EXHIBIT 10.1
TERMINATION AGREEMENT
ELAN PHARMA INTERNATIONAL LIMITED
ELAN INTERNATIONAL SERVICES, LTD.
ATRIX LABORATORIES, INC.
AND
TRANSMUCOSAL TECHNOLOGIES LTD.
INDEX
Section Heading Page
------- ------- ----
1 DEFINITIONS 2
2 TERMINATION OF THE NEWCO AGREEMENTS 7
3 REPRESENTATIONS, WARRANTIES, CONFIRMATIONS AND
INDEMNITIES 9
4 INTELLECTUAL PROPERTY 14
5 RIGHTS RELATED TO SECURITIES 15
6 SALE OF SHARES AND COMPLETION 16
7 CONFIDENTIALITY 17
8 WAIVER OF ACCRUED RIGHTS/MUTUAL RELEASES 20
9 PAYMENTS, REPORTS AND AUDITS 20
10 GENERAL 22
2
THIS
TERMINATION AGREEMENT made this 10th day of September 2003 (this
"AGREEMENT")
AMONG:-
(1) ELAN PHARMA INTERNATIONAL LIMITED, a private limited company
incorporated under the laws of Ireland, and having its registered
office at ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇ ("EPIL ▇▇▇▇▇▇▇");
(2) ELAN INTERNATIONAL SERVICES, LTD., an exempted limited liability
company incorporated under the laws of Bermuda, and having its
registered office at ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇ ▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
("▇▇▇");
(3) ATRIX LABORATORIES, INC., a Delaware corporation having its principal
place of business at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇▇ of America ("ATRIX"); and
(4) TRANSMUCOSAL TECHNOLOGIES LTD., an exempted company incorporated under
the laws of Bermuda, and having its registered office at ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇ ▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇.
RECITALS
A. The Parties entered into various agreements whereby EPIL ▇▇▇▇▇▇▇, EIS
and Atrix established the joint venture company, Newco, and EPIL
▇▇▇▇▇▇▇, EIS and Atrix each licensed certain intellectual property to
Newco for a specified field of use. Specifically:
(i) EIS, EPIL ▇▇▇▇▇▇▇, Atrix and Newco entered into a
Subscription, Joint Development and Operating Agreement dated
18 July 2000 (the "JDOA");
(ii) EPIL ▇▇▇▇▇▇▇ and Newco entered into a License Agreement dated
18 July 2000 (the "ELAN LICENSE AGREEMENT"); and
(iii) EIS, Atrix and Newco entered into a Registration Rights
Agreement with respect to the capital stock of Newco dated 18
July 2000 (the "NEWCO REGISTRATION RIGHTS AGREEMENT").
B. The JDOA, Elan License Agreement and Newco Registration Rights
Agreement are together defined in this Agreement as the "NEWCO
AGREEMENTS".
C. The Parties also entered into agreements whereby Atrix sold and EIS
purchased certain securities of Atrix and the Parties agreed to certain
matters related to the ownership of such securities. Specifically:
(i) EIS and Atrix entered into a Securities Purchase Agreement
dated 18 July 2000 (the "SECURITIES PURCHASE AGREEMENT"); and
(ii) EIS and Atrix entered into a Registration Rights Agreement
with respect to the capital stock of Atrix dated 18 July 2000
(the "ATRIX REGISTRATION RIGHTS AGREEMENT");
(iii) Atrix issued and delivered to EIS a Convertible Promissory
Note, dated 18 July 2000, in a principal amount not to exceed
$8,010,000.00 (the "NOTE"); and
(iv) Atrix issued and delivered to EIS a Warrant, dated as of 18
July 2000, to purchase up to 1,000,000 shares of Common Stock,
par value $.01 per share, of Atrix ("WARRANT").
D. The Parties wish to (i) terminate in full the Newco Agreements as set
forth below; and (ii) set forth their agreement in relation to other
matters, including, inter alia, the transfer of shares by EIS to Atrix.
IN CONSIDERATION OF THE MUTUAL COVENANTS CONTAINED HEREIN, AND OTHER GOOD AND
VALUABLE CONSIDERATION, THE RECEIPT AND ADEQUACY OF WHICH ARE HEREBY
ACKNOWLEDGED, IT IS HEREBY AGREED AS FOLLOWS:
1 DEFINITIONS
CAPITALIZED TERMS USED IN THIS AGREEMENT SHALL HAVE THE SAME MEANINGS
ASSIGNED TO THEM IN THE NEWCO AGREEMENTS OR ATRIX LICENSE AGREEMENT,
UNLESS SUCH TERMS ARE EXPRESSLY DEFINED TO THE CONTRARY IN THIS
AGREEMENT.
"AFFILIATE" shall mean any corporation or entity controlling,
controlled or under the common control of any other corporation or
entity, excluding, in the case of Elan, an Elan JV. For the purpose of
this definition, (i) "control" shall mean direct or indirect ownership
of fifty percent (50%) or more of the stock or shares entitled to vote
for the election of directors; and (ii) Newco shall not be an Affiliate
of Elan.
"AGREED COST DEDUCTION" shall mean the sum of all costs and expenses
directly attributable to research and development, clinical trials,
pre-launch commercialization and regulatory compliance (where such work
is carried out by Atrix and/or Newco, and/or an Affiliate of Atrix
and/or Newco, charged at cost without the addition of any profit
margin) incurred by Atrix and/or Newco, and/or
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an Affiliate of Atrix and/or Newco, directly related to the development
of the Deferred Consideration Product between the Effective Date and
the Date of Commercialization or the date of first commercial launch,
whichever is earlier, and all non-reimbursed costs of Phase IV or
post-approval clinical studies to the extent funded by Atrix and/or
Newco after the Date of Commercialization.
"ATRIX CERTIFICATE OF DESIGNATIONS" shall mean that certain certificate
of designations filed with the Delaware Secretary of State dated 18
July 2000.
"ATRIX IMPROVEMENTS" shall mean improvements to the Atrix Patents
and/or the Atrix Know-How, developed (i) by Atrix outside the Project,
(ii) by Atrix, Elan or Newco or by a third party (under contract with
Newco, Elan or Atrix or any of their respective Affiliates) pursuant to
the Project, and/or (iii) jointly by any combination of Atrix, Elan,
Newco or a third party (under contract with Newco, Elan or Atrix or any
of their respective Affiliates) pursuant to the Project.
"ATRIX KNOW-HOW" shall have the meaning set forth in the Atrix License
Agreement.
"ATRIX LICENSE AGREEMENT" shall mean that certain License Agreement
between Atrix and Newco dated 18 July 2000.
"ATRIX PATENTS" shall have the meaning set forth in the Atrix License
Agreement.
"BALANCE SHEET" shall mean the unaudited balance sheet of Newco as of
the Balance Sheet Date, as set forth in Schedule 1.
"BALANCE SHEET DATE" shall mean June 30, 2003.
"BEMA(TM) TECHNOLOGY" shall mean Atrix's proprietary bioerodible film
technology for delivery of small molecules, peptides and proteins
across mucosal surfaces, as described in more detail in the Atrix
Patents.
"COMMERCIALIZATION AGREEMENT" shall mean:
(i) any license agreement, research and development agreement, or
alternative form of collaboration or commercialization
agreement, such as, but not limited to, a co-promotion or
co-marketing arrangement to research, develop, import, make,
use, offer for sale, and/or sell the Deferred Consideration
Product, Newco Intellectual Property and/or the Newco IP
Product in the Territory;
(ii) any Disposal Agreement; or
(iii) an agreement comprising an option to do any of the foregoing.
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"CPI" shall mean the Consumer Price Index for All Urban Consumers, All
Items, U.S.A. Area, 1982-1984 = 100, as published by the Bureau of
Labor Statistics, United States Department of Labor (U.S. City
Average). If such index is discontinued, CPI shall then mean the most
nearly comparable index published by the Bureau of Labor Statistics or
other official agency of the United States government.
"DATE OF COMMERCIALIZATION" shall mean the date of execution by Atrix
and/or Newco, and/or an Affiliate of Atrix and/or Newco, and any third
party of a Commercialization Agreement.
"DEFERRED CONSIDERATION" shall have the meaning set forth in Clause
6.4.
"DEFERRED CONSIDERATION PERIOD" shall mean the period commencing on the
Effective Date and expiring on a country by country basis:
(a) on the 15th anniversary of the date of the first commercial
launch of the Deferred Consideration Product or Newco IP
Product in the country concerned; or
(b) in any country upon the expiration of the life of the last to
expire patent covering the Deferred Consideration Product or
Newco IP Product in that country;
whichever date is the later to occur.
"DEFERRED CONSIDERATION PRODUCT" shall mean formulations of fentanyl
and ondansetron utilizing the BEMA(TM) Technology.
"DISPOSAL AGREEMENT" shall mean any agreement for the assignment or
outright sale or disposition, in whole or in part, of the Deferred
Consideration Product, the Newco Intellectual Property and/or Newco IP
Product.
"EFFECTIVE DATE" shall mean the date of this Agreement.
"ELAN" shall mean EPIL ▇▇▇▇▇▇▇ and its Affiliates.
"ELAN IMPROVEMENTS" shall mean improvements to the Elan Patents and/or
the Elan Know-How, developed (i) by Elan outside the Project, (ii) by
Elan, Atrix or Newco or by a third party (under contract with Newco,
Elan or Atrix or any of their respective Affiliates) pursuant to the
Project, and/or (iii) jointly by any combination of Elan, Atrix, Newco
or a third party (under contract with Newco, Elan or Atrix or any of
their respective Affiliates) pursuant to the Project.
"ELAN JV" shall mean an entity that Elan and a third party (i)
establish or have established; (ii) take shareholdings in or have a
right to take shareholdings in; and
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(iii) grant certain licenses in and to certain intellectual property
rights for the purpose of implementing a strategic alliance.
"ELAN KNOW-HOW" shall have the meaning set forth in the Elan License
Agreement.
"ELAN PATENTS" shall have the meaning set forth in the Elan License
Agreement.
"EPIL III" shall mean Elan Pharmaceuticals Investment III, Ltd. an
exempted limited liability company incorporated under the laws of
Bermuda.
"EXCHANGE RIGHT" shall have the meaning set forth in the Atrix
Certificate of Designations.
"FORCE MAJEURE" shall mean causes beyond a Party's reasonable control,
including, without limitation, acts of God, fires, strikes, acts of
war, or intervention of a governmental authority.
"INITIAL CONSIDERATION" shall have the meaning set forth in Clause
6.1.2.
"IN MARKET" shall mean the sale of the Deferred Consideration Product
and/or Newco IP Product by Newco and/or Atrix, and/or an Affiliate of
Newco and/or Atrix, to an unaffiliated third party, such as a
wholesaler, managed care organization, hospital or pharmacy, and shall
exclude the transfer pricing of the Deferred Consideration Product and
Newco IP Product by one Affiliate of Newco and/or Atrix to another
Affiliate of Newco and/or Atrix.
"NET REVENUES" shall mean:
(i) all license fees, sublicense fees, license option payments
(whether in relation to the grant or exercise of any license
option) milestone payments, and royalties on sales of Deferred
Consideration Product, Newco Intellectual Property and/or the
Newco IP Product, and any other kinds of revenue whatsoever
received (including value received in the form of securities)
by Atrix and/or Newco, and/or an Affiliate of Atrix and/or
Newco, in respect of the commercialization of the Deferred
Consideration Product, Newco Intellectual Property and/or
Newco IP Product;
(ii) any net manufacturing profits realized by Atrix and/or Newco,
and/or an Affiliate of Atrix and/or Newco, on any commercial
supply of Deferred Consideration Product and/or Newco IP
Product;
(iii) any consideration received by Newco and or Atrix, and/or an
Affiliate of Newco and/or Atrix, in respect of any Disposal
Agreement;
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(iv) research and development payments received by Atrix and/or
Newco, and/or an Affiliate of Atrix and/or Newco, in relation
to research and development of the Newco Intellectual Property
and/or Newco IP Product and/or the Deferred Consideration
Product, where such payments are made other than for
reimbursement of expenses incurred by Atrix and/or Newco,
and/or an Affiliate of Atrix and/or Newco, and other than on
FTE rates charged by Atrix, where such payments are made other
than on FTE rates charged by Atrix, the amount above $300,000
per employee per annum (as adjusted annually for percentage
increases in CPI) shall be included in the calculation of Net
Revenues; and
(v) in the context of any Commercialization Agreement, any premium
paid by a subscriber for stock of Atrix and/or Newco;
(1) where Atrix and/or Newco, and/or an Affiliate of Atrix
and/or Newco, is not publicly listed on a recognized
stock exchange, the premium paid over the fair market
value of such stock as reasonably determined by the
board of directors of Atrix and/or Newco, and/or an
Affiliate of Atrix and/or Newco, in good faith and
certified in a board resolution (taking into account
(i) the most recently or concurrently completed arm's
length transaction in which the primary consideration
for the stock is cash between the Atrix or Newco,
and/or an Affiliate of Atrix and/or Newco, and an
unaffiliated third party that is not part of a
strategic investment and the closing of which occurs
within the six months preceding or on the date of such
calculation, if any) and shall be reasonably agreed to
by Elan (provided that in the event Elan reasonably
does not agree with Atrix's or Newco's, and/or an
Affiliate of Atrix and/or Newco, fair market value
determination, Elan and Atrix and/or Newco, as the case
may be, at Elan's sole cost and expense, shall jointly
appoint an independent nationally-recognized third
party to determine the fair market value), (ii) the
general market conditions for private biotech
securities, and (iii) the general state of progress in
clinical and commercial activities in Atrix and/or
Newco, and/or an Affiliate of Atrix and/or Newco; or
(2) where Atrix and/or Newco, and/or an Affiliate of Atrix
and/or Newco, is publicly listed on a recognized stock
exchange, the premium paid over the average closing
price of such stock of Atrix and/or Newco, and/or an
Affiliate of Atrix and/or Newco, for the 30 trading day
period immediately prior to any such subscription;
provided, however, that the amounts calculated pursuant to
subparagraphs (i) through (v) above shall be reduced by :
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(i) deductions in respect of any customs and excise duties or
other sales taxes that are actually paid by Atrix and/or
Newco, and/or an Affiliate of Atrix and/or Newco (but, for the
avoidance of doubt, not income or corporation tax), directly
related to the receipt of revenue by Atrix and/or Newco,
and/or an Affiliate of Atrix and/or Newco, as set forth above;
and
(ii) the Agreed Cost Deduction (to the extent not otherwise
previously deducted and offset in favor of Atrix, Newco and/or
any of their respective Affiliates).
"NET SALES" shall mean that sum determined, in accordance with
generally accepted accounting principles, by deducting the following
deductions from the aggregate gross In Market sales proceeds received
by Newco and/or Atrix for the Deferred Consideration Product and/or
Newco IP Product by Newco and/or Atrix, and/or an Affiliate of Atrix
and/or Newco:
(i) taxes, duties or other governmental charges (but, for the
avoidance of doubt not income or corporation tax), levied on,
absorbed, or otherwise imposed on the sale of the Deferred
Consideration Product and Newco IP Product that are actually
paid by Newco and/or Atrix, and/or by an Affiliate of Newco
and/or Atrix;
(ii) a discount from the gross sales proceeds to cover such
industry costs as are incurred by Newco and/or Atrix, and/or
by an Affiliate of Newco and/or Atrix, in respect of
transport, shipping and insurance costs; and discounts,
rebates or chargebacks directly related to the sale of the
Deferred Consideration Product and Newco IP Product;
(iii) amounts repaid or credited by Newco and/or Atrix, and/or by an
Affiliate of Newco and/or Atrix by reason of the rejection or
return of goods, including rejection or return of goods
attributable to a recall of a Deferred Consideration Product
and/or Newco IP Product; and
(iv) the Agreed Cost Deduction (to the extent not otherwise
previously deducted and offset in favor of Atrix, Newco and/or
any of their respective Affiliates).
"NEWCO" shall mean Transmucosal Technologies Ltd. and its Affiliates.
"NEWCO INTELLECTUAL PROPERTY" shall have the meaning set forth in the
JDOA.
"NEWCO IP PRODUCT" shall mean a product that utilizes, is based upon,
or is derived directly or indirectly, from the Newco Intellectual
Property.
"PARTY" shall mean EPIL Shannon, EIS, Atrix or Newco, as the case may
be, and "PARTIES" shall mean all such parties together.
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"PROJECT" shall have the meaning set forth in the JDOA.
"TERRITORY" shall mean all of the countries of the world.
"UNITED STATES DOLLAR" and "US$" and "$" shall mean the lawful currency
of the United States of America.
2. TERMINATION OF THE NEWCO AGREEMENTS
2.1. Subject to the provisions of Clause 2.2 hereof, the Parties
hereby agree to:
2.1.1. terminate the Newco Agreements, including without
limitation, those provisions expressly stated to
survive termination, in each case, with effect from
the Effective Date; and
2.1.2. cancel the Note with effect from the Effective Date,
each Party hereby acknowledging that no amounts were
drawn down under the Note.
2.2. For the avoidance of doubt and without prejudice to the
generality of the foregoing Clause 2.1, the Parties hereby
acknowledge and agree as follows as of the Effective Date:
2.2.1. the EIS Director, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, holding office
with Newco immediately prior to the Effective Date
shall resign;
2.2.2. the Management Committee and the R&D Committee (as
such terms are defined in the JDOA) shall each be
dissolved forthwith with effect from the Effective
Date and thereby cease to have any function;
2.2.3. the nominees on the Management Committee of the EIS
Director shall be deemed to have been removed from
the Management Committee by the EIS Director;
2.2.4. the nominees on the R&D Committee of the nominees on
the Management Committee of the EIS Director, shall
be deemed to have been removed from the R&D Committee
by the nominees on the Management Committee of the
EIS Director;
2.2.5. all rights granted to Newco pursuant to the Elan
License Agreement to use the Elan Patents, the Elan
Know-How and the Elan Improvements shall terminate
forthwith;
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2.2.6. neither Atrix nor Newco shall have any rights in or
to the Elan Patents, the Elan Know-How, the Elan
Improvements and any other patents, know-how or any
other intellectual property rights whatsoever of
Elan;
2.2.7. Elan shall not have any rights in or to the Atrix
Patents, the Atrix Know-How, the Atrix Improvements
and any other patents, know-how or any other
intellectual property rights whatsoever of Atrix;
2.2.8. Elan shall terminate or shall cause to be terminated
any and all research and development work being
conducted by Elan in connection with or pursuant to
the Project, the Newco Agreements, or otherwise by or
on behalf of Newco;
2.2.9. Elan shall terminate or cause to be terminated any
and all technical services and assistance being
conducted by Elan in connection with the Newco
Agreements;
2.2.10. for the avoidance of doubt, Elan shall not have any
obligation to provide working capital, research or
development funding, or other funding or financing of
any nature to Newco; and
2.2.11. Elan shall not have any obligation to pay any
milestone payment or make any milestone investment to
Newco, Atrix or any Affiliates of Atrix and/or Newco,
whether relating to the Project, the achievement of
any objectives set forth therein or otherwise.
2.3 Each of the Parties acknowledges and agrees with the other
Parties that, as of the Effective Date, no monies are owed or
are refundable by any of the Parties to the others pursuant to
the Newco Agreements and/or Atrix License Agreement, other
than such sums owed to Atrix by Newco pursuant to the JDOA as
are set forth on Schedule 2.3. Atrix and EIS shall pay to
Newco the amounts set forth in Schedule 2.3 immediately prior
to the Effective Date to enable Newco to discharge its payment
obligations thereunder to Atrix.
For the avoidance of doubt, the Parties acknowledge that Newco
is liable to pay any fees due and owing to Codan Corporate
Administrative Services upon the Effective Date, and
thereafter.
3 REPRESENTATIONS, WARRANTIES, CONFIRMATIONS AND INDEMNITIES
3.1 SUB-LICENSES:
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Newco represents and warrants to the other Parties that it has
not granted any sub-licenses or any other rights of any nature
to any third parties pursuant to the Elan License Agreement or
the Atrix License Agreement.
3.2 ATRIX SHARES:
Atrix confirms to the other Parties that it is the legal and
beneficial owner of the following:
3.2.1 6,000 shares of Newco Common Stock (as defined in the
Securities Purchase Agreement); and
3.2.2 3,612 shares of Newco Preferred Stock (as defined in
the Securities Purchase Agreement).
3.3 EIS SHARES:
EIS confirms to the other Parties that it is the legal and
beneficial owner of 2,388 shares of Newco Preferred Stock (the
"EIS SHARES").
3.4 BALANCE SHEET:
Atrix represents and warrants to the other Parties that the
Balance Sheet is accurate in all material respects and that,
to its knowledge, since the Balance Sheet Date, there has been
no material adverse change in the financial position of Newco.
Atrix represents and warrants to the other Parties that, to
its knowledge, there are no other creditors of Newco other
than as described in the Balance Sheet.
3.5 THIRD PARTY AGREEMENTS / ORDERS / CLAIMS:
3.5.1 Each of the Parties confirms to the other Parties
hereto that, as of the Effective Date, to its actual
knowledge, Newco is not a party to, or bound by, any
judgment, order, decree or other directive of or
stipulation with any court or any governmental or
regulatory authority.
3.5.2 Atrix represents and warrants to the other Parties
that, as of the Effective Date, to its actual
knowledge, Newco is not a party to, or bound by, or
is a third party beneficiary of any agreement with
any third party, except for the Newco Agreements
and/or Atrix License Agreement.
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3.5.3 Each of the Parties confirms to the other Parties
hereto that, as of the Effective Date, to its actual
knowledge, there are no claims, suits or proceedings
pending or threatened against Newco.
3.6 REGULATORY APPLICATIONS:
Each of the Parties confirms to the other Parties that prior
to and as of the Effective Date, except as set forth on
Schedule 3.6, no regulatory applications have been filed by
Newco or by any Party with any government authority in any
part of the world for any product, including without
limitation Newco Intellectual Property or otherwise howsoever
in relation to the Project.
3.7 EXCLUSION OF WARRANTIES / LIABILITY:
WITH REFERENCE TO THE TRANSFER BY EIS TO ATRIX OF THE EIS
SHARES AS PROVIDED BY CLAUSE 6 ON THE EFFECTIVE DATE (BUT
WITHOUT PREJUDICE TO EIS'S OBLIGATION UNDER CLAUSE 6.1.1
HEREOF TO TRANSFER THE EIS SHARES TO ATRIX FREE FROM ALL
LIENS, CHARGES AND ENCUMBRANCES), THE PARTIES ACKNOWLEDGE AND
AGREE THAT, EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT,
EIS AND ITS AFFILIATES MAKE NO REPRESENTATION OR WARRANTY OF
ANY NATURE TO ATRIX, ITS AFFILIATES OR ANY OTHER PERSON IN
RELATION TO NEWCO OR ANY OF ITS AFFAIRS PAST, PRESENT OR
FUTURE.
ATRIX ACKNOWLEDGES THAT IT IS ENTERING INTO THIS AGREEMENT IN
RELIANCE EXCLUSIVELY ON ITS OWN BUSINESS JUDGMENT, THE
INFORMATION WHICH HAS BEEN AVAILABLE TO IT AS A SHAREHOLDER OF
NEWCO AND OTHERWISE AND ON THE DUE DILIGENCE IT HAS CARRIED
OUT IN RELATION TO NEWCO.
EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, ALL OTHER
WARRANTIES, CONDITIONS OR REPRESENTATIONS, EXPRESS OR IMPLIED,
STATUTORY OR OTHERWISE, ARE HEREBY EXPRESSLY EXCLUDED BY THE
PARTIES.
NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS AGREEMENT, NO
PARTY SHALL BE LIABLE TO ANY OTHER PARTY BY REASON OF ANY
REPRESENTATION OR WARRANTY, CONDITION OR OTHER TERM OR ANY
DUTY OF COMMON LAW, OR UNDER THE EXPRESS TERMS OF THIS
AGREEMENT, FOR ANY CONSEQUENTIAL SPECIAL OR
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INCIDENTAL OR PUNITIVE LOSS OR DAMAGE (WHETHER FOR LOSS OF
CURRENT OR FUTURE PROFITS, LOSS OF ENTERPRISE VALUE OR
OTHERWISE) AND WHETHER OCCASIONED BY THE NEGLIGENCE OF THE
RESPECTIVE PARTIES, THEIR EMPLOYEES OR AGENTS OR OTHERWISE.
3.8 INDEMNITY BY ATRIX AND NEWCO:
3.8.1 Atrix and Newco and each of their respective
Affiliates, jointly and severally, hereby agree to
indemnify and hold harmless EIS and EPIL ▇▇▇▇▇▇▇,
their respective Affiliates, officers, directors,
agents, representatives, employees and shareholders,
and any person holding office on or prior to the
Effective Date as an EIS Director (as defined in the
JDOA) (or any alternate director of the EIS Director)
or as a member of the Management Committee or the R&D
Committee (each such person or entity referred to as
an "INDEMNIFIED PARTY") against any claims, losses,
liabilities or damages and expenses (including
reasonable attorneys' fees and expenses) incurred or
sustained by such Indemnified Party arising in
relation to any claim or proceedings made against
Newco or an Indemnified Party which relate in any way
to the activities of Newco, past present or future,
including without limitation, claims arising with
respect to the conduct of clinical trials (if any) by
Newco, or by Atrix, its Affiliates or any other
person or entity on behalf of Newco whether in
connection with the Project or otherwise.
3.8.2 For the avoidance of doubt and without prejudice to
the generality of Clause 3.8.1, Atrix, Newco and each
of their respective Affiliates, jointly and
severally, shall indemnify and hold harmless Elan
against any claims, losses, liabilities or damages
and expenses (including reasonable attorneys' fees
and expenses) which may arise in relation to any
claim or proceedings made against EPIL ▇▇▇▇▇▇▇ or any
of its Affiliates alleging infringement or other
unauthorized use of the proprietary rights of a third
party arising from the manufacture, importation, use,
offer for sale, sale or other commercialization of
any Product, the Newco Intellectual Property and/or
any technology related thereto.
3.8.3 For the avoidance of doubt and with reference to the
indemnity in Clause 3.8.1, the Parties acknowledge
that clinical trials ("Clinical Trials") were carried
out by Atrix and/or any of its Affiliates on behalf
of Newco and agree that the indemnity in Clause 3.8.1
shall extend to any claims, losses, liabilities or
damages arising from such Clinical Trials.
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3.8.4 Notwithstanding any provision contained in this
Clause 3.8 to the contrary, the indemnification
obligations of Atrix, Newco and each of their
respective Affiliates in Clause 3.8.1 shall not be
applicable to the extent that any claims or
proceedings of any third party arise from or relate
to:
3.8.4.1 the gross negligence, willful misconduct or
violation of law by any Indemnified Party;
3.8.4.2 Elan's or any of Elan's Affiliates'
accounting policies or procedures,
disclosure obligations, or alleged
violations of corporate or securities laws;
or
3.8.4.3 any investigation of Newco or any
Indemnified Party by the U.S. Securities and
Exchange Commission relating to Elan's or
any of Elan's Affiliates' accounting
policies or procedures, disclosure
obligations or alleged violations of
corporate or securities laws.
3.8.5 Prior to the Effective Date, Atrix shall furnish Elan
Corp with copies of all policies of comprehensive
general liability insurance and/or other insurance
coverage (the "POLICIES") which it holds in respect
of the Clinical Trials referred to in Clause 3.8.3.
Atrix shall maintain the Policies in full force and
effect for so long as Atrix and/or Newco or any
Affiliate of Atrix and/or Newco is developing the
Deferred Consideration Product, maintaining at all
times at a minimum, the levels of cover evidenced in
the Policies, noting Elan Corp as an additional
insured, and shall, at the reasonable request of Elan
Corp from time to time, furnish to Elan Corp evidence
that all premiums or other payments on the Policies
are fully paid up and the Policies are subsisting.
3.9 ORGANIZATION AND AUTHORITY:
Each of the Parties represents and warrants to the other
Parties that it is a corporation duly organized and validly
existing under the laws of its jurisdiction of organization
and has all the requisite corporate power and authority to
enter into this Agreement and to carry out the transactions
contemplated hereby.
3.10 APPROVALS:
Each of the Parties represents and warrants to the other
Parties that no permit, authorization, consent or approval of
or by ("APPROVAL"), or any notification of or filing with
("FILING"), any person or entity (governmental or otherwise)
13
is required in connection with the execution, delivery or
performance of this Agreement by such Party, or if any such
Approval or Filing is so required, that same has been obtained
or filed prior to the Effective Date.
3.11 INVESTMENT REPRESENTATIONS:
Atrix hereby represents and warrants to the other Parties
that, as of the Effective Date, (i) it is sophisticated in
transactions of this type and capable of evaluating the merits
and risks of its investment in Newco, (ii) it has not been
formed solely for the purpose of making this investment and is
acquiring the EIS Shares for investment for its own account,
not as a nominee or agent, and not with the view to, or for
resale in connection with, any distribution of any part
thereof, and no other person has a direct or indirect
interest, beneficial or otherwise in the EIS Shares, (iii) it
understands that the EIS Shares have not been registered under
the Securities Act of 1933, as amended (the "SECURITIES ACT"),
or applicable state and foreign securities laws by reason of a
specific exemption from the registration provisions of the
Securities Act and applicable state and foreign securities
laws, the availability of which depends upon, among other
things, the bona fide nature of the investment intent and the
accuracy of its representations as expressed herein and (iv)
it understands that no public market now exists for any of the
EIS Shares and that there is no assurance that a public market
will ever exist for such shares.
3.12 TRADEMARK APPLICATIONS:
Atrix represents and warrants to the other Parties that
neither Newco nor Atrix has filed for any trademark protection
or has not adopted any trademark in connection with Newco's
business or any product or service provided thereunder.
3.13 REPRESENTATION AND WARRANTIES AS OF THE EFFECTIVE DATE:
Except where expressly stated otherwise, each of the
representations and warranties in this Agreement are made as
of the Effective Date.
4 INTELLECTUAL PROPERTY
4.1 OWNERSHIP:
On and following the Effective Date:
4.1.1 For the avoidance of doubt, the Elan Patents, the
Elan Know-How, the Elan Improvements and/or the Elan
Trademarks shall remain the sole and exclusive
property of Elan.
14
Elan confirms that no Elan Improvements were
developed pursuant to the Project, or otherwise
pursuant to the Newco Agreements.
4.1.2 For the avoidance of doubt, the Atrix Patents, the
Atrix Know-How, the Atrix Improvements and/or the
Atrix Trademarks shall remain the sole and exclusive
property of Atrix.
A full list of the Atrix Improvements developed
pursuant to the Project or otherwise pursuant to the
Newco Agreements and/or Atrix License Agreement is
set forth in Schedule 4.1.2.
4.1.3 All Newco Intellectual Property shall remain the sole
and exclusive property of Newco.
A full list of Newco Intellectual Property developed
pursuant to the Project or otherwise pursuant to the
Newco Agreements and/or Atrix License Agreement is
set forth in Schedule 4.1.3.
5 RIGHTS RELATED TO SECURITIES
5.1 Nothing contained herein shall constitute a waiver of any
right of EPIL ▇▇▇▇▇▇▇, EPIL III or EIS or any of their
respective successors and assigns with respect to their
respective ownership of securities in Atrix under any
agreements of any kind in existence with Atrix with respect
thereto, which agreements shall remain unmodified and in full
force and effect, except as set forth in Schedule 5.1 hereof.
6 SALE OF SHARES AND COMPLETION
6.1 Subject to the terms of this Agreement:
6.1.1 EIS shall sell as legal and beneficial owner and
Atrix shall purchase, free from all liens, charges
and encumbrances and together with all rights now or
hereafter attaching to them, the EIS Shares; and
6.1.2 the EIS Shares will be sold by EIS to Atrix for a
total initial consideration of $10 (the "INITIAL
CONSIDERATION") and the Deferred Consideration.
6.2 On the Effective Date, Elan and Atrix shall take or (to the
extent that the same is within its powers) cause to be taken
the following steps prior to or at directors and shareholders
meetings of Newco, or such other meetings, as appropriate:
15
6.2.1 the delivery by EIS to Atrix of a stock transfer form
in respect of the EIS Shares duly executed by EIS in
favor of Atrix or as it may direct together with the
related share certificates;
6.2.2 the payment by Atrix to EIS of the Initial
Consideration;
6.2.3 the transfer to Atrix (or as it may direct) of the
share register, and all books and records of Newco in
the possession of Elan (including any minute books
and any company seal(s));
6.2.4 the change of the registered office of Newco from
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇ ▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇;
6.2.5 the resignation of the EIS Director on Newco's Board
of Directors and any alternate director of the EIS
Director;
6.2.6 the adoption of new Bye-Laws of Newco;
6.2.7 the modification, as appropriate, by board
resolutions of Newco of matters such as the removal
of EIS as book keeper for Newco, the removal of EIS
representatives as authorized signatories of Newco's
bank account, the resignation of the Company
Secretary and any other related matters whatsoever;
6.2.8 any other steps required by this Agreement.
6.3 Atrix shall, following the Effective Date, promptly notify the
Bermuda Monetary Authority of the transfer of the EIS Shares.
6.4 DEFERRED CONSIDERATION
6.4.1 In consideration of the sale by EIS to Atrix of the
EIS Shares under Clause 6.1, Atrix and its Affiliates
(except for Newco) shall be jointly and severally
liable to pay to EIS deferred consideration
("DEFERRED CONSIDERATION"), which shall be calculated
as follows:
(1) If Newco and/or Atrix, and/or an Affiliate
of Newco and/or Atrix, sells the Deferred
Consideration Product and/or Newco IP
Product In Market, then 3% of Net Sales in
the Territory shall be payable to EIS during
the Deferred Consideration Period; and
(2) If Newco and/or Atrix, and/or an Affiliate
of Newco and/or Atrix, enters into a
Commercialization Agreement with any third
party then 10% of Net Revenues received from
16
such third party shall be payable to EIS
during the Deferred Consideration Period.
7 CONFIDENTIALITY
7.1 CONFIDENTIALITY:
7.1.1 The Parties agree that it may be necessary pursuant
to this Agreement, from time to time, to disclose to
each other confidential and proprietary information,
including without limitation, inventions, trade
secrets, specifications, designs, data, know-how and
other proprietary information, processes, services
and business of the disclosing Party.
The foregoing together with the terms of this
Agreement shall be referred to collectively as
"ADDITIONAL CONFIDENTIAL INFORMATION".
The Parties also agree that it may have been
necessary to disclose to each other Confidential
Information (as defined in the JDOA) pursuant to the
Newco Agreements and/or Atrix License Agreement.
Together Additional Confidential Information and
Confidential Information shall be referred to
collectively as "PROPRIETARY INFORMATION".
7.1.2 Save as otherwise specifically provided herein, and
subject to Clauses 7.2 and 7.3, each Party shall
disclose Proprietary Information of another Party
only to those employees, representatives and agents
requiring knowledge thereof in connection with
fulfilling the Party's obligations under this
Agreement, and not to any other third party.
Each Party further agrees to inform all such
employees, representatives and agents of the terms
and provisions of this Agreement relating to
Proprietary Information and their duties hereunder
and to obtain their agreement hereto as a condition
of receiving Proprietary Information.
Each Party shall exercise the same standard of care
as it would itself exercise in relation to its own
confidential information (but in no event less than a
reasonable standard of care) to protect and preserve
the proprietary and confidential nature of the
Proprietary Information disclosed to it by another
Party.
17
Each Party shall promptly, upon request of another
Party, return all documents and any copies thereof
containing Proprietary Information belonging to, or
disclosed by, such Party, save that it may retain one
copy of the same solely for the purposes of ensuring
compliance with this Clause 7.
7.1.3 Any breach of this Clause 7 by any person informed by
one of the Parties is considered a breach by the
Party itself.
7.1.4 Proprietary Information shall be deemed not to
include:
(1) information which is in the public domain;
(2) information which is made public through no
breach of this Agreement;
(3) information which is independently developed
by a Party, as evidenced by such Party's
records;
(4) information that becomes available to a
receiving Party on a non-confidential basis,
whether directly or indirectly, from a
source other than another Party, which
source did not acquire this information on a
confidential basis.
7.1.5 The provisions relating to confidentiality in this
Clause 7 shall remain in effect during the term of
this Agreement, and for a period of 10 years
following the Effective Date of this Agreement.
7.1.6 The Parties agree that the obligations of this Clause
7 are necessary and reasonable in order to protect
the Parties' respective businesses, and each Party
agrees that monetary damages may be inadequate to
compensate a Party for any breach by another Party of
its covenants and agreements set forth herein.
The Parties agree that any such violation or
threatened violation may cause irreparable injury to
a Party and that, in addition to any other remedies
that may be available, in law and equity or
otherwise, each Party shall be entitled to seek
injunctive relief against the threatened breach of
the provisions of this Clause 7, or a continuation of
any such breach by another Party, specific
performance and other equitable relief to redress
such breach together with damages and reasonable
counsel fees and expenses to enforce its rights
hereunder.
18
7.2 ANNOUNCEMENTS:
Subject to Clause 7.3, no announcement or public statement
concerning the existence, subject matter or any term of this
Agreement shall be made by or on behalf of any Party without
the prior written approval of the other Parties.
The terms of any such announcement shall be agreed in good
faith by the Parties.
7.3 REQUIRED DISCLOSURES:
7.3.1 A Party (the "DISCLOSING PARTY") will be entitled to
make an announcement or public statement concerning
the existence, subject matter or any term of this
Agreement, or to disclose Proprietary Information
that the Disclosing Party is required to make or
disclose pursuant to:
(1) a valid order of a court or governmental
authority; or
(2) any other requirement of law or any
securities or stock exchange;
provided that if the Disclosing Party becomes legally
required to make such announcement, public statement
or disclosure hereunder, the Disclosing Party shall
give the other Parties prompt notice of such fact to
enable the other Parties to seek a protective order
or other appropriate remedy concerning any such
announcement, public statement or disclosure.
The Disclosing Party shall reasonably co-operate with
the other Parties, at the other Party's cost and
expense, in connection with that other Party's or
Parties' efforts to obtain any such order or other
remedy.
If any such order or other remedy does not fully
preclude announcement, public statement or
disclosure, the Disclosing Party shall make such
announcement, public statement or disclosure only to
the extent that the same is legally required.
7.3.2 Each of the Parties shall be entitled to provide a
copy of this Agreement (and any subsequent amendments
hereto) and the Newco Agreements to a potential third
party purchaser in connection with Clause 10.2.1(1)
and EIS (and/or any Affiliate) shall also be so
entitled in connection with Clause 10.2.2; PROVIDED
THAT the relevant third party purchaser or assignee
has entered into a confidentiality agreement on terms
no less protective than the terms of this Clause 7.
19
8 WAIVER OF ACCRUED RIGHTS/MUTUAL RELEASES
8.1 With effect from the Effective Date, each Party and each of
its Affiliates ("RELEASOR"):
8.1.1 waives any accrued rights that Releasor may have
accrued against the other Parties and each of its
Affiliates, officers, directors, representative,
agents and employees and the assigns and successors
in interest of any of the foregoing entities
("RELEASEES"), whether known or unknown, foreseen or
unforeseen, fixed or contingent, of any nature
whatsoever from the beginning of time to the
Effective Date under the Newco Agreements and Atrix
License Agreement; and
8.1.2 fully and finally releases and discharges the
Releasees from any and all manner of actions, claims,
promises, debts, sums of money, demands, obligations,
in law or in equity, directly or indirectly, whether
known or unknown, foreseen or unforeseen, fixed or
contingent, of any nature whatsoever that Releasor
may have by reason of any act, omission, matter,
provision, cause or thing whatsoever from the
beginning of time to the Effective Date under the
Newco Agreements and Atrix License Agreement.
8.2 For the avoidance of doubt the provisions of this Clause 8
shall not in any way act as a waiver by any of the Parties in
respect of any of the provisions set forth in this Agreement
(including, for the avoidance of doubt, Clause 3.8.1).
9 PAYMENTS, REPORTS AND AUDITS
9.1 With reference to Clause 6.4, Atrix and/or Newco, and/or any
Affiliate of Atrix and/or Newco, shall immediately following
the execution of any Commercialization Agreement (and any
subsequent amendment thereto), provide Elan with a copy of the
financial provisions and any other relevant terms of such
Commercialization Agreement.
9.2 Atrix and Newco shall keep true and accurate records of Net
Revenues and Net Sales and any deductions made in calculating
same. Where Atrix and/or Newco or any Affiliates of Atrix
and/or Newco have Net Revenues and/or Net Sales, Atrix and/or
Newco, as the case may be, shall deliver to EIS a written
statement (the "STATEMENT") thereof within 45 days following
the end of each calendar quarter (or any part thereof) setting
forth in reasonable detail the calculation of Deferred
Consideration in respect of Net Sales and Net Revenues
attributable to each Deferred Consideration Product.
20
9.3 Payments due on Net Revenues and Net Sales on amounts in a
currency other than US Dollars shall first be calculated in
the foreign currency and then converted to US Dollars on the
basis of the exchange rate in effect for the purchase of US
Dollars with such foreign currency quoted in the Wall Street
Journal (or comparable publication if not quoted in the Wall
Street Journal).
9.4 Any income or other taxes which Atrix and/or its Affiliates
(excluding Newco) are required by law to pay or withhold on
behalf of EIS with respect to such Net Revenues and Net Sales
payments under this Agreement shall be deducted from the
amount of such Net Revenues and Net Sales payments. Atrix
and/or its Affiliates (excluding Newco), as the case may be,
shall furnish EIS with proof of such payments. Atrix and/or
its Affiliates (excluding Newco), as the case may be, shall
promptly provide EIS with a certificate or other documentary
evidence to enable EIS to support a claim for a refund or a
foreign tax credit with respect to any such tax so withheld or
deducted by Atrix and/or its Affiliates (excluding Newco), as
the case may be. The Parties will reasonably cooperate in
completing and filing documents required under the provisions
of any applicable tax treaty or under any other applicable
law, in order to enable Atrix and/or its Affiliates (excluding
Newco), as the case may be, to make such payments to EIS
without any deduction or withholding.
9.5 Payment of monies hereunder shall be made by Atrix and/or its
Affiliates (excluding Newco), as the case may be to EIS within
45 days of the Statement.
All payments due hereunder shall be made in U.S. Dollars.
9.6 All payments due hereunder shall be made to the designated
bank account of EIS in accordance with such timely written
instructions as EIS shall from time to time provide.
9.7 Without prejudice to EIS's other remedies hereunder, Atrix
and/or its Affiliates (excluding Newco), as the case may be,
shall pay interest to EIS on sums not paid to EIS on the date
on which payment should have been made pursuant to the
applicable provisions of this Agreement ("DUE DATE") over the
period from the Due Date until the date of actual payment
(both before and after judgment) at the Prime Rate publicly
announced by ▇▇▇▇▇▇ Guaranty Trust Company of
New York at its
principal office on the Due Date (or next to occur business
day, if such date is not a business day) plus 5%, such
interest payable on demand from time to time and compounded
monthly.
21
9.8 For the 180 day period following the close of each calendar
year of the Agreement, Atrix and/or its Affiliates (excluding
Newco), as the case may be, shall, upon reasonable advance
notice to Atrix or the relevant Affiliate, provide EIS's
independent certified accounting firm (reasonably acceptable
to Atrix) ("ACCOUNTANT") with access, subject to reasonable
advance notice and during Atrix's regular business hours and
subject to the confidentiality provisions as contained in this
Agreement, to Atrix's and/or its Affiliates (excluding Newco),
as the case may be, books and records solely for the purpose
of verifying the accuracy and reasonable composition of the
Deferred Consideration for the calendar year then ended. If
the Accountant concludes that an underpayment was made, Atrix
shall pay EIS the amount of any such underpayments, plus
interest at a rate equal to the Prime Rate plus 5% accruing
from the date such payment was first due to EIS, within thirty
(30) days of the date of delivery of the Accountant's report
concluding an underpayment was made to EIS. If the Accountant
concludes that such payments were overpaid, EIS shall refund
the amount of any such overpayments, within thirty (30) days
of the date Atrix delivers to EIS such Accountant's report so
concluding that such payments were overpaid.
9.9 In the event that Atrix and/or Newco, and/or an Affiliate of
Atrix and/or Newco, shall sell the Deferred Consideration
Product or the Newco IP Product to any third party, or enter
into any Commercialization Agreement with respect thereto with
any third party, together with other products of Atrix and/or
Newco, and/or an Affiliate of Atrix and/or Newco, by the
method commonly known in the pharmaceutical industry as
"bundling" and the price attributable to the Deferred
Consideration Product or the Newco IP Product is less than the
average price which would have been attributable thereto on an
"arms length" basis, the Net Sales or Net Revenues
attributable thereto hereunder shall be adjusted by the
Parties to reflect an average price on an "arms length" basis.
10 GENERAL
10.1 GOVERNING LAW AND JURISDICTION:
10.1.1 This Agreement shall be governed by and construed in
accordance with the laws of the State of
New York,
without regard to conflicts of law principles under
the laws of the State of
New York.
10.1.2 For the purposes of this Agreement, the Parties
submit to the nonexclusive jurisdiction of the State
and Federal Courts of
New York.
10.2 ASSIGNMENT:
22
10.2.1 Subject to Clause 10.2.2 and Clause 10.2.3, this
Agreement shall not be assigned by any Party without
the prior written consent of the others, save that
any Party:
(1) may assign this Agreement in whole or in
part and delegate its duties hereunder to
its Affiliate or Affiliates without such
consent; and
(2) may assign its rights and obligations to a
successor (whether by merger, consolidation,
reorganization or other similar event) or
purchaser of all or substantially all of its
assets relating to such Party's technology
related to this Agreement, provided that
such successor or purchaser has agreed in
writing to assume all of such Party's rights
and obligations hereunder and a copy of such
assumption is provided to the other Parties.
10.2.2 EIS (and/or any Affiliate) shall be entitled to
assign the rights of EIS (or any Affiliate) to the
Deferred Consideration under Clause 6.4 without the
consent of any other Party hereto. EIS (and/or any
Affiliate) shall notify the other Parties hereto of
any such assignment within a reasonable time
following any such assignment.
10.2.3 For the avoidance of doubt, nothing in this Clause
10.2 shall affect the provisions governing assignment
of securities in Schedule 5.1 hereof.
10.3 NOTICES:
10.3.1 Any notice to be given under this Agreement shall be
sent in writing in English by registered airmail,
internationally recognized courier or telefaxed to
the following addresses:
If to Newco at:
Transmucosal Technologies Ltd
c/o Atrix Laboratories, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
▇▇▇
Attention: Vice President,
Business Development
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
23
with a copy to Atrix at the address set forth below.
If to Atrix at:
Atrix Laboratories, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
▇▇▇
Attention: Vice President,
Business Development
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
If to EIS and/or EPIL ▇▇▇▇▇▇▇ at:
Elan Pharma International Limited
Elan International Services, Ltd.
c/o Elan International Services, Ltd.
▇▇▇ ▇▇. ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇
Bermuda
Attention: Secretary
Telephone: ▇▇▇ ▇▇▇ ▇▇▇▇
Fax: ▇▇▇ ▇▇▇ ▇▇▇▇
or to such other address (es) and telefax numbers as
may from time to time be notified by any Party to the
others hereunder.
10.3.2 Any notice sent by mail shall be deemed to have been
delivered within seven (7) working days after
dispatch or delivery to the relevant courier and
notice sent by fax shall be deemed to have been
delivered upon confirmation receipt. Notice of change
of address shall be effective upon receipt.
24
10.4 WAIVER:
No waiver of any right under this Agreement shall be deemed
effective unless contained in a written document signed by the
Party charged with such waiver, and no waiver of any breach or
failure to perform shall be deemed to be a waiver of any
future breach or failure to perform or of any other right
arising under this Agreement.
10.5 SEVERABILITY:
If any provision in this Agreement is agreed by the Parties to
be, or is deemed to be, or becomes invalid, illegal, void or
unenforceable under any law that is applicable hereto:
10.5.1 such provision will be deemed amended to conform to
applicable laws so as to be valid and enforceable; or
10.5.2 if it cannot be so amended without materially
altering the intention of the Parties, it will be
deleted, with effect from the date of this Agreement
or such earlier date as the Parties may agree, and
the validity, legality and enforceability of the
remaining provisions of this Agreement shall not be
impaired or affected in any way.
10.6 FURTHER ASSURANCES:
At the request of any of the Parties, the other Party or
Parties shall (and shall use reasonable efforts to procure
that any other necessary parties shall) execute and perform
all such documents, acts and things as may reasonably be
required subsequent to the signing of this Agreement for
assuring to or vesting in the requesting Party the full
benefit of the terms hereof.
10.7 SUCCESSORS:
This Agreement shall be binding upon and inure to the benefit
of the Parties hereto and their respective successors and
permitted assigns.
10.8 AMENDMENTS:
No amendment, modification or addition hereto shall be
effective or binding on any Party unless set forth in writing
and executed by a duly authorized representative of each
Party.
25
10.9 COUNTERPARTS:
This Agreement may be executed in any number of counterparts,
each of which when so executed shall be deemed to be an
original and all of which when taken together shall constitute
this Agreement.
10.10 COSTS:
Each Party shall bear its own costs and expenses in connection
with the transactions contemplated by this Agreement.
10.11 FORCE MAJEURE:
No Party to this Agreement shall be liable for failure or
delay in the performance of any of its obligations hereunder
if such failure or delay results from Force Majeure, but any
such failure or delay shall be remedied by such Party as soon
as practicable; provided, however, that, no Party to this
Agreement shall be excused for a failure or delay in the
performance of any of its payment obligations hereunder, even
if such failure or delay results from Force Majeure.
10.12 RELATIONSHIP OF THE PARTIES:
The Parties are independent contractors under this Agreement.
Nothing herein contained shall be deemed to create or
establish an employment, agency, joint venture, or partnership
relationship between the Parties or any of their agents or
employees, or any other legal arrangement that would impose
liability upon one Party for the act or failure to act of
another Party. No Party shall have any express or implied
power to enter into any contracts, commitments or negotiations
or to incur any liabilities in the name of, or on behalf of,
another Party, or to bind another Party in any respect
whatsoever.
10.13 ENTIRE AGREEMENT:
10.13.1 This Agreement sets forth all of the agreements and
understandings between the Parties with respect to
the subject matter hereof. There are no agreements or
understandings with respect to the subject matter
hereof, either oral or written, between the Parties
other than as set forth in this Agreement.
10.13.2 No provision of this Agreement shall be construed so
as to negate, modify or affect in any way the
provisions of any other agreement between the Parties
unless specifically provided herein and only to the
extent so specified.
IN WITNESS WHEREOF the Parties have executed this Agreement.
26
SIGNED
BY: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
---------------------------
for and on behalf of
ELAN PHARMA INTERNATIONAL LIMITED
SIGNED
BY: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
---------------------------
for and on behalf of
ELAN INTERNATIONAL SERVICES, LTD.
SIGNED
BY: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
---------------------------
for and on behalf of
TRANSMUCOSAL TECHNOLOGIES LTD.
SIGNED
BY: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------
for and on behalf of
ATRIX LABORATORIES, INC.
27
SCHEDULE 1
BALANCE SHEET
JUNE 30, 2003
--------------
ASSETS
Cash $ 1,864
Prepaid expense $ 3,140
Interest receivable $ --
--------------
Total Assets $ 5,004
==============
LIABILITIES
Current liabilities
Accounts payable and accrued expenses $ --
Due to Atrix, Inc $ 118,218
Due to Elan $ --
--------------
Total current liabilities $ 118,218
==============
SHAREHOLDERS' EQUITY
SHARE CAPITAL:
Non-voting convertible preferred stock, $1.00 par value;
6,000 shares authorized and outstanding:
Atrix Laboratories - 3,612 preferred shares $ 3,612
EIS - 2,388 preferred shares $ 2,388
--------------
$ 6,000
--------------
Voting common stock, $1.00 par value;
6,000 shares authorized and outstanding
--------------
Atrix Laboratories - 6,000 common shares $ 6,000
--------------
TOTAL SHARE CAPITAL $ 12,000
==============
CONTRIBUTED SURPLUS:
Atrix Laboratories - Common shares $ 7,494,000
Atrix Laboratories - Preferred shares $ 4,511,388
--------------
$ 12,005,388
--------------
--------------
EIS - Preferred shares $ 2,982,612
--------------
Capital Funding - Atrix Laboratories $ 4,467,046
Capital Funding - EIS $ 1,109,790
TOTAL CONTRIBUTED SURPLUS $ 20,564,836
==============
YTD NET INCOME (LOSS) $ (96,365)
ACCUMULATED DEFICIT $ (20,593,685)
Total shareholders' equity $ (113,213)
==============
Total liabilities and shareholders' equity $ 5,004
==============
28
SCHEDULE 2.3
PAYMENTS
Atrix: $ 97,634.54
EIS: $ 24,256.26
TOTAL $121,890.80
The above amounts include payments to be made by Newco on the Effective Date to
Codan Corporate Administrative Services in the amount of $7.85 and ▇▇▇▇▇▇▇ ▇▇▇▇
& ▇▇▇▇▇▇▇ in the amount of $3,664.95, for services rendered through the
Effective Date, and to Atrix in the amount $118,218.00.
29
SCHEDULE 3.6
REGULATORY APPLICATIONS
BEMA-fentanyl IND #62,864 was received by the FDA on July 1, 2002
30
SCHEDULE 4.1.2
ATRIX IMPROVEMENTS
U.S. Patent Applications filed since July 18, 2000 and pending
Serial Number Matter Title
============= ============
09/909,671 Process and delivery vessel for lyophilizing active agent
09/684,682 Pharmaceutical carrier device suitable for delivery of
pharmaceutical compounds to mucosal surfaces
10/456,814 Coupling syringe system and methods for obtaining a
mixed composition
10/373,400 Polymeric delivery formulations of leuprolide with
improved efficacy
10/121,430 Process for loading a drug delivery device
10/391,480 Process an delivery vessel for lyophilized active agent
60/454,100 Compositions and methods for treatment of tumors
60/441,829 Bioerodible film for delivery of pharmaceutical
compounds to mucosal surfaces
60/359,396 Nucleic acid formulation for the prevention and
treatment of sexually transmitted diseases
60/425,508 Adhesive bioerodible ocular drug delivery system
10/284,682 A protectant for UV-induced skin damage
10/081,050 Topical dapsone for the treatment of acne
US Patents allowed but not issued since July 18, 2000
Serial Number Matter Title
============= ============
09/643,289 Controlled release liquid delivery compositions with low
initial drug burst
10/054,624 Cover plate for use in lyophilization
31
US Patents issued since July 18, 2000
Serial Number Matter Title
============= ============
6,120,789 Nonpolymeric sustained release delivery system
6,159,498 Bioerodible film for delivery of pharmaceutical
compounds to mucosal surfaces
6,290,984 Pharmaceutical preparation applicable to mucosal
surfaces and body tissues
6,103,266 Pharmaceutical preparation applicable to mucosal
surfaces and body tissues
6,355,657 System for percutaneous delivery of opioid analgesics
6,395,293 Biodegradeable implant precursor
6,432,415 Pharmceutical gel and aerosol formulations and methods
to administer the same to skin and mucosal surfaces
Re.37,950 Biodegradeable in-situ forming implants and methods of
producing the same
6,245,345 Filamentous porous films and methods for producing the
same
6,537,565 Filamentous porous films and methods for producing the
same
6,261,583 Moldable solid delivery system
6,143,314 Controlled release liquid delivery compositions with low
initial drug burst
6,566,144 Cover plate for use in lyophilization
6,461,631 Biodegradeable polymer composition
6,528,080 Biodegradeable polymer composition
6,565,874 Polymeric delivery formulations of leuprolide with
improved efficacy
32
SCHEDULE 4.1.3
NEWCO INTELLECTUAL PROPERTY
Data created between July 18, 2000 and the Effective Date related to
formulations of BEMA-fentanyl and BEMA-ondansetron, all as set forth below:
1. Data generated by Preclinical (animal) studies performed on various
formulations of BEMA-fentanyl;
2. Data generated by a Clinical (human) study: Atrix Study No. FEN0104: A
Single Center, Randomized, Single Dose, Crossover, Pharmacokinetic
Study Comparing The Bioavailability Of BEMA*-Fentanyl (AL-3701.02) To
A Reference Oral Transmucosal Fentanyl Citrate (Actiq(R)) In Healthy
Volunteers; and
3. Data generated by Preclinical (animal) studies performed on various
formulations of BEMA-ondansetron.
SCHEDULE 5.1
RIGHTS RELATED TO THE SECURITIES;
AMENDMENTS TO THE FINANCE DOCUMENTS
1. DEVELOPMENT FUNDING; TERMINATION OF CONVERTIBLE PROMISSORY NOTE
Effective as of the Effective Date, in accordance with Clause 2.1.2 hereof, the
Note is hereby cancelled and is of no further force and effect.
The parties acknowledge and agree that no amounts were drawn down under the Note
as of the Effective Date.
2. TRANSFER RESTRICTIONS
The following provisions are hereby amended as follows, effective as of the
Effective Date:
Section 1(e) ("Exemption from Registration") of the Securities Purchase
Agreement (as to second legend only) is hereby deleted in its entirety and is of
no further force and effect.
Section 15 ("Assignments and Transfers") of the Securities Purchase Agreement is
hereby amended by (i) deleting the word "permitted" in the first sentence
thereof, (ii) deleting the second and third sentences thereof in their entirety,
and (iii) adding a new second sentence to read as follows: "The Company shall
not assign all or any part of this Agreement without the prior written consent
of the other parties.".
Section 10 ("Transfer of Registration Rights") of the Atrix Registration Rights
Agreement is hereby deleted in its entirety and is of no further force and
effect. Section 14(d) ("Successors and Assigns") of the Atrix Registration
Rights Agreement is hereby amended by (i) deleting the word "permitted" in the
second sentence thereof and (ii) deleting in the second sentence thereof ", in
accordance with Section 10 hereof".
Section 5(b) (i) of the Warrant is hereby deleted in its entirety and replaced
by the following: "This Warrant may be transferred or assigned by the Holder, in
whole or in part; provided, however, that the transferor shall continue to be
liable and obligated for its respective obligations hereunder after any such
assignment. This Warrant and all of the provisions hereof shall be binding upon
and inure to the benefit of the Holders and their respective successors and
assigns. The Company shall not assign any of its rights or obligations
hereunder."
3. PLEDGE/SECURITY INTEREST
Section 6 ("Pledge of Newco Stock") of the Securities Purchase Agreement is
hereby deleted in its entirety and is of no further force or effect whatsoever
as of the Effective Date.
2
4. EXCHANGE RIGHT
Neither Elan Corp nor any of its Affiliates has any intention of acquiring
shares of Series A Convertible Exchangeable Preferred Stock, $.001 par value, of
Atrix Laboratories, Inc. ("Series A Preferred") from Elan Pharmaceutical
Investments III, Ltd. ("EPIL III"). In the event that Elan Corp or any such
Affiliate nonetheless in the future acquires or otherwise obtains ownership or
control over such Series A Preferred, neither Elan Corp nor such Affiliate will
exercise the EIS Exchange Right (as defined in the Securities Purchase
Agreement) relating thereto.
5. SECURITIES PURCHASE AGREEMENT
For purposes of this Agreement, "EIS Exchange Right" shall have the meaning
given to the term "Exchange Right" in the Certificate of Designations.
Effective as of the Effective Date, Section 5(a) of the Securities Purchase
Agreement is hereby deleted in its entirety.
Effective as of the Effective Date, Section 5(c) of the Securities Purchase
Agreement is hereby amended to read in its entirety as follows:
"(c) Conversion Rights. The Company acknowledges that the Certificate
of Designations sets forth certain rights of the holders of shares of
Series A Preferred Stock to convert such shares of Series A Preferred
Stock into newly issued shares of Atrix Common Stock or successor
securities to Atrix Common Stock, and agrees that it will not take any
action which would impair such rights other than as otherwise permitted
by the provisions thereof or the other Transaction Documents."
3