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EXHIBIT 10.1
TEXT OMITTED AND FILED SEPARATELY
"CONFIDENTIAL TREATMENT REQUESTED
UNDER 17 C.F.R. SECTIONS 200.80(B)(4),
200.83 AND 240.24B-2."
SUBSCRIPTION, JOINT DEVELOPMENT AND OPERATING AGREEMENT
ELAN CORPORATION, PLC
(ACTING THROUGH ITS DIVISION ELAN PHARMACEUTICAL TECHNOLOGIES)
AND
ELAN INTERNATIONAL SERVICES, LTD.
AND
ELAN PHARMA INTERNATIONAL LIMITED
AND
ISIS PHARMACEUTICALS, INC.
AND
HEPASENSE LTD.
JANUARY 14, 2000
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INDEX
CLAUSE 1 DEFINITIONS
CLAUSE 2 HEPASENSE'S BUSINESS
CLAUSE 3 REPRESENTATIONS AND WARRANTIES
CLAUSE 4 AUTHORIZATION AND CLOSING
CLAUSE 5 DIRECTORS; MANAGEMENT AND R&D COMMITTEES
CLAUSE 6 THE BUSINESS PLAN AND REVIEWS
CLAUSE 7 RESEARCH AND DEVELOPMENT
CLAUSE 8 COMMERCIALIZATION
CLAUSE 9 OWNERSHIP OF INTELLECTUAL PROPERTY RIGHTS/NONCOMPETITION
CLAUSE 10 SUBLICENSE AND ASSIGNMENT RIGHTS
CLAUSE 11 INTELLECTUAL PROPERTY RIGHTS
CLAUSE 12 CROSS LICENSING/EXPLOITATION OF PRODUCTS OUTSIDE FIELD
CLAUSE 13 REGULATORY
CLAUSE 14 MANUFACTURING
CLAUSE 15 TECHNICAL SERVICES AND ASSISTANCE
CLAUSE 16 AUDITORS, BANKERS, REGISTERED OFFICE,
ACCOUNTING REFERENCE DATE; SECRETARY; COUNSEL
CLAUSE 17 TRANSFER OF SHARES; RIGHTS OF FIRST OFFER; TAG ALONG RIGHTS
CLAUSE 18 MATTERS REQUIRING STOCKHOLDERS' APPROVAL
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CLAUSE 19 DISPUTES
CLAUSE 20 TERMINATION
CLAUSE 21 SHARE RIGHTS
CLAUSE 22 CONFIDENTIALITY
CLAUSE 23 COSTS
CLAUSE 24 GENERAL
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THIS SUBSCRIPTION, JOINT DEVELOPMENT AND OPERATING AGREEMENT made this 14th day
of January, 2000
BETWEEN:
(1) ELAN CORPORATION, PLC, a public limited company incorporated under the laws
of Ireland, acting through its division ELAN PHARMACEUTICAL TECHNOLOGIES
and having its registered office at Lincoln House, Lincoln Place, Dublin 2,
Ireland ("ELAN, PLC");
(2) ELAN INTERNATIONAL SERVICES, LTD., a Bermuda exempted limited liability
company incorporated under the laws of Bermuda, and having its registered
office at Clarendon House, 2 Church St., Hamilton, Bermuda ("EIS");
(3) ELAN PHARMA INTERNATIONAL LIMITED, a private limited company incorporated
under the laws of Ireland, and having its registered office at WIL House,
Shannon Business Park, Shannon, County Clare, Ireland ("EPIL");
(4) ISIS PHARMACEUTICALS, INC. a corporation duly incorporated and validly
existing under the laws of Delaware and having its principal place of
business at 2292 Faraday Avenue, Carlsbad, CA 92008, United States of
America ("ISIS"); and
(5) HEPASENSE LTD., a Bermuda exempted limited liability company incorporated
under the laws of Bermuda, and having its registered office at Clarendon
House, 2 Church St., Hamilton, Bermuda ("HEPASENSE").
RECITALS:
A. HepaSense desires to issue and sell to the Shareholders (as defined below),
and the Shareholders desire to purchase from HepaSense, for aggregate
consideration of fifteen million United States Dollars (US$15,000,000),
apportioned between them as set forth herein, shares of HepaSense's common
shares, par value $1.00 per share (the "COMMON SHARES") and shares of
HepaSense's preferred shares, par value $1.00 per share (the "PREFERRED
SHARES").
B. As of the date hereof, Elan Pharmaceutical Technologies, a division of Elan
("EPT") and EPIL have entered into a license agreement with HepaSense, and
Isis has entered into a license agreement with HepaSense, in connection
with the license to HepaSense of the Elan Intellectual Property and the
Isis Intellectual Property, respectively (each as defined below).
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C. Elan and Isis have agreed to co-operate in the research, development and
commercialization of the Products (as defined below) based on their
respective technologies.
D. Elan and Isis have agreed to enter into this Agreement for the purpose of
recording the terms and conditions regulating their relationship with each
other, with respect to the Licensed Technologies and with HepaSense.
NOW IT IS HEREBY AGREED AS FOLLOWS:
CLAUSE 1
DEFINITIONS
1.1 In this Agreement, the following terms shall, where not inconsistent
with the context, have the following meanings respectively.
"ADDITIONAL PRODUCTS" shall mean the pharmaceutical formulation
incorporating an Additional Oligonucleotide and incorporated within or
packaged with the System.
"ADDITIONAL OLIGONUCLEOTIDES" shall mean another Oligonucleotide from
the Isis portfolio of Oligonucleotides nominated by Isis and accepted by
Elan to be incorporated within or packaged with the System for
commercialization. For the avoidance of doubt, the Parties acknowledge
that any Additional Oligonucleotide shall be at least at the same stage
of development as the Designated Oligonucleotide, i.e., shall be ready
for clinical testing.
"AFFILIATE" of any Person (in the case of a legal entity) shall mean any
other Person controlling, controlled or under the common control of such
first Person, as the case may be. For the purposes of this definition,
"control" shall mean direct or indirect ownership of fifty percent (50%)
or more of the stock or shares entitled to vote for the election of
directors or capital interests representing at least 50% of the equity
thereof and "controlling" and "controlled" shall be construed
accordingly. HepaSense is not an Affiliate of Elan or EIS.
"AGREEMENT" shall mean this agreement (which expression shall be deemed
to include the Recitals and the Schedules hereto).
"BOARD" shall mean the board of directors of HepaSense.
"BUSINESS" shall mean the business specified in the Business Plan.
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"BUSINESS PLAN" shall mean the business plan and program of development
to be agreed by Elan and Isis pursuant to Clause 6, with respect to the
research, development, and commercialization of the Products that shall
contain, among other things, to the extent practicable, the research and
development objectives, desired Product specifications, clinical
indications, preliminary clinical trial designs (Phase I/II),
development timelines, budgeted costs and the relative responsibilities
of Isis and Elan as it relates to the implementation of the Business
Plan.
"CLOSING DATE" shall mean the date upon which the Definitive Documents
are executed and delivered by the Parties and the transactions effected
thereby are closed.
"COMMON SHARES EQUIVALENTS" shall mean any options, warrants, rights or
any other securities convertible, exercisable or exchangeable, in whole
or in part, for or into Common Shares.
"CERTIFICATE OF DESIGNATIONS" shall mean that certain certificate of
designations, preferences and rights of Series B Preferred Shares of
Isis issued on the date hereof.
"CHANGE OF CONTROL" shall mean, with respect to a Party, the acquisition
of fifty percent (50%) or more of its voting securities, the ability, by
contract or otherwise, to control the board of directors or management
of any such entity, or a sale of all or substantially all of the
business of such Party to which the Transaction Documents relate,
whether by merger, sale of stock, sale of assets or otherwise.
"CONVERTIBLE NOTE" shall mean that certain convertible promissory note,
of even date herewith, by and between Isis and EIS.
"DEFINITIVE DOCUMENTS" shall mean this Agreement, the Funding Agreement,
the Elan License Agreement, the Isis License Agreement, the Convertible
Note, the Isis Securities Purchase Agreement, the Registration Rights
Agreements, the Certificate of Designations and associated documentation
of even date herewith, by and between Isis, Elan, EIS and HepaSense, as
applicable.
"DESIGNATED OLIGONUCLEOTIDE" shall mean Isis 14803.
"DIRECTORS" shall mean, at any time, the directors of HepaSense.
"EIS DIRECTOR" has the meaning set forth in Clause 5.
"ELAN" shall mean Elan, plc and EPIL.
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"ELAN IMPROVEMENTS" has the meaning assigned thereto in the Elan License
Agreement.
"ELAN INTELLECTUAL PROPERTY" has the meaning assigned thereto in the
Elan License Agreement.
"ELAN KNOW-HOW" has the meaning assigned thereto in the Elan License
Agreement.
"ELAN LICENSE AGREEMENT" shall mean the license agreement between Elan
and HepaSense, of even date herewith, attached hereto in Schedule 1.
"ELAN PATENT RIGHTS" has the meaning assigned thereto in the Elan
License Agreement.
"ELAN RIGHT OF FIRST NEGOTIATION" shall have the meaning provided in
Clause 8.3 hereof.
"ENCUMBRANCE" shall mean any liens, charges, encumbrances, equities,
claims, options, proxies, pledges, security interests, or other similar
rights of any nature.
"EXCHANGE RIGHT" has the meaning assigned to such term in the
Certificate of Designations in effect on the date hereof.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
"FDA" shall mean the United States Food and Drug Administration or any
successors or agency the approval of which is necessary to market a
product in the United States of America.
"FIELD" shall mean the administration of the Designated Oligonucleotide
by all routes of administration. Upon nomination by Isis and acceptance
by Elan of an Additional Oligonucleotide, the parties shall amend the
definition of the Field to include the administration of the Additional
Oligonucleotide by such means of administration as agreed to by the
parties.
Notwithstanding the foregoing, the Parties acknowledge and agree that,
pursuant to existing agreement among Elan, Isis and Orasense Ltd, both
Isis and Elan and their Affiliates may be subject to certain
restrictions concerning the development and commercialization of
products comprised upon the Oral administration of any Oligonucleotide.
"FINANCIAL YEAR" shall mean each year commencing on January 1 (or in the
case of the first Financial Year, the date hereof) and expiring on
December 31 of each year.
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"FULLY DILUTED COMMON SHARES" shall mean all of the issued and
outstanding Common Shares, assuming the conversion, exercise or exchange
of all outstanding Common Shares Equivalents.
"FUNDING AGREEMENT" shall mean the Funding Agreement, dated as of the
date hereof, between EIS and Isis.
"HCV" shall mean the hepatitis C virus.
"HEPASENSE BYE-LAWS" shall mean the Memorandum of Association and
Bye-Laws of HepaSense Ltd.
"HEPASENSE INTELLECTUAL PROPERTY" shall mean HepaSense Patents and
HepaSense Know How. In addition to the foregoing, any enhancement or
improvement relating to both the System and the Isis Know-How or Isis
Patents developed by any of the Parties individually or jointly pursuant
to the Project or by a third party (under contract with HepaSense)
pursuant to the Project shall, except as limited by agreements with
third parties, be deemed to be HepaSense Intellectual Property.
"HEPASENSE KNOW-HOW" shall mean any and all rights owned, licensed or
controlled by HepaSense to any scientific, pharmaceutical or technical
information, data, discovery, invention (whether patentable or not),
technique, process, procedure, system, formulation or design that is not
generally known to the public arising out of the conduct of the Project
by any person that does not constitute Elan Improvements or Isis
Improvements.
"HEPASENSE PATENTS" shall mean any and all patents and patent
applications arising out of the conduct of the Project by any person
that does not constitute Elan Improvements or Isis Improvements and all
rights therein, and including all extensions, continuations,
continuations-in-part, divisionals, patents-of-additions,
re-examinations, re-issues, supplementary protection certificates and
foreign counterparts thereto owned or licensed to HepaSense.
"ISIS DIRECTORS" has the meaning set forth in Clause 5.
"ISIS FIELD" has the meaning assigned thereto in the Isis License
Agreement.
"ISIS IMPROVEMENTS" has the meaning assigned thereto in the Isis License
Agreement.
"ISIS INTELLECTUAL PROPERTY" has the meaning assigned thereto in the
Isis License Agreement.
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"ISIS KNOW-HOW" has the meaning assigned thereto in the Isis License
Agreement.
"ISIS LICENSE AGREEMENT" shall mean the license agreement between Isis
and HepaSense, of even date herewith, attached hereto in Schedule 2.
"ISIS PATENT RIGHTS" has the meaning assigned thereto in the Isis
License Agreement.
"ISIS SECURITIES PURCHASE AGREEMENT" shall mean that certain securities
purchase agreement, of even date herewith, by and between Isis and EIS.
"ISIS 14803" shall mean the Oligonucleotide described in Exhibit A to
the Isis License Agreement.
"LICENSE AGREEMENTS" shall mean the Elan License Agreement and the Isis
License Agreement.
"LICENSED TECHNOLOGIES" shall mean, collectively, the Elan Intellectual
Property and the Isis Intellectual Property.
"OLIGONUCLEOTIDE" shall mean any single stranded, [ * ] oligonucleotide
including those [ * ] used as a human therapeutic and/or prophylactic
compound containing between [ * ] nucleotides and/or nucleosides
including oligonucleotide analogs which may include [ * ]. For purposes
of this agreement, Oligonucleotide shall specifically exclude
oligonucleotides used in gene therapy except [ * ] an oligonucleotide,
oligonucleotides used as [ * ] or oligonucleotides used as adjuvants.
Oligonucleotide shall also specifically exclude polymers in which the
linkages are amide based, such as peptides and proteins and shall also
exclude [ * ].
"ORAL" shall mean administration by way of the mouth for the purpose of
topical or systemic delivery by way of the alimentary canal.
"PARTICIPANT" shall mean Isis or Elan, as the case may be, and
"PARTICIPANTS" shall mean both of the Participants together.
"PARTY" shall mean Elan, Isis, or HepaSense, as the case may be, and
"PARTIES" shall mean all three together.
*CONFIDENTIAL TREATMENT REQUESTED
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"PERSON" shall mean an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust,
unincorporated association, joint venture, governmental entity or
authority or other entity of whatever nature.
"PERMITTED TRANSFEREE" shall mean any Affiliate or subsidiary of Elan,
EIS or Isis, to whom this Agreement may be assigned, in whole or in
part, pursuant to the terms hereof or in the case of Elan/EIS, a special
purpose financing entity created by Elan or EIS or their respective
affiliates.
"PRODUCT" shall mean the pharmaceutical formulation incorporating the
Designated Oligonucleotide for [ * ] within the Field, including,
without limitation, the incorporation of the Designated Oligonucleotide
within or packaged with the System.
"PROJECT" shall mean all activity as undertaken by or on behalf of
HepaSense in order to develop the Products in accordance with the
Business Plan.
"REGISTRATION RIGHTS AGREEMENTS" shall mean the Registration Rights
Agreements of even date herewith relating to HepaSense and Isis,
respectively.
"REGULATORY APPLICATION" shall mean any regulatory application or any
other application for marketing approval for a Product, which HepaSense
will file in any country of the Territory, including any supplements or
amendments thereto.
"REGULATORY APPROVAL" shall mean the final approval to market a Product
in any country of the Territory, and any other approval which is
required to launch the Product in the normal course of business. "RHA"
shall mean any relevant government health authority (or successor agency
thereof) in any country of the Territory whose approval is necessary to
market a Product in the relevant country of the Territory.
"RESEARCH AND DEVELOPMENT TERM" shall mean shall mean the period
commencing on the Closing Date and continuing for a period of [ * ]
thereafter.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
"SHARES" shall mean the shares of Common Shares and shares of Preferred
Shares of HepaSense.
"SHAREHOLDER" shall mean any of EIS, Isis, any Permitted Transferee or
any other Person who subsequently becomes bound by this Agreement as a
holder of the Shares, and "SHAREHOLDERS" shall mean all of the
Shareholders together.
*CONFIDENTIAL TREATMENT REQUESTED
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"SUBSIDIARY" shall mean any company that is a subsidiary of HepaSense
within the meaning of applicable laws.
"SUBSTITUTE OLIGONUCLEOTIDE" shall have the meaning set forth in Clause
8 hereof.
"SYSTEM" shall mean an ambulatory drug delivery system for direct
attachment to the body of a patient having a flexible diaphragm drug
reservoir, which is capable of delivering factory pre-programmed
continuous amounts of drug upon activation as disclosed and described in
the Elan Patents set forth in Schedule 1 to the Elan License Agreement.
"TECHNOLOGICAL COMPETITOR OF ELAN" shall mean any entity which has a
significant program for the development of drug delivery systems and
which is active in promoting and contracting the use of such drug
delivery systems to third parties, a listing of which is contained on
Schedule 2B to the Elan License Agreement, as the same shall be updated
and revised on an annual basis by mutual consent of the Parties.
"TECHNOLOGICAL COMPETITOR OF ISIS" shall mean any entity which has a
significant program for the discovery and development of antisense
drugs, a listing of which is contained on Schedule 2 to the Elan License
Agreement, as the same shall be updated and revised on an annual basis
by mutual consent of the Parties.
"TERM" shall mean the term of this Agreement.
"TERRITORY" shall mean all of the countries of the world.
"UNITED STATES DOLLAR" and "US$" and "$" shall mean the lawful currency
of the United States of America.
1.2 In addition, the following definitions have the meanings in the Clauses
corresponding thereto, as set forth below.
DEFINITION CLAUSE
---------- ------
"AAA" 20.6
"Buyout Option" 20.7
"Closing" 4.2
"Common Shares" Recital
"Confidential Information" 22.1
"Co-sale Notice" 17.4
"Elan Valuation" 20.8
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"Expert" 19.3
"Isis Employee Director" 5.1.4
"Isis Valuation" 20.8
"Management Committee" 5.2.1
"Notice of Exercise" 17.3
"Notice of Intention" 17.3
"Offered Shares" 17.3
"Offering Price" 17.3
"Preferred Shares" Recital
"Purchase Price" 20.8
"R&D Committee" 5.2.2
"Remaining Shareholders" 17.4
"Relevant Event" 20.2
"Selling Shareholder" 17.3
"Tag-Along Right" 17.4
"Transaction Proposal" 17.3
"Transfer" 17.1
"Transferee Terms" 17.4
"Transferring Shareholder" 17.4
1.3 Words importing the singular shall include the plural and vice versa.
1.4 Unless the context otherwise requires, reference to a recital, article,
paragraph, provision, clause or schedule is to a recital, article,
paragraph, provision, clause or schedule of or to this Agreement.
1.5 Reference to a statute or statutory provision includes a reference to it
as from time to time amended, extended or re-enacted.
1.6 The headings in this Agreement are inserted for convenience only and do
not affect its construction.
1.7 Unless the context or subject otherwise requires, references to words in
one gender include references to the other genders.
1.8 Capitalized terms used but not defined herein shall have the meanings
ascribed in the Definitive Documents, if defined therein.
CLAUSE 2
BUSINESS
2.1 The primary objective of the Agreement is to regulate the business of
the development, testing, registration, manufacture, commercialization
and licensing of Products in the Territory and to achieve the other
objectives set out in this
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Agreement. The focus of the Business will be to develop the Products
using the Elan Intellectual Property, the Isis Intellectual Property and
the HepaSense Intellectual Property to agreed-upon specifications and
timelines.
2.2 The central management and control of HepaSense shall be exercised in
Bermuda and shall be vested in the Directors and such Persons as they
may delegate the exercise of their powers in accordance with the
HepaSense Bye-Laws. The Participants agree to conduct the Business in
such a manner as to ensure that HepaSense is liable to taxation in
Bermuda and not in any other jurisdiction. The Participants shall use
their best endeavours to ensure that to the extent required the sole
residence of HepaSense in Bermuda, all meetings of the Directors are
held in Bermuda or other jurisdictions outside the United States and
generally to ensure that HepaSense is treated as resident for taxation
purposes in Bermuda.
CLAUSE 3
REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF HEPASENSE: HepaSense hereby represents
and warrants to each of the Shareholders as follows, as of the date
hereof:
3.1.1 ORGANIZATION: HepaSense is an exempted company duly organized,
validly existing and in good standing under the laws of Bermuda,
and has all the requisite corporate power and authority to own
and lease its properties, to carry on its business as presently
conducted and as proposed to be conducted.
3.1.2 CAPITALIZATION: As of the date hereof, the authorized capital
stock of HepaSense consists of 6,001 Common Shares and 6,000
Preferred Shares. Prior to the date hereof, no shares of capital
stock of HepaSense have been issued.
3.1.3 AUTHORIZATION: The execution, delivery and performance by
HepaSense of this Agreement, including the issuance of the
Shares, have been duly authorized by all requisite corporate
actions; this Agreement has been duly executed and delivered by
HepaSense and is the valid and binding obligation of HepaSense,
enforceable against it in accordance with its terms except as
limited by applicable bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting the
enforcement of creditors' rights generally, and except as
enforcement of rights to indemnity and contribution hereunder
may be limited by United States federal or state securities laws
or principles of public policy. The Shares, when issued as
contemplated hereby, will be validly issued and outstanding,
fully paid and non-assessable and not subject to preemptive or
any other similar rights of the Shareholders or others.
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3.1.4 NO CONFLICTS: The execution, delivery and performance by
HepaSense of this Agreement, the issuance, sale and delivery of
the Shares, and compliance with the provisions hereof by
HepaSense, will not:
(i) violate any provision of applicable law, statute, rule
or regulation applicable to HepaSense or any ruling,
writ, injunction, order, judgement or decree of any
court, arbitrator, administrative agency or other
governmental body applicable to HepaSense or any of its
properties or assets;
(ii) conflict with or result in any breach of any of the
terms, conditions or provisions of, or constitute (with
notice or lapse of time or both) a default (or give rise
to any right of termination, cancellation or
acceleration) under its charter or organizational
documents or any material contract to which HepaSense is
a party, except where such violation, conflict or breach
would not, individually or in the aggregate, have a
material adverse effect on HepaSense; or
(iii) result in the creation of, any Encumbrance upon any of
the properties or assets of HepaSense.
3.1.5 APPROVALS: As of the date hereof, no permit, authorization,
consent or approval of or by, or any notification of or filing
with, any Person is required in connection with the execution,
delivery or performance of this Agreement by HepaSense.
HepaSense has full authority to conduct its business as
contemplated in the Business Plan and the Definitive Documents.
3.1.6 DISCLOSURE: This Agreement does not contain any untrue statement
of a material fact or omit to state any material fact necessary
to make the statements contained herein not misleading.
HepaSense is not aware of any material contingency, event or
circumstance relating to its business or prospects, which could
have a material adverse effect thereon, in order for the
disclosure herein relating to HepaSense not to be misleading in
any material respect.
3.1.7 NO BUSINESS; NO LIABILITIES: HepaSense has not conducted any
business or incurred any liabilities or obligations prior to the
date hereof, except solely in connection with its organization
and formation.
3.2 REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS: Each of the
Shareholders hereby severally represents and warrants to HepaSense as
follows as of the date hereof:
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3.2.1 ORGANIZATION: Such Shareholder is a corporation duly organized
and validly existing under the laws of its jurisdiction of
organization and has all the requisite corporate power and
authority to own and lease its respective properties, to carry
on its respective business as presently conducted and as
proposed to be conducted and to carry out the transactions
contemplated hereby.
3.2.2 AUTHORITY: Such Shareholder has full legal right, power and
authority to enter into this Agreement and to perform its
obligations hereunder, which have been duly authorized by all
requisite corporate action. This Agreement is the valid and
binding obligation of such Shareholder, enforceable against it
in accordance with its terms except as limited by applicable
bankruptcy, insolvency, reorganization, moratorium and other
laws of general application affecting the enforcement of
creditors' rights generally, and except as enforcement of rights
to indemnity and contribution hereunder may be limited by United
States federal or state securities laws or principles of public
policy.
3.2.3 NO CONFLICTS: The execution, delivery and performance by such
Shareholder of this Agreement, purchase of the Shares, and
compliance with the provisions hereof by such Shareholder will
not:
(i) violate any provision of applicable law, statute, rule
or regulation known by and applicable to such
Shareholder or any ruling, writ, injunction, order,
judgement or decree of any court, arbitrator,
administrative agency or other governmental body
applicable to such Shareholder or any of its properties
or assets;
(ii) conflict with or result in any breach of any of the
terms, conditions or provisions of, or constitute (with
notice or lapse of time or both) a default (or give rise
to any right of termination, cancellation or
acceleration) under the charter or organizational
documents of such Shareholder or any material contract
to which such Shareholder is a party, except where such
violation, conflict or breach would not, individually or
in the aggregate, have a material adverse effect on such
Shareholder; or
(iii) result in the creation of, any Encumbrance upon any of
the properties or assets of such Shareholder.
3.2.4 APPROVALS: As of the date hereof, no permit, authorization,
consent or approval of or by, or any notification of or filing
with, any Person is required in connection with the execution,
delivery or performance of this Agreement by such Shareholder.
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3.2.5 INVESTMENT REPRESENTATIONS: Such Shareholder is sophisticated in
transactions of this type and capable of evaluating the merits
and risks of its investment in HepaSense. Such Shareholder has
not been formed solely for the purpose of making this investment
and such Shareholder is acquiring the Common Shares and
Preferred Shares for investment for its own account, not as a
nominee or agent, and not with the view to, or for resale in
connection with, any distribution of any part thereof. Such
Shareholder understands that the Shares have not been registered
under the Securities Act or applicable state and foreign
securities laws by reason of a specific exemption from the
registration provisions of the Securities Act and applicable
state and foreign securities laws, the availability of which
depends upon, among other things, the bona fide nature of the
investment intent and the accuracy of such Shareholders'
representations as expressed herein. Such Shareholder
understands that no public market now exists for any of the
Shares and that there is no assurance that a public market will
ever exist for such Shares.
CLAUSE 4
AUTHORIZATION AND CLOSING
4.1 HepaSense has authorized the issuance to (i) EIS of 2,388 Preferred
Shares and (ii) Isis of 6,001 Common Shares and 3,612 Preferred Shares,
issuable as provided in Clause 4.3 hereof.
4.2 Isis and EIS hereby subscribe for the number of Shares set forth in
Clause 4.1 and shall pay to HepaSense in consideration therefore, by
wire transfer of immediately available funds (to a bank account
established by HepaSense in connection with Completion) the subscription
amounts each as provided in Clause 4.4.1.
4.3 The closing (the "CLOSING") shall take place at the offices of Brock
Silverstein LLC at 800 Third Avenue, New York, New York 10022 on the
date hereof or such other places if any, as the Parties may agree and
shall occur contemporaneously with the closing under the Isis Securities
Purchase Agreement.
4.4 At the Closing, each of the Shareholders shall take or (to the extent
within its powers) cause to be taken the following steps at directors
and shareholder meetings of HepaSense, or such other meetings or
locations, as appropriate:
4.4.1 HepaSense shall issue and sell to EIS, and EIS shall purchase
from HepaSense, upon the terms and subject to the conditions set
forth herein, 2,388 Preferred Shares for an aggregate purchase
price of US$2,985,000.
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HepaSense shall issue and sell to Isis, and Isis shall purchase
from HepaSense, upon the terms and conditions set forth herein,
(i) 6,001 Common Shares for an aggregate purchase price of
US$7,500,000 and (ii) 3,612 Preferred Shares for an aggregate
purchase price of US$4,515,000;
4.4.2 the Parties shall execute and deliver to each other, as
applicable, certificates in respect of the Common Shares and
Preferred Shares described above and any other certificates,
resolutions or documents which the Parties shall reasonably
require;
4.4.3 the adoption by HepaSense of HepaSense Bye-Laws;
4.4.4 the appointment of Kevin Insley, B. Lynne Parshall, F. Andrew
Dorr, M.D., Dawn Griffiths and Stephen Rossiter as Directors of
HepaSense;
4.4.5 the resignation of all directors and the secretary of HepaSense
holding office prior to the execution of this Agreement and
delivery of written confirmation under seal by each Person so
resigning that he has no claim or right of action against
HepaSense and that HepaSense is not in any way obligated or
indebted to him; and
4.4.6 the transfer to HepaSense of the share register.
4.5 EXEMPTION FROM REGISTRATION:
The Shares will be issued under an exemption or exemptions from
registration under the Securities Act. Accordingly, the certificates
evidencing the Shares shall, upon issuance, contain the following
legend:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY SECURITIES LAWS OF A STATE OR
OTHER JURISDICTION AND MAY NOT UNDER ANY CIRCUMSTANCES BE SOLD,
TRANSFERRED, OR OTHERWISE DISPOSED OF (OTHER THAN TO AN AFFILIATE OF THE
ORIGINAL HOLDER OR AS OTHERWISE PERMITTED IN THE AGREEMENT PURSUANT TO
WHICH THEY WERE ISSUED) EXCEPT PURSUANT TO (i) AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES
OR BLUE SKY LAWS, OR (ii) TO THE EXTENT APPLICABLE, RULE 144 UNDER THE
SECURITIES ACT (OR ANY SIMILAR RULE UNDER THE SECURITIES ACT RELATING TO
THE DISPOSITION OF SECURITIES) TOGETHER WITH AN OPINION OF COUNSEL
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REASONABLY SATISFACTORY TO THE CORPORATION THAT REGISTRATION IS NOT
REQUIRED UNDER SUCH ACT OR APPLICABLE STATE SECURITIES LAWS.
4.6 HepaSense shall use reasonable efforts to file any documents that
require filing with the Registrar of Companies in Bermuda within the
prescribed time limits. EIS and Isis shall provide all reasonable
co-operation to HepaSense in relation to the matters set forth in this
Clause 4.6.
4.7. In the event that EIS exercises the Exchange Right, HepaSense shall,
immediately upon such exercise, take all necessary steps to ensure that
EIS is duly and validly issued and has full legal right, title and
interest in and to the Preferred Shares exchanged therefor. The Parties
acknowledge that such Preferred Shares have been pledged to EIS pursuant
to the Isis Securities Purchase Agreement and that EIS has physical
possession of such Preferred Shares; upon such exercise, EIS shall be
entitled to keep and retain such Preferred Shares, which shall be owned
by EIS as provided above. In connection with the foregoing, HepaSense
and the Participants shall take all necessary or appropriate steps to
ensure such ownership by EIS.
CLAUSE 5
DIRECTORS; MANAGEMENT AND R&D COMMITTEES
5.1. DIRECTORS:
5.1.1 Prior to the exercise of the Exchange Right, the Board shall be
composed of five Directors.
Isis shall have the right to nominate four directors of
HepaSense, provided that two such directors are residents of
Bermuda, ("ISIS DIRECTORS") and EIS shall have the right to
nominate one Director of HepaSense ("EIS DIRECTOR") which
Director, save as further provided herein, shall only be
entitled to 15% of the votes of the Board.
In the event that the Exchange Right is exercised by EIS within
2 years following the Closing Date, the EIS Director shall only
be entitled to 15% of the votes of the Board until the expiry of
2 years from the Closing Date.
In the event that the Exchange Right is exercised by EIS at any
time after two years following the Closing Date or upon the
expiry of 2 years following the Closing Date where the Exchange
Right has been exercised by EIS within 2 years following the
Closing Date, each of Isis, and EIS shall cause the Board to be
reconfigured so that an equal number of Directors are designated
by EIS and Isis and that each of the Directors has equal voting
power.
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5.1.2 If EIS removes the EIS Director, or Isis removes any of the Isis
Directors, EIS or Isis, as the case may be, shall indemnify the
other Shareholder against any claim by such removed Director
arising from such removal.
5.1.3 The Directors shall meet not less than three times in each
Financial Year and all Board meetings shall be held in Bermuda
or otherwise by teleconference in accordance with the HepaSense
Bye Laws or as otherwise required by to the laws of Bermuda and
to ensure the sole residence of HepaSense in Bermuda.
5.1.4 At any such meeting, the presence of the EIS Director and at
least one Isis Director who at the time of the meeting is an
employee of Isis (an "Isis Employee Director") shall be required
to constitute a quorum and, subject to Clause 17 hereof, the
affirmative vote of a majority of the Directors present at a
meeting at which such a quorum is present shall constitute an
action of the Directors; provided, however, that the EIS
Director and Isis Employee Director also vote in favor of such
action. In the event of any meeting being inquorate, the meeting
shall be adjourned for a period of seven days. A notice shall be
sent to the EIS Director and the Isis Directors specifying the
date, time and place where such adjourned meeting is to be held
and reconvened.
5.1.5 On the Closing Date, Isis may appoint one of the Isis Directors
to be the chairman of HepaSense. The chairman of HepaSense shall
hold office until:
(i) the first meeting of the Board following the exercise by
EIS of the Exchange Right, where the Exchange Right has
been exercised by EIS after two years following the
Closing Date; or
(ii) the first meeting of the Board following the expiry of 2
years following the Closing Date where the Exchange
Right has been exercised by EIS within 2 years following
the Closing Date
(in each case the "CHAIRMAN STATUS BOARD MEETING")
After the Chairman Status Board Meeting, each of EIS and Isis,
beginning with EIS at the Chairman Status Board Meeting, shall
have the right, exercisable alternatively, of nominating one
Director to be chairman of HepaSense for a term of one year.
If the chairman is unable to attend any meeting of the Board
held prior to the Chairman Status Board Meeting, the Isis
Directors shall be entitled to appoint another Isis Director to
act as chairman in his place at the meeting.
If the chairman of HepaSense is unable to attend any meeting of
the Board
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held after the Chairman Status Board Meeting, the Directors
shall be entitled to appoint another Director to act as chairman
of HepaSense in his place at the meeting.
5.1.6 In case of an equality of votes at a meeting of the Board, the
chairman of HepaSense shall not be entitled to a second or
casting vote. In the event of continued deadlock, the Board
shall resolve the deadlock pursuant to the provisions set forth
in Clause 18.
5.2 MANAGEMENT AND R&D COMMITTEES:
5.2.1 The Directors shall appoint a management committee (the
"MANAGEMENT COMMITTEE") to perform certain operational
functions, such delegation to be consistent with the Directors'
right to delegate powers pursuant to the HepaSense Memorandum of
Association of Bye-Laws. The Management Committee shall
initially consist of four members, two of whom will be nominated
by EIS and two of whom will be nominated by Isis, and each of
whom shall be entitled to one vote, whether or not present at
any Management Committee meeting during which such operational
functions are discussed. Except as otherwise provided herein or
in the License Agreements, decisions of the Management Committee
shall require approval by at least one EIS nominee on the
Management Committee and one Isis nominee on the Management
Committee. Each of EIS and Isis shall be entitled to remove any
of their nominees to the Management Committee and appoint a
replacement in place of any nominees so removed.
5.2.2 The Management Committee shall appoint a research and
development committee (the "R&D COMMITTEE") which shall
initially be comprised of four members, two of whom will be
nominated by Elan and two of whom will be nominated by Isis, and
each of whom shall have one vote, whether or not present at an
R&D Committee meeting during which research and development
issues are discussed. Decisions of the R&D Committee shall
require approval by at least one Elan nominee on the R&D
Committee and one Isis nominee on the R&D Committee. Each of
Elan and Isis shall be entitled to remove any of their nominees
to the R&D Committee and appoint a replacement in place of any
nominees so removed.
5.2.3 The Management Committee shall be responsible for, inter alia,
devising, implementing and reviewing strategy for the business
of HepaSense, and the operation of HepaSense, and in particular,
devising HepaSense's strategy for research and development and
to monitor and supervise the implementation of HepaSense's
strategy for research and development.
5.2.4 The R&D Committee shall be responsible for:
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5.2.4.1 designing that portion of the Business Plan that relates
to the Project for consideration by the Management
Committee;
5.2.4.2 establishing a joint Project team consisting of an equal
number of team members from Elan and Isis, including one
Project leader from each of Elan and Isis; and
5.2.4.3 implementing such portion of the Business Plan that
relates to the Project, as approved by the Management
Committee.
5.2.5 In the event of any dispute amongst the R&D Committee, the R&D
Committee shall refer such dispute to the Management Committee
whose decision on the dispute shall be binding on the R&D
Committee. If the Management Committee cannot resolve the matter
after 15 days or such other period as may be agreed by the
Management Committee, the dispute will be referred to a
designated senior officer of each of Elan and Isis, and
thereafter, in the event of continued deadlock, pursuant to the
deadlock provisions to be set forth in Clause 19, involving
inter alia, the referral of the dispute to an expert, whose
decision, however, will ultimately be non-binding on the
Participants. This process shall also apply to any dispute
within the Management Committee.
CLAUSE 6
THE BUSINESS PLAN AND REVIEWS
6.1 The Directors shall meet together as soon as reasonably practicable
after the Closing Date hereof and shall agree upon and approve the
Business Plan for the current Financial Year within 60 days of the
Closing Date.
6.2. The Business Plan shall be subject to ongoing review by the Directors
and the approval of the EIS Director and the Isis Directors on a
quarterly basis.
6.3. Neither Participant shall be obliged to provide funding to HepaSense in
the absence of quarterly approval of the Business Plan and a
determination by each Participant, in its sole discretion, that
Subsequent Funding (as such term is defined in the Funding Agreement)
shall be provided for the development of the Products.
CLAUSE 7
RESEARCH AND DEVELOPMENT WORK
7.1 During the Research Term, HepaSense will diligently pursue the research
and development of the Elan Intellectual Property, Isis Intellectual
Property and
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HepaSense Intellectual in accordance with the Research and Development
Program. The "RESEARCH AND DEVELOPMENT PROGRAM" will be the program the
development of the Product in the Field, including without limitation,
in vivo toxicology, stability, formulation, optimization, clinical and
regulatory activities. Such work shall be agreed to and conducted by
Elan, Isis and/or a third party Isis under contract with HepaSense as
provided in the Business Plan.
7.2 Subject to the provisions of Clause 6.3, Isis and Elan shall provide at
their discretion respective such research and development services as is
requested by HepaSense in accordance with the provisions in the License
Agreements; provided, however, that HepaSense shall not perform any
pre-clinical research or development work. HepaSense shall pay Isis and
Elan for any development work carried out by them on behalf of HepaSense
at the end of each month during the Research and Development Program,
subject to the proper vouching of research and development work and
expenses. An invoice shall be issued to HepaSense by Isis or Elan, as
applicable, by the 15th day of the month following the month in which
work was performed. The payments by HepaSense to Isis or Elan shall be
calculated by reference to the fully burdened actual costs incurred by
Isis and Elan [ * ] in carrying out such research and development work,
on a fully allocated basis. Research and development activities that are
outsourced to third party providers shall be charged to HepaSense at [ *
].
7.3 Elan and Isis shall permit HepaSense or its duly authorized
representative on reasonable notice and at any reasonable time during
normal business hours to have access to inspect and audit the accounts
and records of Elan or Isis and any other book, record, voucher, receipt
or invoice relating to the calculation or the cost of the Research and
Development Program and to the accuracy of the reports which accompanied
them. Any such inspection of Elan's or Isis's records, as the case may
be, shall be at the expense of HepaSense, except that if such inspection
reveals an overpayment in the amount paid to Elan or Isis, as the case
may be, for the Research and Development Program hereunder in any
Financial Year of 5% or more of the amount due to Elan or Isis, as the
case may be, then the expense of such inspection shall be borne solely
by Elan or Isis, as the case may be, instead of by HepaSense. Any
surplus over the sum properly payable by HepaSense to Elan or Isis, as
the case may be, shall be paid promptly by Elan or Isis, as the case may
be, to HepaSense. If such inspection reveals a deficit in the amount of
the sum properly payable to Elan or Isis, as the case may be, by
HepaSense, HepaSense shall pay the deficit to Elan or Isis, as the case
may be.
7.4 Should HepaSense determine that the Designated Oligonucleotide is not
suitable for administration via the System, HepaSense, at its option may
either (i) further develop and commercialize the Designated
Oligonucleotide in a Product via another route of administration within
the Field or (ii) request Isis to designate a substitute
Oligonucleotide. In the event HepaSense requests that Isis designate a
*CONFIDENTIAL TREATMENT REQUESTED
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substitute Oligonucleotide, the Parties shall review in good faith and
designate for in-licensing to HepaSense, subject to then existing
contractual obligations, another Oligonucleotide from the Isis portfolio
of Oligonucleotides with comparable commercial potential, or designate
an Oligonucleotide for in-licensing or acquisition of the rights from
one or more third parties to such Oligonucleotide (the "SUBSTITUTE
OLIGONUCLEOTIDE"). In either case, the Parties shall promptly negotiate
in good faith such amendments as are required to this Agreement, such as
amending the provisions regulating non-competition under Clause 4 of the
License Agreements, and to the research and development budgeted costs
for the Project.
7.5 Except as otherwise provided herein and as provided in the Isis License
Agreement, upon designation of an Isis Oligonucleotide as a Substitute
Oligonucleotide, (i) all rights to ISIS 14803 shall revert to Isis and
(ii) all provisions contained herein and in the Isis License Agreement
other than in the preceding clause (i) relating to the ISIS 14803 shall
be deemed to apply to the Substitute Oligonucleotide as if it were the
Designated Oligonucleotide, unless otherwise amended in accordance with
Clause 7.4.
CLAUSE 8
COMMERCIALIZATION
8.1 HepaSense shall diligently pursue the research, development, prosecution
and commercialization of the Product as provided in the Business Plan.
During the Research Term, Elan and Isis shall meet to discuss the
commercial strategy for HepaSense commercialization of the Product and
the further exploitation of the HepaSense Intellectual Property. For
example, Isis and Elan shall discuss strategy and terms relating to
product and clinical development, corporate partnering, licensing and
supply agreements. It is contemplated that Isis, through its
representatives on the Management Committee, shall locate and negotiate
with independent third party marketing partners for Product. In the
course of such representation, Isis shall keep HepaSense and Elan fully
informed of its efforts and progress with respect to the foregoing.
8.2 In the event HepaSense successfully commercializes the Product, Isis
may, from time to time nominate, subject to Elan's consent, from the
Isis portfolio of Oligonucleotides additional Oligonucleotides to be
designated as Additional Oligonucleotides for incorporation in
Additional Products. It is contemplated that Isis shall locate and
negotiate with independent third party marketing partners for Isis
Products. Isis shall keep HepaSense and Elan apprised of its efforts
and progress with respect to the foregoing; provided, however, that any
such information shall be kept confidential and shall not be disclosed
to the Elan
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Pharmaceuticals division of Elan, plc (excluding senior executive
personnel of Elan).
8.3 Notwithstanding anything set forth herein, at such time as HepaSense
intends to commercialize the Product, Elan shall have the right of first
negotiation with respect to the world-wide commercialization of the
Product (the "ELAN FIRST RIGHT OF NEGOTIATION"). Such right of first
negotiation shall be exercised as follows:
8.3.1 If HepaSense intends to commercialize or enter into an agreement
with an independent third party to commercialize the Product,
then HepaSense immediately shall notify Elan in writing that
Elan may elect to enter into negotiations referred to in this
Clause 8.3. Elan shall indicate its desire to enter into such
negotiations pursuant to this Clause 8.3 by delivering written
notice to HepaSense within forty-five (45) days of Elan's
receipt of the written notification from HepaSense to Elan. If
Elan elects to enter into such negotiations, the Parties shall
negotiate in good faith the terms of an applicable agreement.
8.3.2 If, despite such good faith negotiations, Elan and HepaSense do
not reach agreement on the terms of such an agreement within six
(6) months from the notification in writing by HepaSense to
Elan, then HepaSense shall be free to offer a third party (other
than a Technological Competitor of Elan unless consented to by
Elan which consent may be withheld for any reason and otherwise
subject to the terms and conditions of this Agreement) terms to
commercialize the Product in the Territory, which terms when
taken as a whole, are more favorable to HepaSense than the
principal terms of the last written proposal offered to
HepaSense by Elan, or by HepaSense to Elan, as the case may be;
provided, however, that in the event the stage of development or
data available in connection with the Product shall change
materially, the Elan Right of First Negotiation shall be
revived.
8.4 Subject to the rights of Elan with respect to the Product, HepaSense
shall not be permitted to contract the commercialization of the Product
or any other Product without the prior written consent of Elan and Isis,
which consent will not be unreasonably withheld or delayed; provided
that such reasonableness standard, in the case of Elan, shall not be
applicable in the case of a proposed sublicense to any Technological
Competitor of Elan and in the case of Isis, shall not be applicable in
the case of a proposed sublicense to any Technological Competitor of
Isis.
CLAUSE 9
OWNERSHIP OF INTELLECTUAL PROPERTY RIGHTS/NON-COMPETITION
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9.1 The Parties acknowledge and agree to be bound by the provisions of
Clause 3 of the Elan License Agreement and Clause 3 of the Isis License
Agreement set forth the agreement between the parties thereto in
relation to the ownership of the Elan Intellectual Property, the Isis
Intellectual Property and the HepaSense Intellectual property
respectively.
9.2 The Parties acknowledge and agree to be bound by the provisions the
provisions of Clause 4 of the Elan License Agreement and the provisions
of Clause 4 of the Isis License Agreement which set forth the agreement
between the parties thereto in relation to the non-competition
obligations of Elan and Isis, respectively.
CLAUSE 10
SUBLICENSE AND ASSIGNMENT RIGHTS
10.1 HepaSense shall not assign any of its rights under the HepaSense
Intellectual Property without the prior written consent of Elan and
Isis.
10.2 HepaSense shall not sublicense any of its rights under the License
Agreements for the Licensed Technologies and/or the HepaSense
Intellectual Property without the prior written consent of Elan and
Isis, which consent shall not be unreasonably withheld or delayed;
provided, however, that the consent of Elan may be withheld in Elan's
sole discretion in the case of a proposed sublicense of such rights to a
Technological Competitor of Elan.
CLAUSE 11
INTELLECTUAL PROPERTY RIGHTS
11.1 Elan, at its expense and sole discretion may (i) secure the grant of any
patent applications within the Elan Patents that relate to the Field;
(ii) file and prosecute patent applications on patentable inventions and
discoveries within the Elan Improvements that relate to the Field; (iii)
defend all such applications against third party oppositions; and (iv)
maintain in force any issued letters patent within the Elan Patents that
relate to the Field (including any letters patent that may issue
covering any such Elan Improvements that relate to the Field). Elan
shall have the right in its sole discretion to control such filing,
prosecution, defense and maintenance provided that HepaSense and Isis at
their request shall be provided with copies of all documents relating to
such filing, prosecution, defense and maintenance in sufficient time to
review such documents and comment thereon prior to filing.
11.2 Isis, at its expense and sole discretion, may (i) secure the grant of
any patent applications within the Isis Patents that relate to the
Field; (ii) file and prosecute
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patent applications on patentable inventions and discoveries within the
Isis Improvements that relate to the Field; (iii) defend all such
applications against third party oppositions; and (iv) maintain in force
any issued letters patent within the Isis Patents that relate to the
Field (including any letters patent that may issue covering any such
Isis Improvements that relate to the Field). Isis shall have the right
in its sole discretion to control such filing, prosecution, defense and
maintenance provided that Elan and HepaSense at their request shall be
provided with copies of all documents relating to such filing,
prosecution, defense and maintenance in sufficient time to review such
documents and comment thereon prior to filing.
11.3 In the event that Elan does not intend to file for patent protection on
patentable inventions or discoveries within the Elan Intellectual
Property that relates to the Field in one or more countries in the
Territory after providing written notice to HepaSense and Isis,
HepaSense shall have the option at HepaSense's expense, upon the prior
written approval of Elan which approval shall not be unreasonably
withheld, to request Elan to file and prosecute such patent
application(s). Upon such written request from HepaSense, Elan shall be
responsible for preparing and prosecuting and otherwise seeking patent
protection for such Elan Intellectual Property described in this Clause
11.3. Any such Elan Intellectual Property shall be owned by Elan but
Elan shall grant a royalty free exclusive license to HepaSense for such
Elan Intellectual Property in the Field. Such license shall be subject
to the other terms and conditions set forth in this Agreement and the
Elan License Agreement to HepaSense. The Parties shall have the right to
remove their confidential information from any such patent application.
11.4 In the event that Isis does not intend to file for patent protection on
patentable inventions or discoveries within the Isis Intellectual
Property that relates to the Field in one or more countries in the
Territory after providing written notice to HepaSense and Elan,
HepaSense shall have the option at HepaSense's expense, upon the prior
written approval of Isis which approval shall not be unreasonably
withheld, to request Isis to file and prosecute such patent
application(s). Upon such written request from HepaSense, Isis shall be
responsible for preparing and prosecuting and otherwise seeking patent
protection for such Isis Intellectual Property described in this Clause
11.4. Any such Isis Intellectual Property shall be owned by Isis but
Isis shall grant a royalty free exclusive license to HepaSense such Isis
Intellectual Property in the Field. Such license shall be subject to the
other terms and conditions set forth in this Agreement and the Isis
License Agreement to HepaSense. The Parties shall have the right to
remove their confidential information from any such patent application.
11.5 HepaSense at its expense shall have the right but shall not be obligated
(i) to file and prosecute patent applications on patentable inventions
and discoveries within the HepaSense Intellectual Property; (ii) to
defend all such applications against third party oppositions; and (iii)
to maintain in force any issued letters patent within the HepaSense
Patents (including any patents that issue on patentable
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inventions and discoveries within the HepaSense Intellectual Property).
HepaSense shall have the right to control such filing, prosecution,
defense and maintenance provided that the other Parties shall be
provided with copies of all documents relating to such filing,
prosecution, defense, and maintenance in sufficient time to review such
documents and comment thereon prior to filing. The Parties shall have
the right to remove their confidential information from any such patent
application.
11.6 In the event that HepaSense informs both Elan and Isis that it does not
intend to file an application on the HepaSense Intellectual Property in
or outside the Field, Elan shall have the right to file and prosecute
such patent applications on inventions that Elan invents solely or which
relate predominantly to the Elan Intellectual Property, and Isis shall
have the right to file and prosecute such patent applications on
inventions which Isis invents solely or which relate predominantly to
the Isis Intellectual Property, and Elan and Isis agree to negotiate in
good faith on the course of action to be taken with respect to HepaSense
inventions that relate to both the Elan Intellectual Property and Isis
Intellectual Property. The Parties shall have the right to remove their
confidential information from any such patent application.
11.7 The Parties shall promptly inform each other in writing of any actual or
alleged unauthorized use of any Elan Intellectual Property, the Isis
Intellectual Property or the HepaSense Intellectual Property by a third
party of which it becomes aware and provide the others with any
available evidence of such unauthorized use.
11.8 At its option, as the case may be, Elan or Isis shall have the first
option to enforce at its own expense and for its own benefit any
unauthorized use of its respective Intellectual Property (the Elan
Intellectual Property or the Isis Intellectual Property as the case may
be) in the Field. At the enforcing party's request, the other Parties
shall cooperate with such action. Should Elan or Isis decide not to
enforce the Elan Intellectual Property or the Isis Intellectual Property
respectively, against such unauthorized use in the Field, within a
reasonable period but in any event within twenty (20) days after
receiving written notice of such actual or alleged unauthorized use,
HepaSense may in its discretion initiate such proceedings in its own
name, at its expense and for its own benefit, and at such Party's
request, Elan and Isis shall cooperate with such action. Any recovery
remaining after the deduction by HepaSense of the reasonable expenses
(including attorney's fees and expenses) incurred in relation to such
enforcement proceeding shall belong to HepaSense. Alternatively, the
Parties may agree to institute such proceedings in their joint names and
shall reach agreement as to the proportion in which they shall share the
proceeds of any such proceedings, and the expense of any costs not
recovered, or the costs or damages payable to the third party. If the
enforcement of the Elan Intellectual Property or the Isis Intellectual
Property affects both the Field as well as other products being
developed or commercialized by Isis or Elan or its commercial partners
outside the Field, Isis or Elan shall endeavour to agree as to the
manner in which the
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proceedings should be instituted and as to the proportion in which they
shall share the proceeds of any such proceedings, and the expense of any
costs not recovered, or the costs or damages payable to the third party.
11.9 HepaSense shall have the first right but not the obligation to bring
suit or otherwise take action against any unauthorized use of the
HepaSense Intellectual Property. If any such alleged use occurs that
gives rise to a cause of action both inside and outside the Field,
HepaSense, in consultation with the other Parties, shall determine the
course of action to be taken. In the event that HepaSense takes such
action, HepaSense shall do so at its own cost and expense and all
damages and monetary award recovered in or with respect to such action
shall be the property of HepaSense. HepaSense shall keep Elan and Isis
informed of any action in a timely manner so as to enable Isis and Elan
to provide input in any such action and HepaSense shall reasonably take
into consideration any such input. At HepaSense's request, the Parties
shall cooperate with any such action at HepaSense's cost and expense.
11.10 In the event that HepaSense does not bring suit or otherwise take action
against any unauthorized use of the HepaSense Intellectual Property (i)
if only one Party determines to pursue such suit or take such action at
its own cost and expense, it shall be entitled to all damages and
monetary award recovered in or with respect to such action and (ii) if
the other Parties pursue such suit or action outside of HepaSense, they
shall negotiate in good faith an appropriate allocation of costs,
expenses and recovery amounts. At the Party's request, HepaSense shall
cooperate with any such action at the Party's cost and expense.
11.11 In the event that a claim or proceeding is brought against HepaSense by
a third party alleging that the sale, distribution or use of a Product
in the Territory constitutes the unauthorized use of the intellectual
property rights of such Party, HepaSense shall promptly advise the other
Parties of such threat or suit.
11.12 Save in respect of claims by HepaSense against either Party, or by an
Independent Third Party against HepaSense, where Elan is in breach of a
representation or warranty under Clause 7 of the Elan License Agreement
or where Isis is in breach of a representation or warranty under Clause
7 of the Isis License Agreement, HepaSense shall indemnify, defend and
hold harmless Elan or Isis, as the case may be, against all actions,
losses, claims, demands, damages, costs and liabilities (including
reasonable attorneys fees) relating directly or indirectly to all such
claims or proceedings referred to in Clause 11.11, provided that Elan or
Isis, as the case may be, shall not acknowledge to the third party or to
any other person the validity of any claims of such a third party, and
shall not compromise or settle any claim or proceedings relating thereto
without the prior written consent to HepaSense, not to be unreasonably
withheld or delayed. At its option, Elan or Isis, as the case may be,
may elect to take over the conduct of such proceedings from HepaSense
provided that HepaSense's indemnification obligations shall continue;
the costs of defending such claim shall be borne by Elan or Isis, as the
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case may be and such Party shall not compromise or settle any such claim
or proceeding without the prior written consent of HepaSense, such
consent not to be unreasonably withheld or delayed.
CLAUSE 12
CROSS LICENSING/EXPLOITATION OF PRODUCTS OUTSIDE THE FIELD
12.1 Solely for the purpose of and insofar as is necessary, in each case, for
Elan to perform research and development work on behalf of HepaSense,
HepaSense shall grant to Elan a non-exclusive, worldwide, royalty-free,
fully paid-up license for the term of the Licenses:
12.1.1 to exploit the HepaSense Intellectual Property in the Field, and
12.1.2 subject to the terms and conditions of the Isis License, a
sublicense to exploit the Isis Intellectual Property in the
Field.
12.2 Solely for the purpose of and insofar as is necessary, in each case, for
Isis to perform to conduct research and development work on behalf of
HepaSense, HepaSense shall grant to Isis a non-exclusive, worldwide,
royalty-free, fully paid-up license for the term of the Licenses:
12.2.1 to exploit the HepaSense Intellectual Property in the Field, and
12.2.2 subject to the terms and conditions of the Elan License, a
sublicense to exploit the Elan Intellectual Property in the
Field.
12.3 Subject to the provisions of this Clause 12, HepaSense hereby grants to
each of Elan and Isis a license to the HepaSense Intellectual Property
as follows:
12.3.1 HepaSense hereby grants to Elan a worldwide, perpetual,
fully-paid and royalty-free license, with the right to
sublicense, to the HepaSense Intellectual Property in all fields
other than the Field or in connection with Isis proprietary
Oligonucleotides on an as-is basis without recourse,
representation or warranty whether express or implied, including
warranties of merchantability or fitness for a particular
purpose, or infringement of third party rights, and all such
warranties are expressly disclaimed.
12.3.2 Subject to the rights of Elan pursuant to Clause 8.4 hereof,
HepaSense hereby grants to Isis a worldwide, perpetual,
fully-paid and royalty-free license, with the right to
sublicense, to the HepaSense Intellectual Property as it relates
to the Designated Oligonucleotide or any other Oligonucleotide
for use outside the Field on an as-is basis without recourse,
representation or warranty whether express or implied, including
warranties of merchantability or fitness for
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a particular purpose, or infringement of third party rights, and all
such warranties are expressly disclaimed.
CLAUSE 13
REGULATORY
13.1 HepaSense shall keep the other Parties promptly and fully advised of
HepaSense's regulatory activities, progress and procedures. HepaSense
shall inform the other Parties of any dealings it shall have with an
RHA, and shall furnish the other Parties with copies of all
correspondence relating to the Products. The Parties shall collaborate
to obtain any required regulatory approval of the RHA to market the
Products.
13.2 HepaSense shall, at its own cost, file, prosecute and maintain any and
all Regulatory Applications for the Product in the Territory in
accordance with the Business Plan.
13.3 Any and all Regulatory Approvals obtained hereunder for any Product
shall including without limitation, the DMF, shall be processed by and
remain the property of HepaSense, provided that HepaSense shall allow
Elan and Isis access thereto to enable Elan and Isis to fulfil their
respective obligations and exercise their respective rights under this
Agreement. HepaSense shall maintain such Regulatory Approvals at its own
cost. All regulatory approvals and submissions relating to the System,
including without limitation, the MAF, shall be processed by and be the
property of Elan and at all times held in Elan's sole name; provided,
however, that Elan will authorize HepaSense to reference its regulatory
approval and submission, as described herein, with the FDA and such
foreign agency to the extent necessary for HepaSense's regulatory
purposes.
13.4 It is hereby acknowledged that there are inherent uncertainties involved
in the registration of pharmaceutical products with the RHA's insofar as
obtaining approval is concerned and such uncertainties form part of the
business risk involved in undertaking the form of commercial
collaboration as set forth in this Agreement.
CLAUSE 14
MANUFACTURING
14.1 Subject to the provisions of Clause 14.2, HepaSense shall be responsible
for manufacturing, or having manufactured, all quantities of Products
required for the development and commercialization of Products for use
in the Field.
14.2 Elan shall, at its option, manufacture the System for HepaSense and meet
its requirements, on standard commercial terms negotiated in good faith
by
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HepaSense and Elan or to subcontract the manufacture and supply of the
System and HepaSense shall agree to utilize Elan as its sole supplier,
subject to the customary terms and conditions contained in a supply
agreement to be executed by the parties. Isis shall have the right to
manufacture and supply of the Designated Oligonucleotide with respect to
the Product, on standard commercial terms negotiated in good faith by
HepaSense and Isis or subcontract the manufacture and supply of the
Designated Oligonucleotide. In the event Elan or Isis subcontract such
manufacture and supply, the amount charged to HepaSense shall be [ * ].
Any such supply agreement shall be negotiated and agreed by the Parties
not later than the date of completion of Phase III (as such term is
commonly used in connection with FDA applications) of the R&D Plan.
CLAUSE 15
TECHNICAL SERVICES AND ASSISTANCE
15.1 Whenever commercially and technically feasible, HepaSense shall contract
with Isis or Elan, as the case may be, to perform such other services as
HepaSense may require, other than those specifically dealt with
hereunder or in the License Agreements. In determining which Party
should provide such services, the Management Committee shall take into
account the respective infrastructure, capabilities and experience of
Elan and Isis. There shall be no obligation upon either of Isis or Elan
to perform such services.
15.2 HepaSense shall, if the Participants so agree, conclude an
administrative support agreement with Elan and/or Isis on such terms as
the Parties thereto shall in good faith negotiate. The administrative
services shall include one or more of the following administrative
services as requested by HepaSense:
15.2.1 accounting, financial and other services;
15.2.2 tax services;
15.2.3 insurance services;
15.2.4 human resources services;
15.2.5 legal and company secretarial services;
15.2.6 patent and related intellectual property services; and
15.2.7 all such other services consistent with and of the same type as
those services to be provided pursuant to this Agreement, as may
be required.
*CONFIDENTIAL TREATMENT REQUESTED
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The foregoing list of services shall not be deemed exhaustive and may be
changed from time to time upon written request by HepaSense.
15.3 The Parties agree that each Party shall effect and maintain
comprehensive general liability insurance in respect of all clinical
trials and other activities performed by them on behalf of HepaSense.
The Participants and HepaSense shall ensure that the industry standard
insurance policies shall be in place for all activities to be carried
out by HepaSense.
15.4 If Elan or Isis so requires, Isis or Elan, as the case may be, shall
receive, at times and for periods mutually acceptable to the Parties,
employees of the other Party (such employees to be acceptable to the
receiving Party in the matter of qualification and competence) for
instruction in respect of the Elan Intellectual Property or the Isis
Intellectual Property, as the case may be, as necessary to further the
Project.
15.5 The employees received by Elan or Isis, as the case may be, shall be
subject to obligations of confidentiality no less stringent than those
set out in Clause 20 and such employees shall observe the rules,
regulations and systems adopted by the Party receiving the said
employees for its own employees or visitors.
CLAUSE 16
AUDITORS, BANKERS, REGISTERED OFFICE,
ACCOUNTING REFERENCE DATE; SECRETARY; COUNSEL
Unless otherwise agreed by the Participants and save as may be provided to the
contrary herein:
16.1 the auditors of HepaSense shall be KMPG Peat Marwick of Vallis Building,
Hamilton, Bermuda;
16.2 the bankers of HepaSense shall be Bank of Bermuda or such other bank as
may be mutually agreed from time to time;
16.3 the accounting reference date of HepaSense shall be December 31st in
each Financial Year; and
16.4 the secretary of HepaSense shall be I.S. Outerbridge or such other
Person as may be appointed by the Directors from time to time.
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CLAUSE 17
TRANSFERS OF SHARES;
RIGHT OF FIRST OFFER; TAG ALONG RIGHTS
GENERAL:
17.1 No Shareholder shall, directly or indirectly, sell or otherwise transfer
(each, a "TRANSFER") any Shares held by it except as expressly permitted
by and in accordance with the terms of this Agreement. HepaSense shall
not, and shall not permit any transfer agent or registrar for any Shares
to, transfer upon the books of HepaSense any Shares from any Shareholder
to any transferee, in any manner, except in accordance with this
Agreement, and any purported transfer not in compliance with this
Agreement shall be void.
During the Research and Development Term, no Shareholder shall, directly
or indirectly, sell or otherwise Transfer any of its legal and/or
beneficial interest in the Shares held by it to any other Person. After
completion of the Research and Development Term, a Shareholder may
Transfer Shares provided such Shareholder complies with the provisions
of Clauses 17.2 and 17.3.
Notwithstanding anything contained herein to the contrary, at all times,
EIS and/or Isis shall have the right to Transfer any Shares to their
Affiliates provided, however, that such assignment does not result in
adverse tax consequences for any other Parties. EIS shall have the right
to Transfer any Shares to a special purpose financing or similar entity
established by Elan or EIS; provided, that such Affiliates or other
Permitted Transferee to which such legal and/or beneficial interest in
the Shares have been transferred shall agree to be expressly subject to
and bound by all the limitations and provisions which are embodied in
this Agreement.
17.2 No Shareholder shall, except with the prior written consent of the other
Shareholder, create or permit to subsist any Encumbrance over or in, all
or any of the Shares held by it (other than by a Transfer of such Shares
in accordance with the provisions of this Agreement).
17.3 RIGHTS OF FIRST OFFER:
If at any time after the end of the Research and Development Term a
Shareholder shall desire to Transfer any Shares owned by it (a "SELLING
SHAREHOLDER"), in any transaction or series of related transactions
(other than a Transfer to an Affiliate or subsidiary or in the case of
EIS to a special purpose financing or similar entity established by
EIS), then such Selling Shareholder shall deliver prior written notice
of its desire to Transfer (a "NOTICE OF INTENTION") (i) to HepaSense and
(ii) to the Shareholders who are not the Selling Shareholder (and any
transferee thereof permitted hereunder, if any), as applicable, setting
forth such Selling Shareholder's desire to make such Transfer, the
number of Shares proposed to be
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transferred (the "OFFERED SHARES") and the proposed form of transaction
(the "TRANSACTION PROPOSAL"), together with any available documentation
relating thereto, if any, and the price at which such Selling
Shareholder proposes to Transfer the Offered Shares (the "OFFER PRICE").
The "Right of First Offer" provided for in this Clause 16 shall be
subject to any "Tag Along Right" benefiting a Shareholder which may be
provided for by Clause 16, subject to the exceptions set forth therein.
Upon receipt of the Notice of Intention, the Shareholders who are not
the Selling Shareholder shall have the right to purchase at the Offer
Price the Offered Shares, exercisable by the delivery of notice to the
Selling Shareholder (the "NOTICE OF EXERCISE"), with a copy to
HepaSense, within 10 business days from the date of receipt of the
Notice of Intention. If no such Notice of Exercise has been delivered by
the Shareholders who are not the Selling Shareholder within such
10-business day period, or such Notice of Exercise does not relate to
all of the Offered Shares covered by the Notice of Intention, then the
Selling Shareholder shall be entitled to Transfer all of the Offered
Shares to the intended transferee. In the event that all of the Offered
Shares are not purchased by the non-selling Shareholders, the Selling
Shareholder shall sell the available Offered Shares within 30 days after
the delivery of such Notice of Intention on terms no more favorable to a
third party than those presented to the non-selling Shareholders. If
such sale does not occur, the Offered Shares shall again be subject to
the Right of First Offer set forth in Clause 17.3.
In the event that any of the Shareholders who are not the Selling
Shareholder exercises their right to purchase all of the Offered Shares
(in accordance with this Clause 16), then the Selling Shareholder shall
sell all of the Offered Shares to such Shareholder(s), in the amounts
set forth in the Notice of Intention, after not less than 10 business
days and not more than 25 business days from the date of the delivery of
the Notice of Exercise. In the event that more than one of the
Shareholders who are not the Selling Shareholders wish to purchase the
Offered Shares, the Offered Shares shall be allocated to such
Shareholders on the basis of their pro rata equity interests in
HepaSense.
The rights and obligations of each of the Shareholders pursuant to the
Right of First Offer provided herein shall terminate upon the date that
the Common Shares are registered under Section 12(b) or 12(g) of the
Exchange Act.
At the closing of the purchase of all of the Offered Shares by the
Shareholders who are not the Selling Shareholder (scheduled in
accordance with Clause 16), the Selling Shareholder shall deliver
certificates evidencing the Offered Shares being sold, duly endorsed, or
accompanied by written instruments of transfer in form reasonably
satisfactory to the Shareholders who are not the Selling Shareholder,
duly executed by the Selling Shareholder, free and clear of any adverse
claims, against payment of the purchase price therefor in cash, and such
other customary documents as shall be necessary in connection therewith.
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Notwithstanding any other provision of this Clause 17.3, a Change in
Control of any Stockholder shall not trigger a "Right of First Offer" in
favor of any other Stockholder.
17.4 TAG ALONG RIGHTS:
Subject to Clause 17.3, a Shareholder (the "TRANSFERRING SHAREHOLDER")
shall not Transfer (either directly or indirectly), in any one
transaction or series of related transactions, to any Person or group of
Persons, any Shares, unless the terms and conditions of such Transfer
shall include an offer to the other Shareholders (the "REMAINING
SHAREHOLDERS"), to sell Shares at the same price and on the same terms
and conditions as the Transferring Shareholder has agreed to sell its
Shares (the "TAG ALONG RIGHT").
In the event a Transferring Shareholder proposes to Transfer any Shares
in a transaction subject to this Clause 16.4, it shall notify, or cause
to be notified, the Remaining Shareholders in writing of each such
proposed Transfer. Such notice shall set forth: (i) the name of the
transferee and the amount of Shares proposed to be transferred, (ii) the
proposed amount and form of consideration and terms and conditions of
payment offered by the transferee (the "TRANSFEREE TERMS") and (iii)
that the transferee has been informed of the Tag Along Right provided
for in this Clause 16, if such right is applicable, and the total number
of Shares the transferee has agreed to purchase from the Shareholders in
accordance with the terms hereof.
The Tag Along Right may be exercised by each of the Remaining
Shareholders by delivery of a written notice to the Transferring
Shareholder (the "CO-SALE NOTICE") within 10 business days following
receipt of the notice specified in the preceding subsection. The Co-sale
Notice shall state the number of Shares owned by such Remaining
Shareholder which the Remaining Shareholder wishes to include in such
Transfer; provided, however, that without the written consent of the
Transferring Shareholder, the amount of such securities belonging to the
Remaining Shareholder included in such Transfer may not be greater than
such Remaining Shareholder's percentage beneficial ownership of Fully
Diluted Common Shares multiplied by the total number of Fully Diluted
Common Shares to be sold by both the Transferring Shareholder and all
Remaining Shareholders. Upon receipt of a Co-sale Notice, the
Transferring Shareholder shall be obligated to transfer at least the
entire number of Shares set forth in the Co-sale Notice to the
transferee on the Transferee Terms; provided, however, that the
Transferring Shareholder shall not consummate the purchase and sale of
any Shares hereunder if the transferee does not purchase all such Shares
specified in all Co-sale Notices. If no Co-sale Notice has been
delivered to the Transferring Shareholder prior to the expiration of the
10 business day period referred to above and if the provisions of this
Section have been complied with in all respects, the Transferring
Shareholder shall have the right for a 45 day calendar day period to
Transfer
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Shares to the transferee on the Transferee Terms without further notice
to any other party, but after such 45-day period, no such Transfer may
be made without again giving notice to the Remaining Shareholders of the
proposed Transfer and complying with the requirements of this Clause 17.
At the closing of any Transfer of Shares subject to this Clause 17, the
Transferring Shareholder, and the Remaining Shareholder, in the event
such Tag Along Right is exercised, shall deliver certificates evidencing
such securities as have been Transferred by each, duly endorsed, or
accompanied by written instruments of transfer in form reasonably
satisfactory to the transferee, free and clear of any adverse claim,
against payment of the purchase price therefor.
Notwithstanding the foregoing, this Clause 17 shall not apply to any
sale of Common Shares pursuant to an effective registration statement
under the Securities Act in a bona fide public offering.
The rights and obligations of each of the Stockholders pursuant to the
"Tag Along Right" provided herein shall terminate upon the date that the
Common Shares are registered under Section 12(b) or 12(g) of the
Exchange Act.
Notwithstanding any other provision of this Clause 17.4, a Change in
Control of any Stockholder shall not trigger a "Tag Along Right" in
favor of any other Stockholder.
CLAUSE 18
MATTERS REQUIRING STOCKHOLDERS' APPROVAL
18.1 In consideration of Isis and Elan agreeing to enter into the License
Agreements, the Parties hereby agree that HepaSense shall not without
the prior approval of the EIS Director and the Isis Employee Directors:
18.1.1. make a material determination outside the ordinary course of
business, including, among other things, acquisitions or
dispositions of intellectual property and licenses or
sublicenses, change the domicile of, HepaSense from or
discontinue jurisdiction HepaSense out of Bermuda, changes in
the Business or the HepaSense budget as they relate to the
Licensed Technologies; enter into joint ventures and similar
arrangements as they relate to the Licensed Technologies and
changes to the Business Plan as they relate to the Licensed
Technologies;
18.1.2. issue any unissued Preferred Shares or unissued Common Shares,
or create or issue any new shares (including a split of the
Shares) or Common Shares Equivalents, except as expressly
permitted by the HepaSense Memorandum of Association or
Bye-Laws;
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18.1.3. alter any rights attaching to any class of share in the capital
of HepaSense or alter the HepaSense Memorandum of Association or
Bye-Laws;
18.1.4. consolidate, sub-divide or convert any of HepaSense's share
capital or in any way alter the rights attaching thereto;
18.1.5. dispose of all or substantially all of the assets of HepaSense;
18.1.6. do or permit or suffer to be done any act or thing whereby
HepaSense may be wound up (whether voluntarily or compulsorily),
save as otherwise expressly provided for in this Agreement;
18.1.7. enter into any contract or transaction except in the ordinary
and proper course of the Business on arm's length terms;
18.1.8. subject to Clause 24.13, assign, license or sub-license any of
the Elan Intellectual Property, Isis Intellectual Property or
HepaSense Intellectual Property;
18.1.9. amend or vary the terms of the Isis License Agreement or the
Elan License Agreement;
18.1.10. permit a person other than HepaSense to own a regulatory
approval relating to the Product(s);
18.1.11. amend or vary the Business Plan or the HepaSense budget as they
relate to the Licensed Technologies;
18.1.12. alter the number of Directors;
18.1.13. register any Shares of the Company for public trading with any
governmental authority for public trading in any securities
market; and
18.1.14. declare or pay any dividend or make any distribution, directly
or indirectly, with respect to its capital stock; or issue,
sell, exchange, deliver, redeem, purchase or otherwise acquire
or dispose of any shares of its capital stock or other
securities.
CLAUSE 19
DISPUTES
19.1 Should any dispute or difference arise between Elan and Isis, or between
Elan or Isis and HepaSense, during the period that this Agreement is in
force, other than a dispute or difference relating to (i) the
interpretation of any provision of this
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Agreement, (ii) the interpretation or application of law, or (iii) the
ownership of any intellectual property, then any Party may forthwith
give notice to the other Parties that it wishes such dispute or
difference to be referred to the Chief Executive Officer of Isis and the
President of EPT.
19.2 In any event of a notice being served in accordance with Clause 19.1,
each of the Participants shall within 14 days of the service of such
notice prepare and circulate to the designated senior officer of each of
Elan and Isis a memorandum or other form of statement setting out its
position on the matter in dispute and its reasons for adopting that
position. Each memorandum or statement shall be considered by the
designated senior officers of each of Elan and Isis who shall endeavour
to resolve the dispute. If designated senior officers of each of Elan
and Isis agree upon a resolution or disposition of the matter, they
shall each sign a statement which sets out the terms of their agreement.
The Participants agree that they shall exercise the voting rights and
other powers available to them in relation to HepaSense to procure that
the agreed terms are fully and promptly carried into effect.
CLAUSE 20
TERMINATION/CERTAIN CHANGES OF CONTROL
20.1 This Agreement shall govern the operation and existence of HepaSense
until
20.1.1 terminated by written agreement of all Parties hereto; or
20.1.2 otherwise terminated in accordance with this Clause 20.
20.2 For the purpose of this Clause 20, a "RELEVANT EVENT" is committed or
suffered by a Participant if:
20.2.1 it commits a breach of its material obligations under this
Agreement or the applicable License Agreement and fails to
remedy it within 60 days of being specifically required in
writing to do so by the other Participant; provided, however,
that if the breaching Participant has proposed a course of
action to rectify the breach and is acting in good faith to
rectify same but has not cured the breach by the 60th day, such
period shall be extended by such period as is reasonably
necessary to permit the breach to be rectified; or
20.2.2 a distress, execution, sequestration or other process is levied
or enforced upon or sued out against a material part of its
property which is not discharged or challenged within 30 days;
or
20.2.3 it is unable to pay its debts in the normal course of business;
or
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20.2.4 it ceases wholly or substantially to carry on its business,
otherwise than for the purpose of a reconstruction or
amalgamation, without the prior written consent of the other
Participant (such consent not to be unreasonably withheld); or
20.2.5 the appointment of a liquidator, receiver, administrator,
examiner, trustee or similar officer of such Participant or over
all or substantially all of its assets under the law of any
applicable jurisdiction, including without limitation, the
United States of America, Bermuda or Ireland; or
20.2.6 an application or petition for bankruptcy, corporate
re-organization, composition, administration, examination,
arrangement or any other procedure similar to any of the
foregoing under the law of any applicable jurisdiction,
including without limitation, the United States of America,
Bermuda or Ireland, is filed, and is not discharged within 60
days, or a Participant applies for or consents to the
appointment of a receiver, administrator, examiner or similar
officer of it or of all or a material part of its assets, rights
or revenues or the assets and/or the business of a Participant
are for any reason seized, confiscated or condemned.
20.4 If either Participant commits a Relevant Event, the other Shareholder
shall have in addition to all other legal and equitable rights and
remedies hereunder, the right to terminate this Agreement upon 30 days'
written notice.
20.5 In the event of a termination of the Elan License Agreement and/or the
Isis License Agreement, both parties will negotiate in good faith to
determine whether this Agreement should be terminated and if so, which
provisions should survive termination.
20.6 The provisions of Clauses 1.1, 3, 5.1, 9, 10, 11.11, 11.12,12.3, 13.3,
18, 19, 20, 22, 23 and 24 shall survive the termination of this
Agreement under Clause 20.5 or by mutual consent pursuant to Clause 20.1
in accordance with their terms; all other terms and provisions of this
Agreement shall cease to have effect and be null and void upon the
termination of this Agreement under Clause 20.5 or by mutual consent
pursuant to Clause 20.1; provided, however, that so long as the License
Agreements remain in effect Clauses 11.1 through 11.10 shall also
survive.
20.7 [ * * ].
*CONFIDENTIAL TREATMENT REQUESTED
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20.8 In the event that [ * ] pursuant to Clause 20.7 above, the Participants
shall jointly select a nationally recognised investment banking firm as
arbitrator to make such determination. In the event the Participants do
not agree upon the selection of such investment banking firm, Elan may
contact the presiding justice of the Supreme Court of the State of New
York sitting in the City, County, and State of New York (the "PRESIDING
JUSTICE") and request that an independent US-based nationally recognised
investment banking firm which is knowledgeable of the
pharmaceutical/biotechnology industry be appointed within 10 Business
Days. The Presiding Justice shall endeavor to select an investment
banking firm as arbitrator which is technically knowledgeable in the
pharmaceutical/biotechnology industry (and which directly and through
its Affiliates, has no business relationship with, or shareholding in,
either of the Participants). Promptly upon being notified of the
arbitrator's appointment, the Participants shall submit to the
arbitrator details of their assessment of the [ * ] together with such
information as they think necessary to validate their assessment. The
arbitrator shall notify Isis of the fair market value assessed by Elan
(the "ELAN VALUATION") and shall notify Elan of the fair market value
assessed by Isis (the "ISIS VALUATION"). The Participants shall then be
entitled to make further submissions to the arbitrator within five
Business Days explaining [ * ], as the case may be, are unjustified. The
arbitrator shall thereafter meet with Isis and Elan and shall thereafter
choose either the [ * ] on the basis of [ * ]. The arbitrator shall use
its best efforts to determine [ * ] within 30 Business Days of his
appointment. The Participants shall bear the costs of the arbitrator
equally provided that the arbitrator may, in its discretion, allocate
all or a portion of such costs to one Party. Any decision of the
arbitrator shall be final and binding.
20.9 Elan shall purchase the Shares beneficially owned by Isis by delivery of
the Purchase Price in cash no later than the 15th Business Day following
determination of the Purchase Price by the arbitrator.
20.10 The Shares so transferred shall be sold by Isis with effect from the
date of such transfer free from any lien, charge or encumbrance, but
with all rights and restrictions attaching thereto.
20.11 If Elan exercises the Buyout Option pursuant to Clause 20.7, above,
HepaSense shall continue to develop Isis Products on terms which are
substantially the same as those which would be provided to an third
party negotiating on an arm's length basis.
*CONFIDENTIAL TREATMENT REQUESTED
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20.12 If Elan exercises the Buyout Option pursuant to Clause 20.7, above, both
parties will negotiate in good faith to agree to additional reasonable
provisions and/or amendments to the License Agreements to protect the
intellectual property rights of the Participants.
20.13 If Elan exercises the Buyout Option pursuant to Clause 20.7, above, the
provisions of Clauses 1, 3, 10.2.6, 11.2 through 11.12, 12.3, 20.11,
20.12, 20.13, 22, 23 and 24 shall survive the termination of this
Agreement under this Clause 20.13; all other terms and provisions of
this Agreement shall cease to have effect and be null and void.
CLAUSE 21
SHARE RIGHTS
21.1 The provisions regulating the rights and obligations attaching to the
Common Shares and the Preferred Shares are set out in the HepaSense
Bye-Laws.
CLAUSE 22
CONFIDENTIALITY
22.1 The Parties and/or HepaSense acknowledge and agree that it may be
necessary, from time to time, to disclose to each other confidential
and/or proprietary information, including without limitation,
inventions, works of authorship, trade secrets, specifications, designs,
data, know-how and other information, relating to the Field, the
Products, present or future products, the HepaSense Intellectual
Property, the Elan Intellectual Property or the Isis Intellectual
Property, as the case may be, methods, compounds, research projects,
work in process, services, sales suppliers, customers, employees and/or
business of the disclosing Party, whether in oral, written, graphic or
electronic form (collectively "CONFIDENTIAL INFORMATION").
22.2 Any Confidential Information revealed by a Party to another Party shall
be maintained as confidential and shall be used by the receiving Party
exclusively for the purposes of fulfilling the receiving Party's rights
and obligations under this Agreement, and for no other purpose.
Confidential Information shall not include:
22.2.1 information that is generally available to the public;
22.2.2 information that is made public by the disclosing Party;
22.2.3 information that is independently developed by the receiving
Party, as evidenced by such Party's records, without the aid,
application or use of the disclosing Party's Confidential
Information;
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22.2.4 information that is published or otherwise becomes part of the
public domain without any disclosure by the receiving Party, or
on the part of the receiving Party's directors, officers,
agents, representatives or employees;
22.2.5 information that becomes available to the receiving Party on a
non-confidential basis, whether directly or indirectly, from a
source other than the disclosing Party, which source did not
acquire this information on a confidential basis; or
22.2.6 information which the receiving Party is required to disclose
pursuant to:
(i) a valid order of a court or other governmental body or
any political subdivision thereof or as otherwise
required by law, rule or regulation; or
(ii) other requirement of law;
provided, however, that if the receiving Party becomes legally
required to disclose any Confidential Information, the receiving
Party shall give the disclosing Party prompt notice of such fact
so that the disclosing Party may obtain a protective order or
confidential treatment or other appropriate remedy concerning
any such disclosure. The receiving Party shall fully co-operate
with the disclosing Party in connection with the disclosing
Party's efforts to obtain any such order or other remedy. If any
such order or other remedy does not fully preclude disclosure,
the receiving Party shall make such disclosure only to the
extent that such disclosure is legally required; or
22.2.7 information which was already in the possession of the receiving
Party at the time of receiving such information, as evidenced by
its records, provided such information was not previously
provided to the receiving party from a source which was under an
obligation to keep such information confidential; or
22.2.8 information that is the subject of a written permission to
disclose, without restriction or limitation, by the disclosing
Party.
22.3 Each Party agrees to disclose Confidential Information of another Party
only to those employees, representatives and agents requiring knowledge
thereof in connection with their duties directly related to the
fulfilling of the Party's obligations under this Agreement, so long as
such persons are under an obligation of confidentiality no less
stringent than as set forth herein. Each Party further agrees to inform
all such employees, representatives and agents of the terms and
provisions of this Clause and their duties hereunder and to obtain their
consent hereto as a condition of receiving Confidential Information.
Each Party agrees
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that it will exercise the same degree of care and protection to preserve
the proprietary and confidential nature of the Confidential Information
disclosed by a Party, as the receiving Party would exercise to preserve
its own Confidential Information. Each Party agrees that it will, upon
request of another Party, return all documents and any copies thereof
containing Confidential Information belonging to or disclosed by such
other Party. Each Party shall promptly notify the other Parties upon
discovery of any unauthorized use or disclosure of the other Parties'
Confidential Information.
22.4 Notwithstanding the above, each Party may use or disclose Confidential
Information disclosed to it by another Party to the extent such use or
disclosure is reasonably necessary in filing or prosecuting patent
applications, prosecuting or defending litigation, complying with patent
applications, prosecuting or defending litigation, complying with
applicable governmental regulations or otherwise submitting information
to tax or other governmental authorities, conducting clinical trials, or
granting a permitted sub-license or otherwise exercising its rights
hereunder; provided, that if a Party is required to make any such
disclosure of the other Party's Confidential Information, other than
pursuant to a confidentiality agreement, such Party shall inform the
third party recipient of the terms and provisions of this Agreement and
their duties hereunder and shall obtain their consent hereto as a
condition of releasing to the third party recipient the Confidential
Information.
22.5 Any breach of this Clause 22 by any employee, representative or agent of
a Party is considered a breach by the Party itself.
22.6 The provisions relating to confidentiality in this Clause 22 shall
remain in effect during the Term and for a period of seven years
following the termination of this Agreement.
22.7 The Parties agree that the obligations of this Clause 22 are necessary
and reasonable in order to protect the Parties' respective businesses,
and each Party expressly agrees that monetary damages would be
inadequate to compensate a Party for any breach by the other Party of
its covenants and agreements set forth herein. Accordingly, the Parties
agree and acknowledge that any such violation or threatened violation
will cause irreparable injury to a Party and that, in addition to any
other remedies that may be available, in law or in equity or otherwise,
any Party shall be entitled to obtain injunctive relief against the
threatened breach of the provisions of this Clause 22, or a continuation
of any such breach by the other Party, specific performance and other
equitable relief to redress such breach together with its damages and
reasonable counsel fees and expenses to enforce its rights hereunder,
without the necessity of proving actual or express damages.
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CLAUSE 23
COSTS
23.1 Each Shareholder shall bear its own legal and other costs incurred in
relation to preparing and concluding this Agreement and the Definitive
Documents.
23.2 All other costs, legal fees, registration fees and other expenses
relating to the transactions contemplated hereby, including the costs
and expenses incurred in relation to the incorporation of HepaSense,
shall be borne by HepaSense.
CLAUSE 24
GENERAL
24.1 GOOD FAITH:
Each of the Parties hereto undertakes with the others to do all things
reasonably within its power that are necessary or desirable to give
effect to the spirit and intent of this Agreement.
24.2 FURTHER ASSURANCE:
At the request of any of the Parties, the other Party or Parties shall
(and shall use reasonable efforts to procure that any other necessary
parties shall) execute and perform all such documents, acts and things
as may reasonably be required subsequent to the signing of this
Agreement for assuring to or vesting in the requesting Party the full
benefit of the terms hereof.
24.3 NO REPRESENTATION:
Each of the Parties hereto hereby acknowledges that in entering into
this Agreement it has not relied on any representation or warranty
except as expressly set forth herein or in any document referred to
herein.
24.4 FORCE MAJEURE:
Neither Party to this Agreement shall be liable for delay in the
performance of any of its obligations hereunder if such delay is caused
by or results from causes beyond its reasonable control, including
without limitation, acts of God, fires, strikes, acts of war (whether
war be declared or not), insurrections, riots, civil commotions,
strikes, lockouts or other labor disturbances or intervention of any
relevant government authority, but any such delay or failure shall be
remedied by such Party as soon as practicable.
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24.5 RELATIONSHIP OF THE PARTIES:
Nothing contained in this Agreement is intended or is to be construed to
constitute Elan/EIS and Isis as partners, or Elan/EIS as an employee or
agent of Isis, or Isis as an employee or agent of Elan/EIS.
No Party hereto shall have any express or implied right or authority to
assume or create any obligations on behalf of or in the name of another
Party or to bind another Party to any contract, agreement or undertaking
with any third party.
24.6 COUNTERPARTS:
This Agreement may be executed in any number of counterparts, each of
which when so executed shall be deemed to be an original and all of
which when taken together shall constitute this Agreement.
24.7 NOTICES:
Any notice to be given under this Agreement shall be sent in writing by
registered or recorded delivery post or reputable overnight courier such
as Federal Express or telecopied to:
Elan at:
Lincoln House, Lincoln Place, Dublin 2, Ireland
Attention: Vice President & General Counsel
Elan Pharmaceutical Technologies,
a division of Elan Corporation, plc
Telephone: 353-1-709-4000
Fax: 353-1-709-4124
and
Elan International Services, Ltd.
102 St. James Court
Flatts, Smiths FL04
Bermuda
Attention: President
Telephone: 441-292-9169
Fax: 441-292-2224
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Isis at:
2292 Faraday Avenue
Carlsbad, CA 92008
Attention: B. Lynne Parshall, Esq.
Telephone: 760-603-2460
Fax: 760-931-9639
HepaSense Ltd. at:
102 St. James Court
Clarendon House
Church St.
Hamilton, Bermuda
Attention: Secretary
Telephone: 441-295-1422
Fax: 441-292-4720
or to such other address(es) as may from time to time be notified by any
Party to the others hereunder. A copy of any notice served by a
Participant on HepaSense shall also be delivered to the other
Participant.
Any notice sent by mail shall be deemed to have been delivered within
three Business Days after dispatch or delivery to the relevant courier
and any notice sent by telecopy shall be deemed to have been delivered
upon confirmation of receipt. Notices of change of address shall be
effective upon receipt. Notices by telecopy shall also be sent by
another method permitted hereunder.
24.8 GOVERNING LAW; ARBITRATION
24.8.1 This Agreement shall be governed by and construed in accordance
with the laws of the State of New York.
24.8.2 Any dispute under this Agreement or the other Transaction
Documents which is not settled by mutual consent (whether
pursuant to the provisions in Clause 19 hereof or otherwise)
shall be finally settled by binding arbitration, conducted in
accordance with the Commercial Arbitration Rules of the American
Arbitration Association by one (1) arbitrator appointed in
accordance with said rules. Such arbitrator shall be reasonably
satisfactory to each of the Parties; provided, that if the
Parties are unable to agree upon the identity of such arbitrator
within 15 days of demand by either Party, then either Party
shall have the right to petition the Presiding Justice to
appoint an arbitrator.
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The arbitration shall be held in New York, New York and the arbitrator
shall be an independent expert in pharmaceutical product development and
marketing (including clinical development and regulatory affairs).
The arbitrator shall determine what discovery will be permitted,
consistent with the goal of limiting the cost and time which the Parties
must expend for discovery; provided the arbitrator shall permit such
discovery as they deem necessary to permit an equitable resolution of
the dispute.
Any written evidence originally in a language other than English shall
be submitted in English translation accompanied by the original or a
true copy thereof.
The costs of the arbitration, including administrative and arbitrators'
fees, shall be shared equally by the Parties and each Party shall bear
its own costs and attorneys' and witness' fees incurred in connection
with the arbitration.
In rendering judgement, the arbitrator shall be instructed by the
Parties that he shall be permitted to select solely from between the
proposals for resolution of the relevant issue presented by each Party,
and not any other proposal.
A disputed performance or suspended performances pending the resolution
of the arbitration must be completed within thirty (30) days following
the final decision of the arbitrators or such other reasonable period as
the arbitrators determine in a written opinion.
Any arbitration under the Transaction Documents shall be completed
within one year from the filing of notice of a request for such
arbitration.
The arbitration proceedings and the decision shall not be made public
without the joint consent of the Parties and each Party shall maintain
the confidentiality of such proceedings and decision unless otherwise
permitted by the other Party.
The Parties agree that the decision shall be the sole, exclusive and
binding remedy between them regarding any and all disputes,
controversies, claims and counterclaims presented to the arbitrators.
Application may be made to any court having jurisdiction over the Party
(or its assets) against whom the decision is rendered for a judicial
recognition of the decision and an order of enforcement.
24.9 SEVERABILITY:
If any provision in this Agreement is agreed by the Parties to be,
deemed to be or becomes invalid, illegal, void or unenforceable under
any law that is applicable hereto, such provision will be deemed amended
to conform to applicable laws so as to be valid and enforceable or, if
it cannot be so amended without materially altering the intention of the
Parties, it will be deleted, with effect from the date of
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such agreement or such earlier date as the Parties may agree, and the
validity, legality and enforceability of the remaining provisions of
this Agreement shall not be impaired or affected in any way.
24.10 AMENDMENTS:
No amendment, modification or addition hereto shall be effective or
binding on any Party unless set forth in writing and executed by a duly
authorized representative of all Parties.
24.11 WAIVER:
No waiver of any right under this Agreement shall be deemed effective
unless contained in a written document signed by the Party charged with
such waiver, and no waiver of any breach or failure to perform shall be
deemed to be a waiver of any future breach or failure to perform or of
any other right arising under this Agreement.
24.12 ASSIGNMENT:
None of the Parties shall be permitted to assign its rights or
obligations hereunder without the prior written consent of the other
Parties except as follows:
24.12.1 Elan, EIS and/or Isis shall have the right to assign their
rights and obligations hereunder to their Affiliates provided,
however, that such assignment does not result in adverse tax
consequences for any other Parties.
24.12.2 Elan and EIS shall have the right to assign their rights and
obligations hereunder to a special purpose financing or similar
entity established by Elan or EIS.
24.13 ASSIGNMENT OF HEPASENSE INTELLECTUAL PROPERTY:
Upon one month's prior notice in writing from Elan to HepaSense and
Isis, HepaSense shall assign the HepaSense Intellectual Property from
HepaSense to a wholly-owned subsidiary of HepaSense to be incorporated
in Ireland, which company shall be newly incorporated by Elan to
facilitate such assignment.
24.14 WHOLE AGREEMENT/NO EFFECT ON OTHER AGREEMENTS:
This Agreement (including the Schedules attached hereto) and the
Definitive Documents set forth all of the agreements and understandings
between the Parties with respect to the subject matter hereof, and
supersedes and terminates all prior agreements and understandings
between the Parties with respect to the subject matter hereof. There are
no agreements or understandings with respect to the
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subject matter hereof, either oral or written, between the Parties other
than as set forth in this Agreement and the Definitive Documents.
In the event of any ambiguity or conflict arising between the terms of
this Agreement and those of the HepaSense Bye-Laws, except with respect
to the rights and obligations attaching to the Common Shares and the
Preferred Shares in which respect the HepaSense Bye-Laws shall prevail,
the terms of this Agreement.
No provision of this Agreement shall be construed so as to negate,
modify or affect in any way the provisions of any other agreement
between any of the Parties unless specifically referred to, and solely
to the extent provided herein. In the event of a conflict between the
provisions of this Agreement and the provisions of the License
Agreements, the terms of this Agreement shall prevail unless this
Agreement specifically provide otherwise.
24.15 SUCCESSORS:
This Agreement shall be binding upon and inure to the benefit of the
Parties hereto, their successors and permitted assigns.
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on the day
first set forth above.
SIGNED
BY:
-------------------------------------
for and on behalf of
ELAN CORPORATION, PLC
in the presence of:
-------------------------------------
SIGNED
BY:
-------------------------------------
for and on behalf of
ELAN INTERNATIONAL SERVICES, LTD.
in the presence of:
-------------------------------------
SIGNED
BY:
-------------------------------------
for and on behalf of
ELAN PHARMA INTERNATIONAL LIMITED
in the presence of:
-------------------------------------
SIGNED
BY:
-------------------------------------
for and on behalf of
ISIS PHARMACEUTICALS, INC.
in the presence of:
-------------------------------------
SIGNED
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BY:
-------------------------------------
for and on behalf of
HEPASENSE LTD.
in the presence of:
-------------------------------------
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SCHEDULE 1
ELAN LICENSE AGREEMENT
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SCHEDULE 2
ISIS LICENSE AGREEMENT
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SCHEDULE 3
SUBSCRIPTIONS
ISIS 6,001 Common Shares
3,612 Preferred Shares
EIS 2,388 Preferred Shares
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