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EXHIBIT 10.19
AGREEMENT
Between
NEW YORK UNIVERSITY
and
CALYPTE BIOMEDICAL CORPORATION
Research Agreement
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June 4, 1993
Mr. Isaac T. Kohlberg
Vice President of Industrial Liaison
NYU Medical Center
550 First Avenue
New York, NY 10016
Dear Isaac:
I have read the Research Agreement ("the Agreement") between New York
University and Calypte Biomedical Corporation dated 8/13/93. The contents of
the Agreement are fully acceptable to me.
I warrant that I am not bound by or party to any agreement which prohibits or
would prohibit the execution and delivery by NYU of the Agreement or the
performance or observance by NYU of any term or condition of the Agreement.
I agree to act, to the best of my ability, in accordance with the terms of the
Agreement insofar as they relate to me.
Sincerely yours,
/s/ ALVIN FRIEDMAN-KIEN, M.D.
Alvin Friedman-Kien, M.D.
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NYU/CALYPTE
RESEARCH AGREEMENT
I N D E X
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Section I. Definitions page 2
Section 2. Effective Date page 4
Section 3. Performance of the NYU Research Project page 4
Section 4. Funding of the NYU Research Project page 5
Section 5. Title page 7
Section 6. Patents and Patent Applications page 8
Section 7. License Rights page 10
Section 8. Option to Acquire Shares page 12
Section 9. Publication page 13
Section 10. Expiry and Termination page 14
Section 11. No Assignment page 16
Section 12. Confidential Information page 16
Section 13. Representations and Warranties by CORPORATION page 17
Section 14. Representations and Warranties by NYU page 18
Section 15. Use of Name page 19
Section 16. Miscellaneous page 20
Appendix I - Research Project
Appendix II - Stock Purchase Agreement
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NYU/CALYPTE
RESEARCH AGREEMENT
This Agreement, made and effective as of August 12th, 1993, (the
"Effective Date") is by and between:
NEW YORK UNIVERSITY (hereinafter "NYU"), a corporation organized and
existing under the laws of the State of New York and having a place of business
at 70 Washington Square South, New York, New York 10012
AND
CALYPTE BIOMEDICAL CORPORATION (hereinafter "CORPORATION"), a
corporation organized and existing under the laws of the State of California
having its principal office at 1440 Fourth Street, Berkeley, California 94710.
RECITALS
WHEREAS, NYU is willing to perform the NYU Research Project (as
hereinafter defined) under the direction of Dr. Alvin Friedman-Kien of NYU
(hereinafter "the NYU Scientist");
WHEREAS, CORPORATION is prepared to sponsor the NYU Research Project;
WHEREAS, subject to the terms and conditions hereinafter set forth,
CORPORATION desires to sponsor and NYU is willing to perform the NYU Research
Project (as hereinafter defined);
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NOW, THEREFORE, in consideration of the mutual promises and agreements
contained herein, the parties hereto hereby agree as follows:
1. Definitions.
Whenever used in this Agreement, the following terms shall
have the following meanings:
a. "Corporation's Confidential Information" shall mean
all confidential or proprietary information of
CORPORATION disclosed in writing, or reduced to
writing within thirty (30) days of an oral
disclosure, and marked "Confidential" by CORPORATION
in connection with this Agreement, including without
limitation, any product or marketing plan.
b. "Field" shall mean the analysis of HIV antibodies in
urine.
c. "Joint Inventions" shall mean any invention made by
at least one employee or consultant (not being an
employee or student of NYU) of CORPORATION and one
employee or student of NYU during the Research Period
of the NYU Research Project (as hereinafter defined).
d. "NYU Inventions" shall mean any invention relating to
the NYU Research Project (as hereinafter defined)
made solely by the NYU Scientist, employees or
students of NYU during the Research Period and in the
course of the performance of the NYU Research
Project.
e. "NYU Know-How" shall mean any information and
materials including, but not limited to,
pharmaceutical, chemical, biological and biochemical
products, technical and
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non-technical data, materials, methods and processes
and any drawings, plans, diagrams, specifications
and/or other documents containing such information,
discovered, developed or acquired by, or on behalf of
the NYU Scientist, employees or students of NYU
during the term and in the course of the NYU Research
Project.
f. "NYU Research Project" shall mean the investigations
during the Research Period (as hereinafter defined)
into the Field under the supervision of the NYU
Scientist in accordance with the research program
described in annexed Appendix I which forms an
integral part hereof.
g. "Research Technology" shall mean all NYU Inventions
and NYU Know-How, and NYU's interest in Joint
Inventions.
h. "Research Period" shall mean the three-year period
commencing on the Effective Date hereof and any
extensions thereof as to which NYU and CORPORATION
shall mutually agree in writing.
i. "Rights Period" shall mean the period from the
Effective Date to the date one year after the end of
the Research Period or, in the event of early
termination of this Agreement pursuant to Section
3.a. hereof, one year after the date of CORPORATION's
written notice to NYU that CORPORATION elects to
terminate the Agreement.
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2. Effective Date.
This Agreement shall be effective as of the Effective Date and
shall remain in full force and effect until it expires or is
terminated in accordance with Section 10. hereof.
3. Performance of the NYU Research Project.
a. In consideration of the sums to be paid to NYU as
set forth in Section 4 below, NYU undertakes to
perform the NYU Research Project under the
supervision of the NYU Scientist during the Research
Period. If, during the Research Period the NYU
Scientist shall cease to supervise the NYU Research
Project, then NYU shall promptly so notify
CORPORATION and CORPORATION shall have the option to
terminate this Agreement and shall have no further
obligation for funding of the NYU Research Project.
CORPORATION shall promptly advise NYU in writing if
CORPORATION so elects. Nothing herein contained
shall be deemed to impose an obligation on NYU to
find a replacement for the NYU Scientist.
b. Nothing contained in this Agreement shall be
construed as a warranty on the part of NYU that any
results or inventions will be achieved by the NYU
Research Project, or that the Research Technology
and/or any other results or inventions achieved by
the NYU Research Project, if any, are or will be
commercially exploitable and furthermore, NYU makes
no warranties whatsoever as to the commercial or
scientific value of the Research Technology and/or as
to any results which may be achieved in the NYU
Research Project.
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c. Within sixty (60) days after the end of each year of
the Research Period, NYU shall prepare a detailed
written report describing and summarizing the results
of the work conducted on the NYU Research Project
during the preceding year.
d. NYU will have full authority and responsibility for
the NYU Research Project. All students and employees
of NYU who work on the NYU Research Project will do
so as employees or students of NYU, and not as
employees of CORPORATION.
e. NYU agrees to make available and/or transfer to
CORPORATION, at CORPORATION's request, a sample
and/or copy of the NYU Know-How provided such NYU
Know-How is available in transferable quantities
and/or reproducible form.
f. During the term of this Agreement the Research
Technology shall be used only for scientific research
and shall not be used on human beings or in the
diagnosis of human beings.
4. Funding of the NYU Research Project.
a. As compensation to NYU for work to be performed on
the NYU Research Project during the Research Period,
subject to any earlier termination of the Research
Project pursuant to Section 3.a. hereof, CORPORATION
will pay NYU the total sum of
, payable in six (6)
equal and consecutive installments every six (6)
months in
Confidential portion has been omitted and filed separately with the Commission
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the amount of
each, commencing upon the Effective Date and
according to the following schedule:
Effective Date
February 12, 1994
August 12, 1994
February 12, 1995
August 12, 1995
February 12, 1996
b. Nothing in this Agreement shall be interpreted to
prohibit NYU (or the NYU Scientist) from obtaining
additional financing or research grants for the NYU
Research Project from government agencies, which
grants or financing may render all or part of the NYU
Research Project and the results thereof subject to
the patent rights of the U.S. Government and its
agencies, as set forth in Title 35 U.S.C. Section 200
et seq. However, NYU and the NYU Scientist are
prohibited from obtaining additional financing or
research grants for the NYU Research Project from
other third parties.
Confidential portion has been omitted
and filed separately with the Commission
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c. In the event CORPORATION desires to fund the NYU
Research Project beyond the first three years of the
Research Period, CORPORATION shall give written
notice to NYU at least three (3) months prior to the
termination of the Research Period and NYU and
CORPORATION shall negotiate in good faith a budget
and research plan to extend the Research Period, and
the terms of this Agreement (other than the research
plan and budget) shall continue in full force and
effect with respect to such extended Research Period.
d. The funds or compensation paid by CORPORATION to NYU
for work to be performed under this Agreement shall
be placed in a separate account and expended in
performance of the NYU Research Project as set forth
herein.
5. Title.
a. All right, title and interest, in and to the Research
Technology, and in and to any drawings, plans,
diagrams, specifications, and other documents
containing any of the Research Technology shall vest
solely in NYU.
b. For so long as the NYU Scientist is employed by NYU,
any and all inventions made by the NYU Scientist and
relating to the Field shall be owned solely by NYU,
unless such inventions are jointly made by
CORPORATION personnel and the NYU Scientist and/or
NYU personnel and/or NYU students, in which case such
inventions shall be Joint Inventions and jointly
owned with all right, title and interest vesting
jointly in NYU and CORPORATION as defined under the
laws of the United States of America.
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6. Patents and Patent Applications.
a. NYU will require the NYU Scientist and its employees
and students working on the NYU Research Project to
disclose potential NYU Inventions and/or Joint
Inventions to NYU's Office of Industrial Liaison
promptly upon the making thereof. NYU will disclose
all such NYU Inventions and/or Joint Inventions to
CORPORATION in writing within sixty (60) days after
such NYU Invention and/or Joint Invention was
disclosed to NYU's Office of Industrial Liaison.
b. CORPORATION shall promptly disclose to NYU in writing
the making of any Joint Invention by any employee or
consultant of CORPORATION within sixty (60) days
after such invention was disclosed to CORPORATION.
c. At the initiative of CORPORATION or NYU, the parties
shall consult with each other regarding the filing
and prosecution of all patent applications with
respect to the NYU Inventions or Joint Inventions.
Such patent applications shall be filed, prosecuted
and maintained by patent counsel jointly selected by
NYU and CORPORATION. Copies of all such patent
applications and patent office actions shall be
forwarded to each of NYU and CORPORATION on a timely
basis. NYU and CORPORATION shall each also have the
right to have such patent applications and patent
office actions independently reviewed by other patent
counsel separately retained by NYU or CORPORATION.
d. If CORPORATION requests and provides written
approval, all applications and proceedings with
respect to the NYU Inventions and Joint Inventions
shall be filed, prosecuted and maintained
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by NYU at the expense of CORPORATION. Against the submission
of detailed quarterly invoices, CORPORATION shall reimburse
NYU for all reasonable out-of pocket costs and fees incurred
by NYU during the term of this Agreement, in connection with
the filing, maintenance, prosecution, and issuance of the NYU
Inventions and/or Joint Inventions; provided, however, NYU
shall not be entitled to reimbursement for patent filing,
prosecution and maintenance expenses in excess of ten thousand
dollars ($10,000) per year with respect to any NYU Inventions
or Joint Inventions unless NYU has obtained the prior written
consent of CORPORATION to such expenses. In the event
CORPORATION refuses consent for such expenditures relating to
a NYU Invention, NYU shall be free to pursue patent protection
with respect to such NYU Invention at NYU's sole expense and
all rights to such NYU Invention shall revert to NYU and
CORPORATION shall have no rights with respect to such NYU
Invention. In the event CORPORATION refuses consent for
expenditures relating to a Joint Invention, NYU shall be free
to pursue patent protection with respect to such Joint
Invention at NYU's sole expense. However, all right, title
and interest shall remain jointly owned and vested in NYU and
CORPORATION.
e. CORPORATION shall have the right to comment on and
approve the strategy and prosecution of the patent
applications. NYU shall not abandon any applications
without first consulting with CORPORATION and
obtaining CORPORATION's consent for such abandonment
unless abandonment is in favor of a subsequent
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patent application claiming the subject matter of the
proposed abandoned application and the patentability
of the subject matter is not negatively affected.
The parties agree to cooperate with each other
regarding the patent applications for NYU Inventions
and Joint Inventions and NYU agrees to use its best
efforts to obtain and maintain any patent
applications and patents on NYU Inventions and Joint
Inventions.
f. Nothing herein contained shall be deemed to be a
warranty by NYU that NYU can or will be able to
obtain any patent or patents on any patent
application or applications with respect to the NYU
Inventions or Joint Inventions or any portion
thereof, or that any of such patents will afford
adequate or commercially worthwhile protection.
g. Nothing herein contained shall be deemed to be a
warranty by CORPORATION that CORPORATION can or will
be able to obtain any patent or patents on any patent
application or applications with respect to Joint
Inventions or any portion thereof, or that any such
patents will afford adequate or commercially
worthwhile protection.
7. License Rights.
a. Subject to rights of the U.S. Government and its
agencies, if any, and to the provisions of this
Section 7.a., NYU shall grant CORPORATION an
exclusive, worldwide, license with right to
sublicense to make, have made, use and/or sell any
products or materials, related to or covered by the
NYU Inventions, and/or
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NYU's interest in Joint Inventions, and/or NYU Know-How.("the
License"). The License shall be set forth in an executed
license agreement, containing other terms and provisions as
shall be negotiated in good faith and using best efforts by
NYU and CORPORATION. The term of the license agreement shall
remain in force, unless previously terminated under the
executed license agreement, until the expiration date of the
last to expire patent rights or in the case of non-patentable
rights, for a period of at least ten (10) years from the
execution date of the license agreement. CORPORATION shall
have nine (9) months from the first disclosure by NYU of an
NYU Invention, Joint Inventions, or NYU Know-How to request
and conclude an agreement with respect to the License. If
CORPORATION has not concluded such an agreement with NYU
within nine (9) months after such disclosure, CORPORATION's
rights under this Section 7.a. shall terminate and NYU shall
have the right to commence negotiations with a third party
with respect to NYU Inventions, NYU's share of Joint
Inventions and NYU Know-How disclosed to CORPORATION.
b. During the Rights Period. NYU shall not disclose the
Research Technology to any third party except with
CORPORATION's prior written consent or pursuant to
Sections 9 and 12 hereof, until and unless such
Research Technology has been offered to CORPORATION
pursuant to Section 7.a. above and CORPORATION has
failed to conclude a license agreement as provided in
Section 7.a. above.
c. If, during the Rights Period, NYU shall negotiate a
license agreement with a third party relating to any
part of the Research
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Technology after the expiration Of CORPORATION's
rights as provided in Section 7.a. NYU shall offer
CORPORATION the right to enter into such license
agreement upon the same terms and conditions
negotiated with such third party; such right shall be
exercisable by CORPORATION for a period of thirty
(30) days after receipt by CORPORATION of a copy of
such negotiated agreement from NYU. If CORPORATION
fails to execute such negotiated agreement within
such 30-day period, NYU shall have no further
obligation to CORPORATION and shall be free to
execute such negotiated agreement with a third party.
8. Option to Acquire Shares
CORPORATION hereby grants NYU the option to purchase shares of
the CORPORATION's Common Stock, in the quantities, and on the
terms, set forth in the Stock Purchase Agreement which is
annexed hereto as Appendix II. The option described herein
shall be exercisable by NYU during the period commencing upon
the Effective Date and terminating six (6) months thereafter
("the option period"). If NYU chooses to exercise such
option, it shall given written notice thereof to the
CORPORATION within the option period. Closing for the
purchase of the stock shall be at such time, date and place as
are mutually satisfactory to the CORPORATION and NYU, provided
that such closing shall occur not later than two (2) weeks
after delivery by NYU of the notice that it is exercising its
option to purchase stock. Payment for the stock purchased by
NYU shall be made in full at the closing by
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check payable to the CORPORATION. On or before the closing,
NYU and CORPORATION shall enter into the Stock Purchase
Agreement annexed as Appendix H.
9. Publication.
a. Prior to submission for publication or presentation
of a manuscipt describing the results of any aspect
of the NYU Research Project, NYU shall send
CORPORATION a copy of the manuscript to be submitted
or presented, and shall allow CORPORATION sixty (60)
days from the date of such mailing to determine
whether the manuscript i) discloses Corporation's
Confidential Information or ii) contains subject
matter for which patent protection should be sought
for an NYU Invention or Joint Invention prior to
publication or presentation of such manuscript.
Should CORPORATION believe the subject matter of the
manuscript discloses Corporation's Confidential
Information or contains a patentable invention, then
prior to the expiration of such 60-day period from
the mailing date of such manuscript to CORPORATION by
NYU, CORPORATION shall given written notification to
NYU of its determination.
b. After the expiration of the sixty (60) day period
from the date of mailing such manuscript to
CORPORATION, unless NYU has received the written
notice specified above from CORPORATION, NYU shall be
free to submit such manuscript for publication or
presentation to publish the disclosed research
results in any manner consistent with academic
standards.
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c. Upon receipt of such written notice from CORPORATION
that such manuscript discloses Corporation's
Confidential Information, NYU shall delete such
information from the publication or presentation.
d. Upon receipt of such written notice from CORPORATION
that the manuscript contains patentable inventions,
NYU will thereafter delay submission of the
manuscript for an additional period of up to sixty
(60) days to permit the preparation and filing in
accordance with Section 6. hereof of U.S. patent
application by NYU on the subject matter to be
disclosed in such manuscript. After expiration of
such 60-day period, or the filing of a patent
application on each such invention, whichever shall
occur first, NYU shall be free to submit or present
the manuscript and to publish the disclosed results.
e. CORPORATION shall have the right to render comments
on the manuscript, if any, to NYU and/or the NYU
Scientist. NYU shall consider CORPORATION's
comments, but NYU's decision as to what the
publication or presentation shall contain will be
final, subject to compliance with c. and d. above.
10. Expiry and Termination.
a. Unless earlier terminated pursuant to Section 3.a. or
this Section 10, this Agreement will terminate upon
the expiration of the Rights Period. The provisions
of Sections 8, 9, 10, 12 and 15 hereof shall survive
and remain in full force and effect after any
expiration, cancellation or termination of this
Agreement, including early termination as set forth
below.
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b. At any time prior to expiration of this Agreement
pursuant to Section 10.a. hereof, any party may
terminate this Agreement for cause, as "cause" is
described below, by giving written notice to the
other party. Cause for termination by one party of
this Agreement shall be deemed to exist when there
has been a material breach or default by any party of
any of the terms of this Agreement, and when such
breaching or defaulting party has failed to cure such
breach within ninety (90) days after receipt of
written notice thereof from the non-breaching party.
c. Any party to this Agreement may, upon giving notice
of termination, immediately terminate this Agreement
upon receipt of notice that any other party has
suspended its business.
d. Any amount payable hereunder by one of the parties to
the other, which has not been paid by the date on
which such payment is due, shall bear interest from
such date until the date on which such payment is
made, at the rate of one percent (1%) per annum in
excess of the prime rate prevailing at the Citibank,
N.A., in New York, during the period of arrears and
such amount and the interest thereon may be collected
or set off against any amount due, whether in terms
of this Agreement or otherwise, to the party in
default by any non-defaulting party.
e. Upon expiration or termination of this Agreement
pursuant to Sections 10.a. - 10.c. above, and without
execution of an agreement with respect to the License
as provided in Section 7.a., all rights in and to the
Research Technology shall revert to NYU
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and CORPORATION shall not be entitled to make any
further use of the Research Technology. However, in
the event that NYU Inventions and/or Joint Inventions
are made during the Research Period, but the
resulting patent applications are filed after the
Research Period ends, CORPORATION shall have the
right to a License as provided in Section 7.a.
f. Termination of this Agreement shall not relieve the
either party of any obligation to the other party
incurred prior to such termination.
11. No Assignment.
Neither CORPORATION nor NYU shall have the right to assign,
delegate or transfer at any time to any party, in whole or in
part, any or all of the rights, duties and interest herein
granted without first obtaining the written consent of the
other to such assignment, which consent shall not be
unreasonably withheld. However, CORPORATION shall have the
right to assign, delegate or transfer at any time, in whole or
in part, any or all of the rights, duties and interest herein
granted to a Corporation Entity upon giving written notice to
NYU.
12. Confidential Information.
Except as otherwise provided in this Section and in Section 9,
the parties agree that for the term of the Rights Period and
for five (5) years thereafter, NYU shall maintain all of
Corporation's Confidential
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information disclosed to NYU in confidence and shall not
disclose it to any third party and CORPORATION shall maintain
any Research Technology in confidence and shall not disclose
it to any third party except to the extent the receiving party
can establish that such information:
1. was already known to the receiving party, other than
under an obligation of confidentiality, at the time
of disclosure by the providing party;
2. was generally available to the public or otherwise
part of the public domain at the time of its
disclosure to the receiving party;
3. became generally available to the public or otherwise
part of the public domain after its disclosure and
other than through any act or omission of the
receiving party in breach of this Agreement; or
4. was subsequently lawfully disclosed to the receiving
party by a third party.
Each party may disclose the other's information to the extent
such disclosure is reasonably necessary in prosecuting or
defending patents and litigation, complying with applicable
governmental regulations and laws, and conducting clinical
trials.
13. Representations and Warranties by CORPORATION.
CORPORATION hereby represents and warrants to NYU as follows:
(1) CORPORATION is a corporation duly organized, validly
existing and in good standing under the laws of the
State of California. CORPORATION has been granted all
requisite power and authority to
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carry on its business and to own and operate its
properties and assets. The execution, delivery and
performance of this Agreement have been duly
authorized by the Board of Directors of CORPORATION;
(2) There is no pending or, to CORPORATION's knowledge,
threatened litigation involving CORPORATION which
would have any effect on this Agreement or on
CORPORATION's ability to perform its obligations
hereunder; and
(3) There is no indenture, contract, or agreement to
which CORPORATION is a party or by which CORPORATION
is bound which prohibits or would prohibit the
execution and delivery by CORPORATION of this
Agreement or the performance or observance by
CORPORATION of any term or condition of this
Agreement.
14. Representations and Warranties by NYU.
NYU hereby represents and warrants to CORPORATION as follows:
(1) NYU is a corporation duly organized, validly existing
and in good standing under the laws of the State of
New York. NYU has been granted all requisite power
and authority to carry on its business and to own and
operate its properties and assets. The execution,
delivery and performance of this Agreement have been
duly authorized by the Board of Trustees of NYU;
(2) There is no pending or, to NYU's knowledge,
threatened litigation involving NYU which would have
any effection this Agreement or on NYU's ability to
perform its obligations hereunder;
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(3) There is no indenture, contract, or agreement to
which NYU and/or the NYU Scientist is a party or by
which NYU and/or the NYU Scientist is bound which
prohibits or would prohibit the execution and
delivery by NYU of this Agreement or the performance
or observance by NYU of any term or condition of this
Agreement; and
(4) That all right, title and interest in and to the
Research Technology is owned solely by NYU and NYU
has the sole right to grant licenses thereto and to
enter into this Agreement.
15. Use of Name.
Without the prior written consent of the other party which
consent shall not be unreasonably withheld in accordance with
the business practices and policies of the party whose consent
is sought, neither CORPORATION nor NYU shall use the name of
the other party or any adaptation thereof or of any staff
member, employee or student of the other party, including
without limitation, in any product labeling, advertising or
sales literature. However, in the event that disclosure is
required in connection with any public or private offering,
in connection with a lawsuit settlement involving NYU and/or
Joint Inventions, in conjunction with any application for
regulatory approval, or is otherwise required by law, either
party can make factual statements concerning this Agreement or
file copies of this Agreement so long as the other party has
an opportunity to review and comment on the statements prior
to such intended disclosure. The comment period shall be ten
(10) working days from the receipt of such
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statements unless the parties agree to an extension. Except
as provided herein, neither NYU nor CORPORATION will issue
public announcements about this Agreement.
16. Miscellaneous.
a. In carrying out this Agreement the parties shall
comply with all applicable local, state and federal
laws and regulations.
b. If any provision of this Agreement is determined to
be invalid or void, the remaining provisions shall
remain in effect.
c. This Agreement shall be deemed to have been made in
the State of New York and shall be governed and
interpreted in all respects under the laws of the
State of New York.
d. Any dispute arising under this Agreement shall be
resolved in an action in the courts of New York State
or the federal courts located in New York State, and
the parties hereby consent to personal jurisdiction
of such courts in any such action.
e. All payments or notices required or permitted to be
given under this Agreement shall be given in writing
and shall be effective when either personally
delivered or deposited, postage prepaid, in the
United States registered or certified mail, addressed
as follows:
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To NYU: New York University Medical Center
550 First Avenue
New York, NY 10016
Attention: Isaac T. Kohlberg
Vice President for
Industrial Liaison
and
Office of Legal Counsel
New York University
Bobst Library
70 Washington Square South
New York, NY 10012
Attention: Annette B. Johnson, Esq.
Associate General Counsel
To CORPORATION: Calypte Biomedical Corporation
1440 Fourth Street
Berkeley, California 94710
Attention: David J. Robison, Ph.D.
President and
Chief Executive Officer
or such other address or addresses as either party may
hereafter specify by written notice to the other. Such
notices and communications shall be deemed effective on the
date of delivery or fourteen (14) days after having been sent
by registered or certified mail, whichever is earlier.
f. This Agreement (and the annexed Appendices)
constitute the entire Agreement between the parties
and no variation, modification or waiver of any of
the terms or conditions hereof shall be deemed valid
unless made in writing and signed by both parties
hereto.
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This Agreement supersedes any and all prior agreements or
understandings, whether oral or written, between CORPORATION
and NYU.
g. No waiver by either party of any non-performance or
violation by the other party of any of the
convenants, obligations or agreements of such other
party hereunder shall be deemed to be a waiver of any
subsequent violation or non- performance of the same
or any other covenant, agreement or obligation, nor
shall forbearance by any party be deemed to be a
waiver by such party of its rights or remedies with
respect to such violation or non-performance.
h. The descriptive headings contained in this Agreement
are included for convenience and reference only and
shall not be held to expand, modify or aid in the
interpretation, construction or meaning of this
Agreement.
i. It is not the intent of the parties to create a
partnership or joint venture or to assume partnership
responsibility or liability. The obligations of the
parties shall be limited to those set out herein and
such obligations shall be several and not joint. NYU
shall perform under this Agreement only as an
independent contractor.
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j. In the event of a delay caused by inclement weather,
fire, flood, strike, or other labor dispute, act of
God, act of governmental officials or agencies, or
any other cause beyond the control of a party, such
party shall be excused from performance hereunder for
the period of time attributable to such delay.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
the effective as of the date and year first above written.
NEW YORK UNIVERSITY
By: /s/ ISAAC T. KOHLBERG
----------------------
Isaac T. Kohlberg
Title: Vice President for
Industrial Liaison
Date: August, 10th, 1993
CALYPTE BIOMEDICAL CORPORATION
By: /s/ David J. Robison
---------------------
Title: President and CEO
Date: August 12, 1993
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27
APPENDIX I
DETECTION OF INFECTIOUS HIV-I IN URINE OF
SEROPOSITIVE INDIVIDUALS
ABSTRACT
We have previously described the high prevalence of antibodies to HIV-I in
urine from HIV-I seropositive individuals. Recently, we reported the presence
of HIV-I proviral DNA, HIV-I RNA and p24 core protein in urine cell pellets
from AIDS patients. Our data suggest that HIV-I could be transmissible via
urine from seropositive individuals. Urine cell pellets and cell-free
sediments from twenty urine specimens of HIV positive patients will be
collected. Part of the urine cell pellet from each specimen will be incubated
with TNFa which has been previously shown to be, able to stimulate the
expression of HIV-I. The cells and sediments will then be cultured with PBMC
from HIV-I seronegative donors. The infectivity of urine will be determined by
cytopathic effects (CPE), P24 antigen assay, Polyrmerase Chain Reaction (PCR)
and by Electron Microscopy. This study should help to elucidate and confirm if
urine may serve as a potential infectious body fluid for HIV-I.
BACKGROUND
Human immunodeficiency virus type I (HIV-I), the etiologic agent of the
acquired immunodeficiency syndrome (AIDS) has been isolated from the peripheral
blood mononuclear cells (PBMC), and serum from infected individuals; it has
also been found in other body fluids including cerebrospinal fluid, saliva,
tears, vaginal secretions, breast milk, semen, and alveolar fluid.(1-5) Our
laboratory reported that antibodies against HIV-I proteins are found in urine
of HIV seropositive individuals (7). With the rapidly increasing incidence of
HIV-I infection, the question of whether infectious virons of HIV can be
detected in the urine from HIV-I-infected individuals becomes increasingly
important, since urine could serve as a means of HIV-I transmission. Levy et
al., detected HIV-I in one of five urine specimens examined (8). However,
Skolnik et al., were unable to detect HIV-I in the urine specimens from HIV-I
seropositive individuals examined (9). Recently, we reported the presence of
HIV-I proviral DNA sequences in centifuged fresh cell pellets from urine of
HIV-I infected individuals (10). Furthermore, we detected HIV-I RNA and p24
core protein in these urine cell pellets as well (11). The question is raised
whether the urine from HIV-I infected host could potentially serve as an
infectious body fluid for transmission of AIDS. 1) Urine specimens in general
frequently contains small numbers of mononuclear cells (<2 x 106/24 hours);
these same cells when located in blood or lymph nodes are known to serve as
reservoirs of HIV. 2) A variety of renal diseases have been described in HIV-I
infected patients such as nephropathy associated with tubulointersitial
mononuclear cells infiltrate (12). In addition, the incidence of urinary tract
infections is increased in the HIV-I infected host (12). It is probable that
the number of mononuclear cells found in urine of AIDS patients may be greater
than that found in healthy subjects. 3) The structural cells and tissues of the
genitourinary tract, other than the mononuclear cells may be susceptible to
infectious HIV-I. It has been shown that g1omerular endothelial and mesangial
cells can be infected by HIV-I in vitro (13). Hypothetically, the cellular
components found in the urine of an HIV-infected host could contain infectious
virus. As a matter of fact, we have shown that genomic fragments of HIV-I are
present in the cells found in the centrifuged urine pellets from some HIV-I
sempositive individuals (11). These data suggest that HIV-I could be
transmissible via urine from HIV-I seropositive individuals which has not been
previously examined in great detail.
In the only previous report concerning the absence of infectious HIV-I in urine
of seropositive patients. 36ml of ultracentifuged urine pellets were used as
the source of
28
HIV-I for cell culture; in that study the mononuclear cells found in urine
pellets were likely to have been disrupted during the ultracentrifugation
procedure. The infectivity of HIV-I virions of HIV-I might be diminished in
presence of concentrated various salts or crystals usually found in urine, such
as oxylated and urates, which would be precipitated with the virus at 40C for
1.5 hours. It has been shown that tumor necrosis factor alpha (TNFa) is
capable of inducing HIV-I expression in cells infected with HIV-I (14). The
activity of HIV-I found in cells of urine might be enhanced by TNF-a and
therefore be more easily detected. It is possible that HIV-I virions present
in urine might prove to be infectious if the conventional method used for
collection and detection are modified.
PRELIMINARY STUDIES AND RESULTS
See two previously published papers (attached).
SPECIFIC AIMS
To determine whether urine from HIV-I infected individuals is potentially an
infectious body fluid for the transmission of HIV-I.
EXPERIMENTAL DESIGN AND PROCEDURES
A) Initially the urine samples from a group of about 100 HIV-I
seropositive individual will be screened for the presence of
HIV-I sequences in their fresh urine pellets by Polyrmerase
Chain Reaction (PCR), Reverse Transcriptation-PCR (RTR-PCR),
and in situ hybridization as we have described previously
(10,11).
B) We expect to find at least 20 HIV-I positive urine specimens
to be used for the following studies (see schematic diagram).
Urine specimens will be first centrifugated at 3000 rpm at 40C
for 5 minutes to obtain the cell pellets and the urine
supernants will then be ultracentrifuged at 30,000 rpm at 4O C
for 1.5 hr to obtain cell-free virus, if present. The urine
cell pellets will be washed X3 with HBSS containing
Gentarmycin 50gg/ml, and Amphotericin B l5gg/ml. The
ultracentifugated cell-free sediment will be resuspended in
HBSS containing these antibiotics. Half of the urine cell
pellets from each individual will then be resuspended in RPMI
1640 medium supplemented with 10% fetal calf serum and 100
units of TNF-a/ml (Genzyme) at 370C for 24 hours. The cells
and sediments from urine will also be cultured with 5 x 106
PBMC from HIV-I seronegative donors in RPM2 1640 medium
containing 2gg/ml polybrene (Sigma, St. Louis) and 10%
interleukin-2 (Sigma), supplemented with Penicillin 25ORg/ml.
Streptomycin 250gg/ml, herpes buffer (0.01M), L-glutamine
(2mM) and 20% heat-inactivated fetal calf serum. The donor
PMBC used will have been separated by ficoll-hypaque
differential centrifugation and then stimulated for 3 to 4
days with 10% IL-2 and 10gg/ml of phytohemagglutinin-p (PHA-p:
Sigma. St. Louis) in RPMI-1640 medium.
The cultures will be incubated at 370C in 5% CO2 atmosphere
for 6 weeks. Half the media of each culture will be changed
twice a week. Fresh PBMC stimulated with PHA-p will be added
to the cultures once each week for 6 weeks.
C) The presence of infectious HIV in Urine will be determined by:
1) Cytopathic effect (CPE) including syncytia by
microscopy examination,
29
2) Cultures will be tested twice weekly for the presence
of HIV-I P24 antigen. by ELISA (Abbott Laboratories)
3) Aliquots of the cell cultures will be collected once
weekly to detect H1V-I DNA and/or RNA by PCR and
RT-PCR methods (11).
4) Electromicroscopy examination of the culture for
possible detection of HIV-I infection will be
performed (15).
In summary, utilizing the modified methods proposed in this proposal, we hope
to ascertain whether the fragments of HIV-I we have recently detected and
described in the urine pellets of seropositive individuals could represent
infectious virus.
REFERENCES:
1. Fujikawa, L.S.S.L., Salhuddin, D. Ablashi, et al., HTLV-III in the
tears of AIDS patients. Ophthalmology 1986 93: 1479-1481.
2. Ho, D.D., T.R. Rata, R.T. Schooley, et al. Infrequency of isolation
of HTLV-III virus from saliva in AIDS. 1985 N. Engl. J. Med. 313:
1606.
3. Ho, D.D., T.R. Rata, R.T. Schooley, et al. Isolation of HTLV-III from
cerebrospinal fluid and neural tissues of patients with - neurologic
syndromes related to the acquired immunodeficiency syndrome. 1985 N.
Engl. J. Med. 313: 1493-1497.
4. Thing, L., S. Sprecher-Goldberger, T. Jonckheer, et al. Isolation of
AIDS virus from cell-free beast milk of three health virus carriers.
1985 Lancet ii 891-892.
5. Vogt, M.W., D.J. Witt, D.Z. Craven, et al. Isolation patterns of the
human immunodeficiency virus from cervical secretions during the
menstrual cycles of women at risk for the acquired immunodeficiency
syndrome. 1987 Ann. Intern. Med. 106: 380-382.
6. Ho, DD, Schooley RE, Rota RT: HTLV-III in the semen and blood of a
healthy homosexual man. Science 1984 226:451-453.
7. Cao YZ, Friedman-Kien AE, Chuba VJ. IgG antibodies to HIV-I in urine
of HIV-I seropositive individuals. Lance 1988, i:831-832.
8. Levey, J.A., L.S. Kaminsky, W.J.W. Morrow, et al. Infection by the
retrovirus associated with the acquired immunodeficiency syndrome.
Ann. Intern. Med. 1985 103: 694-699.
9. Skolnick PR, Kosloff BR, Bechtel LJ et al., Absence of infectious
HIV-I in the urine of seropositive viremic subjects. 1989. L Infect.
Dis. 160:1056-1060.
10. Li JJ, Friedman-Kien AE, Huang YQ. HIV-I DNA proviral sequences in
fresh urine pellets from HIV-I seropositive persons. 1990 Lancet
6:1590-1591.
11. Li, J.J., Huang, Y.Q., Poiesz, B.J. et al. Detection of Human
Immunodeficiency Virus Type I (HIV-I) in Urine Cell Pellets fro HIV-I
Seropositive Individuals. 1992 30: 1051-1055.
12. Mazbar SA, Schoenfeld PY, Humphre MG. Renal involvement in patients
infected with HIV-I: Experience at San Francisco General Hospital.
Kidney Int. 1990 37: 1325 - 1332.
13. Green, D.F., Resnick, L., and Bourgolgere. J.J. HIV infects
glomerular endothelial and mesangial but not epithelial cells in
vitro. 1992 41: 956-960.
14. Poll G, Kinter A, Justement JS et al. Tumor necrosis factor 2
functions in an antocrine manner in the induction of human
immunodeficiency virus expression. Proc. Nat]. Acad. Sci. USA
1990 87: 782-785.
15. Huang YQ, Li JJ, Kim KS, Nicolaides A. Zhang WG, Le J., Poiesz BJ,
Friedman-Kien AE. HIV-I infection and modelation of cytokines and
growth factor expression In Kaposi's sarcoma-derived cells in vitro.
AIDS 1993 7: 317-322.
30
24 hour Urine Specimens from HIV-I seropositive Individuals
centrifuge
3000 rpm
cell pellet supernatant
centrifuge
30,000 rpm
wash (3x) cell-free pellet
cell pellet
incubate No TNF2
with
TNF2
culture resulting cell culture resulting pellet
pellets with PBMC with PBMC
detection of HIV-I by CPE, PCR, P24, EM
31
Appendix II
CALYPTE BIOMEDICAL CORPORATION
STOCK PURCHASE AGREEMENT
This agreement is made as of the day of 1993, between
Calypte Biomedical Corporation, a California corporation (the "Company") and New
York University (the "Purchaser").
1. Purchase and Sale of Stock.
The Company hereby sells to the Purchaser and the Purchaser hereby
purchases from the Company, shares of the Company's Common
Stock (the "Shares") at a purchase price of per share for an
aggregate purchase price of . The Company will promptly, after
delivery of this Agreement and a check for the aggregate purchase
price, issue a certificate representing the Shares registered in the
name of the Purchaser.
2. Legends.
All certificates representing any of the Shares shall have endorsed
thereon legends in substantially the following form:
a. "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THESE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN
CONNECTION WITH, THE DISTRIBUTION THEREOF. THESE SECURITIES MAY NOT BE
OFFERED, SOLD, PLEDGED, OR TRANSFERRED UNLESS A REGISTRATION STATEMENT UNDER
THE ACT IS IN EFFECT AS TO THESE SECURITIES OR THERE IS AN OPINION OF COUNSEL,
SATISFACTORY TO THE CORPORATION, THAT AN EXEMPTION THEREFROM IS AVAILABLE."
b. Any legend required to be placed thereon by the California
Commissioner of corporations, or required by the applicable blue sky laws of
any state.
3. Company's Representations.
In connection with the purchase of the Shares, the Company hereby
represents and warrants to the Purchaser as follows:
a. Authorization; Valid Issuance. All corporate action on the
part of the Company necessary for the authorization, execution and delivery of
this Agreement, the performance of all obligations of the Company hereunder and
the authorization, issuance and delivery of the Shares being sold hereunder has
been taken. The Shares, when issued and delivered pursuant to this Agreement,
for the consideration set forth herein, will be duly and validly issued,
fully-paid, and non-assessable.
Confidential portion has been omitted and filed separately with the Commission
32
b. Capitalization. The authorized number of shares of Common
Stock of the Company is 52,000,000. The authorized number of shares of
Preferred Stock of the Company is 42,075,510, of which 1,000,000 shares are
designated Series A Preferred Stock, 8,048,472 shares are designated Series B
Preferred Stock, 17,027,038 shares are designated Series C Preferred Stock, and
16,000,000 are designated Series D Preferred Stock.
As of June 20, 1993, 5,207,780 shares of Common Stock are issued and
outstanding and 1,000,000, 8,048,472, 17,027,038, 9,999,998 shares of Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, and Series
D Preferred Stock, respectively, are issued and outstanding. In addition, the
Company has issued a warrant exercisable for 120,000 shares of Series D
Preferred Stock, which warrant can be exercised at $0.84 per share. Also, the
Company has issued options to acquire 2,655,461 shares of Common Stock, and has
2,254,458 shares of Common Stock available for issuance pursuant to the
Company's 1990 Stock Option Plan.
The Series A Preferred Stock is not convertible into Common Stock.
Each share of Series B, Series C, and Series D Preferred Stock is currently
convertible into one share of Common Stock, subject to future adjustments set
forth in the Company's Restated Articles of Incorporation. Accordingly, the
Company's fully-diluted capitalization (including the Common and Preferred
Stock outstanding, the warrant, and the outstanding options but excluding the
remaining Common Stock available for issuance pursuant to the Company's 1990
Stock option Plan) stated on a Common Stock-equivalent basis, excluding the
shares issued hereby, is 43,058,749 shares of Common Stock.
4. Purchaser's Representations.
In connection with its purchase of the Shares, the Purchaser hereby
represents and warrants to the Company as follows:
a. Investment Intent; Capacity to Protect Interests. The
Purchaser is purchasing the Shares solely for investment and not with any
present intention of selling or otherwise disposing of the Shares or any
portion thereof in any transaction other than a transaction exempt from
registration under the Securities Act of 1933, as amended (the "Act"). The
Purchaser also represents that the entire legal and beneficial interest of the
Shares is being purchased, and will be held, for the Purchaser's account only,
and neither in whole nor in part for any other person.
b. Information concerning company. The Purchaser has had the
opportunity to discuss the plans, operations, and financial condition of the
Company with its officers and has received all information the Purchaser has
deemed appropriate to enable the
-2-
33
Purchaser to evaluate the financial risk inherent in investing in the Shares.
c. Economic Risk. The Purchaser realizes that the purchase of
the Shares involves a high degree of risk, and the Purchaser is able, without
impairing its financial condition, to hold the Shares for an indefinite period
of time and to suffer a complete loss of its value.
d. Accredited investor. The Purchaser is an "accredited
investor" as defined under Regulation D of the Act.
e. Restricted Securities. The Purchaser acknowledges that the
sale of the Shares has not been registered under the Act. The Shares must be
held indefinitely unless subsequently registered under the Act or an exemption
from such registration is available, and the Company is under no obligation to
register the Shares.
f. Disposition under Rule 144. The Purchaser understands:
1. that the Shares are restricted securities within the
meaning of Rule 144 promulgated under the Act which limits the sale of the
Shares in a public market transaction;
2. that the exemption from registration under Rule 144
will not be available, in any event, for at least two years from the date of
purchase of and actual payment for the Shares, and even then will not be
available unless (A) a public trading market then exists for the Common Stock
of the Company, (B) adequate information concerning the Company is then
available to the public, and (C) other terms and conditions of Rule 144 are
complied with; and
3. that certain sales of the Shares may be made only in
limited amounts in accordance with such terms and conditions.
5. Market Standoff Agreement.
In the event that the Company should propose to offer its securities
to the general public in an initial public offering, the Purchaser agrees, at
the option of the managing underwriters of such offering, not to sell any
securities of the Company, other than securities registered in such offering,
for a period specified by the Company not to exceed 180 days from the effective
date of the registration statement filed with the Securities and Exchange
Commission, pursuant to which such offering is to be made. The Purchaser
further agrees, upon the request of such managing underwriter or underwriters,
to execute and deliver such further agree-
-3-
34
ments and instruments, consistent herewith, as it or they may reasonably
request to effect this limitation.
6. Right of First Refusal.
Before any of the Shares registered in the name of the Purchaser or of
any transferee thereof may be sold or transferred (including transfer by
operation of law), such Shares shall first be offered to the Company as
follows:
a. The Purchaser shall deliver a notice to the Company stating
(i) the Purchaser's bona fide intention to sell or transfer such Shares, (ii)
the number of such Shares to be sold or transferred, and (iii) the price for
which the Purchaser proposes to sell or transfer such shares, and (iv) the name
of the proposed purchaser or transferee.
b. Within twenty (20) days after receipt of such notice, the
Company or its assignee may elect to purchase all, but not less than all,
Shares to which the notice refers, at the price per share specified in the
notice. Full payment for all the Shares to which the notice refers shall be
made by cash or check to the Purchaser within thirty (30) days after receipt of
the notice.
c. If the Shares to which the notice refers are not elected to be
purchased as provided in Section 6b, the Purchaser may sell the Shares to any
person named in the notice at the price specified in the notice or at a higher
price, provided that such sale or transfer is consummated within sixty (60)
days of the date of the notice to the Company, and, provided further, that any
such sale is in accordance with all the terms and conditions hereof.
d. Any shares so transferred will continue to be subject to the
right of first refusal provided in this Section 6.
The provisions of this Section 6 shall terminate on (i) the effective
date of a registration statement filed by the Company under the Act, with
respect to an underwritten public offering of Common Stock of the Company or
(ii) the closing date of a sale of substantially all of the assets or merger of
the Company pursuant to which shareholders of the Company receive securities of
a buyer whose shares are publicly traded.
7. Registration Rights.
The Purchaser is hereby granted the "piggyback" registration rights
set forth in Section 9.5 of that certain Agreement for the Purchase and Sale of
Series D Preferred Stock dated as of December 28, 1992 by and between the
Company and the purchasers set forth in Exhibit A to such agreement (the
"Series D Agreement") including, without limitation, the indemnification
-4-
35
rights set forth in Section 9.12, and the Purchaser shall obtain the benefit
of, and agrees to be bound by, the applicable terms and conditions of Section 9
of the Series D Agreement as though the Purchaser were a Holder and the Shares
were Registrable Securities under Section 9 of the Series D Agreement.
Attached hereto as Exhibit A is a copy of Section 9 of the Series D Agreement.
The granting of the foregoing registration rights does not conflict
with any other obligation of the Company.
8. Governing Law.
This agreement shall be governed by the laws of the State of
California, without regard to their conflicts of laws provisions.
9. Counterparts.
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this agreement
as of the day and year first above written.
NEW YORK UNIVERSITY CALYPTE BIOMEDICAL CORPORATION
By: By:
-------------------------- --------------------------------
David J. Robison, President
Title: and Chief Executive Officer
-----------------------
Address:
---------------------
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36
EXHIBIT A
SECTION 9
RESTRICTIONS ON TRANSFER; REGISTRATION RIGHTS
9.1 Restrictions on Transfer. The Securities shall not be sold,
assigned, transferred, or pledged except upon the conditions specified in this
section, which conditions are intended to, among other things, ensure
compliance with the provisions of the Act (as defined herein). Each Purchaser
shall cause any proposed transferee of the securities held by a Purchaser to
agree to take and hold such securities subject to the provisions and upon the
conditions specified in this Section.
9.2 Certain Definitions. As used in this Agreement, the following
definitions shall apply:
"Act" means the Securities Act of 1933, as amended, or any successor
federal statute and the rules and regulations of the commission thereunder, as
shall be in effect at the time.
"Commission" means the Securities and Exchange Commission or any other
federal agency at the time administering the Act.
"Holder" means any holder of outstanding Registrable securities;
provided, however, that for all purposes under this Section, the holder of any
Shares shall be deemed to be the Holder of the Registrable Securities into
which such Shares are then convertible.
"Initiating Holders" means any Holders of not less than 50% of the
Registrable Securities in the aggregate.
-11-
37
The terms "register", "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Act (and any post-effective amendments filed or required to
be filed), and the declaration or ordering of the effectiveness of such
registration statement.
"Registrable Securities" means (i) the Conversion Stock; (ii) shares
of the Company's Common Stock issuable or issued upon conversion of the
Company's Series C Preferred, Stock; (iii) shares of the Company's Common Stock
issuable or issued upon conversion of the Company's Series B Preferred Stock;
(iv) exclusively for purposes of registrations pursuant to Section 9.5 hereof,
up to 43,193 shares of Common Stock issuable to Arthur R. Engel ("Engel"); and
(v) any shares of Common Stock of the Company issued or issuable, directly or
indirectly, in respect of the Conversion Stock, Series C Preferred Stock,
Series B Preferred Stock or such stock issued to Engel, upon any stock split,
stock dividend, recapitalization, or similar event, or any shares of Common
Stock otherwise issued or issuable with respect to such stock; provided,
however, that Registrable Securities shall not include any shares of Common
Stock which have previously been registered or sold to the public, or any
Registrable Securities sold by a person in a transaction in which his rights
under this Section 9 are not assigned.
"Registration Expenses" means all reasonable expenses incurred by the
Company in complying with Sections 9.5 and 9.6, including, without limitation,
all registration, qualification and filing fees, printing expenses, escrow
fees, fees and disbursements of counsel for the Company, blue sky fees and
expenses, and the expense of any special audits incident to or required by any
such registration (but excluding the compensation of regular employees of the
Company which shall be paid in any event by the Company). Registration
Expenses shall not include selling commissions, discounts or other compensation
paid to underwriters or other agents or brokers to effect the sale.
"Restricted Securities" means the securities of the Company required
to bear the legends set forth in Section 9.3.
9.3 Restrictive Legends. Each stock certificate representing (i)
the Securities (including the Conversion Stock) or (ii) any other securities
issued in respect of the Securities upon any stock split, stock dividend,
recapitalization, merger, consolidation, or similar event, shall (unless
otherwise permitted by the provisions of Section 9.4) be stamped or otherwise
imprinted with legends in substantially the following form (in addition to any
legend required under applicable state securities laws):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT").
THESE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND
-12-
38
NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE DISTRIBUTION THEREOF.
THESE SECURITIES MAY NOT BE OFFERED, SOLD, PLEDGED, OR TRANSFERRED
UNLESS (I) A REGISTRATION STATEMENT UNDER THE ACT IS IN EFFECT AS TO
THESE SECURITIES OR (II) THERE IS AN OPINION OF COUNSEL, SATISFACTORY
TO THE CORPORATION, THAT AN EXEMPTION THEREFROM IS AVAILABLE.
COPIES OF THE AGREEMENT COVERING THE PURCHASE OF THESE SECURITIES AND
RESTRICTING THEIR TRANSFER MAY BE OBTAINED AT NO COST BY WRITTEN
REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE
SECRETARY OF THE CORPORATION AT THE PRINCIPAL EXECUTIVE OFFICES OF THE
CORPORATION.
Each Purchaser and holder of any Securities consents to the Company
making a notation on its records and giving instructions to any transfer agent
of the Securities in order to implement the restrictions on transfer described
in this Section.
9.4 Notice of Proposed Transfers. Prior to any proposed transfer
of any Restricted Securities, unless there is in effect a registration
statement under the Act covering the proposed transfer, the holder thereof
shall give written notice (the "Notice") to the Company of such holder's
intention to make such transfer. The Notice shall describe the manner and
circumstances of the proposed transfer in sufficient detail. The holder shall
also provide to the Company a written opinion of legal counsel who shall be
satisfactory to the Company, addressed to the Company and satisfactory in form
and substance to the Company's counsel, to the effect that the proposed
transfer of the Restricted Securities may be effected without registration
under the Act, provided that no such opinion need be provided with respect to a
transfer to any partner of any Purchaser which is a partnership. Each stock
certificate evidencing the Restricted Securities so transferred shall bear the
appropriate restrictive legends set forth in Section 9.3, except that such
certificate shall not bear such restrictive legends if in the opinion of
counsel for the Company such legends are not required in order to establish
compliance with any provisions of the securities laws.
9.5 Company Registration.
(a) Notice of Registration. If at any time or from time
to time, the Company shall determine, to register any of its securities, either
for its own account or the account of a security holder or holders exercising
their respective demand registration rights, other than (i) a registration
relating solely to employee benefit plans, or (ii) a registration relating
solely to a Rule 145 transaction, the Company shall:
(i) promptly give to each Holder written notice thereof;
and
-13-
39
(ii) include in such registration (and any related
qualification under blue sky laws or other compliance), and in any underwriting
involved therein, all the Registrable Securities specified in a written request
by each Holder received by the Company within 15 days after the Company mails
such written notice, subject to the provisions below.
(b) Underwriting. The right of any Holder to
registration pursuant to this Section 9.5 shall be conditioned upon the
participation by such Holder in such underwriting, if any, and the inclusion of
the Registrable Securities of such Holder in the underwriting to the extent
provided herein. All Holders proposing to distribute their securities through
such underwriting shall (together with the Company and the other holders
distributing their securities through such underwriting) enter into an
underwriting agreement in customary form with the managing underwriter selected
for such underwriting by the Company. Notwithstanding any other provision of
this Section 9.5, if the managing underwriter determines that marketing factors
require a limitation of the number of shares to be underwritten, the managing
underwriter may limit the Registrable Securities held by Holders, provided that
the number of shares of Registrable Securities and other securities that may be
included in the registration and underwriting shall be allocated among all
Holders and other holders in proportion, as nearly as practicable, to the
respective amounts of securities entitled to inclusion (determined without
regard to any requirement of a request to be included in such registration) in
such registration held by all such Holders and other holders at the time of
filing the registration statement. To facilitate the allocation of shares in
accordance with the, above provisions, the Company may round the number of
shares allocated to any Holder to the nearest 100 shares. If any Holder or
other holder disapproves of the terms of any such underwriting, he may elect to
withdraw therefrom by written notice to the Company and the managing
underwriter. Any securities excluded or withdrawn from such underwriting shall
be withdrawn from such registration.
(c) Right to Terminate Registration. The Company shall
have the right to terminate or withdraw any registration initiated by it under
this Section 9.5 prior to the effectiveness of such registration whether or not
any Holder has elected to include securities in such registration.
9.6 Requested Registration.
(a) Request for Registration. In case the Company shall
receive from Initiating Holders a written request that the Company effect any
underwritten registration, qualification, or compliance with respect to
Registrable Securities held by such Initiating Holders, then the Company shall:
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(i) promptly give written notice of the proposed
registration, qualification, or compliance to all other Holders; and
(ii) as soon as practicable, use its most diligent
efforts to effect all such registration, qualification, or compliance
(including, without limitation, the execution of an undertaking to file
post-effective amendments, appropriate qualification under applicable blue sky
or other state securities laws, and appropriate compliance with applicable
regulations issued under the Act and any other governmental requirements or
regulations) as may be so requested and as would permit or facilitate the sale
and distribution of all or such portion of such Registrable Securities as are
specified in such request, together with all or such portion of the Registrable
Securities of any Holders joining in such request as are specified in a written
request received by the Company within 30 days after receipt of such written
notice from the Company;
provided, however, that the Company shall not be obligated to take any
action to effect any such registration, qualification, or compliance pursuant
to this Section 9.6:
(A) in any jurisdiction in which the
Company would be required to execute a general consent to service of process in
effecting such registration, qualification, or compliance unless the Company is
already subject to service in such jurisdiction and except as may be required
by the Act;
(B) during the period starting with the
date sixty days prior to the Company's estimated date of filing of, and ending
on the date six months immediately following the effective date of, any
registration statement pertaining to securities of the Company (other than a
registration of securities in a Rule 145 transaction or with respect to an
employee benefit plan or initiated by security holders);
(C) unless the aggregate gross offering
price thereof would be at least $10,000,000; or
(D) after the Company has effected one
such registration pursuant to this Section 9.6 and such registration has been
declared or ordered effective.
Subject to the foregoing clauses (A) through (D), the Company shall
file a registration statement covering the Registrable Securities so requested
to be registered as soon as practicable, and in any event within 120 days,
after receipt of the request or requests of the Initiating Holders; provided,
however, that if the Company shall furnish to the Initiating Holders a
certificate signed by the president of the Company stating that in the good
faith judgment of the board of directors of the Company, it would be seriously
detrimental to the Company or its shareholders for such registration
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statement to be filed on or before the date filing would be required and it is
therefore essential to defer the filing of such registration statement, the
Company shall have the right to defer such filing for a reasonable period not
to exceed an additional 120 days.
(b) Underwriting. The right of any Holder to
registration pursuant to this Section 9.6 shall be conditioned upon such
Holder's participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting to the extent requested (unless
otherwise mutually agreed by a majority in interest of the Initiating Holders
and such Holder) to the extent provided herein.
The Company shall (together with all Holders and holders of other
securities proposing to distribute their securities through such underwriting)
enter into an underwriting agreement in customary form with the managing
underwriter selected for such underwriting by a majority in interest of the
Initiating Holders. Notwithstanding any other provision of this Section 9.6,
if the managing underwriter advises the Initiating Holders in writing that
marketing factors require a limitation of the number of shares to be
underwritten, then the Company shall so advise all Holders and the other
holders distributing their securities through such underwriting, and no other
securities will be included in such registration until all Registrable
Securities requested to be included in such registration have been included
therein and the Registrable securities included in such registration shall be
allocated among all Holders. electing to participate in such registration as
nearly as practicable in proportion to the number of Registrable Securities
held by each such holder. No Registrable Securities or other securities
excluded from the underwriting by reason of the underwriter's marketing
limitation shall be included in such registration. To facilitate the
allocation of shares in accordance with the above provisions, the Company or
the underwriters may round the number of shares allocated to any Holder to the
nearest 100 shares.
If any Holder of Registrable Securities disapproves of the terms of
the underwriting, such person may elect to withdraw therefrom by written notice
to the Company, the managing underwriter and the Initiating Holders. The
Registrable Securities and/or other securities so withdrawn shall also be
withdrawn from registration, and such Registrable Securities shall not be
transferred in a public distribution prior to 90 days after the effective date
of such registration, or such other shorter period of time as the underwriters
may require. If by the withdrawal of such Registrable Securities a greater
number of Registrable Securities held by other Holders may be included in such
registration (up to the maximum of any limitation imposed by the underwriters),
then the Company shall offer to all Holders who have included Registrable
Securities in such underwriting the right to include additional Registrable
Securities in the same proportion and manner used in determining the
underwriter limitation in this Section 9.6(b). If as a result of such
withdrawals, the
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Holders whose Registrable Securities are to be registered do not own a majority
of the outstanding Registrable Securities, then the request for such
registration shall be deemed to have been withdrawn.
If the managing underwriter has not limited the number of Registrable
Securities to be underwritten, the Company may include securities for its own
account or for the account of others in such registration if the underwriter so
agrees and if the number of Registrable Securities which would otherwise have
been included in such registration and underwriting will not thereby be
limited.
9.7 Form S-3-Registration. In case the Company shall receive from
a Holder or Holders a written request that the Company effect a registration on
Form S-3 and any related qualification or compliance with respect to an amount
of the Registrable Securities owned by such Holder or Holders for which the
anticipated aggregate offering price would be at least $1,000,000, the Company
shall:
(a) promptly give written notice of the proposed
registration, and any related qualification or compliance to all other Holders;
and
(b) as soon as practicable, effect such registration and
all such qualifications and compliances as may be so requested and as would
permit or facilitate the sale and distribution of all or such portion of such
Holder's or Holders' Registrable Securities as are specified in such request,
together with all or such portion of the Registrable Securities of any other
Holder or Holders joining in such request as are specified in a written request
given within 15 days after receipt of such written notice from the Company;
provided, however, that the Company shall not be obligated to effect any such
registration, qualification, or compliance pursuant to this Section 9.7: (1) if
Form S-3 is not available for such offering by the Holders; (2) if the Company
shall furnish to the Holders a certificate signed by the president of the
Company stating that in the good faith judgment of the board of directors of
the Company, it would be seriously detrimental to the Company and -its
shareholders for such Form S-3 Registration to be effected at such time, in
which event the company shall have the right to defer the filing of the Form
S-3 registration statement for a period of not more than one hundred twenty
(120) days after receipt of the initiating request of the Holder or Holders
under this Section 9.7; provided, however, that the Company shall not utilize
this right more than once in any twelve (12) month period; (3) if the Company
has, within the six (6) month period preceding the date of such request,
already effected a registration on Form S-3 for the Holders pursuant to this
Section 9.7; or (4) in any jurisdiction in which the Company would be required
to execute a general consent to service of process in effecting such
registration, qualification or compliance unless the Company is already subject
to service in such jurisdiction and except as may be required by the Securities
Act.
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Subject to the foregoing, the Company shall effect such registration,
qualification, or compliance (including, without limitation, the execution of
an undertaking to file post-effective amendments, appropriate qualification
under applicable blue sky or other state securities laws and appropriate
compliance with applicable regulations issued under the Securities Act and any
other governmental requirements or regulations) covering the Registrable
Securities and other securities so requested to be registered as soon as
practicable after receipt of the request or requests of the Holders.
Registrations effected pursuant to this Section 9.7 shall not be counted as a
request for registration or registrations effected pursuant to Sections 9.5 or
9.6.
If the registration to be effected pursuant to this Section 9.7 is to
be an underwritten public offering, it shall be managed by an underwriter or
underwriters acceptable to the Company selected by a majority in interest of
the Holders requesting registration. In such event, the right of any Holder to
registration pursuant to Section 9.7 shall be conditioned upon the
participation by such Holder in such underwriting and the inclusion of the
registrable securities of such Holder in the underwriting to the extent
provided herein. If the managing underwriter so selected determines that
marketing factors require a limitation of the number of shares to be
underwritten, the managing underwriter may limit the Registrable Securities
held by such Holders to be included in such registration. The Company shall so
advise such Holders, and the number of shares of Registrable Securities that
may be included in the registration shall be allocated among such Holders in
proportion to the respective amounts of Registrable Securities which would be
held by each of such Holders at the time of filing of the registration
statement. Any Registrable Securities that are so excluded from the
underwriting shall be excluded from the registration. As used throughout this
Section, the term "Form S-3" shall be deemed to include any equivalent
successor form for registration pursuant to the Act.
9.8 Expenses of Registration.
(a) All Registration Expenses incurred in connection with
the registration, qualification or compliance 'pursuant to Sections 9.5 and 9.6
shall be borne by the Company; provided, however, that the Company shall not be
required to pay for expenses of any registration proceeding begun pursuant to
Section 9.6, the request of which has been subsequently withdrawn by the
Initiating Holders, in which case such expenses shall be borne by the
Initiating Holders of securities (including Registrable Securities) requesting
or causing such withdrawal pro rata in accordance with the number of shares
initially sought to be registered; except that if Holders of a majority of the
Registrable Securities so elect, all Registration Expenses relating to any
withdrawn registration initiated under Section 9.6 will be paid by the Company,
and such withdrawn registration shall be counted as
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the one demand registration -to which Holders are entitled under Section 9.6.
(b) All Registration Expenses and selling expenses
incurred in connection with a registration, qualification, or compliance
pursuant to Section 9.7 shall be borne pro rata by the Holder or Holders
requesting the registration on Form S-3 according to the number of Registrable
Securities included in such registration.
9.9 Letter or Opinion of Counsel in Lieu of Registration. If in
the opinion of counsel for the Company concurred in by counsel for the Holders,
no registration under the Act is required in connection with the disposition of
the Registrable Securities covered by any request made under Sections 9.5 and
9.6 in the manner in which they propose to dispose of the Registrable
Securities included in such request, the Company need not comply with such
request or requests; provided, however, that the Company shall not be so
relieved of its obligations under Sections 9.5 and 9.6 unless such opinion of
counsel for the Company shall have been mailed by the Company to such Holders
within fifteen (15) days after the Company's receipt of their request or
requests; and provided, further, that if counsel for the Company has opined
that no registration is required in connection with any such disposition, such
counsel shall further opine as to whether the removal of any legend from
certificates representing all shares to which such opinion refers is
permissible, and, if so, the Company shall remove from such certificates all
legends no longer required thereon and shall rescind any stop-transfer
instructions previously communicated to its transfer agent relating to such
shares.
9.10 Lock-up. Each Purchaser (or other holder of any Securities)
hereby agrees not to offer, sell, or otherwise dispose of any of the Company's
Common Stock held of record or beneficially owned by such person during such
period, not to exceed 120 days, following the effective date of the
registration statement for the Company's initial underwritten public offering
as is requested by the managing underwriter for such offering, provided that
all officers, directors and holders or 1% or more of the outstanding capital
stock of the Company and all other persons with registration rights are bound
by similar restrictions. Such restriction shall not apply to shares registered
in such offering. In order to enforce this provision, the Company may impose
stop-transfer instructions with respect to such shares until the end of such
period.
9.11 Registration Procedures. If and whenever the company is
required by the provisions of this Section to use its most diligent efforts to
effect promptly the registration of Registrable Securities, the Company shall:
(a) Prepare and file with the Commission a registration
statement with respect to such Registrable Securities and use its most
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diligent efforts to cause such registration statement to become and remain
effective as provided herein.
(b) Prepare and file with the Commission such amendments
and supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration statement
effective and current and to comply with the provisions of the Act with respect
to the sale or other disposition of all Registrable Securities covered by such
registration statement, including such amendments and supplements as may be
necessary to reflect the intended method of disposition of the prospective
seller or sellers of such Registrable Securities, but for no longer than one
hundred eighty (180) days subsequent to the effective date of such registration
in the case of a registration statement on Form S-1 or S-18 (or any similar
form of registration statement required to set forth substantially identical
information) and for no longer than ninety (90) days in the case of a
registration statement on Form S-3.
(c) Furnish to each prospective seller of Registrable
Securities such number of copies of a prospectus, including a preliminary
prospectus, in conformity with the requirements of the Act, and such other
documents, as such seller may reasonably request in order to facilitate the
public sale or other disposition of the Registrable Securities of such seller.
9.12 Indemnification. In the event any of the Registrable
Securities are included in a registration statement under this Section:
(a) The Company will indemnify each Holder, each of its
officers and directors and partners and such Holder's separate legal counsel
and independent accountants, and each person controlling such Holder within the
meaning of Section 15 of the Securities Act, and each underwriter, if any, and
each person who controls any underwriter within the meaning of Section 15 of
the Act, against all expenses, claims, losses, damages or liabilities (or
actions in respect thereof), including any of the foregoing incurred in
settlement of any litigation, commenced or threatened, arising out of or based
on any untrue statement (or alleged untrue statement) of a material fact
contained in any registration statement, prospectus, offering circular or other
document, or any amendment or supplement thereto, incident to any such
registration, qualification or compliance, or based on any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances in
which they were made, not misleading, or any violation by the Company of any
rule or regulation promulgated under the Act applicable to the Company in
connection with any such registration, qualification or compliance, and the
company will reimburse each such Holder, each of its officers and directors and
partners and such Holders' separate legal counsel and independent accountants
and each person controlling such Holder, each such
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underwriter and each person who controls any such underwriter, for any legal
and any other expenses reasonably incurred in connection with investigating,
preparing or defending any such claim, loss, damage, liability or action,
provided that the Company will not be liable in any such case to the extent
that any such claim, loss, damage, liability or expense arises out of or is
based on any untrue statement or omission or alleged untrue statement or
omission, made in reliance upon and in conformity with written information
furnished to the Company by an instrument duly executed by such Holder or
underwriter and stated to be specifically for use therein.
(b) Each Holder will, if Registrable Securities held by
such Holder are included in the securities as to which such registration,
qualification or compliance is being effected, indemnify the Company, each of
its directors and officers and its legal counsel and independent accountants,
each underwriter, if any, of the Company's securities covered by such a
registration statement, each person who controls the Company or such
underwriter within the meaning of Section 15 of the Act, and each other such
Holder, each of its officers and directors and each person controlling such
Holder within the meaning of Section 15 of the Act, against all claims, losses,
damages and liabilities (or actions in respect thereof) arising out of or based
on any untrue statement (or alleged untrue statement) of a material fact
contained in any such registration statement, prospectus, offering circular or
other document, or any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse the Company, such Holders, such
directors, officers, persons, underwriters or controlling persons for any legal
or any other expenses reasonably incurred in connection with investigating or
defending any such claim, loss, damage, liability or action, in each case to
the extent, but only to the extent, that such untrue statement (or alleged
untrue statement) or omission (or alleged omission) is made in such
registration statement, prospectus, offering circular or other document in
reliance upon and in conformity with written information furnished to the
Company by an instrument duly executed by such Holder and stated to be
specifically for use therein; provided, however, that the obligations of each
Holder hereunder shall be limited to an amount equal to the proceeds to each
such Holder of Registrable Securities sold as contemplated herein.
(c) Each party entitled to indemnification under this
Section (the "Indemnified Party") shall give notice to the party required to
provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may
be sought, and shall permit the Indemnifying Party to assume the defense of any
such claim or any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or litigation,
shall be approved by the Indemnified Party (whose approval shall not
unreasonably be withheld), and the Indemnified Party may
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participate in such defense at such party's expense. No Indemnifying Party, in
the defense of any such claim or litigation, shall, except with the consent of
each Indemnified Party, consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the giving
by the claimant or plaintiff to such Indemnified Party of a release from all
liability in respect of such claim or litigation.'
(d) If the indemnification provided for in this Section
is held by a court of competent jurisdiction to be unavailable to an
Indemnified Party with respect to any loss, liability, claim, damage or expense
referred to herein, then the Indemnifying Party, in lieu of indemnifying the
Indemnified Party, shall contribute to the amount paid or payable by such
Indemnified Party with respect to such loss, liability, claim, damage or
expense in the proportion that is appropriate to reflect the relative fault of
the Indemnifying Party and the Indemnified Party in connection with the
statements or omissions that resulted in such loss, liability, claim, damage or
expense, as well as any other relevant equitable considerations. The relative
fault of the Indemnifying Party and the Indemnified Party shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of material fact or the omission to state a material fact relates to
information supplied by the Indemnifying Party or by the Indemnified Party, and
the parties-' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission.
9.13 Information by Holder. The Holder or Holders of Registrable
Securities included in any registration shall furnish to the Company such
information regarding such Holder or Holders and the distribution proposed by
such Holder or Holders as the Company may request in writing and as shall be
required in connection with any registration, qualification or compliance
referred to in this Section.
9.1.4 Rule 144 Reporting. With a view to making available the
benefits of certain rules and regulations of the Commission which may at-any
time permit the sale of the Restricted Securities to the public without
registration, after such time as a public market exists for the. Common Stock
of the Company, the Company shall use its best efforts to:
(a) Make and keep public information available, as those
terms are understood and defined in Rule 144 under the Act, beginning 90 days
after (i) the effective date of the first registration statement filed by the
Company for an offering of its securities to the general public, (ii) the
Company registers a class of securities under Section 12 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") , or (iii) the Company
issues an offering circular meeting the requirements of Regulation A under the
Act;
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(b) File with the Commission in a timely manner all
reports and other documents required of the Company under the Act and the
Securities Exchange Act of 1934, as amended (at any time after it has become
subject to such reporting requirements); and
(c) Furnish to any Holder promptly upon request a written
statement as to its compliance with the reporting requirements of Rule 144 (at
any time after-90 days after the effective date of the first registration
statement filed by the Company for an offering of its securities to the general
public) , and of the Act and the Exchange Act (at any time after it has become
subject to such reporting requirements), a copy of the most recent annual or
quarterly report of the Company, and such other reports and documents of the
Company and other information in the possession of or reasonably obtainable by
the Company as a Holder may reasonably request in availing itself of any rule
or regulation of the Commission allowing a Holder to sell any such securities
without registration.
9.15 Assignment of Registration Rights. The rights to cause the
Company to register securities granted under this Section may be assigned to a
transferee or assignee in connection with the transfer or assignment of shares
of Registrable Securities only if (i) such shares represent at least 1% of the
outstanding shares of the Company's capital stock (assuming conversion of all
Preferred Stock to Common Stock) on the date of such assignment, or (ii) the
transfer of such shares occurs in a distribution from a Purchaser which is a
partnership to a partner thereof.
9.16 Amendment of Registration Rights. The registration rights
provided in this Section may be-Amended with the written consent of the Company
and the holders of 51% of the Registrable Securities.
9.17 Amendment of Old Agreement. Holders of the outstanding shares
of Series C Preferred Stock and Series B Preferred Stock hold registration
rights provided under an Agreement for the Purchase and Sale of Series C
Preferred Stock dated as of October 18, 1991, and the Addendum thereto dated as
of February 28, 1992, (collectively, the "Old Agreement"). Section 9.16 of the
Old Agreement provides that Section 9 of the Old Agreement may be amended with
the written consent of the Company and holders of 51% of the "Registrable
Securities," as such term is defined in the Old Agreement. The Purchasers
include holders of in excess of 51% of such "Registrable Securities." By their
execution hereof, the Company and the Purchasers which have registration rights
under the Old Agreement agree that, effective at the First Closing hereunder,
the rights of holders of "Registrable Securities" under the Old Agreement shall
be superseded in their entirety by the registration rights under Section 9 of
this Agreement.
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