquiries from physicians and health care
providers. CVT shall advise Innovex of its procedures for
handling such inquiries and the Innovex Sales Force shall be
trained by Innovex on such procedures.
7.7 Database of Clinical Trial Data. CVT shall own and maintain
its own database of clinical trial data accumulated from all
clinical trials of the Product and CVT shall own and maintain a
unified database of complaints and adverse drug event information
for the Product and shall develop and utilize uniform report
forms.
<PAGE>
ARTICLE 8
EQUITY & LOAN ARRANGEMENTS; MILESTONE PAYMENT
8.1 Equity Stake. Concurrent with execution of this Agreement,
Quintiles shall execute a Stock Purchase Agreement to purchase
five million dollars ($5,000,000) of CVT common stock on the
terms and conditions as set forth therein ("Stock Purchase
Agreement"). The terms and conditions of such equity purchase,
and the covenants of each Party related thereto, shall be
governed solely by the Stock Purchase Agreement and the related
documents executed pursuant thereto.
8.2 Pre-Approval Line of Credit. Quintiles shall extend to CVT
a ten-million dollar ($10,000,000) line of credit, according to
terms and conditions of the Pre-Approval Commitment of the Loan
Agreement between the Parties dated the date hereof (the "Loan
Agreement").
8.3 First Year Sales Loan. Upon Product Launch, Quintiles shall
extend to CVT an additional line of credit to fund the first year
of sales and marketing expenses to the extent such expenses
exceed thirty three percent (33%) of actual sales, according to
the terms and conditions of the First Year Sales Commitment of
the Loan Agreement.
8.4 Milestone Payment. Quintiles shall make a milestone payment
of ten million dollars ($10,000,000) to CVT upon Product Launch.
Such milestone shall be payable within ten (10) days following
Product Launch, provided that Quintiles shall have the right to
apply such ten million dollar ($10,000,000) payment first against
any amounts then outstanding under the Pre-Approval Loan, then to
any Innovex Pre-Approval Marketing Activity unpaid invoices, with
the balance (if any) to be paid to CVT in cash.
ARTICLE 9
COMPENSATION
9.1 Sales and Marketing Fee. As consideration for the milestone
payment provided by Quintiles and the sales and marketing
services provided by Innovex under this Agreement, CVT shall pay
Innovex a Sales and Marketing Fee for each Sales Year as follows.
The Sales and Marketing Fee for each Sales Year shall be equal to
the lesser of the amounts set forth in column A or B below for
that year (the "Sales and Marketing Fee").
<PAGE>
Year of Commercial Column A Column B
Sale
Sales Year 1 Fully Burdened Costs N/A
in Sales Year 1.
Sales Year 2 33% of cumulative 300% of cumulative
Net Sales in Sales Fully Burdened Costs
Year 1 and Sales in Sales Year 1 and
Year 2, less Sales Sales Year 2, less
and Marketing Fee Sales and Marketing
for Sales Year 1 Fee for Sales Year 1
Sales Year 3 30% of Net Sales in 300% of cumulative
Sales Year 3 Fully Burdened Costs
in Sales Year 1
through Sales Year
3, less cumulative
Sales and Marketing
Fees for Sales Year
1 and Sales Year 2
Sales Year 4 25% of Net Sales in 300% of cumulative
Sales Year 4 Fully Burdened Costs
in Sales Year 1
through Sales Year
4, less cumulative
Sales and Marketing
Fees for Sales Year
1 through Sales Year
3
Sales Year 5 25% of Net Sales in 300% of cumulative
Sales Year 5 Fully Burdened Costs
in Sales Year 1
through Sales Year
5, less cumulative
Sales and Marketing
Fees for Sales Year
1 through Sales Year
4
The Sales and Marketing Fee for each quarter shall be
calculated and reported in the manner set forth in Section 9.4
and paid on the schedule set forth in Section 9.6. In
consideration of the Sales and Marketing Fee, Innovex shall bear,
without limitation, all of the Post-Approval Marketing expenses
identified on Exhibit C as being included in Innovex Sales Force
Expenses and Innovex Marketing Expenditures.
9.2 Penalty for Shortfall of Innovex Effort. In the event
Innovex fails to provide at least [ * ] of the Minimum Sales
Force Commitment for any Sales Quarter (Section 4.5.1), or [* ]
of the Minimum Post-Approval Marketing Expenditure Commitment for
any full Sales Year or any two (2) consecutive Sales Quarters
(Section 4.5.2), then Innovex shall pay CVT a penalty equal to [
* ] times the Fully Burdened Cost of the shortfall in Minimum
Sales Force Commitment or Minimum Post-Approval Marketing
Expenditure Commitment (which penalty shall be offset against any
Sales and Marketing Fee owed by CVT to Innovex, or if no such
Sales and Marketing Fee is owed by CVT or if the penalty is in
excess of the Sales and Marketing Fee owed by CVT, then Innovex
shall pay such shortfall to CVT within thirty (30) days from
receipt of invoice). If Innovex fails to provide the minimum
commitment required under either Section 4.5.1 or 4.5.2 but such
shortfall does not give rise to an express penalty under the
foregoing sentences of this Section 9.2, then the Parties shall
agree in good faith on other compensatory efforts or
contributions (such as special marketing expenditures or
promotional efforts) by
<PAGE>
Innovex at its own expense as consideration for such shortfall. The failure
by Innovex to supply at least [ * ] of the Minimum Sales Force Commitment
in any Sales Quarter or at least [ * ] of such commitment in any [ *
] consecutive Sales Quarters shall be a material breach of this
Agreement.
9.3 Start-Up Sales Force Costs. Pursuant to Section 4.2.1,
Innovex shall bear the cost of recruiting, training, and
compensating the Sales Force prior to the Launch of the Product.
However, Innovex shall be entitled to bill CVT for [ * ] worth of
the Fully Burdened Cost of such Sales Force (as if it were
engaged in customary promotional activities) in consideration of
the expense of such Sales Force start-up. Such [ * ] billing
shall be included in the invoice to CVT for the first Sales
Quarter and shall be included in the Fully Burdened Cost in Sales
Year 1 (and therefore shall be excluded from the expenses of Pre-
Approval Marketing Activities).
9.4 Reports of Sales, Fully Burdened Cost, Sales and Marketing
Fee.
9.4.1 Monthly Reports. On a monthly basis, within fifteen
(15) days after the end of each calendar month Innovex shall
report to CVT the Sales Force activities for the previous
calendar month and the Fully Burdened Cost of such activities, as
well as marketing expenditures by Innovex, and following Product
Launch, CVT shall report to Innovex the Net Sales during such
month. Reports by Innovex shall include the names of the Innovex
personnel who provide Sales Force services and the number of days
worked by them. Such monthly reports shall be for information
purposes only, and shall remain subject to correction and
reconciliation in future quarterly reports. Such monthly
reporting by Innovex shall terminate at the end of the Term and
such monthly reporting by CVT shall terminate at the end of the
Term if the Term ends prior to Product Launch and the Agreement
was not terminated by Innovex pursuant to Section 14.2 or 14.7,
or the Agreement was not terminated by CVT pursuant to Section
14.4, or two (2) years after the end of the Term, in all other
events.
9.4.2 Quarterly Reports. On a quarterly basis, within thirty
(30) days after the end of each calendar quarter, Innovex shall
report to CVT its Sales Force and marketing activities for such
quarter and the Fully Burdened Cost of all Post-Approval
Marketing Expenses and Sales Force activities, and following
Product Launch, CVT shall report to Innovex the Net Sales during
such quarter. On a quarterly basis, CVT shall also report to
Innovex on its delivery of Product Samples pursuant to Section
5.3. Within forty-five (45) days after the end of each calendar
quarter following Product Launch, CVT shall submit to Innovex a
determination of the Sales and Marketing Fee for such quarter.
Such determination of the Sales and Marketing Fee shall show the
calculation of the fee provided for under both Column A and
Column B for that quarter, as provided in Section 9.1, and then
the actual Sales and Marketing Fee earned (which shall be the
lesser of those two amounts). During each Sales Quarter the
Sales and Marketing Fee shall be calculated [ * ], and the Sales
and Marketing Fee for such quarter shall be equal to the [ * ],
provided, however, that in calculating the Sales and Marketing
Fee for [ * ], CVT shall only deduct [ * ]. The quarterly
reports of Sales Force activities shall terminate upon the
earlier of the end of Sales Year 5, or the end of the Term, and
the quarterly reports of Net Sales shall continue until the end
of the Term if the Term ends prior to Product Launch and the
Agreement was not terminated by Innovex pursuant to Section 14.2
or 14.7, or the Agreement was not terminated by CVT pursuant to
Section 14.4, or for the eight (8) calendar quarters following
such
<PAGE>
Sales Year or the termination of this Agreement by Innovex
pursuant to Section 14.2 or 14.7, or by CVT pursuant to Section
14.4.
9.4.3 Reconciliation. In the event of any disagreement or
uncertainty about amounts reported under Section 9.4, the Parties
shall seek to resolve their differences as promptly as possible.
If any corrections in previously reported Fully Burdened Cost or
Net Sales are determined by the Parties to be necessary, the
Sales and Marketing Fee for the affected time periods shall be
recalculated. If the Sales and Marketing Fee for the time period
in question has already been paid, then the Party which benefited
from the error in the previous report shall pay the other Party
the amount of the difference within ten (10) days following the
determination by the Parties of the revised Sales and Marketing
Fee.
9.5 Post-Term Royalty.
9.5.1 Royalty Obligation. Subject to Section 9.5.2, CVT
shall pay, as additional consideration for the sales and
marketing services provided by Innovex under this Agreement, a
royalty to Innovex on Net Sales of the Product in the Territory
in the two (2) calendar years following the end of the Term.
Such royalty shall be equal to the following specified percentage
of Net Sales of the Product in the Territory during each of such
years:
Calendar Year Royalty Rate
FIRST year following the end of the 7%
Term
SECOND year following the end of the 4%
Term
No fee shall be paid in respect of Product sales occurring more
than twenty-four (24) months after the end of the Term.
9.5.2 Conditions. No royalty shall be paid under Section
9.5.1 unless Net Sales of Product in the Territory in the last
twelve (12) months of the Term exceeded Net Sales of Product in
the Territory in the immediately preceding twelve (12) months.
In addition, no royalty shall be paid under Section 9.5.1 in the
event this Agreement terminates for any reason prior to its full
scheduled Term (i.e., the end of the calendar year containing the
fifth anniversary of Launch), unless Innovex terminates under
Section 14.2 or 14.7 or CVT terminates under Section 14.4, in
which cases, the royalty shall be paid for the two (2) years
following the end of the Term.
9.6 Payments.
9.6.1 Sales and Marketing Fee. The Sales and Marketing Fee
for each calendar quarter shall be paid within six (6) months
following the end of such calendar quarter by check or wire
transfer to an account designated by Innovex. By way of example,
the Sales and Marketing Fee for the calendar quarter ending March
31, 2001 shall be payable on September 30, 2001.
9.6.2 Royalty. The royalty under Section 9.5 for the first
year following the end of the Term shall be paid within three (3)
months following the end of such calendar year.
<PAGE>
The royalty for the second year following the end of the Term shall be
paid on a quarterly basis, ninety (90) days after the end of each calendar
quarter during such year. Each such payment shall be made by
check or wire transfer to an account designated by Innovex.
9.7 Non-Monetary Consideration. If CVT sells the Product in the
Territory for any consideration other than cash, it shall report
such transaction to Innovex and the reasonable monetary value of
such other consideration shall be included within Net Sales
(reduced by any applicable deductions contained in the definition
of Net Sales).
ARTICLE 10
ACCOUNTING; INVOICING AND PAYMENT
10.1 Accounting. Each Party agrees to calculate all costs and
expenses hereunder using its standard accounting procedures, in
accordance with GAAP, consistently applied, to the maximum extent
practical.
10.2 Invoicing Procedure; Additional Services; Standard Terms Not
Part of this Agreement. Innovex will invoice CVT at the end of
each month in arrears for Pre-Approval Marketing Activities
provided in accordance with this Agreement. Invoices will
include the names of the Innovex Personnel for which CVT is being
billed, the number of days worked during the invoice period, the
total due for each individual for the invoice period, and a grand
total of all fees for the invoice period. Supporting
documentation will be made available within seven (7) days of
CVT's requesting the same. To the extent that CVT purchases
additional services from Innovex pursuant to Section 4.2.2, which
services are not included within services provided as part of the
Sales and Marketing Fee, and another billing procedure or
purchase order is used to book such additional services, any
conflicting standard terms and conditions contained on any such
other documentation shall have no force and effect for this
collaboration; the terms and conditions of this Agreement shall
prevail in terms and meaning.
10.3 Obligation to Pay for Innovex Pre-Approval Marketing
Activities. With regard to the Pre-Approval Marketing Activities
provided by or through Innovex, CVT shall pay invoices therefor
in accordance with Section 10.4. In the event of termination of
this Agreement at any time and for any reason, payment for all
Pre-Approval Marketing Activities shall be due within thirty (30)
days of the termination date. Notwithstanding the foregoing,
payment for Pre-Approval Marketing Activities shall be subject to
Section 8.4 of this Agreement and the terms of the Loan
Agreement.
10.4 Payment of Invoices. All invoices are strictly net of any
taxes imposed on services, and except as otherwise set forth in
this Agreement, payment in full is due within thirty (30) days of
the date of receipt of the invoice.
<PAGE>
10.4.1 If the method of payment is by direct transfer to the
Innovex bank account, the wire transfer instructions are as
follows:
Innovex Inc.
Accounting Number: 511-4454518
ABA Number: 053 101 121
Branch Banking & Trust Co., Raleigh, NC
Innovex Federal Employment ED Number is 06-1076709.
10.4.2 Payments by check may be mailed to the Innovex Lockbox:
Innovex Inc.
P.O. Box 890062
Charlotte, NC 28289-0062
10.4.3 Payments by check may be remitted via Federal Express
to Innovex's Lockbox as follows:
Innovex Inc.
Branch Banking & Trust Co.
1251 Arrowpine Drive
Charlotte, NC 28273
ATTN.: Wholesale Lockbox Dept. (Box 890062)
10.5 Penalty for Late Payment. CVT and Innovex agree that unless
there is a bona fide dispute as to amounts payable hereunder, if
payment is not made within three (3) days of the due date of the
invoice, interest shall accrue on a daily basis at the lesser of
two percent (2%) above the Prime Rate as announced periodically
by Bank of America at either Charlotte, North Carolina or San
Francisco, California or the maximum rate permitted by law on any
amount overdue from the date payment became due until payment is
made in full. In any event, such interest penalty shall only be
assessed for undisputed and unpaid amounts.
10.6 Record-Keeping and Financial Audits. Each Party shall keep
or cause to be kept such records as are required to determine, in
a manner consistent with GAAP in the United States, the sums or
credits due under this Agreement. Upon the written request (and
expense) of either Party, the other Party, but not more than once
in each calendar year, shall permit an independent certified
public accountant appointed by such Party and reasonably
acceptable to the other Party, accompanied by representatives of
the financial department of such Party at reasonable times and
upon reasonable notice, to examine only those records as may be
necessary to determine, with respect to any Sales Year or
calendar year, as applicable, ending not more than three (3)
years prior to such Party's request, the correctness or
completeness of any report or payment made under this Agreement.
Results of any such examination shall be: (i) limited to
information relating to the Product; (ii) made available to both
Parties; and (iii) subject to Article 12. The Party requesting
the audit shall bear the full cost of the performance of any such
audit, unless such audit discloses a variance of more than ten
percent (10%) from the amount of the original report, royalty or
payment calculation. In such case, the Party being audited shall
bear
<PAGE>
the full cost of the performance of such audit. Auditors
shall be expressly subject to the same confidentiality
obligations as the Parties are to each other hereunder. This
Section 10.6 shall survive the termination of this Agreement by
five (5) years.
ARTICLE 11
REPRESENTATIONS AND COVENANTS
11.1 Mutual Authority. Each Party represents and warrants to the
other that:
11.1.1 Corporate Power. It is duly organized and validly
existing under the laws of its state or country of incorporation,
and has full corporate power and authority to enter into this
Agreement and to carry out the provisions hereof.
11.1.2 Due Authorization. It is duly authorized to execute
and deliver this Agreement and to perform its obligations
hereunder, and the person or persons executing this Agreement on
its behalf has been duly authorized to do so by all requisite
corporate action.
11.1.3 Binding Agreement. This Agreement is legally binding
upon it and enforceable in accordance with its terms. The
execution, delivery and performance of this Agreement by it does
not conflict with any agreement, instrument or understanding,
oral or written, to which it is a Party or by which it may be
bound, nor violate any material law or regulation of any court,
governmental body or administrative or other agency having
jurisdiction over it.
11.1.4 Grant of Rights; Maintenance of Agreements. It has
not, and will not during the term of this Agreement, grant any
right to any Third Party which would conflict with the rights
granted to the other Party hereunder or enter any agreement which
would impair its ability to perform its obligations under this
Agreement. It has (or will have at the time performance is due)
maintained and will maintain and keep in full force and effect
all agreements necessary to perform its obligations hereunder.
11.1.5 Validity. It is aware of no action, suit or inquiry or
investigation instituted by any governmental agency that
questions or threatens the validity of this Agreement.
11.2 Conformance with Laws. Innovex and CVT agree to undertake
all of their respective obligations under this Agreement in
material conformance with all applicable local, state and federal
laws and regulations, as amended, including the Federal Equal
Employment Opportunity Act, the Fair Labor Standards Act, the
Food Drug and Cosmetics Act, Section 1128B(b) of the Social
Security Act, the Prescription Drug Marketing Act, the Medicaid
Prescription Rebate Act, the Veterans Health Care Act of 1992,
and similar state laws. By entering into this Agreement, it is
not the intent of the Parties to enter into any financial
relationship or arrangement prohibited under state or federal
fraud or abuse regulations, including, but not limited to Sec.
1128B(b) of the Social Security Act, and any regulations
promulgated thereunder, nor do the Parties hereto have any belief
that the relationship and compensation arrangement provided in
this Agreement is prohibited. Neither Party shall assert against
the other that the compensation arrangement provided in this
Agreement is grounds for
<PAGE>
voiding the Agreement or rendering the Agreement unenforceable. If either
Party is notified by a state or federal agency, or it is alleged in a qui tam
proceeding, that performance of this Agreement is illegal, neither Party shall
be obligated to continue such performance hereof to the extent such
performance is an alleged violation of law. In such event, the
Parties shall proceed as described in the final sentence of
Section 17.17.
11.3 Rights in Product. As of the Effective Date, CVT warrants
and represents that it has no knowledge of the existence of any
patent or trademark owned or controlled by anyone other than CVT
or an Affiliate which covers the Product and would prevent CVT
from making, using, or selling the Product or would prevent CVT
or Innovex from promoting or marketing the Product in the
Territory. CVT is not aware of any patents or trademarks owned
by Third Parties which would be infringed by the promotion or
sale of the Product in the Territory. CVT is not pursuing any
action against any Third Party which CVT believes infringes its
trademark, copyright or patent relating to the Product. There
are no actions, suits, claims or proceedings pending against CVT
or any of its Affiliates in any court or before any agency in the
Territory related to alleged patent, trademark, or copyright
infringement in connection with the Product, and to the best of
CVT's knowledge, no such actions, suits, claims or proceedings
have been threatened. During the term of this Agreement, CVT
will use diligent efforts not to diminish the rights granted to
Innovex herein, including without limitation by not committing or
permitting any acts or omissions which would cause the material
breach of any agreements between CVT and Third Parties which
provide for intellectual property rights applicable to the
development, manufacture, use or sale of the Product in the
Territory. As of the Effective Date, CVT is in compliance in all
material respects with any such agreements with Third Parties.
11.4 Record Maintenance. Innovex will (i) maintain all necessary
personnel and payroll records for Innovex Sales Force and other
relevant personnel; (ii) compute their wages and withhold
applicable Federal, State, and local taxes and Federal FICA
payments; (iii) remit employee withholdings to the proper
governmental authorities and make employer contributions for
Federal FICA and Federal and State unemployment insurance
payments; (iv) pay net wages and fringe benefits, if any,
directly to its employees; and (v) provide for liability and
Workers' Compensation insurance coverage.
11.5 Firewall. Innovex represents and warrants that it shall
maintain as confidential, shall keep separate and shall not share
with other parts of the Innovex organization that are or may be
engaged in the promotion and/or sales of a competing product, the
material and information supplied and/or generated hereunder for
use in accordance with this Agreement and the promotion and sale
of the Product.
11.6 No Use of Names or Trademarks. Neither Party will use the
other Party's name in connection with any publication or
promotion without the other Party's prior written consent. Nor
shall either Party use the other Party's corporate or product
logo or trademark in any manner without the other Party's prior
written consent.
11.7 Year 2000 Compliance. Each Party represents and warrants
that its computer systems used in the performance of work under
this Agreement shall operate and function without any Year 2000
Error. The term "Year 2000 Error" means (a) any failure of such
computer systems properly to record, store, process, calculate or
present calendar dates falling on
<PAGE>
and after (and if applicable,spans of time including) January 1, 2000
as a result of the occurrence, or use of data consisting of, such dates;
(b) any failure of such computer systems to calculate any information
dependent on or relating to dates on or after January 1, 2000 in
the same manner, and with the same functionality, data integrity
and performance, as such computer system records, stores,
processes, calculates and presents calendar dates on or before
December 31, 1999, or information dependent on or relating to
such dates; or (c) any loss of functionality or performance with
respect to the introduction of records or processing of data
containing dates falling on or after January 1, 2000. In
addition, each Party represents and warrants that any failure of
its computer systems used in the performance of work under this
Agreement to operate and function without any Year 2000 Error
will not materially effect such Party's performance under this
Agreement. However, as either Party's sole and exclusive remedy
for any breach of the representations and warranties in this
Section 11.7, Innovex or CVT, as the case may be, will promptly
perform again any adversely impacted deliverable at no additional
cost to the recipient-Party.
11.8 NDA Filing. CVT agrees to exercise diligent efforts to
submit the NDA for the Product in a sustained release formulation
to the FDA and to diligently seek FDA approval.
ARTICLE 12
CONFIDENTIALITY
12.1 Confidential Information. Innovex and CVT agree that
information specifically relating to the marketing and sales of
the Product, or the business affairs or finances of the other or
Affiliates or of any suppliers, agents, distributors, licensees
or customers of the other which is disclosed in writing, and
marked "confidential" or disclosed orally, or in any other
tangible form and reduced to a written summary marked
"confidential" and which comes into possession of Innovex or CVT
under this Agreement shall be Confidential Information
("Confidential Information"). This Agreement, the Stock Purchase
Agreement, the Loan Agreement and related documentation shall be
treated as Confidential Information. Innovex and CVT agree to
hold Confidential Information in strict confidence and disclose
it only on a need-to-know basis to Affiliates, subcontractors and
employees who are under a written obligation to maintain the
confidentiality of the information, except for information:
12.1.1 which can be shown by written documentation to have
been known by the recipient prior to its receipt from the other;
12.1.2 which is public or lawfully becomes generally available
to the public through no fault of the recipient;
12.1.3 which is lawfully acquired from a Third Party without
being made subject to an obligation of confidence by the Third
Party;
12.1.4 which by mutual agreement is released from a
confidential status; or
12.1.5 which is required to be disclosed under any statutory,
regulatory or judicial requirement, including, but not limited
to, any filing with the Securities Exchange
<PAGE>
Commission and in that event, confidentiality will be preserved and
protected to the extent possible; additionally, notice will be provided
to the other Party prior to any such disclosure.
12.2 Ownership of Data; No License. It is expressly agreed that
neither Party transfers to the other Party by operation of this
Agreement any patent right, copyright or other proprietary right.
All data and information generated or derived by Innovex as the
result of services performed by Innovex under this Agreement
shall be and remain the exclusive property of CVT. Any inventions
that may evolve from the data and information as the result of
services performed by Innovex under this Agreement shall belong
to CVT and Innovex agrees to assign its rights in all such
inventions and/or related patents to CVT. Notwithstanding the
foregoing, CVT acknowledges that Innovex possesses certain
inventions, processes, know-how, trade secrets, improvements,
other intellectual properties and other assets, including but not
limited to analytical methods, procedures and techniques,
procedure manuals, personnel data, financial information,
computer technical expertise and software, which have been
independently developed by Innovex and which relate to its
business or operations (collectively "Innovex Property"). CVT
and Innovex agree that any Innovex Property or improvement
thereto which are used, improved, modified or developed by
Innovex under or during the term of this Agreement are the sole
and exclusive property of Innovex.
12.3 Survival. The obligations of Innovex and CVT under this
Article 12 shall survive the termination or expiration of this
Agreement for a period of five (5) years.
ARTICLE 13
INDEMNIFICATION
13.1 Indemnification by CVT. CVT shall indemnify, defend, save,
protect, and hold harmless Innovex, its Affiliates, and its and
their respective directors, officers, employees, and agents
("Innovex Indemnitees") against any and all losses, claims,
damages, liabilities, costs and expenses (including reasonable
attorneys fees and expenses and court costs) (collectively,
"Losses") resulting or arising from any Third Party claims,
actions, proceedings, investigations or litigation relating to or
arising from or in connection with: (i) the design, development,
manufacture, sale, distribution or use of the Product; (ii) the
breach by CVT of any of its obligations under this Agreement;
(iii) the negligent or wrongful acts or omissions of CVT or any
of its directors, officers, employees or agents; (iv) a violation
of any law, rule or regulation by CVT relating to this Agreement;
(v) the Promotional Materials or any other materials referred to
in Section 6.2; or (vi) the infringement or violation, or alleged
infringement or violation by CVT or the Product of any patents or
any copyrights, trademark, trade secret or other intellectual
property rights. Notwithstanding the foregoing, CVT shall not be
required to indemnify Innovex for any Losses to the extent they
arise from the negligent or wrongful acts or omissions of Innovex
or any of the Innovex Indemnitees or Innovex's breach of its
obligations under this Agreement.
13.2 Indemnification by Innovex. Innovex shall indemnify,
defend, save, protect, and hold harmless CVT, its Affiliates, and
its and their respective directors, officers, employees, and
agents (the "CVT Indemnitees") against any and all Losses
resulting or arising from any Third Party claims, actions,
proceedings, investigations or litigation relating to or arising
from or
<PAGE>
in connection with: (i) the marketing, promotion or sale
of the Product by Innovex in a manner which violates this
Agreement; (ii) the breach by Innovex of any of its obligations
under this Agreement; (iii) the negligent or wrongful acts or
omissions of Innovex or any of its directors, officers, employees
or agents; (iv) a violation of any law, rule or regulation by
Innovex relating to this Agreement; or (v) the representations or
misrepresentations by Innovex relating to the Product which were
not consistent with the labeled claims or Promotional Material.
Notwithstanding the foregoing, Innovex shall not be required to
indemnify CVT for any Losses to the extent they arise from (i)
the negligent or wrongful acts or omissions of CVT or CVT
Indemnitees; (ii) the breach by CVT of its obligations under this
Agreement; (iii) a manufacturing or design defect of the Product;
or (iv) a strict liability claim arising out of CVT's failure to
warn.
13.3 Procedure. The Party seeking indemnification hereunder (the
"Indemnified Party") shall (a) promptly notify the Party
obligated to indemnify (the "Indemnifying Party") of any Losses
for which the Indemnified Party seeks indemnification; (b)
cooperate fully with Indemnifying Party and its legal
representatives in the investigation of any matter the subject of
indemnification; (c) permit the Indemnifying Party full control
over the defense and settlement of any matter the subject of
indemnification; and (d) not unreasonably withhold its approval
of the settlement of any claim, liability or action by
Indemnifying Party covered by this indemnification provision.
13.4 No Consequential Damages. Notwithstanding the Parties'
rights and remedies in equity and except with respect to
indemnification obligations under Sections 13.1 and 13.2, neither
Party, nor its Affiliates or their respective directors,
officers, employees or agents shall have any liability to the
other for any special, incidental, indirect or consequential
damages, including, but not limited to the loss of opportunity,
use, revenue or profit, in connection with or arising out of this
Agreement, or the Services performed by Innovex hereunder, even
if such damages were foreseeable.
13.5 CVT Responsibility for Product Description. Innovex shall
not be liable to CVT for claims or losses arising out of the
statements or representations of the Innovex Personnel with
respect to the Product to the extent the statements or
representations conform to the oral, written or printed
statements or representations made to the Innovex Personnel by
CVT with respect to the Product or contained in the Product
labeling, Promotional Materials or other material referred to in
Section 6.2, provided all such materials have been approved in
advance in writing by CVT.
13.6 Insurance. Innovex and CVT shall at their own expense
obtain and maintain insurance of a type and amount as may be
necessary to protect their interests and obligations connected
with performance under this Agreement. Neither Party shall do or
omit to do any act, matter or thing which could prejudice or
render voidable any such insurance. Innovex and CVT shall, upon
request by the other, provide a certification evidencing the
insurance or any renewal. Each Party shall notify the other
Party of any cancellation of or material change in any such
insurance arrangements, if possible, prior to cancellation or
material change, but in any event, as soon as possible. Innovex
shall carry workers' compensation and employer's insurance and
Innovex shall remain solely responsible for all employment-
related claims and injury claims of its employees devoted to
performing services hereunder, except those claims arising out of
<PAGE>
CVT's negligence or intentional acts. CVT shall carry product
liability insurance covering the Product in the Territory, in a
minimum amount of [ * ] at all times following Launch.
ARTICLE 14
TERM AND TERMINATION
14.1 Term. The Term of this Agreement will begin on the
Effective Date and continue until the end of the calendar year
that includes the fifth (5th) anniversary of the Product Launch,
unless the Agreement is terminated earlier in accordance with
this Article 14.
14.2 Material Breach. Either Party may terminate this Agreement
by written notice at any time if the other Party defaults in the
performance of any material obligations under this Agreement. In
the event of such default, the Party declaring the default shall
provide the defaulting Party with written notice setting forth
the nature of the default, and the defaulting Party shall have
thirty (30) days to cure the default. If the defaulting Party
fails to cure the default within the foregoing time periods, and
provided the default is continuing, the other Party may terminate
this Agreement by written notice to the defaulting Party, which
notice shall be effective upon receipt.
14.3 NDA Filing; No Product Approval. Either Party may terminate
this Agreement if CVT provides written notice to Innovex that:
(i) it will not submit an NDA due to Product failure; (ii) that
CVT has terminated development of the Product; (iii) if the FDA
provides written notice that it will not approve the Product; or
(iv) if the Product Launch does not occur prior to [ * ]. If at
any time CVT reasonably concludes that Product Launch is not
likely to occur by [ * ], CVT shall notify Innovex of the change
in circumstances and its revised estimate of the scheduled Launch
(the "Revised Launch Date"). At the time of such notice, Innovex
must either and by written notice to CVT: (i) confirm its
intention to proceed under this Agreement, in which case the
first sentence of this Section 14.3 shall be automatically
amended to replace the date "[*]" with the date ninety (90) days
after the Revised Launch Date; or (ii) immediately exercise its
right of termination under this Section 14.3. If Innovex does
not exercise its right of termination within sixty (60) days
after receiving such CVT request, Innovex shall be deemed to have
confirmed its intention to proceed under this Agreement and the
first sentence of this Section 14.3 shall be so automatically
amended. In the event of additional delays in anticipated
Launch, CVT shall give a further notice under this Section 14.3,
and the same procedure for an Innovex election shall apply.
Innovex may terminate this Agreement by written notice to CVT if
the NDA Filing for the Product has not occurred by [ * ]. In the
case of a Revised Launch Date which does not lead Innovex to
terminate this Agreement, the date in the previous sentence shall
be extended to a new date which is six (6) months prior to the
new Revised Launch Date.
14.4 Failure to Achieve Certain Net Sales. Either Party may
terminate this Agreement by giving twelve (12) months prior
notice if Product sales in the Territory in the prior Sales Year
are below minimum levels specified by the Parties, provided that
such notice of termination may not be given by either Party until
the end of Sales Year 2. Attached as Exhibit D is a schedule of
the minimum levels of forecast sales, which may be amended and
revised by mutual and express agreement among the Parties.
Notwithstanding the foregoing, if Innovex provides notice of
termination under this Section 14.4, CVT shall have the option to
extend the
<PAGE>
term of the Agreement for a period of one (1) year
from the end of such twelve (12) month period by providing notice
to Innovex, provided that in such case: (i) CVT shall become
solely responsible for the portion of the Post-Approval Marketing
Expenditures that are designated as Innovex Marketing
Expenditures on Exhibit C, to the extent such expenditures are
applicable to such final one-year term of the Agreement; (ii) the
Sales and Marketing Fee for such final one-year term of the
Agreement shall equal the Fully Burdened Cost of the Sales Force
provided by Innovex; and (iii) CVT shall chair the JCC and be
entitled to make any final decisions.
14.5 Permitted CVT Co-Promotion Agreement. As an exception to
the exclusivity provided for in Section 1.3, CVT shall be
entitled to grant co-promotion or license rights for the Product
in the Territory to a Third Party at any time prior to the first
Pre-Approval Advance under the Loan Agreement. If CVT enters
into such a co-promotion or license agreement with a Third Party,
it shall give written notice to Innovex within ten (10) days of
signing such agreement. Innovex shall, within sixty (60) days
after receipt of such notice, elect to either (a) terminate the
Agreement immediately, or (b) continue the Agreement subject to
adjustment of financial terms corresponding to CVT's retained
rights (e.g., in a 50/50 co-promotion with a Third Party in which
CVT retains a fifty percent (50%) promotion right, then
Quintiles' Pre-Approval Loan Commitment would be reduced by fifty
percent (50%) to five million dollars ($5,000,000), Innovex's
minimum sales and marketing commitments would be reduced by
one-half, the Sales and Marketing Fee would be reduced by one-
half, and the milestone payment under section 8.4 would be
reduced by fifty percent (50%)). If Innovex elects to continue
the Agreement in such case, the Parties shall execute an
amendment to this Agreement to set forth the revised terms and
conditions of the Agreement. If Innovex does not provide any
notice of election to CVT within such sixty (60)-day time period,
then it shall be deemed to have terminated this Agreement.
Subsequent to the first Pre-Approval Advance under the Loan
Agreement, and provided CVT has not given notice to Innovex under
this Section 14.5 prior thereto, CVT shall not license to any
Third Party the rights to market or sell the Product in the
Territory, or grant co-promotion rights to market or sell the
Product in the Territory to any Third Party without Innovex's
prior written consent.
14.6 Loss of Product Rights by CVT. CVT holds the rights to the
Product under an exclusive license from a Third Party. This
Agreement shall terminate automatically if CVT's license rights
to the Product terminate in the Territory.
14.7 Bankruptcy. Either Party may terminate this Agreement by
written notice to the other Party, if the other Party files a
petition for bankruptcy, reorganization or arrangement under any
state statute, or makes an assignment for the benefit of
creditors or takes advantage of any insolvency statute or similar
statute, or such filing is made by a Third Party, and such filing
is not withdrawn within sixty (60) days of the filing date, or if
a receiver or trustee is appointed for the property and assets of
the Party and the receivership proceedings are not dismissed
within sixty (60) days of such appointment.
14.8 Accrued Rights. Termination of the Agreement for whatever
reason shall not affect the accrued rights of either Innovex or
CVT arising under or out of this Agreement and all provisions
which expressly or by implication survive this Agreement shall
remain in full force and effect. Termination of this Agreement
shall not relieve the Parties of any liability which accrued
hereunder prior to the effective date of such termination nor
preclude either Party from
<PAGE>
pursuing all rights and remedies it may have hereunder or at law or in
equity with respect to any breach of this Agreement nor prejudice either
Party's right to obtain performance of any obligation.
14.9 Right to Receive Data. Upon termination, CVT shall have the
right to receive data attendant or related to sales and marketing
activities under this Agreement.
14.10 Survival. The following provisions shall survive any
expiration or termination of this Agreement, and if time periods
are specified, for the period of time specified: Sections 1.4,
4.8, 4.9, 5.4.3, 6.2.2, 7.1, 7.2, 7.4, 7.7, 9.1, 9.2, 9.4, 9.5,
9.6, 9.7, 10.3, 10.4, 10.5, 10.6, 11.2, 11.4, 11.5, 14.8, 14.9,
14.10 and Articles 12, 13, 15, 16 and 17.
ARTICLE 15
SALES FORCE CONVERSION
15.1 Right to Convert Sales Force. CVT shall have the right to
offer CVT employment to the Innovex Personnel who are members of
the Sales Force at the end of the full scheduled Term or earlier
upon a termination under Section 14.2, 14.4 or 14.7. In the
event CVT desires to convert some or all of the Sales Force to
its employment, it shall provide Innovex notice of such election
at least three (3) months prior to the end of the full scheduled
Term or with its notice of termination under Section 14.2, 14.4
or 14.7.
15.2 Transition Plan. In the event CVT decides to convert the
Sales Force, in accordance with Section 15.1, the Parties shall
promptly meet and determine a transition plan, which shall
include a schedule for actions which will enable a smooth
transition date for all Innovex Personnel: (i) who may be offered
employment by CVT; (ii) who may not be offered such employment;
and (iii) who may decline such offers. No later than thirty (30)
days before the end of the full scheduled Term or within two (2)
months from termination under Sections 14.2, 14.4 or 14.7, CVT
shall identify for Innovex the names of Innovex Personnel who
have elected to accept employment offers from CVT and those who
have not been offered employment or have declined an employment
offer.
15.3 CVT Determination. CVT shall make an independent
determination regarding the qualifications and suitability of
Innovex Personnel to be offered employment by CVT, and the terms
of such offers, if any. No information contained in the
personnel files of Innovex Personnel shall be disclosed to CVT,
including resumes, applications, performance appraisals or
disciplinary records, or the results of drug screens, motor
vehicle or background reports. Notwithstanding the foregoing,
Innovex shall notify CVT of any material violation by any Innovex
Personnel of the PDMA.
15.4 Compensation. As compensation for such conversion, CVT
shall pay Innovex a supplemental fee at the end of the payment of
royalties under Section 9.5, as follows. In the event the
aggregate amount of such royalties exceeds [ * ] of the base
salary for the Sales Force hired by CVT under this Article 15,
CVT shall not owe any supplemental payment to Innovex as a result
of the Sales Force conversion. In the event such aggregate is
less than [ * ] of the base
<PAGE>
salary for the Sales Force hired by CVT, CVT shall pay Innovex the
difference, within thirty (30)days after the second anniversary of
the end of the Term.
15.5 Proprietary Information. In the event of any Sales Force
conversion under this Article 15, the Innovex Personnel who join
CVT may continue to use in their employment by CVT any and all
Product knowledge that they gained while in the employment of
Innovex, including knowledge regarding Product customers,
competition, selling techniques, and the like. However, other
proprietary information of Innovex (including Innovex sales and
personnel manuals and software) shall remain the property of
Innovex and shall not be conveyed to CVT. As part of the
transition plan referred to above, the Parties shall cooperate to
deliver to CVT in the most convenient electronic form any data
related to the Product (including sales activities of the Sales
Force under this Agreement) in the possession of Innovex.
ARTICLE 16
DISPUTE RESOLUTION
16.1 Disputes. The Parties recognize that disputes as to certain
matters may from time to time arise during the term of this
Agreement which relate to either Party's rights and/or
obligations hereunder. In addition to the decision-making
provisions of Article 2 of this Agreement it is the objective of
the Parties to establish procedures to facilitate the resolution
of disputes arising under this Agreement in an expedient manner
by mutual cooperation and without resort to litigation, as such
may be accomplished by good faith negotiations between CVT and
Innovex, within thirty (30) days of notice. If such dispute
remains unresolved at that point, it shall promptly be submitted
to the President of Innovex and the Chief Executive Officer of
CVT who will meet in person or by teleconference at least once
within ten (10) days after such submission and attempt to resolve
the matter or matters in dispute. If any such dispute cannot be
resolved by such officers of each Party within twenty (20) days
from the date on which the Parties submitted such dispute to such
officers, then such dispute shall be brought before and resolved
in a court of competent jurisdiction in the State of Delaware and
each Party agrees to the exclusive jurisdiction of Delaware
courts for any disputes arising from this Agreement.
16.2 Governing Law. Resolution of all disputes arising out of or
related to this Agreement or the performance, enforcement, breach
or termination of this Agreement and any remedies relating
thereto, shall be governed by and construed under the substantive
laws of the State of Delaware, as applied to agreements executed
and performed entirely in the State of Delaware by residents of
the State of Delaware, without regard to conflicts of law rules.
ARTICLE 17
MISCELLANEOUS
17.1 Condition Subsequent. This Agreement shall terminate and be
of no force and effect if for any reason the closing under the
Stock Purchase Agreement does not close within ten (10) days
following the Effective Date of this Agreement.
<PAGE>
17.2 Return of Materials. At the completion of the services by
Innovex or termination pursuant to Article 14, all materials and
all other data owned by CVT under this Agreement, regardless of
the method of storage or retrieval, shall either be delivered to
CVT in such form as is then currently in the possession of
Innovex or disposed of, at the direction and written request of
CVT unless such materials are otherwise required to be stored or
maintained by Innovex as a matter of law or regulation. The
costs associated with either of the above options shall be paid
by CVT.
17.3 Nonsolicitation of Employees. Except as otherwise provided
herein, during the term of this Agreement and for a period of six
(6) months thereafter, each Party agrees that neither it nor any
of its divisions or operating groups that directly participates
in or is directly responsible for the development or
commercialization of the Product pursuant to this Agreement
shall, directly or indirectly, recruit, solicit or induce any
employee of the other Party to terminate his or her employment
with such other Party.
17.4 Publicity. The Parties agree that promptly following the
execution of this Agreement, they will issue a joint press
release, attached hereto and incorporated herein by reference as
Exhibit E. Subsequent announcements related to this Agreement
shall be by mutual consent. Innovex acknowledges that CVT shall
be the Party responsible for disclosure of information related to
the sales, performance, pharmaceutical characteristics and
clinical study data of the Product, and agrees not to make any
disclosures, public or private, in that regard, except for
disclosures permitted by Section 12.1.5. Each Party is otherwise
authorized to make any disclosures as may be required by law.
17.5 Business Days. If any date for payment or notice under this
Agreement falls on a Saturday, Sunday or bank holiday, then the
referenced date shall move to the first working day following
such date, provided that the calculation of working days are
never to include Saturdays, Sundays or bank holidays and the
calculation of days (without reference to "working" days) shall
include Saturdays, Sundays and bank holidays.
17.6 Entire Agreement; Amendment. This Agreement, the Loan
Agreement, the Stock Purchase Agreement and the other agreements
referred to herein between the Parties, set forth the complete,
final and exclusive agreement and all the covenants, promises,
agreements, warranties, representations, conditions and
understandings between the Parties hereto and supersede and
terminate all prior agreements and understandings between the
Parties. There are no covenants, promises, agreements,
warranties, representations, conditions or understandings, either
oral or written, between the Parties other than as are set forth
herein and therein. No subsequent alteration, amendment, change
or addition to this Agreement shall be binding upon the Parties
unless reduced to writing and signed by an authorized officer of
each Party.
17.7 Force Majeure. Both Parties shall be excused from the
performance of their obligations under this Agreement to the
extent that such performance is prevented by force majeure and
the nonperforming Party promptly provides notice of the
prevention to the other Party. Such excuse shall be continued so
long as the condition constituting force majeure continues and
the nonperforming Party takes reasonable efforts to remove the
condition. For purposes of this Agreement, force majeure shall
include conditions beyond the control of the Parties, including
without limitation, an act of God, voluntary or involuntary
compliance with
<PAGE>
any regulation, law or order of any government,
war, civil commotion, labor strike or lock-out, epidemic, failure
or default of public utilities or common carriers, destruction of
production facilities or materials by fire, earthquake, storm or
like catastrophe; provided, however, the payment of invoices due
and owing hereunder shall not be delayed by the payor because of
a force majeure affecting the payor.
17.8 Notices. Any notice required or permitted to be given under
this Agreement shall be in writing, shall specifically refer to
this Agreement and shall be deemed to have been sufficiently
given for all purposes if mailed by first class certified or
registered mail, postage prepaid, express delivery service or
personally delivered. Unless otherwise specified in writing, the
mailing addresses of the Parties shall be as described below.
For CVT: CV THERAPEUTICS, Inc.
3172 Porter Drive
Palo Alto, California 94304
Attention: Cynthia L. Clark, General Counsel
Fax: 650-858-0388
Phone: 650-812-9524
With a Copy to: Cooley Godward LLP
Five Palo Alto Square
3000 El Camino Real
Palo Alto, CA 94306
Attention: Robert L. Jones
Fax: 650-857-0663
Phone: 650-843-5034
For Innovex: Innovex Inc.
10 Waterview Boulevard
Parsippany, NJ 07054
Attention: David Stack, President
Fax: (973) 257-4581
Phone: (973) 257-4570
With a Copy to: L. Stephen Garlow
General Counsel
10 Waterview Boulevard
Parsippany, New Jersey 07054
Fax: (973) 257-4581
Phone: (973) 257 4784
or to such other destination as either Party
may hereafter notify the other Party in accordance with this
section.
17.9 Consents Not Unreasonably Withheld or Delayed. Whenever
provision is made in this Agreement for either Party to secure
the consent or approval of the other, that consent or approval
shall not unreasonably be withheld or delayed, and whenever in
this
<PAGE>
Agreement provisions are made for one Party to object to or
disapprove a matter, such objection or disapproval shall not
unreasonably be exercised.
17.10 Maintenance of Records. Each Party shall keep and
maintain all records required of it by law or regulation with
respect to the Product and shall make copies of such records
available to the other Party upon request.
17.11 United States Dollars. References in this Agreement to
"Dollars" or "$" shall mean the legal tender of the United States
of America.
17.12 No Strict Construction. This Agreement has been
prepared jointly and shall not be strictly construed against
either Party.
17.13 Assignment. Neither Party may assign or transfer this
Agreement or any rights or obligations hereunder without the
prior written consent of the other, except that a Party may make
such an assignment without the other Party's consent to
Affiliates or to a successor to substantially all of the business
of such Party, whether in a merger, sale of stock, sale of assets
or other transaction. Any permitted successor or assignee of
rights and/or obligations hereunder shall, in a writing to the
other Party, expressly assume performance of such rights and/or
obligations. Any permitted assignment shall be binding on the
successors of the assigning Party. Any assignment or attempted
assignment by either Party in violation of the terms of this
Section 17.13 shall be null and void and of no legal effect. If
either Party assigns this Agreement to an Affiliate pursuant to
this Section 17.13, the assigning Party shall provide a
continuing guarantee of the performance of this Agreement by such
Affiliate.
17.14 Performance by Affiliates. Obligations under this
Agreement may be performed by Affiliates of Innovex and CVT only
with the prior consent of the other Party. In the event any such
performance is carried out by Affiliates with the prior consent
of the other Party, each of Innovex and CVT guarantees
performance of this Agreement by its Affiliates. No Affiliate of
a Party may make decisions inconsistent with this Agreement,
amend the terms of this Agreement or act contrary to its terms in
any way.
17.15 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same
instrument.
17.16 Further Actions. Each Party agrees to execute,
acknowledge and deliver such further instruments, and to do all
such other acts, as may be necessary or appropriate in order to
carry out the purposes and intent of this Agreement.
17.17 Severability. If any one or more of the provisions of
this Agreement is held to be invalid or unenforceable by any
court of competent jurisdiction from which no appeal can be or is
taken, the provision shall be considered severed from this
Agreement and shall not serve to invalidate any remaining
provisions hereof. The Parties shall make a good faith effort to
replace any invalid or unenforceable provision with a valid and
enforceable one such that the objectives contemplated by the
Parties when entering this Agreement may be realized.
<PAGE>
17.18 Ambiguities. Ambiguities, if any, in this Agreement
shall not be construed against any Party, irrespective of which
Party may be deemed to have authored the ambiguous provision.
17.19 Headings. The headings for each article and section in
this Agreement have been inserted for convenience of reference
only and are not intended to limit or expand on the meaning of
the language contained in the particular article or section.
17.20 No Waiver. Any delay in enforcing a Party's rights
under this Agreement or any waiver as to a particular default or
other matter shall not constitute a waiver of such Party's rights
to the future enforcement of its rights under this Agreement,
except with respect to an express written and signed waiver
relating to a particular matter for a particular period of time.
<PAGE>
[SIGNATURE PAGE TO SALES AND MARKETING SERVICES AGREEMENT]
In Witness Whereof, the Parties have executed this Agreement
in duplicate originals by their duly authorized officers as of
the date and year first above written.
CV Therapeutics, Inc.
By: /s/ Louis G. Lange
Print: Louis G. Lange
Title: Chairman & CEO
Date: May 5, 1999
Innovex Inc.
By: /s/ David Stack
Print: David Stack
Title: President and General Manager
Date:
For the Purposes Only of
Article 8 Quintiles
Transnational Corp.
By: /s/ James L. Bierman
Print: James L. Bierman
Title: Senior Vice President
Corporate Development
Date:
<PAGE>
Exhibit A
Definitions
The following terms shall have the following meanings as
used in this Agreement:
1. "Affiliate" means any corporation or business entity
controlled by, controlling, or under common control with a Party
to this Agreement. For this purpose, "control" shall mean direct
or indirect beneficial ownership of at least fifty percent (50%)
of the voting stock or income interest in such corporation or
other business entity, or such other relationship as, in fact,
constitutes actual control.
2. "FDA" means the U.S. Food and Drug Administration.
3. "Field Manager" means a member of the Sales Force having the
responsibilities set forth on Schedule III for such job title.
4. "First Year Sales Commitment" means the line of credit
extended to CVT by Quintiles, for the purpose of assisting in the
financing of first year sales and marketing expenses for the
Product, and identified as in the Loan Agreement.
5. "Fully Burdened Cost" will have the meaning provided in
Section 3.3.
6. "Innovex Personnel" means any individual who is performing
any part of the services hereunder and who stands in an employer-
employee relationship with Innovex.
7. "Joint Commercialization Committee" or "JCC" means the
committee formed pursuant to Section 2.2.
8. "Joint Steering Committee" or "JSC" means the joint
committee formed pursuant to Section 2.1.
9. "Loan Agreement" means the loan agreement of even date
herewith between Quintiles and CVT.
10. "Marketing Plan" means a plan detailing the activities to be
performed by each Party in the Territory as more fully described
in Article 3 hereof.
11. "Minimum Post-Approval Marketing Expenditure Commitment"
means the minimum expenditures on Post-Approval Marketing
Activities Innovex shall provide in accordance with Section
4.5.2.
12. "Minimum Sales Force Commitment" means such Innovex Sales
Force commitment in accordance with Section 4.5.1 hereof.
13. "National Sales Manager" means the leader of the Sales Force
having the responsibilities set forth on Schedule III for such
job title.
<PAGE>
14. "NDA" means an application as defined in the United States
Food, Drug and Cosmetic Act and applicable regulations
promulgated thereunder to the FDA, the approval of which is
required before a pharmaceutical product may be promoted and sold
in the Territory.
15. "NDA Filing" means the date the FDA accepts the
submission/application and issues an NDA identification number.
16. "Net Sales" means the amount billed by CVT or an Affiliate
for sales of the Product to an unrelated Third Party in the
Territory less: (i) discounts, including cash and quantity
discounts, charge-back payments and rebates granted to managed
health care organizations or to federal, state and local
governments, their agencies, and purchasers and reimbursers or to
trade customers, including but not limited to, wholesalers and
chain and pharmacy buying groups; (ii) credits or allowances
actually granted upon claims, damaged goods, rejections or
returns of such Product, including recalls, regardless of the
Party or Third Party requesting such; (iii) freight, postage,
shipping and insurance charges actually allowed or paid for
delivery of the Product, to the extent billed; (iv) taxes, duties
or other governmental charges levied on, absorbed or otherwise
imposed on sale of such Product, including without limitation
value-added taxes, or other governmental charges otherwise
measured by the billing, when included in billing, as adjusted
for rebates and refunds; and (v) bad debts (defined as any bills
unpaid for one hundred eighty (180) days after due) and after CVT
has used commercially reasonable efforts to collect.
17. "Phase IIIB/IV Studies" means a study conducted for
marketing of the Product in the Territory and not for the purpose
of obtaining FDA approval of the NDA.
18. "Post-Approval Marketing Activities" means such promotional
and marketing activities as are described on the Exhibits and
Schedules attached hereto and any other activities identified by
the JSC in furtherance of the objectives of this Agreement, which
activities are allowed by the FDA or under the Food Drug &
Cosmetic Act and its attendant regulations, and which are
conducted after Product Launch. Such activities also include
marketing input into clinical strategic planning activities, i.e.
protocol development, future indications.
19. "Pre-Approval Loan" means the line of credit extended to CVT
by Quintiles, for the purpose of assisting in the financing of
Pre-Approval Marketing Activities, and identified in the Loan
Agreement.
20. "Pre-Approval Marketing Activities" means marketing
activities identified by the JSC in furtherance of the objectives
of this Agreement, and as may be allowed by applicable regulatory
authorities and the AMA Guidelines on Gifts to Physicians prior
to Product Launch. Such activities shall include without
limitation, educational programs, symposia, poster-sessions,
seminars for physicians, market research, pricing studies,
development of promotional activities and advertising agency
fees. Such activities also include marketing input into clinical
strategic planning activities, i.e. protocol development, future
indications, Phase IIIB/IV Studies.
<PAGE>
21. "Pre-Approval Marketing Expenses" means expenses incurred
for Pre-Approval Marketing Activities, which shall include all
Innovex billable expenses related to the Product prior to Product
Launch, exclusive of: (i) post-Launch sales and marketing
activities or expenses; and (ii) Sales Force Startup Costs.
22. "Product" means ranolazine (the pharmaceutical agent
described in U.S. Patent No. 4,567,264) in a sustained release
formulation, together with any other formulation approved or
marketed during the Term for the treatment of stable angina.
23. "Product Launch" or "Launch" means the first date upon which
the FDA-approved Product is shipped by CVT to a wholesaler for
commercial distribution.
24. "Project Administrator" means the Innovex employee at the
headquarters office who will provide administrative support for
the National Sales Manager.
25. "Promotional Materials" means written materials generated
for the purpose of promotion and sale of the Product, in all
cases with the prior written approval of CVT.
26. "Sales and Marketing Fee" means the amount Innovex will be
paid for the services as ore fully set forth in Section 9.1
hereof.
27. "Sales Force" means those Innovex Personnel, including
without limitation Territory Representatives, Field Managers,
National Sales Manager and Project Administrator who promote the
Product under this Agreement.
28. "Sales Force Startup Costs" means costs associated with
keeping, training and maintaining a dedicated Sales Force
preceding Product Launch, exclusive of Pre-Approval Marketing
Expenses and as more fully described in Sections 4.2.1 and 9.3.
29. "Sales Quarter" means a calendar quarter, the first quarter
to consist of the period from the Product Launch until the
beginning of the calendar month the next calendar quarter begins.
30. "Sales Year" means, respectively, the periods that encompass
Sales Quarters 1-4, 5-8, 9-12, 13-16 and, for Sales Year 5, the
period commencing with Sales Quarter 17 and ending with December
31st of the calendar year which includes the fifth anniversary of
the Product Launch.
31. "Sample" means units of Product distributed by Innovex,
pursuant to the provisions of the Prescription Drug Marketing
Act, and for complimentary distribution to patients by
practitioners licensed to prescribe Product, whether packaged as
individual samples or as trade packages.
32. "Stock Purchase Agreement" shall have the meaning provided
in Section 8.1.
33. "Term" means the period of time from the Effective Date to
the end of the calendar year which includes the fifth anniversary
of the Product Launch or the earlier termination of the Agreement
in accordance with its terms, whichever is earlier.
<PAGE>
34. "Territory" means the United States of America and its
territories and possessions, including Puerto Rico.
35. "Territory Representative" means an employee of Innovex: (i)
who is responsible for meeting with customers and others who can
buy (or influence the buying process and decision regarding) the
Product; and (ii) whose success at such activities is a
significant factor in the ongoing employment and compensation of
the individual representative. The responsibilities of a
Territory Representative are set forth on Schedule III.
36. "Third Party" means any entity or person other than Innovex
or CVT or an Affiliate of either of them.
<PAGE>
Exhibit B
MARKETING PLAN OUTLINE
I. Executive Summary
II. Market Analysis
" Angina Market
" Angina Products
" Future Outlook
III. Product Profile
" Product Description
" Indications
" Clinical Experience and Program
" Formulation, Packaging and Administration
IV. SWOT Analysis
V. 5 year Sales Forecasts
" Units, Dollars, Prescriptions, Market Share
VI. Objectives
" Awareness
" Communication
" Product Use
" Sales
" Market Share
" Managed Care/Formulary
VII. Key Issues
VIII.Strategies
" Product Positioning
" Audiences
" Sales Force
" Pharmacoeconomics
IX. Tactics
" Pharmacoeconomics
" Market Research
" Medical Education
" Publication Plan
" Personal Selling Materials Program
" Clinical Support
" Sales Force Support
" Sampling
" Managed Care / Formulary
<PAGE>
" Territory Sales Force Effort
X. Budget Following Year
XI. Timelines
<PAGE>
Exhibit C
Cost Allocation For Post-Approval Marketing Activities
Category Innovex Innovex CVT
Sales Marketing Cost
Force Expenditur
Expenses es
Advertising (journal and mail) [ * ] [ * ] [ * ]
Auto Costs (allowance, mileage, [ * ] [ * ] [ * ]
parking, tolls, etc.)
Back office, infrastructure [ * ] [ * ] [ * ]
Distribution of the Samples [ * ] [ * ] [ * ]
Drug Screens and reference [ * ] [ * ] [ * ]
checks
Equipment: 1) Computer (hard [ * ] [ * ] [ * ]
& soft), printer, fax [ * ] [ * ] [ * ]
2) Detail bags, business
cards
Field Supplies: postage, [ * ] [ * ] [ * ]
stationery, printer ink, phone
charges
Forms, reports especially [ * ] [ * ] [ * ]
requested by CVT
Innovex Fee for Services [ * ] [ * ] [ * ]
Marketing
ITMS (call reporting, voice [ * ] [ * ] [ * ]
mail, email, Sample
accountability)
Insurance: employment, workers [ * ] [ * ] [ * ]
comp, E & O, CGL
Market Research [ * ] [ * ] [ * ]
Medical and other benefits [ * ] [ * ] [ * ]
Medical Education [ * ] [ * ] [ * ]
Meetings: [ * ] [ * ] [ * ]
CVT national, regional &
district; product Launches;
initial training.
Payroll Taxes [ * ] [ * ] [ * ]
Pharmacoeconomic Analysis and [ * ] [ * ] [ * ]
Communication
Product Public Relations [ * ] [ * ] [ * ]
Promotional Agency Fees [ * ] [ * ] [ * ]
Promotional literature and sales [ * ] [ * ] [ * ]
aids, including distribution
Recruiting (database screening, [ * ] [ * ] [ * ]
ad placement); re-recruiting
Salaries and variable incentive [ * ] [ * ] [ * ]
compensation (bonus)
Sales data [ * ] [ * ] [ * ]
Samples [ * ] [ * ] [ * ]
Sample Packaging [ * ] [ * ] [ * ]
Supplemental Post Approval [ * ] [ * ] [ * ]
Marketing Activities
Territory alignment, mapping and [ * ] [ * ] [ * ]
optimization
Trade shows and organized [ * ] [ * ] [ * ]
customer events
Training-production of training [ * ] [ * ] [ * ]
materials
Training-cost of delivery and [ * ] [ * ] [ * ]
facilities
Travel Expenses (air, hotel &
meals) for Sales Force [ * ] [ * ] [ * ]
*Interviewing [ * ] [ * ] [ * ]
*Training [ * ] [ * ] [ * ]
*Field Manager, National Sales [ * ] [ * ] [ * ]
Manager, Representatives
<PAGE>
Exhibit D
Sales Levels For Section 14.4
Sales Year 2 [ * ]
Sales Year 3 [ * ]
Sales Year 4 [ * ]
<PAGE>
Exhibit E
Mutual Press Release
<PAGE>
PRESS RELEASE
FOR IMMEDIATE RELEASE
Contact: Dan Spiegelman
Chief Financial Officer
650/812-9509
or
Christopher Chai
Director of Strategic Planning
and Investor Relations
650/812-9560
CV THERAPEUTICS ANNOUNCES AGREEMENT WITH INNOVEX TO
COMMERCIALIZE RANOLAZINE
PALO ALTO, CA (May 11, 1999) - CV Therapeutics, Inc.
(Nasdaq: CVTX) today announced the signing of an innovative
commercialization agreement with Innovex, a leading
commercial solutions provider for the global pharmaceutical
industry, for the U.S. marketing and sales of CVT's
ranolazine. Ranolazine is currently in Phase III clinical
trials for the potential treatment of chronic stable angina,
a disease that affects approximately 7 million people in the
United States.
The agreement calls for Innovex to conduct pre-launch
activities, hire and train a dedicated cardiology sales
force to launch and promote ranolazine, and provide post-
launch marketing and sales services. Innovex has agreed to
provide services for at least three years after launch and
to provide services in years four and five after launch if
certain minimum sales levels are met.
In the first year after launch, Innovex will provide a sales
force and fund marketing activities and will be paid on a
standard fee-for-service basis. Based on the minimum sales
force and marketing spend specified in the agreement, the
first year fee would be at least $19 million. In year two,
the agreement specifies that Innovex will provide a sales
force of a certain minimum size. Per the agreement, total
compensation for these first two years will not exceed, and
in most cases is expected to be roughly equal to, 33% of
total revenues during that period.
The size of the sales force and the marketing spend in year
three or any subsequent year will be tied to the performance
of the product. Total compensation to Innovex for years
three through five will not exceed, and is expected to be
roughly equal to, 25% to 30% of total revenues during that
period, and deferred compensation in years six and seven
after launch will not exceed 7% and 4% respectively.
-more-
<PAGE>
The agreement also calls for Innovex's parent company,
Quintiles Transnational Corp. (Nasdaq: QTRN), to make a $5
million investment in common stock of CVT and, upon the
FDA's acceptance of the ranolazine New Drug Application
filed by CVT, make available up to a $10 million secured
credit facility to CVT for funding of pre-launch activities
to be performed by Innovex under a traditional fee-for-
service agreement, or in some limited cases to be performed
by vendors approved by Innovex. This credit facility is
convertible into CVT stock at the election of Quintiles
under certain circumstances. Quintiles will also make a
milestone payment of $10 million payable at product launch
which can be offset by the outstanding loan.
The agreement represents an innovative commercialization
model designed to maximize commercial successes of both
parties while preserving resources for discovery and
development efforts. The agreement provides CVT access to
Innovex's high-quality, full-service marketing and sales
operation and strategic consulting services. As such, this
agreement allows CVT to maintain its focus and dedicate
internal resources to the development of its product
portfolio. The minimum amount of services Innovex is
expected to provide over the full five-year period after
launch, if ranolazine is approved and meets the minimum
sales levels specified in the agreement, would otherwise
cost CVT about $110 million under a traditional fee-for-
service basis. CVT has final decision-making control on all
strategic issues regarding ranolazine throughout the term of
the agreement, and has the option after five years to
convert the Innovex sales force to a CVT sales force.
"This agreement allows CVT to retain product control while
avoiding most of the significant burden of acquiring a
dedicated sales force," said Louis G. Lange, M.D., Ph.D.,
Chairman and Chief Executive Officer of CV Therapeutics.
"By paying for these services under a fee agreement based on
a percentage of revenues, CVT retains product control while
mitigating both the risks of acquiring a dedicated sales
force and of financing it. And with access to the unique
market research derived for the non-patient-identified
pharmacy and medical transactions data of Quintiles' ENVOY
subsidiary, we believe Innovex is in a unique position to
market ranolazine effectively."
David Stack, President and General Manager of Innovex Inc.,
said: "We're extremely pleased about the opportunity to
launch ranolazine, potentially the first new class of anti-
anginals in over 20 years. This innovative service
agreement is a response to our customers' current needs and
requests and demonstrates again Innovex's commitment to
providing overall commercialization solutions to the
pharmaceutical industry. The fee structure gives us
potential for much greater return on our investment if sales
meet the minimum sales levels specified in the agreement.
We have the opportunity to exceed twice our normal margins.
The agreement also allows for Innovex to change the size of
the sales force if sales are lower or higher than the
minimum sales levels specified in the agreement."
As the leader in providing contract sales and marketing
solutions to the healthcare industry, Innovex has built over
30 sales teams ranging in size from five to 500. With more
than 7,500 employees worldwide and sales forces in 19
countries, Innovex has worked with virtually all of the
major pharmaceutical companies in almost every
-more-
<PAGE>
therapeutic area. Innovex, through Quintiles' propriety
QUINTERNETTM technology platform, also has developed one of
the first Web-based sales force automation systems offering
territory planning, alignment, sample accountability and
call reporting capabilities.
CV Therapeutics, Inc., headquartered in Palo Alto,
California, is a biopharmaceutical company focused on the
application of molecular cardiology to the discovery,
development and commercialization of novel, small molecule
drugs for the treatment of cardiovascular diseases. CV
Therapeutics is a development stage company. Ranolazine has
not been approved for marketing by the Food and Drug
Administration or other foreign agencies. Ranolazine is
presently being investigated in Phase III clinical trials
subject to a United States IND and applicable foreign
authority submissions. CV Therapeutics has not yet
submitted an NDA to the FDA or equivalent application to any
other foreign regulatory authorities for ranolazine and
ranolazine has not yet been determined to be safe or
effective in humans for its intended use. In addition to
historical information, this press release contains forward-
looking statements that involve risks and uncertainties,
including, but not limited to, uncertainties related to CV
Therapeutics' early stage of development and clinical trials
and dependence on collaborative and licensing arrangements,
which may cause actual results to differ materially. These
factors are more fully discussed in CV Therapeutics' Annual
Report on Form 10K for the year ended December 31, 1998.
For more information, please visit CV Therapeutics' web-site
at www.cvt.com.
Innovex, a service group of Quintiles Transnational Corp.,
is the worldwide leader in providing pharmaceutical and
biotechnology companies integrated solutions to enhance the
commercial success of their products. Quintiles is the
market leader in providing a full range of integrated
product development and commercialization solutions to the
pharmaceutical, biotechnology and medical device industries.
Quintiles also is a leader in the electronic data
interchange and healthcare informatics industry and provides
healthcare policy consulting to governments and other
organizations worldwide.
Headquartered near Research Triangle Park, North Carolina,
Quintiles is a Fortune 1000 company and a member of the
Nasdaq-100 Index. With more than 16,000 employees worldwide
and offices in 31 countries, Quintiles operates through
specialized work groups dedicated to meeting customers'
individual needs. For more information, please visit the
Quintiles Transnational web site at www.quintiles.com.
Information in this press release contains "forward-looking
statements." These statements involve risks and
uncertainties that could cause actual results to differ
materially, including without limitation, actual operating
performance, the ability to maintain large client contracts
or to enter into new contracts. Additional factors that
could cause actual results to differ materially, including
the affect of recent acquisitions, are discussed in
Quintiles Transnational Corp.'s recent filings with the
Securities and Exchange Commission, including but not
limited to its S-3 and S-4 Registration Statements, its
Annual Report on Form 10-K, its Form 8-Ks, and its other
periodic reports, including Form 10-Qs.
-end-
<PAGE>
Schedule I
Innovex Responsibilities
1. Innovex will provide the following Innovex Personnel to
comprise the Sales Force:
(a) Territory Representatives (as defined in Schedule III,
Section 1);
(b) Field Managers (as defined in Schedule III, Section 2);
(c) National Sales Manager (as defined in Schedule III, Section
3); and
(d) Project Administrator.
2. Innovex will be responsible for recruitment and re-
recruitment of the Innovex Personnel, in accordance with the
Innovex 10 step hiring process. CVT will not be involved in the
interviewing, selection or hiring of Innovex Personnel.
3. Innovex will only hire qualified Innovex Personnel, defined
as meeting a hiring profile to be established by the JCC.
4. Innovex will manage all employer obligations in connection
with the employment of Innovex Personnel, including, but not
limited to, discipline and termination of employees. Innovex
shall provide administrative resources for Field Managers, and
communication between Innovex and the Innovex Personnel. CVT
will not be involved in the management or supervision of Innovex
Personnel.
5. Training: Innovex shall be responsible for training the
Sales Force regarding the Promotional Materials, disease and
therapeutic areas, Product knowledge, Product marketing strategy
and regional management in the Territory, Product recalls,
reporting complaints and adverse events. The training will be
conducted in a manner so as to meet or exceed the minimum
training standards agreed to by the Parties and in accordance
with all laws, rules, regulations and policies, including but not
limited to the AMA Guidelines on Gifts to Physicians.
6. Innovex shall be responsible for equipping the Sales Force
with computer hardware and software needed to carry out the
promotion of the Product. All Innovex Personnel assigned to the
Sales Force will receive a laptop computer and printer with
interface cable. Innovex shall bear the cost of the hardware and
software, including appropriate licenses and training,
configuration, and replication/data line access. Innovex shall
bear the costs of upgrades to hardware or software as it deems
necessary for successful promotion of the Product. In addition,
Innovex shall establish and bear the costs of help desk support
for the hardware and software it provides.
7. Innovex will provide the Sales Force the Innovex Territory
Management System ("ITMS") or other comparable sales force
automation system and email/voice mail systems which will include
components for call reporting, expense reporting, physician
prescribing, Sample tracking, call history, sales and market-
share reporting, customized
<PAGE>
reports and communications. These
systems shall be of similar quality and effectiveness to that
which Innovex provides to its other clients. Innovex will make
reasonable efforts to enable a reasonable number of CVT personnel
to have access to and be able to link into the ITMS and
email/voicemail systems used by the Sales Force.
8. Innovex shall be responsible for equipping the Field
Managers with facsimile machines as needed to carry out the
promotion of the Product.
9. All promotional and detailing activities and obligations
undertaken by Innovex Personnel and the Sales Force hereunder
shall be performed in accordance with the Marketing Plan. No
Innovex Personnel shall create Promotional Materials or other
written materials relating to the Product without first
submitting those materials to CVT for and obtaining CVT's written
approval prior to use. Innovex Personnel and the Sales Force
shall make no statements, claims or undertakings to any person
with whom they discuss or promote the Product that are
inconsistent with the Promotional Materials. Promotional
activities shall be in compliance with all applicable laws,
rules, and regulations and policies. The Innovex Personnel and
the Sales Force shall not offer, pay, solicit or receive any
remuneration to or from physicians or prescribers or health
facilities, in order to induce referrals of or purchase of the
Product. The Innovex Personnel and the Sales Force shall have no
direct contact with, nor shall the Innovex Personnel and the
Sales Force be involved with the delivery of the Product to
patients of physicians, other than delivery of Samples directly
to physicians or practitioners authorized to prescribe the
Product in the Territory. Innovex shall permit CVT to accompany
Territory Representatives on sales calls from time to time with
reasonable advance notice.
10. Innovex shall provide monthly project management reports to
CVT in Innovex's standard form within fifteen (15) business days
after the end of each month.
11. Innovex shall be responsible for the Product Launch meeting,
POA meetings and national, regional or district meetings.
12. Innovex shall distribute the Samples provided by CVT through
a combination of the Sales Force and by mail, as directed in the
Marketing Plan and in accordance with recordkeeping and other
requirements of the PDMA.
13. Innovex shall be responsible for establishment of Sales
Force targets and level of activity against these targets.
Targeting should take into account the Minimum Sales Force
Commitment and the Marketing Plan.
14. Innovex shall have developed for it, in accordance with the
Minimum Sales Force Commitment and the Marketing Plan and provide
to the Sales Force, customer listings and territory mapping,
alignment and optimization.
15. Innovex shall provide the Sales Force with CVT business
cards.
<PAGE>
Schedule II
CVT Responsibilities & Obligations
CVT Sales Project
1. CVT shall ensure that the CVT sales, marketing and medical
personnel are fully briefed as to the complementary role of the
Innovex Personnel and ensure cooperation with the Innovex
Personnel.
2. CVT shall be responsible for:
" Communications within CVT and from CVT to Innovex.
" Handling all aspects of order processing and fulfillment,
invoicing and collection, Product supply, inventory and
receivables.
<PAGE>
Schedule III
Role Definitions
1. Territory Representative
RESPONSIBILITIES AND DUTIES:
" Generates sales within an assigned territorial boundaries.
" Maintains current and prospective customer profiles and
information.
" Keeps current with Product, competitor products, and market
knowledge.
" Maintains a professional image for CVT and the Product at
all times.
" Organizes territory-planning to meet sales and call goals.
" Provides sales presentations: individual one-on-one, groups,
in-services.
" Maintains Sample inventories, distributes Samples, complies
with Sample accountability procedures and policies.
" Participates in all training programs.
" Completes and submits in a timely manner all accountability
and expense reports. Monitors that Product is appropriately
stocked by local distribution centers, hospitals and pharmacies.
" Monitors that Product is on hospital formularies.
" Attends trade shows as directed by National Sales Manager.
SKILLS:
" Initiative
" Persuasiveness/Sales ability
" Planning and Organizing
" Individual Leadership/Influencing
" Teamwork/Collaboration
" Motivational Fit
2. Field Manager
" Attains sales objectives within assigned districts.
" Deploys resources to maximize district sales potential.
" Implements CVT Product strategies within district.
" Maintains District budgets and accurate records on all sales
activities.
" Makes regular field visits to develop, train, supervise,
motivate and monitor Territory Representative performance;
completes field contact reports.
" Makes final hiring decision; training and evaluation of
Territory Representatives.
" Documents and recommends all disciplinary actions to include
warnings, suspensions, probation, terminations.
" Communicates with CVT management on a regular basis.
" Submits a formal monthly report to Innovex National Sales
Manager.
" Assists in the planning and delivery of initial training
course.
" Assists in the planning and delivery of POA or trimester
meetings.
<PAGE>
" Monitors that Product is on managed care formularies that
are within the Field Manager's district.
3. National Sales Manager
" Hires, trains develops and evaluates Field Managers.
" Develops, supervises, motivates and monitors performance of
Field Managers.
" Maintains project budgets.
" Monitors days worked and directs Field Managers accordingly.
" Prepares and submits monthly summary report to Innovex and
CVT management Serves as key point of contact for CVT.
" Approves all Sales Force disciplinary actions.
" Develops initial training program for Territory
Representatives and Field Managers.
" Coordinates POA or trimester meetings; plans and conducts
meetings with CVT and its region management.
" Coordinates submissions for national managed care
formularies.
" Directs coordination of Field Manager and Territory
Representatives to attend trade shows as appropriate.
<PAGE>
SALES AND MARKETING AGREEMENT
among
CV THERAPEUTICS, INC.,
INNOVEX INC.,
and
QUINTILES TRANSNATIONAL CORP.
<PAGE>
Table Of Contents
Page
ARTICLE 1 SERVICES OVERVIEW; INNOVEX EXCLUSIVITY 1
1.1 Definitions 1
1.2 Overview; CVT Engagement of Innovex 1
1.3 Innovex Exclusive Rights 1
1.4 Retained Rights by CVT 2
1.5 Additional Indications 2
ARTICLE 2 COMMITTEES 2
2.1 Joint Steering Committee ("JSC") 2
2.2 Joint Commercialization Committee ("JCC") 3
2.3 Agendas and Minutes for the JSC and JCC 4
2.4 Innovex Attendance at JCC as a Billable Expense 4
2.5 No Authority to Modify Agreement 4
ARTICLE 3 MARKETING PLAN; DETERMINATION OF FULLY BURDENED
COST 5
3.1 Marketing Plan 5
3.2 Plan Contents 5
3.3 Determination of Fully Burdened Cost 5
ARTICLE 4 INNOVEX RESPONSIBILITIES 6
4.1 Covenant to Operate under the Agreement; General
Diligence Requirement 6
4.2 Pre-Approval Responsibilities 6
4.3 Post-Approval Responsibilities 7
4.4 Fully Dedicated Sales Force 7
4.5 Minimum Requirements 7
4.6 Training Requirements 8
4.7 Innovex Responsibilities 8
4.8 Records and Reports Regarding Promotional
Activities 8
4.9 Performance Audits 8
4.10 Other Responsibilities 8
ARTICLE 5 CVT'S RESPONSIBILITIES AND OBLIGATIONS 8
5.1 Regulatory Affairs 8
<PAGE>
5.2 Pre-Approval Marketing Activities 9
5.3 Obligation to Provide Samples 9
5.4 Sales and Distribution 10
5.5 CVT Responsibilities 10
ARTICLE 6 TRAINING; ADVERTISING AND PROMOTIONAL MATERIALS 10
6.1 Training Programs 10
6.2 Advertising and Promotional Materials 10
ARTICLE 7 REGULATORY ISSUES AND COMPLAINTS 11
7.1 Ownership of Regulatory Filings and Compliance 11
7.2 Communication with the FDA and Other Regulatory
Agencies 11
7.3 New Developments Relating to the Product 12
7.4 Product Recalls 12
7.5 Adverse Event Reporting Procedures 12
7.6 Product Inquiries; Complaints 12
7.7 Database of Clinical Trial Data 12
ARTICLE 8 EQUITY & LOAN ARRANGEMENTS; MILESTONE PAYMENT 12
8.1 Equity Stake 13
8.2 Pre-Approval Line of Credit 13
8.3 First Year Sales Loan 13
8.4 Milestone Payment 13
ARTICLE 9 COMPENSATION 13
9.1 Sales and Marketing Fee 13
9.2 Penalty for Shortfall of Innovex Effort 14
9.3 Start-Up Sales Force Costs 15
9.4 Reports of Sales, Fully Burdened Cost, Sales and
Marketing Fee 15
9.5 Post-Term Royalty 16
9.6 Payments 16
9.7 Non-Monetary Consideration 17
ARTICLE 10 ACCOUNTING; INVOICING AND PAYMENT 17
10.1 Accounting 17
<PAGE>
10.2 Invoicing Procedure; Additional Services; Standard
Terms Not Part of this Agreement 17
10.3 Obligation to Pay for Innovex Pre-Approval
Marketing Activities 17
10.4 Payment of Invoices 17
10.5 Penalty for Late Payment 18
10.6 Record-Keeping and Financial Audits 18
ARTICLE 11 REPRESENTATIONS AND COVENANTS 19
11.1 Mutual Authority 19
11.2 Conformance with Laws 19
11.3 Rights in Product 20
11.4 Record Maintenance 20
11.5 Firewall 20
11.6 No Use of Names or Trademarks 20
11.7 Year 2000 Compliance 20
11.8 NDA Filing 21
ARTICLE 12 CONFIDENTIALITY 21
12.1 Confidential Information 21
12.2 Ownership of Data; No License 22
12.3 Survival 22
ARTICLE 13 INDEMNIFICATION 22
13.1 Indemnification by CVT 22
13.2 Indemnification by Innovex 22
13.3 Procedure 23
13.4 No Consequential Damages 23
13.5 CVT Responsibility for Product Description 23
13.6 Insurance 23
ARTICLE 14 TERM AND TERMINATION 24
14.1 Term 24
14.2 Material Breach 24
14.3 NDA Filing; No Product Approval 24
<PAGE>
14.4 Failure to Achieve Certain Net Sales 24
14.5 Permitted CVT Co-Promotion Agreement 25
14.6 Loss of Product Rights by CVT 25
14.7 Bankruptcy 25
14.8 Accrued Rights 25
14.9 Right to Receive Data 26
14.10Survival 26
ARTICLE 15 SALES FORCE CONVERSION 26
15.1 Right to Convert Sales Force 26
15.2 Transition Plan 26
15.3 CVT Determination 26
15.4 Compensation 26
15.5 Proprietary Information 27
ARTICLE 16 DISPUTE RESOLUTION 27
16.1 Disputes 27
16.2 Governing Law 27
ARTICLE 17 MISCELLANEOUS 27
17.1 Condition Subsequent 27
17.2 Return of Materials 28
17.3 Nonsolicitation of Employees 28
17.4 Publicity 28
17.5 Business Days 28
17.6 Entire Agreement; Amendment 28
17.7 Force Majeure 28
17.8 Notices 29
17.9 Consents Not Unreasonably Withheld or Delayed 29
17.10Maintenance of Records 30
17.11United States Dollars 30
17.12No Strict Construction 30
17.13Assignment 30
<PAGE>
17.14Performance by Affiliates 30
17.15Counterparts 30
17.16Further Actions 30
17.17Severability 30
17.18Ambiguities 31
17.19Headings 31
17.20No Waiver 31
EXHIBIT A
DEFINITIONS A-1
EXHIBIT B
MARKETING PLAN OUTLINE B-1
EXHIBIT C
COST ALLOCATION FOR POST-APPROVAL MARKETING ACTIVITIES C-1
EXHIBIT D
SALES LEVELS FOR SECTION 14.4 D-1
EXHIBIT E
MUTUAL PRESS RELEASE E-1
SCHEDULE I
INNOVEX RESPONSIBILITIES SI-1
SCHEDULE H
CVT RESPONSIBILITIES & OBLIGATIONS, CVT SALES PROJECT SII-1
SCHEDULE III
ROLE DEFINITIONS SIII-1
<PAGE>
An extra section break has been inserted above this paragraph. Do
not delete this section break if you plan to add text after the
Table of Contents/Authorities. Deleting this break will cause
Table of Contents/Authorities headers and footers to appear on
any pages following the Table of Contents/Authorities.
[ * ] = Certain confidential information contained in this
document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant
to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.
<PAGE>
Certain confidential information contained in this document,
marked by brackets, has been omitted and filed separately with
the Securities and Exchange Commission pursuant to Rule 24b-2 of
the Securities Exchange Act of 1934, as amended.
Exhibit 10.67
LOAN AGREEMENT
This Loan Agreement is dated and entered into as of May 5,
1999 (the "Effective Date") by and between CV Therapeutics, Inc.,
a Delaware corporation ("Borrower"), and Quintiles Transnational
Corp., a North Carolina corporation ("Lender").
Whereas, Borrower and Innovex Inc., a wholly-owned
subsidiary of Lender ("Innovex"), are parties to a Sales and
Marketing Services Agreement (the "Services Agreement"), dated as
of the same date hereof; and
Whereas, in connection with the Services Agreement, Lender
is willing to extend certain credit facilities to Borrower,
subject to and upon the terms and conditions of this Agreement;
Now, Therefore, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged by the
parties, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
1.01 Definitions. Capitalized terms used but not defined in the
text of this Agreement shall have the meanings ascribed to them
on Exhibit A attached hereto and incorporated herein by
reference.
ARTICLE II
AMOUNT AND TERMS OF LOAN
2.01 Advances.
(a) Subject to and upon the terms and conditions herein set
forth, including without limitation Section 2.01(c) hereof,
Lender agrees, at any time and from time to time from NDA Filing,
or such earlier date as mutually agreed upon by the parties, to
and including the earlier to occur of (i) Product Launch, or (ii)
[*] (or in the case of this clause (ii), such later date as may
be established in connection with a Revised Launch Date under
Section 14.3 of the Services Agreement), to make advances ("Pre-
Approval Advances") to Borrower at such times and in such amounts
as Borrower shall request pursuant to this Agreement, up to an
aggregate principal amount of Ten Million Dollars ($10,000,000)
(the "Pre-Approval Commitment"). If at any time or for any
reason, the aggregate outstanding principal amount of the Pre-
Approval Advances is greater than the Pre-Approval Commitment,
Borrower shall immediately pay to Lender in cash the amount of
such excess. The availability of the Pre-Approval Commitment
shall not be on a revolving basis and, accordingly, once the Pre-
Approval Advances or any portion thereof have been borrowed and
repaid by Borrower, such amounts may not be reborrowed.
<PAGE>
(b) Subject to and upon the terms and conditions herein set
forth, Lender agrees that it shall make up to four advances (each
a "First Year Sales Advance") to Borrower at such times and in
such amounts as Borrower shall request pursuant to this
Agreement, during the period beginning on the last day of the
first Sales Quarter (as defined in the Services Agreement) to and
including the date one hundred eighty (180) days following the
last day of the fourth Sales Quarter (the "First Year
Availability End Date"). The maximum amount of each First Year
Sales Advance shall be determined as of the end of each Sales
Quarter during the First Sales Year (as defined in the Services
Agreement), and shall be an amount equal to (i) the Sales and
Marketing Fee (as defined in the Services Agreement) for such
Sales Quarter, minus (ii) 33% of the Net Sales of the Product (as
defined in the Services Agreement) during such Sales Quarter.
(The total amount of First Year Sales Advances allowed under this
section is referred to as the "First Year Sales Commitment"; the
Pre-Approval Commitment and the First Year Sales Commitment are
sometimes collectively referred to herein as the "Commitments"
and individually as a "Commitment"). If at any time or for any
reason, the aggregate outstanding principal amount of the First
Year Sales Advances is greater than the First Year Sales
Commitment, Borrower shall immediately pay to Lender in cash the
amount of such excess. The availability of the First Year Sales
Commitment shall not be on a revolving basis and, accordingly,
once the First Year Sales Advances or any portion thereof have
been borrowed and repaid by Borrower, they may not be reborrowed.
(Pre-Approval Advances and First Year Sales Advances are
sometimes collectively referred to herein as the "Advances" and
individually as an "Advance.")
(c) Upon the termination of the Services Agreement, the Pre-
Approval Commitment and the First Year Sales Commitment shall
terminate and Lender shall have no further obligation to make Pre-
Approval Advances or First Year Sales Advances. Upon the
delivery by Borrower to Lender of a Pre-Approval Termination
Notice (as defined in the Security Agreement), the Pre-Approval
Commitment (but not the First Year Sales Commitment) shall
terminate and Lender shall have no further obligation to make Pre-
Approval Advances.
(d) Each Advance shall be a principal amount of a loan,
evidenced by the respective Note referenced below.
2.02 Use of Proceeds.
(a) The Pre-Approval Advances shall be used solely (i) to pay
invoices covering Pre-Approval Marketing Activities and/or Pre-
Approval Marketing Expenses (as defined in the Services
Agreement), which are delivered by Innovex to Borrower and
payable after NDA Filing (ii) to pay invoices covering Pre-
Approval Marketing Activities and/or Pre-Approval Marketing
Expenses, which are delivered by Third Parties (as defined in the
Services Agreement) and payable after NDA Filing, as described in
Section 5.2.1 of the Services Agreement; provided, however, that
the aggregate amount of Advances used for the purpose described
in this subsection (ii) shall not exceed the maximum aggregate
amount payable to Third Parties pursuant to the terms of such
Section 5.2.1, and (iii) for working capital and general
corporate purposes; provided, however, that the aggregate amount
of Advances used for the purpose described in this subsection
(iii) shall not exceed the aggregate amount of invoices for Pre-
Approval Marketing Activities and/or Pre-Approval Marketing
Expenses paid by Borrower prior to NDA Filing; and provided,
further, that Advances used for the purpose
<PAGE>
described in this subsection (iii) shall not be available at any time
that any amounts due and payable by Borrower to Lender are outstanding.
(Pre-Approval Advances used for the purpose described in the
preceding subsections (ii) and (iii) are sometimes referred to as
"Cash Advances.")
(b) The proceeds from the First Year Sales Advances shall be
used solely to pay Sales and Marketing Fees due to Innovex from
Borrower with respect to the first Sales Year.
2.03 Notices of Advances; Disbursement of Funds.
(a) Whenever Borrower desires to obtain an Advance, Borrower
shall give to Lender and, in the case of Advances described in
Sections 2.02(a)(i) and (b), Innovex, a written notice of the
requested Advance, signed by an officer of Borrower (each a
"Notice of Advance"), and received no later than 3:00 p.m.
Eastern Time three (3) Business Days before the day on which
Borrower desires the Advance to be made. The Notice of Advance
shall specify: (i) a description of the invoice or fee referred
to in Section 2.02 being paid; (ii) the aggregate principal
amount of the Advance to be made; (iii) the date on which
Borrower desires the Advance to be made, which date shall be a
Business Day; (iv) the type of Advance to be made; (v) in the
case of a Cash Advance, an account of Borrower to which the Cash
Advance shall be directed and wire transfer instructions; and
(vi) that Borrower represents and warrants that the conditions
precedent set forth in Section 3.02 have been satisfied. In any
event, the giving of each Notice of Advance shall constitute a
representation and warranty by Borrower to Lender that the
conditions precedent set forth in Section 3.02 have been
satisfied.
(b) Whenever Borrower desires to obtain a Cash Advance, Lender
shall make available to Borrower, at an account of Borrower
specified to Lender by an officer of Borrower, no later than 2:00
p.m. Eastern Time on the date specified in the Notice of Advance
for such Cash Advance, the aggregate amount of such requested
Cash Advance. Each Notice of Advance requesting a Cash Advance
shall be irrevocable when sent by Borrower.
2.04 Advances Made. On the date specified in each Notice of
Advance for Pre-Approval Advances (other than for Cash Advances)
and First Year Sales Advances, an Advance shall be made under the
applicable Note (as defined below) and the applicable invoice for
Pre-Approval Marketing Activities and/or Pre-Approval Marketing
Expenses, or the applicable Sales and Marketing Fee, as the case
may be, shall be paid in the amount of the Advance (all without
the necessity of the actual transfer of funds between Lender and
Borrower). For each Notice of Advance for Cash Advances, an
Advance shall be made under the Pre-Approval Note (as defined
below) at the time the amount of the Cash Advance is made
available to Borrower in accordance with Section 2.03(b).
2.05 Notes. Borrower's obligation to pay the principal of, and
interest on, the Advances made by Lender shall be evidenced by
the following:
(a) For any and all Pre-Approval Advances made by Lender
pursuant to this Loan Agreement, a single promissory note (the
"Pre-Approval Note") duly executed and delivered by Borrower in
the form of Exhibit B attached hereto.
<PAGE>
(b) For any and all First Year Sales Advances made by Lender
pursuant to this Loan Agreement, a single promissory note (the
"First Year Sales Note") duly executed and delivered by Borrower
in the form of Exhibit C attached hereto (the Pre-Approval Note
and the First Year Sales Note are sometimes collectively referred
to herein as the "Notes" and individually as a "Note").
(c) All Advances made by Lender to Borrower, and all payments in
respect thereof, shall be recorded by Lender and shall be
endorsed on the grid attached to the appropriate Note. Failure
to make any such notation shall not affect Borrower's obligations
in respect of such Advances.
2.06 Interest and Repayment; Late Payment.
(a) Borrower shall pay the aggregate outstanding principal
balance of, and all accrued interest on, all Pre-Approval
Advances on or before the Pre-Approval Maturity Date.
(b) With respect to each First Year Sales Advance, Borrower
shall pay the entire outstanding principal balance of, and all
accrued interest on, each First Year Sales Advance on the date
which is twenty-four (24) months after the date on which such
First Year Sales Advance was made.
(c) Notwithstanding subsections (a) and (b) above, the aggregate
outstanding principal balance of, and all accrued interest on,
all Advances shall become immediately due and payable to Lender
upon the termination of the Services Agreement by Lender pursuant
to Section 14.2 of the Services Agreement.
(d) Interest on the outstanding principal amount of each Advance
shall accrue and be payable at a rate per annum equal to [*]
percent ([*]%) above the Prime Rate in effect from time to time.
Interest shall be calculated on the basis of a 360-day year for
the actual number of days elapsed. Interest shall be compounded
quarterly.
(e) Any outstanding principal of an Advance or accrued interest
amounts thereon that are not paid when due shall accrue interest
on a daily basis at the lesser of (i) [*] percent ([*]%) above
the Prime Rate in effect from time to time, or (ii) the maximum
rate permitted by law on any amount overdue, such accrual
beginning on the date payment is due and continuing until the
date payment is made in full.
(f) All payments of principal and interest shall be made to
Lender in lawful money of the United States of America in
immediately available funds.
2.07 Conversion.
(a) At any time or from time to time after the occurrence and
during the continuance of an Event of Default, or four hundred
fifty (450) days after NDA Filing, Lender shall have the option
to convert, in whole or in part, the outstanding principal
balance of and all accrued interest on the Pre-Approval Note,
into shares of common stock of Borrower ("Common Stock") in
accordance with the provisions of this Agreement. At any time or
from time to time,
<PAGE>
Lender shall have the option to convert, in
whole or in part, the outstanding principal balance of and all
accrued interest on the First Year Sales Note, into shares of
Common Stock in accordance with the provisions of this Agreement.
Notwithstanding the foregoing, in the event that Lender exercises
its conversion rights under this Section 2.07 to convert in part
outstanding principal and interest amounts under the Notes and
such conversion results in Lender owning in excess of twenty
percent (20%) of the outstanding Common Stock, then promptly
following written notice thereof to Lender by Borrower, Lender
will exercise its conversion rights with respect to any remaining
principal and interest under the Notes. The number of shares of
Common Stock into which the Notes may be converted shall be equal
to (i) the total amount of outstanding principal balance and
accrued interest being converted, divided by (ii) the Fair Market
Value as of the Conversion Effective Date (as defined below);
provided, however, that if Lender converts any portion of the
Notes after the occurrence of an Event of Default under Section
7.01 (a) or 7.01(d) hereof and after a notice referred to in
Section 7.02, then the number of shares of Common Stock into
which the Notes may be converted shall be equal to (i) the total
amount of outstanding principal balance and accrued interest
being converted, divided by (ii) the Default Conversion Price as
of the Conversion Effective Date. (Shares issued upon conversion
of the Notes are sometimes referred to herein as the "Conversion
Shares.") Promptly following Lender's written request, Borrower
will inform Lender in writing of the percentage of the
outstanding Common Stock owned by Lender. Notwithstanding the
foregoing, Lender may not convert any or all of the outstanding
principal balance of and accrued interest on the Notes within
twenty (20) days of any sale of Common Stock by Lender or its
Affiliates, provided that this twenty (20) day waiting period
shall not apply to the conversion of the Notes after the
occurrence and during the continuance of an Event of Default
under Section 7.01(a) or 7.01(d) hereof or an Event of Default
under Section 7.01(g) or 7.01(h).
(b) Lender must give written notice to Borrower of its intent to
convert the Notes into Conversion Shares. Such notice must state
(i) the amount of the outstanding principal and interest under
the Notes to be converted, (ii) the name or names in which the
certificate(s) for the Conversion Shares are to be issued, and
(iii) the date upon which such conversion shall be effective,
which shall be at least five (5) days after the date on which
such notice is given (the "Conversion Effective Date"); provided,
however, that if Borrower irrevocably pays and satisfies prior to
the Conversion Effective Date the amount of the outstanding
principal and interest to be converted pursuant to the notice,
then Lender's right to convert such principal and interest into
Common Stock shall terminate. Notwithstanding anything to the
contrary in Section 2.07(a) above, if such notice of conversion
is given after the occurrence and during the continuance of an
Event of Default, such notice shall remain valid and such
conversion shall remain effective if thereafter such Event of
Default is not continuing. Promptly upon delivery of such
notice, Borrower shall inform Lender of the aggregate percentage
of Borrower's capital stock Lender will hold after such
conversion.
(c) Upon the Conversion Effective Date, the outstanding
principal and interest under the Notes shall be deemed paid in
the amount of the portion of the Notes converted by Lender.
After the Conversion Effective Date, Borrower shall, as soon as
is practicable, issue and deliver to Lender at its principal
office a certificate or certificates for the number of Conversion
Shares to which Lender is entitled upon such conversion.
<PAGE>
(d) Borrower 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 Notes such number
of its shares of Common Stock as shall from time to time be
sufficient to effect the conversion of the Notes; and if at any
time the number of authorized but unissued shares of Common Stock
shall not be sufficient to effect the conversion of the entire
outstanding principal balance of and accrued interest on the
Notes, in addition to such other remedies as shall be available
to Lender, Borrower shall use its best efforts to take such
corporate action as may, in the opinion of 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.
(e) Upon conversion of the Notes pursuant to this section, the
Conversion Shares shall be included in the definition of "Shares"
for all purposes of the Stock Purchase Agreement dated as of the
same date hereof, as amended, modified or supplemented from time
to time, between Lender and Borrower.
(f) Any conversion of Notes pursuant to this Section 2.07 shall
be subject to compliance with the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 (the "HSR Act"), together with any other
requirements for governmental consents. If any filing under the
HSR Act is required in order to consummate such conversion, each
of Borrower and Lender shall cooperate and work diligently to
make such filing and obtain the termination or expiration of the
waiting period promptly. In the event of a delay in the
conversion of the Notes by reason of the need to obtain
governmental consents, the number of Conversion Shares to be
issued shall be the same as if the conversion had occurred on the
originally specified Conversion Effective Date (i.e., without any
change by reason of the delay in conversion or any subsequent
change in the market value of the Conversion Shares).
ARTICLE III
CONDITIONS PRECEDENT
3.01 Initial Conditions Precedent. The obligation of Lender to
perform its obligations under this Agreement is subject to the
conditions precedent that Lender shall have received each of the
following executed documents on the date of this Agreement:
(a) The Pre-Approval Note, in the form of Exhibit B attached
hereto;
(b) The First Year Sales Note, in the form of Exhibit C attached
hereto;
(c) A Security Agreement, dated as of the date of this Agreement
between Lender and Borrower (the "Security Agreement"), granting
Lender a first priority, perfected security interest in the
Collateral (as defined in the Security Agreement), as well as
financing statements and other instruments duly filed in each
jurisdiction that Lender deems necessary to establish and perfect
a first priority, perfected security interest created by the
Security Agreement in such Collateral;
(d) Copies of resolutions of the Board of Directors of Borrower
approving this Agreement, the Notes, the Security Agreement and
any other documents required or necessary to consummate the
transactions contemplated in this Loan Agreement (collectively,
the "Loan
<PAGE>
Documents") and the Services Agreement, in each case
certified by an appropriate officer of Borrower;
(e) A certificate of the appropriate officers of Borrower
certifying (i) the names and true signatures of the officers of
Borrower authorized to sign the Loan Documents and the Services
Agreement, (ii) that the representations and warranties contained
in Article IV of this Agreement are true and correct as of the
date hereof, and (iii) that no event has occurred and is
continuing, which constitutes an Event of Default (as defined in
Section 7.01 hereof) or would constitute an Event of Default but
for the requirement that notice be given or time elapse or both;
(f) A copy of the Ranolazine License Agreement, and all
amendments thereto, certified as true and correct by an
appropriate officer of Borrower.
(g) A legal opinion of Cooley Godward LLP, counsel for Borrower,
regarding the Loan Documents and the transactions contemplated
thereby; and
(h) Consents required to effectuate the transactions
contemplated by this Agreement from all necessary parties (if
any), including without limitation Hambrecht & Quist and Biogen,
Inc. or their respective affiliates, and the licensor under the
Ranolazine License Agreement.
3.02 Conditions Precedent to All Advances. The obligation of
Lender to make each Advance shall be subject to the further
conditions precedent that on the date of such Advance:
(a) The representations and warranties contained in Article IV
of this Agreement are true and correct on and as of the date of
such Advance, before and after giving effect to such Advance and
to the application of the proceeds therefrom, as though made on
and as of such date; and
(b) No event has occurred and is continuing, or would result
from such Advance or from the application of the proceeds
therefrom, which constitutes an Event of Default, or would
constitute an Event of Default but for the requirement that
notice be given or time elapse or both or that obligations of
Borrower under the Loan Documents be outstanding as required in
Section 7.01.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF BORROWER
Borrower represents and warrants to Lender as follows:
4.01 Corporate Status. Borrower is a corporation duly
incorporated, validly existing and in good standing under the
laws of the State of Delaware, and has all requisite corporate
power and authority to own and use its properties and assets and
to transact the business in which it is currently engaged.
<PAGE>
4.02 Corporate Power and Authority. The execution and delivery
by Borrower of the Loan Documents, the performance of the terms
and obligations therein, and the issuance, sale and delivery of
the Common Stock issuable upon conversion of the Notes are each
within Borrower's corporate powers and have been duly authorized
by all necessary corporate action on the part of Borrower. The
Loan Documents, when executed and delivered hereunder, will
constitute valid and legally binding obligations of Borrower
enforceable against Borrower in accordance with their terms,
subject to (i) applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors' rights generally,
and (ii) the effect of general principles of equity, regardless
of whether considered in a proceeding in equity or at law.
4.03 Government Approvals. No authorization, consent, approval
or other action by, and no notice to or filing with, any
governmental authority or regulatory body, or any other party, is
required for the due execution, delivery and performance by
Borrower of the Loan Documents or Services Agreement, where the
failure to obtain any such authorization, consent, approval or
other action or the failure to so notify or file, would have a
material adverse effect on Borrower.
4.04 No Violation. Neither the execution or delivery by Borrower
of the Loan Documents and the Services Agreement, nor the
performance of their respective terms and obligations, will (i)
violate Borrower's charter or bylaws, (ii) constitute a breach or
default under any agreement or instrument to which Borrower is a
party or by which Borrower is bound, which breach or default
would have a material adverse effect on Borrower, (iii) violate
any applicable law, rule or regulation, which violation would
have a material adverse effect on Borrower, or (iv) violate any
order, writ, injunction, decree or judgment of any court or
governmental authority applicable to or binding on the Borrower,
which violation would have a material adverse effect on Borrower.
4.05 Financial Statements; Budget and Projections.
(a) All financial statements contained in the SEC Documents (as
defined in Section 4.07) filed by Borrower with the Securities
and Exchange Commission (the "Commission"), have been prepared in
accordance with generally accepted accounting principles ("GAAP")
consistently applied throughout the periods indicated, except as
may be expressly stated in the notes thereto and, as to the
unaudited financial statements, subject to normal recurring year-
end audit adjustments and the absence of notes thereto. Each
balance sheet fairly presents the financial condition of Borrower
and its subsidiaries as of the date of such balance sheet, and
each statement of operations, of stockholders' equity and of cash
flows, fairly presents the results of operations, the
stockholders' equity and the cash flows of Borrower and its
subsidiaries for the periods then ended, all in accordance with
GAAP.
(b) Since the date of Borrower's most recent filing of financial
statements with the SEC, there has been no material adverse
change in the business, property, assets, operations or financial
condition of Borrower and its subsidiaries.
(c) Borrower has furnished Lender with a summary of Borrower's [
* ] for its fiscal year ending December 31, 1999. Such [ * ],
taken as a whole, are reasonable.
<PAGE>
4.06 Litigation. There is no pending, or to Borrower's knowledge
overtly threatened, action, suit, proceeding, arbitration, or
investigation before any court, governmental agency,
instrumentality or arbitrator, which, if determined adversely to
Borrower, could reasonably be expected to materially adversely
affect the business, property, assets, operations or financial
condition of Borrower and its subsidiaries or which purports to
affect the legality, validity or enforceability of the Loan
Documents.
4.07 SEC Filings. Borrower has filed with the Commission on a
timely basis, or received a valid extension of such time of
filing, all forms, reports and documents required to be filed by
it under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), since November 19, 1996 (such documents
collectively referred to as the "SEC Documents"). As of their
respective dates, the SEC Documents complied in all material
respects with the requirements of the Securities Act of 1933, as
amended (the "Securities Act") and the Exchange Act and the rules
and regulations of the Commission promulgated thereunder, and
none of the SEC Documents, when filed, contained any untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were
made, not misleading.
4.08 Valid Issuance. Upon Borrower's issuance of any and all
shares of Common Stock upon conversion of the Notes, such shares
of Common Stock shall be duly authorized, validly issued, fully
paid, non-assessable and free and clear of all liens and
encumbrances.
4.09 Compliance with Statutes, etc. Each of Borrower and its
subsidiaries is in compliance with all applicable laws, rules,
regulations and orders of, and all applicable restrictions
imposed by, all governmental bodies, in respect of the conduct of
its business and the ownership of its property, except where the
failure to be in compliance would not have a material adverse
effect on Borrower.
4.10 Tax Returns and Payments. Each of Borrower and its
subsidiaries has filed all federal, state, local, foreign and
other tax returns required to be filed by it and has paid all
taxes and other assessments which have become due pursuant to
such tax returns and all other taxes and assessments which have
become due, except for those contested in good faith and for
which adequate reserves have been established. Each of Borrower
and its subsidiaries has made adequate provisions on its books of
account for all taxes, assessments and governmental charges with
respect to its business, properties and operations for all prior
fiscal years and for the current fiscal year to the date hereof.
No governmental authority has asserted a lien or other claim
against Borrower or any of its subsidiaries with respect to
unpaid taxes which has not been discharged or resolved, which
would have a material adverse effect on Borrower.
4.11 Insurance. Borrower and each of its subsidiaries maintains
insurance on all of its properties with financially sound and
reputable insurance companies against such risks and in such
amounts as are customarily maintained by companies of comparable
size engaged in a similar business.
4.12 No Infringement. To its knowledge, Borrower owns or
possesses rights to use all patents, patent applications,
trademarks, service marks, trade names, copyrights, trade
secrets, licenses and rights with respect to the foregoing which
are required to conduct its business
<PAGE>
without any known infringement of the rights of others. No event has
occurred which, to the knowledge of Borrower, permits, or after notice or
lapse of time or both would permit, the revocation or termination
of any such rights, and, to the knowledge of Borrower, neither
Borrower nor any of its subsidiaries is liable to any person or
entity for infringement under applicable law with respect to such
rights. As of the Effective Date, Borrower is not pursuing any
action against any third party for the infringement of Borrower's
patents, patent applications, trademarks, service marks, trade
names, copyrights, trade secrets, or licenses relating to its
business.
4.13 Debt. As of the Effective Date, no Debt is outstanding or
owed by Borrower except the Debt listed on Schedule 4.13. Set
forth on Schedule 4.13 is a list of all amounts of outstanding
Debt of Borrower for borrowed money and the maturity dates
thereof.
4.14 Liens. As of the Effective Date, no lien, mortgage, pledge
or security interest exists upon or with respect to any of
Borrower's properties or assets, and no Lien (as defined in
Section 6.03) exists on or with respect to any of the Collateral
(as defined in the Security Agreement), except in each case as
listed on Schedule 4.14.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF LENDER
Lender hereby represents and warrants to Borrower as
follows:
5.01 Corporate Status. Lender is a corporation duly
incorporated, validly existing and in good standing under the
laws of the State of North Carolina, and has all requisite
corporate power and authority to own and use its properties and
assets and to transact the business in which it is currently
engaged.
5.02 Corporate Power and Authority. The execution and delivery
by Lender of the Loan Documents, and the performance of the terms
and obligations therein, are each within Lender's corporate
powers, and each has been duly authorized by all necessary
corporate action. The Loan Documents, when executed and
delivered hereunder, will constitute valid and legally binding
obligations of Lender enforceable against Lender in accordance
with their terms, subject to (i) applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally, and (ii) the effect of general
principles of equity, regardless of whether considered in a
proceeding in equity or at law.
5.03 Investment. Lender is acquiring the Notes and the Common
Stock issuable upon conversion of the Notes (collectively, the
"Securities") for investment for Lender's own account, not as a
nominee or agent for investment, and not with a view to, or for
resale in connection with, any distribution or public offering
thereof within the meaning of the Securities Act.
5.04 Securities Not Registered. Lender understands that the
Notes are not, and any Common Stock acquired upon conversion of
the Notes at the time of issuance might not be, registered under
the Securities Act on the ground that the sale provided for in
this Agreement and the issuance of Securities hereunder is exempt
from registration under the Securities Act
<PAGE>
pursuant to Section 4(2) thereof, and that Borrower's reliance on such
exemption is predicated on Lender's representations set forth herein.
5.05 Accredited Investor. Lender represents that it is an
"accredited investor" within the meaning of Rule 501 of
Regulation D adopted pursuant to the Securities Act.
5.06 Restricted Securities. Lender understands that the
Securities may not be sold, transferred, or otherwise disposed of
without registration under the Securities Act or an exemption
therefrom, and that in the absence of an effective registration
statement covering the Securities or an available exemption from
registration under the Securities Act, the Securities must be
held indefinitely. Lender is aware that the Securities may not
be sold pursuant to Rule 144 promulgated under the Securities Act
unless all of the conditions of that Rule are met.
5.07 Legend. To the extent applicable, each certificate or other
document evidencing any of the shares of Common Stock issued upon
conversion of the Notes shall be endorsed with the legends
substantially in the form set forth below:
"THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY
NOT BE SOLD, TRANSFERRED, PLEDGED, OR HYPOTHECATED
UNLESS AND UNTIL REGISTERED UNDER SUCH ACT, OR UNLESS
THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL OR OTHER
EVIDENCE, SATISFACTORY TO THE COMPANY AND ITS COUNSEL,
THAT SUCH REGISTRATION IS NOT REQUIRED."
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT
TO CERTAIN RESTRICTIONS ON TRANSFER SET FORTH IN AN
AGREEMENT BETWEEN THE COMPANY AND THE HOLDER HEREOF
DATED ______________, 1999, A COPY OF WHICH IS ON FILE
AT THE COMPANY'S PRINCIPAL OFFICES AND IS AVAILABLE
UPON REQUEST."
5.08 Investment Information.
(a) Lender has been furnished with all the information necessary
to make an informed investment decision. Lender has been given
access to such information relating to Borrower as Lender has
requested.
(b) By reason of Lender's business or financial experience,
Lender has the capacity to make the decision referred to in
subsection (a) above.
ARTICLE VI
COVENANTS OF BORROWER
So long as any or all of the Notes shall remain unpaid or
Lender shall have any Commitment hereunder, Borrower shall comply
with the following covenants (it being
<PAGE>
understood that Sections 6.01, 6.05 and 6.06 shall not be effective
until the initial Advance is made):
6.01 Compliance with Laws, Etc. Borrower shall comply, and cause
each of its subsidiaries to comply, in all material respects with
all applicable laws, rules, regulations and orders, where the
failure to so comply would have a material adverse effect on
Borrower, such compliance to include without limitation paying
before the same become delinquent all taxes, assessments and
governmental charges imposed upon it or upon its property except
to the extent contested in good faith.
6.02 Transfers of Assets. Borrower shall not sell, convey,
transfer, lease, license, assign or otherwise dispose of (whether
in one transaction or in a series of transactions) all or
substantially all of its assets (whether now owned or hereafter
acquired) to any person or entity, or permit any of its
subsidiaries to do so. Borrower shall not sell, convey,
transfer, lease, license, assign or otherwise dispose of (whether
in one transaction or in a series of transactions) (i) any of the
Pre-Approval Collateral (as defined in the Security Agreement)
until such time as the Pre-Approval Commitment has been
terminated and all obligation of Borrower under the Loan
Documents with respect to Pre-Approval Advances have been
irrevocably paid and satisfied in full and (ii) any of the First
Year Sales Collateral (as defined in the Security Agreement)
until such time as the First Year Sales Commitment has been
terminated and all obligations of Borrower under the Loan
Documents with respect to First Year Sales Advances have been
irrevocably paid and satisfied in full.
6.03 Liens, Etc. Borrower shall not create or allow to be
created, or permit any of its subsidiaries to create or allow to
be created, any lien, mortgage, pledge, security interest or
other encumbrance (collectively "Liens"), upon or with respect to
(i) any of the Pre-Approval Collateral (as defined in the
Security Agreement) until such time as the Pre-Approval
Commitment has been terminated and all obligation of Borrower
under the Loan Documents with respect to Pre-Approval Advances
have been irrevocably paid and satisfied in full and (ii) any of
the First Year Sales Collateral (as defined in the Security
Agreement) until such time as the First Year Sales Commitment has
been terminated and all obligations of Borrower under the Loan
Documents with respect to First Year Sales Advances have been
irrevocably paid and satisfied in full. Notwithstanding the
preceding sentence, Borrower may create Liens upon such
Collateral securing indebtedness which is junior and subordinate
in right of payment to Borrower's obligations to Lender under the
Loan Documents ("Junior Liens") so long as, prior to the creation
of such Junior Liens, Lender has consented in writing to such
Junior Liens (such consent not to be unreasonably withheld) and
Lender and the holder of such Junior Liens have entered into a
subordination agreement in form and substance reasonably
satisfactory to the Lender providing for the subordination of the
indebtedness secured by the Junior Liens to the obligations of
Borrower under the Loan Documents.
6.04 Debt. Borrower shall not create or allow to be created or
permit any of its subsidiaries to create or allow to be created,
any Debt which is senior in right of payment to Borrower's
indebtedness pursuant to this Agreement.
<PAGE>
6.05 Corporate Existence; Business. Borrower will (i) maintain
and preserve in full force and effect its corporate existence,
and (ii) continue to engage in the business in which it is
engaged on the date hereof.
6.06 SEC Information. Borrower will provide to Lender a copy of
any and all forms, reports, or other documents filed with the
Securities and Exchange Commission contemporaneously with
providing such documents to the Securities and Exchange
Commission.
ARTICLE VII
EVENTS OF DEFAULT
7.01 Events of Default. At any time at which any obligations of
the Borrower are outstanding under the Loan Documents with
respect to any Advances, the occurrence of each of the following
events shall be considered an event of default ("Event of
Default"):
(a) Borrower shall fail to pay any principal of, or interest on,
either of the Notes when the same becomes due and payable and
four (4) Business Days have elapsed following receipt of notice
of such non-payment from Lender to Borrower;
(b) Any representation or warranty made by Borrower under or in
connection with this Agreement shall prove to have been incorrect
in any respect when made and such incorrect representation or
warranty has a material adverse effect on Borrower or
significantly impairs the prospect that Lender will be repaid in
accordance with the terms of this Agreement and is not cured
within thirty (30) days of receipt of notice by Borrower;
(c) Borrower shall fail to perform or observe, in any respect,
any term, covenant or agreement contained in this Agreement
required to be performed or observed by Borrower (other than
under Section 6.02 or 6.03 above) and such failure to perform or
observe any term, covenant or agreement contained in this
Agreement has a material adverse effect on Borrower or
significantly impairs the prospect that Lender will be repaid in
accordance with the terms of this Agreement and is not cured
within thirty (30) days after receipt of notice by Borrower;
(d) Borrower shall fail to perform or observe, in any respect,
the provisions of Section 6.02 or 6.03 above except as provided
in Section 8.02; and, in the case of Section 6.03, if such Event
of Default is based on a tax lien, judgment lien or materialman's
lien, such judgment shall continue without discharge or stay for
a period of sixty (60) days;
(e) One or more judgments or orders for the payment of money
shall be entered against Borrower or any of its subsidiaries
involving in the aggregate a liability of [*] or more, and each
such judgment or order shall continue without discharge or stay
for a period of sixty (60) days;
(f) Borrower or any of its subsidiaries shall (i) commence a
voluntary case under the federal bankruptcy laws (as now or
hereafter in effect), (ii) file a petition seeking to take
advantage of any other laws relating to bankruptcy, insolvency,
reorganization, winding up or composition for adjustment of
debts, (iii) consent to or fail to contest in a timely and
<PAGE>
appropriate manner any petition filed against it in an
involuntary case under such bankruptcy laws or other laws, (iv)
apply for or consent to, or fail to contest in a timely and
appropriate manner, the appointment of, or the taking of
possession by, a receiver, custodian, trustee, or liquidator of
itself or of a substantial part of its property, (v) admit in
writing its inability to pay its debts as they become due, (vi)
make a general assignment for the benefit of creditors, or (vii)
take any corporate action for the purpose of authorizing any of
the foregoing;
(g) A case or other proceeding shall be commenced against
Borrower or any of its subsidiaries in any court of competent
jurisdiction seeking (i) relief under the federal bankruptcy laws
(as now or hereafter in effect) or under any other laws relating
to bankruptcy, insolvency, reorganization, winding up or
adjustment of debts, or (ii) the appointment of a trustee,
receiver, custodian, liquidator or the like for Borrower or any
of its subsidiaries or for all or any substantial part of their
respective assets, and such case or proceeding shall continue
without dismissal or stay for a period of sixty (60) consecutive
days, or an order granting the relief requested in such case or
proceeding (including, but not limited to, an order for relief
under such federal bankruptcy laws) shall be entered;
(h) A Change of Control shall occur;
(i) Any Debt of Borrower or any of its subsidiaries in excess of
[*] shall be declared to be due and payable, or required to be
prepaid (other than by a regularly scheduled required prepayment)
prior to the stated maturity thereof;
(j) Borrower shall fail to meet the continued listing criteria
of the Nasdaq National Market or Nasdaq Smallcap Market at any
time and shall not cure such failure within thirty (30) days of
receipt of notice by Borrower of the occurrence thereof; or
(k) Borrower shall violate or breach the provisions of Section
14.5 of the Services Agreement.
7.02 Default. If any Event of Default shall occur and be
continuing, then Lender (i) may, by notice to Borrower, declare
its obligation to make Advances to be terminated, whereupon the
same shall forthwith terminate, and (ii) may, by notice to
Borrower, declare each Note, all interest thereon and all other
amounts payable under this Agreement to be forthwith due and
payable, whereupon each Note, all such interest and all such
amounts shall become and be, forthwith due and payable, without
presentment, demand, protest or further notice of any kind, all
of which are hereby expressly waived by Borrower; provided
however that if an Event of Default specified in Section 7.01(f)
and (g) shall occur, (A) the obligation of Lender to make
Advances shall automatically be terminated and (B) each Note, all
such interest and all such amounts shall automatically become and
be due and payable, without presentment, demand, protest or any
notice of any kind, all of which are hereby expressly waived by
Borrower.
ARTICLE VIII
CERTAIN AGREEMENTS OF LENDER
8.01 Subordination. Effective upon the initial Advance, Lender
agrees that the indebtedness of Borrower under the Notes (the
"Subordinated Debt") is subordinate in right of
<PAGE>
payment to the prior payment of the indebtedness of Borrower under
the Biogen Loan Agreement up to, but only up to, an aggregate amount of
[*] (the "Senior Debt"), except as provided in this Section 8.01.
Principal and interest due and payable from Borrower to Lender
under the Subordinated Debt may be paid in accordance with the
terms and conditions of this Agreement until and unless the
holder of the Senior Debt: notifies Borrower in writing to cease
making such payments on the Subordinated Debt as a result of any
default or event which has occurred that entitles the holder of
the Senior Debt to accelerate or declare due and payable the
Senior Debt prior to its stated maturity; and declares the Senior
Debt due and payable. Borrower shall not resume making payments
to Lender until it receives written notice from the holder of the
Senior Debt stating that such default or event has abated or been
cured and that Borrower may resume making payments; provided,
however, that the holder of the Senior Debt shall provide such
notice promptly upon the abatement or cure, to its reasonable
satisfaction, or such default or event. The holder of the Senior
Debt shall send to Lender concurrently any notice it sends to
Borrower to cease making payments, or any notice of default or
other event that would cause a deferral of payments, on the
Subordinated Debt. In addition, Lender shall enter into a
subordination agreement reflecting the foregoing subordination in
form and substance reasonably acceptable to Biogen and Lender.
8.02 Inventory Financing. Upon the written request of Borrower,
Lender agrees to negotiate in good faith with Borrower and a
third-party lender, which proposes to provide to Borrower
inventory financing with respect to the Product (the "Financing
Party"), to enter into an intercreditor agreement on terms
reasonably satisfactory to Lender, providing that, effective upon
the repayment of all of Borrower's obligations under the Loan
Documents with respect to Pre-Approval Advances (i) each of
Lender and the Financing Party will have a security interest in
the First Year Sales Collateral, (ii) the Financing Party will
serve as collateral agent for the First Year Sales Collateral for
the benefit of Lender and the Financing Party, and (iii) the
obligations of Borrower to the Financing Party shall be
subordinate to the prior payment in full of all of Borrower's
obligations under the Loan Documents with respect to First Year
Sales Advances.
ARTICLE IX
MISCELLANEOUS
9.01 Amendments, Etc. No amendment or waiver of any provision of
this Agreement or the Notes, nor consent to any departure by
Borrower therefrom, shall in any event be effective unless the
same shall be in writing and signed by Borrower and Lender, and
then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
9.02 Notices, Etc. All notices and other communications provided
for hereunder shall be in writing, shall specifically refer to
this Agreement, shall be addressed to the receiving party's
address set forth below or to such other address as a party may
designate by notice hereunder, and shall be deemed to have been
sufficiently given for all purposes if (i) mailed by first class
certified or registered mail, postage prepaid, (ii) sent by
express delivery service, (iii) personally delivered, or (iv)
made by telecopy or facsimile transmission.
If to Borrower: CV Therapeutics, Inc.
<PAGE>
3172 Porter Drive
Palo Alto, CA 94304
Attn: Cynthia L. Clark, General Counsel
Facsimile: (650) 858-0388
with a copy to: Cooley Godward LLP
Five Palo Alto Square
3000 El Camino Real
Palo Alto, CA 94306-2155
Attn: Robert L. Jones
Facsimile: (650) 857-0663
If to Lender: Quintiles Transnational Corp.
4709 Creekstone Drive
Riverbirch Bldg., Suite 200
Durham, NC 27703
Attn: John S. Russell
Facsimile: (919) 998-2759
with a copy to: Smith, Anderson, Blount, Dorsett,
Mitchell & Jernigan, L.L.P.
2500 First Union Capitol Center
Raleigh, NC 27601
Attn: Gerald F. Roach, Esq.
Facsimile: (919) 821-6800
If to Innovex: Innovex, Inc.
10 Waterview Boulevard
Parsippany, NJ 07054
Attn: David Stack, President
Facsimile: (973) 257-4581
with a copy to: L. Stephen Garlow
General Counsel
10 Waterview Boulevard
Parsippany, NJ 07054
Facsimile: (973) 257-4581
9.03 No Waiver; Remedies. No failure on the part of Lender to
exercise, and no delay in exercising, any right hereunder or
under the Notes shall operate as a waiver thereof; nor shall any
single or partial exercise of any such right preclude any other
or further exercise thereof or the exercise of any other right.
The remedies herein provided are cumulative and not exclusive of
any remedies provided by law.
9.04 Right of Set-off. Lender is hereby authorized at any time
and from time to time, to the fullest extent permitted by law, to
set off and apply any milestone payment obligation by Lender to
Borrower under the Services Agreement against any and all of the
obligations of Borrower now or hereafter existing under this
Agreement and the Notes, whether or not Lender
<PAGE>
shall have made any demand under this Agreement or the Notes and although
such obligations may be unmatured. Lender agrees promptly to notify
Borrower after any such set-off and application, provided that
the failure to give such notice shall not affect the validity of
such setoff and application. The rights of Lender under this
Section 9.04 are in addition to other rights and remedies
(including, without limitation, other rights of set-off) which
Lender may have.
9.05 Attorneys' Fees. In the event that any dispute among the
parties to this Agreement should result in litigation, the
prevailing party in such dispute shall be entitled to recover
from the losing party all fees, costs and expenses enforcing any
right of such prevailing party under or with respect to this
Agreement, including without limitation, such reasonable fees and
expenses of attorneys and accountants, which shall include,
without limitation, all fees, costs and expense of appeals.
9.06 Binding Effect; Assignment. This Agreement shall be binding
upon and inure to the benefit of Borrower and Lender and their
respective successors and assigns, provided that neither Borrower
nor Lender may assign or transfer any or all of its rights or
obligations under the Loan Documents without the prior written
consent of the other party; provided however, that Lender may at
any time assign or transfer any or all of its rights or
obligations under the Loan Documents to an Affiliate.
9.07 Governing Law; Consent to Jurisdiction . This Agreement and
the Notes shall be governed by, and construed in accordance with,
the laws of the State of Delaware, without reference to the
conflicts or choice of law principals thereof. Borrower and
Lender hereby irrevocably consents to the exclusive personal
jurisdiction of any state or federal courts located in Delaware,
in any action, claim or other proceeding arising out of any
dispute in connection with the Loan Documents, any rights or
obligations hereunder or the performance of such rights and
obligations. Lender and Borrower agree to waive their respective
rights to a jury trial with respect to any action, claim, or
other proceeding arising out of any dispute in connection with
the Loan Documents or the Services Agreement, any rights or
obligations hereunder or thereunder, or the performance of such
rights and obligations.
9.08 Severability. To the extent any provision of this Agreement
is prohibited by or invalid under applicable law, such provision
shall be ineffective to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Agreement.
9.09 Entire Agreement. This Agreement and the other Loan
Documents embody the entire agreement and understanding between
the parties hereto and supersede all prior oral or written
agreements and understandings relating to the subject matter
hereof. No statement, representation, warranty, covenant or
agreement of any kind not expressly set forth in the Loan
Documents shall affect, or be used to interpret, change or
restrict, the express terms and provisions of the Loan Documents.
9.10 Inconsistent Terms. If any provision contained in this
Agreement is in conflict with, or inconsistent with, any
provision of the Services Agreement, then the provision contained
in this Agreement shall control.
<PAGE>
9.11 Further Action. Each party shall, without further
consideration, take such further action and execute and deliver
such further documents as may be reasonably requested by the
other party in order to carry out the provisions and purposes of
this Agreement.
9.12 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original and
all of which, when taken together, shall constitute one and the
same instrument.
REST OF PAGE INTENTIONALLY LEFT BLANK;
SIGNATURES ON FOLLOWING PAGE
<PAGE>
Signature Page to Loan Agreement
In Witness Whereof, the parties hereto have caused this Loan
Agreement to be executed by their respective officers thereunto
duly authorized, as of the date first above written.
BORROWER:
CV THERAPEUTICS, INC.
By: /s/ Louis Lange
Name: Louis G. Lange
Title: Chairman & CEO
LENDER:
QUINTILES TRANSNATIONAL CORP.
By:
Name:
Title:
<PAGE>
Signature Page to Loan Agreement
In Witness Whereof, the parties hereto have caused this Loan
Agreement to be executed by their respective officers thereunto
duly authorized, as of the date first above written.
BORROWER:
CV THERAPEUTICS, INC.
By:
Name:
Title:
LENDER:
QUINTILES TRANSNATIONAL CORP.
By:/s/ James L. Bierman
Name: James L. Bierman
Title: Senior Vice President
Corporate Development
<PAGE>
EXHIBIT A
DEFINITIONS
"Affiliate" shall have the meaning given such term in Rule
12b-2 of the Exchange Act.
"Agreement" or "Loan Agreement" shall mean this Loan
Agreement between Lender and Borrower.
"Biogen Loan Agreement" shall mean the Loan Agreement dated
March 7, 1997 between Borrower and Biotech Manufacturing Ltd., a
wholly-owned subsidiary of Biogen, Inc. ("Biogen"), as amended
from time to time.
"Business Day" shall mean any day other than a Saturday,
Sunday or legal holiday on which banks in New York, New York are
open for the conduct of their banking business.
"Change of Control" shall mean the occurrence of any of the
following events: (i) the acquisition, whether directly or
indirectly, by any person or entity, including a "group" as
defined in Section 13(d)(3) of the Exchange Act, of more than
thirty percent (30%) of the Common Stock of Borrower; (ii)
Borrower shall merge or consolidate with or into another
corporation with the effect that the persons who were the
shareholders of Borrower immediately prior to the effective time
of such merger or consolidation hold less than fifty-one percent
(51%) of the combined voting power of the outstanding securities
of the surviving corporation of such merger or the corporation
resulting from such consolidation ordinarily (and apart from
rights accruing under special circumstances) having the right to
vote in the election of directors; or (iii) at any time during
any calendar year, fifty percent (50%) or more of the members of
the full Board of Directors of Borrower shall have resigned or
been removed or replaced.
"Debt" shall mean (i) indebtedness for borrowed money, (ii)
obligations evidenced by bonds, debentures, notes or other
similar instruments, (iii) obligations to pay the deferred
purchase price of property or services, (iv) obligations as
lessee under leases which shall have been or should be, in
accordance with generally accepted accounting principles,
recorded as capital leases, and (v) obligations under direct or
indirect guaranties in respect of, and obligations (contingent or
otherwise) to purchase or otherwise acquire, or otherwise to
assure a creditor against loss in respect of, indebtedness or
obligations of others of the kinds referred to in clauses (i)
through (iv) above.
"Default Conversion Price" shall mean (a) the Fair Market
Value of the Common Stock, multiplied by (b) [*].
"Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
"Fair Market Value" of the Common Stock on any date shall
mean (a) if the Common Stock is then traded on a securities
exchange or the Nasdaq National Market, the average of the
closing prices of the Common Stock on such exchange or market
over the ten (10) trading days immediately prior to such date;
(b) if the Common Stock is then regularly traded over-the-
counter, the average of the sale prices or secondarily the
closing bid of the Common Stock over the ten (10) trading days
immediately prior to such date; or (c) if there is no active
public market for the Common Stock, the fair market value thereof
shall be determined as of such date by a
<PAGE>
nationally recognized investment banking firm chosen in good faith by
Borrower's board of directors.
"Knowledge" of the Borrower shall mean the knowledge of one
or more of Borrower's executive officers.
"NDA Filing" shall have the meaning given such term in the
Services Agreement.
"Pre-Approval Maturity Date" shall mean the earlier to occur
of (a) [ * ] following Product Launch, or (b) [ * ] following the
date of the NDA Filing (as defined in the Services Agreement).
"Prime Rate" shall mean the rate which Bank of America at
either Charlotte, North Carolina or San Francisco, California
announces from time to time as its prime rate, the Prime Rate to
change when and as such prime rate changes.
"Product" shall have the meaning given such term in the
Services Agreement.
"Product Launch" shall have the meaning given such term in
the Services Agreement.
"Ranolazine License Agreement" shall mean the License
Agreement dated as of March 27, 1996 between Syntex (U.S.A.),
Inc., as licensor, and Borrower, as licensee, as amended from
time to time.
<PAGE>
EXHIBIT B
PRE-APPROVAL NOTE
<PAGE>
PROMISSORY NOTE
$10,000,000 May 5, 1999
FOR VALUE RECEIVED, CV THERAPEUTICS, INC., a Delaware
corporation ("Borrower"), hereby promises to pay to the order of
QUINTILES TRANSNATIONAL CORP., a North Carolina corporation
("Lender"), in lawful money of the United States of America in
immediately available funds, the principal sum of Ten Million
Dollars ($10,000,000) or, if less, the aggregate unpaid principal
amount of all Advances (as defined below) made by Lender to
Borrower pursuant to the Loan Agreement (as defined below),
together with accrued and unpaid interest thereon, on the Pre-
Approval Maturity Date. The interest shall accrue on the unpaid
principal amount of each Advance at the rates and in the manner
provided in the Loan Agreement. Payment of this Note shall be
made as provided in the Loan Agreement. Borrower may prepay this
Note in full or in part at any time without penalty. Capitalized
terms used but not defined herein shall have the meanings
ascribed to them in the Loan Agreement.
Each Advance made by Lender to Borrower, and all payments
made on account of the principal amount hereof, shall be recorded
by Lender and endorsed on the grid attached hereto which is a
part of this Note. Failure to so record and endorse such
Advances and payments, however, shall not affect Borrower's
obligations in respect of such Advances.
This Note is the Pre-Approval Note referenced in the Loan
Agreement between Borrower and Lender dated as of the date of
this Note (as same may be amended from time to time, the "Loan
Agreement"), and is entitled to the benefits thereof. The Loan
Agreement, among other things, (i) provides for the making of
certain Pre-Approval Advances ("Advances") by Lender to Borrower
from time to time, the indebtedness of Borrower resulting from
each such Advance being a principal amount evidenced by this
Note, (ii) provides that this Note is secured by, and Borrower
has granted a security interest in, certain of its assets as set
forth in that certain Security Agreement, dated as of the same
date as this Note, and (iii) provides that, under certain
circumstances set forth in Section 2.07 of the Loan Agreement,
Lender may convert the outstanding principal balance of and all
accrued interest on this Note, in whole or in part, into shares
of Common Stock in accordance with the provisions of the Loan
Agreement.
In case an Event of Default shall occur and be continuing,
the unpaid principal amount of, and accrued interest on, this
Note may be declared to be due and payable in the manner and with
the effect provided in the Loan Agreement.
Borrower hereby waives presentment, demand, notice, protest
and all other demands and notices in connection with the
delivery, acceptance, performance and enforcement of this Note.
<PAGE>
Signature Page to Pre-Approval Note
This Note shall be governed by and construed in accordance
with the law of the State of Delaware without regard to the
conflicts of law rules of such state.
BORROWER:
CV THERAPEUTICS, INC.
By: /s/ Louis Lange
Name: Louis G. Lange
Title:Chairman & CEO
<PAGE>
ADVANCES AND PAYMENTS OF PRINCIPAL
Date Amount Amount of Unpaid Notation
of Principal Principal Made By
Advance Paid or Balance
Prepaid
<PAGE>
EXHIBIT C
FIRST YEAR SALES NOTE
<PAGE>
PROMISSORY NOTE
May 5, 1999
FOR VALUE RECEIVED, CV THERAPEUTICS, INC., a Delaware
corporation ("Borrower"), hereby promises to pay to the order of
QUINTILES TRANSNATIONAL CORP., a North Carolina corporation
("Lender"), in lawful money of the United States of America in
immediately available funds, the aggregate principal amount of
all Advances (as defined below) made by Lender to Borrower
pursuant to the Loan Agreement (as defined below) and endorsed on
the grid attached hereto, which is a part of this Note, together
with accrued and unpaid interest thereon. The interest shall
accrue on the unpaid principal amount of each Advance at the
rates and in the manner provided in the Loan Agreement. The
unpaid principal amount of, and accrued interest on, each Advance
is due and payable to Lender on the date which is twenty four
(24) months after the date on which such Advance was made, as
provided in the Loan Agreement. Borrower may prepay this Note in
full or in part at any time without penalty. Any capitalized
terms used but not defined herein shall have the meanings
ascribed to them in the Loan Agreement.
Each Advance made by Lender to Borrower, and all payments
made on account of the. principal amount hereof, shall be
recorded by Lender and endorsed on the grid attached hereto which
is a part of this Note. Failure to so record and endorse such
Advances and payments, however, shall not affect Borrower's
obligations in respect of such Advances.
This Note is the First Year Sales Note referenced in the
Loan Agreement between Borrower and Lender dated as of the date
of this Note (as same may be amended from time to time, the "Loan
Agreement"), and is entitled to the benefits thereof. The Loan
Agreement, among other things, (i) provides for the making of
certain First Year Sales Advances ("Advances") by Lender to
Borrower from time to time, the indebtedness of Borrower
resulting from each such Advance being a principal amount
evidenced by this Note, (ii) provides that this Note is secured
by, and Borrower has granted a security interest in, certain of
its assets as set forth in that certain Security Agreement, dated
as of the same date as this Note, and (iii) provides that Lender
may, under certain circumstances set forth in Section 2.07 of the
Loan Agreement, convert the outstanding principal balance of and
all accrued interest on this Note, in whole or in part, into
shares of Common Stock in accordance with the provisions of the
Loan Agreement.
In case an Event of Default shall occur and be continuing,
the unpaid principal amount of, and accrued interest on, this
Note may be declared to be due and payable in the manner and with
the effect provided in the Loan Agreement.
Borrower hereby waives presentment, demand, notice, protest
and all other demands and notices in connection with the
delivery, acceptance, performance and enforcement of this Note.
<PAGE>
Signature Page to First Year Sales Note
This Note shall be governed by and be construed in
accordance with the laws of the State of Delaware without regard
to the conflicts of law rules of such state.
BORROWER:
CV THERAPEUTICS, INC.
By: /s/ Louis Lange
Name: Louis G. Lange
Ttitle: Chairman & CEO
<PAGE>
ADVANCES AND PAYMENTS OF PRINCIPAL
Date Amount Amount of Unpaid Notation
of Principal Principal Made By
Advance Paid or Balance
Prepaid
<PAGE>
Schedule 4.13
Debt of Borrower
Long-term debt consists of the following:
Biogen Loan Agreement in the amount of $7,500,000 at prime
plus 1.0% (8.75% at March 31, 1999) with interest due annually on
March 10th; first $3.0 million of principal due in equal
installments beginning March 10, 2000 through February 10, 2005;
remaining $4.5 million to be deducted from future royalty
payments or repaid through the issuance of common stock. An
additional $4.5 million to be made available upon achievement of
certain development milestones and this may be deducted from
future royalty payments or repaid through the issuance of common
stock.
Future minimum lease payments as of March 31, 1999 for
noncancelable capital lease with Mellon US Leasing, a Division of
Mellon US Leasing Corporation, is as follows:
1999 $ 83,564
2000 $111,419
2001 $111,419
2002 $162,918
Total minimum payments $469,320
Less amount representing (70,932)
interest
Present value of future $398,388
lease payments
Guarantor of second mortgage from Imperial Bank for Andrew
W. Wolff, Vice President Clinical Research and Development of
Borrower, and Dianne Budd, his wife, dated October 27, 1997 in
the original amount of $75,000. The maturity date of the second
mortgage is October 28, 2002.
<PAGE>
Schedule 4.14
Lien, Mortgage, Pledge, or Security Interest of Borrower
On Borrower's properties or assets:
Lien Holder: Ice Machines Incorporated
1228 Folsom St.
San Francisco
Financing Statement on leased Crystal Tips Flaker,
Model 404-UAF-161 filed May 21, 1997, pursuant to
equipment lease dated May 13, 1997.
Lien Holder: OCE-USA, Inc.
5450 N. Cumberland
Chicago, IL 60656
Financing Statement on leased copier, Oce 3045
filed September 11, 1997 pursuant to Term Rental
Agreement dated June 6, 1997.
On the Collateral:
None.
[ * ] = Certain confidential information contained in this
document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant
to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.
<PAGE>
Certain confidential information contained in this document,
marked by brackets, has been omitted and filed separately with
the Securities and Exchange Commission pursuant to Rule 24b-2 of
the Securities Exchange Act of 1934, as amended.
Exhibit 10.68
SECURITY AGREEMENT
This Security Agreement is dated and entered into as of May
5, 1999, by and between CV Therapeutics, Inc., a Delaware
corporation ("Borrower"), and quintiles transnational corp., a
North Carolina corporation ("Lender").
WITNESSETH:
Whereas, Borrower and Lender are parties to a Loan
Agreement (as amended, modified or supplemented from time to
time, the "Loan Agreement") dated as of the same date hereof,
pursuant to which, among other things, Borrower is delivering to
Lender the Pre-Approval Note and First-Year Sales Note (each as
defined in the Loan Agreement) (collectively, the "Notes"); and
Whereas, it is a condition precedent to the performance of
Lender under the Loan Agreement that Borrower enter into this
Security Agreement;
Now, Therefore, in consideration of the benefits to
Borrower, the receipt and legal sufficiency of which are hereby
acknowledged, Borrower hereby makes the following representations
and warranties to Lender and hereby covenants and agrees with
Lender as follows:
1. Definitions. The following terms, as used in this
Agreement, shall have the following meanings:
"Borrower NDA Letter" shall mean the letter, in the form of
Exhibit A attached hereto, delivered by Lender to Escrow Agent on
the date of this Agreement, which is signed by Lender as the
"former owner" of the NDA and addressed to the FDA, but which
otherwise is executed by Lender in blank.
"Collateral" shall mean the Pre-Approval Collateral and the
First-Year Sales Collateral.
"Copyrights" shall mean any U.S. copyright to which
Borrower now or hereafter has title, as well as any application
for a U.S. copyright hereafter made by Borrower.
"Event of Default" shall have the meaning given such term in
the Loan Agreement.
"Escrow Agent" shall mean Fort Knox Escrow Services, Inc.
"FDA" shall have the meaning given such term in the
Services Agreement.
<PAGE>
"First-Year Sales Collateral" shall mean all of Borrower's
right, title and interest in, to and under all accounts, accounts
receivable and proceeds in respect of any sales of the Product in
the Territory, wherever located, however arising or created,
whether now existing or hereafter from time to time acquired or
created, together with all additions and accessions thereto or
replacements thereof, and any proceeds or products thereof.
"First-Year Sales Obligations" shall mean all indebtedness,
obligations and liabilities of Borrower to Lender under or in
connection with the First-Year Sales Note (as defined in the Loan
Agreement) and under or in connection with each of the Loan
Agreement and this Agreement with respect to the First-Year Sales
Note.
"Lender NDA Letter" shall mean the letter, in the form of
Exhibit B attached hereto, delivered by Borrower to Escrow Agent
on the date of this Agreement, which is signed by Borrower as the
"former owner" of the NDA and addressed to the FDA, but which
otherwise is executed by Borrower in blank.
"License Agreement" shall mean the License Agreement dated
as of March 27, 1996 between Syntex (U.S.A.), Inc., as licensor,
and Borrower, as licensee, as amended from time to time.
"Licensor" shall mean the licensor under the License
Agreement.
"NDA" shall mean the NDA for the Product which is the
subject of the NDA Filing as such terms are defined in the
Services Agreement.
"Obligations" shall mean the Pre-Approval Obligations and
the First-Year Sales Obligations.
"Pre-Approval Collateral" shall mean all of Borrower's
right, title and interest in, to and under the following,
wherever located, however arising or created, whether now
existing or hereafter from time to time acquired or created,
together with any and all additions and accessions thereto or
replacements thereof, and any proceeds or products thereof:
(a) All payments (including royalty payments) and proceeds
received or receivable by Borrower under the License Agreement in
respect of its license rights relating to the Product in the
Territory or pursuant to any license or any sublicense of such
license rights relating to the Product granted by Borrower under
the License Agreement;
(b) All payments (including royalty payments) and proceeds
received or receivable by Borrower pursuant to any assignment of
any rights in the Territory relating to the Product under the
License Agreement;
(c) All accounts, accounts receivable and proceeds in respect of
any sales of the Product in the Territory;
<PAGE>
(d) All regulatory applications and filings of Borrower related
to the Product in the Territory whether issued or pending,
including without limitation the NDA and all supplements,
records, and reports that are required to be maintained under
applicable FDA regulations and all correspondence to and from the
FDA;
(e) All clinical data related to the NDA;
(f) The proceeds of all claims that have been or may be asserted
by Borrower arising out of the Product in the Territory or
arising out of Borrower's rights relating to the Product in the
Territory under the License Agreement or any license or
sublicense granted by Borrower under the License Agreement or any
assignment of any rights under the License Agreement, each in
respect of Borrower's rights relating to the Product in the
Territory;
(g) The proceeds from: the assignment or license of the
Trademark and all trademark rights and interests with respect
thereto, including all suits or oppositions or cancellation
proceedings in the name of Borrower for past, present, and future
infringements of the Trademark or other trademark rights related
to the Product in the Territory; and the entire goodwill
associated with the business now or hereafter conducted by
Borrower connected with or symbolized by the Trademark;
(h) All proceeds from the assignment or license of Copyrights
related to the Product; and
(i) All books, records, files, computer information or files and
other materials or documents relating to or arising out of the
foregoing subsections (c), (d) and (e) of this definition;
provided, however, that Borrower may retain a copy of each item
in this subsection (i).
"Pre-Approval Obligations" shall mean all indebtedness,
obligations and liabilities of Borrower to Lender arising under
or in connection with the Pre-Approval Note (as defined in the
Loan Agreement) and under or in connection with each of the Loan
Agreement and this Agreement with respect to the Pre-Approval
Note.
"Product" shall have the meaning given such term in the
Services Agreement.
"Regulatory Collateral" shall mean the items referred to in
clauses (d) and (e) of the definition of Pre-Approval Collateral
above and the items referred to in clause (i) of the definition
of Pre-Approval Collateral to the extent related to such clauses
(d) and (e).
"Services Agreement" shall mean the Sales and Marketing
Services Agreement dated as of the same date as this Agreement
between Innovex, Inc. and Borrower.
"Territory" shall have the meaning given such term in the
Services Agreement.
"Trademark" shall mean the United States trademark for the
Product.
<PAGE>
2. Grant of Security Interests.
(a) As security for the prompt and complete payment and
performance when due of all of the Pre-Approval Obligations,
Borrower does hereby assign, transfer, pledge, and hypothecate
unto Lender, and does hereby grant to Lender a continuing
security interest of first priority in, all of the right, title,
and interest of Borrower in, to, and under the Pre-Approval
Collateral.
(b) As security for the prompt and complete payment and
performance when due of all of the First-Year Sales Obligations,
Borrower does hereby assign, transfer, pledge and hypothecate
unto Lender, and does hereby grant to Lender a continuing
security interest of first priority in, all of the right, title
and interest of Borrower in, to and under the First-Year Sales
Collateral.
3. Title to Collateral. Borrower represents and warrants that
it is the owner of the Collateral and has good, valid, marketable
and insurable title to the Collateral, free and clear of all
liens, security interests, and other encumbrances except for
those in favor of Lender.
4. Representations and Warranties of Borrower. Borrower
represents and warrants to Lender as of the date hereof as
follows:
(a) The execution and delivery by Borrower of this Agreement and
the financing statements and security interest filing statements
described herein (collectively, the "Security Documents"), and
the performance of the terms and obligations therein, are within
Borrower's corporate powers and have been duly authorized by all
necessary corporate action on the part of Borrower. The Security
Documents, when executed and delivered hereunder, will constitute
valid and legally binding obligations of Borrower enforceable
against Borrower in accordance with their terms, subject to (i)
applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors' rights generally, and (ii) the
effect of general principles of equity, regardless of whether
considered in a proceeding in equity or at law.
(b) No agreements or contracts relating to the Collateral are in
effect that would likely have a material adverse impact on
Borrower's business relating to the Collateral.
(c) The License Agreement is a valid and legally binding
agreement, in full force and effect, enforceable in accordance
with its terms. Borrower is not and, to the knowledge of
Borrower, Licensor is not, in breach of any material term or
obligation of the License Agreement. No event has occurred which
permits, or after notice or lapse of time or both would permit,
the revocation or termination of any or all of the rights and
obligations of any party under the License Agreement. To the
knowledge of Borrower, neither Borrower nor Licensor is liable to
any person or entity for infringement of patents or other
proprietary information under applicable law with respect to the
rights relating to the Product granted under the License
Agreement.
<PAGE>
(d) Except for the filing of financing statements with the State
of California and Santa Clara County, California, and, only in
the case of any trademark matters, filings with the United States
Patent and Trademark Office and, only in the case of any
copyright matters, filings with the United State Copyright
Office, necessary to perfect the security interests created
hereunder, no authorization, approval, or other action by, and no
notice to or filing with, any governmental authority or
regulatory body is required either for the grant by Borrower of
the security interest hereunder or for the execution, delivery,
or performance of this Agreement by Borrower or for the
perfection of such security interest or the exercise by Lender of
its rights hereunder to the Collateral. Upon the execution of
this Agreement and the completion of such filings, Lender will
have: a perfected, first priority security interest in the
Collateral, except for the Collateral referred to in subsections
(g) and (h) of the definition of Pre-Approval Collateral (the
"Intellectual Property Collateral"); and a first priority
security interest in the Intellectual Property Collateral.
(e) Neither the execution or delivery by Borrower of the
Security Documents, nor the performance of their respective terms
and obligations, will (i) violate Borrower's charter or bylaws,
(ii) constitute a breach or default under any agreement or
instrument to which Borrower is a party or by which Borrower is
bound, which breach or default would have a material adverse
effect on Borrower; (iii) violate any applicable law, rule or
regulation, which violation would have a material adverse effect
on Borrower, or (iv) violate any order, writ, injunction, decree
or judgment of any court or governmental authority applicable to
or binding upon Borrower, which violation would have a material
adverse effect on Borrower.
5. Transfer and Other Liens. The provisions of Sections 6.02,
6.03 and 8.02 of the Loan Agreement are hereby incorporated
herein by reference.
6. Other Financing Statements. Borrower represents, warrants
and covenants to and with Lender that: there exists no financing
statement (or similar statement or instrument of registration
under the law of any jurisdiction) covering or purporting to
cover any interest of any kind in the Collateral, and Borrower
will not execute or authorize to be filed in any public office
any financing statement (or similar statement or instrument of
registration under the law of any jurisdiction) relating to the
Pre-Approval Collateral or the First Year Sales Collateral, as
applicable, except financing statements (or similar statements or
instruments of registration under the law of any jurisdiction)
filed or to be filed in respect of and covering the security
interests granted to Lender by Borrower and except as permitted
by Sections 6.03 and 8.02 of the Loan Agreement.
7. Performance Under License Agreement. Borrower shall perform
all of its obligations under the License Agreement as necessary
to maintain Borrower's rights in such agreement in full force and
effect including without limitation any and all payment
obligations.
8. Notices Under License Agreement. Borrower shall provide
written notice to Lender within two (2) business days of
Borrower's receipt of any notice from Licensor (or Borrower's
delivery of any notice to Licensor) of the occurrence of
Borrower's breach or default or an event of default under the
License Agreement.
<PAGE>
9. Further Assurances. Borrower, upon request of Lender, will
deliver and execute or cause to be delivered and executed, in
form and content satisfactory to Lender, any financing,
continuation, termination, or security interest filing
statements, security agreement, assignment, or other document as
Lender may reasonably request in order to perfect, preserve,
maintain, or continue the perfection of Lender's security
interest in the Pre-Approval Collateral or the FirstYear Sales
Collateral, as applicable, or its priority, including without
limitation any document necessary to record Lender's security
interest in the items referred to in clause (g) of the definition
of Pre-Approval Collateral in the United States Patent and
Trademark Office. Borrower will pay the costs of filing any
financing, continuation, termination, or security interest filing
statement, assignment or other document as well as any
recordation or transfer tax required by law to be paid in
connection with the filing or recording thereof.
10. Power of Attorney. Borrower hereby appoints Lender as
Borrower's true and lawful attorney, with full power of
substitution, to do any or all of the following, in the name,
place, and stead of Borrower, as the case may be: (a) file this
Agreement (or an abstract hereof) or any other document
describing Lender's interest in the Collateral with any
appropriate governmental office (including, without limitation,
the State of California or any political subdivision thereof and
the United States Patent and Trademark Office or the United
States, Copyright Office); and (b) following an Event of Default,
(i) endorse Borrower's name on all applications, documents,
papers, and instruments necessary for Lender to use or maintain
the Pre-Approval Collateral or the First-Year Sales Collateral,
as applicable; (ii) ask, demand, collect, sue for, recover,
impound, receive, and give acquittance and receipts for money due
or to become due under or in respect of any of the Pre-Approval
Collateral or the First-Year Sales Collateral, as applicable;
(iii) file any claims or take any action or institute any
proceedings that Lender may deem necessary or desirable for the
collection of any of the Pre-Approval Collateral or the First-
Year Sales Collateral, as applicable, or otherwise enforce
Lender's rights with respect to any of the Pre-Approval
Collateral or the First-Year Sales Collateral, as applicable;
(iv) assign, pledge, convey, or otherwise transfer title in or
dispose of the Pre-Approval Collateral or the First-Year Sales
Collateral, as applicable, to any person; and (v) take any action
and execute any instrument that Lender may deem necessary or
advisable to accomplish the purposes of this Agreement. The
provisions of this Section 10 shall be subject to the provisions
of Sections 15(b) and 16.
11. Right to Inspect. Borrower grants to Lender and its
employees and agents the right to visit Borrower's plants,
corporate offices, and facilities to inspect the Pre-Approval
Collateral or the First Year Sales Collateral, as applicable, at
reasonable times during regular business hours with prior written
notice to Borrower.
12. Name of Borrower, Place(s) of Business, and Location of
Collateral. Borrower represents and warrants that its correct
legal name is as specified on the signature lines of this
Agreement, and each legal or trade name of Borrower for the
previous seven (7) years (if different from Borrower's current
legal name) is as specified below the signature lines of this
Agreement. Without the prior written notice to Lender of at
least sixty (60) days, Borrower will not change its name,
dissolve, merge, or consolidate with any other person. Borrower
warrants that the address of its chief executive office is as
specified below the signature lines of this Agreement. The Pre-
Approval Collateral and the First Year Sales Collateral, as
applicable, and
<PAGE>
all books and records pertaining thereto will be
located at Borrower's chief executive office specified below.
Borrower may establish a new location for the Pre-Approval
Collateral and the First Year Sales Collateral, as applicable, or
any part thereof, or the books and records concerning the Pre-
Approval Collateral and the First-Year Sales Collateral, as
applicable, or any part thereof, only if (a) it shall have given
to Lender prior written notice of its intention so to do, clearly
describing such new location and providing such other information
in connection therewith as Lender may request, and (b) with
respect to such new location, it shall have taken all action
satisfactory to Lender to maintain the security interest of
Lender in the Pre-Approval Collateral and the First Year Sales
Collateral, as applicable, intended to be granted hereby at all
times fully perfected and in full force and effect.
13. Taxes. Borrower shall pay as and when due and payable all
taxes, levies, license fees, assessments, and other impositions
levied on the Pre-Approval Collateral and the First Year Sales
Collateral, as applicable, or any part thereof for its use and
operations.
14. Litigation and Proceedings. Borrower shall commence and
diligently prosecute in its own name, as the real party in
interest, for its own benefit, and at its own expense, such
suits, administrative proceedings, or other actions for
infringement or other damages as are necessary to protect the Pre-
Approval Collateral and the First Year Sales Collateral, as
applicable. Borrower shall provide to Lender any information
with respect thereto reasonably requested by Lender.
15. Rights and Remedies upon Default.
(a) Borrower agrees that, if any Event of Default shall have
occurred and is continuing, then and in every such case, Lender,
in addition to any rights now or hereafter existing under
applicable law, and upon written notice to Borrower, shall have
all rights as a secured creditor under the Uniform Commercial
Code in all relevant jurisdictions and may:
(i) personally, or by agents or attorneys, immediately retake
possession of the Pre-Approval Collateral and the First Year
Sales Collateral, as applicable, or any part thereof;
(ii) instruct the obligor or obligors on any agreement,
instrument or other obligation constituting the Pre-Approval
Collateral and the First Year Sales Collateral, as applicable, to
make any payment required by the terms of such instrument or
agreement directly to Lender;
(iii)sell, assign or otherwise liquidate, or direct Borrower
to sell, assign or otherwise liquidate, any or all of the Pre-
Approval Collateral and the First Year Sales Collateral, as
applicable, or any part thereof, and take possession of the
proceeds of any such sale or liquidation;
(iv) take possession of the Pre-Approval Collateral and the First
Year Sales Collateral, as applicable, or any part thereof by
directing Borrower in writing to deliver the same to Lender at
any place or places designated by Lender; it being understood
that Borrower's
<PAGE>
obligation so to deliver the Pre-Approval
Collateral and the First Year Sales Collateral, as applicable, is
of the essence of this Agreement and that, accordingly, upon
application to a court of equity having jurisdiction, Lender
shall be entitled to a decree requiring specific performance by
Lender of said obligation;
(v) until the Pre-Approval Obligations are paid in full, or
released in accordance with the Loan Agreement, notify licensees
or assignees under the License Agreement in respect of rights
relating to the Product in the Territory, or any license,
sublicense or assignment pursuant thereto, to make payments
thereunder (including royalty payments) directly to Lender; and
(vi) until the Pre-Approval Obligations are paid in full, or
released in accordance with the Loan Agreement, to transfer the
Regulatory Collateral into Lender's name and otherwise act with
respect thereto as the outright owner thereof, and to complete
and submit the Lender NDA Letter to the FDA.
(b) Notwithstanding the foregoing, Lender shall refrain from
exercising its rights and remedies under Sections 15(a)(iii),
(iv) and (vi) above and Section 10 above with respect to (but
only with respect to) the Regulatory Collateral until the earlier
of the date (the "Reconveyance Date") which is (i) [*] days after
the date on which the Event of Default under the Loan Agreement
shall have occurred, (ii) the date on which an Event of Default
under Section 7.01(f) of the Loan Agreement shall have occurred,
or (iii) the date on which an Event of Default under Section
7.01(g) of the Loan Agreement shall have occurred. If Borrower
irrevocably pays and satisfies the Pre-Approval Obligations prior
to the Reconveyance Date, then (x) Lender will execute and
deliver to Borrower a proper instrument in order to duly transfer
to Borrower such of the Regulatory Collateral as may be in the
possession of Lender and (y) Borrower shall be entitled to
complete and submit the Borrower NDA Letter to the FDA. Prior to
the Reconveyance Date, Lender shall not, except as required by
applicable laws or regulations, communicate with the FDA
regarding the Regulatory Collateral, except through Borrower. If
prior to the Reconveyance Date Lender is required by applicable
law or regulations to communicate with the FDA regarding the
Regulatory Collateral, Lender shall promptly notify Borrower of
the nature and content thereof and Lender shall reasonably
cooperate with Borrower, at Borrower's expense, in all proper
respects in all regulatory matters relating to the Regulatory
Collateral.
(c) Borrower shall pay on demand all costs and expenses,
including, without limitation, reasonable attorneys' fees and
expenses, incurred by or on behalf of Lender (a) in enforcing the
Obligations, and (b) in connection with the taking, holding,
preparing for sale or other disposition, selling, managing,
collecting, or otherwise disposing of the Collateral. All of
such costs and expenses (collectively, the "Liquidation Costs")
together with interest thereon at the interest rate specified in
the Notes, from the date of payment until repaid in full, shall
be paid by Borrower to Lender on demand and shall constitute and
become a part of the Obligations secured hereby. Any proceeds of
sale or other disposition of the Collateral will be applied by
Lender to the payment of Liquidation Costs, and any balance of
such proceeds will be applied by Lender to the payment of the
remaining Obligations in such order and manner of application as
Lender may determine. Borrower hereby grants to Lender, as
security for the full and punctual
<PAGE>
payment and performance of the
Obligations, a continuing security interest in and lien on all
now or hereafter existing balances, credits, accounts, deposits,
and all other sums credited by, maintained with, or due from
Lender or any affiliate of Lender to Borrower; and regardless of
the adequacy of any Collateral or other means of obtaining
repayment of the Obligations, Lender may at any time and without
notice to Borrower set off the whole or any portion or portions
of any or all such balances, credits, accounts, deposits, and
other sums against any and all of the Obligations.
16. Additional Deliveries by the Parties and Related Provisions.
(a) On the date of this Agreement, Borrower shall execute and
deliver to Escrow Agent the Lender NDA Letter, which shall be
used by Lender only as described in Section 15(a).
(b) On the date of this Agreement, Lender shall execute and
deliver to Escrow Agent the Borrower NDA Letter, which shall be
used by Borrower only as described in Section 15(b).
(c) On the date of this Agreement, Lender shall execute and
deliver to Borrower termination statements on Form UCC-3 executed
by Lender for the purpose of terminating the financing statements
delivered by Borrower to Lender pursuant to the Loan Agreement
with respect to (but only with respect to) the Pre-Approval
Collateral. Such termination statements shall be used by
Borrower: only if no initial Pre-Approval Advance under the Loan
Agreement has been made or all Pre-Approval Obligations have been
irrevocably paid and satisfied in full; and, if no initial Pre-
Approval Advance has been made, only upon the occurrence of the
date which is ten (10) days after Borrower delivers to Lender a
written notice by Borrower addressed to Lender (a "Pre-Approval
Termination Notice") which expressly states that, as of the date
of such notice: (i) Borrower is obligated and intends to perform
the provisions of Section 5.2 of the Services Agreement, (ii) the
Pre-Approval Commitment of Lender under the Loan Agreement is
terminated, and (iii) Borrower has the financial resources to
fulfill its obligations under Section 5.2 of the Services
Agreement because Borrower has obtained sufficient financing from
a party other than Lender in lieu of utilizing the Pre-Approval
Commitment. In the event Borrower delivers to Lender a Pre-
Approved Termination Notice, Lender shall return to Borrower the
Lender NDA Letter.
17. Deficiency. If the sale or other disposition of the
Collateral fails to satisfy in full the Obligations, Borrower
shall remain liable to Lender for any deficiency; provided,
however, that upon the sale or other disposition of the
Collateral, the Obligations shall be decreased by an amount equal
to the greater of (a) the fair market value of the Collateral,
whether or not Lender actually receives fair market value upon
the sale or other disposition of the Collateral; or (b) the
amount that Lender actually receives upon the sale or other
disposition of the Collateral.
18. Remedies Cumulative. Each right, power, and remedy of
Lender as provided for in this Agreement or now or hereafter
existing at law or in equity or by statute or otherwise shall be
cumulative and concurrent and shall be in addition to every other
right, power, or remedy provided for in this Agreement or now or
hereafter existing at law or in equity or by statute or
otherwise, and the exercise or beginning of the exercise by
Lender of any one or more of such
<PAGE>
rights, powers, or remedies shall not preclude the simultaneous or later
exercise by Lender of any or all such other rights, powers, or remedies.
19. Pre-Approval Collateral. Notwithstanding anything to the
contrary contained herein, the provisions of this Security
Agreement shall only apply with respect to the Pre-Approval
Collateral until: the Pre-Approval Commitment shall terminate
and the Lender shall have no further obligation to make Pre-
Approval Advances under the Loan Agreement; and any Pre-Approval
Advances have been irrevocably paid and satisfied in full.
20. Amendments, Etc. No amendment or waiver of any provision of
this Agreement, nor consent to any departure by Borrower
herefrom, shall in any event be effective unless the same shall
be in writing and signed by Borrower and Lender, and then such
waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
21. Notices. All notices and other communications provided for
hereunder shall be in writing, shall specifically refer to this
Agreement and shall be deemed to have been sufficiently given to
Borrower and Lender for all purposes if mailed by first class
certified or registered mail, postage prepaid, express delivery
service, personally delivered, or telecopied, to the following
names and addresses:
If to Lender:
Quintiles Transnational Corp.
4709 Creekstone Drive
Riverbirch Bldg., Suite 200
Durham, NC 27703
Attention: John S. Russell
Facsimile: (919) 998-2759
with a copy to:
Smith, Anderson, Blount, Dorsett, Mitchell & Jernigan, L.L.P.
2500 First Union Capitol Center
Raleigh, NC 27601
Attention: Gerald F. Roach
Facsimile: (919) 821-6800
If to Borrower:
CV Therapeutics, Inc.
3172 Porter Drive
Palo Alto, California 94304
Attention: Cynthia L. Clark, General Counsel
Facsimile: (650) 858-0388
With a Copy to:
<PAGE>
Cooley Godward LLP
Five Palo Alto Square
3000 El Camino Real
Palo Alto, CA 94306
Attention: Robert L. Jones
Facsimile: (650) 857-0663
22. No Waiver; Remedies. No failure on the part of Lender to
exercise, and no delay in exercising, any right hereunder or
under the Loan Agreement or the Notes shall operate as a waiver
thereof; nor shall any single or partial exercise of any such
right preclude any other or further exercise thereof or the
exercise of any other right. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law.
23. Binding Effect; Assignment. This Agreement shall be binding
upon and inure to the benefit of Borrower and Lender and their
respective successors and assigns, provided that neither Borrower
nor Lender may assign or transfer any or all of its rights or
obligations under the Security Documents without the prior
written consent of the other party; provided however, that Lender
may at any time assign or transfer any or all of its rights or
obligations under the Security Documents to an affiliate.
24. Governing Law; Consent to Jurisdiction. This Agreement
shall be governed by, and construed in accordance with, the laws
of the State of Delaware, without reference to the conflicts or
choice of law principals thereof. Borrower and Lender hereby
irrevocably consents to the exclusive personal jurisdiction of
any state or federal courts located in Delaware, in any action,
claim or other proceeding arising out of any dispute in
connection with the Security Documents, any rights or obligations
hereunder or the performance of such rights and obligations.
Lender and Borrower agree to waive their respective rights to a
jury trial with respect to any action, claim, or other proceeding
arising out of any dispute in connection with the Security
Documents, any rights or obligations hereunder or thereunder, or
the performance of such rights and obligations.
25. Severability. To the extent any provision of this Agreement
is prohibited by or invalid under applicable law, such provision
shall be ineffective to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Agreement.
26. Entire Agreement. This Agreement and the other Security
Documents embody the entire agreement and understanding between
the parties hereto and supersede all prior oral or written
agreements and understandings relating to the subject matter
hereof. No statement, representation, warranty, covenant or
agreement of any kind not expressly set forth in the Security
Documents shall affect, or be used to interpret, change or
restrict, the express terms and provisions of the Security
Documents.
<PAGE>
27. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original and
all of which, when taken together, shall constitute one and the
same instrument.
[THE REMAINDER OF THE PAGE IS INTENTIONAL LEFT BLANK;
SIGNATURES ON FOLLOWING PAGE]
<PAGE>
[Signature Page to Security Agreement]
In Witness Whereof, the parties hereto have caused this
Agreement to be duly executed by their respective duly authorized
officers, as of the date first above written.
BORROWER:
CV Therapeutics, Inc.
By: /s/ L. Lange
Name: Louis G. Lange
Title:Chairman & CEO
Legal or tradename of Borrower for the previous seven (7) years
CV Therapeutics, Inc. (June 23, 1992 to present)
Cholesterex, Inc. (prior to June 23, 1992)
Address of chief executive office
3172 Porter Drive
Palo Alto, California 94306
LENDER:
Quintiles Transnational Corp.
By:
Name:
Title:
<PAGE>
[Signature Page to Security Agreement]
In Witness Whereof, the parties hereto have caused this
Agreement to be duly executed by their respective duly authorized
officers, as of the date first above written.
BORROWER:
CV Therapeutics, Inc.
By:
Name: Louis G. Lange
Title:Chairman & CEO
Legal or tradename of Borrower for the previous seven (7) years
CV Therapeutics, Inc. (June 23, 1992 to present)
Cholesterex, Inc. (prior to June 23, 1992)
Address of chief executive office
3172 Porter Drive
Palo Alto, California 94306
LENDER:
Quintiles Transnational Corp.
By: /s/ James L. Bierman
Name: James L. Bierman
Title: Senior Vice President
Corporate Development
<PAGE>
CV Therapeutics
Date:
Food and Drug Administration
Re:
Product: Ranolazine
NDA No:
Dear Sirs:
In accordance with 21 CFR 314.72, we are informing you that
effective as of the date specified below, ownership of the above-
referenced NDA was transferred to the following new owner:
Quintiles Transnational Corp.
4709 Creekstone Drive
Riverbirch Building, Suite 200
Durham, North Carolina 27703
Attention: Legal Department
A letter of acceptance of ownership is being provided to your
office under separate cover by Quintiles Transnational Corp. All
future correspondence concerning this NDA should be addressed to
Quintiles Transnational Corp. Thank you.
Sincerely,
/s/ Louis Lange
Name:
Title:
<PAGE>
QUINTILES Quintiles Transnational Corp.
Post Office Box 13979
Research Triangle Park, NC 27709-3979
919 9412000 / Fax 919 9419113
Date:
Food and Drug Administration
Re:
Product: Ranolazine
NDA No:
Dear Sirs:
In accordance with 21 CFR 314.72, we are informing you that
effective as of the date specified below, ownership of the above-
referenced NDA was transferred to the following new owner:
CV Therapeutics, Inc.
3172 Porter Drive
Palo Alto, California 94304
Attention: General Counsel
A letter of acceptance of ownership is being provided to your
office under separate cover by CV Therapeutics, Inc. All future
correspondence concerning this NDA should be addressed to CV
Therapeutics, Inc. Thank you.
Sincerely,
/s/ James L. Bierman
Name: James L. Bierman
Title: Senior Vice President,
Corporate Development
[ * ] = Certain confidential information contained in this
document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant
to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.
<PAGE>
PROMISSORY NOTE
$10,000,000 May 5, 1999
FOR VALUE RECEIVED, CV THERAPEUTICS, INC., a Delaware
corporation ("Borrower"), hereby promises to pay to the order of
QUINTILES TRANSNATIONAL CORP., a North Carolina corporation
("Lender"), in lawful money of the United States of America in
immediately available funds, the principal sum of Ten Million
Dollars ($10,000,000) or, if less, the aggregate unpaid principal
amount of all Advances (as defined below) made by Lender to
Borrower pursuant to the Loan Agreement (as defined below),
together with accrued and unpaid interest thereon, on the Pre-
Approval Maturity Date. The interest shall accrue on the unpaid
principal amount of each Advance at the rates and in the manner
provided in the Loan Agreement. Payment of this Note shall be
made as provided in the Loan Agreement. Borrower may prepay this
Note in full or in part at any time without penalty. Capitalized
terms used but not defined herein shall have the meanings
ascribed to them in the Loan Agreement.
Each Advance made by Lender to Borrower, and all payments
made on account of the principal amount hereof, shall be recorded
by Lender and endorsed on the grid attached hereto which is a
part of this Note. Failure to so record and endorse such
Advances and payments, however, shall not affect Borrower's
obligations in respect of such Advances.
This Note is the Pre-Approval Note referenced in the Loan
Agreement between Borrower and Lender dated as of the date of
this Note (as same may be amended from time to time, the "Loan
Agreement"), and is entitled to the benefits thereof. The Loan
Agreement, among other things, (i) provides for the making of
certain Pre-Approval Advances ("Advances") by Lender to Borrower
from time to time, the indebtedness of Borrower resulting from
each such Advance being a principal amount evidenced by this
Note, (ii) provides that this Note is secured by, and Borrower
has granted a security interest in, certain of its assets as set
forth in that certain Security Agreement, dated as of the same
date as this Note, and (iii) provides that, under certain
circumstances set forth in Section 2.07 of the Loan Agreement,
Lender may convert the outstanding principal balance of and all
accrued interest on this Note, in whole or in part, into shares
of Common Stock in accordance with the provisions of the Loan
Agreement.
In case an Event of Default shall occur and be continuing,
the unpaid principal amount of, and accrued interest on, this
Note may be declared to be due and payable in the manner and with
the effect provided in the Loan Agreement.
Borrower hereby waives presentment, demand, notice, protest
and all other demands and notices in connection with the
delivery, acceptance, performance and enforcement of this Note.
<PAGE>
Signature Page to Pre-Approval Note
This Note shall be governed by and construed in accordance
with the law of the State of Delaware without regard to the
conflicts of law rules of such state.
BORROWER:
CV THERAPEUTICS, INC.
By: /s/ Louis Lange
Name: Louis G. Lange
Title:Chairman & CEO
<PAGE>
ADVANCES AND PAYMENTS OF PRINCIPAL
Date Amount Amount of Unpaid Notation
of Principal Principal Made By
Advance Paid or Balance
Prepaid
<PAGE>
PROMISSORY NOTE
May 5, 1999
FOR VALUE RECEIVED, CV THERAPEUTICS, INC., a Delaware
corporation ("Borrower"), hereby promises to pay to the order of
QUINTILES TRANSNATIONAL CORP., a North Carolina corporation
("Lender"), in lawful money of the United States of America in
immediately available funds, the aggregate principal amount of
all Advances (as defined below) made by Lender to Borrower
pursuant to the Loan Agreement (as defined below) and endorsed on
the grid attached hereto, which is a part of this Note, together
with accrued and unpaid interest thereon. The interest shall
accrue on the unpaid principal amount of each Advance at the
rates and in the manner provided in the Loan Agreement. The
unpaid principal amount of, and accrued interest on, each Advance
is due and payable to Lender on the date which is twenty four
(24) months after the date on which such Advance was made, as
provided in the Loan Agreement. Borrower may prepay this Note in
full or in part at any time without penalty. Any capitalized
terms used but not defined herein shall have the meanings
ascribed to them in the Loan Agreement.
Each Advance made by Lender to Borrower, and all payments
made on account of the. principal amount hereof, shall be
recorded by Lender and endorsed on the grid attached hereto which
is a part of this Note. Failure to so record and endorse such
Advances and payments, however, shall not affect Borrower's
obligations in respect of such Advances.
This Note is the First Year Sales Note referenced in the
Loan Agreement between Borrower and Lender dated as of the date
of this Note (as same may be amended from time to time, the "Loan
Agreement"), and is entitled to the benefits thereof. The Loan
Agreement, among other things, (i) provides for the making of
certain First Year Sales Advances ("Advances") by Lender to
Borrower from time to time, the indebtedness of Borrower
resulting from each such Advance being a principal amount
evidenced by this Note, (ii) provides that this Note is secured
by, and Borrower has granted a security interest in, certain of
its assets as set forth in that certain Security Agreement, dated
as of the same date as this Note, and (iii) provides that Lender
may, under certain circumstances set forth in Section 2.07 of the
Loan Agreement, convert the outstanding principal balance of and
all accrued interest on this Note, in whole or in part, into
shares of Common Stock in accordance with the provisions of the
Loan Agreement.
In case an Event of Default shall occur and be continuing,
the unpaid principal amount of, and accrued interest on, this
Note may be declared to be due and payable in the manner and with
the effect provided in the Loan Agreement.
Borrower hereby waives presentment, demand, notice, protest
and all other demands and notices in connection with the
delivery, acceptance, performance and enforcement of this Note.
<PAGE>
Signature Page to First Year Sales Note
This Note shall be governed by and be construed in
accordance with the laws of the State of Delaware without regard
to the conflicts of law rules of such state.
BORROWER:
CV THERAPEUTICS, INC.
By: /s/ Louis Lange
Name: Louis G. Lange
Ttitle: Chairman & CEO
<PAGE>
ADVANCES AND PAYMENTS OF PRINCIPAL
Date Amount Amount of Unpaid Notation
of Principal Principal Made By
Advance Paid or Balance
Prepaid
<PAGE>
AMENDMENT TO LOAN AGREEMENT
This Amendment To Loan Agreement (this "Amendment") is dated
as of April 30, 1999, and entered into by and between CV
Therapeutics, Inc. ("Debtor"), a Delaware corporation, located at
3172 Porter Drive, Palo Alto, California 94304 and Biotech
Manufacturing Ltd., a wholly-owned subsidiary of Biogen, Inc.
("Secured Party"), located at St. Paul's Gate, New Street, St.
Helier, Jersey JE48Z, Channel Islands.
Recitals
A. Debtor and Secured Party are parties to that certain
Loan Agreement dated as of March 7, 1997, as amended from time to
time (the "Loan Agreement"). All capitalized terms used herein
without definition shall have the meaning ascribed to them in the
Loan Agreement.
B. Under the Loan Agreement, Debtor issued a Promissory
Note dated March 10, 1997, in favor of Secured Party in the
amount of Twelve Million Dollars ($12,000,000) (the "Note").
C. Under this Amendment, the parties desire to amend
certain provisions of the Loan Agreement and the Note as provided
below.
Agreement
Now Therefore, in consideration of the foregoing, and the
representations, warranties, and conditions set forth below, the
parties hereto, intending to be legally bound, hereby agree to
amend the Loan Agreement and Note as follows:
1. Amendments.
(a) Section 2.1(b) of the Loan Agreement is hereby deleted in
its entirety and replaced with the following:
"On the EFFECTIVE DATE CVT shall execute and deliver to
BML unsecured note, substantially in the form set forth
in Appendix A attached hereto and made a part hereof
(the "Note"), evidencing the Loan. CVT hereby
covenants not to incur or maintain any additional
senior indebtedness while any amount under the Note
remains unpaid. The Note shall be subordinated to all
debt of CVT existing as of March 7, 1999 and may be
prepaid by CVT at any time without penalty, in cash or,
in case of the Loan Remainder, in CVT Common Stock,
registered for resale, priced at its then Fair Market
Value (as defined in Section 2.1(i) below), subject to
the provisions of subsections (g) and (i) of this
Section 2.1."
(b) The first sentence of Section 2.1(c) of the Loan Agreement
is hereby deleted in its entirety and replaced with the
following:
<PAGE>
"The Note shall bear interest on the outstanding
principal amount thereof at a rate per annum equal
to Prime (as defined below) plus one and one half
percent (1.5%)."
(c) The following is added to the end of Section 5.1 of the Loan
Agreement:
"Notwithstanding the foregoing, all of CVT's
representations, warranties and covenants contained in
this Agreement shall terminate upon the termination or
expiration of this Agreement. The covenants set forth
in Section 2.1(b) shall survive termination or
expiration of this Agreement until all amounts due
under the Note have been repaid in full."
(d) The first sentence under the "Interest" section of the Note
shall be deleted and replaced with the following:
"Interest shall accrue on the outstanding
principal balance hereunder at a rate per annum
equal to Prime plus 1.5%."
(e) Section (j) under the "Event of Default" section of the Note
shall be deleted in its entirety and replaced with the following:
There occurs a Change of Control with Borrower.
"Change of Control" shall mean the occurrence of any of
the following events: (i) the acquisition, whether
directly or indirectly, by any person or entity,
including a "group" as defined in Section 13(d)(3) of
the Exchange Act, of more than forty percent (40%) of
the Common Stock of Borrower; (ii) Borrower shall merge
or consolidate with or into another corporation with
the effect that the persons who were the shareholders
of Borrower immediately prior to the effective time of
such merger or consolidation hold less than fifty-one
percent (51%) of the combined voting power of the
outstanding securities of the surviving corporation of
such merger or the corporation resulting from such
consolidation ordinarily (and apart from rights
accruing under special circumstances) having the right
to vote in the election of directors; or (iii) at any
time during any calendar year, fifty percent (50%) or
more of the members of the full Board of Directors of
Borrower shall have resigned or been removed or
replaced.
2. Miscellaneous.
(a) Waivers and Amendments. Any provision of this Amendment may
be amended, waived or modified only upon the written consent of
Debtor and Secured Party.
(b) Governing Law. This Amendment and all actions arising out
of or in connection with this Amendment shall be governed by and
construed in accordance with the laws of the State of Delaware,
without regard to the conflicts of law provisions of the State of
Delaware or of any other state.
<PAGE>
(c) Successors and Assigns. The rights and obligations of Debtor
and Secured Party shall be binding upon and benefit the
successors, assigns, heirs, administrators and transferees of the
parties.
(d) Entire Agreement. This Amendment together with the Loan
Agreement, the BML Agreement, the Biogen Agreement, the Stock
Purchase Agreement and the Note, constitute the full and entire
understanding and agreement between the parties with regard to
the subjects hereof and thereof.
(e) Severability of this Agreement. If any provision of this
Amendment shall be judicially determined to be invalid, illegal
or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or
impaired thereby.
(f) Counterparts. This Amendment may be executed in any number
of counterparts, each of which shall be an original, but all of
which together shall be deemed to constitute one instrument.
BIOTECH MANUFACTURING LTD. CV THERAPEUTICS, INC.
By /s/ Timothy M. Kish By /s/ Louis Lange
Name Timothy M. Kish Name Louis G. Lange
Title Director Title Chairman & CEO
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains financial information extracted from the Consolidated
Balance Sheet as of June 30, 1999 and the Consolidated Statement of
Operations for the six month period ended June 30, 1999 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 7,769
<SECURITIES> 30,358
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 39,251
<PP&E> 8,245
<DEPRECIATION> (5,229)
<TOTAL-ASSETS> 42,798
<CURRENT-LIABILITIES> 3,926
<BONDS> 0
0
0
<COMMON> 109,410
<OTHER-SE> (79,659)
<TOTAL-LIABILITY-AND-EQUITY> 42,798
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 11,033
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 478
<INCOME-PRETAX> (10,418)
<INCOME-TAX> 0
<INCOME-CONTINUING> (10,418)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (10,418)
<EPS-BASIC> (0.90)
<EPS-DILUTED> (0.90)
</TABLE>
