Exhibit 10.13
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT is entered into as of February 23, 2004,
between: Houston Pharmaceuticals, Inc., a Texas corporation (the "SELLER"), and
Callisto Pharmaceuticals, Inc., a Delaware corporation (the "PURCHASER").
RECITALS
WHEREAS, the Seller owns and wishes to sell and transfer the 784 Patent
Rights (as defined in Exhibit A hereto and subject to certain pre-existing
rights) to the Purchaser, and the Purchaser wishes to purchase and acquire such
patent rights; and
WHEREAS, as part of the transactions contemplated by this Agreement, the
Purchaser and the Seller will enter into the Sublicense Agreement (as defined
below), whereby the Seller will grant the Purchaser a world-wide exclusive
license (subject to certain pre-existing rights) to the 412 Patent Rights (as
defined in Exhibit A hereto and, together with the 784 Patent Rights, the
"PATENT RIGHTS"), on the terms and subject to the conditions set forth in the
Sublicense Agreement.
NOW, THEREFORE, in consideration of the representations, warranties,
agreements and conditions set forth in this Agreement and other good and
valuable consideration, the sufficiency of which is hereby acknowledged, the
parties agree as follows:
AGREEMENT
The parties to this Agreement, intending to be legally bound, agree as
follows:
1. SALE OF PATENT RIGHTS; GRANT OF LICENSE; RELATED TRANSACTIONS.
1.1 SALE OF PATENT RIGHTS. The Seller shall sell, assign, transfer,
convey and deliver to the Purchaser, at the Closing (as defined below), good and
valid title to the 784 Patent Rights (as defined in EXHIBIT A hereto), free and
clear of any encumbrances, except Permitted Encumbrances, on the terms and
subject to the conditions set forth in this Agreement. "PERMITTED ENCUMBRANCES"
shall mean those rights retained by the University of Texas System pursuant to
that certain Release of Invention, executed by the University of Texas System in
favor of Waldemar Priebe, Marta Krawczyk, Piotr Skibicki, Izabela Fokt,
Krzysztof Dziewiszek, Grzegorz Grynkiewicz, and Roman Perez-Soler on January 31,
2000 (the "RELEASE"). Under the terms of the Release, the University of Texas
System and its components hold a royalty-free, non-exclusive license to use the
784 Patent Rights in educational, research and patient-care activities.
1.2 GRANT OF LICENSE. Subject to the terms and conditions of this
Agreement, at the Closing, the Seller shall grant to the Purchaser an exclusive,
world-wide license to the 412 Patent Rights, on the terms and subject to the
conditions set forth in the Sublicense Agreement, in the form of EXHIBIT B
hereto (the "SUBLICENSE AGREEMENT").
1.3 CONSIDERATION.
(a) At the Closing, the Purchaser shall issue to the Seller:
(i) 25,000 shares of common stock of the Purchaser (the
"CLOSING SHARES"); and
(ii) options to purchase an aggregate of 1,170,000 shares
of common stock of the Purchaser at an exercise price equal to the
closing price of the Purchaser's common stock on the date hereof, as
quoted on the Over the Counter Bulletin Board ("OTCBB"), which such
options shall vest as set forth in EXHIBIT C hereto (the "CLOSING
OPTION").
(b) In addition to the consideration payable to the Seller
pursuant to Section 1.3(a), the Purchaser agrees to pay to the Seller a royalty
equal to two percent (2%) of Net Sales of Products. Royalties under this Section
1.3(b) shall be paid annually during the period of time commencing on the first
commercial sale of a Product and ending upon the expiration of the last to
expire of the 784 Patent Rights.
(i) "NET SALES" shall mean the gross amounts received by
the Purchaser or its affiliates or licensees for the sale of Products to
third parties, less the following: (a) discounts actually granted, (b)
credits, rebates or allowances actually granted upon claims, damaged
goods, rejections or returns of Products, including recalls, (c) freight,
postage, shipping and insurance charges actually allowed or paid for
delivery of Products, to the extent billed, and (d) taxes, duties or
other governmental charges (other than income taxes) levied on, absorbed
or otherwise imposed on sales of Products.
(ii) "PRODUCT" shall mean any product developed,
manufactured or sold by the Purchaser or its affiliates or licensees,
which, when made, used or sold would, but for the sale of the 784 Patent
Rights to the Purchaser pursuant to this Agreement, constitute an
infringement of a valid, enforceable and unexpired claim within the 784
Patent Rights.
(c) In addition to the consideration payable to the Seller
pursuant to Sections 1.3(a) and 1.3(b), in the event that the Purchaser
achieves any of the milestones listed on Exhibit C hereto after such time
as the Closing Option has become fully vested, then the Purchaser and
Seller shall mutually determine an additional number of options to
purchase shares of the common stock of the Purchaser to be issued by the
Purchaser to the Seller; PROVIDED, that such number shall not be less
than the number of options that would have vested as a result of
achievement of such milestone had the Closing Option not been
fully-vested at the time such milestone was achieved (the "MILESTONE
OPTIONS" and, together with the Closing Option, the "OPTIONS"). Any stock
options issued to the Seller pursuant to this Section 1.3(c) shall be
fully-vested and shall be issued at an exercise price equal to the
closing price of the Purchaser's common stock on the date of grant, as
quoted on the OTCBB.
1.4 SALES TAXES. The Purchaser shall bear and pay, and shall reimburse
the Seller for, any sales taxes, use taxes, transfer taxes, documentary charges,
recording fees or similar taxes,
2.
charges, fees or expenses that may become payable in connection with the
transfer of the 784 Patent Rights to the Purchaser or in connection with any of
the other transactions contemplated by this Agreement.
1.5 CLOSING.
(a) The closing of the sale of the 784 Patent Rights to the
Purchaser (the "CLOSING") shall take place at the offices of Paul, Hastings,
Janofsky & Walker LLP in San Diego, California, at 10:00 a.m. on the date
hereof. For purposes of this Agreement, "CLOSING DATE" shall mean the date as of
which the Closing actually takes place.
(b) At the Closing:
(i) the Seller shall execute and deliver to the
Purchaser a bill of sale, assigning, conveying, transferring and
delivering to the Purchaser good and valid title to the 784 Patent Rights
free and clear of any encumbrances, except Permitted Encumbrances;
(ii) the Purchaser shall deliver to the Seller a
certificate representing 25,000 shares of common stock of the Purchaser
and an option to purchase 1,170,000 shares of common stock of the
Purchaser, as contemplated by Section 1.3(a);
(iii) the Purchaser shall pay to the Seller $100,000 for
the reimbursement of fully-burdened costs and expenses incurred prior to
the Closing Date by the Seller in connection with the Seller's patent
rights, including, without limitation, fully-burdened costs and expenses
associated with acquiring and maintaining such patent rights;
(iv) the Purchaser shall pay to the Seller up to $3,500
for the reimbursement of legal fees and expenses incurred by the Seller
in connection with the Transaction Agreements and the Transactions (each
as defined below); and
(v) the Seller and the Purchaser shall execute and
deliver the Sublicense Agreement.
2. REPRESENTATIONS AND WARRANTIES OF THE SELLER.
The Seller represents and warrants as of the date of this
Agreement that each of the following representations and warranties is true and
correct:
2.1 DUE ORGANIZATION. The Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of Texas.
2.2 AUTHORITY; BINDING NATURE OF AGREEMENT. The Seller has the
corporate power and authority to enter into and to perform its obligations under
this Agreement and the Sublicense Agreement (together, the "TRANSACTION
AGREEMENTS"); and the execution, delivery and performance by the Seller of the
Transaction Agreements has been duly authorized by all
3.
necessary action on the part of the Seller. The Transaction Agreements
constitute the valid and binding obligations of the Seller, enforceable against
the Seller in accordance with their terms, subject to any applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws now or hereinafter in
effect relating to creditors' rights generally or to general principles of
equity.
2.3 NON-CONTRAVENTION. The execution, delivery and performance of the
Transaction Agreements by the Seller, and the consummation by the Seller of the
transactions contemplated by the Transaction Agreements (the "TRANSACTIONS"), do
not and will not (a) contravene or conflict with the organizational documents of
the Seller, (b) to the knowledge of the Seller, contravene or conflict with or
constitute a material violation of any provision of any applicable legal
requirement binding upon or applicable to the Seller, or (c) contravene or
constitute a default under any material contract of the Seller, in the case of
each of (a), (b) and (c), except as would not have a material adverse effect on
the Seller.
2.4 PATENT RIGHTS.
(a) The Seller exclusively owns all right, title, and interest
to and in the 784 Patent Rights, free and clear of any encumbrances, except
Permitted Encumbrances. Without limiting the generality of the foregoing:
(i) All documents and instruments necessary to perfect
the rights of the Seller in the 784 Patent Rights have been validly
executed, delivered, and filed in a timely manner with the appropriate
governmental body.
(ii) Each person who is or was involved in the creation
or development of the 784 Patent Rights has signed a valid, enforceable
agreement containing an assignment of intellectual property rights to the
Seller. No current or former stockholder, officer, director, or employee
of the Seller has any claim, right (whether or not currently
exercisable), or interest to or in the 784 Patent Rights.
(iii) The Seller has not assigned or otherwise transferred
ownership of, or agreed to assign or otherwise transfer ownership of, the
784 Patent Rights to any other person or licensed to any person any
rights with respect to the 784 Patent Rights.
(b) The 784 Patent Rights are valid, subsisting, and
enforceable. Without limiting the generality of the foregoing:
(i) Any U.S. patent application within the 784 Patent
Rights was filed within one year of the first printed publication, public
use or offer for sale of the invention described in such patent.
(ii) No interference, opposition, reissue, reexamination,
or other proceeding of any nature is or has been pending or, to the
knowledge of the Seller, threatened, in which the scope, validity, or
enforceability of the 784 Patent Rights is being contested or challenged.
4.
2.5 PROCEEDINGS; ORDERS. There is no pending proceeding, and to
Seller's knowledge, no person has threatened to commence any proceeding that
challenges, or that may have the effect of preventing, delaying, making illegal
or otherwise interfering with, any of the Transactions. There is no order to
which the 784 Patent Rights is subject.
2.6 LIMITED WARRANTY. Except as otherwise provided herein, the 784
Patent Rights are sold "AS IS" and without WARRANTY OF MERCHANTABILITY or
WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE or any other warranty, express or
implied. The Seller makes no representation or warranty that the use of the 784
Patent Rights will not infringe any other patent or other proprietary rights.
2.7 INVESTMENT REPRESENTATIONS.
(a) THE SELLER BEARS ECONOMIC RISK. The Seller must bear the
economic risk of this investment indefinitely unless the Closing Shares or the
shares of Purchaser common stock issued upon exercise of the Options are
registered pursuant to the Securities Act of 1933, as amended (the "SECURITIES
ACT"), or an exemption from registration is available. The Seller also
understands that there is no assurance that any exemption from registration
under the Securities Act will be available and that, even if available, such
exemption may not allow the Seller to transfer all or any portion of the shares
of the common stock of the Purchaser to be received by the Seller pursuant to
this Agreement under the circumstances, in the amounts or at the times the
Seller might propose.
(b) ACQUISITION FOR OWN ACCOUNT. The Seller is acquiring the
common stock of the Purchaser to be received by the Seller pursuant to this
Agreement for its own account for investment only, and not with a view towards
distribution.
(c) THE SELLER CAN PROTECT ITS INTEREST. The Seller represents
that by reason of its, or of its management's, business or financial experience,
the Seller has the capacity to protect its own interests in connection with the
transactions contemplated by this Agreement. Further, the Seller is aware of no
publication of any advertisement in connection with the transactions
contemplated by this Agreement.
(d) COMPANY INFORMATION. The Seller has had an opportunity to
discuss the Purchaser's business, management and financial affairs with
directors, officers and management of the Purchaser and has had the opportunity
to review the Purchaser's operations and facilities. The Seller has also had the
opportunity to ask questions of and receive answers from the Purchaser and its
management regarding the terms and conditions of this investment.
(e) TRANSFER RESTRICTIONS. The Seller will not sell or
otherwise transfer the Closing Shares, the Options or any shares of Purchaser
common stock received upon exercise of the Options without registration under
the Securities Act or unless an exemption from registration is available.
(f) RULE 144. The Seller acknowledges and agrees that the
common stock of the Purchaser to be received by the Seller pursuant to this
Agreement must be held indefinitely unless it is subsequently registered under
the Securities Act or an exemption from such
5.
registration is available. The Seller is aware that the Closing Shares and any
shares of Purchaser common stock issued to the Seller upon exercise of the
Options are "restricted securities," as such term is defined in Rule 144
promulgated under the Securities Act. The Seller has been advised or is aware of
the provisions of Rule 144 promulgated under the Securities Act as in effect
from time to time, which permits limited resale of shares purchased in a private
placement subject to the satisfaction of certain conditions, including, among
other things: the availability of certain current public information about the
Purchaser, the resale occurring following the required holding period under Rule
144 and the number of shares being sold during any three-month period not
exceeding specified limitations.
(g) NO REPRESENTATIONS OR WARRANTIES. No representations or
warranties have been made to the Seller by the Purchaser or any officer,
director, employee, agent, affiliate or subsidiary of the Purchaser other than
those contained herein, and in accepting shares of common stock of the
Purchaser, the Seller is not relying on any representations other than those
contained herein.
(h) RESIDENCE. The office of the Seller in which its investment
decision was made is located at the address of the Seller set forth in Section
6.3.
(i) LEGEND. The Seller understands and acknowledges that any
shares of common stock of the Purchaser to be received by the Seller pursuant to
this Agreement shall bear a legend substantially as follows until such time as
(a) such securities shall have been registered under the Securities Act, or (b)
in the opinion of counsel for the Purchaser such securities may be sold without
registration under the Securities Act as well as any applicable state securities
laws:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OR ANY STATE SECURITIES LAW AND MAY NOT
BE PLEDGED, HYPOTHECATED, SOLD OR TRANSFERRED UNLESS REGISTERED AND QUALIFIED
UNDER THE SECURITIES ACT AND, IF APPLICABLE, STATE SECURITIES LAWS, OR IN THE
OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY SUCH REGISTRATION AND
QUALIFICATION ARE NOT REQUIRED."
The Purchaser shall reimburse the Seller for the reasonable
legal costs incurred by the Seller in obtaining an opinion of counsel reasonably
satisfactory to the Purchaser in connection with the sale by the Seller of the
Closing Shares and any shares of Purchaser common stock received by the Seller
upon exercise of the Options.
3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.
The Purchaser represents and warrants, to and for the benefit of the
Seller that each of the following representations and warranties is true and
correct:
3.1 DUE ORGANIZATION; ETC. The Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. The Purchaser is qualified, authorized, registered or licensed to do
business as a foreign corporation in any jurisdiction where its business
requires such qualification; PROVIDED, HOWEVER, that the
6.
Purchaser's Application for Authority in New York is pending clearance from the
New York Department of Taxation and Finance.
3.2 AUTHORITY; BINDING NATURE OF AGREEMENTS. The Purchaser has the
corporate power and authority to enter into and perform its obligations under
each of the Transaction Agreements, including, without limitation, the issuance
and delivery of the Closing Shares and the Options and the reservation of the
shares of common stock of the Purchaser issuable upon exercise of the Options,
and the execution and delivery by the Purchaser of each Transaction Agreement
has been duly authorized by all necessary action on the part of the Purchaser
and its board of directors. Each Transaction Agreement constitutes the legal,
valid and binding obligation of the Purchaser, enforceable against it in
accordance with its terms, subject to any applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws now or hereinafter in effect relating
to creditors' rights generally or to general principles of equity.
3.3 PURCHASER COMMON STOCK. The Closing Shares and the Closing
Options, and the shares of common stock of the Purchaser issuable upon exercise
of the Closing Options after the Closing Date, have been duly and validly
reserved for issuance. When issued in compliance with the provisions of this
Agreement, the Closing Shares and the Options, and the shares of common stock of
the Purchaser issuable upon exercise of the Options after the Closing Date, will
be, when so issued, (i) duly authorized, validly issued, fully paid and
nonassessable, (ii) free of any liens or encumbrances, (iii) free of preemptive
rights created by statute, the Purchaser's certificate of incorporation or
bylaws or any agreement to which the Purchaser is a party or by which the
Purchaser is bound, and (iv) issued in compliance with all applicable federal
and state securities laws.
3.4 NON-CONTRAVENTION. The execution, delivery and performance of the
Transaction Agreements by the Purchaser and the consummation of the Transactions
do not and will not (a) contravene or conflict with the certificate of
incorporation or bylaws of the Purchaser, (b) to the knowledge of the Purchaser,
contravene or conflict with or constitute a material violation of any provision
of any applicable legal requirement binding upon or applicable to the Purchaser,
or (c) contravene or constitute a default under any material contract of the
Purchaser, in the case of each of (a), (b) and (c), except as would not have a
material adverse effect on the Purchaser.
3.5 PROCEEDINGS; ORDERS. There is no pending proceeding, and no person
has threatened to commence any proceeding: (i) that could result in a material
adverse effect to the Purchaser (whether or not the Purchaser is named as a
party thereto); or (ii) that challenges, or that may have the effect of
preventing, delaying, making illegal or otherwise interfering with, any of the
Transactions. No event has occurred, and no claim, dispute or other condition or
circumstance exists, that could directly or indirectly give rise to or serve as
a basis for the commencement of any such proceeding. There is no proposed order
that, if issued or otherwise put into effect, (i) could result in a material
adverse effect to the Purchaser, or (ii) may have the effect of preventing,
delaying, making illegal or otherwise interfering with any of the Transactions.
7.
3.6 SEC DOCUMENTS AND OTHER REPORTS. The Purchaser has filed all
required documents with the Securities and Exchange Commission ("SEC") since
January 1, 2003 (the "PURCHASER SEC DOCUMENTS"). As of the respective dates such
documents were filed with the SEC (or, if amended or superceded by a filing
prior to the date of this Agreement, then on the date of such filing), the
Purchaser SEC Documents complied in all material respects with the requirements
of the Securities Act or the Securities Exchange Act of 1934, as amended (the
"EXCHANGE ACT"), as the case may be, and, at the respective times they were
filed (or if amended or superceded by a filing prior to the date of this
Agreement, then on the date of such filing), none of the Purchaser SEC Documents
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading. The
consolidated financial statements (including, in each case, any notes thereto)
of Purchaser included in the Purchaser SEC Documents, with the exception of the
audited financial statements of Callisto Research Labs, LLC (formerly Callisto
Pharmaceuticals, Inc.) for the years ended December 31, 2001 and 2002, included
in the Current Report on Form 8-K, filed by the Purchaser on May 15, 2003,
complied as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto, were prepared in accordance with generally accepted accounting
principles ("GAAP") (except, in the case of the unaudited statements, as
permitted by Form 10-Q of the SEC) applied on a consistent basis during the
periods involved (except as may be indicated therein or in the notes thereto)
and fairly presented in all material respects the consolidated financial
position of Purchaser and its consolidated subsidiaries as at the respective
dates thereof and the consolidated results of their operations and their
consolidated cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments and to any other
adjustments described therein which will not, individually or in the aggregate,
be material in amount). Except as disclosed in the Purchaser SEC Documents or as
required by GAAP, Purchaser has not, since September 30, 2003, made any change
in the accounting practices or policies applied in the preparation of financial
statements.
4. OTHER AGREEMENTS.
4.1 DEVELOPMENT AND COMMERCIALIZATION EFFORTS. From and after the
Closing Date, the Purchaser shall use its commercially reasonable efforts to
develop and commercialize at least one drug candidate resulting from the 784
Patent Rights that meets the Purchaser's criteria for clinical development. In
the event the Board of Directors of the Purchaser shall determine to abandon its
development and commercialization efforts with respect to the 784 Patent Rights,
the Board of Directors of the Purchaser shall notify the Seller in writing
within 10 days of the Board's determination (the "NOTICE"), and the Seller shall
have the right, in its sole discretion, to repurchase the 784 Patent Rights from
the Purchaser at a price to be mutually agreed to by the parties in good faith;
PROVIDED, that such price shall not exceed the fair market value of that portion
of the consideration received by the Seller for such patent rights pursuant to
this Agreement plus the aggregate amount spent by the Purchaser to maintain the
784 Patent Rights from the Closing Date. In order to exercise its right to
repurchase the 784 Patent Rights pursuant to this Section 4.1, the Seller must
notify the Purchaser, in writing, of its intent to repurchase within 30 days
after receipt of the Notice by the Seller. Any sale or license of the 784
8.
Patent Rights by the Purchaser shall not trigger the Seller's right to
repurchase the 784 Patent Rights pursuant to this Section 4.1.
4.2 OWNERSHIP OF DEVELOPMENTS. The Purchaser shall own the entire
right and title in all inventions, discoveries, improvements or other
technology, whether or not patentable, and any patent applications or patents
based thereon, made or conceived during and as a result of the research,
development and commercialization of the Patent Rights by the Purchaser
(collectively, the "DEVELOPMENTS"). In addition, the Seller agrees that the
Purchaser will own all quantitative and qualitative information and test results
or reports arising from the research, development, and commercialization of the
Patent Rights. In the event that the Seller exercises its right to repurchase
the 784 Patent Rights pursuant to Section 4.1 above, the Purchaser agrees to
grant the Seller, on commercially reasonable terms, a non-exclusive license to
use any of the Developments that, in the reasonable discretion of the Seller,
are necessary to enable the Seller to develop and commercialize any drug
candidates resulting from the 784 Patent Rights.
5. INDEMNIFICATION, ETC.
5.1 SURVIVAL OF SELLER REPRESENTATIONS. Except as otherwise set forth
in this Section 5.1, (a) the representations and warranties of the Seller set
forth in Section 2 (except that representation that is specifically referenced
in subsection (b) below) shall expire at 11:59 p.m. (PST) on the twelve-month
anniversary of the Closing Date, and (b) the representation of the Seller set
forth in Section 2.4(a)(iii) shall expire on the 10 year anniversary of the
Closing Date. Notwithstanding anything to the contrary contained herein, if a
claim notice relating to any representation or warranty set forth in any of the
provisions of Section 2 is given to the Seller on or prior to the expiration
date for such representation or warranty, then, notwithstanding anything to the
contrary contained in this Section 5.1, such representation or warranty shall
not so expire, but rather shall remain in full force and effect until such time
as any breach of such representation or warranty has been fully and finally
resolved, either by means of a written settlement agreement executed on behalf
of the Seller and the Purchaser or by means of a final, non-appealable judgment
issued by a court of competent jurisdiction.
5.2 INDEMNIFICATION BY THE SELLER.
(a) From and after the Closing Date, the Seller shall hold
harmless and indemnify the Purchaser from and against, and shall compensate and
reimburse the Purchaser for, any damages, costs or expenses that are suffered or
incurred by the Purchaser and that arise from or as a result of any breach of
any of the representations or warranties made by the Seller in Section 2 of this
Agreement.
(b) The Seller shall not be required to make any
indemnification payment pursuant to Section 5.2(a) until such time as the total
amount of all damages, costs or expenses that have been suffered or incurred by
the Purchaser exceeds $2,500. If the total amount of such damages exceeds
$2,500, the Purchaser shall be entitled to be indemnified against and
compensated and reimbursed for the entire amount of such damages, and not merely
the portion of such damages exceeding $2,500.
9.
(c) Notwithstanding anything in this Agreement to the contrary,
Seller's aggregate liability for any indemnification payments pursuant to
Section 5.2(a) will be limited to, and shall not exceed, an amount equal to the
fair market value of the Closing Shares on the date hereof, based on the closing
price of the Purchaser's common stock on the date hereof, as quoted on the OTCBB
(the "SHARES CAP"). Prior to the date that any of the Closing Shares may be sold
by the Seller in open market transactions, all claims for indemnification which
are finally determined shall be satisfied by the return to the Purchaser of that
number of Closing Shares having a value equal to the total amount of any such
claim. Notwithstanding the above, if the Seller's aggregate liability for
indemnification pursuant to Section 5.2(a) exceeds the Shares Cap (such excess
shall be referred to herein as the "EXCESS AMOUNT"), at such time as the
Seller's liability for the Excess Amount becomes final, the Purchaser shall be
entitled to cancel a number of unvested Closing Options equal in value to the
Excess Amount. The number of unvested Closing Options to be cancelled pursuant
to the preceding sentence shall be determined by dividing the Excess Amount by
the difference between (i) the closing price of the Purchaser's common stock on
the date that the indemnification claim becomes final, as quoted on the
principal stock exchange on which the Purchaser's common stock is listed or, if
not listed on a national stock exchange, as quoted on the OTCBB or other
quotation system, and (ii) the per share exercise price of the Closing Options.
In the event that (i) the Seller's aggregate liability for indemnification
payments pursuant to Section 5.2(a) shall exceed the Shares Cap, (ii) all
unvested Closing Options shall have been cancelled pursuant to this Section
5.2(c), and (iii) the Seller shall have additional unpaid liability for
indemnification payments pursuant to Section 5.2(a) solely resulting from the
Seller's breach of its representation set forth in Section 2.4(a)(iii) (such
unpaid liability shall be referred to herein as the "ADDITIONAL AMOUNT"), the
Seller shall be required to pay the Purchaser a cash payment equal to such
Additional Amount; PROVIDED, HOWEVER, that the Seller's aggregate liability for
the Additional Amount shall be limited to, and shall not exceed, $100,000.
6. MISCELLANEOUS PROVISIONS.
6.1 FURTHER ASSURANCES. Each party hereto shall execute and/or cause
to be delivered to each other party hereto such instruments and other documents,
and shall take such other actions, as such other party may reasonably request
(at or after the Closing) for the purpose of carrying out or evidencing any of
the Transactions.
6.2 ATTORNEYS' FEES. If any legal action or other legal proceeding
relating to any of the Transaction Agreements or the enforcement of any
provision of any of the Transaction Agreements is brought between the parties to
this Agreement, the prevailing party shall be entitled to recover reasonable
attorneys' fees, costs and disbursements (in addition to any other relief to
which the prevailing party may be entitled).
6.3 NOTICES. Any notice or other communication required or permitted
to be delivered to any party under this Agreement shall be in writing and shall
be deemed properly delivered, given and received when delivered (by hand, by
registered mail, by courier or express delivery service or by facsimile) to the
address or facsimile telephone number set forth beneath the name of such party
below (or to such other address or facsimile telephone number as such party
shall have specified in a written notice given to the other parties hereto):
10.
IF TO THE SELLER: Houston Pharmaceuticals, Inc.
4239 Emory Avenue
Houston, TX 77005
WITH A COPY (WHICH COPY SHALL NOT CONSTITUTE NOTICE) TO:
Paul, Hastings, Janofsky & Walker LLP
3579 Valley Centre Drive
San Diego, CA 92130
Attn: Carl Sanchez, Esq.
IF TO THE PURCHASER: Callisto Pharmaceuticals, Inc.
420 Lexington Avenue, Suite 2500
New York, NY 10170
Facsimile: 212-297-0020
WITH A COPY (WHICH COPY SHALL NOT CONSTITUTE NOTICE) TO:
Sills Cummis Epstein & Gross, P.C.
One Riverfront Plaza
Newark, NJ 07102
Attn: Jeffrey J. Fessler, Esq.
Facsimile: 973-643-6500
6.4 TIME OF THE ESSENCE. Time is of the essence of this Agreement.
6.5 HEADINGS. The underlined headings contained in this Agreement are
for convenience of reference only, shall not be deemed to be a part of this
Agreement and shall not be referred to in connection with the construction or
interpretation of this Agreement.
6.6 COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall constitute an original and all of which, when
taken together, shall constitute one agreement.
6.7 GOVERNING LAW. This Agreement shall be construed in accordance
with, and governed in all respects by, the internal laws of the State of New
York (without giving effect to principles of conflicts of laws).
6.8 SUCCESSORS AND ASSIGNS; PARTIES IN INTEREST.
(a) This Agreement shall be binding upon: the Seller and its
successors and assigns (if any); and the Purchaser and its successors and
assigns (if any). This Agreement shall inure to the benefit of: the Seller; the
Purchaser and the respective successors and assigns (if any) of the foregoing.
(b) Neither the Purchaser nor the Seller shall be permitted to
assign any of its rights or delegate any of its obligations under this Agreement
without the prior written consent of
11.
the other party; PROVIDED, HOWEVER, that the Purchaser shall not be required to
obtain the prior written consent of the Seller in connection with the delegation
of any of its obligations under this Agreement in connection with a sale or
license of the 784 Patent Rights so long as the Purchaser provides the Seller
with written notice of such delegation within fifteen days following the closing
of the transaction.
(c) None of the provisions of this Agreement is intended to
provide any rights or remedies to any person other than the parties to this
Agreement and their respective successors and assigns (if any).
6.9 REMEDIES CUMULATIVE; SPECIFIC PERFORMANCE. The rights and remedies
of the parties hereto shall be cumulative and not alternative. The parties
hereto agree that: (a) in the event of any breach or threatened breach by any
party hereto of any obligation or other provision set forth in this Agreement,
the other party shall be entitled (in addition to any other remedy that may be
available to it) to (i) a decree or order of specific performance or mandamus to
enforce the observance and performance of such obligation or other provision,
and (ii) an injunction restraining such breach or threatened breach; and (b)
such other party shall not be required to provide any bond or other security in
connection with any such decree, order or injunction or in connection with any
related action or proceeding.
6.10 WAIVER.
(a) No failure on the part of any person to exercise any power,
right, privilege or remedy under this Agreement, and no delay on the part of any
person in exercising any power, right, privilege or remedy under this Agreement,
shall operate as a waiver of such power, right, privilege or remedy; and no
single or partial exercise of any such power, right, privilege or remedy shall
preclude any other or further exercise thereof or of any other power, right,
privilege or remedy.
(b) No person shall be deemed to have waived any claim arising
out of this Agreement, or any power, right, privilege or remedy under this
Agreement, unless the waiver of such claim, power, right, privilege or remedy is
expressly set forth in a written instrument duly executed and delivered on
behalf of such person; and any such waiver shall not be applicable or have any
effect except in the specific instance in which it is given.
6.11 AMENDMENTS. This Agreement may not be amended, modified, altered
or supplemented other than by means of a written instrument duly executed and
delivered on behalf of the Purchaser and the Seller.
6.12 SEVERABILITY. In the event that any provision of this Agreement,
or the application of any such provision to any person or set of circumstances,
shall be determined to be invalid, unlawful, void or unenforceable to any
extent, the remainder of this Agreement, and the application of such provision
to persons or circumstances other than those as to which it is determined to be
invalid, unlawful, void or unenforceable, shall not be impaired or otherwise
affected and shall continue to be valid and enforceable to the fullest extent
permitted by law.
12.
6.13 ENTIRE AGREEMENT. The Transaction Agreements set forth the entire
understanding of the parties relating to the subject matter thereof and
supersede all prior agreements and understandings among or between any of the
parties relating to the subject matter thereof.
13.
The parties to this Agreement have caused this Agreement to be executed
and delivered as of the date set forth above.
HOUSTON PHARMACEUTICALS, INC.
a Texas corporation
By: /s/ Teresa Priebe
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Name: Teresa Priebe
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Title: President
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CALLISTO PHARMACEUTICALS, INC.
a Delaware corporation
By: /s/ Gary S. Jacob
------------------------------------
Name: Gary S. Jacob
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Title: Chief Executive Officer
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14.
EXHIBIT A
The "784 PATENT RIGHTS" shall mean (a) that certain United States Patent
number 6,355,784, issued on March 12, 2002, entitled "Methods and compositions
for the manufacture of halogenated anthracyclines with increased antitumor
activity, other anthracyclines, halogenated sugars, and glycosyl donors," (b)
any and all foreign (including International) patents and patent applications
that claim priority either directly or indirectly from US 6,355,784 or US
Provisional Patent Application 60/089,162, (c) any provisionals, substitutions,
divisionals, reissues, renewals, continuations, continuations-in-part,
substitute applications and inventors' certificates that claim priority either
directly or indirectly from US 6,355,784 or US Provisional Patent Application
60/089,162, and (d) any foreign or domestic patents issuing from any of the
foregoing patent applications.
The "412 PATENT RIGHTS" shall mean (a) that certain United States Patent
number 5,874,412, issued on February 23, 1999, entitled "Bis-Anthracyclines with
high activity against doxorubicin resistant tumors," (b) any and all foreign
(including International) patents and patent applications that claim priority
either directly or indirectly from US 5,874,412 or US Provisional Patent
Application 60/013,869, (c) any provisionals, substitutions, divisionals,
reissues, renewals, continuations, continuations-in-part, substitute
applications and inventors' certificates that claim priority either directly or
indirectly from US 5,874,412 or US Provisional Patent Application 60/013,869,
and (d) any foreign or domestic patents issuing from any of the foregoing patent
applications.
EXHIBIT B
SUBLICENSE AGREEMENT
EXHIBIT C
STOCK OPTIONS
The stock options to purchase 1,170,000 shares of common stock of the Purchaser
to be issued to the Seller pursuant to Section 1.3(a)(ii) of the Agreement shall
vest pursuant to the following schedule:
- --------------------------------------- ---------------------------------------
Milestone Number of Options Vested
- --------------------------------------- ---------------------------------------
Each new grant award associated with 10,000
a clinical candidate covered by the
Patent Rights.
- --------------------------------------- ---------------------------------------
Any and each new drug candidate 30,000
covered by the Patent Rights that
achieves success in cancer animal
model studies.
- --------------------------------------- ---------------------------------------
Each successful IND filing of a 50,000
new drug candidate covered by the
Patent Rights.
- --------------------------------------- ---------------------------------------
Upon the completion of each 100,000
successful Phase II trial for
a drug covered by the
Patent Rights.
- --------------------------------------- ---------------------------------------
Each time NDA approval is obtained 200,000
from the FDA for a drug covered by
the Patent Rights.
- --------------------------------------- ---------------------------------------