EXHIBIT 10.2
DATED 15th June 2007
(1) BIOTECHNOLOGY RESEARCH CORPORATION LIMITED
(2) GERON CORPORATION
(3) TA THERAPEUTICS LIMITED
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AMENDED AND RESTATED JOINT VENTURE AGREEMENT
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CONTENTS
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1. Definitions and Interpretation.......................................................................1
2. Share Capital and Capital Contributions.............................................................11
3. The Business........................................................................................13
4. Directors...........................................................................................14
5. Prior Approval Required for Certain Board and Shareholders Actions..................................16
6. Discovery Research Program and Joint Discovery Research Committee...................................18
7. Joint Development Committee.........................................................................19
8. New Issues of Shares and Finance....................................................................19
9. Transfer of Shares..................................................................................21
10. Undertakings not to Compete.........................................................................22
11. Further Post Closing Provisions.....................................................................24
12. Termination.........................................................................................25
13. Effect of Winding Up of the Company or a Shareholder Transferring its Shares........................26
14. Undertakings Regarding the Operations of the Company................................................27
15. Distribution Policy.................................................................................28
16. Warranties..........................................................................................28
17. Confidentiality.....................................................................................29
18. Intellectual Property...............................................................................30
19. Expert Determination of Certain Matters.............................................................33
20. Mutual Co-operation.................................................................................34
21. Restrictions on Announcements.......................................................................35
22. No Partnership......................................................................................35
23. Conflict with Articles of Association...............................................................35
24. Remedies............................................................................................35
25. Costs...............................................................................................36
26. Assignment..........................................................................................36
27. Entire Agreement....................................................................................36
28. Variation...........................................................................................36
29. Notices.............................................................................................36
30. Waiver..............................................................................................37
31. Severability........................................................................................37
32. Counterparts........................................................................................37
33. Governing Law and Dispute Resolution................................................................37
Schedule 1 Pre-Emption Provisions............................................................................39
Schedule 2 Amendment to Geron Licence Agreement..............................................................41
Schedule 3 Existing Compounds................................................................................46
Schedule 4 Discovery Research Program........................................................................47
THIS AGREEMENT is made on the 15th day of June 2007
BETWEEN:
(1) BIOTECHNOLOGY RESEARCH CORPORATION LIMITED, a company incorporated
under the laws of Hong Kong whose registered office is at The Hong Kong
University of Science and Technology, Clear Water Bay, Kowloon, Hong
Kong ("BRC").
(2) GERON CORPORATION, a company incorporated under the laws of the state
of Delaware whose registered office is at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ of America ("Geron").
(3) TA THERAPEUTICS LIMITED, a company incorporated under the laws of Hong
Kong whose registered office is at ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇ (the "Company").
RECITALS:
(A) BRC and Geron have established the Company as a joint venture company
for the purposes of carrying on the Business (as defined below), and in
connection therewith, entered into the Original Joint Venture
Agreement.
(B) The Shareholders have entered into the Restructuring Agreement (as
defined below) to restructure their respective interests in the
Company.
(C) It is a requirement of Closing (as defined below) that the Shareholders
enter into this Agreement for the purposes of amending and restating
the Original Joint Venture Agreement.
(D) Each of the Parties enters into this Agreement in consideration of each
of the other Parties entering into this Agreement and accepting the
terms, undertakings and covenants contained herein.
TERMS AGREED:
1. Definitions and Interpretation
1.1 In this Agreement and the Recitals, where the context so admits, the
following words and expressions shall have the following meanings:
"Affiliate" means, in respect of a person, any other person who has Control
of, is under the Control of or is under common Control with the first mentioned
person and includes an Affiliated Company of the first mentioned person.
"Affiliated Company" means in relation to any company, any Associated
Company of such company and any company in which such company or any holding
company of such company holds or controls directly or indirectly not less than
20% of the issued share capital, provided that, for the purposes of the
foregoing, the terms "company" and "holding company" shall be deemed to include,
in addition to a body corporate, any other type of legal entity, including any
limited liability company, unincorporated association, firm, partnership, joint
venture, consortium, association, organisation or trust, and the meanings given
to the terms "company" and "holding company" in the Companies Ordinance shall,
for the purposes of the foregoing, be deemed to apply, mutatis mutandis, to such
other entities;
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"Amended BRC Services Agreement" means the amended services agreement
entered into on the date of this Agreement between the Company and BRC;
"Ancillary Agreements" means the BRC Licence Agreement, the Amended BRC
Services Agreement, the Geron Licence Agreement and the Geron Services
Agreement;
"Articles of Association" means the new Articles of Association of the
Company adopted as of the date of this Agreement and any reference to an
"Article" shall be a reference to that article of the Articles of Association;
"Associated Company" means, in relation to any company, any subsidiary or
holding company of that company or any other subsidiary of such holding company
(and for this purpose, HKUST shall be deemed to be a holding company of BRC
until such time as when BRC ceases to be a subsidiary of HKUST), provided that,
for the purposes of the foregoing, the terms "company", "subsidiary" and
"holding company" shall be deemed to include, in addition to a body corporate,
any other type of legal entity, including any limited liability company,
unincorporated association, firm, partnership, joint venture, consortium,
association, organisation or trust, and the meanings given to the terms
"company" and "holding company" in the Companies Ordinance shall, for the
purposes of the foregoing, be deemed to apply, mutatis mutandis, to such other
entities;
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"Background IP" means Intellectual Property existing as of 1 March 2005 or
at any time thereafter other than the Existing IP, a licence under which is
necessary for the development and/or commercialisation of products in the Field
of Use;
"Board" means the Company's board of directors;
"BRC Background IP" means Background IP owned by or licensed to BRC or
HKUST or any Affiliated Companies Controlled by BRC or HKUST, under which BRC or
such Affiliated Company of BRC or HKUST is legally permitted to grant licences;
"BRC Director" means a Director appointed by BRC pursuant to Clause 4.1;
"BRC Existing IP" means Existing IP owned by or licensed to BRC or HKUST or
any Affiliated Companies Controlled by BRC or HKUST under which BRC, HKUST or
such Affiliated Company of BRC or HKUST is legally permitted to grant licences;
"BRC Licence Agreement" means the licence agreement dated 21 March 2005
entered into between the Company and BRC;
"Business" means the business of the Company as described in Clause 3 and
such other business as the Board may determine should be carried on by the
Company (subject always to Clause 5.1);
"Business Day" means a day (other than a Saturday or a Sunday) on which
banks are open for business in both Hong Kong and California;
"Closing" has the meaning specified in the Restructuring Agreement;
"Collaboration Inventions" means any and all inventions, discoveries,
improvements, modifications, innovations, Derivative Compounds or Intellectual
Property (including without limitation materials and rights therein), whether or
not patentable, that are made, created, developed, discovered, conceived, or
reduced to practice (i) by an employee of the Company or of either BRC or Geron
or any of the Affiliated Companies Controlled by either BRC or Geron in the
course of activities in the Collaboration Program, or (ii) by a Third Party or
an Affiliated Company of either BRC or Geron which is not Controlled by either
BRC or Geron in the performance of a contract in support of the Collaboration
Program (but only to the extent that the Company, BRC or Geron or their relevant
Affiliated Companies has rights in such invention);
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"Collaboration Product" means any product that is described in, is claimed
in, incorporates or contains any Collaboration Technology;
"Collaboration Program" means the research, development, commercialization,
and other activities of the Parties under this Agreement;
"Collaboration Technology" means Background IP, Existing IP and
Collaboration Inventions;
"Companies Ordinance" means the Companies Ordinance (Chapter 32 of the Laws
of Hong Kong);
"company" means any company or body corporate wherever incorporated;
"Control" when used with respect to any person means the possession,
directly or indirectly, of power to direct or cause the direction of the
management and policies of such person, whether through the ownership of voting
securities, the right to control the composition of the governing body of the
person or by contract or otherwise and "Controlled" shall have a correlative
meaning and a "change in Control" shall be deemed to have occurred if any person
having previously Controlled the relevant person, ceases to do so, or if any
person acquires Control of the relevant person;
"Deed of Adherence" means a deed in a form reasonably acceptable to the
Shareholders pursuant to which a transferee or allottee of Shares agrees to be
bound by all the terms of this Agreement as if it had been a signatory to this
Agreement subject to any changes herein as are made in accordance with the
provisions of Clause 8.4;
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"Default Notice" means the written notice given by the non-defaulting
Shareholder to the Defaulter of the occurrence of an Event of Default;
"Defaulter" means with respect to an Event of Default, the Shareholder who
has committed or suffered any of the acts or events referred to in the
definition of Event of Default (whether or not that Shareholder has received
notice of breach under that definition);
"Derivative Compound" means any molecule or substance derived by or on
behalf of the Company from any Existing Compound, including, without limitation,
any modification, purification, analog, or synthetic reproduction of any
Existing Compound;
"Director" means any director of the Company from time to time;
"Discovery Research Program" has the meaning specified in Clause 6.1;
"DRP Completion Date" has the meaning specified in Clause 6.1;
"Event of Default" means the occurrence of any of the following:
(i) if (A) a proceeding is commenced in a court of competent jurisdiction
and is not dismissed within 30 days, or an order is made by a court of competent
jurisdiction or an effective resolution is passed, for the winding-up,
insolvency, administration, reorganisation, reconstruction, dissolution or
bankruptcy of the Defaulter (in each case, other than in the course of a bona
fide reorganisation or restructuring whilst solvent, including without
limitation by merger, consolidation, or sale of assets) or for the appointment
of a liquidator, receiver, administrator, trustee or similar officer of the
Defaulter or of all or substantially all of its business or assets; (B) the
Defaulter stops or suspends payments to its creditors generally or is unable or
admits its inability to pay its debts as they fall due or enters into any
composition or other arrangement with its creditors or is declared or becomes
bankrupt or insolvent; or (C) a creditor takes possession of all or
substantially all of the business or assets of the Defaulter or any execution or
other legal process is enforced against all or substantially all of the business
or assets of the Defaulter and is not discharged within 30 days;
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(ii) if the Defaulter is in material breach of its obligations hereunder
(or under any of the Ancillary Agreements) and such breach, if capable of
remedy, has not been remedied to the reasonable satisfaction of the other
Shareholder (or of the Company, in the case of the Ancillary Agreements) at the
expiry of (a) in the case of a failure to make a payment, 14 days, and (b) in
any other case, 60 days, following receipt by the Defaulter of written notice
from the non-defaulting Shareholder specifying the breach and reasonably
indicating the steps required to be taken to remedy the failure;
(iii) if the Defaulter ceases to carry on its business or any substantial
part thereof, or disposes of, or any governmental or other authority
expropriates, all or substantially all of its business or assets, provided that
this shall not apply to a bona fide reorganisation or restructuring of the
Defaulter whilst solvent (including without limitation by merger or
consolidation or sale of assets); and
(iv) in the case of BRC only, BRC ceases to be under the Control of HKUST,
The Hong Kong Jockey Club and/or The Hong Kong Jockey Club Charities Trust
provided that no Event of Default shall be deemed to have occurred if, with the
consent in writing of Geron (such consent not to be unreasonably withheld or
delayed) BRC becomes and remains under the Control of an entity Controlled by
The Hong Kong Jockey Club and/or The Hong Kong Jockey Club Charities Trust;
"Existing Compounds" means the compounds described in Schedule 3;
"Existing IP" means the Intellectual Property that existed as at 1 March
2005 to the extent it was directed to TA or TA Compounds;
"Expert" has the meaning given to it in Clause 19.1;
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"Field of Use" means the use of TA for Human Therapeutics;
"Geron Background IP" means Background IP owned by or licensed to Geron or
any of the Affiliated Companies Controlled by Geron, under which Geron or such
Affiliated Company is legally permitted to grant licences or sublicences (as the
case may be);
"Geron Director" means a Director appointed by Geron pursuant to Clause
4.1;
"Geron Existing IP" means Existing IP owned by or licensed to Geron or any
of the Affiliated Companies Controlled by Geron, under which Geron or such
Affiliated Company is legally permitted to grant licences or sublicences (as the
case may be);
"Geron Licence Agreement" means the licence agreement dated 21 March 2005
between the Company and Geron;
"Geron Services Agreement" means the services agreement dated 21 March 2005
between the Company and Geron;
"HKUST" means The Hong Kong University of Science and Technology;
"holding company" has the meaning attributed to it in section 2 of the
Companies Ordinance;
"Hong Kong" means the Hong Kong Special Administrative Region of the
People's Republic of China;
"Human Therapeutics" means any therapeutic or prophylactic products or
applications of products the marketing, use or sale of which in the U. S.
requires approval by the U.S. Food and Drug Administration of any such product
as a therapeutic or prophylactic drug, biologic or combination product;
"Intellectual Property" means patents, registered designs, design rights,
knowhow, trade marks, service marks, copyrights, trade secrets and other
confidential information, Internet domain names of any level, design rights,
rights in circuit layouts, topography rights, business names, registrations of,
applications to register (including without limitation patent applications) and
rights to apply for registration of any of the aforesaid items, rights in the
nature of any of the aforesaid items in any country, rights in the nature of
unfair competition rights and rights to ▇▇▇ for passing off;
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"Joint Development Committee" has the meaning given to it in Clause 7.1;
"Joint Discovery Research Committee" has the meaning given to it in Clause
6.3;
"Net" means, in relation to revenue, gross revenue received by the seller,
less any applicable sales and value added taxes but excluding income tax and in
the case of revenue from sales of products less (a) government-imposed duties,
(b) trade or cash discounts and rebates, and (c) shipping, insurance and freight
costs borne by the seller;
"Original Joint Venture Agreement" means the Joint Venture Agreement dated
1 March 2005 between BRC and Geron;
"Parties" means the parties to this Agreement and "Party" means any one of
them including any other person who becomes a Shareholder of the Company and who
agrees to be bound by the provisions of this Agreement by executing a Deed of
Adherence;
"Prescribed Price" means the price per Share (as of the date of the written
notice specified under either Clause 12.3 or Clause 12.4.2) (i) as agreed by the
Shareholders, or (ii) in the event the Shareholders do not agree on the
Prescribed Price per Share within 30 days of the relevant written notice, as
determined by an Expert in accordance with Clause 19 below;
"Product" means a product for which either (i) the manufacture, (ii) sale
or (iii) use thereof would, but for a license, infringe a Valid Patent Claim to
a Collaboration Invention and / or within the Geron Existing IP in the country
of such manufacture, sale or use;
"Prospective Purchaser" has the meaning given to it in paragraph (C) of
Schedule 1;
"Purchase Notice" has the meaning given to it in paragraph (E) of Schedule
1;
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"Recipient" has the meaning given to it in paragraph (C) of Schedule 1;
"Relevant Percentage" means, in relation to a Shareholder, a fraction, the
numerator of which is the total number of Shares held by that Shareholder at the
time in question and the denominator of which is the total number of Shares in
issue at that time;
"Relevant Shares" has the meaning given to it in paragraph (C) of Schedule
1;
"Restructuring Agreement" means the restructuring agreement dated 15th June
2007 entered into between BRC and Geron providing among other things for the
restructuring of the Shareholders' equity interests in the Company;
"SIAC" means the Singapore International Arbitration Centre;
"Share" means any share (of whatever class or denomination) in the share
capital from time to time of the Company;
"Shareholder" means any registered holder of one or more Shares from time
to time;
"subsidiary" has the meaning attributed to it in section 2 of the Companies
Ordinance;
"TA" means directly or indirectly inducing the expression, or increasing
the level of expression, or otherwise increasing the activity of endogenous
telomerase in a cell or organism;
"TA Compounds" means compounds that induce TA, including the Existing
Compounds;
"Third Party" means any person other than BRC, Geron or any of their
Affiliated Companies;
"Third Party Interest" means and includes any interest or equity of any
person (including any right to acquire, option or right of pre-emption), voting
arrangement, mortgage, charge, pledge, ▇▇▇▇ of sale, lien, deposit,
hypothecation, assignment or any other encumbrance, priority or security
interest or arrangement or interest under any contract or trust or any other
Third Party interest of whatsoever nature over or in the relevant property;
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"Transfer Notice" has the meaning given to it in paragraph (C) of Schedule
1;
"Transferor" has the meaning given to it in paragraph (C) of Schedule 1;
"U.S." means the United States of America;
"US$" means United States dollars, the lawful currency of the United States
of America; and
"Valid Patent Claim" means a claim of a pending patent application or an
issued and unexpired patent, which claim has not been revoked or held
unenforceable or invalid by a decision of a court or other governmental agency
of competent jurisdiction, and which claim has not been disclaimed, denied or
admitted to be invalid or unenforceable through reissue, re-examination or
disclaimer or otherwise as of the date of sale of a Product.
1.2 Save where the context otherwise requires words and phrases the
definitions of which are contained or referred to in the Companies
Ordinance shall be construed as having the meaning thereby attributed
to them.
1.3 Any references, express or implied, to statutes or statutory provisions
shall be construed as references to those statutes or provisions as
respectively amended or re-enacted or as their application is modified
from time to time by other provisions (whether before or after the date
hereof) and shall include any statutes or provisions of which they are
re-enactments (whether with or without modification) and any orders,
regulations, instruments or other subordinate legislation under the
relevant statute or statutory provision. References to sections of
consolidating legislation shall wherever necessary or appropriate in
the context be construed as including references to the sections of the
previous legislation from which the consolidating legislation has been
prepared.
1.4 References to any document (including this Agreement) are references to
that document as amended, consolidated, supplemented, novated or
replaced from time to time;
1.5 References in this Agreement to recitals, clauses, paragraphs and
schedules are to clauses and paragraphs in and recitals and schedules
to this Agreement (unless the context otherwise requires). The Recitals
and Schedules to this Agreement shall be deemed to form part of this
Agreement.
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1.6 Headings are inserted for convenience only and shall not affect the
construction of this Agreement.
1.7 References to the Shareholders and the Company include their respective
successors and permitted assigns.
1.8 References to "persons" shall include any individual, any form of body
corporate, unincorporated association, firm, partnership, joint venture,
consortium, association, organisation or trust (in each case whether or not
having a separate legal personality).
1.9 References to writing shall include any methods of reproducing words in a
legible and non-transitory form.
1.10 The masculine gender shall include the feminine and neuter and the singular
number shall include the plural and vice versa.
1.11 In construing this Agreement:
1.11.1 the rule known as the ejusdem generis rule shall not apply and,
accordingly, general words introduced by the word "other" shall not be
given a restrictive meaning by reason of the fact that they are
preceded by words indicating a particular class of acts, matters or
things; and
1.11.2 general words shall not be given a restrictive meaning by reason of
the fact that they are followed by particular examples intended to be
embraced by the general words.
2. Share Capital and Capital Contributions
2.1 As at the date of this Agreement, immediately following Closing, BRC
and Geron are the legal and beneficial owners of the following Shares:
Shareholder Number and Class of Shares
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Geron * fully paid up Shares
BRC * fully paid up Shares
1 partly paid Share, paid up as to
US1.00 (being the nominal value of
such Share)
2.2 BRC agrees and undertakes to pay to the Company in cash an amount of
US$* by way of share premium on its partly paid Share in two
installments, being as to US$* on * and as to US$* on * (together being
the "Agreed Premium Amount").
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* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to
the omitted portions.
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2.3 As soon as practicable following Closing, the Shareholders agree to procure
that all such steps as are necessary are taken to procure that the share
premium payable on the one partly paid Share legally and beneficially owned
by BRC shall be reduced from US$* to US$* by means of a lawful reduction of
capital in accordance with the Companies Ordinance (the amount of US$* by
which the capital of the Company is to be reduced being the "Reduction
Amount"). The costs and expenses relating to application to Court and the
reduction procedure shall be borne by the Company. If the Court shall not
approve such reduction, then each of Geron and BRC shall as soon as
reasonably practicable take all commercially reasonable steps in order to
procure that the one (1) partly paid Share held by BRC (the "BRC Partly
Paid Share") shall be lawfully repurchased by the Company in accordance
with the Companies Ordinance after * and after the payment in full of the
balance of the Agreed Premium Amount under Clause 2.2 and for this purpose:
2.3.1 the Parties agree to enter into and to procure the Company to enter
into such documentation as is necessary to give effect to such
repurchase;
2.3.2 subject to payment to the Company of the Reduction Amount then
outstanding on the BRC Partly Paid Share to make it paid up in full,
such repurchase shall be made for a consideration of US$*;
2.3.3 Geron shall pay to the Company the amount of US$* for and on behalf
of * referred to in Clause 2.3.2;
2.3.4 *; and
2.3.5 the Company shall bear the legal costs, filing fees and other charges
relating to the repurchase.
2.4 For so long as the Company shall remain under the Control of ▇▇▇▇▇, ▇▇▇▇▇
undertakes to procure that the Company shall not:
2.4.1 make a call on BRC in respect of the amount of the Reduction Amount;
2.4.2 make any claim against BRC for any damages arising from the
non-payment when due of the capital contributions that were required
to be made by BRC prior to the date of this Agreement under clause 3.1
and schedule 7 of the Original Joint Venture Agreement; or
2.4.3 make any claim against BRC on or after the commencement of a
voluntary winding up of the Company for the unpaid balance of the
Agreed Premium Amount,
provided always that Clauses 2.4.1 and 2.4.2 shall be deemed not to
affect BRC's liability to pay the amounts referred to in Clause 2.2
above comprising the Agreed Premium Amount on the dates for payment
specified in that Clause, or any deemed call or right of the Company to
make a call in respect of such amounts.
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the Commission. Confidential treatment has been requested with respect to
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2.5 Unless BRC shall have defaulted in payment of an instalment of the
Agreed Premium Amount and such default shall not have been remedied,
Geron further agrees to pay to the Company on behalf of BRC *% of the
amount of any call that is made by the Company at any time after the
execution of this Agreement in respect of the Reduction Amount, such
payment by Geron to be made as soon as reasonably practicable following
receipt of written notice to Geron of such call and in any event
simultaneously with the payment to the Company of the balance of *% of
the amount of such call by BRC provided that, for the avoidance of
doubt, this Clause 2.5 shall not apply to any payment in respect of the
Reduction Amount made in connection with the repurchase contemplated
under Clause 2.3.
2.6 The Parties agree that the US$* paid or payable to the Company by BRC
in respect of the subscription price of its partly paid Share on or
before the DRP Completion Date shall, subject to Clause 6.2, be applied
following receipt to the costs and expenses of the Discovery Research
Program. To the extent that any part of the subscription price payable
by BRC for its partly paid Share is not expended by the Company towards
the Discovery Research Program before the DRP Completion Date, such
funds shall be applied in accordance with Clause 2.7, provided that,
without the prior written consent of BRC, in no event shall any such
funds be applied with respect to any expense or work unless such
expense shall have been incurred, or such work shall have been
undertaken, at HKUST.
2.7 Unless otherwise directed by the Board, and unless already expended by
the Company at the date of this Agreement, and except as provided in
Clause 2.6, all amounts received by the Company before or after the
date of this Agreement from either Shareholder by way of subscription
monies for Shares shall be applied to work directed by the Joint
Development Committee, as specified in Clause 7, or if not so required
then in such manner as the Board shall determine but, for the avoidance
of doubt, except as provided in Clause 2.6 or otherwise approved by the
Board such funds shall not be applied towards additional work or
expenses in connection with the Discovery Research Program.
3. The Business
3.1 The Parties shall procure that the Business shall be the carrying on
all or any of the following activities: to conduct research,
development and commercialisation of Intellectual Property and
technology in the Field of Use, including without limitation the
development and commercialisation of the Collaboration Products.
3.2 Subject to Clauses 5.1 and 5.4, the Business shall be conducted in
accordance with the business plan approved by the Board from time to
time. During the period from the date of this Agreement to the DRP
Completion Date, the business plan shall incorporate the work plan for
the Discovery Research Program as specified in Schedule 4. Each of the
Parties shall use its respective reasonable endeavours, without being
required to incur any financial obligation (other than as expressly set
out in this Agreement), to promote the interests of the Company, to
ensure that the
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* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to
the omitted portions.
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3.3 Company conducts the Business with energy and efficiency and to facilitate
the promotion of the Business. Each Shareholder hereby covenants with the
other Shareholder that it shall at all times act in good faith towards the
other in connection with this Agreement and in relation to the conduct of
the Business and the interests of the Company, and further, shall act in
what it reasonably believes to be the best interest of the Company and not
act contrary to what it reasonably believes to be the interests of the
Company or the Company's conduct of the Business.
4. Directors
4.1 The maximum number of Directors shall be six, unless otherwise agreed
in writing by the Shareholders. At such times as a Shareholder owns (i)
at least 10% but less than 20% of the total issued Shares, such
Shareholder shall be entitled to appoint and at any time remove or
substitute one Director; (ii) at least 20% but not more than 40% of the
total issued Shares, such Shareholder shall be entitled to appoint and
at any time remove or substitute two Directors; (iii) more than 40% but
less than 60% of the total issued Shares, such Shareholder shall be
entitled to appoint and at any time remove or substitute three
Directors; (iv) at least 60% but not more than 80% of the total issued
Shares, such Shareholder shall be entitled to appoint and at any time
remove or substitute four Directors; (v) more than 80% but not more
than 90% of the total issued Shares, such Shareholder shall be entitled
to appoint and at any time remove or substitute five Directors; and
(vi) more than 90% of the total issued Shares, such Shareholder shall
be entitled to appoint and at any time remove or substitute six
Directors.
4.2 A Shareholder may appoint or remove a Director by depositing written
notice at the Company's registered office and by sending a copy of the
same to the other Shareholder.
4.3 In the event that any Shareholder disposes of all its Shares, such
Shareholder shall immediately procure the resignation of all the
Directors at the time holding office by reason of their nomination by
such Shareholder. In the event that the Relevant Percentage of a
Shareholder falls below any of the relevant shareholding thresholds set
out in Clause 4.1, such Shareholder shall comply with Clause 4.1 and
immediately procure the resignation of the relevant number of
Director(s) at the time holding office by reason of their nomination by
such Shareholder.
4.4 Any Shareholder removing a Director in accordance with this Clause 4
and the relevant provisions of the Articles of Association shall be
responsible for and shall hold harmless the other Shareholder and the
Company from and against any claim for damages, loss of office,
wrongful dismissal or otherwise arising out of such removal and any
reasonable costs and expenses incurred in defending such proceedings
including, but without prejudice to the generality of the foregoing,
legal costs actually incurred.
4.5 The Board shall meet from time to time as required. At each meeting of
the Board and in respect of each resolution proposed to the Board each
Director shall have one vote. Subject to Clause 4.10, Clause 4.11,
Clause 5.1 and 5.4, all resolutions of the Board shall be passed by
simple majority vote.
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4.6 Unless waived by a majority of the Directors, not less than seven days'
notice, which period of notice shall be exclusive of the day on which
the notice is served or deemed to be served and the day for which the
meeting is called, of all meetings of the Board shall be given to each
Director and shall be accompanied by an agenda of the business to be
transacted at such meeting together with all papers to be circulated or
presented to the same. Within no more than ten days after each such
meeting, a certified copy of the minutes of that meeting shall be
delivered to each Director.
4.7 The chairman of the Board (the "Chairman") shall at all times be a
Director appointed by the Shareholder holding more than 50% of the
Shares (or if no Shareholder holds more than 50% of the Shares, then
determined by ordinary resolution of Shareholders). In the case of an
equality of votes at any meeting of the Board or of the Shareholders,
the Chairman shall not be entitled to a second or casting vote.
4.8 No meeting of the Board may proceed to business nor transact any
business unless a quorum is present at the start of and throughout such
meeting. A quorum of the Board shall be one BRC Director and two Geron
Directors present in person or represented by an alternate. In the
event that a quorum of the Directors is not so present at the start of
and throughout a duly convened Board meeting, that meeting shall be
adjourned to the same time and place on the same day in the next week
or as otherwise agreed by a simple majority of the Directors and a
quorum at such adjourned meeting shall consist of any three Directors
present in person or represented by an alternate.
4.9 Each Director may in accordance with and subject to the Articles of
Association, appoint an alternate to represent him at meetings of the
Board which he is unable to attend. Such alternate shall be entitled to
attend and vote at meetings of the Board and to be counted in
determining whether a quorum is present. Each alternate director shall
have one vote for every Director whom he represents in addition to any
vote of his own.
4.10 Subject only to Clauses 5.1 and 5.4, a resolution of the Board shall be
validly passed if the text of the resolution has been signed or
approved by all of the Directors or their respective alternates in
accordance with the Articles.
4.11 Subject only to Clauses 5.1 and 5.4, the business of the Company shall
be managed by the Board which may delegate its powers to the Joint
Discovery Research Committee, the Joint Development Committee or such
other committees of the Board as it may determine. Any such committee
shall, in the exercise of the powers so delegated, conform to any
regulations that may be imposed on it by the Board. If the Board so
authorises or requests, auditors, consultants, advisers and employees
shall be permitted to attend and speak at meetings of the Board, but
not to vote.
4.12 Directors may participate in a meeting of the Board by means of
telephone conference, video conferencing or similar communications
equipment whereby all persons participating in the meeting can hear
each other and such participation shall constitute presence in person.
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4.13 Each Shareholder hereby consents to receiving not less than seven days'
notice (or such shorter notice as consented to by the Shareholders in
writing) of each Shareholders' meeting, which period of notice shall be
exclusive of the day on which the notice is served or deemed to be
served and the day for which the meeting is called and each such notice
shall specify the business to be transacted thereat. The quorum for
Shareholders' meetings shall be at least one duly authorised
representative of BRC and at least one duly authorised representative
of Geron, with each Share having one vote. A quorum must be present at
the beginning of and throughout each meeting. In the event that a
quorum of Shareholders is not present at the start of and throughout a
duly convened Shareholders' meeting, that meeting shall be adjourned to
the same time and place on the same day in the next week and a quorum
at such adjourned meeting shall consist of the duly authorised
representative of any Shareholder present at such adjourned meeting.
The Chairman shall preside as chairman at every Shareholders' meeting.
Questions arising at any Shareholders' meeting shall be decided by a
simple majority vote of those present or participating via other
permitted means and entitled to vote, except where a greater majority
is required by the Articles of Association, any agreement between the
Shareholders or by any relevant law and in the case of an equality of
votes, the Chairman shall not have a casting vote. Any Shareholder may
require a vote to be taken on a poll. Shareholders may participate in a
Shareholders' meeting by means of telephone conference, video
conferencing or similar communications equipment whereby all persons
participating in the meeting can hear each other and such participation
shall constitute presence in person or by proxy or representative.
Shareholders' resolutions may be passed by circular resolutions signed
by or on behalf of all the Shareholders.
4.14 Each Shareholder shall use all its reasonable efforts to attend at each
general meeting of the Company. Each Shareholder shall exercise or
refrain from exercising any voting rights or other powers of control so
as to ensure the passing of any and every resolution necessary or
desirable to procure that the affairs of the Company are conducted in
accordance with the provisions of this Agreement and otherwise to give
full effect to the provisions of this Agreement and likewise to ensure
that no resolution is passed which does not accord with such
provisions.
5. Prior Approval Required for Certain Board and Shareholders Actions
5.1 Subject to Clauses 5.2, 5.3 and 5.6, following Closing and save as
otherwise provided in this Agreement, the Shareholders shall exercise
all voting rights and other powers of control available to them in
relation to the Company to procure that the Company and/or the Board
shall not, without the prior written approval of BRC and Geron:
5.1.1 repurchase any of its own shares or effect any reduction of share
capital or enter into any scheme of arrangement in respect of its
share capital;
5.1.2 permit the registration of any person as a shareholder whether by way
of subscription or transfer if such subscription or transfer is
restricted by or not in compliance with this Agreement;
5.1.3 vary any of the rights attaching to any Shares;
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5.1.4 create or, where appropriate, issue any fixed or floating charge,
debenture, lien (other than a lien arising by operation of law or in
the ordinary course of business) or other mortgage, encumbrance or
security over the whole or any part of the undertaking, business,
property or assets (tangible or intangible) of the Company, except for
the purpose of securing the indebtedness of the Company for sums
borrowed in the ordinary and proper course of the Business;
5.1.5 give any guarantee, indemnity or security to secure the liabilities
or obligations of any person (other than the Company);
5.1.6 make any material change in the nature of the Business;
5.1.7 enter into, vary or terminate any of the Ancillary Agreements (other
than in accordance with its terms); or
5.1.8 establish, cancel, or vary the terms of any share option or share
incentive scheme.
5.2 The approval of a Shareholder under Clause 5.1 shall not be required if
that Shareholder ceases to be the legal and beneficial owner of at
least 15% of the total issued share capital from time to time.
5.3 No Shareholder shall unreasonably withhold or delay its approval under
Clause 5.1 to the establishment, cancellation, or variation of the
terms of any share option or share incentive scheme which, when
considered in the aggregate with all such schemes of the Company,
involves the issue of Shares carrying Voting Rights not exceeding 10%
of the total Voting Rights attaching to Shares, and for these purposes
in respect of any Share, "Voting Rights" means the right to vote in all
circumstances at general meetings of the Company, and for the avoidance
of doubt the dilution or potential dilution of the equity interests of
a Shareholder arising from an issue of shares under such scheme shall
not be a reasonable basis for withholding or delaying such approval.
5.4 Save as otherwise provided in this Agreement, the Shareholders shall
exercise all voting rights and other powers of control available to
them in relation to the Company to procure that the Company and/or the
Board shall not, without the prior written approval of BRC and Geron
enter into any transaction between the Company and any of the
Shareholders or any Affiliate of any Shareholder if such transaction is
not on arms' length commercial terms and at fair market value.
5.5 The Parties shall procure that the Company shall (so far as it is
legally able to do so) observe and comply with the provisions,
prohibitions and restrictions in this Clause 5.
5.6 No provision of this Agreement shall restrict Geron from procuring (or
require Geron to obtain the consent of BRC for) the winding up of the
Company in any manner permitted by law, provided that, for the
avoidance of doubt, the foregoing shall not restrict, limit or reduce
in any manner any of the obligations of Geron that apply upon and
following the winding up of the Company under applicable law and under
this Agreement, including Clauses 13 and 18 thereof.
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6. Discovery Research Program and Joint Discovery Research Committee
6.1 The Company shall during the period from the date of this Agreement to
31 May 2009 or such later date as the Joint Discovery Research
Committee may agree (the "DRP Completion Date") undertake the program
of discovery research specified in Schedule 4 ("Discovery Research
Program").
6.2 No expense shall be incurred and no work shall be undertaken in
connection with the Discovery Research Program unless (i) the amount of
such expense or cost of such work shall have been funded in advance by
BRC paying to the Company the amount thereof towards the payment of the
issue price of its partly paid Share, and (ii) unless otherwise agreed
in writing by BRC, such expense shall be incurred and such work shall
be undertaken at HKUST. Unless otherwise approved by the Board:
6.2.1 the aggregate amount to be applied by the Company (whether before or
after the date of this Agreement) towards the Discovery Research
Program shall not exceed US$*; and
6.2.2 no further expense shall be incurred or work undertaken in connection
with the Discovery Research Program after the DRP Completion Date.
6.3 The Company shall maintain a committee to be known as the "Joint
Discovery Research Committee" up to the DRP Completion Date and beyond
that date if so directed by the Board. The Joint Discovery Research
Committee shall consist of two representatives of Geron (one of whom
shall serve as Chair) and two representatives of BRC, and shall
communicate frequently (at least monthly) in formal or informal
meetings and/or telephone conferences.
6.4 Subject to the final authority of the Board, the Joint Discovery
Research Committee shall oversee and provide day to day management of
the Discovery Research Program and any other functions allocated to it
by the Board. The Joint Discovery Research Committee shall (i)
implement the Discovery Research Program, including the work plan
described in Schedule 4; (ii) if appropriate in the Joint Discovery
Research Committee's judgment, propose modifications to the Discovery
Research Program and the work plan described in Schedule 4 and submit
them to the Board for approval; and (iii) perform such other functions
in relation to the Discovery Research Program as are assigned to it by
the Board. Despite paragraph (ii) above, no modifications shall be made
to the Discovery Research Program and the work plan described in
Schedule 4 without the written approval of both BRC and Geron.
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6.5 The Joint Discovery Research Committee shall seek to achieve unanimity
on all issues coming before it. In the event that the Joint Discovery
Research Committee is unable to reach a unanimous decision on any
issue, then the matter shall be decided by a simple majority vote and
in the case of an equality of votes, the Chair of the Joint Discovery
Research Committee shall not have a casting vote. If the vote on a
matter before the Joint Discovery Research Committee is a tie, any
member of the Joint Discovery Research Committee may refer the matter
to the Board for decision by a written notice to the Board, with copies
to the members of the Board and the Joint Discovery Research Committee,
that describes the matter as presented to the Joint Discovery Research
Committee.
7. Joint Development Committee
7.1 The Company shall establish a committee to be known as the "Joint
Development Committee" to direct, subject to the final authority of the
Board, all research and development activities of the Company other
than those allocated in Clauses 6.1 and 6.4 to the Joint Discovery
Research Committee. For so long as BRC shall own 20% of the Shares: (a)
the Joint Development Committee shall consist of 5 members, of which
Geron shall have the right to appoint three members (one of whom shall
serve as Chair) and BRC shall be entitled to appoint two members, and
(b) each of BRC and Geron may also nominate non-voting observers to the
Joint Development Committee to observe its work who may speak but may
not vote at meetings of the Joint Development Committee. The Joint
Development Committee may impose restrictions on such observers to the
extent that it reasonably determines that the number, presence or
actions of such observers adversely affects or may adversely affect the
work of the Joint Development Committee. If the percentage of Shares
owned by Geron and/or BRC should change, then the composition of the
Joint Development Committee shall be as determined by the Board,
provided however that BRC shall be entitled to appoint at least one
voting member of the Joint Development Committee (as well as non-voting
observers) for so long as BRC shall own at least 10% of the Shares. The
Joint Development Committee shall communicate frequently (at least
monthly) in formal or informal meetings and/or telephone conferences.
7.2 Voting on all matters coming before the Joint Development Committee
shall be decided by a simple majority vote and in the case of an
equality of votes, the Chair of the Joint Development Committee shall
have a casting vote.
8. New Issues of Shares and Finance
8.1 The Company will not issue any new Shares to any person unless the
Board has offered each Shareholder the opportunity, but without any
obligation, to subscribe for such Shares on a pro rata basis in
accordance with their then Relevant Percentage (a "New Subscription"),
such offer to be made by written notice to the Shareholders specifying
(a) the aggregate amount to be raised by such new issue; (b) the number
of Shares offered to the Shareholder, (c) the terms of the offer
(including the subscription price per Share to be subscribed). If it is
intended or anticipated by the Company that the new Shares shall be
subscribed wholly by a Shareholder and/or any of its Affiliates, then
the subscription price per Share to be subscribed shall be such amount
as is agreed by the Company and all the Shareholders or, failing such
agreement within seven (7) days of written notice from the Company
requiring such agreement, not less than the fair market value thereof
as appraised by a reputable independent expert.
19
8.2 If either Shareholder (a "Diluting Shareholder") fails to apply for its
pro rata entitlement to the new Shares in accordance with this Clause 8
within a period of 14 days after from the Board's call therefor, then
the other Shareholder shall have the right within 14 days thereafter to
elect by written notice to the Board and to the Diluting Shareholder to
subscribe for both the Shares offered to it and the Shares offered to
the Diluting Shareholder, on the same terms as previously offered to
both the Shareholders, and the Shareholders shall promptly procure that
the necessary authorisations are given (including the passing of any
resolutions of Shareholders) and steps taken for such Shares to be
allotted and issued to such other Shareholder, such Shares to be paid
up and issued in accordance with the terms of the offer as specified in
the notice of the offer given under Clause 8.1.
8.3 If the subscriptions elected to be made by the Shareholders in
accordance with Clause 8.1 and 8.2 are insufficient to provide the
Company with funding in the aggregate amount specified in the notice
given under Clause 8.1, then the Company may, during a period of 6
months following the last date for payment of the subscriptions under
Clauses 8.1 and 8.2 offer the balance of any Shares to any other person
or person for subscription on such terms as the Board may determine,
provided always that the subscription price per Share to be subscribed
shall not be less than the price offered to the Shareholders under
Clause 8.1.
8.4 If the Board wishes to offer new Shares to Third Parties pursuant to
Clause 8.3, then the Parties agree that they will promptly enter into
such reasonable agreements and other documents as may be necessary to
amend the terms of this Agreement and the Articles of Association in
such manner as, subject to the approval of the Board, such Third
Parties shall reasonably require, provided always that no such
amendment shall be made as shall abrogate or impair the rights of any
Shareholder:
8.4.1 under Clauses 2.3 to 2.6, 4.1, 5, 6, 8, 13, 15.2 or 18,
8.4.2 to appoint Directors to the Board or representatives to the Joint
Discovery Research Committee or Joint Development Committee; or
8.4.3 to form part of the quorum at any meeting of the Board or
Shareholders,
in each case as expressed in, and subject to the terms of, this
Agreement. Each of the Parties agrees that it will not unreasonably
withhold or delay its execution or implementation of, such amendments
and/or documents and agrees and acknowledges that (a) any such
withholding or delay shall constitute a material breach of this
Agreement and (b) the dilution or potential dilution of the equity
interests of a Shareholder in the Company arising from an issue of
shares under Clause 8.3 shall not be a reasonable basis for any such
withholding or delay.
8.5 Subject to Clause 8.6, the provisions of Clauses 8.1 to 8.4 shall apply
in the same manner, adjusted as necessary, to the issue of any
securities convertible into or exchangeable for Shares and the grant by
the Company of any rights (by way of option or warrant or otherwise) to
subscribe for or acquire Shares.
20
8.6 Nothing in this Clause 8 shall restrict or apply to the grant of
options or the issue of Shares in accordance with the terms of any
share option or share incentive scheme established in accordance with
the terms of this Agreement.
8.7 If the Board determines to obtain loans from one or more Shareholders,
the Board must offer to each Shareholder, without any obligation, the
right to advance loans to the Company on a pro rata basis in accordance
with their then Relevant Percentage (a "New Advance") such offer to be
made by written notice to the Shareholders specifying the amount which
each Shareholder is entitled to advance and terms for the loans.
8.8 If either Shareholder (a "Non-Lending Shareholder") fails to make its
New Advance in accordance with the offer made under Clause 8.7 within a
period of 14 days after from the date of such offer, then the other
Shareholder shall have the right within 14 days thereafter to elect by
written notice to the Board and to the Non-Lending Shareholder to make
both its own New Advance and the New Advance of the Non-Lending
Shareholder, on the same terms as previously offered to both the
Shareholders, and the Shareholders shall procure that the necessary
authorisations are given (including the passing of any resolutions of
Shareholders) and steps taken for such New Advances to be made in
accordance with the terms of the offer as specified in the notice of
the offer given under Clause 8.7.
8.9 Despite Clauses 8.7 and 8.8, nothing in this Agreement shall restrict
the Company from obtaining loans from, or entering into borrowing or
financing facilities of any type with, any bank or financial
institution on such terms as the Board may determine.
8.10 Save as provided in Clause 2.3, no Shareholder shall be obliged to
provide any loan to or subscribe any share capital of the Company nor
to give any guarantee, security or indemnity in respect of any of the
liabilities or obligations of the Company.
9. Transfer of Shares
9.1 No transfer of any Share to any other person shall be registered
unless:
9.1.1 it is made in respect of a Share on which the total amount of the
nominal value and any premium has been paid in cash in full to the
Company;
9.1.2 the proposed transferee (if not already bound by the provisions of
this Agreement) has entered into a Deed of Adherence; and
9.1.3 such transfer is made in compliance with this Clause 9 and the
provisions contained in Schedule 1; and
9.1.4 except where the transfer is in accordance with Clause 9.2, the
transferor assigns and the transferee accepts an assignment of the
benefit of all or, in the case of a transfer of part of the Shares of
a Shareholder a proportionate part, of any loans made to the Company
by the transferor or any of its Associated Companies and for the time
being outstanding and assumes all the obligations of the transferor in
respect of all, or a proportionate part, of any guarantee given by the
21
transferor on behalf of the Company,
and save as otherwise provided in this Agreement no Shareholder shall
otherwise sell, transfer or dispose of any Share or Shares or any
interest therein or create any Third Party Interest in respect thereof.
9.2 Notwithstanding Clause 9.1, the Parties agree that a transfer of all of
the Shares owned by a Shareholder to a transferee who is and remains
either (i) a wholly-owned subsidiary of the ultimate holding company of
the transferor Shareholder; (ii) the ultimate holding company of the
transferor Shareholder; or (iii) a wholly-owned subsidiary of the
transferor Shareholder, shall be permitted provided that:
9.2.1 the obligations of the transferor Shareholder under this Agreement
will remain unaffected by the proposed transfer;
9.2.2 the transferee executes a Deed of Adherence contemporaneously with
such transfer; and
9.2.3 the Shares will be re-transferred to the transferor Shareholder (or,
at the election of the transferor Shareholder by prior written notice
to the other Shareholder, to another transferee that is either (i) a
wholly-owned subsidiary of the ultimate holding company of the
transferor Shareholder; (ii) the ultimate holding company of the
transferor Shareholder; or (iii) a wholly-owned subsidiary of the
transferor Shareholder, in which case this Clause 9.2 shall apply to
such transfer of Shares to another transferee) immediately upon the
relevant transferee ceasing to be either a wholly-owned subsidiary of
the ultimate holding company of the transferor Shareholder, the
ultimate holding company of the transferor Shareholder or a
wholly-owned subsidiary of the transferor Shareholder, as the case may
be.
Each Shareholder shall provide to the other such information as the
other may reasonably require to ascertain that the transferee has not
ceased to be such a wholly-owned subsidiary.
9.3 The Shareholders will procure that the Directors shall register any
transfer of Shares which complies with the provisions of this Clause 9
and Schedule 1.
10. Undertakings not to Compete
10.1 Each of the Shareholders undertakes to and with the Company and the
other Shareholder that (except following the commencement of a winding
up of the Company) for as long as it owns any Shares and for a period
of * months thereafter ("the Period"):
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10.1.1 it shall not and it shall procure that none of its Associated
Companies shall, other than by means of the Company, either on its own
account or in conjunction with or on behalf of any other person, carry
on or be engaged, concerned or interested directly or indirectly
whether as shareholder, director, employee, partner, agent or
otherwise in carrying on any activity or business within the Field of
Use;
10.1.2 without the prior written consent of the other Shareholder granted
specifically with respect to the individual(s) in question, it shall
not and it shall procure that none of its Associated Companies shall
either on its own account or in conjunction with or on behalf of any
other person, employ, solicit or entice away or attempt to employ,
solicit or entice away from the Company or other Shareholder or any
Associated Company of the other Shareholder any person who is or shall
have been at the date of, or within one year prior to, the
commencement of the Period an officer, manager, consultant or employee
of the Company or other Shareholder or any Associated Company of the
other Shareholder including but not limited to any person who had been
seconded to the Company, whether or not such person would commit a
breach of contract by reason of leaving such employment, provided that
nothing in this Clause 10.1.2 shall restrict a Shareholder or its
Associated Companies from (a) continuing as the employer of any person
who is appointed a director or officer of the Company or who is
seconded to the Company, or (b) with respect to any person who is
seconded to the Company, re-employing or continuing to employ such
person after the expiry of the agreed term of their secondment; and
10.1.3 it shall not in relation to any trade, business or company use a
name, word or symbol or its Chinese equivalent in such a way as to be
capable of or likely to be confused with the name or symbol of the
Company and shall use all reasonable endeavours to procure that no
such name shall be used by any person with which it is connected.
10.2 Each and every obligation under this Clause 10 shall be treated as a
separate obligation and shall be severally enforceable as such, and in
the event of any obligation or obligations being or becoming
unenforceable in whole or in part, such part or parts as are
unenforceable shall be deleted from this Clause, and any such deletion
shall not affect the enforceability of all such parts of this Clause as
remain not so deleted.
10.3 While the restrictions contained in this Clause 10 are considered by
the Parties to be reasonable in all the circumstances, it is recognised
that restrictions of the nature in question may fail for technical
reasons and accordingly it is hereby agreed and declared that if any of
such restrictions shall be adjudged to be void as going beyond what is
reasonable in all the circumstances for the protection of the interest
of the Parties but would be valid if part of the wording thereof were
deleted or the periods thereof reduced or the range of activities or
area dealt with thereby reduced in scope the said restriction shall
apply with such modifications as may be necessary to make it valid and
effective.
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11. Further Post Closing Provisions
11.1 BRC shall, both before and after Closing, procure that its
representatives and the representatives of its Associated Companies
having knowledge or information relating to the accounts and/or any
transactions of the Company in respect of any period up to 31 December
2007 shall assist with the preparation of the audit of each of the
Company's financial statements for the financial years ended in 2006
and ending in 2007.
11.2 Each Shareholder shall procure that each item of equipment or other
asset of the Company in the possession or control of such Shareholder
or any of such Shareholder's Associated Companies at the date of this
Agreement or in the future ("Equipment") shall (a) (until such time as
it is delivered up to the possession and control of Company) be clearly
and permanently labelled with a fixed asset tag identifying it as the
property of the Company and shall remain in the possession and control
of either such Shareholder or its Associated Companies, and (b) on
written demand of the Company, be promptly delivered up to the Company.
11.3 Each Shareholder shall at all times maintain an up to date list of all
Equipment in the possession or control of such Shareholder and/or its
Associated Companies and provide such list to the Company and the other
Shareholder promptly on written request.
11.4 Future reimbursements of expenses shall be subject to the following
provisions:
11.4.1 No claims for reimbursement of any expenses incurred on or before 31
March 2007 may be made by Geron or by BRC following Closing.
11.4.2 Claims for reimbursement of expenses incurred on or after 1 April
2007 may be submitted by the Shareholders to the Company. Such
expenses shall be reviewed for appropriateness and subject to approval
by the Board such expenses shall be reimbursed.
11.4.3 BRC shall not incur and shall not be entitled to reimbursement of
any fees, expenses or other payments under the Amended BRC Services
Agreement or otherwise incurred from the date of this Agreement until
the approval by the Board of a revised budget and workplan except for
expenses incurred in connection with the Discovery Research Program
that are incurred and funded in accordance with Clauses 2.6 and 6.
11.4.4 For the avoidance of doubt, the Company shall not be liable for any
costs or expenses relating to the termination of employment of any
persons engaged at any time (before or after the date of this
Agreement) in relation to (a) the Discovery Research Program, (b)
other research and development work involving Collaboration Technology
or (c) the provision of any other services to the Company, in each
case unless such person has been directly employed by the Company.
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12. Termination
12.1 This Agreement shall become effective as of the Effective Date and
shall continue in full force and effect until terminated in accordance
with the provisions herein.
12.2 In the event that either Shareholder shall commit or suffer an Event of
Default, the Defaulter shall within five Business Days of the
occurrence of such Event of Default notify the non-defaulting
Shareholder in writing and the non-defaulting Shareholder shall
(whether or not such notice is given by the Defaulter) be entitled but
not obliged to give a Default Notice to the Defaulter.
12.3 In the event a Default Notice is given pursuant to Clause 12.2 and the
Defaulter is Geron, BRC may (without prejudice to any other rights it
may have) exercise a call option to purchase all, but not less than
all, of Geron's Shares (a "BRC Call Option") by serving on Geron,
within 30 days of the date the Default Notice is served on Geron,
written notice (a "BRC Call Option Notice") of its wish to exercise the
BRC Call Option. Upon service of a valid BRC Call Option Notice in
accordance with this Agreement, Geron shall be bound to sell all of its
Shares to BRC at the Prescribed Price. Closing of the purchase of all
of Geron's Shares shall take place no later than 14 days after the date
on which the Prescribed Price applicable thereto shall have been
determined or, if later, the date on which all governmental and other
consents necessary for the purchase of such Shares have been obtained.
On the date of completion of the purchase of all of Geron's Shares,
Geron and the Company shall enter into the Amendment to Licence
Agreement (a copy of which is attached hereto as Schedule 2) to amend
the Geron Licence Agreement.
12.4 In the event a Default Notice is given pursuant to Clause 12.2 and the
Defaulter is BRC, Geron may (without prejudice to any other rights it
may have) exercise a call option to purchase all, but not less than
all, of BRC's Shares (a "Geron Call Option") by serving on BRC, within
30 days of the date the Default Notice is served on BRC, written notice
(a "Geron Call Option Notice") of its wish to exercise the Geron Call
Option. Upon service of a valid Geron Call Option Notice in accordance
with this Agreement, BRC shall be bound to sell all of its Shares to
Geron at:
12.4.1 in the case of an Event of Default comprising or arising from the
failure of BRC to pay an instalment of the balance of the issue price
payable on its partly paid Share on or before the due date for such
payment of such instalment in accordance with Clause 2.3, at an
aggregate price of US$1.00; and
12.4.2 in the case of any other Event of Default, at the Prescribed Price.
Subject to Clause 12.5, completion of the purchase of all of BRC's
Shares shall take place no later than 14 days after (a)(i) if Clause
12.4.1 applies, the date of service of the Geron Call Option Notice, or
(ii) if Clause 12.4.2 applies, the date on which the Prescribed Price
applicable thereto shall have been determined, or (b), if later, the
date on which all governmental and other consents necessary for the
purchase of such Shares have been obtained. Effectively upon the
completion of the purchase of all of BRC's Shares, the Geron Licence
Agreement shall be amended as mutually agreed between Geron and the
Company.
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12.5 If, on or before the date set for completion of the sale and purchase
of Geron's Shares under the BRC Call Option, BRC objects to the
Prescribed Price as determined in accordance with Clause 19, BRC may by
notice in writing to Geron withdraw its exercise of the BRC Call Option
in which event all the rights and obligations of the Parties in respect
of such exercise shall cease to have effect. If, on or before the date
set for completion of the sale and purchase of BRC's Shares under the
Geron Call Option, Geron objects to the Prescribed Price as determined
in accordance with Clause 19, Geron may by notice in writing to BRC
withdraw its exercise of the Geron Call Option in which event all the
rights and obligations of the Parties in respect of such exercise shall
cease to have effect. Following such withdrawal of the exercise of a
call option under this Clause 12.5 in respect of an Event of Default, a
Shareholder shall not be entitled to exercise a call option again in
respect of the same Event of Default, but no withdrawal of the exercise
of a call option under this Clause 12.5 in respect of an Event of
Default shall affect or prejudice the right of either Shareholder to
exercise a call option under this Clause 12 in respect of any other
Event of Default.
13. Effect of Winding Up of the Company or a Shareholder Transferring its
Shares
13.1 Save as otherwise provided herein, if the Company is placed in winding
up, then:
13.1.1 the Ancillary Agreements shall be deemed to be terminated in
accordance with the termination provisions thereof;
13.1.2 Subject to Clause 18.8.1, Geron shall grant to BRC, HKUST and the
Associated Companies of HKUST a non-exclusive, non-transferable and
fully paid-up licence to use, reproduce and exploit for research
purposes (i) all Geron Existing IP; and (ii) all Geron Background IP
(including, subject to appropriate obligations of confidentiality,
trade secrets and knowhow) which has been made available to the
Company prior to the commencement of the winding up of the Company;
13.1.3 the provisions of Clause 18.8.1 shall have effect with respect to
all Collaboration Inventions; and
13.1.4 the provisions of this Agreement shall cease to have effect as to
its future operation except (a) for Clauses 1, 10, 13, 17, 18, 21, 23,
24, 29, 30, 31 and 33 which shall survive such termination and remain
in full force and effect and (b) in relation to any antecedent claims
which may have arisen between the Parties.
13.2 For the purposes of Clause 13.1.2, the Parties acknowledge and agree
that the licence granted by Geron for research purposes includes,
without limitation, the following rights:
13.2.1 the right to publish the results of such research;
13.2.2 the right to own all Intellectual Property arising from such
research and to file patent applications in respect of all such
Intellectual Property; and
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13.2.3 the right to commercialise all Intellectual Property arising from
such research. The Parties acknowledge that it is possible that
commercialisation of such Intellectual Property may require a licence
under other Intellectual Property owned or controlled by Geron
(including, for example, Geron Existing IP or Geron Background IP),
and that nothing in this Clause 13.4 shall be interpreted as granting
the licensee any commercialisation rights under any of that other
Intellectual Property.
13.3 Save as otherwise provided herein if a Party ceases to be a Shareholder
by reason of the transfer of all of its Shares to another Shareholder
or person, whether pursuant to Clause 12 or otherwise, then the
provisions of this Agreement (other than Clauses 1, 10, 11, 13, 17, 18,
21, 23, 24, 29, 30, 31 and 33) shall cease to have effect in relation
to the former Shareholder save as may be necessary to give effect to
the provisions of Clause 12 or in relation to any antecedent claims
which may have arisen between the Parties.
14. Undertakings Regarding the Operations of the Company
14.1 The Company shall, and each of the Shareholders undertakes to the other
Shareholders that it shall take all actions as may be within its power
in order that the Company shall:
14.1.1 maintain with a well established and reputable insurer adequate
liability insurance against all risks usually insured against by
companies carrying on the same or similar business to the Business;
14.1.2 keep books of account and therein make true and complete entries of
all its dealings and transactions of and in relation to the Business
and, where applicable, the business of the Company; such books of
account and all other records and documents relating to the business
affairs of the Company shall be open to inspection by each of the
Shareholders during normal business hours and on reasonable prior
notice and they shall be permitted to take and remove copies thereof;
14.1.3 provide each Shareholder with periodic management accounts and
reports as may be agreed upon by the Shareholders, in a form
acceptable to the Shareholders;
14.1.4 prepare such accounts in respect of each accounting period as are
required by statute (such accounts being prepared on an historical
cost basis) and procure that such accounts are audited as soon as
practicable in accordance with applicable law; and
14.1.5 otherwise keep each Shareholder informed of its financial and
business affairs in meetings of the Board.
14.2 The Board shall not later than 30 days before the beginning of each
annual financial period, prepare and deliver to the Shareholders an
operations plan, incorporating the proposed annual budget and cash flow
forecast for the next annual financial period.
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15. Distribution Policy
15.1 Unless otherwise expressly agreed by each of the Shareholders in
writing and in compliance with the applicable laws, the Parties shall
procure that the Company distributes to the Shareholders by way of
dividend in respect of each of its accounting periods such amount, if
any, as shall be determined from time to time by the Board. Any such
distribution shall be made within 120 days of the end of the financial
year in question or, if later, 21 days after the date of the auditor's
report on the relevant accounts, provided that nothing in this Clause
15 shall require the Company to declare any dividend, and that in no
event shall the Company declare a dividend of an amount which would
prevent it from retaining sufficient working capital to enable it to
carry on business in a prudent and business-like manner.
15.2 If the Company shall sell all or substantially all of its assets, the
Company shall give notice in writing to each of the Shareholders ("Sale
Notification") giving details of the sale and stating the amount of the
proceeds of such sale received by the Company. Any Shareholder shall be
entitled within thirty (30) days after the Sale Notification is given
to serve notice on the Company and each of the other Shareholders
("Distribution Notice") requiring that within sixty (60) days after the
Distribution Notice is given a dividend be declared and paid to the
Shareholders, to the fullest extent permitted by law, up to the amount
of such proceeds of sale, and each of the Shareholders shall co-operate
and pass all resolutions necessary to procure that such dividend shall
be declared and paid within such period.
16. Warranties
16.1 Each of BRC and Geron represents and warrants to the other that:
16.1.1 It is duly incorporated;
16.1.2 It has the power to enter into and to exercise its rights and to
perform its obligations under this Agreement;
16.1.3 It has taken and will take all necessary action to authorise the
execution of and the performance of its obligations under this
Agreement;
16.1.4 The obligations expressed to be assumed by it under this Agreement
are legal, valid and binding;
16.1.5 Neither the execution nor performance of this Agreement will
contravene any provision of:
(a) Any existing law, treaty or regulation;
(b) Its memorandum and articles of association or equivalent
constitutive documents; or
(c) Any obligation (contractual or otherwise) which is binding upon
it, or upon any of its assets.
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17. Confidentiality
17.1 Each Shareholder undertakes to the other and to the Company that it
will not and will procure that its respective officers, employees,
agents, subsidiaries and other persons under its Control and the
respective officers, employees and agents of each such person, will not
during the period of this Agreement, and after its termination (for
whatever reason but subject to Clause 18.7 in the event of the winding
up of the Company);
17.1.1 save in the proper course of the provision of services on behalf of
the Company, use or divulge to any person, or publish or disclose or
permit to be published or disclosed, any secret or confidential
information relating to the Company or any of the other Shareholders
which it has received or obtained, or may receive or obtain (whether
or not, in the case of documents, they are marked as confidential);
and/or
17.1.2 other than as required by the Company and save as specifically
allowed herein, retain, duplicate or remove from the premises of the
Company information relating to the Company or the other Shareholder
in whatever form (whether written, or recorded in some other form, or
oral) which is supplied by the Company or the other Shareholder to it
or which comes to its notice during the period of this Agreement,
PROVIDED THAT the obligations of this Clause shall not apply to:
(i) the use of information by a Shareholder or its employees for the
purposes of managing its interests in the Company as Shareholder;
(ii) the disclosure of information to a person to the extent
reasonably necessary for that person to perform its obligations
to provide services or products to the Company provided that that
other person has entered into obligations of confidentiality to
the Company similar to those contained in this Clause;
(iii) the disclosure of information which the recipient can reasonably
demonstrate is in the public domain through no fault of its own;
(iv) the disclosure of information which the recipient can reasonably
demonstrate was in its possession prior to 1 March 2005 without
any confidentiality obligations, as evidenced by written
documents in its files;
(v) the disclosure of information where the disclosure is required by
law, pursuant to a court order or by any recognised stock
exchange or governmental or other regulatory body;
(vi) the disclosure of information in confidence to any professional
adviser to any of the Parties for the purposes of obtaining
advice or assistance in connection with its obligations or
rights, or the obligations or rights of any other Shareholder or
the Company hereunder or pursuant to any of the Ancillary
Agreements; or
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(vii) the disclosure of information in confidence to or by any adviser
to any of the Parties for the purposes of giving or obtaining
advice or acting on behalf of the relevant Party in connection
with a matter where disclosure of information is permitted
pursuant to the provisions hereof; or
(viii) the disclosure of information by any Party to a potential
purchaser of all or any of its Shares which is not a competitor
of the Company and which has entered into obligations of
confidentiality similar to those contained in this Clause.
17.2 For the purposes of this Clause 17, "information" includes, without
limitation, the following:
17.2.1 information concerning the affairs or property of the Company or the
other Shareholder or any business property or transaction in which the
Company or the other Shareholder may be or may have been concerned or
interested;
17.2.2 the names and addresses of any client of the Company or the other
Shareholder;
17.2.3 information on the terms of this Agreement; or
17.2.4 information relating to the business methods of the Company or the
other Shareholder.
18. Intellectual Property
18.1 Subject to the rights of Third Parties in Intellectual Property, the
Company shall own all Collaboration Inventions generated by or on
behalf of the Company, its employees, secondees and contractors and
sub-contractors in the course of carrying out the Business.
18.2 In the case of a Collaboration Invention made by any agent or
contractor of a Shareholder or any employee of such Shareholder, agent
or contractor (alone or in collaboration with others), such Shareholder
shall (a) procure the assignment to it by such employee, agent or
contractor of all right, title and interest of such employee, agent or
contractor in such Collaboration Invention, and (b) assign to the
Company all its right, title and interest in such Collaboration
Invention including such rights as are assigned to it under (a) above.
18.3 The Shareholders shall reasonably co-operate to ensure that any
contractor or sub-contractor of the Company and the employees of the
Company or of any such contractor or sub-contractor shall, where
determined to be necessary by the Board, have agreed to assign to the
Company their interest in any Collaboration Inventions generated by
them in the course of the Business.
18.4 Each Shareholder shall reasonably co-operate to ensure that each
contractor or sub-contractor of the Shareholder and each of the
employees and secondees of such Shareholder, contractor or
sub-contractor shall fully disclose and record all Collaboration
Inventions to enable the Company to fully collect, protect, exploit and
commercialise the Collaboration Inventions.
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18.5 The Shareholders shall reasonably co-operate to ensure that the Company
procures that, where determined by the Board to be necessary, written
and irrevocable waivers of any such moral or other non-transferable
rights have been given by (a) each contractor or sub-contractor of the
Company or any Shareholder and (b) the employees and secondees of the
Company, of each Shareholder and of each such contractor or
sub-contractor, as the case may be.
18.6 Each of the Shareholders agrees that any Collaboration Technology owned
by a Shareholder or any of its Associated Companies which is made
available for the use of the Company (under the BRC Licence Agreement,
the Geron Licence Agreement, or otherwise) shall remain the property of
the relevant Shareholder or its Associated Company.
18.7 Each Shareholder shall do all things reasonably necessary, co-operate
in good faith and provide such assistance as may be necessary and do
all things as may be required to disclose, protect, maintain, enforce
and/or transfer or assign the Collaboration Inventions, and shall
procure that each contractor and sub-contractor of the relevant
Shareholder and each employee or secondee or the relevant Shareholder
or of any of its contractors or sub-contractors shall co-operate in the
provision of such assistance including preparing and signing all forms,
applications, documents, agreements and deeds to give effect to and
complete the transactions, assignments, and licences contemplated by
this Clause 18.
18.8 The Parties shall procure that on or before the commencement of a
winding up of the Company, but subject to any other written agreement
between the Shareholders:
18.8.1 all BRC's and the Company's interests in the Collaboration
Inventions and in the Company's confidential information and all the
Company's surviving rights under the Amended BRC Services Agreement
shall be vested in, or assigned or otherwise transferred to Geron
absolutely for no additional consideration so as to become owned
exclusively by Geron, and Geron shall be free to use, reproduce,
exploit and commercialise such interests, and to grant licences to
Third Parties to do so, without any obligation to account to BRC
(except as provided in Clause 18.8.2); and
18.8.2 subject to the vesting, assignment or transfer referred to in Clause
18.8.1 having been completed, and subject to no Event of Default
having been committed or suffered by BRC before the commencement of
the winding up of the Company (which Event of Default (i) has been the
subject of a Default Notice and (ii) has not been expressly waived in
writing by Geron), Geron shall grant to BRC the right to receive a
royalty on Net worldwide annual revenues received by Geron or its
Associated Companies (generated after the date of such grant) on
account of (a) sales of Product by Geron or its Associated Companies
and (b) sublicences granted by Geron or its Associated Companies under
a Collaboration Invention or Geron Existing IP, but excluding any
payments received to fund research or development work, as follows:
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(a) *% until the total of royalty payments has equalled
*% of the amounts paid up by BRC for Shares; and
thereafter
(b) *% until the total of royalty payments has equalled
*% of the amounts paid up by BRC for Shares
(excluding any amount paid up in respect of the
Reduction Amount in connection with a repurchase of
its partly paid Share under Clause 2.3),
less the amount of any distribution paid to BRC in
accordance with Clause 15.2.
For avoidance of doubt, such royalty shall be reduced to
zero percent and shall cease to be payable once BRC has
received total royalty payments equivalent to *% of the
amounts paid up by BRC for Shares (excluding any amount
paid up in respect of the Reduction Amount in connection
with a repurchase of its partly paid Share under Clause
2.3) less the amount of any distribution paid to BRC in
accordance with Clause 15.2.
18.9 Despite any other provision of this Agreement (including Clause 5)
Directors appointed by Geron are authorized to execute (under seal if
deemed necessary or desirable by Geron), and to pass any resolution of
the Board approving and authorizing the execution of, any document on
behalf of the Company to give effect to Clause 18.8.1, and any such
document may be executed before the commencement of a winding up of the
Company and may be expressed to be effective on or immediately before
the commencement of such winding up. No document shall be executed or
resolution passed under this Clause 18.9 unless each Director shall
have received a copy thereof at least 5 Business Days in advance.
18.10 Geron shall pay to BRC the royalties specified in Clause 18.8.2 on a
quarterly basis within 60 days after the end of each calendar quarter.
All payments shall be made by wire transfer to the bank account
designated by BRC in writing from time to time and shall be considered
received on the date such funds actually are received in the account.
With each payment Geron shall provide BRC with a written report that
includes, for each calendar quarter, on a Product-by-Product basis: (i)
the identity and quantity of Products sold by Geron or its Associated
Companies; (ii) the gross and Net revenues from such sales; and (iii)
the gross and Net sublicence revenues received by Geron or its
Associated Companies on account of sales of Product by sub-licensees on
a sublicence-by-sublicence basis. Geron shall provide a copy of its
audited consolidated financial statements for each relevant financial
year to BRC as soon as practicable after they are prepared together
with a written statement from a director or officer of Geron certifying
the amount of the royalties payable to BRC in respect of such financial
year. Any discrepancy as to the amount of royalties payable as shown by
the audited financial statements for the relevant financial year shall
be promptly corrected, within five (5) Business Days after such audited
financial statements are
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made available to Geron, by payment or refund by either Geron or BRC
(as appropriate) of the difference in the amount of royalties payable,
together with the accrued interest. All payments of royalties by Geron
to BRC hereunder shall be made in US$, without any set-off, deduction
or withholding of any kind. If Geron is overdue with any payment of
royalties to BRC hereunder, then Geron shall be liable to pay interest
on the overdue amount at an annual rate of 3% above the prevailing
prime lending rate of The Hongkong and Shanghai Banking Corporation
Limited, which interest shall accrue on a daily basis from the due date
for payment until BRC has received payment of all outstanding sums in
full.
18.11 Geron shall keep (and procure that its Associated Companies keep)
proper and adequate records and accounts of revenues in sufficient
detail to enable the amounts payable to BRC under Clause 18.8.2 to be
reasonably determined. Upon reasonable notice to Geron, BRC shall have
the right to have an independent certified public accountant, selected
by BRC and reasonably acceptable to Geron, and under an appropriate
obligation of confidentiality, audit the records of Geron or its
Associated Companies pertaining to sales of Product (including without
limitation pertaining to revenues generated by sales of Product by a
licensee under licence) to verify the amounts payable pursuant to this
Agreement; provided, however, that such audit: (i) shall take place
during normal business hours; (ii) shall not take place more frequently
than once a year; and (iii) shall not cover such records for more than
the preceding five (5) years. Such audit shall be at BRC's expense
unless Geron has paid BRC less than ninety percent (90%) of the amount
determined to be due for any full calendar year, in which case Geron
shall reimburse BRC for all expenses related to such audit. Any
discrepancy between the amount of royalties payable as shown by the
results of such audit and the amount of royalties actually paid shall
be promptly corrected, within ten (10) Business Days after the results
of such audit are made available to Geron, by payment or refund, by
either Geron or BRC (as appropriate) of the difference in the amount of
royalties payable, together with the accrued interest. Geron shall
preserve and maintain all such records and accounts required for audit
for a period of at least five (5) years after the quarter to which such
records and accounts apply.
18.12 If Geron or any Associated Company of Geron is required by any law or
regulation to make any deduction or withholding (on account of tax or
otherwise) from any payment, Geron shall, together with such payment,
pay such additional amount as will ensure that BRC receives (free and
clear of any tax or other deductions or withholdings) the full amount
which it would have received if no such deduction or withholding had
been required.
18.13 The provisions of this Clause 18 shall survive any termination of this
Agreement.
19. Expert Determination of Certain Matters
19.1 For the purposes of Clause 12.3 or 12.4, except in the circumstances
described in Clause 12.4.1, each of BRC and Geron shall in good faith
use its best endeavours to agree upon the Prescribed Price within 30
days of the relevant written notice exercising a call option under
Clause 12.3 or Clause 12.4. In the absence of agreement by BRC and
Geron within such 30 day period, the Prescribed Price shall be
determined by a director of an independent investment bank of
international repute (the "Expert") who shall be selected (i) by
agreement of the Shareholders, or (ii) if the Shareholders fail to
agree within ten (10) Business Days after either Shareholder requests
such selection, by two investment bankers (with each Shareholder having
the right to designate one), who shall notify the Shareholders promptly
upon making such selection, or (iii) upon request of either BRC or
Geron if the two designated investment bankers fail to agree on the
appointment of the Expert within ten (10) Business Days after the
expiration of the ten (10) Business Day period in sub-clause (ii)
above, by the Chairman of SIAC.
33
19.2 The Expert shall determine the Prescribed Price in accordance with the
following procedures:
19.2.1 Within five (5) Business Days after selection of the Expert, each
Shareholder may submit to the Expert and to the other Shareholder in
writing its proposal for the Prescribed Price ("Proposal");
19.2.2 Within five (5) Business Days after each Shareholder has submitted
its Proposal to the Expert, each Shareholder may submit to the Expert
and to the other Shareholder concise written facts and arguments (not
more than 20 pages) in support of its position;
19.2.3 Within ten (10) Business Days after the date for submission of such
written facts and arguments, the Expert may, in his discretion, hold a
single meeting with both Shareholders, at a place determined by the
Expert and lasting not more than one day, in which to hear directly
from the Shareholders and ask them any questions he wishes;
19.2.4 Within ten (10) Business Days after such meeting (or, in the absence
of a meeting, after the expiry of the 5 Business Day period for the
submission of written facts and arguments), the Expert shall determine
the Prescribed Price, based on his professional judgment, and in
making his determination, the Expert may, at his sole discretion,
decide whether or not to take into consideration the Shareholders'
Proposals and written submissions;
19.2.5 The Expert shall act as an expert and not as an arbitrator and his
written determination shall be final and binding on the Shareholders.
The Expert shall make his working papers relating thereto available to
each Shareholder upon request; and
19.2.6 The costs and expenses of the Expert shall be borne by the
Shareholders according to the Relevant Percentages.
20. Mutual Co-operation
20.1 Each of the Shareholders agrees that it will use all reasonable
endeavours to promote the business and profitability of the Company.
20.2 Each of the Parties shall do and execute or procure to be done and
executed all such acts, deeds, documents and things as may be within
its power including in relation to the Shareholders (without prejudice
to the generality of the foregoing) the passing of resolutions (whether
by the Board or in general meeting or any class meeting of the Company)
to give full effect to this Agreement and to procure that all
provisions of this Agreement are observed and performed.
34
20.3 Each of the Shareholders agrees with the other that this Agreement is
entered into between them and will be performed by each of them in a
spirit of mutual co-operation, trust and confidence and that it will
use all means reasonably available to it (including its voting power
whether direct or indirect, in relation to the Company) to give effect
to the objectives of this Agreement and to ensure compliance by the
Company with its obligations.
20.4 Each Shareholder undertakes with the other that whilst it remains a
Shareholder, it will not (except as expressly provided for in this
Agreement) cast any of the voting rights exercisable in respect of any
of the Shares held by it in accordance with the directions, or subject
to the consent of, any other person (other than an Associated Company
or in the case of BRC, other than The Hong Kong Jockey Club Charities
Trust or an Associated Company).
21. Restrictions on Announcements
Each of the Parties undertakes that it will not (save as required by
law or any applicable regulatory body) make any announcement in
connection with this Agreement unless the other Parties shall have
given their respective consents to such announcement (which consents
may not be unreasonably withheld and may be given either generally or
in a specific case or cases and may be subject to conditions).
22. No Partnership
Nothing contained or implied in this Agreement shall constitute or be
deemed to constitute a partnership between the Parties and save as
expressly agreed herein none of the Parties shall have any authority to
bind or commit any other Party.
23. Conflict with Articles of Association
The Shareholders hereby agree that if and to the extent that the
Articles of Association conflict with the provisions of this Agreement,
this Agreement shall prevail for so long as it is in force and each
Shareholder shall take all such further steps as may be necessary or
requisite to ensure that the provisions of this Agreement shall
prevail, including without limitation assisting, on request by either
Shareholder, in convening a general meeting and voting in favor of
amendments to the Articles of Association to conform with the terms of
this Agreement.
24. Remedies
Each Party acknowledges and agrees that if any of them shall breach the
warranties, representations, indemnities, covenants, agreements,
undertakings, and obligations (for the purposes of this Clause referred
to as the "Agreed Terms") on each of their parts contained in this
Agreement or any other agreement entered into pursuant to it, damages
may not be an adequate remedy in which case the Agreed Terms shall be
enforceable by injunction, order for specific performance or such other
equitable relief as a court of competent jurisdiction may see fit to
award.
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25. Costs
Each Party shall pay its own costs and disbursements of and incidental
to the preparation and execution of this Agreement.
26. Assignment
Save as otherwise provided herein, the benefits and obligations
conferred by this Agreement upon each of the Parties are personal to
that Party and shall not be, and shall not be capable of being,
assigned, delegated, transferred or otherwise disposed of save with the
written consent of each of the other Parties. Notwithstanding the
foregoing provisions, Geron may assign this Agreement and the benefits
and obligations thereof in connection with the merger or consolidation
of Geron with another company, or the sale of all or substantially all
of its assets (or of the portion of its business related to the subject
matter of this Agreement) provided that Geron notifies BRC and the
Company in writing prior to any such merger or consolidation or sale.
27. Entire Agreement
This Agreement (together with the Restructuring Agreement and any
documents referred to herein or therein or executed contemporaneously
by the Parties in connection herewith or therewith) amends, restates
and replaces the Original Joint Venture Agreement, with effect as of
the date hereof, and constitutes the whole agreement between the
Parties and supersedes any previous agreements, arrangements or
understandings between them relating to the subject matter hereof. Each
of the Parties acknowledges that it is not relying on any statements,
warranties or representations given or made by any of them relating to
the subject matter hereof, save as expressly set out in this Agreement
or the Restructuring Agreement.
28. Variation
No variation or amendment to this Agreement shall be effective unless
in writing signed by authorised representatives of each of the Parties.
29. Notices
Any notice required to be given by any Party to any other Party may be
made (i) by hand delivery by Federal Express or comparable private
courier service to the other Party's address given herein or such other
address as may from time to time be notified for this purpose or (ii)
by facsimile transmission to its facsimile number set out below (or
such other facsimile number as the addressee has by five (5) days'
prior written notice specified to the other Parties):
36
To BRC: Fax No: ++ *
Attention: The Chairman of the board of directors
To Geron: Fax No: ++ *
Attention: The Chief Executive Officer
The Company: Fax No: C/o ++ *
Attention: The Chairman
Any properly addressed notice served by hand shall be deemed to have
been served on delivery and any notice served by facsimile transmission
shall be deemed to have been served when received, as shown by a
confirmed transmission report.
30. Waiver
No failure of any Party to exercise, and no delay in exercising, any
right or remedy in respect of any provision of this Agreement shall
operate as a waiver of such right or remedy.
31. Severability
If any provision or part of a provision of this Agreement or its
application to any Party, shall be, or be found by any authority of
competent jurisdiction to be, invalid or unenforceable, such invalidity
or unenforceability shall not affect the other provisions or parts of
such provisions of this Agreement, all of which shall remain in full
force and effect.
32. Counterparts
This Agreement may be entered into on separate engrossments, each of
which when so executed and delivered shall be an original but each
engrossment shall together constitute one and the same instrument and
shall take effect from the time of execution of the last engrossment.
33. Governing Law and Dispute Resolution
33.1 This Agreement shall be governed by and construed in accordance with
the laws of Hong Kong.
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33.2 In the event of any dispute arising out of or in connection with this
Agreement, including any question regarding its existence, validity,
breach or termination, the Parties shall attempt in good faith to reach
a resolution satisfactory to all Parties. In the event the Parties do
not reach such a resolution within thirty (30) days after the relevant
dispute arises (or such longer period as the Parties may agree in
writing), then any Party may, by written notice to the other Parties,
demand arbitration, and the relevant dispute shall be referred to and
finally resolved by arbitration in Singapore in accordance with the
Arbitration Rules of SIAC for the time being in force which rules are
deemed to be incorporated by reference into this Clause. The tribunal
for any arbitration shall consist of three arbitrators to be appointed
by the Chairman of SIAC. The language of the arbitration shall be
English. Judgment on the award rendered by the arbitrators may be
entered in any court having jurisdiction thereof.
38
Schedule 1
----------
Pre-Emption Provisions
----------------------
(A) The Directors in their absolute discretion and without assigning any
reason therefor may decline to register any transfer of shares which
are not fully paid and shall refuse to register any transfer of shares
if registration thereof would cause the number of Shareholders to
exceed the number permitted under the Articles of Association. The
Directors shall not register a transfer to a person who is known to
them to be an infant, bankrupt or person of unsound mind provided that
the Directors shall not be bound to enquire into the age or soundness
of mind of any transferee or whether or not he is a bankrupt.
(B) Save as provided in paragraph (I) of this Schedule and subject to any
agreement between all of the Shareholders no transfer or disposal of
any shares or any interest in any shares shall be made by a Shareholder
except in compliance with the following provisions of this Schedule and
no Shareholder shall otherwise sell, mortgage, charge or otherwise
dispose of or encumber any shares or assign or otherwise purport to
deal with the beneficial interest therein or any right in relation
thereto separate from the legal interest.
(C) A Shareholder shall be entitled to transfer its shares to a Third Party
who has made a bona fide offer therefor provided that before
transferring its shares such Shareholder (the "Transferor") shall give
a notice in writing (a "Transfer Notice") to the other Shareholder (the
"Recipient") that it desires to transfer the same. The Transfer Notice
shall specify:
(a) the number of shares which the Transferor wishes to transfer (which
may be all or part only of the shares then held by the Transferor)
(the "Relevant Shares");
(b) the name of the Third Party who has made the bona fide offer for the
Relevant Shares (the "Prospective Purchaser");
(c) the price which the Prospective Purchaser has offered for the Relevant
Shares; and
(d) details of any other material terms of the offer made by the
Prospective Purchaser and any other material terms or circumstances
known to the Transferor which affect or may affect the offer.
(D) The Recipient may within a period of one month after the Transfer
Notice is given require the Transferor to produce to it such further
evidence as it may reasonably require to enable it to establish the
bona fides of the offer by the Prospective Purchaser.
(E) The Recipient shall be entitled within a period of three months after
the Transfer Notice is given, or, if later, the provision to it of such
further evidence, to serve a purchase notice (a "Purchase Notice") on
the Transferor requiring it to sell the Relevant Shares to it at the
same price and on the same terms as those offered by the Prospective
Purchaser (as set out in the Transfer Notice).
39
(F) Subject to paragraph (H) of this Schedule, if the Recipient serves a
Purchase Notice within the said three month period referred to in
paragraph (E), the Transferor shall be bound upon payment to transfer
such of the Relevant Shares to the Recipient as he has applied for. The
purchase shall be completed at a place and time to be appointed by the
Directors being not less than three days nor more than ten days after
the Purchase Notice is served and the Directors shall be bound to
register the transfer.
(G) If the Recipient has not served a Purchase Notice within the period
referred to in paragraph (E), the Transferor shall be entitled to sell
the Relevant Shares to the Prospective Purchaser at the price and on
the terms set out in the Transfer Notice provided that if such sale is
not completed within six months after the Transfer Notice is given the
right to sell the Relevant Shares to the Prospective Purchaser shall
lapse. The Directors shall be bound to register a transfer effected
pursuant to this paragraph (G).
(H) If Purchase Notices shall have been served in respect of part only of
the Relevant Shares, the Transferor shall be entitled to sell the
remaining Relevant Shares to the Prospective Purchaser in accordance
with the provisions of paragraph (G) of this Schedule or by notice in
writing to the Recipient may withdraw all the Relevant Shares from sale
in which event the Transfer Notice shall be deemed to have been
withdrawn and no transfers shall take place.
(I) The foregoing provisions of this Schedule shall not apply to any
transfer to which the consent in writing of all the Shareholders for
the time being is given.
40
Schedule 2
----------
Amendment to Geron Licence Agreement
------------------------------------
(Pursuant to Clause 12.3)
AMENDMENT TO LICENCE AGREEMENT
This Amendment to Licence Agreement (the "Agreement"), effective __________,
____, (the "Effective Date"), is between Geron Corporation, a Delaware
corporation having a place of business at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Geron") and TA Therapeutics Limited, a Hong Kong private
limited company having a place of business at ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇ ("Newco").
RECITALS
WHEREAS, Geron and Biotechnology Research Corporation Limited ("BRC") formed
Newco to develop telomerase activation for human therapeutic applications,
pursuant to a Joint Venture Agreement dated 1 March 2005 (the "Original JV
Agreement");
WHEREAS, pursuant to the JV Agreement Geron and Newco entered into a Licence
Agreement dated as of 21 March, 2005 (the "Licence Agreement");
WHEREAS, the Original JV Agreement has been amended and restated pursuant to an
Amended and Restated Joint Venture Agreement between Geron, BRC and Newco dated
15th June 2007 (the "JV Agreement");
WHEREAS, pursuant to Clause 12.3 of the JV Agreement, Geron and Newco now wish
to amend the Licence Agreement;
NOW, THEREFORE, Geron and Newco agree as follows:
1. The definition of "Territory" in Section 1.9 of the Licence Agreement
is amended to read as follows:
1.9 "Territory" means the People's Republic of China, Hong Kong,
Macau, India, Indonesia, Cambodia, Korea, Laos, Malaysia,
Burma, the Philippines, Singapore, Taiwan, Thailand and
Vietnam.
2. Section 1 of the Licence Agreement is amended to add the following new
definitions as Sections 1.11, 1.12 and 1.13:
1.11 "Net Sales Revenues" means any and all gross revenues, other
than Net Sublicence Revenues, received by Newco on account of
the sale or transfer of Licensed Products by Newco, less
amounts actually paid or payable by Newco with respect to: (a)
any applicable sales and value added taxes and any
government-imposed duties (excluding income taxes or franchise
taxes), (b) trade or cash discounts and rebates, and (c)
shipping, insurance and freight costs.
1.12 "Net Sublicence Revenues" means any and all gross revenues,
other than Net Sales Revenues, received by Newco for or on
account of the grant of a sublicence of any of the rights
granted under the Licence Agreement, less: any applicable
sales and value added taxes and any government-imposed duties
(excluding income taxes). Net Sublicence Revenues include,
without limitation, upfront fees or equity, milestone
payments, annual licence fees, success fees, share of profits,
and royalty payments, but exclude payment by a third party of
Newco's expenses for research employees and laboratory
supplies and equipment directly related to research and
development of Licensed Products.
41
1.13 "Newco Revenues" means Net Sales Revenues and Net Sublicence
Revenues.
3. Section 7.2 of the Licence Agreement is deleted in its entirety and replaced
by the following new Section 7.2:
7.2 Termination. This Agreement may be terminated:
(a) by Geron upon sixty (60) days written notice to Newco
for Newco's breach of this Agreement, unless such
breach is cured to Geron's reasonable satisfaction
within said sixty (60) day period, or
(b) by Newco upon sixty (60) days written notice to Geron
for Geron's breach of this Agreement, unless such
breach is cured to Newco's reasonable satisfaction
within said sixty (60) day period, or
(c) by either party upon written notice to the other
party if the other party files a voluntary petition
in bankruptcy or an involuntary petition is filed
against it and not dismissed within sixty (60) days
of filing.
4. A new Section 12 is added at the end of the Licence Agreement, reading
as follows:
12. Diligence, Reports and Publications.
12.1 Diligence. Within thirty (30) days of the effective date
of this Amendment to the Licence Agreement, Newco will deliver
to Geron a development plan (the "Development Plan") that will
include Newco's research and development and commercialization
work plans for the development and commercialization of
Licensed Products and a description of proposed Licensed
Products. Newco may make reasonable amendments to the
Development Plan from time to time to reflect the results of
its development work, provided that the amended Development
Plan continues to include all the elements described in the
previous sentence and that Newco provides Geron promptly with
a copy of any amended Development Plan. Newco will diligently
pursue the development and commercialization of Licensed
Products in the Field of Use as set forth in and in accordance
with the timeline in the then-current Development Plan.
Newco's noncompliance in a material respect with the
Development Plan shall be deemed a material breach of the
Licence Agreement, provided that failure to achieve an
objective by a deadline for reasons beyond Newco's control and
in spite of Newco's diligent efforts shall not be deemed a
material breach. For purposes of this provision, if Newco's
noncompliance with the Development Plan consists of a failure
to take an action or achieve an objective by a deadline, Newco
may cure such noncompliance by taking such action or achieving
such objective within the 60-day notice period.
42
12.2 Development Reports. On each anniversary of the effective
date of this Amendment to the Licence Agreement, Newco will
provide Geron with an annual progress report summarizing its
activities under the Development Plan, its progress in
bringing Licensed Products to market and accomplishing the
Development Plan, and any departures or anticipated departures
from the Development Plan.
5. A new Section 13 is added at the end of the Licence Agreement, to read
as follows:
13. Royalties and Revenue Sharing.
13.1 Newco shall pay to Geron a royalty equal to * percent (*%)
of Newco Revenues generated after the date of this
Agreement. If Newco receives Newco Revenues in the form of
non-cash consideration (other than equity securities of a
third party) for any Licensed Product sold or otherwise
transferred to an independent third party hereunder, Newco
will pay Geron the royalty computed in accordance with the
previous sentence, based upon the fair market value of such
non-cash consideration on the date of its receipt by Newco.
If Newco receives Newco Revenues in the form of equity
securities of a third party, Newco will transfer to Geron *
percent (*%) of the number of shares of such equity
securities. Notwithstanding the foregoing, Geron shall not
be entitled to any royalties on either (a) Net Sales
Revenues for any Licensed Products that are made, used, and
sold in a country or jurisdiction in which (i) there has
never been any Valid Claims under the Geron Existing IP and
any applicable Geron Background IP, or (ii) in which all
Valid Claims under the Geron Existing IP and any applicable
Geron Background IP have expired, or (b) Net Sublicence
Revenues in respect of any such country or jurisdiction.
Newco shall pay to Geron the royalties specified in Section
13.1 on a quarterly basis within 60 days after the end of each
calendar quarter. With each payment Newco shall provide Geron
with a written report that includes, for each calendar
quarter, on a product-by-product and country-by-country basis:
(i) the identity and quantity of Licensed Products sold by
Newco or its sublicensees; (ii) the identity of the countries
in which such sales have been made; (iii) the gross and Net
Sales Revenues from such sales; and (iv) the gross and Net
Sublicence Revenues received by Newco, on a
sublicence-by-sublicence basis. Newco shall provide a copy of
its audited financial statements for each relevant financial
year to Geron as soon as practicable after they are prepared
together with a written statement from a director or officer
of Newco certifying the amount of the royalties payable to
Geron in respect of such financial year. Any discrepancy as to
the amount of royalties payable as shown by the audited
financial statements for the relevant financial year shall be
promptly corrected, within five (5) Business Days after such
audited financial statements are made available to Newco, by
payment or
-------------
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to
the omitted portions.
43
refund by either Geron or BRC (as appropriate) of the
difference in the amount of royalties payable, together with
the accrued interest. All payments of royalties by Newco to
Geron hereunder shall be made in US$, without any set-off,
deduction or withholding of any kind. If Newco is overdue with
any payment of royalties to Geron hereunder, then Newco shall
be liable to pay interest on the overdue amount at an annual
rate of 3% above the prevailing prime lending rate of The
Hongkong and Shanghai Banking Corporation Limited, which
interest shall accrue on a daily basis from the due date for
payment until Geron has received payment of all outstanding
sums in full.
13.2 Payments Generally. All payments shall be made in U.S.
dollars by wire transfer to the account designated by Geron to
Newco in writing from time to time and shall be considered
received on the date such funds actually are received in the
account. Newco shall be solely responsible for any and all
payments due from its sublicensees.
13.3 Non-U.S. Sales - Conversion and Withholding.
(a) Royalties shall be calculated in the currency in which
they are received by Newco, and converted into U.S. dollars
and paid in U.S. dollars on the basis of the average of the
closing spot selling exchange rates on the last Business Day
of the calendar quarter as reported by the Wall Street
Journal. If the Wall Street Journal ceases to publish currency
exchange rates, the parties shall agree to an alternate
reference.
(b) If Newco or any other person is required by any law or
regulation to make any deduction or withholding (on account of
tax or otherwise) from any payment, Newco shall, or (as the
case may be) shall procure that its sublicensee or such other
person shall, together with such payment, pay such additional
amount as will ensure that Geron receives (free and clear of
any tax or other deductions or withholdings) the full amount
which it would have received if no such deduction or
withholding had been required.
13.4 Records and Audit. Newco shall keep proper and adequate
records and accounts of Net Sales Revenues and Net Sublicence
Revenues in sufficient detail to enable the amounts payable to
Geron under this Section 13 to be reasonably determined. Newco
shall require its sublicensees to keep such records as
required by this Section 13.4 and shall be solely responsible
to Geron for such sublicensees' compliance with this Section
13.4. Upon reasonable notice to Newco, Geron shall have the
right to have an independent certified public accountant,
selected by Geron and reasonably acceptable to Newco, and
under an appropriate obligation of confidentiality, audit
Newco's and Newco's sublicensees' records pertaining to
Licensed Products during normal business hours to verify the
amounts payable pursuant to this Agreement; provided, however,
that such audit: (i) shall not take place more frequently than
once a year; and (ii) shall not cover such records for more
than the preceding five (5) years. Such audit shall be at
Geron's expense unless Newco has paid Geron less than ninety
percent (90%) of the amount determined to be due for any full
calendar year, in which case Newco shall reimburse Geron for
all expenses related to such audit. Any discrepancy between
the amount of royalties payable as shown by the results of
such audit and the amount of royalties actually paid shall be
promptly corrected, within ten (10) Business Days after the
results of such audit are made available to Newco, by payment
or refund, by either Geron or Newco (as appropriate) of the
difference in the amount of royalties payable, together with
accrued interest. Newco shall (and shall require its
sublicensees to) preserve and maintain all such records and
accounts required for audit for a period of at least five (5)
years after the quarter to which such records and accounts
apply.
44
6. In all other respects, the Licence Agreement remains unchanged and in full
force and effect.
IN WITNESS THEREOF, Geron and Newco have caused this Agreement to be executed by
their duly authorized representatives as of the day and year first written
above.
GERON CORPORATION TA THERAPEUTICS LIMITED
By:___________________________ By:___________________________
45
Schedule 3
----------
Existing Compounds
------------------
GRN140665
GRN139951
46
Schedule 4
----------
Discovery Research Program
--------------------------
Location
*
Objectives
*
Strategy for Discovery Research
1. *
2. *
3. *
Discovery Research Workplan
1. *
a. *
b. *
c. *
2. *
a. *
3. *
a. *
i. *
ii. *
-------------
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to
the omitted portions.
47
IN WITNESS whereof this Agreement has been executed by the Parties and is
intended to be and is hereby delivered on the date appearing at the head hereof.
SIGNED by ▇▇▇ ▇▇▇▇ ▇▇▇▇ )
for and on behalf of )
BIOTECHNOLOGY ) /s/ ▇▇▇ ▇▇▇▇ ▇▇▇▇
RESEARCH CORPORATION )
LIMITED )
in the presence of: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ )
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
SIGNED by ▇▇▇▇▇ ▇▇▇▇ )
for and on behalf of ) /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇ CORPORATION )
in the presence of: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ )
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Solicitor, Hong Kong SAR
▇▇▇▇▇ ▇▇▇▇ ▇▇▇ & Partners
SIGNED by ▇▇▇▇▇ ▇▇▇▇ )
for and on behalf of ) /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
TA THERAPEUTICS LIMITED )
in the presence of: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ )
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Solicitor, Hong Kong SAR
▇▇▇▇▇ ▇▇▇▇ ▇▇▇ & Partners
48