Exhibit 99.1
CONFIDENTIAL PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED PURSUANT TO REGULATION
240.24B-2B OF THE SECURITIES EXCHANGE ACT OF 1934. [*] INDICATES OMITTED
MATERIAL THAT IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST AND IS FILED
SEPARATELY WITH THE COMMISSSION.
Participation Agreement
- Atugen Biotechnology GmbH -
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Participation Agreement
Among
1. RIBOZYME PHARMACEUTICALS, Inc.,
2950 Wilderness Place
Boulder, Colorado
USA
- hereinafter referred to as "Founder 1" -
2. Dr. Ralph Earl Christoffersen
1995 Stony Hill
Boulder, Colorado 80303
USA
- hereinafter referred to as "Founder 2" -
3. Mr. Lawrence E. Bullock
8550 Waterford Way.
Longmont, CO 80503
USA
- hereinafter referred to as "Founder 3" -
4. Dr. Nassim Usman
2129 Night Sky Lane,
Lafayette, CO 80026
USA
- hereinafter referred to as "Founder 4" -
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5. Dr. James Thompson
2925 Glenwood Drive # 103
Boulder, CO 80301
USA
- hereinafter referred to as "Founder 5" -
6. Ms. Alene Holzman
971 6th Street,
Boulder, CO 80302
USA
- hereinafter referred to as "Founder 6" -
7. Dr. Thomas H. Rossing
13781 N. 115th St.
Longmont, CO 80501
- hereinafter referred to as "Founder 7" -
8. Dr. Jorg Potzsch
Pradelstrasse 9
13187 Berlin
- hereinafter referred to as "Founder 8" -
9. Dr. Thomas Walther
Dunckerstrasse 34
10439 Berlin
- hereinafter referred to as "Founder 9" -
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- - the parties 1 to 9 hereinafter jointly referred to as "Founders" -
10. Atugen Biotechnology GmbH,
Maxmimilianstr. 35,
80539 Munchen
Germany
- hereinafter referred to as the "Company" -
11. BB BioVentures L. P.
One Cambridge Center, 9th Floor
Cambridge, Massachusetts 02142
USA
- hereinafter referred to as the "Investor" -
Preamble
The Founders hold all the shares of the Company Atugen Biotechnology GmbH with
its seat in Munich (application pending for transfer of seat to Berlin)
registered in the Trade Register of the local court of Munich under HRB 119609.
The Founders intend to increase the share capital of the Company in order to
provide the Company with new operating funds. Within the framework of this
capital increase, the Investor shall be given the opportunity to purchase up to
a maximum of 36.65% of the shares in total after the capital increase has
been effected at a closing (the "Closing") as set out in column titled
"Percentage of Share Holding After the First Closing" of annex 20 on a fully
diluted basis.
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The Investor is, inter alia, a capital investment fund which exists partly
for the purpose of making private investments in young companies with
technologically progressive products and for providing the means for business
expansion.
The basis of the Investor's decision to invest is, among other things, the Term
Sheet of June 16, 1998 agreed to and signed by the Founders (annex 1) and the
business plan as amended on July 30, 1998 (annex 2).
In view of these interests the parties conclude the following Participation
Agreement:
Part 1
------
Participation
-------------
(S) 1
Increase of Capital
1. Today the Founders will increase the share capital of the Company by
DM 30,600 from DM 50,000 to DM 80,600 with a shareholders' resolution,
recorded by a notary, whereby solely the Investor is allowed to subscribe
the new Shares.
The Investor is allowed to subscribe to a share in the amount of
DM 30,600
created by the increase of capital. The investor shall assume the new
original capital contribution and pay, in addition to the nominal value
of the new share, a surcharge to be allocated to the Company's reserves
(EK04) in the total amount of DM 12,696,246.
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2. The Founders agree to waive their subscription right. Only the Investor is
allowed to take over the new share.
3. The Investor commits itself to subscribe to the new share through a
separately notarized declaration and to pay, in addition to the nominal
value of the new share, a surcharge to be allocated to the Company's
reserves (EK04) in the total amount of DM 12,696,246.
4. The new original capital contribution of DM 30,600 shall be paid in full
before the registration of the capital increase, and the surcharge in the
total amount of DM 12,696,246 shall be paid immediately after the
registration of the capital increase in the Trade Register to the
Company's bank account at the [*] with the account number [*] provided (i)
the parties to this Agreement have by then executed a Vote Pooling
Agreement concerning the election of the Advisory Council members and the
transfer of the Company from GmbH to AG, satisfactory to the Investor; and
(ii) the Company shall have received by then the grant funding contract or
binding commitment letter from BMBF and the Senate of Berlin in the same
amount as outlined in the letters of intent of those institutions
contained in annex 18 and annex 19 as well as reports of a positive
decision by tbg and regarding the GA-Grant funding; and (iii) the Founder
1 has completed, on or before September 30, 1998, certain amendments, as
previously discussed with the Investor, to its existing "Stock Purchase
Agreement" and the "Research, License, Supply and Royalty Agreement" with
Schering AG Company; (iv) all liens and encumbrances on the intellectual
property to be transferred by Founder 1 to the Company pursuant to the
License Agreement (Annex 14) shall be released and extinguished; and (v)
all other agreements to be executed and delivered prior to the Closing
shall have been so executed and delivered and any funding due thereunder
shall have been received by the Company.
5. Founder 1's participation in this Agreement is contingent upon Founder 1
completing, on or before September 30, 1998, certain amendments, as
previously discussed with the Investor, to its existing "Stock Purchase
Agreement" and the "Research, License, Supply and Royalty Agreement" with
Schering AG Company (which amendments shall be the same amendments
referred to above).
6. In the event that the conditions to the payment by the Investor of DM
12,696,246 surcharge (as set forth in (S)1, paragraph 4 above) have not
been fulfilled before January 1, 1999,
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the Investor will transfer its entire share of the Company to Founder 1
for the nominal amount of DM 30,600; provided however, that the Investor
will not be obligated to make such transfer if Founder 1 has materially
breached this Agreement or failed to use its best efforts to satisfy those
conditions to the payment of the surcharge which was within its control.
(S) 2
Transformation into an AG (German Stock Corporation) and
Employee Participation
1. The parties will transform the Company into an Aktiengesellschaft (German
stock corporation), changing its legal form before September 30, 1998,
provided that the terms of the restructuring, as set forth in the
documents to be prepared in connection therewith, are acceptable to the
Investor. In the course of the Company's conversion into an AG, the -
Investor's shares will be changed into preferred convertible stock with
voting rights and liquidation preference ("Vorzugsaktien") as outlined in
annex 17 and the founders' shares will be changed into common stock.
Furthermore, Founder 1 will convert its shareholder loan in the amount of
$10 Mio to be paid over the next 5 years into a shareholder contribution
(EK04) still to be made available to the Company in the same time period.
2. The Founders and the Investor will use their best efforts to agree to the
terms of and to establish an employee stock option model based on the Term
Sheet of June 16, 1998 (annex 1), probably in the form of a right to
convert options into shares ("naked warrants"), to boost the motivation of
the employees of the Company after its transformation into an AG.
3. The documents to be agreed upon in the course of the conversion will
conform as close as possible to the originally agreed corporate documents.
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Part 2
------
(S) 3
Assurances and Warranties
In concluding this Agreement, the Investor assumes the veracity of the
statements and explanations given by the Founders and the Company in this
Agreement including annexes, especially the following ones. The Founders and the
Company are aware that the information contained in this Agreement, aside from
the examinations and investigations carried out by the Investor, is the basis of
the Investor's participation. The Founders, subject to the limitations of Part 3
(S) 4, section 1, declare explicitly and stand behind the following declarations
as complete and correct as of the date of this Agreement and as of the date of
Closing, insofar as the following individual explanations do not refer to
specific shareholders, as an independent guarantee in the sense of (S) 305 of
the Bugerliches Gesetzbuch (German Civil Code).
I. Establishment and Continued Existence
1. The Company was established on February 5, 1998 under the name "RM
9810 Vermogensverwaltungs GmbH" and registered with the Local Court
of Munich in the Trade Register under 119609. This is a legally
effective Company with limited liability (GmbH) in accordance with
the provisions of the GmbHG (Private Limited Company Act).
2. The Founder 1 acquired on May 5, 1998 all shares of capital of the
Company, changed the Company's name to "Atugen Biotechnology GmbH",
amended and restated the Articles of Association and applied to move
the Company's seat to Berlin, on June 10, 1998, and finally split
its share with the nominal amount of DM 50,000 into one partial
share with the nominal amount of DM 46,000 and four small partial
shares and sold the latter ones to the Founders 2, 8 and 9 as well
as to the Founders 3 to 7 who are holding their share in the nominal
amount of DM 1,600
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jointly. There are no other shares of capital stock of the Company
issued or outstanding.
The Company has never adopted or maintained any stock option plan or
granted any stock options, and there are no options, warrants,
calls, rights, commitments or agreements of any character, written
or oral, to which the Company is a party or by which it is bound or
committed to issue, deliver, sell, repurchase, or redeem, or cause
to be issued, delivered, sold, repurchased or redeemed, any shares
of the capital stock of the Company, or obligating the Company to
issue any such option, with the exception of provisions under Annex
11, warrant call, right, commitment or agreement.
The Company has the right to conduct its business in its present
form and has all requisite power and authority to enter into this
Agreement and any other Related Agreements to which it is a party
and to consummate the transactions contemplated hereby and thereby.
The execution and delivery of this Agreement and the Related
Agreements to which the Company is a party have been duly authorized
by all corporate action on the part of the Company, and no further
action on the part of the Company is required to authorize the
Agreement, the Related Agreements and the transactions contemplated
hereby and thereby. For purposes of this Agreement, the term
"Related Agreements" shall mean ancillary agreements contemplated by
this Agreement to be executed and delivered in connection with the
transactions contemplated hereby.
3. The object of the enterprise is the research, development, and
commercialization of biotechnological and pharmaceutical products
and services, however not for the ultimate consumer. Excluded from
the foregoing is, in particular, the production of such products
whose purpose is the de-
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livery to others as far as pharmaceutical drugs are qualified in the
sense of the Pharmaceutical Product Law.
4. The Founders have given the Investor a copy of the June 10, 1998
version of the Articles of Association (annex 3) which is the
current registered version. Supplementary contracts and additional
agreements affecting shareholders' rights do not exist.
5. The excerpt from the Trade Register in Munich/Berlin as seen in
annex 4 shows the current legal position correctly and completely
with the exception of the appointment of Dr. Potzsch as general
manager which has been effected by a shareholders' meeting of July
10, 1998, but has not yet been registered in the trade register
because of the pending seat transfer to Berlin.
6. The only persons entitled to represent the Company and to execute
documents on its behalf according to its Articles of Association and
otherwise solely are:
Dr. Ralph Earl Christoffersen
Dr. Jorg Potzsch
7. The nominal share or capital of the Company amounts to DM 50,000. It
is fully paid, and refund payments have not occurred since the
acquisition of the shares through the Founders or earlier.
8. The present shareholders of the Company and the nominal shares
distributed to them are stated in annex 5.
The Founders 1, 2, 8 and 9 each hold their shares as sole owners in
their own name and on their own account. The Founders 3 to 7 hold
their share jointly in their name and on their own account. All of
the shares,
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with the exception of provisions under Annex 11, are free of any
rights of third parties, of whatever sort, and there are no claims
for the grant of such rights or the transfer of shares. The shares
are in particular not pledged or attached or burdened. With the
exception of the obligations resulting from the Articles of
Association with regard to shares of capital, there are in
particular no right of pre-emption, options or similar rights of
third parties. The shares are not subject to executorship or the
conditions of provisional or reversionary succession.
9. Silent shareholders, partiaric loans, royalties or other obligations
in regard to the distribution of the profits and losses of the
Company do not exist.
10. Apart from the Articles of Association of the Company listed in
Annex 3 and other Agreement, resolutions, and promises mentioned
explicitly in this Agreement and its annexes, there are neither any
contracts, resolutions nor promises of any which would regulate the
relationship between the Company and the shareholders or the legal
relationships of the Company or the appointments to a body of the
Company or obligations to conclude such contracts, resolutions or
promises.
11. At no time has a petition to open bankruptcy/composition proceedings
with regard to the assets of the Company or a winding-up resolution
been made.
II. Declarations with of Assets and Financial Standing
1.a) The Company has no binding obligations with regard to taxes or
social insurance contributions or other contributions for an
employee's pension, warranty or guarantee contracts, bills of
exchange or suretyships.
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1.b) Pension obligations do not exist. Promises for pensions have not
been made.
1.c) The Company has no contingent liability arising from suretyships,
guarantees, etc. with the exception of the normal warranties arising
within the framework of the proper Company management. The same
applies to all shareholders of the Company in relation to the
Company.
1.d) Hidden distributions of profits did not occur.
1.e) The Company is not overindebted or insolvent.
2. The Company is entitled to the full, exclusive and unencumbered
ownership of each of the assets of the Company at the moment of the
capital increase including, but not limited to full, unlimited and
unencumbered ownership or exclusive licenses as set out in annex 14
and also possession of all tangible and intangible assets which
currently serve the business activity of the Company or which are
designated to serve it. The assets of the Company are not liable for
the obligations of third parties.
3. Since the date of its formation, the Company has been managed within
the framework of the normal and proper course of business. Since its
establishment, no material business incidents or legal transactions
have occurred or were undertaken, and no event which individually or
in conjunction with other events which did or could have
substantially, negatively influenced the assets or profit margin of
the Company occurred
4. Since the date of its formation, the Company has not suffered any
damages or losses which individually or together could have a
material effect on the Company or its financial status. No
distribution of profits or decisions regarding the distribution of
profits have occurred since the acquisition of the shares by the
founders.
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5. The Company owns no real estate.
III. Other Declarations
1. Neither the Company nor the Founders and their direct relatives hold
shares in other enterprises which operate in the field of the
Company (as described in Annex 2) or a direct competitor of the
Company or have business relations with the Company except for
holdings detailed in annex 6.
2. The Founders each individually declare that they are not the owner
of any intellectual property rights (patents, licenses, other
intellectual property rights) on the basis of which any royalty
payment could be demanded from the Company or the Company's business
conduct could be impeded or prohibited world-wide with the
exception of the patents and patent applications of Founder 1 in
accordance with annex 13 which are subject to licenses to the
Company through the license agreement drafted in annex 14 and the
Service Agreement drafted in annex 15.
(a) Annex 21 contains a complete and accurate list of all (i)
patented or registered intellectual property rights owned by
the Company or owned by Founder 1 and being transferred to the
Company in connection with the transactions contemplated
herein, (ii) pending patent applications and applications for
registrations of other intellectual property rights filed by
Founder 1 which relate to the technology to be transferred to
the Company, (iii) material unregistered trade names and
corporate names owned by the Company, (iv) material
unregistered trademarks, service marks, copyrights, mask works
and computer software owned by the Company and (v) all other
intellectual property rights owned by the Company
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that are material to the operation of the business of the
Company as presently conducted and as presently proposed to be
conducted. The items listed on Annex 21 constitute all of the
intellectual property and intellectual property rights
necessary for the operation of the Company's business as
contemplated by this Agreement and the other agreements
contemplated hereby.
(b) Annex 22 also contains a complete and accurate list of (i) all
material licenses and other rights granted by the Company to
any third party with respect to any intellectual property
rights, except with respect to rights granted to customers of
the Company with respect to the Company's products in the
ordinary course of business, (ii) all material licenses and
other rights granted by Founder 1 to any third party with
respect to any intellectual property rights to be transferred
to the Company, and (iii) to the extent not disclosed pursuant
to Paragraph 1(a), all licenses and other rights material to
the operation of the businesses of the Company as presently
conducted and as presently proposed to be conducted, free and
clear of all liens or encumbrances granted by any third party
to the Company with respect to any intellectual property
rights, in each identifying the subject intellectual property
rights.
(c) Except to the extent set forth Annex 21 and the schedule of
exceptions, (i) the Company and Founder 1 collectively own all
right, title and interest in and to all of the intellectual
property rights listed or required to be listed on Annex 21
pursuant to Section 2(a), free and clear of all liens or
encumbrances; (ii) the Company will have pursuant to the
license granted by Founder 1, a valid license to all
intellectual property rights not owned by Founder 1 that are
material to the operation of the contemplated businesses of the
Company as presently conducted and as presently proposed to be
conducted (including but not
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limited to those intellectual property rights listed on Annex
21 pursuant to Sections 2(a), and (b)), free and clear of all
liens or encumbrances, and such license or licenses will not be
terminated as a result of or require any third party consent to
effect an effective transfer via the license to the Company;
(iii) the conduct of the Founder 1's business as it relates to
the technology being licensed to the Company, to the Knowledge
of Founder 1 without having conducted any infringement
analysis, has not infringed, misappropriated or conflicted with
and does not infringe, misappropriate or confilct with any
intellectual property right of other Persons; (iv) Neither the
Company nor Founder 1 has received any notices of, any
infringement or misappropriation by, or conflict with, any
third party with respect to such intellectual property rights
(including, without limitation, any demand or request that the
Company or Founder 1 license any rights from a third party)
nor, to the Company's or Founder 1's knowledge, are there valid
grounds for any such assertion of infringement,
misappropriation or conflict; (v) to the best of the Company's
and Founder 1's knowledge, the intellectual property rights
owned by or licensed to the Company have not been infringed,
misappropriated or conflicted by other persons or entities; and
(vi) Founder 1 has taken all actions reasonably necessary to
maintain and protect the Intellectual Property Rights which
they own.
Each service provider of Founder 1 has executed a proprietary information
and inventions agreement that provides for the confidential treatment of
the intellectual property rights of Founder 1 and the assignment to
Founder 1 of inventions developed in connection with the performance of
services for Founder 1, in the form previously furnished or made available
to the Investors. To the Founder 1's best knowledge, no such service
provider is in violation thereof. To Founder 1's best knowledge, all
relevant technology has been assigned to Founder 1 by all service
providers. Each service provider of the Company will execute a proprietary
information and inventions agreement that provides for the confidential
treatment of the intellectual property rights to be held by the Company
and the assignment to the Company of inventions to be developed in
connection with services performed for the Company.
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3. The Founders declare that since the acquisition of the shares by the
Founders, the Company did not and does not engage in any anti-
competition violations which could have a considerable influence on
the profitability and the longevity of the Company.
4. The Company possesses or is applying for all essential official
approvals and licenses, which are necessary for the management of
the present business enterprise. The Company has not infringed on
the rights of third parties or governing law including competition
laws, commercial business laws, and the provisions of environmental
protection since the acquisition of the shares by the Founders. In
the past, the business enterprise has also not infringed on any
provisions which serve to protect the environment.
5. To the best of the Founders' knowledge, the Company owns or has
entered into agreements to provide it with the production and
procedural know-how as well as all related documents to develop and,
if necessary, to produce and to sell products.
6. To the best of the Founders' knowledge, there are no special
circumstances which could significantly impair the business of the
Company in the future.
7. Annex 7 of this Agreement contains a complete and correct list of
all bank accounts of the Company and all powers granted to employees
for the respective bank accounts.
8. Claims for compensation by an employee as an inventor have not been
submitted to the management since the acquisition of the shares by
the
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Founders. To the best of the Founder's knowledge, the Company
does not use any inventions made by employees other than those to
which it holds title or valid license rights.
9. The Company has not yet established an advisory council.
10. The Company has not been a party to continuing or threatened
lawsuits, arbitration proceedings, tax proceedings, administrative
proceedings, or investigations since the acquisition of the shares
by the Founders. Since this point in time, the Company has not been
subject to any judgements, administrative acts or the like which
would significantly interfere or limit specific business measures
for the acquisition or transfer of assets, for competition, or for
the management of the business enterprise. To the best of the
Founders' and the Company's knowledge, the Company is not delayed in
performance of any contractual or legal obligations to the current
day.
11. Annex 8 of this Agreement contains all obligations to third parties
(e.g. banks, leasing companies, lessors) worth more than DM 50,000
(fifty thousand German marks) per annum which were entered into or
granted with the exception of those concerning employment
relationships.
12. As long as nothing else is revealed by this Agreement, the Company
has delivered all tax returns and all other legally necessary
declarations to the public authorities by the deadline or within an
explicit or implicit extension. The Company has paid all taxes,
prepayment of taxes, and other compulsory public charges due and
withheld all taxes to be withheld, social insurance contributions,
and other compulsory public charges. The Company delivered and/or
paid the foregoing to the re-
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spective recipients within the deadline including all related late
penalties and fines.
13. With the exception of the contracts mentioned explicitly in this
Agreement including its annexes, particularly the enclosed contracts
made with the Founders (annex 11, 12, 14 - 16), in particular the
Company is not a party to contracts of the following kind:
- contracts or other settlements with the Founders, their
relatives, dependent enterprises, or former shareholders;
- contracts with third parties relating to the acquisition of a
share in the Company or similar rights of third parties;
- tenancy agreements, leases, and leasing contracts with a value of
more than DM 50,000 (fifty thousand German marks) per annum
with the exception of the usual contracts for equipment for
utilities, office furnishings, automobiles and operating
equipment ;
- other contracts which individually or together establish an
obligation exceeding DM 100,000 (one hundred thousand German
marks) per annum and with whose fulfillment no party had yet
begun at the time of concluding this contract with the
exception of such contracts which have been concluded in the
normal course of business;
- agreements concerning the purchase or sale of items from the
fixed assets or construction contracts with a value of more
than DM 50,000 (Fifty Thousand German marks);
- commission agreements or the like in connection with the existing
shareholdings;
- contracts which could significantly impair the Company in its
business conduct or in its freedom of competition;
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- collective or Company-specific collective employment agreements.
14. The Company is in compliance with (a) the terms of its Articles of
Association, by-laws or other charter or organizational documents,
(b) all Contracts to which the Company is a party or by or to which
any of them or their assets or Properties may be bound or subject,
(c) all applicable laws, statutes, ordinances, rules, regulations or
other legal requirements, whether federal, state, local or foreign,
and (d) all applicable orders, writs, judgements, injunctions,
awards and decrees of any court, other governmental entity or
arbitrator except, in the case of (b) and (c), such failures to
comply as would not have a material adverse effect. The Company has
not received any written or oral notice of any violation by the
Company of, or default by the Company under, any of the items
described in clauses (a) through (d) above in this paragraph.
15. No consent, approval, order or authorization of, or registration,
qualification, designation, declaration or filing with, any
governmental authority is required on the part of the Company in
connection with the execution and delivery of this Agreement, the
offer, issuance, sale and delivery of the capital stock of the
Company, or the other transactions to be consummated in connection
with this Agreement, except such filings as have been made prior to
and shall be effective before the execution of this Agreement by the
Company.
Part 3
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(S) 4
Liability
1. In case of a violation of assurances or warranties within the meaning of
(S) 3 of this Agreement, the Founders , as co-debtors (debtors jointly and
severally li-
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able) with regard to the Investor and the Company, are obligated to
replace the full damage to the Company or the proportionate damage to the
Investors, even insofar as the damage only affects the Company, upon the
election of the Investor. Damage is the net worth of the difference
between the described or guaranteed state of affairs and the actual state
of affairs or, if the net worth cannot be ascertained, the estimated costs
for bringing about the described or guaranteed state of affairs. However,
the liability of the Founders 2-9 jointly is limited to a maximum of DM
50,000
2. The regulations of German Civil Code (S) 439 para. 1 and (S) 460 are only
applicable to defects which are explicitly disclosed in this agreement.
Moreover the Investor have the right to exercise their rights from this
agreement independently of the fact that if they, their organs,
employees, representatives, advisors or auditors knew or should have known
of the deficiency where they or their advisors were given a sufficient
opportunity for examination. German Civil Code (S) 464 and German
Commercial Code (S) 377 are not applicable.
3. Limitation of Liability in Time
a) The limitation period for all claims of the Investor and the Company
based on this agreement runs until two months after the submission
of the annual report for the financial year of 1999 as far as there
is no longer statutory limitation period valid for the claim.
b) Possible claims in connection with (S) 3 I No. 1- 11 shall expire
after 10 years.
4. Rescission ("Wandlung") and resignation ("Rucktritt") are impossible in
view of the present agreement except on the part of the Investor if a
statement contained in (S) 3 I Nos. 1-11 is incorrect. The right to avoid
this Agreement according to (S) 123 German Civil Code remains unaffected.
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Part 4
------
New Provisions
--------------
(S) 5
Articles of Association / Transformation into an AG
1. The Founders shall change the Articles of Association of the Company in
accordance with annex 10 by a notarized shareholders' resolution.
2. The Company will decide to create an Advisory Council numbering six
members. The first advisory council shall be composed of the following
people:
(advisory council person 1 designated by founder 1, chairman)
(advisory council person 2 designated by founder 1)
(advisory council person 3 designated by investor)
(advisory council person 4 designated by investor)
(advisory council person 5, pharma expert)
(Prof. Ganten, advisory council person 6)
3. The Company shall from time to time:
(i) deliver to the Investor as soon as practicable, but in any event with
in ninety (90) days after the end of each fiscal year of the Company, an
income statement for such fiscal year, a balance sheet of the Company and
a statement of stockholders' equity as of the end of such year, and a
schedule as to the sources and applications of funds for such year, such
year-end financial reports to be in reasonable detail and prepared in
accordance with generally accepted accounting principles;
(ii) deliver to the Investor within thirty (30) days of the end of each
month, an unaudited income statement and schedule as to the sources and
applications of funds and balance sheet for and as of the end of such
month, in reasonable detail;
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(iii) deliver to the Investor as soon as practicable, but in any event
thirty (30) days prior to the end of each fiscal year, a budget and
business plan for the next fiscal year, prepared on a monthly basis,
including balance sheets and sources and applications of funds statements
for such months and promptly after they are prepared, any other budgets or
revised budgets prepared by the Company;
(iv) deliver to the Investor such other information relating to the
financial condition, business, prospects or corporate affairs of the
Company as Investor may from time to time request;
(v) maintain its rights to property, including all intellectual property
and to its facilities in accordance with the best interests of its
stockholders;
(vi) maintain such insurance, including if determined by the Advisory
Council, key person insurance (especially for Drs. Christoffersen and
Usman and any other officers of the Company);
(vii) pay its taxes and other obligations as and when they become due in
the ordinary course of its business;
(viii) notify Investor of any material defaults by the Company, of all
material litigation by or against the Company;
(ix) conduct its business in compliance with all applicable laws and with
its Articles of association ("Gesellschaftsvertrag")
(x) maintain a proper system of internal accounting controls;
(xi) maintain in full force and effect the License Agreement and the
Services Agreement between the Company and Founder 1, subject to the
Termination provision therein.
4. The Company commits itself to announce the new Articles of Association
after the corresponding shareholders` resolution to the Trade Register
without delay. Possible later changes to the Articles of Association shall
be effected in accordance with the law and the Articles of Association.
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(S) 6
Technology, Know-How, Advisory, Service Agreements and Loan Agreements
1. The Company has concluded an employment agreement for the position of
general manager with Dr. Christoffersen and Dr. Potzsch in accordance with
annex 11.
2. The Company has concluded individual employment contracts with Mr. Andre
Hansen in accordance with annex 12.
3. The Company has concluded a License Agreement and a Service Agreement with
the Founder 1 in accordance with annex 14.
4. The Company has concluded a Service Agreement with the Founder 1 in
accordance with annex 15.
5. The Company has concluded a Loan Agreement with the Founder 1 in
accordance with annex 16.
(S) 7
Commitment under the Law of Obligations to the New Articles of Association
Even before adoption of the resolution necessitated by the increase of capital
and the change of the Articles of Association, the shareholders are obligated to
observe the interests of the Investor and to maintain the orderly continuation
of the Company. Until the registration of the increase of capital, the Founders
will not resolve to or undertake any distribution of profits.
(S) 8
Costs
All costs of the parties to this Agreement, including reasonable legal fees and
related out-of-pocket expenses, in connection with the conclusion of this
Agreement, the increase of capital, the subscription to the new shares, the
change of the Articles of Association, the
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application for registration in the Trade Register, and other parts of the
transaction directly concerning the Company's relationships are to be borne by
the Company.
(S) 9
Condition of Postponement
This Agreement is subject to the postponement condition that the investors
effectively sign their take-over (assumption) declarations in accordance with
(S) 1 paragraph 3 within two months of the signing of this Agreement.
(S) 10
General Provisions
1. The agreements reached in the term sheet of June 16, 1998, insofar as they
are regulated in detail in this Agreement including annexes, are rescinded
with the effectiveness of this Agreement; so that in the future only
individual points, in particular those in relation to the future
transformation of the Company into a stock corporation with limited
liability, shall have effect.
2. Should any of the provisions of this Agreement prove to be invalid or
should this agreement contain omissions, the efficacy of the remaining
provisions shall not be disturbed. In lieu of the invalid provision, the
valid provision, which comes closest to fulfilling the intended economic
purpose of the invalid provision, shall be deemed agreed upon. In the case
of omissions, the provision, which represents the meaning and intention of
this agreement and would have been agreed to if the parties had been aware
of it shall be deemed agreed upon.
3. The validity of this Agreement is not conditional on access to a copy of
this Agreement signed by all the parties.
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4. Alterations and supplements to this Participation Agreement necessitate a
writing, provided the law does not stipulate a stricter form. The
requirement of the written form can only be cancelled by a written
agreement of all parties to this agreement.
5. Exclusive place of jurisdiction and venue for all disputes in connection
with the participation created by this agreement is Berlin, insofar this
is legally permissible.
6. The annexes to this Agreement are an essential part of it. The headings in
this Agreement only serve for a better orientation and are of no
significance for the content and interpretation of this agreement.
Explanations in a provision or annex of this Agreement are also deemed
listed for purposes of all other provisions or annexes.
7. A German and an English version of this Agreement exist. Only the English
version of this Participation Agreement is binding.
Boulder, August 24, 1998
--
/s/ Larry Bullock
-------------------------------------------------
RIBOZYME PHARMACEUTICALS, Inc.
Founder 1
/s/ Ralph E. Christoffersen
-------------------------------------------------
Dr. Ralph Earl Christoffersen
Founder 2
/s/ Larry Bullock
-------------------------------------------------
Mr. Larry Bullock
Founder 3
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/s/ Nassim Usman
-------------------------------------------------
Dr. Nassim Usman
Founder 4
/s/ James Thompson
-------------------------------------------------
Dr. James Thompson
Founder 5
/s/ Alene Holzman
-------------------------------------------------
Ms. Alene Holzman
Founder 6
/s/ Thomas Rossing
-------------------------------------------------
Dr. Thomas Rossing
Founder 7
Boston, August __, 1998
BB BIOVENTURES L.P.
By: /s/ Luke Evnin
Name: Luke Evnin
Title: Managing Director
Berlin, August 31 , 1998
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/s/ Jorg Potzsch
-------------------------------------------------
Dr. Jorg Potzsch
Founder 8
/s/ Thomas Walther
-------------------------------------------------
Dr. Thomas Walther
Founder 9
/s/ Ralph E. Christoffersen
-------------------------------------------------
Atugen Biotechnology GmbH
Company
List of Annexes
---------------
to the
------
Participation Agreement
-----------------------
Annex 1: Signed Term Sheet of June 16,1998
Annex 2: Business Plan in the version of July 30, 1998
Annex 3: Minutes from the shareholders' meeting of June 10, 1998
including the Articles of Association
Annex 4: Excerpt from the Trade Register
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Annex 5: List of Shareholders
Annex 6: Shareholdings in other Companies Which Are Active in
the Field of the Company or a Related Field or Are in a
Business Relationship with the Company
Annex 7: Bank Accounts of the Company
Annex 8: Obligations of the Company Exceeding DM 50,000
Annex 9: List of Employees
Annex 10: Draft of the New Articles of Association
Annex 11: Employment Contracts for the General Manager(s)
Annex 12 Employment Contract
Annex 13 Patents and applications for patents of founder 1
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Annex 14 License Agreement
Annex 15 Service Agreement
Annex 16 Loan Agreement
Annex 17 Rights of Preferred Stock
Annex 18 Letter of Intent (BMBF)
Annex 19 Letter of Intent (Senate of Berlin)
Annex 20 Cap table
Annex 21 Founder 1 Patents and Trademark
Annex 22 List of Existing Licensees
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