CONDITIONAL AMENDMENT NO. 1 TO
ASSIGNMENT AGREEMENT
This Conditional Amendment No. 1 to Assignment Agreement (this
"Amendment"), dated as of January 24, 1997, amends that certain Assignment
Agreement, dated as of April 13, 1994 (the "Assignment Agreement"), among
Zonagen, Inc., a Delaware corporation ("Zonagen"), Gamogen, Inc., a New York
corporation ("Gamogen"), and Dr. Adrian Zorgniotti ("Zorgniotti"). Capitalized
terms used without definition in this Amendment shall have the meanings ascribed
thereto in the Assignment Agreement.
WITNESSETH
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WHEREAS, Gamogen and Zorgniotti assigned certain technology (referred to in
the Assignment Agreement as the "Subject Technology") to Zonagen pursuant to the
Assignment Agreement; and
WHEREAS, Zonagen agreed in the Assignment Agreement to pay certain
royalties to Gamogen with respect to its sales of any Royalty-Bearing Product;
and
WHEREAS, Gamogen and Zonagen desire to amend the Assignment Agreement to
provide Zonagen with the option to terminate its obligations with respect to
royalties on Royalty-Bearing Products in exchange for payments by Zonagen;
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and promises contained in this Amendment, the parties hereto agree as follows:
1. Grant of Option. Gamogen hereby grants Zonagen the right, exercisable in
the sole discretion of Zonagen in the manner set forth in this Amendment, (a) to
amend Section 2.1(b) of the Assignment Agreement by deleting subsection (iii)
thereof in its entirety and (b) to further amend Article II of the Assignment
Agreement by deleting Section 2.3 thereof in its entirety. Without limiting the
foregoing, Zonagen's exercise of the right granted hereby (referred to herein as
the "Option") in accordance with the terms of this Amendment shall terminate (x)
any and all obligations of Zonagen with respect to (i) the payment of royalties
on Royalty-Bearing Products and (ii) obtaining regulatory approval for and
marketing Royalty-Bearing Products, and (y) any and all rights whatsoever of
Gamogen under the Assignment Agreement; provided that such obligations of
Zonagen and rights of Gamogen shall remain in effect unless and until the Option
is exercised.
2. Term of Option. Zonagen shall have the right to exercise the Option at
any time prior to January 24, 2000 [third anniversary of Amendment], provided
that Gamogen shall have the right to terminate the Option prior to such date (as
provided below) if Zonagen fails to make any of the following payments
("Maintenance Payments") in cash to Gamogen:
(a) $75,000 upon the execution of this Amendment;
(b) $75,000 on each July 24 and January 24 which occurs after the execution
of this Amendment and before Zonagen's exercise of the Option, with the final
such payment to be due on July 24, 1999.
If Zonagen fails to make any Maintenance Payment on the date indicated, Gamogen
shall have the right to terminate the Option by delivering written notice of
such termination to Zonagen; provided that the Option shall not terminate if
Zonagen pays such Maintenance Payment to Gamogen within 30 days after its
receipt of such termination notice. Zonagen shall have no obligation to make
any Maintenance Payment except for the payment due upon the execution of this
Amendment. The sole consequence of Zonagen's failure to make any Maintenance
Payment on the date indicated shall be the right of Gamogen to terminate the
Option as provided above.
3. Exercise of Option. Zonagen may exercise the Option by delivering to
Gamogen (a) notice of such exercise and (b) the payment in cash to Gamogen of
the amount (the "Option Price") specified below:
(i) if the Option is exercised on or before January 24, 1998, the Option
Price shall be $750,000;
(ii) if the Option is exercised after January 24, 1998 but on or before
January 24, 1999, the Option Price shall be $1,000,000;
(iii) if the Option is exercised after January 24, 1999 but on or before
July 24,1999, the Option Price shall be $1,500,000; and
(iv) if the Option is exercised after July 24, 1999 but before the
expiration of the Option, the Option Price shall be $1,750,000.
In determining the amount to be paid by Zonagen upon exercise of the Option,
Zonagen shall receive credit against the applicable Option Price in an amount
equal to the total of all Maintenance Payments previously made by Zonagen
pursuant to this Amendment. Upon Zonagen's exercise of the Option as
contemplated hereby, the Assignment Agreement shall automatically be amended as
reflected in Section 1 of this Amendment, without the necessity of any further
action by any party to this Amendment or the Assignment Agreement.
4. Representations and Warranties. Each party hereto represents and
warrants to the other party as follows:
(a) It is a corporation duly organized, validly existing, and in good
standing under the laws of jurisdiction of its incorporation, with the requisite
power to enter into and perform its obligations under this Amendment in
accordance with terms hereof.
(b) It has the full right, power and authority to execute and deliver this
Amendment and to perform the terms hereof. It has taken all required corporate
actions to approve and adopt this Amendment. This Amendment has been duly
authorized by all necessary corporate action, and upon execution and delivery
thereof will be its valid and binding agreement enforceable against it in
accordance with the terms hereof, subject as to enforcement to bankruptcy,
insolvency and other laws of general applicability relating to or affecting
creditors' rights and to general principles of equity.
(c) Its execution and delivery of this Amendment and the consummation of
the transactions required hereby (i) do not and will not violate or conflict
with any statute, regulation, judgment, order, writ, decree, or injunction,
currently applicable to it, any of its subsidiaries or any of their respective
property or assets, and (ii) will not violate or conflict with any provision of
its articles of incorporation or bylaws or any existing mortgage, indenture,
contract, licensing agreement, financing statement, or other agreement binding
on it or any of its subsidiaries.
(d) No consent or approval of its stockholders or any third party is
required to be obtained by it in connection with the execution and delivery of
this Amendment or the performance of the transactions contemplated hereby. No
material contract or agreement to which it is a party restricts its ability to
fulfill its obligations and responsibilities under this Amendment or to carry
out the activities contemplated herein.
5. No Other Changes. The Assignment Agreement shall continue to be in full
force and effect in accordance with the terms thereof, except to the extent such
terms are amended by this Amendment upon exercise of the option by Zonagen.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the date
first set forth above.
ZONAGEN, INC.
By: /s/ Joseph S. Podolski
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Joseph S. Podolski
President and CEO
GAMOGEN, INC.
By: /s/ Jesse A. Garringer
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Jesse A. Garringer
Executive Vice President