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EXHIBIT 99.5
SUBSCRIPTION, JOINT DEVELOPMENT AND OPERATING AGREEMENT
ELAN PHARMA INTERNATIONAL LIMITED
ELAN INTERNATIONAL SERVICES, LTD.
AND
ATRIX LABORATORIES, INC.
AND
ATRIX NEWCO, LIMITED
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INDEX
CLAUSE 1 DEFINITIONS
CLAUSE 2 NEWCO'S BUSINESS
CLAUSE 3 REPRESENTATIONS AND WARRANTIES
CLAUSE 4 AUTHORIZATION AND CLOSING
CLAUSE 5 DIRECTORS; MANAGEMENT AND R&D COMMITTEES
CLAUSE 6 THE BUSINESS PLAN AND REVIEWS
CLAUSE 7 RESEARCH AND DEVELOPMENT
CLAUSE 8 COMMERCIALIZATION
CLAUSE 9 OWNERSHIP OF INTELLECTUAL PROPERTY RIGHTS
CLAUSE 10 INTELLECTUAL PROPERTY RIGHTS
CLAUSE 11 CROSS LICENSING/EXPLOITATION OF PRODUCTS OUTSIDE FIELD
CLAUSE 12 REGULATORY
CLAUSE 13 MANUFACTURING
CLAUSE 14 TECHNICAL SERVICES AND ASSISTANCE
CLAUSE 15 AUDITORS, BANKERS,
ACCOUNTING REFERENCE DATE; SECRETARY
CLAUSE 16 TRANSFER OF SHARES; RIGHTS OF FIRST OFFER; TAG ALONG RIGHTS
CLAUSE 17 MATTERS REQUIRING STOCKHOLDERS' APPROVAL
CLAUSE 18 DISPUTES
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CLAUSE 19 TERMINATION
CLAUSE 20 SHARE RIGHTS
CLAUSE 21 CONFIDENTIALITY
CLAUSE 22 COSTS
CLAUSE 23 GENERAL
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THIS SUBSCRIPTION, JOINT DEVELOPMENT AND OPERATING AGREEMENT made this 18 day of
July, 2000
BETWEEN:
(1) ELAN PHARMA INTERNATIONAL LIMITED, a private limited company
incorporated under the laws of Ireland, and having its registered
office at ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇ ("EPIL");
(2) ELAN INTERNATIONAL SERVICES, LTD., a Bermuda exempted limited liability
company incorporated under the laws of Bermuda, and having its
registered office at ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇ ▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
("▇▇▇");
(3) ATRIX LABORATORIES, INC., a corporation duly incorporated and validly
existing under the laws of State of Delaware and having its principal
place of business at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇▇ of America.
(4) ATRIX NEWCO, LIMITED a Bermuda exempted limited liability company
incorporated under the laws of Bermuda, and having its registered
office at ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇ ▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ("▇▇▇▇▇").
RECITALS:
A. Newco desires to issue and sell to the Stockholders (as defined below),
and the Stockholders desire to purchase from Newco, for aggregate
consideration of $15,000,000, apportioned between them as set forth
herein, (i) 6,000 ordinary shares of Newco's common stock, par value
$1.00 per share (the "COMMON STOCK"), allocated to Atrix, and (ii)
6,000 shares of Newco's preferred stock, par value $1.00 per share (the
"PREFERRED STOCK"), allocated 3,612 Shares to Atrix and 2,388 Shares to
EIS.
B. As of the Closing Date, EPIL, has entered into a license agreement with
Newco, and Atrix has entered into a license agreement with Newco, in
connection with the license to Newco of the Elan Intellectual Property
and the Atrix Intellectual Property, respectively (each as defined
below).
C. Elan and Atrix have agreed to co-operate in the research, development
and commercialization of the Products (as defined below) based on their
respective technologies.
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D. Elan and Atrix have agreed to enter into this Agreement for the purpose
of recording the terms and conditions regulating their relationship
with each other, with respect to the Licensed Technologies and with
Newco.
NOW IT IS HEREBY AGREED AS FOLLOWS:
CLAUSE 1
DEFINITIONS
1.1 In this Agreement, the following terms shall, where not inconsistent
with the context, have the following meanings respectively.
"AFFILIATE" of any Person (in the case of a legal entity) shall mean
any other Person controlling, controlled or under the common control of
such first Person, as the case may be. For the purposes of this
definition, "control" shall mean direct or indirect ownership of fifty
percent (50%) or more of the stock or shares entitled to vote for the
election of directors and "controlling" and "controlled" shall be
construed accordingly. Newco is not an Affiliate of Elan or EIS.
"AGREEMENT" shall mean this agreement (which expression shall be deemed
to include the Recitals and the Schedules hereto).
"ATRIGEL(R)TECHNOLOGY" shall mean Atrix's proprietary [**].
"ATRIX DIRECTORS" has the meaning set forth in Clause 5.
"ATRIX IMPROVEMENTS" has the meaning assigned thereto in the Atrix
License Agreement.
"ATRIX INTELLECTUAL PROPERTY" has the meaning assigned thereto in the
Atrix License Agreement.
"ATRIX KNOW-HOW" has the meaning assigned thereto in the Atrix License
Agreement.
"ATRIX LICENSE AGREEMENT" shall mean the license agreement between
Atrix and Newco, of even date herewith, attached hereto in Schedule 2.
"ATRIX PATENTS" has the meaning assigned thereto in the Atrix License
Agreement.
"ATRIX SECURITIES PURCHASE AGREEMENT" shall mean that certain
Securities Purchase Agreement, of even date herewith, by and between
Atrix and EIS.
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"BEMA(TM)TECHNOLOGY" shall mean Atrix's proprietary [**]
"BOARD" shall mean the board of directors of Newco.
"BUSINESS" shall mean the business specified in the Business Plan.
"BUSINESS PLAN" shall mean the business plan and program of development
to be agreed by Elan and Atrix pursuant to Clause 6, with respect to
the research, development, and commercialization of the Products that
shall contain, among other things, to the extent practicable, the
research and development objectives, desired Product specifications,
clinical indications, preliminary clinical trial designs (Phase I/II),
development timelines, budgeted costs and the relative responsibilities
of Atrix and Elan as it relates to the implementation of the R&D Plan.
"CERTIFICATE OF DESIGNATIONS" shall mean that certain certificate of
designations, preferences and rights of Series A Preferred Stock of
Atrix issued on the Closing Date.
"CLOSING DATE" shall mean the date upon which the Definitive Documents
are executed and delivered by the Parties and the transactions effected
thereby are closed.
"COMMON STOCK EQUIVALENTS" shall mean any options, warrants, rights or
any other securities convertible, exercisable or exchangeable, in whole
or in part, for or into Common Stock.
"COMPOUNDS" shall mean the compounds, up to a maximum of three, which
shall be nominated and approved by the Management Committee in
accordance with Clause 2 of this Agreement.
"CONVERTIBLE NOTE" shall mean that certain convertible promissory note,
of even date herewith, by and between Atrix and EIS.
"DEFINITIVE DOCUMENTS" shall mean this Agreement, the Elan License
Agreement, the Atrix License Agreement, the Convertible Note, the Atrix
Securities Purchase Agreement, the Registration Rights Agreements, the
Certificate of Designations and associated documentation of even date
herewith, by and between Atrix, Elan, EIS and Newco, as applicable.
"DIRECTORS" shall mean, at any time, the directors of Newco.
"EIS DIRECTOR" has the meaning set forth in Clause 5.
"ELAN" shall mean EPIL and Affiliates and subsidiaries of Elan
Corporation, plc. within the division of Elan Corporation, plc.
carrying on business as Elan
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Pharmaceutical Technologies but shall not include The Liposome Company,
Inc. and its subsidiaries, Axogen Limited and Neuralab Limited and
Affiliates and subsidiaries (present or future) of Elan Corporation
plc. within the division of Elan Pharmaceuticals which incorporates,
inter alia, EPIL (to the extent that EPIL is the owner of patents,
know-how or other intellectual property or technology invented and/or
developed within the division of Elan Corporation, plc carrying on
business as Elan Pharmaceuticals), Athena Neurosciences, Inc., Elan
Pharmaceuticals, Inc. and Elan Europe Limited.
"ELAN IMPROVEMENTS" has the meaning assigned thereto in the Elan
License Agreement.
"ELAN INTELLECTUAL PROPERTY" has the meaning assigned thereto in the
Elan License Agreement.
"ELAN KNOW-HOW" has the meaning assigned thereto in the Elan License
Agreement.
"ELAN LICENSE AGREEMENT" shall mean the license agreement between Elan
and Newco, of even date herewith, attached hereto in Schedule 1.
"ELAN PATENT RIGHTS" shall mean has the meaning assigned thereto in the
Elan License Agreement.
"ENCUMBRANCE" shall mean any liens, charges, encumbrances, equities,
claims, options, proxies, pledges, security interests, or other similar
rights of any nature.
"EXCHANGE RIGHT" has the meaning assigned to such term in the
Certificate of Designations in effect on the Closing Date.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
"FDA" shall mean the United States Food and Drug Administration or any
other successor agency in the USA.
"FIELD" shall mean the administration of the Products for pain
management or oncology indications.
"FINANCIAL YEAR" shall mean each year commencing on January 1 (or in
the case of the first Financial Year, the Closing Date) and expiring on
December 31 of each year.
"FULLY DILUTED COMMON STOCK" shall mean all of the issued and
outstanding Common Stock, assuming the conversion, exercise or exchange
of all outstanding Common Stock Equivalents.
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"LICENSE AGREEMENTS" shall mean the Elan License Agreement and the
Atrix License Agreement.
"LICENSED TECHNOLOGIES" shall mean, collectively, the Elan Intellectual
Property and the Atrix Intellectual Property.
"NEWCO INTELLECTUAL PROPERTY" shall mean all rights to patents,
know-how and other intellectual property arising during and as a direct
result of the conduct of the Project by any person, including any
technology acquired by Newco from a third party, that does not
constitute either Elan Intellectual Property or Atrix Intellectual
Property. For the avoidance of doubt, patents, know-how and other
intellectual property, including all pre-clinical and clinical trial,
on the Products, and all correspondence with and submissions to
government agencies for marketing or other regulatory approval of the
Products shall be deemed Newco Intellectual Property.
"NEWCO BYE-LAWS" shall mean the Memorandum of Association and Bye-Laws
of Newco.
"PARTICIPANT" shall mean Atrix or Elan, as the case may be, and
"PARTICIPANTS" shall mean both of the Participants together;
"PARTY" shall mean Elan, Atrix, or Newco, as the case may be, and
"PARTIES" shall mean all such parties together;
"PERSON" shall mean an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust,
unincorporated association, joint venture, governmental entity or
authority or other entity of whatever nature.
"PERMITTED TRANSFEREE" shall mean any Affiliate or subsidiary of Elan,
EIS or Atrix, to whom this Agreement may be assigned, in whole or in
part, pursuant to the terms hereof or in the case of Elan, EPIL, EIS, a
special purpose financing entity created by Elan or EIS.
"PRODUCTS" shall mean formulations of the Compounds utilizing, in no
particular order, (i) the Atrigel(R) Technology or BEMA(TM) Technology,
(ii) the NanoCrystal(TM) Technology and the BEMA(TM) Technology, or
(iii) the NanoCrystal(TM) Technology and the Atrigel(R) Technology, as
developed by or on behalf of Newco pursuant to the Project.
"PROJECT" shall mean all activities as undertaken by Elan, Atrix and
Newco in order to develop the Products.
"REGISTRATION RIGHTS AGREEMENTS" shall mean the Registration Rights
Agreements of even date herewith relating to Newco and Atrix,
respectively.
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"REGULATORY APPLICATION" shall mean any regulatory application or any
other application for marketing approval for a Product, which Newco
will file in any country of the Territory, including any supplements or
amendments thereto.
"REGULATORY APPROVAL" shall mean the final approval to market a Product
in any country of the Territory, and any other approval which is
required to launch the Product in the normal course of business.
"RESEARCH AND DEVELOPMENT TERM" shall mean the period of [**] months
immediately following the Closing Date.
"RHA" shall mean any relevant government health authority (or successor
agency thereof) in any country of the Territory whose approval is
necessary to market a Product in the relevant country of the Territory.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
"SHARES" shall mean the shares of Common Stock and shares of Preferred
Stock of Newco.
"STOCKHOLDER" shall mean any of EIS, Atrix, any Permitted Transferee or
any other Person who subsequently becomes bound by this Agreement as a
holder of the Shares, and "STOCKHOLDERS" shall mean all of the
Stockholders together.
"TECHNOLOGICAL COMPETITOR OF ELAN" has the meaning assigned thereto in
the Elan License Agreement.
"TERM" shall mean the term of this Agreement.
"TERRITORY" shall mean all of the countries of the world.
"UNITED STATES DOLLAR" and "US$" and "$" shall mean the lawful currency
of the United States of America.
"USA" shall mean the United States of America.
1.2 In addition, the following definitions have the meanings in the Clauses
corresponding thereto, as set forth below.
DEFINITION CLAUSE
"AAA" 18.4
"Buyout Option" 19.3
"Closing" 4.3
"Common Stock" Recital
"Confidential Information" 21.1
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"Co-sale Notice" 16.4
"Expert" 18.4
"Management Committee" 5.2.1
"Notice of Exercise" 16.3
"Notice of Intention" 16.3
"Offered Shares" 16.3
"Offer Price" 16.3
"Preferred Stock" Recital
"Proposing Participant" 19.3
"Proposing Participant Price: 19.5
"Purchase Price" 19.5
"R&D Committee" 5.2.3
"Recipient Participant" 19.3
"Recipient Participant Price" 19.5
"Remaining Stockholders" 16.4
"Relevant Event" 19.2
"Selling Stockholder" 16.3
"Tag-Along Right" 16.4
"Transaction Proposal" 16.3
"Transfer" 16.1
"Transferee Terms" 16.4
"Transferring Stockholder" 16.4
1.3 Words importing the singular shall include the plural and vice versa.
1.4 Unless the context otherwise requires, reference to a recital, article,
paragraph, provision, clause or schedule is to a recital, article,
paragraph, provision, clause or schedule of or to this Agreement.
1.5 Reference to a statute or statutory provision includes a reference to
it as from time to time amended, extended or re-enacted.
1.6 The headings in this Agreement are inserted for convenience only and do
not affect its construction.
1.7 Unless the context or subject otherwise requires, references to words
in one gender include references to the other genders.
1.8 Capitalized terms used but not defined herein shall have the meanings
ascribed in the Definitive Documents, if defined therein.
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CLAUSE 2
BUSINESS
2.1 The primary objective of the Agreement is to regulate the business of
the development, testing, registration, manufacture, commercialization
and licensing of Products in the Territory and to achieve the other
objectives set out in this Agreement. The focus of the Business will be
to develop the Products in the Field using the Elan Intellectual
Property, the Atrix Intellectual Property and the Newco Intellectual
Property to agreed-upon specifications and timelines.
2.2 The central management and control of Newco shall be exercised in
Bermuda and shall be vested in the Directors and such Persons as they
may delegate the exercise of their powers in accordance with the Newco
Bye-Laws. The Stockholders agree to conduct the Business in such a
manner as to ensure that Newco is liable to taxation in Bermuda and not
in any other jurisdiction. The Participants shall use their best
endeavours to ensure the sole residence of Newco in Bermuda, all
meetings of the Directors are held in Bermuda or other jurisdictions
outside the United States and generally to ensure that Newco is treated
as resident for taxation purposes in Bermuda.
2.3 The focus of the Agreement will be to develop three Products using, in
no particular order, (i) the Atrigel(R) Technology or BEMA(TM)
Technology, (ii) the BEMA(TM) Technology and the NanoCrystal(TM)
Technology, or (iii) the Atrigel(R) Technology and the NanoCrystal(TM)
Technology, all to agreed upon specifications and timelines. Subject to
the provisions of Clause 8, Newco shall be responsible for determining
the subsequent commercialization strategy to allow the Products to be
marketed in the Territory.
2.4 Within 60 days of the Effective Date or such period as may be agreed by
the Parties in writing, the Management Committee shall, by unanimous
agreement, nominate and agree upon up to a maximum of three Compounds
which should be developed by Newco. The Management Committee shall have
regard to the following criteria in agreeing upon Compounds for
development by Newco:-
2.4.1 market potential of the Compounds, as estimated by the
Management Committee;
2.4.2 development cost of the Compounds, as estimated by the
Management Committee; and
2.4.3 results of intellectual property due diligence primarily
focused on determining whether there are any third party
intellectual property issues which might impact the
development and marketing of any of the Compounds in the
Territory.
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2.5 The selection of the Compounds shall be subject to, inter alia, the
then existing contractual arrangements of Elan and Atrix and such
discussions as Elan or Atrix are having with one or more third parties
at the time of such selection. Nothing in this Clause 2 shall restrict
the ability of Elan or Atrix to pursue discussions or enter into
agreements with one or more third parties so long as mutual agreement
has not been reached regarding the Compounds.
2.6 Should any of the Compounds fail to meet agreed specifications or the
results of the review under Clause 2.4 or reveal third party
intellectual property issues which might materially impact the
development and marketing of a Product, the Management Committee shall
terminate the portion of the Project that relates to such Compound(s)
and shall review in good faith the nomination by Newco of additional
Compound(s). In such case, the Parties shall negotiate in good faith
such amendments as are required to the Definitive Documents, such as
amending the provisions regulating non-competition.
CLAUSE 3
REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF NEWCO: Newco hereby represents and
warrants to each of the Stockholders as follows, as of the Closing
Date:
3.1.1 ORGANIZATION: Newco is an exempted company duly organized,
validly existing and in good standing under the laws of
Bermuda, and has all the requisite corporate power and
authority to own and lease its properties, to carry on its
business as presently conducted and as proposed to be
conducted.
3.1.2 CAPITALIZATION: As of the Closing Date, the authorized capital
stock of Newco consists of 6,000 shares of Common Stock and
6,000 shares of Preferred Stock. Prior to the Closing Date, no
shares of capital stock of Newco have been issued.
3.1.3 AUTHORIZATION: The execution, delivery and performance by
Newco of this Agreement, including the issuance of the Shares,
have been duly authorized by all requisite corporate actions;
this Agreement has been duly executed and delivered by Newco
and is the valid and binding obligation of Newco, enforceable
against it in accordance with its terms except as limited by
applicable bankruptcy, insolvency, reorganization, moratorium
and other laws of general application affecting the
enforcement of creditors' rights generally, and except as
enforcement of rights to indemnity and contribution hereunder
may be limited by United States federal or state securities
laws or principles of public policy. The Shares, when issued
as contemplated hereby, will be validly issued and
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outstanding, fully paid and non-assessable and not subject to
pre-emptive or any other similar rights of the Stockholders or
others.
3.1.4 NO CONFLICTS: The execution, delivery and performance by Newco
of this Agreement, the issuance, sale and delivery of the
Shares, and compliance with the provisions hereof by Newco,
will not:
(i) violate any provision of applicable law, statute,
rule or regulation applicable to Newco or any ruling,
writ, injunction, order, judgment or decree of any
court, arbitrator, administrative agency or other
governmental body applicable to Newco or any of its
properties or assets;
(ii) conflict with or result in any breach of any of the
terms, conditions or provisions of, or constitute
(with notice or lapse of time or both) a default (or
give rise to any right of termination, cancellation
or acceleration) under its charter or organizational
documents or any material contract to which Newco is
a party, except where such violation, conflict or
breach would not, individually or in the aggregate,
have a material adverse effect on Newco; or
(iii) result in the creation of, any Encumbrance upon any
of the properties or assets of Newco.
3.1.5 APPROVALS: As of the Closing Date, no permit, authorization,
consent or approval of or by, or any notification of or filing
with, any Person is required in connection with the execution,
delivery or performance of this Agreement by Newco. Newco has
full authority to conduct its business as contemplated in the
Business Plan and the Definitive Documents.
3.1.6 DISCLOSURE: This Agreement does not contain any untrue
statement of a material fact or omit to state any material
fact necessary to make the statements contained herein not
misleading. Newco is not aware of any material contingency,
event or circumstance relating to its business or prospects,
which could have a material adverse effect thereon, in order
for the disclosure herein relating to Newco not to be
misleading in any material respect.
3.1.7 NO BUSINESS; NO LIABILITIES: Newco has not conducted any
business or incurred any liabilities or obligations prior to
the Closing Date, except solely in connection with its
organization and formation.
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3.2 REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS: Each of the
Stockholders hereby severally represents and warrants to Newco as
follows as of the Closing Date:
3.2.1 ORGANIZATION: Such Stockholder is a corporation duly organized
and validly existing under the laws of its jurisdiction of
organization and has all the requisite corporate power and
authority to own and lease its respective properties, to carry
on its respective business as presently conducted and as
proposed to be conducted and to carry out the transactions
contemplated hereby.
3.2.2 AUTHORITY: Such Stockholder has full legal right, power and
authority to enter into this Agreement and to perform its
obligations hereunder, which have been duly authorized by all
requisite corporate action. This Agreement is the valid and
binding obligation of such Stockholder, enforceable against it
in accordance with its terms except as limited by applicable
bankruptcy, insolvency, reorganization, moratorium and other
laws of general application affecting the enforcement of
creditors' rights generally, and except as enforcement of
rights to indemnity and contribution hereunder may be limited
by United States federal or state securities laws or
principles of public policy.
3.2.3 NO CONFLICTS: The execution, delivery and performance by such
Stockholder of this Agreement, purchase of the Shares, and
compliance with the provisions hereof by such Stockholder will
not:
(i) violate any provision of applicable law, statute,
rule or regulation known by and applicable to such
Stockholder or any ruling, writ, injunction, order,
judgment or decree of any court, arbitrator,
administrative agency or other governmental body
applicable to such Stockholder or any of its
properties or assets;
(ii) conflict with or result in any breach of any of the
terms, conditions or provisions of, or constitute
(with notice or lapse of time or both) a default (or
give rise to any right of termination, cancellation or
acceleration) under the charter or organizational
documents of such Stockholder or any material contract
to which such Stockholder is a party, except where
such violation, conflict or breach would not,
individually or in the aggregate, have a material
adverse effect on such Stockholder; or
(iii) except as contemplated by the Definitive Documents,
result in the creation of, any Encumbrance upon any of
the properties or assets of such Stockholder.
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3.2.4 APPROVALS: As of the Closing Date, no permit, authorization,
consent or approval of or by, or any notification of or filing
with, any Person is required in connection with the execution,
delivery or performance of this Agreement by such Stockholder
except for filings required under the Securities Act or the
Exchange Act, under the rules of NASDAQ or under the Delaware
General Corporation Law.
3.2.5 INVESTMENT REPRESENTATIONS: Such Stockholder is sophisticated
in transactions of this type and capable of evaluating the
merits and risks of its investment in Newco. Such Stockholder
has not been formed solely for the purpose of making this
investment and such Stockholder is acquiring the Common Stock
and Preferred Stock for investment for its own account, not as
a nominee or agent, and not with the view to, or for resale in
connection with, any distribution of any part thereof. Such
Stockholder understands that the Shares have not been
registered under the Securities Act or applicable state and
foreign securities laws by reason of a specific exemption from
the registration provisions of the Securities Act and
applicable state and foreign securities laws, the availability
of which depends upon, among other things, the bona fide
nature of the investment intent and the accuracy of such
Stockholders' representations as expressed herein. Such
Stockholder understands that no public market now exists for
any of the Shares and that there is no assurance that a public
market will ever exist for such Shares.
CLAUSE 4
AUTHORIZATION AND CLOSING
4.1 Newco has authorized the issuance to (i) EIS of 2,388 shares of
Preferred Stock and (ii) Atrix of 6,000 shares of Common Stock and
3,612 shares of Preferred Stock, issuable as provided in Clause 4.4
hereof.
4.2 Atrix and EIS hereby subscribe for the number of Shares set forth in
Clause 4.1 and shall pay to Newco in consideration therefore, by wire
transfer of immediately available funds (to a bank account established
by Newco in connection with the Closing) the subscription amounts each
as provided in Clause 4.4.1.
4.3 The closing (the "CLOSING") shall take place at the offices of ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ LLC at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ on the
Closing Date or such other places if any, as the Parties may agree and
shall occur contemporaneously with the closing under the Atrix
Securities Purchase Agreement.
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4.4 At the Closing, each of the Stockholders shall take or (to the extent
within its powers) cause to be taken the following steps at Directors
and shareholder meetings of Newco, or such other meetings, as
appropriate:
4.4.1 Newco shall issue and sell to EIS, and EIS shall purchase from
Newco, upon the terms and subject to the conditions set forth
herein, 2,388 shares of Preferred Stock for an aggregate
purchase price of $2,985,000;
Newco shall issue and sell to Atrix, and Atrix shall purchase
from Newco, upon the terms and conditions set forth herein,
(i) 6,000 shares of Common Stock for an aggregate purchase
price of $7,500,000 and (ii) 3,612 shares of Preferred Stock
for an aggregate purchase price of $4,515,000;
4.4.2 the Parties shall execute and deliver to each other, as
applicable, certificates in respect of the Common Stock and
Preferred Stock described above and any other certificates,
resolutions or documents which the Parties shall reasonably
require;
4.4.3 the adoption by Newco of Newco Bye-Laws;
4.4.4 the appointment of ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ as Directors
of Newco;
4.4.5 the resignation of all directors and the secretary of Newco
holding office prior to the execution of this Agreement and
delivery of written confirmation under seal by each Person so
resigning that he has no claim or right of action against
Newco and that Newco is not in any way obligated or indebted
to him; and
4.4.6 the transfer to Newco of the share register.
4.5 EXEMPTION FROM REGISTRATION:
The Shares will be issued under an exemption or exemptions from
registration under the Securities Act. Accordingly, the certificates
evidencing the Shares shall, upon issuance, contain the following
legend:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY SECURITIES LAWS OF A STATE
OR OTHER JURISDICTION AND MAY NOT UNDER ANY CIRCUMSTANCES BE SOLD,
TRANSFERRED, OR OTHERWISE DISPOSED OF (OTHER THAN TO AN AFFILIATE OF
THE ORIGINAL
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HOLDER OR AS OTHERWISE PERMITTED IN THE AGREEMENT PURSUANT TO WHICH
THEY WERE ISSUED) EXCEPT PURSUANT TO (i) AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES
OR BLUE SKY LAWS, OR (ii) TO THE EXTENT APPLICABLE, RULE 144 UNDER THE
SECURITIES ACT (OR ANY SIMILAR RULE UNDER THE SECURITIES ACT RELATING
TO THE DISPOSITION OF SECURITIES) TOGETHER WITH AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE CORPORATION THAT REGISTRATION IS NOT
REQUIRED UNDER SUCH ACT OR APPLICABLE STATE SECURITIES LAWS.
4.6 Newco shall use reasonable efforts to file any documents that require
filing with the Registrar of Companies in Bermuda within the prescribed
time limits. EIS and Atrix shall provide all reasonable co-operation to
Newco in relation to the matters set forth in this Clause 4.6.
4.7 In the event that EIS validly exercises the Exchange Right, Newco
shall, immediately upon such exercise, take all necessary steps to
ensure that EIS is duly and validly issued and has full legal right,
title and interest in and to the shares of Preferred Stock covered
thereby.
The Parties acknowledge that such Shares have been pledged to EIS
pursuant to the Atrix Securities Purchase Agreement and that EIS has
physical possession of such Shares; upon such exercise, EIS shall be
entitled to keep and retain such shares, which shall be owned by EIS as
provided above. In connection with the foregoing, Newco and the
Participants shall take all necessary or appropriate steps to ensure
such ownership by EIS.
CLAUSE 5
DIRECTORS; MANAGEMENT AND R&D COMMITTEES
5.1. DIRECTORS:
5.1.1 Prior to the exercise of the Exchange Right, the Board shall
be composed of five Directors.
Atrix shall have the right to nominate four directors of
Newco, ("ATRIX DIRECTORS") and EIS shall have the right to
nominate one Director of Newco ("EIS DIRECTOR") which
Director, save as further provided herein, shall only be
entitled to 15% of the votes of the Board. To the extent
required by applicable Bermuda law, in the event that the EIS
Director is
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not a resident of Bermuda, at least one Atrix Director shall
be a resident of Bermuda.
In the event that the Exchange Right is exercised by EIS
within 2 years following the Closing Date, the EIS Director
shall only be entitled to 15% of the votes of the Board until
the expiry of 2 years from the Closing Date.
In the event that the Exchange Right is exercised by EIS at
any time after two years following the Closing Date or upon
the expiry of 2 years following the Closing Date where the
Exchange Right has been exercised by EIS within 2 years
following the Closing Date, each of Atrix, and EIS shall cause
the Board to be reconfigured so that an equal number of
Directors are designated by EIS and Atrix and that each of the
Directors has equal voting power.
5.1.2 If EIS removes the EIS Director, or Atrix removes any of the
Atrix Directors, EIS or Atrix, as the case may be, shall
indemnify the other Stockholder against any claim by such
removed Director arising from such removal.
5.1.3 The Directors shall meet not less than three times in each
Financial Year and all Board meetings shall be held in Bermuda
to the extent required pursuant to the laws of Bermuda or to
ensure the sole residence of Newco in Bermuda.
5.1.4 At any such meeting, the presence of the EIS Director and at
least two of the Atrix Directors shall be required to
constitute a quorum and, subject to Clause 17 hereof, the
affirmative vote of a majority of the Directors present at a
meeting (in person or by telephone) at which such a quorum is
present shall constitute an action of the Directors. In the
event of any meeting being inquorate, the meeting shall be
adjourned for a period of seven days. A notice shall be sent
to the EIS Director and the Atrix Directors specifying the
date, time and place where such adjourned meeting is to be
held and reconvened.
5.1.5 On the Closing Date, Atrix may appoint one of the Atrix
Directors to be the chairman of Newco. The chairman of Newco
shall hold office until:
(i) the first meeting of the Board following the exercise
by EIS of the Exchange Right, where the Exchange
Right has been exercised by EIS after two years
following the Closing Date; or
(ii) the first meeting of the Board following the expiry
of 2 years following the Closing Date where the
Exchange Right has been exercised by EIS within 2
years following the Closing Date
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(in each case the "CHAIRMAN STATUS BOARD MEETING"),
After the Chairman Status Board Meeting, each of EIS and
Atrix, beginning with EIS at the Chairman Status Board
Meeting, shall have the right, exercisable alternatively, of
nominating one Director to be chairman of Newco for a term of
one year.
If the chairman is unable to attend any meeting of the Board
held prior to the Chairman Status Board Meeting, the Atrix
Directors shall be entitled to appoint another Atrix Director
to act as chairman in his place at the meeting.
If the chairman of Newco is unable to attend any meeting of
the Board held after the Chairman Status Board Meeting, the
Directors shall be entitled to appoint another Director to act
as chairman of Newco in his place at the meeting.
5.1.6 In case of an equality of votes at a meeting of the Board, the
chairman of Newco shall not be entitled to a second or casting
vote. In the event of continued deadlock, the Board shall
resolve the deadlock pursuant to the provisions set forth in
Clause 18.
5.2 MANAGEMENT AND R&D COMMITTEES:
5.2.1 Newco's board of directors shall appoint a management
committee (the "MANAGEMENT COMMITTEE") to consist initially of
four members, two of whom shall be nominated by Elan and two
of whom shall be nominated by Atrix, and each of whom shall be
entitled to one vote, whether or not present at any Management
Committee meeting. Decisions of the Management Committee shall
require approval of at least one Elan nominee on the
Management Committee and one Atrix nominee on the Management
Committee.
5.2.2 Each of Elan and Atrix shall be entitled to remove any of its
nominees to the Management Committee and appoint a replacement
in place of any nominees so removed. The number of members of
the Management Committee may be altered if agreed to by a
majority of the directors of Newco; provided that, each of
Elan and Atrix shall be entitled to appoint an equal number of
members to the Management Committee. The Management Committee
shall be responsible for, inter alia, devising, implementing
and reviewing strategy for the Project.
5.2.3 The Management Committee shall appoint a research and
development committee (the "R&D COMMITTEE"), which shall
initially be comprised of four members, two of whom
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shall be nominated by Elan and two of whom shall be nominated
by Atrix, and each of whom shall have one vote, whether or not
present at an R&D Committee meeting. Decisions of the R&D
Committee shall require approval of at least one Elan nominee
on the R&D Committee and one Atrix nominee on the R&D
Committee.
5.2.4 Each of Elan and Atrix shall be entitled to remove any of its
nominees to the R&D Committee and appoint a replacement in
place of any nominee so removed. The number of members of the
R&D Committee may be altered if agreed to by a majority of the
directors of Newco provided that each of Elan and Atrix shall
be entitled to appoint an equal number of members to the R&D
Committee.
5.2.5 The R&D Committee shall be responsible for:-
5.2.5.1 designing that portion of the Business Plan that
relates to the Project for consideration by the
Management Committee;
5.2.5.2 establishing a joint Project team consisting of an
equal number of team members from Elan and Atrix,
including one Project leader from each of Elan and
Atrix; and
5.2.5.3 implementing such portion of the Business Plan that
relates to the Project, as approved by the Management
Committee.
5.2.6 In the event of any dispute amongst the R&D Committee, the R&D
Committee shall refer such dispute to the Management Committee
whose decision on the dispute shall be binding on the R&D
Committee.
If the Management Committee cannot resolve the matter after 15
days or such other period as may be agreed by the Management
Committee, the dispute will be referred to a designated senior
officer of each of Elan and Atrix, and thereafter, in the
event of continued deadlock, pursuant to the deadlock
provisions to be set forth in Clause 18, involving inter alia,
the referral of the dispute to an expert, whose decision,
however, will ultimately be non-binding on the Participants.
This process shall also apply to any dispute within the
Management Committee.
CLAUSE 6
THE BUSINESS PLAN AND REVIEWS
6.1 The Directors shall meet together as soon as reasonably practicable
after the Closing Date and shall agree upon and approve the Business
Plan for the current Financial Year within 60 days of the Closing Date.
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6.2 The Business Plan shall be subject to ongoing review by the Directors
and the approval of the EIS Director and the Atrix Directors on a
quarterly basis.
6.3 Neither Participant shall be obliged to provide development funding
("DEVELOPMENT FUNDING") to Newco in the absence of quarterly approval
of the Business Plan and a determination by each Participant, in its
sole discretion, that Development Funding shall be provided for the
development of the Products.
CLAUSE 7
RESEARCH AND DEVELOPMENT WORK
7.1 Subject to the provisions of Clause 6.3, Atrix and Elan, at Newco's
request, shall provide at their respective discretion such research and
development services as is requested by Newco in accordance with the
provisions in the License Agreements and as articulated in the Business
Plan. Newco shall pay Atrix and Elan for any research and development
work carried out by them on behalf of Newco at the end of each month
during the Research and Development Program, subject to the proper
vouching of research and development work and expenses. An invoice
shall be issued to Newco by Atrix or Elan, as applicable, by the 15th
day of the month following the month in which work was performed.
The cost of any research and development work undertaken by Atrix or
Elan shall be calculated based on a rate of $[**] per FTE (Full Time
Equivalent Employee Rate) per year in respect thereof (an FTE being the
equivalent of [**] hours per year per employee). This FTE rate will be
reviewed by Elan and Atrix on an annual basis. Research and development
work that is sub-contracted by Elan or Atrix and to third party
providers shall be charged by Elan or Atrix to Newco [**].
7.2 Elan and Atrix shall permit Newco or its duly authorized representative
on reasonable notice and at any reasonable time during normal business
hours to have access to inspect and audit the accounts and records of
Elan or Atrix and any other book, record, voucher, receipt or invoice
relating to the calculation or the cost of the Research and Development
Program and to the accuracy of the reports which accompanied them. Any
such inspection of Elan's or Atrix's records, as the case may be, shall
be at the expense of Newco, except that if such inspection reveals an
overpayment in the amount paid to Elan or Atrix, as the case may be,
for the Research and Development Program hereunder in any Financial
Year of 5% or more of the amount due to Elan or Atrix, as the case may
be, then the expense of such inspection shall be borne solely by Elan
or Atrix, as the case may be, instead of by Newco. Any surplus over the
sum properly payable by Newco to Elan or Atrix, as the case may be,
shall be paid promptly by Elan or Atrix, as the case may be, to Newco.
If such inspection reveals a deficit in the amount of
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the sum properly payable to Elan or Atrix, as the case may be, by
Newco, Newco shall pay the deficit to Elan or Atrix, as the case may
be.
CLAUSE 8
COMMERCIALIZATION
8.1 Newco shall diligently pursue the research, development, prosecution
and commercialization of the Products as provided in the Business Plan.
8.2 At such time as Newco notifies Elan in writing that Newco in good faith
intends to commercialize a Product, Elan Corporation, Plc or any
Affiliate shall have a right of first negotiation to negotiate the
terms of any agreement for the commercialization of such Product, which
right of first negotiation shall be exercised within [**] of Elan's
receipt of such written notification from Newco (the "ELAN/NEWCO RIGHT
OF FIRST NEGOTIATION"). If Elan Corporation, Plc or any Affiliate
elects to enter into such negotiations, the Parties shall negotiate in
good faith the terms of the agreement for the commercialization of such
Product by Elan Corporation, Plc or the relevant Affiliate.
If, despite good faith negotiations, Elan Corporation, Plc or the
relevant Affiliate and Newco do not reach agreement within [**] from
Elan's exercise of the Elan/Newco Right of First Negotiation, then
Newco shall be free for a period of [**] thereafter to enter into
negotiations with a third party (other than a Technological Competitor
Of Elan) to agree to terms upon which the third party would
commercialize the relevant Product in the Territory, which terms when
taken as a whole, are not more favorable to the third party than the
principal terms of the last written proposal offered by Newco to Elan
Corporation, Plc or the relevant Affiliate or by Elan Corporation, Plc
or the relevant Affiliate to Newco, as the case may be.
Prior to entering into any agreement with a third party for any Product
that relates to therapeutic areas of strategic interest to the
Affiliates of Elan carrying on business as Elan Pharmaceuticals, Newco
shall promptly notify Elan Corporation, Plc in writing of the principal
terms of such proposed agreement (except for the identity of the third
party with whom Newco intends to contract). Elan Corporation, Plc or
the relevant Affiliate shall have the right, within 10 days of receipt
of such notice, to elect to enter into an agreement with Newco upon the
same terms and conditions contained in Newco's notice to Elan
Corporation, Plc.
If Newco has not entered into an agreement with a third party within
the [**] period described above, the Elan/Newco Right of First
Negotiation shall be deemed to have re-commenced upon the same terms as
set forth herein.
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CLAUSE 9
OWNERSHIP OF INTELLECTUAL PROPERTY RIGHTS
9.1 The Parties acknowledge and agree to be bound by the provisions of
Clause 3.1 of the Elan License Agreement and Clause 3.1 of the Atrix
License Agreement which set forth the agreement between the Parties in
relation to the ownership of the Elan Intellectual Property, the Atrix
Intellectual Property and the Newco Intellectual Property respectively.
CLAUSE 10
INTELLECTUAL PROPERTY RIGHTS
10.1 Elan shall remain the owner of the Elan Intellectual Property.
10.2 Atrix shall remain the owner of the Atrix Intellectual Property.
10.3 Newco shall remain the owner of the Newco Intellectual Property.
10.4 Elan, at its expense and sole discretion may (i) secure the grant of
any patent applications within the Elan Patents that relate to the
Field; (ii) file and prosecute patent applications on patentable
inventions and discoveries within the Elan Improvements that relate to
the Field; (iii) defend all such applications against third party
oppositions; and (iv) maintain in force any issued letters patent
within the Elan Patents that relate to the Field (including any letters
patent that may issue covering any such Elan Improvements that relate
to the Field). Elan shall have the right in its sole discretion to
control such filing, prosecution, defense and maintenance provided that
Newco and Atrix at their request shall be provided with copies of all
documents relating to such filing, prosecution, defense and maintenance
in sufficient time to review such documents and comment thereon prior
to filing.
10.5 Atrix, at its expense and sole discretion, may (i) secure the grant of
any patent applications within the Atrix Patents that relate to the
Field; (ii) file and prosecute patent applications on patentable
inventions and discoveries within the Atrix Improvements that relate to
the Field; (iii) defend all such applications against third party
oppositions; and (iv) maintain in force any issued letters patent
within the Atrix Patents that relate to the Field (including any
letters patent that may issue covering any such Atrix Improvements that
relate to the Field). Atrix shall have the right in its sole discretion
to control such filing, prosecution, defense and maintenance provided
that Elan and Newco at their request shall be provided with copies of
all documents relating to such filing, prosecution, defense and
maintenance in sufficient time to review such documents and comment
thereon prior to filing.
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10.6 In the event that Elan does not intend to file for patent protection on
patentable inventions or discoveries within the Elan Intellectual
Property that relates to the Field in one or more countries in the
Territory after providing written notice to Newco and Atrix, Newco
shall have the option at Newco's expense, upon the prior written
approval of Elan which approval shall not be unreasonably withheld, to
request Elan to file and prosecute such patent application(s). Upon
such written request from Newco, Elan shall be responsible for
preparing and prosecuting and otherwise seeking patent protection for
such Elan Intellectual Property described in this Clause 10.6 at
Newco's expense. Any such Elan Intellectual Property shall be owned by
Elan but Elan shall grant a royalty free exclusive license to Newco of
such Elan Intellectual Property in the Field. The Parties shall have
the right to remove their confidential information from any such patent
application.
10.7 In the event that Atrix does not intend to file for patent protection
on patentable inventions or discoveries within the Atrix Intellectual
Property that relates to the Field in one or more countries in the
Territory after providing written notice to Newco and Elan, Newco shall
have the option at Newco's expense, upon the prior written approval of
Atrix which approval shall not be unreasonably withheld, to request
Atrix to file and prosecute such patent application(s). Upon such
written request from Newco, Atrix shall be responsible for preparing
and prosecuting and otherwise seeking patent protection for such Atrix
Intellectual Property described in this Clause 10.7 at Newco's expense.
Any such Atrix Intellectual Property shall be owned by Atrix but Atrix
shall grant a royalty free exclusive license to Newco of such Atrix
Intellectual Property in the Field. The Parties shall have the right to
remove their confidential information from any such patent application.
10.8 Newco at its expense shall have the right but shall not be obligated
(i) to file and prosecute patent applications on patentable inventions
and discoveries within the Newco Intellectual Property; (ii) to defend
all such applications against third party oppositions; and (iii) to
maintain in force any issued letters patent within the Newco Patents
(including any patents that issue on patentable inventions and
discoveries within the Newco Intellectual Property). Newco shall have
the right to control such filing, prosecution, defense and maintenance
provided that the other Parties shall be provided with copies of all
documents relating to such filing, prosecution, defense, and
maintenance in sufficient time to review such documents and comment
thereon prior to filing. The Parties shall have the right to remove
their confidential information from any such patent application.
10.9 In the event that Newco informs both Elan and Atrix that it does not
intend to file an application on the Newco Intellectual Property in or
outside the Field, Elan shall have the right to file and prosecute such
patent applications on inventions that Elan invents solely or which
relate predominantly to the Elan Intellectual Property, and Atrix shall
have the right to file and prosecute such patent applications on
inventions which Atrix invents solely or which relate predominantly to
the Atrix Intellectual Property, and Elan and Atrix agree to
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negotiate in good faith on the course of action to be taken with
respect to Newco inventions that relate to both the Elan Intellectual
Property and Atrix Intellectual Property. The Parties shall have the
right to remove their confidential information from any such patent
application.
10.10 The Parties shall promptly inform each other in writing of any actual
or alleged unauthorized use of any Elan Intellectual Property, the
Atrix Intellectual Property or the Newco Intellectual Property by a
third party of which it becomes aware and provide the others with any
available evidence of such unauthorized use.
10.11 At its option, as the case may be, Elan or Atrix shall have the first
option to enforce at its own expense and for its own benefit any
unauthorized use of its respective Intellectual Property (the Elan
Intellectual Property or the Atrix Intellectual Property as the case
may be) in the Field. At the enforcing party's request, the other
Parties shall cooperate with such action. Should Elan or Atrix decide
not to enforce the Elan Intellectual Property or the Atrix Intellectual
Property respectively, against such unauthorized use in the Field,
within a reasonable period but in any event within twenty (20) days
after receiving written notice of such actual or alleged unauthorized
use, Newco may in its discretion initiate such proceedings in its own
name, at its expense and for its own benefit, and at such Party's
request, Elan and Atrix shall cooperate with such action. Any recovery
remaining after the deduction by Newco of the reasonable expenses
(including attorney's fees and expenses) incurred in relation to such
enforcement proceeding shall belong to Newco. Alternatively, the
Parties may agree to institute such proceedings in their joint names
and shall reach agreement as to the proportion in which they shall
share the proceeds of any such proceedings, and the expense of any
costs not recovered, or the costs or damages payable to the third
party. If the enforcement of the Elan Intellectual Property or the
Atrix Intellectual Property affects both the Field as well as other
products being developed or commercialized by Atrix or Elan or its
commercial partners outside the Field, Atrix or Elan shall endeavour to
agree as to the manner in which the proceedings should be instituted
and as to the proportion in which they shall share the proceeds of any
such proceedings, and the expense of any costs not recovered, or the
costs or damages payable to the third party.
10.12 Newco shall have the first right but not the obligation to bring suit
or otherwise take action against any unauthorized use of the Newco
Intellectual Property. If any such alleged use occurs that gives rise
to a cause of action both inside and outside the Field, Newco, in
consultation with the other Parties, shall determine the course of
action to be taken. In the event that Newco takes such action, Newco
shall do so at its own cost and expense and all damages and monetary
award recovered in or with respect to such action shall be the property
of Newco. Newco shall keep Elan and Atrix informed of any action in a
timely manner so as to enable Atrix and Elan to provide input in any
such action and Newco shall reasonably take into consideration any such
input. At Newco's request, the Parties shall cooperate with any such
action at Newco's cost and expense.
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10.13 In the event that Newco does not bring suit or otherwise take action
against any unauthorized use of the Newco Intellectual Property (i) if
only one Party determines to pursue such suit or take such action at
its own cost and expense, it shall be entitled to all damages and
monetary award recovered in or with respect to such action and (ii) if
the other Parties pursue such suit or action outside of Newco, they
shall negotiate in good faith an appropriate allocation of costs,
expenses and recovery amounts. At the Party's request, Newco shall
cooperate with any such action at the Party's cost and expense.
10.14 In the event that a claim or proceeding is brought against Newco by a
third party alleging that the sale, distribution or use of a Product in
the Territory constitutes the unauthorized use of the intellectual
property rights of such Party, Newco shall promptly advise the other
Parties of such threat or suit.
10.15 Save where Elan is in breach of a representation or warranty under
Clause 7 of the Elan License Agreement or Atrix is in breach of a
representation or warranty under Clause 7 of the Atrix License
Agreement, Newco shall indemnify, defend and hold harmless Elan or
Atrix, as the case may be, against all actions, losses, claims,
demands, damages, costs and liabilities (including reasonable attorneys
fees) relating directly or indirectly to all such claims or proceedings
referred to in Clause 10.14, provided that Elan or Atrix, as the case
may be, shall not acknowledge to the third party or to any other person
the validity of any claims of such a third party, and shall not
compromise or settle any claim or proceedings relating thereto without
the prior written consent of Newco, not to be unreasonably withheld or
delayed. At its option, Elan or Atrix, as the case may be, may elect to
take over the conduct of such proceedings from Newco provided that
Newco's indemnification obligations shall continue; the costs of
defending such claim shall be borne by Elan or Atrix, as the case may
be and such Party shall not compromise or settle any such claim or
proceeding without the prior written consent of Newco, such consent not
to be unreasonably withheld, conditioned or delayed.
CLAUSE 11
CROSS LICENSING/EXPLOITATION OF PRODUCTS OUTSIDE THE FIELD
11.1 Solely for the purpose of and insofar as is necessary, in each case,
for Elan to conduct research and development work on behalf of Newco,
Newco shall grant to Elan a non-exclusive, worldwide, royalty-free,
fully paid-up license for the term of the Licenses:
11.1.1 to use the Newco Intellectual Property in the Field, and
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11.1.2 subject to the terms and conditions of the Atrix License
Agreement, a sublicense to use the Atrix Intellectual Property
in the Field.
11.2 Solely for the purpose of and insofar as is necessary, in each case,
for Atrix to conduct research and development work on behalf of Newco,
Newco shall grant to Atrix a non-exclusive, worldwide, royalty-free,
fully paid-up license for the term of the Licenses:
11.2.1 to use the Newco Intellectual Property in the Field, and
11.2.2 subject to the terms and conditions of the Elan License
Agreement, a sublicense to use the Elan Intellectual Property
in the Field.
11.3 Subject to the provisions of this Clause 8, Newco hereby grants to each
of Elan and Atrix a license to the Newco Intellectual Property as
follows:
11.3.1 In circumstances where the Newco Intellectual Property [**],
Newco hereby grants to Elan a worldwide, perpetual, fully-paid
and royalty-free license, with the right to sublicense, to the
Newco Intellectual Property for use outside the Field.
11.3.2 In circumstances where the Newco Intellectual Property [**],
Newco hereby grants to Atrix a worldwide, perpetual,
fully-paid and royalty-free license, with the right to
sublicense, to the Newco Intellectual Property for use outside
the Field.
11.3.3 Any license granted hereunder shall be on an as-is basis
without recourse, representation or warranty whether express
or implied, including warranties of merchantability or fitness
for a particular purpose, or infringement of third party
rights, and all such warranties are expressly disclaimed.
11.4 Elan and Atrix shall be entitled to exploit the Newco Intellectual
Property [**] outside the Field subject to the Parties negotiating a
license agreement in good faith (including all material provisions
thereof, including as to whether the license should be exclusive or
non-exclusive), pursuant to which Newco will grant Elan or Atrix, as
the case may be, a license under the Newco Intellectual Property
outside the Field. The financial terms of the said license agreement
shall have regard, inter alia, to:
11.4.1 the amount of monies expended by Newco in developing the Newco
Intellectual Property;
11.4.2 the materiality of the contribution of the Newco Intellectual
Property by comparison to the further research and development
work to be conducted, and of the Elan Intellectual Property
and the Atrix Intellectual Property;
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11.4.3 the financial return likely to be earned by Elan or Atrix, as
the case may be, from the proposed exploitation outside the
Field; and
11.4.4 the impact of the proposed exploitation of the Newco
Intellectual Property outside the Field on the exploitation of
the Newco Intellectual Property within the Field.
CLAUSE 12
REGULATORY
12.1 Newco shall keep the other Parties promptly and fully advised of
Newco's regulatory activities, progress and procedures. Newco shall
inform the other Parties of any dealings it shall have with an RHA, and
shall furnish the other Parties with copies of all correspondence
relating to the Products. The Parties shall collaborate to obtain any
required Regulatory Approval of the RHA to market the Products.
12.2 Newco shall, at its own cost, file, prosecute and maintain any and all
Regulatory Applications for the Products in the Territory in accordance
with the Business Plan.
12.3 Subject to Clause 12.5 and any determination by Newco that one or more
regulatory approvals should be held in the name of Newco's commercial
partner such as a sub-licensee, any and all Regulatory Approvals
obtained hereunder for any Product shall remain the property of Newco,
provided that Newco shall allow Elan and Atrix access thereto to enable
Elan and Atrix to fulfill their respective obligations and exercise
their respective rights under this Agreement. Newco shall maintain such
Regulatory Approvals at its own cost.
12.4 It is hereby acknowledged that there are inherent uncertainties
involved in the registration of pharmaceutical products with the RHA's
insofar as obtaining approval is concerned and such uncertainties form
part of the business risk involved in undertaking the form of
commercial collaboration as set forth in this Agreement.
12.5 All regulatory approvals and the DMF (Drug Master File) relating
predominately to the Elan Intellectual Property shall be processed by
and be the property of Elan and at all times held in Elan's sole name.
All regulatory approvals and the DMF relating predominately to the
Atrigel(R) Intellectual Property shall be processed by and be the
property of Atrix and at all times held in Atrix's sole name. Elan and
Atrix will authorize Newco to reference such DMF, as described herein,
with the FDA to the extent necessary for Newco's regulatory purposes.
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CLAUSE 13
MANUFACTURING
13.1 It is the expectation of the Parties that Newco shall enter into a
supply agreement with Elan or Atrix, as the case may be, to allow for
the commercial production of such Product on behalf of Newco. In
determining which of Elan or Atrix shall provide such services, the
Management Committee shall, in good faith, consider the respective
infrastructure and experience of the respective Parties; provided
however that Elan shall have the first right to manufacture and supply,
and/or subcontract the manufacture and supply, of the NanoCrystal(TM)
Technology formulations which may be incorporated in the Products and
Atrix shall have the first right to manufacture and supply, and/or
subcontract the manufacture and supply, of the Atrigel(R) Technology
and/or the BEMA(TM) Technology.
13.2 Any such supply agreement shall be negotiated and agreed by Newco and
Elan or Atrix, as the case may be not later than the date of completion
of Phase III (as such term is commonly used in connection with FDA
applications) of the R&D Plan. The terms of the said supply agreement
shall be negotiated in good faith on standard industry and commercial
terms.
CLAUSE 14
TECHNICAL SERVICES AND ASSISTANCE
14.1 Whenever commercially and technically feasible, Newco shall contract
with Atrix or Elan, as the case may be, to perform such other services
as Newco may require, other than those specifically dealt with
hereunder or in the License Agreements. In determining which Party
should provide such services, the Management Committee shall take into
account the respective infrastructure, capabilities and experience of
Elan and Atrix. There shall be no obligation upon either of Atrix or
Elan to perform such services.
14.2 Newco shall, if the Participants so agree, conclude an administrative
support agreement with Elan and/or Atrix on such terms as the Parties
thereto shall in good faith negotiate. The administrative services
shall include one or more of the following administrative services as
requested by Newco:
14.2.1 accounting, financial and other services;
14.2.2 tax services;
14.2.3 insurance services;
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14.2.4 human resources services;
14.2.5 legal and company secretarial services;
14.2.6 patent and related intellectual property services; and
14.2.7 all such other services consistent with and of the same type
as those services to be provided pursuant to this Agreement,
as may be required.
The foregoing list of services shall not be deemed exhaustive and may
be changed from time to time upon written request by Newco.
14.3 The Parties agree that each Party shall effect and maintain
comprehensive general liability insurance in respect of all clinical
trials and other activities performed by them on behalf of Newco. The
Participants and Newco shall ensure that the industry standard
insurance policies shall be in place for all activities to be carried
out by Newco.
14.4 If Elan or Atrix so requires, Atrix or Elan, as the case may be, shall
receive, at times and for periods mutually acceptable to the Parties,
employees of the other Party (such employees to be acceptable to the
receiving Party in the matter of qualification and competence) for
instruction in respect of the Elan Intellectual Property or the Atrix
Intellectual Property, as the case may be, as necessary to further the
Project.
14.5 The employees received by Elan or Atrix, as the case may be, shall be
subject to obligations of confidentiality no less stringent than those
set out in Clause 21 and such employees shall observe the rules,
regulations and systems adopted by the Party receiving the said
employees for its own employees or visitors.
CLAUSE 15
AUDITORS, BANKERS, ACCOUNTING REFERENCE DATE; SECRETARY
Unless otherwise agreed by the Participants and save as may be provided to the
contrary herein:
15.1 the auditors of Newco shall be KMPG Peat Marwick of Vallis Building,
Hamilton, Bermuda;
15.2 the bankers of Newco shall be Bank of Bermuda or such other bank as may
be mutually agreed from time to time;
15.3 the accounting reference date of Newco shall be December 31st in each
Financial Year; and
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15.4 the secretary of Newco shall be I.S. ▇▇▇▇▇▇▇▇▇▇▇ or such other Person
as may be appointed by the Directors from time to time.
CLAUSE 16
TRANSFERS OF SHARES;
RIGHT OF FIRST OFFER; TAG ALONG RIGHTS
GENERAL:
16.1 Until such time as the Common Stock shall be registered pursuant to the
Exchange Act and be publicly traded in an established securities
market, no Stockholder shall, directly or indirectly, sell or otherwise
transfer (each, a "TRANSFER") any Shares held by it except in as
expressly permitted by and accordance with the terms of this Agreement.
Newco shall not, and shall not permit any transfer agent or registrar
for any Shares to, transfer upon the books of Newco any Shares from any
Stockholder to any transferee, in any manner, except in accordance with
this Agreement, and any purported transfer not in compliance with this
Agreement shall be void.
During the Research and Development Term, no Stockholder shall,
directly or indirectly, sell or otherwise Transfer any of its legal
and/or beneficial interest in the Shares held by it to any other
Person. After completion of the Research and Development Term, a
Stockholder may Transfer Shares provided such Stockholder complies with
the provisions of Clauses 16.2 and 16.3.
Notwithstanding anything contained herein to the contrary, at all
times, EIS and/or Atrix shall have the right to Transfer any Shares to
their Affiliates provided, however, that such assignment does not
result in adverse tax consequences for any other Parties. EIS shall
have the right to Transfer any Shares to a special purpose financing or
similar entity established by Elan or EIS; provided, that such
Affiliates or other Permitted Transferee to which such legal and/or
beneficial interest in the Shares have been transferred shall agree to
be expressly subject to and bound by all the limitations and provisions
which are embodied in this Agreement.
16.2 No Stockholder shall, except with the prior written consent of the
other Stockholder, create or permit to subsist any pledge, lien or
charge over, or grant any option or other rights in all or any of the
Shares held by it (other than by a Transfer of such Shares in
accordance with the provisions of this Agreement).
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16.3 RIGHTS OF FIRST OFFER:
If at any time after the end of the Research and Development Term a
Stockholder shall desire to Transfer any Shares owned by it (a "SELLING
STOCKHOLDER"), in any transaction or series of related transactions
other than a Transfer to an Affiliate or subsidiary or in the case of
EIS to a special purpose financing or similar entity established by
EIS, then such Selling Stockholder shall deliver prior written notice
of its desire to Transfer (a "NOTICE OF INTENTION") (i) to Newco and
(ii) to the Stockholders who are not the Selling Stockholder (and any
transferee thereof permitted hereunder, if any), as applicable, setting
forth such Selling Stockholder's desire to make such Transfer, the
number of Shares proposed to be transferred (the "OFFERED SHARES") and
the proposed form of transaction (the "TRANSACTION PROPOSAL"), together
with any available documentation relating thereto, if any, and the
price at which such Selling Stockholder proposes to Transfer the
Offered Shares (the "OFFER PRICE"). The "Right of First Offer" provided
for in this Clause 16 shall be subject to any "Tag Along Right"
benefiting a Stockholder which may be provided for by Clause 16,
subject to the exceptions set forth therein.
Upon receipt of the Notice of Intention, the Stockholders who are not
the Selling Stockholder shall have the right to purchase at the Offer
Price the Offered Shares, exercisable by the delivery of notice to the
Selling Stockholder (the "NOTICE OF EXERCISE"), with a copy to Newco,
within 10 business days from the date of receipt of the Notice of
Intention. If no such Notice of Exercise has been delivered by the
Stockholders who are not the Selling Stockholder within such
10-business day period, or such Notice of Exercise does not relate to
all of the Offered Shares covered by the Notice of Intention, then the
Selling Stockholder shall be entitled to Transfer all of the Offered
Shares to the intended transferee. In the event that all of the Offered
Shares are not purchased by the non-selling Stockholders, the Selling
Stockholder shall sell the available Offered Shares within 30 days
after the delivery of such Notice of Intention on terms no more
favorable to a third party than those presented to the non-selling
Stockholders. If such sale does not occur, the Offered Shares shall
again be subject to the Right of First Offer set forth in Clause 16.3.
In the event that any of the Stockholders who are not the Selling
Stockholder exercises their right to purchase all of the Offered Shares
(in accordance with this Clause 16), then the Selling Stockholder shall
sell all of the Offered Shares to such Stockholder(s), in the amounts
set forth in the Notice of Intention, after not less than 10 business
days and not more than 25 business days from the date of the delivery
of the Notice of Exercise. In the event that more than one of the
Stockholders who are not the Selling Stockholders wish to purchase the
Offered Shares, the Offered Shares shall be allocated to such
Stockholders on the basis of their pro rata equity interests in Newco.
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The rights and obligations of each of the Stockholders pursuant to the
Right of First Offer provided herein shall terminate upon the date that
the Common Stock is registered under Section 12(b) or 12(g) of the
Exchange Act.
At the closing of the purchase of all of the Offered Shares by the
Stockholders who are not the Selling Stockholder (scheduled in
accordance with Clause 16), the Selling Stockholder shall deliver
certificates evidencing the Offered Shares being sold, duly endorsed,
or accompanied by written instruments of transfer in form reasonably
satisfactory to the Stockholders who are not the Selling Stockholder,
duly executed by the Selling Stockholder, free and clear of any adverse
claims, against payment of the purchase price therefor in cash, and
such other customary documents as shall be necessary in connection
therewith.
16.4 TAG ALONG RIGHTS:
Subject to Clause 16.3, a Stockholder (the "TRANSFERRING STOCKHOLDER")
shall not Transfer (either directly or indirectly), in any one
transaction or series of related transactions, to any Person or group
of Persons, any Shares, unless the terms and conditions of such
Transfer shall include an offer to the other Stockholders (the
"REMAINING STOCKHOLDERS"), to sell Shares at the same price and on the
same terms and conditions as the Transferring Stockholder has agreed to
sell its Shares (the "TAG ALONG RIGHT").
In the event a Transferring Stockholder proposes to Transfer any Shares
in a transaction subject to this Clause 16.4, it shall notify, or cause
to be notified, the Remaining Stockholders in writing of each such
proposed Transfer. Such notice shall set forth: (i) the name of the
transferee and the amount of Shares proposed to be transferred, (ii)
the proposed amount and form of consideration and terms and conditions
of payment offered by the transferee (the "TRANSFEREE TERMS") and (iii)
that the transferee has been informed of the Tag Along Right provided
for in this Clause 16, if such right is applicable, and the total
number of Shares the transferee has agreed to purchase from the
Stockholders in accordance with the terms hereof.
The Tag Along Right may be exercised by each of the Remaining
Stockholders by delivery of a written notice to the Transferring
Stockholder (the "CO-SALE NOTICE") within 10 business days following
receipt of the notice specified in the preceding subsection. The
Co-sale Notice shall state the number of Shares owned by such Remaining
Stockholder which the Remaining Stockholder wishes to include in such
Transfer; provided, however, that without the written consent of the
Transferring Stockholder, the amount of such securities belonging to
the Remaining Stockholder included in such Transfer may not be greater
than such
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Remaining Stockholder's percentage beneficial ownership of Fully
Diluted Common Stock multiplied by the total number of shares of Fully
Diluted Common Stock to be sold by both the Transferring Stockholder
and all Remaining Stockholders. Upon receipt of a Co-sale Notice, the
Transferring Stockholder shall be obligated to transfer at least the
entire number of Shares set forth in the Co-sale Notice to the
transferee on the Transferee Terms; provided, however, that the
Transferring Stockholder shall not consummate the purchase and sale of
any Shares hereunder if the transferee does not purchase all such
Shares specified in all Co-sale Notices. If no Co-sale Notice has been
delivered to the Transferring Stockholder prior to the expiration of
the 10 business day period referred to above and if the provisions of
this Section have been complied with in all respects, the Transferring
Stockholder shall have the right for a 45 day calendar day period to
Transfer Shares to the transferee on the Transferee Terms without
further notice to any other party, but after such 45-day period, no
such Transfer may be made without again giving notice to the Remaining
Stockholders of the proposed Transfer and complying with the
requirements of this Clause 16.
At the closing of any Transfer of Shares subject to this Clause 16, the
Transferring Stockholder, and the Remaining Stockholder, in the event
such Tag Along Right is exercised, shall deliver certificates
evidencing such securities as have been Transferred by each, duly
endorsed, or accompanied by written instruments of transfer in form
reasonably satisfactory to the transferee, free and clear of any
adverse claim, against payment of the purchase price therefor.
Notwithstanding the foregoing, this Clause 16 shall not apply to any
sale of Common Stock pursuant to an effective registration statement
under the Securities Act in a bona fide public offering.
CLAUSE 17
MATTERS REQUIRING STOCKHOLDERS' APPROVAL
17.1 In consideration of Atrix and Elan agreeing to enter into the License
Agreements, the Parties hereby agree that Newco shall not without the
prior approval of each of the EIS Director and the Atrix Director:
17.1.1 make a material Newco determination outside the ordinary
course of business, including, among other things,
acquisitions or dispositions of intellectual property and
licenses or sublicenses, changes in the Business or the Newco
budget as they relate to the Licensed Technologies; enter into
joint ventures and similar arrangements as they relate to the
Licensed Technologies and changes to the Business Plan as they
relate to the Licensed Technologies;
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17.1.2 issue any unissued Shares or unissued Common Stock
Equivalents, or create or issue any new shares (including a
split of the Shares) or Common Stock Equivalents, except as
expressly permitted by the Newco Bye-Laws;
17.1.3 alter any rights attaching to any class of share in the
capital of Newco or alter the Newco Bye-Laws;
17.1.4 consolidate, sub-divide or convert any of Newco's share
capital or in any way alter the rights attaching thereto;
17.1.5 dispose of all or substantially all of the assets of Newco;
17.1.6 do or permit to be done any act or thing whereby Newco may be
wound up (whether voluntarily or compulsorily), save as
otherwise expressly provided for in this Agreement;
17.1.7 enter into any contract or transaction except in the ordinary
and proper course of the Business on arm's length terms;
17.1.8 subject to Clause 23.13, assign, license or sub-license any of
the Elan Intellectual Property, Atrix Intellectual Property or
the Newco Intellectual Property;
17.1.9 amend or vary the terms of the Atrix License Agreement or the
Elan License Agreement;
17.1.10 permit a person other than Newco to own a regulatory approval
relating to the Product(s);
17.1.11 amend or vary the Business Plan or the Newco budget as they
relate to the Licensed Technologies;
17.1.12 alter the number of Directors;
17.1.13 change the domicile of Newco from, or discontinue Newco out
of, Bermuda;
17.1.14 register any Shares of Newco for public trading with any
governmental authority for public trading in any securities
market; and
17.1.15 declare or pay any dividend or make any distribution, directly
or indirectly, with respect to its capital stock; or issue,
sell, exchange, deliver, redeem, purchase or otherwise acquire
or dispose of any shares of its capital stock or other
securities.
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CLAUSE 18
DISPUTES
18.1 Should any dispute or difference arise between Elan and Atrix, or
between Elan or Atrix and Newco, during the period that this Agreement
is in force, other than a dispute or difference relating to (i) the
interpretation of any provision of this Agreement, (ii) the
interpretation or application of law, or (iii) the ownership of any
intellectual property, then any Party may forthwith give notice to the
other Parties that it wishes such dispute or difference to be referred
to a designated senior officer of each of Elan and Atrix.
18.2 In any event of a notice being served in accordance with Clause 18.1,
each of the Participants shall within 14 days of the service of such
notice prepare and circulate to the designated senior officer of each
of Elan and Atrix a memorandum or other form of statement setting out
its position on the matter in dispute and its reasons for adopting that
position. Each memorandum or statement shall be considered by the
designated senior officers of each of Elan and Atrix who shall
endeavour to resolve the dispute. If designated senior officers of each
of Elan and Atrix agree upon a resolution or disposition of the matter,
they shall each sign a statement which sets out the terms of their
agreement. The Participants agree that they shall exercise the voting
rights and other powers available to them in relation to Newco to
procure that the agreed terms are fully and promptly carried into
effect.
18.3 In the event the designated senior officers of each of Elan and Atrix
are unable to resolve a dispute or difference when it is referred to
them under Clause 18.1, the following procedures shall apply:
18.3.1 If the dispute relates to the interpretation of this Agreement
or any other Transaction Document or the compliance of the
Parties with their legal obligations thereunder, the
provisions of Clause 23.8.2 shall govern.
18.3.2 If the dispute does not relate to the interpretation of this
Agreement or any other Transaction Document or the compliance
of the Parties with their legal obligations thereunder, the
provisions of Clause 18.4 shall govern.
18.4 The designated senior officers of each of Elan and Atrix shall, if they
are unable to resolve a dispute or difference when it is referred to
them under Clause 18.1, within sixty (60) days of such referral, refer
the matter to an independent expert in pharmaceutical product
development and marketing (including clinical development and
regulatory affairs) jointly selected by the designated senior officers
of each of Elan and Atrix (the "EXPERT").
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In the event the designated senior officers of each of Elan and Atrix
cannot agree upon the designation of the Expert, the Participants shall
request the American Arbitration Association ("AAA"), sitting in the
City of New York to select the Expert. In each case, the Expert shall
be selected having regard to his suitability to determine the
particular dispute or difference on which the Expert is being requested
to determine. Unless otherwise agreed between the designated senior
officers of each of Elan and Atrix, the following rules shall apply to
the appointment of the Expert. The fees of the AAA and the Expert shall
be shared equally by the Participants. The Expert shall be entitled to
inspect and examine all documentation and any other material which the
Expert may consider to be relevant to the dispute. The Expert shall
afford each Party a reasonable opportunity (in writing or orally) of
stating reasons in support of such contentions as each Party may wish
to make relative to the matters under consideration. The Expert shall
give notice in writing of his determination to the Parties within such
time as may be stipulated in his terms of appointment or in the absence
of such stipulation as soon as practicable but in any event within four
weeks from the reference of the dispute or difference to him.
18.5 Any determination by the Expert of a dispute or difference shall not be
final and binding on the Parties.
CLAUSE 19
TERMINATION
19.1 This Agreement shall govern the operation and existence of Newco until
19.1.1 terminated by written agreement of all Parties hereto; or
19.1.2 otherwise terminated in accordance with this Clause 19.
19.2 For the purpose of this Clause 19, a "RELEVANT EVENT" is committed by a
Participant if:
19.2.1 it commits a breach of its material obligations under this
Agreement and fails to cure it within 60 days of being
specifically required in writing to do so by the other
Participant; provided, however, that if the breaching
Participant has proposed a course of action to cure the breach
and is acting in good faith to cure same but has not cured the
breach by the 60th day, such period shall be extended by such
period as is reasonably necessary to permit the breach to be
cured, provided that such period shall not be extended by more
than 90 days, unless otherwise agreed in writing by the
Parties; or
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19.2.2 a distress, execution, sequestration or other process is
levied or enforced upon or sued out against a material part of
its property which is not discharged or challenged within 30
days; or
19.2.3 it is unable to pay its debts in the normal course of
business; or
19.2.4 it ceases wholly or substantially to carry on its business,
otherwise than for the purpose of a reconstruction or
amalgamation, without the prior written consent of the other
Participant (such consent not to be unreasonably withheld); or
19.2.5 the appointment of a liquidator, receiver, administrator,
examiner, trustee or similar officer of such Participant or
over all or substantially all of its assets under the law of
any applicable jurisdiction, including without limitation, the
United States of America, Bermuda or Ireland; or
19.2.6 an application or petition for bankruptcy, corporate
re-organization, composition, administration, examination,
arrangement or any other procedure similar to any of the
foregoing under the law of any applicable jurisdiction,
including without limitation, the United States of America,
Bermuda or Ireland, is filed, and is not discharged within 60
days, or a Participant applies for or consents to the
appointment of a receiver, administrator, examiner or similar
officer of it or of all or a material part of its assets,
rights or revenues or the assets and/or the business of a
Participant are for any reason seized, confiscated or
condemned.
19.3 If either Participant commits a Relevant Event, the other Participant
shall be entitled but not required, within three months of the
occurrence of the Relevant Event, to require the defaulting Participant
(the "RECIPIENT PARTICIPANT") to sell on reasonable terms of payment to
the non-defaulting Participant (the "PROPOSING PARTICIPANT") all (but
not some only) of the Shares, held or beneficially owned by the
Recipient Participant for an amount equal to [**]% of the fair market
value of the Shares of the Recipient Participant (the "BUYOUT OPTION").
19.4 The Proposing Participant shall notify the Recipient Participant of the
exercise of the Buyout Option, no later than 30 business days prior to
the proposed exercise thereof, by delivering written notice to the
Recipient Participant stating that the Buyout Option is exercised and
the price at which the Proposing Participant is willing to purchase the
Shares of the Recipient Participant.
19.5 In the event that the Participants do not agree upon a purchase price
for the Shares within five Business Days following the receipt by the
Recipient Participant of written notice from the Proposing Participant
pursuant to Clause 19.4 above, the Proposing Participant may contact
the American Arbitration Association ("AAA"), sitting in New York City
and request that an independent US-based arbitrator who is
knowledgeable of the pharmaceutical/biotechnology industry be
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appointed within 10 Business Days. The AAA shall endeavour to select an
arbitrator who is technically knowledgeable in the
pharmaceutical/biotechnology industry (and who directly and through his
affiliates, has no business relationship with, or shareholding in,
either the Proposing Participant or the Recipient Participant).
Promptly upon being notified of the arbitrator's appointment, the
Proposing Participant and the Recipient Participant shall submit to the
arbitrator details of their assessment of the fair market value for the
Shares of the Recipient Participant together with such information as
they think necessary to validate their assessment. The arbitrator shall
notify the Recipient Participant of [**]% of the fair market value
assessed by the Proposing Participant (the "PROPOSING PARTICIPANT
PRICE") and shall notify the Proposing Participant of [**] the fair
market value assessed by the Recipient Participant (the "RECIPIENT
PARTICIPANT PRICE"). The Proposing Participant and the Recipient
Participant shall then be entitled to make further submissions to the
arbitrator within five Business Days explaining why the Recipient
Participant Price or the Proposing Participant Price, as the case may
be, is unjustified. The arbitrator shall thereafter meet with the
Proposing Participant and the Recipient Participant and shall
thereafter choose either the Recipient Participant Price or the
Proposing Participant Price (but not any other price) as the purchase
price for the Shares (the "PURCHASE PRICE") on the basis of which price
the arbitrator determines to be closer to [**] the fair market value
for the Shares of the Recipient Participant. The arbitrator shall use
his best efforts to determine the Purchase Price within 30 Business
Days of his appointment. The Proposing Participant and the Recipient
Participant shall bear the costs of the arbitrator equally. Any
decision of the arbitrator shall be final and binding.
19.6 The Proposing Participant shall purchase the Shares of the Recipient
Participant by delivery of the Purchase Price in cash no later than the
15th Business Day following determination of the Purchase Price by the
Expert.
19.7 The Shares of the Recipient Participant so transferred shall be sold by
the transferor as beneficial owner with effect from the date of such
transfer free from any lien, charge or encumbrance with all rights and
restrictions attaching thereto.
19.8 If the Proposing Participant exercises the Buyout Option, both parties
will negotiate in good faith to agree to additional reasonable
provisions and/or amendments to the License Agreements to protect the
intellectual property rights of the Recipient Party.
19.9 If either Participant commits a Relevant Event, the other Stockholder
shall have in addition to all other legal and equitable rights and
remedies hereunder, the right to terminate this Agreement upon 30 days'
written notice.
19.10 In the event of a termination of the Elan License Agreement and/or the
Atrix License Agreement, both parties will negotiate in good faith to
determine whether
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this Agreement should be terminated and if so, which provisions should
survive termination.
19.11 The provisions of Clauses 3, 9, 10, 16, 17, 18, 19, 21 and 23 shall
survive the termination of this Agreement under this Clause 19; all
other terms and provisions of this Agreement shall cease to have effect
and be null and void upon the termination of this Agreement.
CLAUSE 20
SHARE RIGHTS
The provisions regulating the rights and obligations attaching to the Common
Stock and the Preferred Stock are set out in the Newco Bye-laws.
CLAUSE 21
CONFIDENTIALITY
21.1 The Parties and/or Newco acknowledge and agree that it may be
necessary, from time to time, to disclose to each other confidential
and/or proprietary information, including without limitation,
inventions, works of authorship, trade secrets, specifications,
designs, data, know-how and other information, relating to the Field,
the Products, present or future products, the Newco Intellectual
Property, the Elan Intellectual Property or the Atrix Intellectual
Property, as the case may be, methods, compounds, research projects,
work in process, services, sales suppliers, customers, employees and/or
business of the disclosing Party, whether in oral, written, graphic or
electronic form (collectively "CONFIDENTIAL INFORMATION").
21.2 Save as otherwise specifically provided herein, any Confidential
Information revealed by a Party to another Party shall be maintained as
confidential and shall be used by the receiving Party exclusively for
the purposes of fulfilling the receiving Party's rights and obligations
under this Agreement, and for no other purpose. Confidential
Information shall not include:
21.2.1 information that is generally available to the public;
21.2.2 information that is made public by the disclosing Party;
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21.2.3 information that is independently developed by the receiving
Party, as evidenced by such Party's records, without the aid,
application or use of the disclosing Party's Confidential
Information;
21.2.4 information that is published or otherwise becomes part of the
public domain without any disclosure by the receiving Party,
or on the part of the receiving Party's directors, officers,
agents, representatives or employees;
21.2.5 information that becomes available to the receiving Party on a
non-confidential basis, whether directly or indirectly, from a
source other than the disclosing Party, which source did not
acquire this information on a confidential basis; or
21.2.6 information which was already in the possession of the
receiving Party at the time of receiving such information, as
evidenced by its records, provided such information was not
previously provided to the receiving party from a source which
was under an obligation to keep such information confidential;
or
21.2.7 information that is the subject of a written permission to
disclose, without restriction or limitation, by the disclosing
Party.
21.3 The receiving Party will be entitled to disclose Confidential
Information which the receiving Party is required to disclose pursuant
to:
21.3.1 a valid order of a court or other governmental body or any
political subdivision thereof or as otherwise required by law,
rule or regulation; or; or
21.3.2 any other requirement of law;
provided, however, that if the receiving Party becomes legally
required to disclose any Confidential Information, the
receiving Party shall give the disclosing Party prompt notice
of such fact so that the disclosing Party may obtain a
protective order or confidential treatment or other
appropriate remedy concerning any such disclosure. The
receiving Party shall fully co-operate with the disclosing
Party in connection with the disclosing Party's efforts to
obtain any such order or other remedy. If any such order or
other remedy does not fully preclude disclosure, the receiving
Party shall make such disclosure only to the extent that such
disclosure is legally required.
21.4 Save as otherwise specifically provided herein, each Party agrees to
disclose Confidential Information of another Party only to those
employees, representatives and agents requiring knowledge thereof in
connection with their duties directly related to the fulfilling of the
Party's obligations under this
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Agreement, so long as such persons are under an obligation of
confidentiality no less stringent than as set forth herein. Each Party
further agrees to inform all such employees, representatives and agents
of the terms and provisions of this Agreement and their duties
hereunder and to obtain their consent hereto as a condition of
receiving Confidential Information. Each Party agrees that it will
exercise the same degree of care and protection to preserve the
proprietary and confidential nature of the Confidential Information
disclosed by a Party, as the receiving Party would exercise to preserve
its own Confidential Information. Each Party agrees that it will, upon
request of another Party, return all documents and any copies thereof
containing Confidential Information belonging to or disclosed by such
other Party. Each Party shall promptly notify the other Parties upon
discovery of any unauthorized use or disclosure of the other Parties'
Confidential Information.
21.5 Any breach of this Clause 21 by any employee, representative or agent
of a Party is considered a breach by the Party itself.
21.6 The provisions relating to confidentiality in this Clause 21 shall
remain in effect during the Term and for a period of seven years
following the termination of this Agreement.
21.7 The Parties agree that the obligations of this Clause 21 are necessary
and reasonable in order to protect the Parties' respective businesses,
and each Party expressly agrees that monetary damages would be
inadequate to compensate a Party for any breach by the other Party of
its covenants and agreements set forth herein. Accordingly, the Parties
agree and acknowledge that any such violation or threatened violation
may cause irreparable injury to a Party and that, in addition to any
other remedies that may be available, in law or in equity or otherwise,
any Party shall be entitled to seek injunctive relief against the
threatened breach of the provisions of this Clause 21, or a
continuation of any such breach by the other Party, specific
performance and other equitable relief to redress such breach together
with its damages and reasonable counsel fees and expenses to enforce
its rights hereunder, without the necessity of proving actual or
express damages.
CLAUSE 22
COSTS
22.1 Each Stockholder shall bear its own legal and other costs incurred in
relation to preparing and concluding this Agreement and the Definitive
Documents.
22.2 All other costs, legal fees, registration fees and other expenses
relating to the transactions contemplated hereby, including the costs
and expenses incurred in relation to the incorporation of Newco, shall
be borne by Newco.
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CLAUSE 23
GENERAL
23.1 GOOD FAITH:
Each of the Parties hereto undertakes with the others to do all things
reasonably within its power that are necessary or desirable to give
effect to the spirit and intent of this Agreement.
23.2 FURTHER ASSURANCE:
At the request of any of the Parties, the other Party or Parties shall
(and shall use reasonable efforts to procure that any other necessary
parties shall) execute and perform all such documents, acts and things
as may reasonably be required subsequent to the signing of this
Agreement for assuring to or vesting in the requesting Party the full
benefit of the terms hereof.
23.3 NO REPRESENTATION:
Each of the Parties hereto hereby acknowledges that in entering into
this Agreement it has not relied on any representation or warranty
except as expressly set forth herein or in any document referred to
herein.
23.4 FORCE MAJEURE:
Neither Party to this Agreement shall be liable for delay in the
performance of any of its obligations hereunder if such delay is caused
by or results from causes beyond its reasonable control, including
without limitation, acts of God, fires, strikes, acts of war (whether
war be declared or not), insurrections, riots, civil commotions,
strikes, lockouts or other labor disturbances or intervention of any
relevant government authority, provided that the Party whose
performance is delayed or prevented shall continue to use good faith
diligent efforts to mitigate, avoid or end such delay or failure in
performance as soon as practicable.
23.5 RELATIONSHIP OF THE PARTIES:
Nothing contained in this Agreement is intended or is to be construed
to constitute Elan/EIS/EPIL and Atrix as partners, or Elan/EIS/EPIL as
an employee or agent of Atrix, or Atrix as an employee or agent of
Elan/EIS/EPIL.
No Party hereto shall have any express or implied right or authority to
assume or create any obligations on behalf of or in the name of another
Party or to bind another Party to any contract, agreement or
undertaking with any third party.
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23.6 COUNTERPARTS:
This Agreement may be executed in any number of counterparts, each of
which when so executed shall be deemed to be an original and all of
which when taken together shall constitute this Agreement.
23.7 NOTICES:
Any notice to be given under this Agreement shall be sent in writing by
registered or recorded delivery post or reputable overnight courier
such as Federal Express or telecopied to:
Elan at:
▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇
▇▇▇▇▇▇▇
Attention: Vice President & General Counsel
Elan Pharmaceutical Technologies,
a division of Elan Corporation, plc
Telephone: ▇▇▇-▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇-▇▇▇-▇▇▇▇
and
Elan International Services, Ltd.
▇▇▇ ▇▇. ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇
Bermuda
Attention: President
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Atrix at:
Atrix Laboratories, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
▇▇▇
Attention: President
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
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with a copy to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Newco at:
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇ ▇▇▇▇▇▇ ▇▇.,
▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇: Secretary
Telephone: ▇▇▇ ▇▇▇ ▇▇▇▇
Fax: ▇▇▇ ▇▇▇ ▇▇▇▇
or to such other address(es) as may from time to time be notified by
any Party to the others hereunder.
Any notice sent by mail shall be deemed to have been delivered within
three Business Days after dispatch or delivery to the relevant courier
and any notice sent by telecopy shall be deemed to have been delivered
upon confirmation of receipt. Notices of change of address shall be
effective upon receipt. Notices by telecopy shall also be sent by
another method permitted hereunder.
23.8 GOVERNING LAW
23.8.1 This Agreement shall be governed by and construed in accordance with
the laws of the State of New York except that the applicable corporate
laws of Bermuda shall apply to the issuance of the Shares and to the
authority and responsibilities of the Directors.
23.8.2 In the event that a dispute regarding the matters described in Clause
18.3.1 is not resolved pursuant to the provisions of Clause 18.1, the
Parties agree to consider other dispute resolution mechanisms including
mediation.
23.8.3 In the event that the Parties fail to agree on a mutually acceptable
dispute resolution mechanism under Clause 23.8.2 or in the event that
the dispute is not resolved pursuant to any dispute resolution
mechanism agreed by the Parties under Clause 23.8.2 within 6 months,
the dispute shall be finally settled by the courts of
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competent jurisdiction. For the purposes of this Agreement the parties
submit to the non-exclusive jurisdiction of the courts of the State of
New York.
23.9 SEVERABILITY:
If any provision in this Agreement is agreed by the Parties to be,
deemed to be or becomes invalid, illegal, void or unenforceable under
any law that is applicable hereto, such provision will be deemed
amended to conform to applicable laws so as to be valid and enforceable
or, if it cannot be so amended without materially altering the
intention of the Parties, it will be deleted, with effect from the date
of such agreement or such earlier date as the Parties may agree, and
the validity, legality and enforceability of the remaining provisions
of this Agreement shall not be impaired or affected in any way.
23.10 AMENDMENTS:
No amendment, modification or addition hereto shall be effective or
binding on any Party unless set forth in writing and executed by a duly
authorized representative of all Parties.
23.11 WAIVER:
No waiver of any right under this Agreement shall be deemed effective
unless contained in a written document signed by the Party charged with
such waiver, and no waiver of any breach or failure to perform shall be
deemed to be a waiver of any future breach or failure to perform or of
any other right arising under this Agreement.
23.12 ASSIGNMENT:
None of the Parties shall be permitted to assign its rights or
obligations hereunder without the prior written consent of the other
Parties except as follows:
23.12.1 Elan, EIS and/or Atrix shall have the right to assign their
rights and obligations hereunder to their Affiliates
provided, however, that such assignment does not result in
adverse tax consequences for any other Parties.
23.12.2 Elan and EIS shall have the right to assign their rights and
obligations hereunder to a special purpose financing or
similar entity established by Elan or EIS.
23.13 ASSIGNMENT OF NEWCO INTELLECTUAL PROPERTY:
Upon one month's prior notice in writing from Elan to Newco and Atrix,
Newco shall assign the Newco Intellectual Property from Newco to a
wholly-owned
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subsidiary of Newco to be incorporated in Ireland, which company shall
be newly incorporated to facilitate such assignment.
23.14 WHOLE AGREEMENT/NO EFFECT ON OTHER AGREEMENTS:
This Agreement (including the Schedules attached hereto) and the
Definitive Documents set forth all of the agreements and understandings
between the Parties with respect to the subject matter hereof, and
supersedes and terminates all prior agreements and understandings
between the Parties with respect to the subject matter hereof. There
are no agreements or understandings with respect to the subject matter
hereof, either oral or written, between the Parties other than as set
forth in this Agreement and the Definitive Documents.
In the event of any ambiguity or conflict arising between the terms of
this Agreement and those of the Newco Bye-Laws, the terms of this
Agreement shall prevail except with respect to the rights and
obligations attaching to the Common Stock and the Preferred Stock,
where the Newco Bye-Laws shall prevail.
No provision of this Agreement shall be construed so as to negate,
modify or affect in any way the provisions of any other agreement
between any of the Parties unless specifically referred to, and solely
to the extent provided herein. In the event of a conflict between the
provisions of this Agreement and the provisions of the License
Agreements, the terms of this Agreement shall prevail unless this
Agreement specifically provides otherwise.
23.15 SUCCESSORS:
This Agreement shall be binding upon and inure to the benefit of the
Parties hereto, their successors and permitted assigns.
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SCHEDULE 1
ELAN LICENSE AGREEMENT
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SCHEDULE 2
ATRIX LICENSE AGREEMENT
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on the day
first set forth above.
SIGNED
BY: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
---------------------
▇▇▇▇▇ ▇▇▇▇▇▇
Authorized Signatory on behalf of
ELAN PHARMA INTERNATIONAL LIMITED
SIGNED
BY: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
---------------------
▇▇▇▇▇ ▇▇▇▇▇▇
President and Chief Financial Officer
ELAN INTERNATIONAL SERVICES, LTD.
SIGNED
BY: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Chairman and Chief Executive Officer
ATRIX LABORATORIES, INC.
SIGNED
BY: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
for and on behalf of
ATRIX NEWCO, LIMITED
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