Dated as of the 4th day of February, 1998.
INEX PHARMACEUTICALS CORPORATION
- and -
LYNX THERAPEUTICS, INC.
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ACQUISITION AGREEMENT
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TABLE OF CONTENTS
PART 1
INTERPRETATION
Definitions......................................................... 1
Interpretation...................................................... 6
PART 2
PURCHASE AND SALE
Assets ........................................................... 7
License ........................................................... 7
Excluded Liabilities................................................ 7
PART 3
PURCHASE PRICE AND OTHER PAYMENTS
Purchase Price...................................................... 8
Allocation of Purchase Price........................................ 9
Royalty Payments on Antisense Products.............................. 9
Sharing of Payments under Development Agreements.................... 10
Payments ........................................................... 10
Sales and Manufacturing Records..................................... 11
PART 4
SUBLEASE AND EMPLOYEES
Manufacturing Facilities............................................ 11
Employees........................................................... 12
PART 5
RESALE RESTRICTIONS
Share Restrictions.................................................. 12
Legends ........................................................... 13
Notice of Disposition............................................... 14
Assistance on Sales................................................. 14
Voting ........................................................... 14
PART 6
REPRESENTATIONS AND WARRANTIES
Representations and Warranties of Lynx.............................. 14
Representations and Warranties of Inex.............................. 14
Survival of Representations and Warranties.......................... 15
PART 7
COVENANTS
Covenants of Lynx................................................... 15
Covenants of Inex................................................... 17
Mutual Covenants.................................................... 17
PART 8
CONDITIONS PRECEDENT TO OBLIGATIONS OF INEX
Conditions Precedent of Inex........................................ 18
Conditions for Benefit of Inex...................................... 19
PART 9
CONDITIONS PRECEDENT TO OBLIGATIONS OF LYNX
Conditions Precedent of Lynx........................................ 19
Conditions for Benefit of Lynx...................................... 20
PART 10
DELIVERIES AT CLOSING
Closing ........................................................... 20
Deliveries of Lynx.................................................. 20
Deliveries of Inex.................................................. 21
PART 11
LOSS OR DAMAGE BEFORE CLOSING
Loss or Damage Closing.............................................. 22
PART 12
ADJUSTMENTS
Effective Date of Transfer of Assets................................ 22
PART 13
CONVEYANCE
Conveyance of Assets................................................ 22
Trust Regarding Assets Not Conveyed................................. 23
PART 14
NON-COMPETITION AND CONFIDENTIALITY
Non-Competition..................................................... 23
PART 15
DISPUTE RESOLUTION
Initiation of Process............................................... 25
Acceptance and Implementation....................................... 26
Arbitration Rules................................................... 26
Place of Arbitration................................................ 26
Legal Proceedings................................................... 26
Exclusions.......................................................... 26
PART 16
INDEMNITIES AND SET-OFF
Indemnity........................................................... 26
De Minimus.......................................................... 27
Notification Regarding Claim........................................ 27
Litigation.......................................................... 27
Set-Off ........................................................... 28
PART 17
GENERAL PROVISIONS
Modifications, Approvals and Consents............................... 28
Further Assurances.................................................. 29
Entire Agreement.................................................... 29
Notice ........................................................... 29
Deemed Receipt...................................................... 30
Change of Address................................................... 30
Enurement........................................................... 30
Assignment.......................................................... 30
Applicable Law...................................................... 31
Attornment.......................................................... 31
Waiver of Jury Trial................................................ 31
Severability........................................................ 31
Counterparts........................................................ 32
SCHEDULE A - ACQUIRED TECHNOLOGY
SCHEDULE B - AMIDATE LICENSE
SCHEDULE C - REPRESENTATIONS AND WARRANTIES OF LYNX
SCHEDULE D - REPRESENTATIONS AND WARRANTIES OF INEX
SCHEDULE E - LEASED PROPERTY
SCHEDULE F - SUBLEASE OF LEASED PROPERTY
SCHEDULE G - EQUIPMENT AND INVENTORY
SCHEDULE H - MATERIAL CONTRACTS
SCHEDULE I - PERMITS
SCHEDULE J - PERMITTED ENCUMBRANCES AND ASSUMED LIABILITIES
SCHEDULE K - ENVIRONMENTAL MATTERS
SCHEDULE L - EMPLOYEES
SCHEDULE M - OPINION OF COUNSEL TO LYNX
SCHEDULE N - OPINION OF COUNSEL TO INEX
***TEXT OMITTED AND FILED SEPARATELY
CONFIDENTIAL TREATMENT REQUESTED
UNDER 17 C.F.R. ▇▇.▇▇. 200.80(B)(4),
200.83 AND 240.24B-2
ACQUISITION AGREEMENT
THIS AGREEMENT is made February 4th, 1998,
BETWEEN:
INEX PHARMACEUTICALS CORPORATION, a British Columbia
corporation having an office at 100 - 8900 Glenlyon Parkway,
Glenlyon Business Park, Burnaby, British Columbia, Canada, V5J
5J8 ("Inex")
AND:
LYNX THERAPEUTICS, INC., a Delaware corporation having an
office at ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇.▇.▇.
▇▇▇▇▇ ("Lynx")
WHEREAS:
(A) Inex carries on the business of developing and commercializing
transmembrane carrier systems for drugs which regulate gene expression;
(B) Lynx owns certain assets and technology relating to oligonucleotide
chemistry and antisense therapeutics; and
(C) Lynx has agreed to sell certain of such assets and technology, as well
as certain rights related thereto, to Inex on the terms and subject to the
conditions hereinafter contained, and concurrent with the closing of such sale
has also agreed to license certain antisense technology to Inex;
NOW THEREFORE THIS AGREEMENT WITNESSES THAT in consideration for the sum of $10
and the mutual covenants and agreements herein contained, and other good and
valuable consideration the sufficiency and receipt of which are hereby
acknowledged, the parties mutually agree as follows:
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PART 1
INTERPRETATION
Definitions
1.1 In this Agreement, including the recitals, except as otherwise
expressly provided or unless the context otherwise requires,
1933 Act means the United States Securities Act of 1933, as amended;
Acquired Technology means all Technology related to the Business, other
than the Amidate Technology, as more fully described in Schedule A;
Affiliate means a company that is related to another company by virtue of
the fact that the first company is, directly or indirectly, a subsidiary of
the second company or both companies are, directly or indirectly,
subsidiaries of the same company or each company is, directly or
indirectly, controlled by the same person or company;
Amidate License has the meaning assigned to it in ss.2.2;
Amidate Technology means all Technology relating to phosphoramidate
oligonucleotides covered by the Amidate License;
Antisense Product means a therapeutic product developed from the Acquired
Technology using a phosphorothioate antisense compound;
Assets means all the assets ordinarily used, or in which Lynx hold rights,
in connection with the Business, including
(a) the Acquired Technology,
(b) the Books and Records,
(c) the Equipment,
(d) the Inventory,
(e) the Material Contracts,
(f) the Permits, and
and all other tangible and intangible property and assets used in
connection with the Business whether located on Lynx's premises or
otherwise;
Assumed Liabilities means those Liabilities set out in Schedule J;
Books and Records means all books, records, files, documents and other
written, electronically maintained or computer accessed information
relating solely to the Assets or the Business;
Business means the business of researching, developing (for both
preclinical and clinical phases), designing, making, having made,
marketing, distributing, and selling products in the field of or relating
to oligonucleotides and antisense technology (but excluding products based
on the Amidate Technology) as it applies to therapeutics;
Business Day means a day that is not a Saturday or a Sunday or a British
Columbia provincial, Canadian
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federal, California state or United States federal holiday;
Confidential Information means all information (including, without
limitation, trade secrets, know-how, specifications, analyses, formulae,
drawings, data, reports, patterns, devices, plans, processes, or
compilations) and any other documentation, whether written, graphic or
stored electronically or magnetically, belonging to either Party or any of
its Affiliates, including:
(a) all proprietary information licensed to or acquired, used or
developed by the party including information in respect of laboratory
or research procedures and techniques, research data, chemical
compositions and processes and other scientific strategies and
concepts; and
(b) all information relating to the party's business, structure,
personnel, operations, financial condition, marketing, advertising and
commercial strategies, customer and supplier lists, agreements and
contractual records and correspondence that may not be generally known;
Closing means the completion of the sale and purchase of the Assets
hereunder by the transfer and conveyance thereof, the issuance of the Inex
Shares and the completion of any other related or ancillary matters all as
provided herein, and "Closing Time" means the time that Closing occurs;
Closing Date means March 10, 1998, or such other date as is agreed upon by
the parties;
Development Agreements means the SPAG Agreement and the TSCL Agreement;
Employee Benefit Plan has the meaning assigned to it in ss.29 of Schedule
C;
Encumbrance means any mortgage, charge, pledge, hypothecation, lien,
easement, right-of-way, encroachment, security interest, covenant,
condition, right of re-entry, right of possession, lease, license,
assignment, option, claim or other title defect, encumbrance or charge
whatsoever, whether or not registered or registrable and whether or not
consensual or arising by law, statutory or otherwise, that secures the
payment of any Liabilities or the performance of any obligation or creates
in favour of or grants to any Person a proprietary right;
Equipment means all machinery, equipment, office equipment, furniture,
furnishings, spare parts, tools, stores and supplies of all kinds used in
connection with the Business as more fully set out in Schedule G;
Fully Burdened Costs means, with respect to the manufacture of a particular
Licensed Compound, a party's fully burdened costs of manufacturing the
particular Licensed Compound, including without limitation all raw
materials, labour, manufacturing and packaging costs and expenses, overhead
amounts directly allocable to such manufacturing, and all third party
royalties owed by the party based on its sales of such Licensed Compound
hereunder to the extent not creditable at any time against third party
running royalties, calculated in accordance with generally accepted
accounting principles consistently applied;
Governmental Authority means, as applicable, the government of Canada, the
government of the United States of America, the government of a Canadian
province or territory, the government of a state in the United States of
America, and a ministry, department, commission, board, bureau or other
agency of, or municipality, regional district or other local governing body
established by, any such government, or other political subdivision thereof
and includes any Person exercising executive, legislative, judicial,
regulatory or administrative functions of, or pertaining to, any such
government;
Gross Profits means those payments received from partners after deducting
Fully Burdened Costs;
Hazardous Substance includes any contaminants, pollutants, dangerous
substances, liquid wastes,
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industrial wastes, hauled liquid wastes, toxic substances, hazardous
wastes, hazardous materials, or hazardous substances as defined in or
pursuant to any law, judgment, decree, order, injunction, rule, statute and
regulation of any court, arbitrator or Governmental Authority by which the
Business, the Assets or Lynx is bound or to which Business, the Assets or
Lynx is subject;
HSR Act means The ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as
amended, and the rules and regulations promulgated thereunder;
IND means an investigational new drug application filed with a health
regulatory agency;
Inex Shares has the meaning assigned to it in ss.3.1;
Inventory means the goods, merchandise, stock-in-trade and inventories of
raw materials, work in progress and finished goods of or pertaining to the
Business, particulars of which are listed in Schedule G;
Leasehold Property means the premises leased by Lynx as described in
Schedule E;
Licensed Compound means [...***...];
Liabilities in respect of a Person means collectively, all liabilities,
indebtedness, capitalized lease obligations, advances, debts, duties,
endorsements, guarantees, obligations, responsibilities and undertakings of such
Person assumed, created, incurred, or made, or to which such Person is bound or
subject, whether voluntary or involuntary, however arising, whether due or not
due, absolute, inchoate or contingent, liquidated or unliquidated, determined or
undetermined, direct or indirect, express or implied, and whether in respect of
which such Person is liable individually or jointly with others;
LR-3280 means the oligonucleotide compound described in Schedule A;
Material Contracts means all contracts, engagements or commitments, whether
written or oral, to which Lynx is entitled in connection with the Business
including the right, title and interest of Lynx in the material agreements
and contracts described in Schedules H and J, but excluding the payments
under the Development Agreements to which Lynx will continue to be entitled
to as specifically provided for in ss.3.4;
Net Sales means the total amount invoiced or otherwise charged by a party
or its Affiliates or sublicensees on account of the final or end product
sale of a product to a non-Affiliate, less the following deductions to the
extent actually incurred or allowed based upon the sale of such product:
(a) credits, allowances, discounts and rebates to, and chargebacks
from the account of, such non-Affiliate for spoiled, damaged, out-dated
and returned product;
(b) freight and insurance costs for transporting such Product, to the
extent invoiced to the purchaser;
(c) sales, value-added and other direct taxes on the sale of the
product;
(d) customs duties, surcharges and other governmental charges
incurred in connection with the exportation or importation of such
product;
(e) trade, cash, and quantity discounts off the invoiced price and
similar promotional discounts (such as management fees required by
hospital buying groups) off the invoiced price, all to the extent
consistent with normal practice in the industry;
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* Confidential Treatment Requested
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(f) amounts reflecting retroactive price adjustments on sale of
products, to the extent not previously deducted from Net Sales; and
(g) rebates or chargebacks made on the sale of such product, to the
extent consistent with the normal practice in the industry,
and provided that any and all of the foregoing are calculated in accordance
with generally accepted accounting principles applicable to the locality
where the invoices are prepared and consistently applied;
Permits means all written or oral licenses, consents, permits, authorities,
certificates and registrations which are required for the conduct of the
Business in the usual and ordinary course and the ownership or leasing of
and the uses to which the Assets have been and presently are put including
those set out in Schedule I;
Permitted Encumbrances means the Encumbrances described in Schedule J;
Person means an individual, corporation, body corporate, firm, limited
liability company, partnership, syndicate, joint venture, society,
association, trust, unincorporated organization or Governmental Authority
or any trustee, executor, administrator or other legal representative;
Purchase Price has the meaning assigned to it in ss.3.1;
SPAG Agreement means the Development and Supply Agreement dated September
30, 1996 between Lynx and ▇▇▇▇▇▇▇ Pharma AG;
TCS means Inex's transmembrane carrier system;
Technology means all ideas, methods, inventions, know-how, trade secrets,
techniques and formulations developed or acquired or licensed by a party;
TSCL Agreement means the Collaboration Agreement dated July 9, 1996 between
Lynx and Tanabe Seiyaku Co., Ltd.; and
TSE means The Toronto Stock Exchange.
Interpretation
1.2 In this Agreement, except as expressly provided or unless the context
otherwise requires,
(a) "this Agreement" means this Acquisition Agreement, including the
Schedules hereto, as from time to time supplemented or amended by one or
more agreements entered into pursuant to the applicable provisions hereof,
(b) the headings in this Agreement are inserted for convenience only and do
not form a part of this Agreement and are not intended to interpret, define
or limit the scope, extent or intent of this Agreement or any provision
hereof,
(c) the word "including", when following any general statement or term, is
not to be construed as limiting the general statement or term to the
specific items or matters set forth or to similar items or matters, but
rather as permitting the general statement or term to refer to all other
items or matters that could reasonably fall within its broadest possible
scope,
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(d) all accounting terms not otherwise defined herein have the meanings
assigned to them, and all calculations to be made hereunder are to be made,
in accordance with United States generally accepted accounting principles
applied on a consistent basis,
(e) all references to currency mean currency of the United States of
America,
(f) a reference to a statute includes all regulations made thereunder, all
amendments to the statute or regulations in force from time to time, and
any statute or regulation that supplements or supersedes such statute or
regulations,
(g) a reference to an entity includes any successor to that entity,
(h) words importing the masculine gender include the feminine or neuter,
words in the singular include the plural, words importing a corporate
entity include individuals, and vice versa,
(i) a reference to "approval", "authorization" or "consent" means written
approval, authorization or consent, and
(j) a reference to a Part is to a Part of this Agreement and the symbol ss.
followed by a number or some combination of numbers and letters refers to
the section, paragraph, subparagraph, clause or subclause of this Agreement
so designated.
1.3 The Schedules attached hereto are incorporated in this Agreement by
reference and deemed to form a part hereof.
PART 2
PURCHASE AND SALE
Assets
2.1 On the Closing Date, Inex will purchase from Lynx and Lynx will sell,
assign and transfer to Inex all of its right, title and interest in the Assets,
free and clear of all Encumbrances, except the Permitted Encumbrances.
License
2.2 On the Closing Date, Lynx will grant to Inex an exclusive, worldwide
license (the "Amidate License") in substantially the form of the license
attached as Schedule B.
Excluded Liabilities
2.3 Inex will not assume any Liabilities of Lynx relating to the Business,
other than as expressly set out in Schedule J, and, without limiting the
generality of the foregoing, specifically will not assume
(a) any liabilities for taxes either accruing or relating to the periods on
or prior to the Closing Time, except as otherwise provided in this
Agreement;
(b) any claim, judgment, penalty, settlement agreement or other obligation
that is pending or
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threatened on or prior to the Closing Time;
(c) any claims, liabilities or other obligations that relate to injuries,
actions, omissions, conditions or events that occurred or existed on or
prior to the Closing Time, whether or not based on any act or omission of
Lynx, in connection with the operation of the Business;
(d) all claims and liabilities arising out of or relating to
(i) the treatment, storage or disposal on or prior to the Closing
Time of Hazardous Materials by Lynx or any other person on any property
used in the operation of the Business,
(ii) releases, on or before the Closing Time, of Hazardous Materials
on, at or from any assets or properties,
(iii) generation or transportation of Hazardous Materials by Lynx in
the operation of the Business, and
(iv) releases of Hazardous Materials by any person on or from property
used in the operation of the Business prior to Lynx's ownership or use
thereof;
(e) any taxes, claims, expenses, liabilities, penalties, damages or
obligations in any way relating to or arising out of (or in connection
with) any Employee Benefit Plan, as defined in paragraph 29 of Schedule C,
whether arising prior to, on or after the Closing Date, including, but not
limited, to any obligations or liabilities relating to health care
continuation coverage under Section 4980B of the Code or Part 6 of Subtitle
B of Title I of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), or any state law providing similar rights to
continuation coverage, with respect to any qualifying events occurring
before, on or after the Closing Date with respect to any Employee Benefit
Plan;
(f) all severance obligations and other costs of terminating employees of
Lynx prior to the Closing Time from whatever source such obligations and
costs arise, including, without limitation, contractual obligations,
notices to employees, employment manuals, course of dealings, past
practices or otherwise; and
(g) all other liabilities accrued prior to the Closing Time, and
Lynx agrees to pay or otherwise discharge the Liabilities of the Business
that are not assumed by Inex, and any failure to do so will be subject to
indemnification under Part 16.
PART 3
PURCHASE PRICE AND OTHER PAYMENTS
Purchase Price
3.1 In consideration for the transfer of the Assets, Inex will, on the
Closing Date:
(a) make a cash payment to Lynx in the amount of US$3,000,000 (the "Cash
Amount");
(b) issue to Lynx 1,200,000 Common shares of Inex (the "Inex Shares"), of
which
(i) 400,000 shares (the "First Tranche Shares") will be delivered to
Lynx on the Closing
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date,
(ii) 400,000 shares (the "Second Tranche Shares") will be held by Inex
in escrow to be released on the earlier of
(A) Inex executing an agreement with a strategic partner for
the development of an Antisense Product,
(B) Inex commencing Phase II clinical trials in the United
States utilizing an Antisense Product to target one of the genes
c-myb, c-myc or IGF-IR, or
(C) two years from the Closing Date, and
(iii) 400,000 shares (the "Third Tranche Shares") will be held by Inex
in escrow to be released on the earlier of
(A) LR-3280 being approved in the United States for the
treatment of restenosis, or
(B) three years from the Closing Date.
The Inex Shares together with the Cash Amount are referred to as the "Purchase
Price".
Allocation of Purchase Price
3.2 The parties agree to utilize the fair market values of the Assets
described in the Schedules for the purpose of allocating the purchase price paid
the Assets for federal, state, provincial, local and other tax. Each party
agrees to report federal, state, local and other tax consequences of the
transactions contemplated by this Agreement in a manner consistent with such
allocation.
Royalty Payments on Antisense Products
3.3 In addition to the payment of the Purchase Price, Inex will pay to
Lynx:
(a) a royalty of [...***...] of all Net Sales of Antisense Products not
used in conjunction with TCS; and
(b) a royalty of [...***...] of all Net Sales of Antisense Products used in
conjunction with TCS;
in each case excluding all such sales made under the Development Agreements.
Sharing of Payments under Development Agreements
3.4 Inex agrees that Lynx will retain the right to, and be entitled to,
receive
(a) all milestone payments made under ss.7.1(b) (as a result of satisfying
ss.7.2(a)(i)) of the SPAG Agreement and ss.7.1(b) of the TSCL Agreement,
(b) 50% of all other milestone payments made under the Development
Agreements, and
(c) 50% of all Gross Profits which are earned by Inex under the Development
Agreements.
3.5 On the Closing Date, Inex will establish procedures with ▇▇▇▇▇▇▇ Pharma
AG and Tanabe
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* Confidential Treatment Requested
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Seiyaku Co., Ltd. under which they will pay directly to Lynx all payments due to
Lynx under ss.3.4, and if a payment required to be paid to Lynx pursuant to
ss.3.4 is paid to Inex, Inex will forthwith pay to Lynx an amount equal to such
misdirected payment.
3.6 Lynx acknowledges that, as at the date hereof, it has received, in the
aggregate, milestone payments of [...***...], and that no further milestone
payments are or will become due and payable under such agreements before the
Closing Date.
Payments
3.7 Payments under ss.3.3 are to be made to Lynx within 45 days of the end
of each calendar quarter of Net Sales of Antisense Products. Payments made under
ss.3.3 ("Royalties") shall be accompanied by a statement that will include for
each country in which sales of products occurred: the gross sales and Net Sales
in each country's currency; the royalty rate; the related amounts payable in
each country's currency; the applicable exchange rate to convert from each
country's currency to U.S. dollars; and the amounts payable in U.S. dollars.
Payments to be received by Lynx under ss.3.4 in respect of Gross Profits will be
accompanied by an explanation of Inex's calculation of Gross Profits. Royalties
and the payments due Lynx under ss.3.4(b) will first be calculated to U.S.
Dollars using the exchange rate as reported in the Wall Street Journal for the
last business day of the calendar quarter of sales. All payments hereunder will
be made to Lynx in U.S. dollars by bank wire transfer in immediately available
funds to such account designated by Lynx. The paying party shall provide notice
at least five business days prior to the wire transfer date of the amount of
payment, the nature of the payment (with reference to the applicable section of
the subject agreement) and the date of receipt of good funds. Such notice should
be given to the Controller of Lynx at the address for notices set forth herein
or such other address directed by Lynx. Funds due Lynx under ss.3.3(a) will be
paid according to the procedures set out in the respective Development
Agreement.
3.8 Any payment of Royalties under this Part not paid by the payment due
date will bear interest at the rate which is the lesser of [...***...],
calculated on the number of days such payment is delinquent.
3.9 The payment of Royalties under this Part will be free and clear of any
taxes, duties, levies, fees or charges, except for withholding taxes (to the
extent applicable). The paying party will make any withholding payments due on
behalf of Lynx and will promptly provide Lynx with written documentation of any
such payment sufficient to satisfy the reasonable requirements of an appropriate
tax authority concerning an application by Lynx for a foreign tax credit for
such payment or for similar treatment. The paying party agrees to take such
reasonable and lawful steps as Lynx may request to minimize the amount of tax to
which the payments to Lynx are subject.
3.10 If by law, regulations or fiscal policy of a particular country,
remittance of payments in U.S. Dollars is restricted or forbidden, notice
thereof will be promptly given to Lynx, and payments will be made by deposit
thereof in local currency to the credit of Lynx in a recognized banking
institution designated by Lynx. When in any country the law or regulations
prohibit both the transmittal and deposit of payments based on sales in such a
country, such payments will be suspended for as long as such prohibition is in
effect and as soon as such prohibition ceases to be in effect, all payments that
the paying party would have been under obligation to transmit or deposit but for
the prohibition will forthwith be deposited or transmitted promptly to the
extent allowable.
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* Confidential Treatment Requested
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Sales and Manufacturing Records
3.11 Inex will keep, for at least three years, pertinent sales and accounting
records in sufficient detail to permit Lynx to confirm the accuracy of payments
due Lynx under ss.3.3 and ss.3.4. Once a year, at the request and expense of
Lynx, upon at least five days prior written notice, Inex will permit a
nationally recognized, independent, certified public accountant, appointed by
Lynx and acceptable to Inex, access to such records during regular business
hours solely to the extent necessary to verify such calculations, provided that
such an accountant enters into a confidentiality agreement with Inex limiting
the use and disclosure of such information to purposes relevant to this section.
Results of any such examination will be made available to both Lynx and Inex and
any underpayment identified in the examination will be paid by Inex to Lynx
within 30 days of the date of delivery of the accountant's written report. If
such examination reveals an underpayment of amounts by 5% or more, Inex will pay
the costs of such examination. This section will survive the termination of this
Agreement for a period of 10 years.
PART 4
SUBLEASE AND EMPLOYEES
Manufacturing Facilities
4.1 On the Closing Date, Lynx will sublease to Inex's subsidiary, Inex
Pharmaceuticals (U.S.A.) Corporation, a portion of the facilities currently
leased and utilized by Lynx pursuant to the sublease attached as Schedule E.
Employees
4.2 Lynx covenants and agrees with Inex that Lynx will cooperate with Inex
and give Inex access to such employee information and such assistance with
employee communications as may be necessary in connection with Inex's potential
employment of current employees utilized in the Business. Lynx will also
cooperate and assist Inex by making such employees available at reasonable times
in connection with any lawful pre-employment screening, interviewing or other
appointments, with respect to such employees, that Inex desires to conduct or
schedule, and in the distribution of communication materials and enrollment
forms for Inex's employee benefit plans.
4.3 Lynx covenants and agrees with Inex that with respect to any employees
of Lynx utilized in the Business who are hired by Inex in connection with the
transactions contemplated in this Agreement ("Retained Employees"), and who are
participants in the Code Section 401(k) plan maintained by Lynx (the "Lynx
401(k) Plan"), Lynx will contribute to the Lynx 401(k) Plan and allocate to the
Lynx 401(k) Plan accounts of such Retained Employees all employer contributions
(including matching contributions with respect to all employee contributions and
salary deferrals) that would otherwise have been made to the Lynx 401(k) Plan
for the current plan year (with respect to the time period elapsed through the
Closing Time) but for the transfer of such employees to Inex, regardless of
whether or not such Retained Employees are credited with a year of service for
such plan year or are employed by Lynx on the last day of such plan year. To the
extent (but only to the extent) that the Lynx 401(k) Plan accounts of any
Retained Employees are not transferred to a Code Section 401(k) plan maintained
by Inex, Lynx will cause such accounts to be 100 percent vested. Lynx will make
whatever amendments to the Lynx 401(k) Plan as are necessary to accomplish the
foregoing and will furnish an executed copy of such amendments to Inex.
4.4 Lynx covenants and agrees with Inex that Inex will not assume and that
Lynx will be solely
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responsible for, and will indemnify and hold Inex harmless from, any and all
obligations and liabilities accrued in respect of a Retained Employee while
employed by Lynx, including all severance payment, termination allowances,
accrued bonus entitlement, liabilities relating to health care continuation
coverage under Section 4980B of the Code and Part 6 of Subtitle B of Title I of
ERISA (and any state laws providing similar rights to continuation coverage)
with respect to any qualifying events occurring before, on or after the Closing
Date with respect to any Employee Benefit Plan.
4.5 Lynx will not, for a period of 18 months following the Closing Date,
solicit for employment any individual who, at the time of such solicitation, is
employed by Inex or an Affiliate of Inex.
PART 5
RESALE RESTRICTIONS
Share Restrictions
5.1 Lynx will not sell or otherwise dispose of the Inex Shares except as
follows:
(a) in the case of the First Tranche Shares, for a period of [...***...];
(b) in the case of the Second Tranche Shares and Third Tranche Shares, for
a period of [...***...]; and
(c) to an Affiliate, provided that such company agrees to abide by the
provisions of this Agreement and all other agreements contemplated
hereunder.
5.2 After the issue of the Inex Shares, Lynx will not, directly or indirectly,
acquire any additional share, or security convertible into a share, in the
capital of Inex until the expiry of the restrictions contained in ss.5.1.
Legends
5.3 Lynx understands and acknowledges that until such time as the same is
no longer required by this Agreement, all certificates representing the Inex
Shares will bear a legend, in addition to any legend required under applicable
Canadian provincial securities legislation, in substantially the following form:
"The transfer of the securities represented by this certificate is subject
to the provisions of an Acquisition Agreement dated February 4, 1998 made
among Inex Pharmaceuticals Corporation, and Lynx Therapeutics, Inc. A copy
of the Acquisition Agreement is on file at the head office of Inex
Pharmaceuticals Corporation."
5.4 In addition to legend set out in ss.5.3, Lynx understands and acknowledges
that until such time as the same is no longer required under applicable
requirements of the 1933 Act, or by this Agreement, as the case may be, all
certificates representing the Inex Shares will bear a legend, in addition to any
legend required under applicable Canadian provincial securities legislation, in
substantially the following form:
"The securities represented hereby have not been and will not be registered
under the United States Securities Act of 1933, as amended (the "1933
Act"), or the securities laws of any state of the United States. The holder
hereof, by purchasing such securities, agrees for the benefit of the
Company that such securities may be offered, sold, pledged or otherwise
transferred only (A) to the Company, (B) outside the United States in
accordance with Regulation S under the 1933 Act, if applicable, (C) inside
the United States (i) pursuant to the exemption from registration
----------------
* Confidential Treatment Requested
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requirements under the 1933 Act provided by Rule 144 thereunder, if
available, and in accordance with applicable state securities laws, or (ii)
pursuant to another applicable exemption under the 1933 Act and any
applicable state securities laws governing the offer and sale of such
securities, as evidenced by an opinion of counsel of recognized standing in
form acceptable to the Company. Delivery of this certificate may not
constitute "good delivery" in settlement of transactions on stock exchanges
in Canada."
If the Inex Shares are being sold outside the United States in compliance with
the requirements of Rule 904 of Regulation S under the 1933 Act, the legend may
be removed by delivering a duly executed declaration to Inex's registrar and
transfer agent in a form satisfactory to Inex.
Notice of Disposition
5.5 Lynx will promptly advise Inex of the particulars of all permitted
sales, transfers, pledges or other disposition of any of the Inex Shares by
Lynx, and of its holding of the Inex Shares remaining after each such permitted
sale, transfer, pledge or other disposition.
Assistance on Sales
5.6 Where reasonably requested by Lynx, Inex will use all reasonable
efforts to assist Lynx to effect any sale of the Inex Shares, including
assisting in arranging the sale in large blocks on a private placement basis of
all or a portion of the Inex Shares to investment dealers or institutional
investors known to Inex, with such resale restrictions as may be applicable
under relevant securities legislation, provided such sales are made in
accordance with this Agreement.
Voting
5.7 Lynx will not exercise, or execute any proxy for the exercise of, any
voting rights in respect of an Inex Share until such Inex Share has been
released from escrow in accordance with ss.3.1.
PART 6
REPRESENTATIONS AND WARRANTIES
Representations and Warranties of Lynx
6.1 In order to induce Inex to enter into and consummate the transactions
contemplated by this Agreement, Lynx represents and warrants to Inex the
statements contained in Schedule C as representations and warranties that are
true, accurate and complete as at the date of this Agreement and at the Closing
Time as if such representations and warranties were made at the Closing Time
(except insofar as such representations and warranties are stated to be given as
of a particular date or for a particular period and relate solely to such date
or period, in which case such representations and warranties are true, accurate
and complete in all material respects as at that date).
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Representations and Warranties of Inex
6.2 In order to induce Lynx to enter into and consummate the transactions
contemplated by this Agreement, Inex represents and warrants to Lynx the
statements contained in Schedule D as representations and warranties that are
true, accurate and complete as at the date of this Agreement and at the Closing
Time as if such representations and warranties were made at the Closing Time
(except insofar as such representations and warranties are stated to be given as
of a particular date or for a particular period and relate solely to such date
or period, in which case such representations and warranties are true, accurate
and complete in all material respects as at that date).
Survival of Representations and Warranties
6.3 The representations and warranties of each of Lynx and Inex contained
in this Agreement will not merge at Closing and will survive the Closing and the
payment of the Purchase Price and will continue in full force and effect for the
benefit of Inex or Lynx, as applicable, for a period of three years after the
Closing Date, except for those representations and warranties relating to
environmental liability which will continue for a period of five years after
Inex ceases to have payment obligations under ss.3.3 or under the Amidate
License.
PART 7
COVENANTS
Covenants of Lynx
7.1 Lynx covenants and agrees with Inex that from and after the date of
execution of this Agreement to the Closing Date:
(a) as soon as Lynx has determined that a state of facts exist which
results in or will result in
(i) a representation or warranty contained in ss.6.1 being untrue or
incorrect in any material respect, or
(ii) the non-fulfilment of any of the conditions precedent set forth
in ss.8.1.
Lynx will notify Inex of such state of facts;
(b) Lynx will obtain any release, waiver, consent, assignment or approval
that Inex, acting reasonably, may advise is required in order that the
execution and delivery of this Agreement, the completion of the
transactions contemplated hereby and the observance and performance of the
obligations of Lynx herein will not result in a representation or warranty
contained in ss.6.1 being untrue or incorrect, including without
limitation, all necessary consents
(i) to assign the License Agreements dated April 1, 1993, June 1,
1993 and June 1, 1994 with ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ University,
(ii) to assign the License Agreement dated April 6, 1992 with Temple
University - Of the Commonwealth System of Higher Learning, as amended,
and
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(iii) from the lessors of the Leasehold Property to the grant of the
sublease referred to under ss.4.1,
(c) Lynx will make all necessary applications for, and Lynx will use its
best efforts to obtain all necessary approvals of, the relinquishment and
reissue or the transfer to Inex of all Permits,
(d) Lynx will maintain in force policies of insurance heretofore
maintained,
(e) Lynx will take good care of, do and make all necessary repairs and
maintenance to, and take reasonable care to protect and safeguard, the
Assets and the Amidate Technology;
(f) Lynx will permit Inex, its officers, directors, agents, professional
advisors or other authorized representatives at any time and from time to
time to inspect and review the Assets, the Business and the Books and
Records and for these purposes will permit such persons at any time and
from time to time upon reasonable notice and during regular business hours
to enter into or upon such premises where the Assets or any such
information may be;
(g) Lynx will not sell, consume, or dispose of or transfer possession of
any of the Assets (except in the usual and ordinary course of the operation
of the Business);
(h) Lynx will conduct the Business, only in the usual and ordinary course
of the operation of such business, endeavour to preserve the organization
of such business intact and preserve the goodwill of the suppliers and
customers and others having business relations with Lynx relating to such
business;
(i) Lynx will be liable for and pay all sales, use, transfer and similar
taxes, properly payable upon and in connection with the sale and transfer
of the Assets and, if any, the grant of the Amidate License;
(j) in respect of the Amidate Technology, Lynx
(i) will permit Inex to review and comment on all patent prosecution
matters in the manner permitted under Article 10 of the Amidate
License,
(ii) will maintain in good standing all patents that are licensed, and
licenses that are sublicensed, to Inex under the Amidate License, and
(iii) will not sell, consume, dispose of or transfer possession of
(including the granting of any license) the Amidate Technology in any
manner that would be inconsistent with the Amidate License; and
(k) Lynx will make all necessary tax, governmental and other filings
required of it in a timely fashion.
7.2 Lynx covenants and agrees with Inex that, at the Closing Time, Lynx
will, at Lynx's cost, cooperate with Inex in making any registrations or
applications required by Inex in respect of any Acquired Technology assigned
hereunder and, if required, the Amidate License.
Covenants of Inex
7.3 Inex covenants and agrees with Lynx that Inex will:
(a) co-operate with Lynx with respect to the covenants set forth in ss.7.1
and the satisfaction of the conditions precedent set forth in ss.8.1;
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(b) take or cause to be taken all proper steps, actions and corporate
proceedings for the issue to Lynx of the Inex Shares, including any
resolutions required to ensure that the Inex Shares are issued as fully
paid and non-assessable;
(c) take all steps necessary to ensure that the Inex Shares will be listed
and posted for trading on the TSE upon their issue;
(d) issue the Inex Shares to Lynx under applicable exemptions from
prospectus and registration requirements under the Securities Act (British
Columbia) and under applicable exemptions from the registration
requirements under U.S. securities laws;
(e) at the request of Lynx, execute and deliver such applications for
consent and such assumption agreements, and provide such information as may
reasonably be necessary to obtain the consents referred to in ss.7.1(c),
(d) and (f) and will reasonably assist and cooperate with Lynx in obtaining
the said consents; provided that nothing herein will obligate Inex to
assume or become liable or responsible for any liabilities or obligations
of Lynx other than as expressly set forth in this Agreement;
(f) on and after the Closing Time, assume, perform and discharge all
obligations arising under the Material Contracts and all other contracts,
commitments or engagements relating to the Business which are entered into
by Lynx between the date of this Agreement and the Closing Time in the
usual and ordinary course of the operation of the Business, and will
indemnify and save Lynx harmless of and from all claims, demands, suits and
actions in respect thereof; and
(g) prior to the Closing Time not authorize or effect any dividend, share
split or other like capitalization change which would be reasonably seen to
be prejudicial to Lynx.
Mutual Covenants
7.4 Each party shall make or cause to be made any filings and submissions
required under the HSR Act in connection with the consummation of the
transactions contemplated by this Agreement , and each party shall also notify
the Committee on Foreign Investment in the United States ("CFIUS") of such
transactions pursuant to Section 721 of the Defense Production Act of 1950, as
amended, and the rules and regulations promulgated thereunder (the "Exon-▇▇▇▇▇▇
Amendment"). Each party shall furnish to the other party such necessary
information and reasonable assistance as the other party may request in
connection with its preparation of such filings, submissions or notifications.
7.5 Each party intends to treat the transactions contemplated herein as
fully taxable transactions for U.S. federal income tax purposes. Neither party
hereto will take any action inconsistent with this treatment.
PART 8
CONDITIONS PRECEDENT TO OBLIGATIONS OF INEX
Conditions Precedent of Inex
8.1 Notwithstanding any other provision of this Agreement, the obligation
of Inex to complete the purchase of the Assets is subject to the following
conditions being met:
(a) the representations and warranties of Lynx contained in this Agreement
and in any agreement, certificate or document delivered pursuant to the
provisions hereof or in connection with the transactions contemplated
hereby, are true on and as of the Closing Date with the same effect as
though such representations and warranties had been made on and as of the
Closing Date except
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(i) to the extent that any of such representations and warranties
have been waived by Inex or affected by the transactions between the
parties contemplated hereby, or
(ii) insofar as such representations and warranties are given as of a
particular date or for a particular period and relate solely to such
date or period;
(b) all of the covenants, agreements and deliveries of Lynx to be performed
or complied with by it on or before the Closing Date have been duly
performed or complied with, except to the extent that such performance or
compliance has been waived by Inex or is prevented by a default by Inex in
the performance of its obligations hereunder;
(c) all consents or approvals required to be obtained by Lynx for the
purpose of selling, assigning or transferring the Assets and granting the
Amidate License have been obtained;
(d) all consents or approvals required to be obtained by Inex, including
the approval of the TSE, for the purpose of issuing the Inex Shares and
completing the transactions contemplated hereby have been obtained;
(e) from the date hereof to the Closing Date, no event has occurred and no
action has been taken which materially and adversely affects the Business,
any of the Assets or the Amidate License, or the value thereof; and
(f) no injunction or restraining order of a court, administrative tribunal,
arbitrator or Governmental Authority of competent jurisdiction being in
effect which prohibits the transactions contemplated hereunder and no
action or proceeding having been instituted and remaining pending before
any such court, administrative tribunal, arbitrator or Governmental
Authority to restrain or prohibit the transactions contemplated hereby.
Conditions for Benefit of Inex
8.2 The foregoing conditions are for the exclusive benefit of Inex and any
such condition may be waived in whole or in part by Inex on or before the
Closing Date by delivery to Lynx of a written waiver to that effect, signed by
Inex.
PART 9
CONDITIONS PRECEDENT TO OBLIGATIONS OF LYNX
Conditions Precedent of Lynx
9.1 Notwithstanding any other provision of this Agreement, the obligation
of Lynx to complete the transactions contemplated hereunder is subject to the
following conditions being met:
(a) the representations and warranties of Inex contained in this Agreement
and in any agreement, certificate or document delivered pursuant to the
provisions hereof or in connection with the transactions contemplated
hereby, are true on and as of the Closing Date with the same effect as
though such representations and warranties had been made on and as of the
Closing Date except
(i) to the extent that any of such representations and warranties
have been waived by Lynx or affected by the transactions between the
parties contemplated hereby, or
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(ii) insofar as such representations and warranties are given as of a
particular date or for a particular period and relate solely to such
date or period;
(b) all of the covenants, agreements and deliveries of Inex to be performed
or complied with by it on or before the Closing Date have been duly
performed or complied with, except to the extent that such performance or
compliance has been waived by Lynx or is prevented by a default by Lynx in
the performance of its obligations hereunder;
(c) all consents or approvals required to be obtained by Inex, including
the approval of the TSE, for the purpose of issuing the Inex Shares and
completing the transactions contemplated hereby have been obtained;
(d) from the date hereof to the Closing Date, no event has occurred and no
action has been taken which materially and adversely affects the business
or assets of Inex; and
(e) no injunction or restraining order of a court, administrative tribunal,
arbitrator or Governmental Authority of competent jurisdiction being in
effect which prohibits the transactions contemplated hereunder and no
action or proceeding having been instituted and remaining pending before
any such court, administrative tribunal, arbitrator or Governmental
Authority to restrain or prohibit the transactions contemplated hereby.
Conditions for Benefit of Lynx
9.2 The foregoing conditions are for the exclusive benefit of Lynx and any
such condition may be waived in whole or in part by Lynx on or before Closing
Date by delivery to Inex of a written waiver to that effect, signed by Lynx.
PART 10
DELIVERIES AT CLOSING
Closing
10.1 Subject to the terms and conditions of this Agreement, the Closing
shall take place at the offices of Cooley Godward at Five Palo Alto Square, ▇▇▇▇
▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ at 10:00 a.m. on the Closing Date, or
at such other location or time as the parties may agree. If the Closing has not
occurred by April 10, 1998 either party may terminate this Agreement, provided
that no such termination will relieve any party from any liability for any
breach or default of the terms of this Agreement.
Deliveries of Lynx
10.2 At the Closing, Lynx will deliver or cause to be delivered to Inex:
(a) a certified copy of a resolution of the directors of Lynx duly passed,
authorizing the execution, delivery and implementation of this Agreement,
and of all transactions contemplated hereby and of all documents to be
delivered by Lynx pursuant hereto;
(b) where applicable, all deeds of conveyance, bills of sale, transfer and
assignments and assumption
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agreements, duly executed, in form and content satisfactory to Inex,
appropriate to effectively vest good and marketable title to the Assets in
Inex to the extent contemplated by this Agreement, and immediately
registrable in all places where registration of such instruments is
necessary or desirable;
(c) all consents or approvals required to be obtained by Lynx hereunder;
(d) possession of the Assets and all rights appurtenant thereto;
(e) evidence satisfactory to Inex of the transfer to Inex or acquisition by
Inex of all the Permits;
(f) an executed Amidate License;
(g) an executed sublease of the Leased Property, substantially in the form
set out in Schedule F;
(h) executed counterparts of one or more Notices of Abandonment of
Trademarks covering each of the trademarks described in Schedule A, in due
form for recordation with the appropriate Governmental Authority;
(i) executed counterparts of one or more Assignments of Patents covering
each of the patents and patent applications described in Schedule A, in due
form for recordation with the appropriate Governmental Authority;
(j) a legal opinion, addressed to Inex, dated the Closing Date,
substantially in the form set out in Schedule M, delivered by the counsel
for Lynx;
(k) a certificate of a senior officer of Lynx certifying as to the accuracy
of the representations and warranties of Lynx herein as at the Closing Date
and the fulfilment by Lynx of the covenants and agreements required to be
fulfilled by it at or before the Closing, which will include a
representation and warranty that all third party consents have been
obtained; and
(l) all such other documents and instruments as counsel for Inex may
reasonably require.
Deliveries of Inex
10.3 At the Closing, Inex will deliver or cause to be delivered to Lynx:
(a) a certified copy of resolutions of the directors of Inex duly passed,
authorizing
(i) the execution, delivery and implementation of this Agreement, and
of all transactions contemplated hereby and of all documents to be
delivered by Inex pursuant hereto,
(ii) the creation, allotment and issue or, where applicable,
conditional issue of the Inex Shares, fixing the issue price of the
Inex Shares and authorizing the issuance of a share certificate
representing the Inex Shares in the name of Lynx in accordance with the
provisions of this Agreement;
(b) three share certificates each representing 400,000 Inex Shares;
(c) notification under blanket order ruling 95/17 of the British Columbia
Securities Commission;
(d) a cheque for US$3,000,000 representing payment for the Cash Amount;
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(e) a legal opinion, addressed to Lynx, dated the Closing Date,
substantially in the form set out in Schedule N, delivered by the counsel
for Inex;
(f) a certificate of a senior officer of Inex certifying as to the accuracy
of the representations and warranties of Inex herein as at the Closing Date
and the fulfilment by Inex of the covenants and agreements required to be
fulfilled by it at or before the Closing.
PART 11
LOSS OR DAMAGE BEFORE CLOSING
Loss or Damage Closing
11.1 If, before the Closing Date, there will have been any loss or damage to
any of the Assets or Amidate Technology, Lynx will forthwith thereafter deliver
to Inex a detailed list showing the insurance coverage with respect thereto,
particulars of any claims made by Lynx under its insurance coverage, and the
standing of such claims and if, notwithstanding such loss or damage, Inex elects
by notice in writing to Lynx to complete the transactions contemplated herein,
the sale and purchase provided for herein will be completed and Lynx will, on
Closing
(a) pay to Inex all monies received by Lynx before the Closing Date as
proceeds of insurance with respect thereto, and
(b) deliver to Inex, a duly executed assignment in form and substance
satisfactory to Inex of all of Lynx' interest in and to any proceeds of
insurance with respect to any such items and Lynx' written undertaking to
cooperate with Inex in the satisfactory settlement of all claims.
PART 12
ADJUSTMENTS
Effective Date of Transfer of Assets
12.1 Subject as otherwise specified in this Agreement, all transactions in
the Business conducted before the Closing Date will be for the account of Lynx
and all transactions in the Business on or after that date will be for the
account of Inex. From and after the Closing Date, all amounts expended by Lynx
for the Business and the Assets in the ordinary course, including insurance
premiums, will be reimbursed by Inex, forthwith upon request.
PART 13
CONVEYANCE
Conveyance of Assets
13.1 On completion of the Closing, this Agreement will, without further act
or formality, operate as a transfer to Inex of all Assets to be sold and
purchased hereunder as the same will be at the close of business on the Closing
Date.
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Trust Regarding Assets Not Conveyed
13.2 If any of the Assets intended to be transferred hereunder are not
transferred to Inex on the Closing Date, Lynx will hold as bare trustee in trust
for, and at the sole cost of Inex, all such Assets from the Closing Time until
such Assets are effectively transferred.
PART 14
NON-COMPETITION AND CONFIDENTIALITY
Non-Competition
14.1 For a period of [...***...] from the Closing Date, Lynx will not,
directly or indirectly, in sole proprietorship, in any partnership or joint
venture or as an owner of [...***...], compete with [...***...].
Confidential Information
14.2 As a result of completing the transactions contemplated by this
Agreement, each party (the "Recipient") acknowledges that it may acquire or hold
Confidential Information (other than information that is an Asset or is licensed
under the Amidate License) belonging to (whether acquired by Discloser before
the date of, or as a result of the transactions contemplated by, this Agreement)
the other party (the "Discloser"). Lynx also acknowledges that certain
directors, officers and employees of Lynx, and its agents or third party agents
and contractors, may be aware of Confidential Information that forms part of the
Assets, which information is, for the purpose of this Part, deemed to belong to
Inex as a Discloser. Discloser warrants that it has the right to disclose the
Confidential Information disclosed to Recipient under this Agreement.
Property
14.3 Except as provided for in this Agreement, all Confidential Information
belonging to Discloser (whether acquired by Discloser before the date of, or as
a result of the transactions contemplated by, this Agreement) will remain the
exclusive property of the Discloser.
14.4 Except as expressly set out herein, nothing in this Agreement confers
on Recipient any interest, licence or other right in respect of Confidential
Information of the Discloser.
Fiduciary Relationship
14.5 Recipient acknowledges that certain of the Confidential Information
consists of information vital to the business and commercial prospects of
Discloser and that such information is of a special, valuable and unique nature
and would not normally be disclosed to Recipient and, accordingly, Recipient
will act as a fiduciary of Discloser in holding and using such Confidential
Information.
Obligation of Confidentiality
14.6 Except as provided for in this Agreement, all Confidential Information
belonging to Discloser and known to or held by Recipient will be held in strict
confidence and the Recipient:
(a) agrees to use such Confidential Information only for the purposes of
completing the transactions contemplated by this Agreement;
----------------
* Confidential Treatment Requested
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(b) will, and will ensure that each of its directors, officers, employees
and agents (collectively, the "Recipient's Agents") will, hold in
confidence and keep confidential the Confidential Information disclosed to
them by the Discloser;
(c) will not, and will ensure that none of the Recipient's Agents will,
directly or indirectly, use or disclose any such Confidential Information
except to the extent that it is strictly necessary to enable the Recipient
to exercise its rights and perform its obligations under this Agreement;
(d) will not, and will ensure that none of the Recipient's Agents will,
except to the extent necessary to enable the Recipient to exercise its
rights or perform its obligations under this Agreement, make copies of such
Confidential Information;
(e) will, upon the request of the Discloser, return, and cause the
Recipient's Agents to return, all Confidential Information and copies
thereof to the Discloser; and
(f) will, and will ensure that each of the Recipient's Agents will,
maintain all such Confidential Information in a manner so as to protect the
same against wrongful disclosure, misuse, espionage and theft.
Exceptions
14.7 Nothing in this Agreement will prevent the Recipient or the Recipient's
Agents from making use of or disclosing any Confidential Information:
(a) which has already become generally available to the public through no
breach of this Agreement or any other obligation of the Recipient or the
Recipient's Agents to the Disclosing Party;
(b) which the Recipient can show, through written evidence, has been
independently developed, without use of any Confidential Information
belonging to the Discloser, by employees of the Recipient who had no access
to such Confidential Information;
(c) which the Recipient can show, through written evidence, was received by
it on a non-confidential basis from a source other than the Discloser and
which source, to the knowledge of Recipient, lawfully obtained such
information and had the right to disclose such information; or
(d) which is required to be disclosed pursuant to a final order or judgment
of a court of competent jurisdiction and in such case the parties will
cooperate with one another to seek to obtain an appropriate protective
order or other reliable assurance that confidential treatment will be
afforded to such Confidential Information.
Recipient will immediately notify Discloser if Recipient becomes legally
compelled to discloser any Confidential Information sufficiently in advance of
the date of disclosure so as to provide Discloser with a reasonable opportunity
to seek an appropriate remedy to enjoin such disclosure from occurring.
Reasonable Restriction
14.8 Each party agrees that the restrictions contained in this Part are
reasonable in order to protect the respective legitimate business interests of
the parties and all defences to the strict enforcement of such restrictions are
hereby waived by the parties.
-▇▇-
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
14.9 Each party acknowledges that a breach by it of any covenants contained
in this Part could result in damages to the other party to this Agreement which
damages could not adequately be compensated for by monetary award. Accordingly,
each party agrees that in the event of any such breach by such party, in
addition to all other remedies available to any other party at law or in equity,
such other party will be entitled as a matter of right to apply to a court of
competent jurisdiction for such relief by way of restraining order, injunction,
decree or otherwise, as may be appropriate, to ensure compliance with the
provisions of this Agreement.
Survival of Covenants
14.10 The covenants and agreements contained in this Part, except ss.14.1, will
survive the Closing for a period of five years after the Closing Time and will
be separate and distinct covenants and agreements enforceable after the
termination of the remainder of this Agreement in accordance with the terms
thereof, and any reference in this Agreement to termination will not influence
the termination of this Part unless specifically agreed to by the parties.
PART 15
DISPUTE RESOLUTION
Initiation of Process
15.1 If at any time a dispute among the parties with respect to any matter
relating to this Agreement arises, a party that wishes that the issue be
considered further may, upon giving notice to the other, submit the issue or
dispute for determination by three arbitrators, one of which will be appointed
by each of Inex and Lynx, with the third to be named jointly by Lynx and Inex.
Acceptance and Implementation
15.2 Each party will accept and proceed in good faith diligently to implement
the award or decision of the arbitrators on an arbitration pursuant to ss.15.1,
including the entering of the award in any court having jurisdiction.
Arbitration Rules
15.3 The applicable rules of the American Arbitration Association will apply
to arbitration hereunder except to the extent inconsistent with or contrary to
any provision of this Agreement.
Place of Arbitration
15.4 All arbitration proceedings will be conducted in San Francisco,
California or as the parties otherwise agree.
Legal Proceedings
15.5 A legal proceeding commenced by a party to this Agreement in respect of
an issue or dispute that may be arbitrated under this Agreement will be stayed
until the time during which an arbitration may be initiated has expired or, if
an arbitration is initiated, a decision on the arbitration is delivered or the
arbitration process has otherwise ended.
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Exclusions
15.6 This Part will not apply to any action pursuant to Part 14 or any
actions seeking any grant of provisional remedies, including injunctions,
restraining orders and specific performance, and each party reserves its right
to commence such action or seek such remedies from a court of competent
jurisdiction.
PART 16
INDEMNITIES AND SET-OFF
Indemnity
16.1 Subject to ss. 16,2, without prejudice to any other remedy available to
a party (the "Indemnified Party") at law or in equity, the other party (the
"Indemnifying Party") hereby agrees, forthwith upon demand, to indemnify and
save harmless the Indemnified Party from and against any and all costs, losses,
damages, taxes or expenses suffered or incurred by the Indemnified Party in any
manner arising out of, in connection with, with respect to or relating to any
representation or warranty the Indemnifying Party set forth in this Agreement,
including any representation or warranty given at Closing, being untrue or
incorrect or the failure of the Indemnifying Party to observe or perform any of
its obligations pursuant hereto, and any and all goods and services taxes,
actions, suits, proceedings, demands, assessments, judgments, reasonable costs
and reasonable legal and other expenses incidental thereto.
De Minimus
16.2 Any claim(s) under ss. 16.1 or otherwise must
(a) exceed $100,000 in the aggregate before any claim is made, in which
event all damages or deficiencies may be claimed and not just the amount in
excess of the aforementioned amount, and
(b) be claimed within a period of three years after the Closing Date.
Notification Regarding Claim
16.3 Each party will promptly notify the other when it has determined that
it has actual (and not attributed or assumed) knowledge of a state of facts
which gives rise to a claim under this Part 16.
Litigation
16.4 Inex will promptly notify Lynx of any claim made by any Person against Inex
in respect of which Inex has the right to indemnity under ss.16.1. If Lynx
acknowledges and accepts liability in respect of such claim,
(a) Lynx will be entitled (but not obligated) to assume the defence of any
such claim, in which case Lynx will do so in a bona fide and diligent
fashion and will bear the costs and expenses associated therewith,
(b) and if Lynx has elected not to assume the defence of such claim,
(i) Inex will be entitled (but not obligated) to do so, and will bear
the cost and expenses associated therewith provided that any such costs
and expenses will be recoverable from Lynx under ss.16.1,
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(ii) Lynx will have the right to join such proceeding as a party
defendant, each of Inex and Lynx hereby agreeing to the entry of an
order making Lynx a party defendant in such proceeding should Lynx so
wish,
(c) and if Lynx has elected to assume the defence of such claim,
(i) Lynx will select and employ legal counsel to appear and to
participate in any proceeding relating to such claim on behalf of Inex
(subject to the approval of such legal counsel by Inex) unless both
Lynx and Inex are defendants in any such proceeding and, in the
reasonable opinion of independent counsel to Inex, Inex may have legal
defences available to it which are different from or in addition to
those available to Lynx or representation of both parties by the same
counsel would be inappropriate due to actual or potential differing
interests between them, in which case Lynx will be liable for the fees
and expenses of one such separate counsel, and
(ii) Inex will, at the cost of Lynx, cooperate with Lynx in contesting
such claim, and
(iii) Lynx will be the sole judge of the acceptability of any
compromise or settlement of such proceeding provided that such
compromise or settlement
(A) results in the complete release of Inex from all claims
which are the subject of such proceeding in respect of which Inex
has the right to make a claim under ss.16.1,
(B) requires no more than the payment of money (that is, Inex
is not required to admit any wrong doing or to take or refrain
from taking any material action), and
(C) does not contain any admission of liability or fault on the
part of Inex,
and Inex is satisfied, acting reasonably, that the full amount of money
required to be paid by Inex as a result of such settlement will be paid by
Lynx. In all other cases such compromise or settlement will require the
prior written approval of Inex.
Set-Off
16.5 Notwithstanding anything in this Agreement, and in addition to any
other rights Inex may have, where, in the opinion of Inex, Lynx has materially
breached an obligation, representation, warranty or covenant under this
Agreement, Inex may delay the delivery to Lynx of the Second Tranche Shares or
Third Tranche Shares (where such shares have not yet been delivered) until such
time as such breach is resolved in favour of Lynx as not being a breach or is
established as a breach (an "Established Breach") by agreement of the parties,
by final judgment of a court of competent jurisdiction, by arbitration or by
settlement. Where there is an Established Breach on the part of Lynx and where
such Established Breach is not discharged by Lynx in a timely fashion in
accordance with this Part 16, Inex will cancel such number of Second Tranche
Shares or Third Tranche Shares not yet released from escrow having a value
(based upon a share price equal to the closing price of the Common shares of
Inex on The Toronto Stock Exchange on the Closing Date) equal to the value of
the Established Breached.
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PART 17
GENERAL PROVISIONS
Modifications, Approvals and Consents
17.1 No amendment, modification, supplement, termination or waiver of any
provision of this Agreement will be effective unless in writing signed by the
appropriate party and then only in the specific instance and for the specific
purpose given.
Survival of Covenants
17.2 The covenants and agreements contained in ss.3.2, 3.3, Part 5 and Part 16
will survive the termination of the remainder of this Agreement and will be
separate and distinct covenants and agreements enforceable after the termination
of the remainder of this Agreement in accordance with the terms thereof, and any
reference in this Agreement to termination will not influence the termination of
such provisions unless specifically agreed to by the parties.
Further Assurances
17.3 The parties will execute such further assurances and other documents
and instruments and do such further and other things as may be necessary to
implement and carry out the intent of this Agreement.
Entire Agreement
17.4 The provisions in this Agreement and the other agreements contemplated
herein constitute the entire agreement among the parties and supersede all
previous expectations, understandings, communications, representations and
agreements, whether verbal or written, among the parties, including, without
limitation, all previous confidentiality agreements between the parties, and if
there is any conflict between the terms of this Agreement and the terms of the
Other Transaction Agreements with respect to the subject matter hereof, the
provisions of this Agreement will prevail.
Notice
17.5 Every notice, request, demand, direction or other communication (each,
for the purposes of ss. 17.5, ss. 17.6 and ss. 17.7, a "Notice") required or
permitted to be given pursuant to this Agreement will be deemed to be well and
sufficiently given if in writing and delivered by hand (including recognized
overnight courier service) or transmitted by facsimile, in each case addressed
as follows:
(a) if to Lynx at:
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇.▇.▇. ▇▇▇▇▇
Attention: Chief Executive Officer
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ Godward
Five Palo Alto Square
▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇
-▇▇-
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇.▇.▇. ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to Inex at:
100 - ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Glenlyon Business Park
Burnaby, British Columbia
V5J 5J8
Attention: Chief Executive Officer
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to
Lang ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇
1500 - ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address or transmission receiving station as is specified by
the particular party by Notice to the other.
Deemed Receipt
17.6 Any Notice delivered or sent as aforesaid will be deemed conclusively
to have been effectively given and received on the day Notice was delivered or
sent as aforesaid if it was delivered or sent on a day that was a Business Day
or on the next day that is a Business Day if it was delivered or sent on a day
that was not a Business Day.
Change of Address
17.7 A party may at any time, by Notice to the other, change its address to
some no less convenient address and will so change its address whenever its
address ceases to be suitable for delivery by hand.
Enurement
17.8 This Agreement will enure to the benefit of and be binding upon Lynx
and Inex and their respective permitted assigns.
Assignment
17.9 Lynx may not assign its rights, title or interests, or any part
thereof, under this Agreement, other than to an Affiliate of Lynx, except with
the prior written consent of Inex, which consent may be arbitrarily withheld.
Inex may not assign its rights, title or interests, or any part thereof, under
this Agreement to any person, other than to an Affiliate of Inex, except with
the prior written consent of Lynx, which consent may be arbitrarily withheld.
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Applicable Law
17.10 This Agreement will be deemed to have been made in California and the
construction, validity and performance of this Agreement will be governed in all
respects by the laws prevailing in California.
Attornment
17.11 Each party irrevocably attorns to the non-exclusive jurisdiction of the
courts of California and all courts having appellate jurisdiction thereover in
respect of any proceeding arising out of or relating to this Agreement.
Waiver of Jury Trial
17.12 The parties hereby waive trial by jury in any judicial proceeding
involving, directly or indirectly, any matter in any way arising out of, related
to, or connected with this Agreement.
Severability
17.13 If any one or more of the provisions contained in this Agreement is
invalid, illegal or unenforceable in any respect in any jurisdiction, the
validity, legality and enforceability of such provision or provisions will not
in any way be affected or impaired thereby in any other jurisdiction and the
validity, legality and enforceability of the remaining provisions contained
herein will not in any way be affected or impaired thereby, unless in either
case as a result of such determination this Agreement would fail in its
essential purpose.
Counterparts
17.14 This Agreement may be executed in any number of counterparts or by
facsimile, each of which will together, for all purposes, constitute one and the
same instrument, binding on the parties, and each of which will together be
deemed to be an original, notwithstanding that all of the parties are not
signatories to the same counterpart or facsimile.
IN WITNESS WHEREOF the above noted parties have executed this Agreement as and
of the date first above written.
The Common Seal of
INEX PHARMACEUTICALS CORPORATION
was affixed in the presence of:
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
Authorized Signatory
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
Authorized Signatory
The Corporate Seal of )
LYNX THERAPEUTICS, INC. )
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was affixed in the presence of: )
)
/s/ ▇▇▇ ▇▇▇▇▇ ) C/S
--------------------------------- )
Authorized Signatory )
)
▇▇▇ ▇▇▇▇▇ )
--------------------------------- )
Authorized Signatory )