SUBSCRIPTION, JOINT DEVELOPMENT AND OPERATING AGREEMENT
ELAN PHARMA INTERNATIONAL LIMITED
ELAN INTERNATIONAL SERVICES, LTD.
AND
SHEFFIELD PHARMACEUTICALS, INC.
AND
SHEFFIELD NEWCO, LTD.
INDEX
CLAUSE 1 DEFINITIONS
CLAUSE 2 NEWCO'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 SUBLICENSE AND ASSIGNMENT RIGHTS
CLAUSE 10 OWNERSHIP OF INTELLECTUAL PROPERTY RIGHTS/NONCOMPETITION
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 PARTICIPANTS' APPROVAL
CLAUSE 19 DISPUTES
CLAUSE 20 TERMINATION
CLAUSE 21 SHARE RIGHTS
CLAUSE 22 CONFIDENTIALITY
CLAUSE 23 COSTS
CLAUSE 24 GENERAL
iii
THIS SUBSCRIPTION, JOINT DEVELOPMENT AND OPERATING AGREEMENT made this 18th day
of October, 1999
BETWEEN:
(1) ELAN PHARMA INTERNATIONAL LIMITED, a public limited company
incorporated under the laws of Ireland, and having its registered
office at XXX Xxxxx, Xxxxxxx Xxxxxxxx Xxxx, Xxxxxxx, Xxxxxx Xxxxx,
Xxxxxxx ("EPIL")
(2) ELAN INTERNATIONAL SERVICES, LTD., a private limited company
incorporated under the laws of Bermuda, and having its registered
office at Xxxxxxxxx Xxxxx, 0 Xxxxxx Xx., Xxxxxxxx, Xxxxxxx ("XXX");
(3) SHEFFIELD PHARMACEUTICALS, INC. a corporation duly incorporated and
validly existing under the laws of Delaware and having its principal
place of business at 000 Xxxxx Xxxxxxxxx Xxxx, Xxxxx 000, Xx. Xxxxx, XX
00000, Xxxxxx Xxxxxx of America; and
(4) SHEFFIELD NEWCO, LTD., a private limited company incorporated under the
laws of Bermuda, and having its registered office at Xxxxxxxxx Xxxxx, 0
Xxxxxx Xx., Xxxxxxxx, Xxxxxxx ("Xxxxx").
RECITALS:
A. Newco desires to issue and sell to the Stockholders (as defined below),
and the Stockholders desire to purchase from Newco, for aggregate
consideration of $7,500,000 apportioned between them as set forth
herein, 12,000 ordinary shares of Newco's common stock, par value $1.00
per share (the "Common Stock"), allocated to Sheffield. Additionally,
Newco desires to issue and sell to the Stockholders, and the
Stockholders desire to purchase from Newco, for aggregate consideration
of $7,500,000, apportioned between them as set forth herein, 12,000
shares of Newco's preferred stock, par value $1.00 per share (the
"Preferred Stock"), allocated 7,224 shares to Sheffield for aggregate
consideration of $4,515,000 and 4,776 shares to EIS for aggregate
consideration of $2,985,000.
B. As of the date hereof, EPIL has entered into a license agreement with
Newco, and Sheffield has entered into a license agreement with Newco,
in connection with the license to Newco of the Elan Intellectual
Property and the Sheffield Intellectual Property, respectively (each as
defined below).
C. Elan and Sheffield 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 Sheffield 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 Newco.
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.
"Affiliate" shall mean any corporation or entity controlling,
controlled or under the common control of Elan or Sheffield, as the
case may be. For the purpose 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. Newco
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 Newco.
"Business" shall mean the business specified in the Business Plan.
"Business Plan" shall mean the business plan and program of development
to be agreed by Elan and Sheffield pursuant to Clause 6 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 Sheffield and Elan as it relates to the implementation of the R&D
Plan.
"Certificate of Designations" shall mean that certain certificate of
designations, preferences and rights of the Series D Preferred Stock
issued on the Closing Date.
"Closing Date" shall mean the date upon which the Transaction Documents
are executed and delivered by the Parties and the transactions effected
thereby are closed.
"Combined Fields" shall mean Field A, Field B and Field C.
"Common Stock Equivalents" shall mean any options, warrants, rights or
any other securities convertible, exercisable or exchangeable, in whole
or in part, for or into Common Stock.
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"Compounds" shall mean the Field A Compound, the Field B Compound
and/or the Field C Compound.
"Directors" shall mean, at any time, the directors of Newco.
"Dividend Notes" shall mean promissory notes issued by Sheffield to
holders of Series D Preferred Stock as payment for dividends pursuant
to the Certificate of Designations.
"EIS Director" has the meaning set forth in Clause 5.
"Elan" shall mean EPIL and Affiliates and includes EIS and subsidiaries
of Elan Corporation, Plc. within the division of Elan Corporation, Plc.
carrying on business as Elan Pharmaceutical Technologies but shall not
include Affiliates and subsidiaries (present or future) of Elan
Corporation Plc within the division of Elan Corporation, Plc carrying
on business as Elan Pharmaceuticals which incorporates, inter alia,
Targon Corporation, Athena Neurosciences, Inc., Elan Pharmaceuticals,
Inc., Elan Diagnostics, Carnrick Laboratories, and Elan Europe Limited.
"Elan Improvements" shall mean improvements relating to the Elan
Patents and/or the Elan Know-How, developed (i) by Elan whether or not
pursuant to the Project, (ii) by Newco or Sheffield or by a third party
(under contract with Newco) whether or not pursuant to the Project,
and/or (iii) jointly by any combination of Elan, Sheffield or Newco
pursuant to the Project, except as limited by agreements with third
Parties. Subject to third party agreements, Elan Improvements shall
constitute part of Elan Intellectual Property and be included in the
license of the Elan Intellectual Property pursuant to Clause 2.1 of the
Elan License Agreement solely for the purposes set forth therein. If
the inclusion of an Elan Improvement in the license of Elan
Intellectual Property is restricted or limited by a third party
agreement, Elan shall use reasonable commercial efforts to minimize any
such restriction or limitation.
"Elan Intellectual Property" shall mean the Elan Know-How, the Elan
Patents and the Elan Improvements. For the avoidance of doubt, Elan
Intellectual Property shall exclude (i) Elan's patent rights and
know-how relating to protein or peptide agents or peptodomimetics,
derivatives or analogs thereof, designed to target a pharmaceutically
active agent to a certain site or sites in the body (targeting
technology) and (ii) inventions, patents and know-how owned, licensed
or controlled by Axogen Limited and Neuralab Limited, and by all
Affiliates and subsidiaries (present or future) of Elan Corporation,
Plc. carrying on business as Elan Pharmaceuticals which incorporates,
inter alia, Targon Corporation, Athena Neurosciences, Inc., Elan
Pharmaceuticals, Inc., Elan Diagnostics, Carnrick Laboratories, and
Elan Europe Limited.
"Elan Know-How" shall mean any and all rights owned, licensed or
controlled by Elan to any discovery, invention (whether patentable or
not), know-how, substances, data, techniques, processes, systems,
formulations and designs relating to Nanocrystal(TM) Technology.
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"Elan License Agreement" shall mean the license agreement between Elan
and Newco, of even date herewith, attached hereto in Schedule 1.
"Elan Patents" shall mean any and all rights under any and all patents
applications and/or patents, now existing, currently pending or
hereafter filed or obtained by Elan relating to Nanocrystal(TM)
Technology as set forth in Schedule 1 of the Elan License Agreement,
and any foreign counterparts thereof and all divisionals,
continuations, continuations-in-part, any foreign counterparts thereof
and all patents issuing on, any of the foregoing, together with all
registrations, reissues, re-examinations or extensions thereof.
"Encumbrance" shall mean any liens, charges, encumbrances, equities,
claims, options, proxies, pledges, security interests, or other similar
rights of any nature.
"EPIL Patents" shall mean the Elan Patents owned by EPIL.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Exchange Note" shall mean promissory notes issued by Sheffield to
holders of the Series D Preferred Stock in exchange for share of Series
D Preferred Stock pursuant to the Certificate of Designations.
"Exchange Right" shall mean the Equity Exchange Right (as such term is
defined in the Certificate of Designations in effect on the date
hereof.)
"Field A" shall mean the topical pulmonary delivery of Formulations of
the Field A Compound by means of the Field A Device.
"Field B" shall mean the topical pulmonary delivery of Formulations of
the Field B Compound by means of the Field B Device.
"Field C" shall mean the topical pulmonary delivery of Formulations of
the Field C Compound by means of the Field C Device.
"Field A Device" shall mean a third party table top unit dose nebulizer
having a reservoir capable of holding a unit dose (a device and a
compressor to nebulize a unit dose shall be deemed a device), which is
a device having any one the following characteristics:
(i) [REDACTED]
(ii) [REDACTED]
(iii) [REDACTED]
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(iv) [REDACTED]
(v) [REDACTED]
For the avoidance of doubt, Field A Device does not include [REDACTED]
"Field B Device" shall mean the Aerosol Drug Delivery System ("ADDS"),
owned by Systemic Pulmonary Delivery Limited and exclusively licensed
to Sheffield for topical pulmonary applications.
"Field C Device" shall mean the handheld multi-dose nebulizer ("MSI")
which was licensed exclusively by Siemens to Sheffield pursuant to the
Siemens Agreements and which was subsequently sub-licensed by Sheffield
to Zambon (on an exclusive basis for delivery of various medicines for
humans in treating respiratory disease and/or other lung diseases
including, but not limited to, anti-infectives) provided that Newco,
through the Management Committee, is successful in obtaining a
sub-license from Zambon to Newco enabling the development and use of
the Field C Compounds for use with a Field C Device, as described in
more detail in Clause 2.2 of the Elan License.
"Field A Compound" shall mean [REDACTED.]
"Field B Compound" shall mean [REDACTED] for therapeutic use to be
nominated by the Management Committee pursuant to Clause 2.3, and with
reference to Clause 2.3, any Substitute Field B Compound.
"Field C Compound" shall mean [REDACTED] and with reference to Clause
2.4, any Substitute Field C Compound and/or any Additional Field C
Compound".
"Field A Products" shall mean Formulations of the Field A Compound
delivered by means of any Field A Device in Field A.
"Field B Products" shall mean Formulations of the Field B Compound
delivered by means of the Field B Device in Field B.
"Field C Products" shall mean Formulations of the Field C Compound
delivered by means of the Field C Device in Field C.
"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.
"Formulations" shall mean Nanocrystal(TM) Technology formulations of
Compounds for use in Field A, Field B or Field C, as applicable.
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"Fully Diluted Common Stock" shall mean all of the issued and
outstanding Common Stock, assuming the conversion, exercise or exchange
of all outstanding Common Stock Equivalents.
"Funding Agreement" shall mean the Funding Agreement, dated as of the
date hereof, between EIS and Sheffield.
"License Agreements" shall mean the Elan License Agreement and the
Sheffield License Agreement.
"Licensed Technologies" shall mean, collectively, the Elan Intellectual
Property and the Sheffield Intellectual Property.
"Nanocrystal(TM) Technology" shall mean the Elan proprietary technology
directed to nanoparticulate formulations of compounds used in the
manufacturing and/or formulation process, and methods of making the
same.
"Newco By-Laws" shall mean the By-Laws of Newco.
"Newco Intellectual Property" shall mean all rights to patents,
know-how and other intellectual property arising out of the conduct of
the Project by any person, including any technology acquired by Newco
from a third party, that does not constitute Elan Intellectual Property
or Sheffield Intellectual Property.
"Newco Patents" shall mean any and all patents now existing, currently
pending or hereafter filed or obtained relating to the Newco
Intellectual Property, and any foreign counterparts thereof and all
divisionals, continuations, continuations-in-part, any foreign
counterparts thereof and all patents issuing on, any of the foregoing,
together with all registrations, reissues, re-examinations or
extensions thereof.
"Participant" shall mean Sheffield or Elan, as the case may be, and
"Participants" shall mean both Sheffield and Elan together as the
context requires.
"Party" shall mean Elan, Sheffield, or Newco, as the case may be, and
"Parties" shall mean all three together.
"Permitted Transferee" shall mean any Affiliate or subsidiary of Elan,
EIS or Sheffield, 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 provided such
are not competitors of Sheffield.
"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.
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"Products" shall mean the Field A Products, the Field B Products and/or
the Field C Products.
"Project" shall mean all activities as undertaken by or on behalf of
Newco in order to develop the Products.
"Registration Rights Agreements" shall mean the Registration Rights
Agreements of even date herewith relating to the common shares and the
common stock of Newco and Sheffield, respectively.
"Regulatory Application" shall mean any regulatory application or any
other application for marketing approval for a Product, which Newco
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.
"Research and Development Term" shall refer to the period of time from
the date hereof until the third anniversary of the date hereof.
"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.
"R&D Program" shall mean any research and development program commenced
by Newco pursuant to the Project.
"R&D Plan" shall mean the program of work, including the budget, agreed
by the Management Committee as part of the Business Plan that relates
to the formulation, biopharmaceutical and clinical development of the
Products and such further research and development work as may be
agreed by the Management Committee from time to time.
"Securities Act" shall mean the United States Securities Act of 1933,
as amended.
"Series D Preferred Stock" shall mean the Series D Cumulative
Convertible Exchangeable Preferred Stock, par value $.01 per share, of
Sheffield.
"Shares" shall mean the shares of Common Stock and the shares of
Preferred Stock issued or issuable (directly or upon conversion) to the
Participants pursuant to this Agreement or the Newco Bye-Laws.
"Sheffield" shall mean Sheffield Pharmaceuticals, Inc and its
Affiliates.
"Sheffield Devices" shall mean the Field B Device and the Field C
Device.
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"Sheffield Directors" has the meaning set forth in Clause 5.
"Sheffield Improvements" shall mean improvements relating to the
Sheffield Patents and/or the Sheffield Know-How, developed (i) by
Sheffield whether or not pursuant to the Project, (ii) by Newco or Elan
or by a third party (under contract with Newco) whether or not pursuant
to the Project, and/or (iii) jointly by any combination of Sheffield,
Elan or Newco pursuant to the Project, except as limited by agreements
with third Parties.
Subject to third party agreements, Sheffield Improvements shall
constitute part of Sheffield Intellectual Property and be included in
the license of the Sheffield Intellectual Property pursuant to Clause
2.1 of the Sheffield License solely for the purposes set forth therein.
If the inclusion of a Sheffield Improvement in the license of Sheffield
Intellectual Property is restricted or limited by a third party
agreement, Sheffield shall use reasonable commercial efforts to
minimize any such restriction or limitation.
"Sheffield Intellectual Property" shall mean the Sheffield Know-How,
the Sheffield Patents and the Sheffield Improvements.
"Sheffield Know-How" shall mean any and all rights owned, licensed or
controlled by Sheffield to any discovery, invention (whether patentable
or not), know-how, substances, data, techniques, processes, systems,
formulations and designs relating exclusively to the Sheffield Devices.
"Sheffield License Agreement" shall mean the license agreement between
Sheffield and Newco, of even date herewith, attached hereto in Schedule
2.
"Sheffield Patents" shall mean any and all rights under any and all
patents applications and/or patents, now existing, currently pending or
hereafter filed or obtained by Sheffield relating to the Sheffield
Devices and all divisionals, continuations, continuations-in-part, any
foreign counterparts thereof and all patents issuing on, any of the
foregoing, together with all registrations, reissues, re-examinations
or extensions thereof.
"Sheffield Securities Purchase Agreement" shall mean that certain
Securities Purchase Agreement, of even date herewith, by and between
Sheffield and EIS.
"Siemens" shall mean Siemens Aktiengesellschaft.
"Siemens Agreements" shall mean the License Agreement (as amended)
dated 21 March 1997 and the Basic Supply Agreement dated 21 March 1997,
both between Sheffield Medical Technologies Inc. and Siemens
Aktiengesellschaft.
"Stockholder" shall mean any of EIS, Sheffield, any Permitted
Transferee or any other Person who subsequently becomes bound by this
Agreement as a holder of the Shares, and
"Stockholders" shall mean all of the Stockholders together.
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"Subsidiary" shall mean any company that is a subsidiary of Newco
within the meaning of applicable laws.
"Technological Competitor of Elan" shall mean a company, corporation or
person listed in Schedule 3 and successors thereof or any additional
broad-based technological competitor of Elan added to such Schedule 3
from time to time upon mutual agreement of the Parties
"Technological Competitor of Sheffield" shall mean a company,
corporation or person listed in Schedule 4 and successors thereof or
any additional broad-based technological competitor of Sheffield added
to such Schedule 4 from time to time upon mutual agreement of the
Parties.
"Term" shall mean the term of this Agreement.
"Territory" shall mean all of the countries of the world.
"Transaction Documents" shall mean this Agreement, the Funding
Agreement, the Elan License Agreement, the Sheffield License Agreement,
the Sheffield Securities Purchase Agreement, the Exchange Notes, the
Dividend Notes, the Registration Rights Agreements, the Certificate of
Designations and associated documentation of even date herewith, by and
between Sheffield, Elan, EIS and Newco, as applicable.
"United States Dollar" and "US$" and "$" shall mean the lawful currency
of the United States of America.
"Zambon" shall mean Inpharzam International, S.A..
"Zambon Agreement" shall mean the agreement dated June 15, 1998 between
Sheffield and Zambon.
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" 20.4
"Closing" 4.3
"Common Stock" Recital
"Confidential Information" 22.1
"Co-sale Notice" 17.4
"Expert" 19.3
"Management Committee" 5.2.1
"Notice of Exercise" 17.3
"Notice of Intention" 17.3
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"Offered Shares" 17.3
"Offer Price" 17.3
"Preferred Stock" Recital
"Proposing Participant" 20.4
"Proposing Participant Price" 20.6
"Purchase Price" 20.6
"R&D Committee" 5.2.3
"Recipient Participant" 20.4
"Recipient Participant Price" 20.6
"Remaining Stockholders" 17.4
"Relevant Event" 20.2
"Selling Stockholder" 17.3
"Tag-Along Right" 17.4
"Transaction Proposal" 17.3
"Transfer" 17.1
"Transferee Terms" 17.4
"Transferring Stockholder" 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 Transaction Documents, if defined therein.
CLAUSE 2
BUSINESS
2.1 This Agreement shall 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
Agreement. The focus of the Business will be to develop the Products in
the Combined Fields (subject to the provisions outlined in Clause 2.3
and Clause 2.4 of this
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Agreement and Clause 1 of the Funding Agreement) using the Elan
Intellectual Property, the Sheffield Intellectual Property and the
Newco Intellectual Property to agreed upon specifications and
timelines.
2.2 The central management and control of Newco 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 Newco
By-Laws. The Stockholders shall use their best endeavors to ensure
that to the extent required pursuant to the laws of Bermuda, and to
ensure the sole residence of Newco in Bermuda, all meetings of the
Directors are held in Bermuda or other jurisdictions outside the United
States and generally to ensure that Newco is treated as resident for
taxation purposes in Bermuda.
2.3 Nomination procedures in Field B
The Management Committee shall nominate the Field B Compound as soon as
practicable following the Effective Date provided that the Management
Committee shall in no circumstances be entitled to nominate [REDACTED]
as the Field B Compound without the prior consent in writing of Elan.
Upon nomination of the Field B Compound, the R&D Committee shall carry
out, or have carried out on its behalf by a third party agreed by the
R&D Committee, a feasibility study ("Field B Feasibility Study") to
determine the feasibility of the Field B Compound initially nominated
for an R&D Program in Field B.
Subject to Clause 6.3 and Clause 1 of the Funding Agreement, if the
Management Committee is satisfied with the results of the Field B
Feasibility Study, the Management Committee will consider whether and
when Newco will commence an R&D Program in Field B with such Field B
Compound having regard to the other R&D Programs being undertaken by
Newco and the personnel resources and funding which Newco has allocated
thereto. If the Management Committee determines that such Field B
Compound represents a more valuable opportunity for Newco than Field A,
the
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Management Committee, to the extent necessary, will re-prioritize any
R&D Program(s) already commenced in Field A or proposed to be commenced
by Newco in such Field.
If the Management Committee is not satisfied with the results of the
Field B Feasibility Study, no R&D Program will be commenced by Newco in
respect of such Field B Compound and the Management Committee will
nominate a substitute [REDACTED] for therapeutic use in Field B (the
"Substitute Field B Compound") (provided that the Management Committee
shall in no circumstances be entitled to nominate [REDACTED] as the
Field B Compound without the prior consent in writing of Elan) which
will be subject to a new Field B Feasibility Study and all other
applicable provisions of this Clause 2.3.
Prior to Newco commencing any R&D Program in Field B with the Field B
Compound, or the Substitute Field B Compound, the Parties shall
negotiate in good faith such amendments as are required to the Licenses
and/or the Development Agreement, such as amending the provisions
regulating non-competition.
The Management Committee shall not be entitled to nominate more than
one Substitute Field B Compound hereunder.
With reference to Clause 6.3 and Clause 1 of the Funding Agreement, in
the event that either Elan or Sheffield determines not to fund any
amounts required for an R&D Program in Field B, but the other Party
desires to fund such R&D Program in Field B, the Party desiring to
continue such funding shall be entitled to enter into an agreement with
Newco to obtain the relevant R&D Program in Field B from Newco and to
enter into any necessary license agreements with Newco which will be
negotiated in good faith with Newco and based on the then current fair
market value of such R&D Program in Field B and other customary terms.
2.4 Nomination procedures in Field C
As provided in Clause 2.2 of the Elan License Agreement, on the date
which is [REDACTED] days following the Effective Date, or such extended
date as may be agreed in writing by Elan and Newco, Elan shall, at its
sole discretion, be entitled forthwith to terminate the license to
Newco described in Clause 2.1.3 of the Elan License, upon notice in
writing to Newco, in the event that Newco has not, prior to such date,
executed a written sub-license with Zambon for the development by Newco
of the Field C Formulation in Field C.
Prior to the execution by Newco of the written sub-license with Zambon,
as described herein, within the period specified herein, the Management
Committee will consider whether and when Newco will commence an R&D
Program in Field C having regard to the other R&D Programs being
undertaken by Newco and the personnel resources which Newco has
allocated thereto and the funding available from Zambon for such
proposed R&D Program.
If Newco commences an R&D Program in Field C with the Field C Compound
under this Clause 2.4 and such R&D Program is subsequently terminated
by the Management Committee within one year of commencement because the
Field C Compound cannot be
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formulated in a manner suitable for delivery with the Field C Device,
the Management Committee will consider the nomination of a substitute
[REDACTED] in Field C (the "Substitute Field C Compound").
After a period of 1 year following the later of the commencement date
of the R&D Program commenced by Newco for the Field C Compound or the
Substitute Field C Compound, on a semi-annual basis, the Management
Committee will consider whether it should nominate and consider one
additional [REDACTED] in Field C ("Additional Field C Compound") for an
one additional R&D Program in Field C having regard to the other R&D
Programs being undertaken by Newco and the personnel resources and
funding which Newco has allocated thereto and the funding available
from Zambon for such an additional R&D Program.
Prior to Newco commencing any R&D Program in Field C with a Substitute
Field C Compound or with an Additional Field C Compound, the Parties
shall negotiate in good faith such amendments as are required to the
Licenses and/or the Development Agreement, such as amending the
provisions regulating non-competition and as are required to the
agreement between Newco and Zambon described herein (assuming that such
agreement has been executed in accordance with the provisions hereof).
CLAUSE 3
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of Newco: Newco hereby represents and
warrants to each of the Stockholders as follows, as of the date hereof:
3.1.1 Organization: Newco 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 Newco consists of 12,000 shares of Common Stock and
12,000 shares of Preferred Stock. Prior to the date hereof, no
shares of capital stock of Newco have been issued.
3.1.3 Authorization: The execution, delivery and performance by Newco
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 Newco and is
the valid and binding obligation of Newco, 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
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contemplated hereby or in the Newco By-Laws, will be validly
issued and outstanding, fully paid and non-assessable and not
subject to preemptive or any other similar rights of the
Stockholders or others.
3.1.4 No Conflicts: The execution, delivery and performance by Newco
of this Agreement, the issuance, sale and delivery of the
Shares, and compliance with the provisions hereof by Newco,
will not:
(i) violate any provision of applicable Bermuda law,
statute, rule or regulation applicable to Newco or
any ruling, writ, injunction, order, judgment or
decree of any court, arbitrator, administrative
agency or other governmental body applicable to Newco
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 Newco is
a party, except where such violation, conflict or
breach would not, individually or in the aggregate,
have a material adverse effect on Newco; or
(iii) result in the creation of, any Encumbrance upon any
of the properties or assets of Newco.
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 Newco. Newco has
full authority to conduct its business as contemplated in the
Business Plan and the Transaction 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. Newco 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 Newco not to be
misleading in any material respect.
3.1.7 No Business; No Liabilities: Newco 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 Stockholders: Each of the
Stockholders hereby severally represents and warrants to Newco
as follows as of the date hereof:
3.2.1 Organization: Such Stockholder 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 Stockholder 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 Stockholder, 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 Stockholder of this Agreement, purchase of
the Shares, and compliance with the provisions hereof
by such Stockholder will not:
(i) violate any provision of applicable law,
statute, rule or regulation known by and
applicable to such Stockholder or any ruling,
writ, injunction, order, judgment or decree of
any court, arbitrator, administrative agency
or other governmental body applicable to such
Stockholder 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 Stockholder or any material contract
to which such Stockholder is a party, except
where such violation, conflict or breach would
not, individually or in the aggregate, have a
material adverse effect on such Stockholder;
or
(iii) result in the creation of, any Encumbrance
upon any of the properties or assets of such
Stockholder.
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 Stockholder.
3.2.5 Investment Representations: Such Stockholder is
sophisticated in transactions of this type and
capable of evaluating the merits and risks of its
investment in Newco. Such Stockholder has not been
formed solely for the purpose of making this
investment and such Stockholder is acquiring the
Common Stock and/or Preferred Stock 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
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Stockholder 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 Stockholders' representations as expressed
herein. Such Stockholder 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 Newco has authorized the issuance to (i) EIS of 4,776 shares of
Preferred Stock and (ii) Sheffield of 12,000 shares of Common Stock and
7,224 shares of Preferred Stock, issuable as provided in Clause 4.3
hereof.
4.2 Sheffield and EIS hereby subscribe for the number of Shares set forth
in Clause 4.1 and shall pay to the Newco in consideration therefor, by
wire transfer of immediately available funds (to a bank account
established by Newco 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 Xxxxx
Xxxxxxxxxxx LLC at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 on the
date hereof or such other places if any, as the Parties may agree and
shall occur contemporaneously with the closing under the Sheffield
Securities Purchase Agreement.
4.4 At the Closing, each of the Stockholders shall take or (to the extent
within its powers) cause to be taken the following steps at directors
and shareholder meetings of the Newco, or such other meetings or
locations, as appropriate:
4.4.1 Newco shall issue and sell to EIS, and EIS shall purchase from
Newco, upon the terms and subject to the conditions set forth
herein, 4,776 shares of Preferred Stock for an aggregate
purchase price of $2,985,000 Newco shall issue and sell to
Sheffield, and Sheffield shall purchase from Newco, upon the
terms and conditions set forth herein, (i) 12,000 shares of
Common Stock for an aggregate purchase price of $7,500,000 and
(ii) 7,224 shares of Preferred Stock for an aggregate purchase
price of $4,515,000;
4.4.2 the Parties shall execute and deliver to each other, as
applicable, certificates in respect of the Common Stock and
Preferred Stock described above and any other certificates,
resolutions or documents which the Parties shall reasonably
require;
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4.4.3. the adoption by the Newco of Newco's By-Laws;
4.4.4. the appointment of Xxxxx Xxxxxx, Xxxxx X. Xxxxxxxx, and Xxxxxx
X. Xxxxxxxxxx as Directors of Newco; and
4.4.5. the resignation of all directors and the secretary of Newco
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
Newco and that Newco is not in any way obligated or indebted
to him.
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 EXCEPT PURSUANT TO (i) AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE
SECURITIES OR BLUE SKY LAWS, (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)
OR ANY OTHER AVAILABLE EXCEPTION TO OR EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF SUCH ACT AND ANY APPLICABLE
STATE SECURITIES OR BLUE SKY LAWS, TOGETHER WITH AN OPINION
OF COUNSEL REASONABLY SATISFACTORY TO THE CORPORATION THAT
REGISTRATION IS NOT REQUIRED UNDER SUCH ACT OR APPLICABLE
STATE SECURITIES LAWS.
4.6. Newco 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 Sheffield shall provide all reasonable
co-operation to Newco in relation to the matters set forth in this
Clause 4.6.
4.7. In the event that EIS exercises the Exchange Right prior to the second
anniversary of the Closing Date and Sheffield is required to transfer
to EIS any shares of Common Stock (in addition to the shares of
Preferred Stock otherwise transferable), Newco shall, immediately upon
such exercise, take all necessary steps to ensure that each share to be
transferred by Sheffield to EIS upon the exercise of the Exchange Right
is a duly and validly issued share
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of Preferred Stock (including the conversion of existing shares of
Common Stock held by Sheffield prior to the exercise of the Exchange
Right for newly created shares of Preferred Stock for purposes of the
exercise of the Exchange Right) and that EIS shall have full legal
right, title and interest in and to such shares of Preferred Stock
thereby exchanged. All shares of Newco capital stock transferred by
Sheffield to EIS upon exercise of the Exchange Right prior to the
second anniversary of the Closing Date shall be (or pursuant to this
clause 4.7, shall be converted from common into) shares of Preferred
Stock.
CLAUSE 5
DIRECTORS; MANAGEMENT AND R&D COMMITTEES
5.1. Directors:
Prior to the exercise of the Exchange Right, the Board shall be
composed of three Directors. Sheffield shall have the right to nominate
two directors of Newco ("Sheffield Directors") and EIS shall have the
right to nominate one Director of Newco ("EIS Director"), which
Director, save as further provided herein, shall only be entitled to
15% of the votes of the Board. To the extent required by applicable
Bermuda law, in the event that the EIS Director is not a resident of
Bermuda, at least one of the Sheffield Directors shall be a resident of
Bermuda. Sheffield may appoint one of the Sheffield Directors to be the
chairman of Newco. 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
Sheffield, and EIS shall cause the Board to be reconfigured so that an
equal number of Directors are designated by EIS and Sheffield and that
each of the Directors has equal voting power.
5.1.1 If EIS removes the EIS Director, or Sheffield removes any of
the Sheffield Directors, EIS or Sheffield, as the case may be,
shall indemnify the other Stockholder against any claim by such
removed Director arising from such removal.
5.1.2 The Directors shall meet not less than three times in each
Financial Year and Board meetings shall be held in Bermuda to
the extent required pursuant to the laws of Bermuda or to
ensure the sole residence of Newco in Bermuda.
5.1.3 At any such meeting, the presence of at least one EIS Director
and at least one Sheffield Director shall be required to
constitute a quorum and, subject to Clause 18 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. In the event of any meeting being
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inquorate, the meeting shall be adjourned for a period of seven
days. A notice shall be sent to the EIS Director(s) and the
Sheffield Directors specifying the date, time and place where
such adjourned meeting is to be held and reconvened.
5.1.4 The chairman of Newco shall hold office until the first meeting
of the Board after the exercise by EIS of the Exchange Right,
provided that the Exchange Right is exercised by EIS at any
time after two years from the date hereof. If the Exchange
Right is exercised by EIS within two years from the date
hereof, the chairman of Newco shall continue to hold office. If
the chairman is unable to attend any meeting of the Board, the
Sheffield Directors shall be entitled to appoint another
Director to act as chairman in his place at the meeting. After
exercise of the Exchange Right by EIS, each of EIS and
Sheffield, beginning with EIS, shall have the right,
exercisable alternatively, of nominating one Director to be
chairman of Newco for a term of one year. If the chairman of
Newco is unable to attend any meeting of the Board held after
the exercise of the Exchange Right by EIS, the Directors shall
be entitled to appoint another Director to act as chairman of
Newco in his place at the meeting.
5.1.5. In case of an equality of votes at a meeting of the Board, the
chairman of Newco 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 19.
5.2 Management and R&D Committees:
5.2.1 The Board shall appoint a management committee (the "Management
Committee") to consist initially of four members, two of whom
shall be nominated by Elan and two of whom shall be nominated
by Sheffield, and each of whom shall be entitled to one vote,
whether or not present at any Management Committee meeting.
Decisions of the Management Committee shall require approval of
at least one Elan nominee on the Management Committee and one
Sheffield nominee on the Management Committee.
5.2.2 Each of Elan and Sheffield shall be entitled to remove any of
their nominees to the Management Committee and appoint a
replacement in place of any nominees so removed. The number of
members of the Management Committee may be altered if agreed to
by a majority of the Directors; provided that, each of Elan and
Sheffield shall be entitled to appoint an equal number of
members to the Management Committee. The Management Committee
shall be responsible for, inter alia, devising, implementing
and reviewing strategy for the Project.
5.2.3 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 shall be
nominated by Elan and two of whom shall be nominated by
Sheffield, 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 of at least one Elan nominee
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on the R&D Committee and one Sheffield nominee on the R&D
Committee.
5.2.4 Each of Elan and Sheffield 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. The number of members of
the R&D Committee may be altered if agreed to by a majority of
the Directors provided that each of Elan and Sheffield shall be
entitled to appoint an equal number of members to the R&D
Committee.
5.2.5 The Management Committee shall be responsible for the
preparation of the Business Plan. The Management Committee
shall also be responsible for monitoring and conducting
periodic reviews of Elan Intellectual Property and Sheffield
Intellectual Property.
5.2.6 The R&D Committee shall be responsible for:-
(i) designing that portion of the Business Plan that
relates to the Project for consideration by the
Management Committee;
(ii) establishing a joint Project team consisting of an
equal number of team members from Elan and Sheffield,
including one Project leader from each of Elan and
Sheffield; and
(iii) implementing such portion of the Business Plan that
relates to the Project, as approved by the Management
Committee.
5.2.7 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 Sheffield, 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 will
be binding on the Participants. This process shall also apply
to any dispute within the Management Committee.
5.2.8 Elan and Sheffield shall permit Newco 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 Sheffield and any
other book, record, voucher, receipt or invoice relating to the
calculation or the cost of the R&D Program and to the accuracy
of the reports which accompanied them. Any such inspection of
Elan's or Sheffield's records, as the case may be, shall be at
the expense of Newco, except that if such inspection reveals an
overpayment in the amount paid to Elan or Sheffield, as the
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case may be, for the R&D Program hereunder in any Financial
Year of 5% or more of the amount due to Elan or Sheffield, as
the case may be, then the expense of such inspection shall be
borne solely by Elan or Sheffield, as the case may be, instead
of by Newco. Any surplus over the sum properly payable by Newco
to Elan or Sheffield, as the case may be, shall be paid
promptly by Elan or Sheffield, as the case may be, to Newco. If
such inspection reveals a deficit in the amount of the sum
properly payable to Elan or Sheffield, as the case may be, by
Newco, Newco shall pay the deficit to Elan or Sheffield, as the
case may be.
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 [REDACTED] days of
the Closing Date.
6.2. The Business Plan shall be reviewed and mutually agreed to by the
unanimous approval of the EIS Director and the Sheffield Directors on a
semi-annual basis.
6.3. Neither Participant shall be obliged to provide funding to Newco in the
absence of the semi-annual 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.
6.4. Future Business Plans prepared pursuant to Clause 5 shall be reviewed
and mutually agreed to by the EIS Director and the Sheffield Directors.
CLAUSE 7
RESEARCH AND DEVELOPMENT WORK
7.1 Subject to Clause 6.3, Elan and Sheffield, at Newco's request, may
undertake research and development work related to the development and
commercialization of the Products, at the request of Newco and as
articulated in the Business Plan, in furtherance of the development and
commercialization of the Products and cultivation of patent rights and
know-how related to the Elan Intellectual Property, Sheffield
Intellectual Property and Newco Intellectual Property.
7.2 Elan and Sheffield shall use reasonable efforts in undertaking any such
research and development work undertaken for Newco hereunder to conduct
such research and development work in a professional and timely manner,
in accordance with relevant RHA guidelines and regulations.
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7.3 The cost of such development work shall be Elan's and Sheffield's, as
the case may be, fully-burdened actual costs in respect thereof, plus
[REDACTED] of such costs. Research and development work that is
sub-contracted by Elan or Sheffield to third party providers and/or any
other materials or other services purchased from a third party provider
on Newco's behalf shall be charged by Elan or Sheffield to Newco at the
amount invoiced by the relevant third party provider.
CLAUSE 8
COMMERCIALIZATION
8.1 Newco shall diligently pursue the research, development, prosecution
and commercialization of the Products, as provided in the Business
Plan.
8.2 Subject to Clause 2 of the Sheffield License Agreement, at any time
during the development of the Products, Newco may, subject to the
Licenses and Clause 8.3, license the marketing rights to the Products
to one or more marketing partners, or otherwise commercialize the
Products under an alternative strategy to be agreed upon by Elan and
Sheffield.
8.3 Newco shall be responsible for negotiating with third Parties
commercially reasonable terms (including, inter alia, royalties,
milestones, fees, profit sharing, manufacturing rights, supply terms)
for the rights to be granted, but shall do so under the commercial
strategy agreed with Elan and Sheffield and shall keep Elan and
Sheffield informed throughout the negotiation process.
CLAUSE 9
SUBLICENSE AND ASSIGNMENT RIGHTS
9.1 Newco shall not be permitted to assign, license or sublicense any of
its rights in respect of the Newco Intellectual Property without the
prior written consent of Elan and Sheffield which consent will not be
unreasonably withheld or delayed; provided that:
9.1.1 Elan shall in all cases, in its sole discretion, be entitled
to withhold its consent in the case of a proposed sublicense
to any Technological Competitor of Elan;
9.1.2 Sheffield shall in all cases, in its sole discretion, be
entitled to withhold its consent in the case of a proposed
sublicense to any Technological Competitor of Sheffield
provided that for the avoidance of doubt, this Clause 9.1.2
shall not impact in any way Elan's right to grant sub-licenses
of Newco Intellectual Property pursuant to Clause 12.
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9.2 The Parties acknowledge and agree to be bound by the provisions of
Clause 2.7 of the Elan License Agreement and the provisions of Clause
2.7 of the Sheffield License Agreement which set forth the agreement
between the Parties thereto in relation to sub-licensing of the Elan
Intellectual Property and the Sheffield Intellectual Property
respectively.
CLAUSE 10
OWNERSHIP OF INTELLECTUAL PROPERTY RIGHTS/NON-COMPETITION
10.1. The Parties acknowledge and agree to be bound by the provisions of
Clause 3.1 of the Elan License Agreement and Clause 3.1 of the
Sheffield License Agreement set forth the agreement between the parties
thereto in relation to the ownership of the Elan Intellectual Property,
the Sheffield Intellectual Property and the Newco Intellectual property
respectively.
10.2 The Parties acknowledge and agree to be bound by the provisions of
Clause 4 of the Elan License Agreement and the provisions of Clause 4
of the Sheffield License Agreement which set forth the agreement
between the parties thereto in relation to the non-competition
obligations of Elan and Sheffield, respectively.
CLAUSE 11
INTELLECTUAL PROPERTY RIGHTS
11.1 Newco shall remain the owner of the Newco Intellectual Property.
11.1.1 Each Party shall be responsible for the preparation,
prosecution and maintenance of all patent applications and
issued patents relating to its own intellectual property.
Prior to filing for any patent protection on any Newco
Intellectual Property, Newco shall inform Elan and Sheffield
of its intention to do so.
11.1.2 Upon request, Elan or Sheffield shall provide information
regarding its activities set forth in 11.1.1.
11.2 Enforcement of Intellectual Property Rights; third party infringement
11.2.1 Sheffield, Newco and Elan shall promptly inform the other in
writing of any alleged infringement or unauthorized use of
which it shall become aware by a third party of Newco
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Intellectual Property, Elan Intellectual Property or Sheffield
Intellectual Property, and provide such other with any
available evidence of such unauthorized activity.
11.2.2 Elan shall have the right to pursue at its own expense any
enforcement activities of the Elan Intellectual Property.
Sheffield shall have the right to pursue at its own expense
any enforcement activities of the Sheffield Intellectual
Property. Both Elan and Sheffield agree to reasonably
co-operate with each other in any such action. Any expenses
borne by the co-operating party shall be reimbursed by the
enforcing party. Should either Elan or Sheffield decide not to
enforce the Elan Intellectual Property or the Sheffield
Intellectual Property as the case may be within the Combined
Fields, Newco may do so at its expense and for its own
benefit, and the parties will reasonably co-operate with such
action. If an enforcement action is successful, the Party
taking such enforcement action shall be entitled to any
proceeds recovered.
11.3 Infringement of third party patents
11.3.1 In the event that a claim or proceeding is brought against
Newco by a third party alleging that the manufacture, use,
offer for sale, sale or other activity relating to any of the
Products constitute an unauthorized use of an intellectual
property right owned by such a third party in the Territory,
Newco shall promptly advise Elan and Sheffield of such threat
or suit.
11.3.2 Newco shall indemnify, defend and hold Elan and Sheffield
harmless against all actions, losses, claims, demands,
damages, costs and liabilities (including reasonable attorneys
fees) relating directly or indirectly to all such claims or
proceedings directed to Products; provided that Elan or
Sheffield 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 of Newco,
not to be unreasonably withheld or delayed. At its option, in
the event the claim is directed primarily to Compounds, Elan
may elect to take over the conduct of such proceedings from
Newco, or in the event the claim is directed primarily at
Sheffield Devices, Sheffield may elect to take over the
conduct of such proceedings from Newco; provided that Newco's
indemnification obligations shall continue; the costs of
defending such claim shall be borne by the Party assuming
control over such proceedings; and Elan or Sheffield shall not
compromise or settle any such claim or proceeding without the
prior written consent of Newco, not to be unreasonably
withheld or delayed.
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CLAUSE 12
CROSS-LICENSES/EXPLOITATION OF PRODUCTS OUTSIDE FIELDS A, B AND C
12.1 Solely for the purpose of and insofar as is necessary, in each case,
for Elan to perform its obligations under the Elan License Agreement,
Newco shall grant to Elan a non-exclusive, worldwide, royalty-free,
fully paid-up license for the term of the License Agreements:
12.1.1 to use the Newco Intellectual Property in the Combined Fields,
and
12.1.2 subject to the terms and conditions of the Sheffield License
Agreement, a sublicense to use the Sheffield Intellectual
Property in the Combined Fields.
12.2 Solely for the purpose of and insofar as is necessary, in each case,
for Sheffield to perform its obligations under the Sheffield License
Agreement, Newco shall grant to Sheffield a non-exclusive, worldwide,
royalty-free, fully paid-up license for the term of the Licenses:
12.2.1 to use the Newco Intellectual Property in the Combined Fields,
and
12.2.2 subject to the terms and conditions of the Elan License
Agreement, a sublicense to use the Elan Intellectual Property
in the Combined Fields.
12.3 Elan shall be entitled to exploit the Newco Intellectual Property in
Field B and/or Field C outside Field B and/or Field C respectively
subject to the Parties negotiating a license agreement in good faith
(including all material provisions thereof, including as to whether the
license should be exclusive or non-exclusive), pursuant to which Newco
will grant Elan a license under the Newco Intellectual Property in
Field B and/or Field C outside Field B and/or Field C respectively on a
Product by Product basis. The financial terms of the said license
agreement shall have regard, inter alia, to:
12.3.1 the amount of monies expended by Newco in developing the Newco
Intellectual Property;
12.3.2 the materiality of the Newco Intellectual Property in Field B
and/or Field C by comparison to the further research and
development work to be conducted, and of the Elan Intellectual
Property and the Sheffield Intellectual Property; and
12.3.3 the financial return likely to be earned by Elan from the
proposed exploitation outside Field B and/or Field C; and
12.3.4 the impact of the proposed exploitation of the Newco
Intellectual Property in Field B and/or Field C outside Field
B and/or Field C respectively on the exploitation of the Newco
Intellectual Property in Field B and/or Field C within Field B
and/or Field C respectively.
12.4 Sheffield shall be entitled to exploit the Newco Intellectual Property
in Field B and/or Field C outside Field B and/or Field C respectively
subject to the Parties negotiating a license agreement in good faith
(including all material provisions thereof, including as to whether the
license should be exclusive or non-exclusive), pursuant to which Newco
will xxxxx Xxxxxxxxx a license under the Newco Intellectual Property
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outside Field B and/or Field C respectively on a Product by Product
basis. The financial terms of the said license agreement shall have
regard, inter alia, to:
12.4.1 the amount of monies expended by Newco in developing the Newco
Intellectual Property;
12.4.2 the materiality of the Newco Intellectual Property in Field B
and/or Field C by comparison to the further research and
development work to be conducted, and of the Elan Intellectual
Property and the Sheffield Intellectual Property; and
12.4.3 the financial return likely to be earned by Sheffield from the
proposed exploitation of outside Field B and/or Field C; and
12.4.4 the impact of the proposed exploitation of the Newco
Intellectual Property in Field B and/or Field C outside Field
B and/or Field C respectively on the exploitation of the Newco
Intellectual Property in Field B and/or Field C within Field B
and/or Field C respectively.
12.5 Newco hereby grants to Elan a worldwide, perpetual, fully-paid and
royalty-free license, with the right to grant sublicenses, to the Newco
Intellectual Property in Field A for use outside Field A.
CLAUSE 13
REGULATORY
13.1 Newco shall keep the other Parties promptly and fully advised of
Newco's regulatory activities, progress and procedures. Newco 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 with a view to
obtaining any required regulatory approval of the RHA to market the
Products.
13.2 Newco shall, at its own cost, file, prosecute and maintain any and all
Regulatory Applications for the Products in the Territory in accordance
with the Business Plan, except where such obligations are by contract
undertaken by a third party.
13.3 Subject to Clause 13.5, and subject to a determination by Newco that
one or more regulatory approvals should be held in the name of Newco's
commercial partner such as a sub-licensee, any and all Regulatory
Approvals obtained hereunder for any Product shall be prosecuted and
owned by Newco, provided that Newco shall allow Elan and Sheffield
access thereto to enable Elan and Sheffield to fulfill their respective
obligations and exercise their respective rights under this Agreement.
Newco shall maintain such Regulatory Approvals at its own cost.
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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.
13.5 The DMF (Drug Master File) relating to Formulations shall be processed
by and be the property of Elan and at all times held in Elan's sole
name. Elan grants Newco for Field A, Field B and Field C, a right to
reference Elan's DMF, as described herein, with the FDA to the extent
necessary for Newco's regulatory purposes. Elan grants Sheffield for
Field B and Field C a right to reference Elan's DMF, as described
herein, with the FDA to the extent necessary for Sheffield's regulatory
purposes.
CLAUSE 14
MANUFACTURING
Elan will supply Nanocrystal Compounds to Newco at Elan's fully burdened cost
plus [REDACTED] of such cost; provided, however, that Elan shall have the right
to subcontract the manufacture and supply of the Nanocrystal Compounds. Elan
shall have the first right to manufacture and supply, and/or subcontract the
manufacture and supply of Formulations, subject to the Zambon Agreement.
Any such supply agreement shall be negotiated and agreed by the Parties not
later than the date of completion of Phase II (as such term is commonly used in
connection with FDA applications) of the R&D Program. The terms of the said
supply agreements shall be on Elan's normal commercial terms, and shall be
negotiated in good faith by the Parties thereto provided that Elan agrees that
the cost which would to be invoiced by Elan to Newco in respect of such
manufacture would be Elan's fully-burdened actual costs plus [REDACTED] of such
costs.
If Elan does not exercise its first right hereunder to manufacture and supply,
and/or subcontract the manufacture and supply of Formulations, then Newco shall
be free to enter into negotiations with a third party (other than a
Technological Competitor of Elan) to agree to terms upon which the third party
would be licensed by Elan (on licensing terms satisfactory to Elan) and by Newco
to the extent necessary (on licensing terms satisfactory to Newco) to
manufacture the relevant Formulation(s) in the Territory, which terms when taken
as a whole, are not more favourable to the third party than the principal terms
of the last written proposal offered by Newco to Elan or by Elan to Newco, as
the case may be.
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CLAUSE 15
TECHNICAL SERVICES AND ASSISTANCE
15.1 Whenever commercially and technically feasible, Newco shall contract
with Sheffield or Elan, as the case may be, to perform such other
services as Newco 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 Sheffield. There shall be no obligation upon either of
Sheffield or Elan to perform such services.
15.2 Newco shall, if the Participants so agree, conclude an administrative
support agreement with Elan and/or Sheffield 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 Newco:
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.
The foregoing list of services shall not be deemed exhaustive and may
be changed from time to time upon written request by Newco.
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 Newco. The
Stockholders and Newco shall ensure that the industry standard
insurance policies shall be in place for all activities to be carried
out by Newco.
15.4 If Elan or Sheffield so requires, Sheffield 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
Sheffield Intellectual Property, as the case may be, as necessary to
further the Project.
15.5 The employees received by Elan or Sheffield, as the case may be, shall
be subject to obligations of confidentiality no less stringent than
those set out in Clause 22 and such employees shall observe the rules,
regulations and systems adopted by the Party receiving the said
employees for its own employees or visitors.
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CLAUSE 16
AUDITORS, BANKERS, REGISTERED OFFICE,
ACCOUNTING REFERENCE DATE; SECRETARY
Unless otherwise agreed by the Stockholders and save as may be provided to the
contrary herein:
16.1 the auditors of Newco shall be Ernst & Young or as designated by the
Directors;
16.2 the bankers of Newco shall be as designated by the Directors; there
shall be established at a U.S. bank mutually agreed to by the parties a
bank account managed by Sheffield for the benefit of Newco;
16.3 the accounting reference date of Newco shall be December 31 in each
Financial Year; and
16.4 the secretary of Newco shall be I.S. Xxxxxxxxxxx or such other Person
as may be appointed by the Directors from time to time.
CLAUSE 17
TRANSFERS OF SHARES;
RIGHT OF FIRST OFFER; TAG ALONG RIGHTS
General:
17.1. No Stockholder shall, directly or indirectly, sell or otherwise
transfer (each, a "Transfer") any Shares held by it except in as
expressly permitted by and accordance with the terms of this Agreement.
Newco shall not, and shall not permit any transfer agent or registrar
for any Shares to, transfer upon the books of Newco any Shares from any
Stockholder 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 Stockholder 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
Stockholder may Transfer Shares provided such Stockholder complies with
the provisions of Clauses 17.2 and 17.3.
Notwithstanding anything contained herein to the contrary (i) at all
times, EIS and/or Sheffield shall have the right to Transfer any Shares
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to their Affiliates provided, however, that such assignment does not
result in adverse tax consequences for any other Parties and (ii)
Sheffield may not Transfer or allow any Encumbrance in, or to, any
Shares that are subject to the Exchange Right, other than to EIS or its
Affiliates. EIS shall have the right to Transfer any Shares to an
affiliate; provided, that such Affiliates shall agree to be expressly
subject to and bound by all the limitations and provisions which are
embodied in this Agreement.
17.2 No Stockholder shall, except with the prior written consent of the
other Stockholder, create or permit to subsist any pledge, lien or
charge over, or grant any option or other rights or Encumbrance in, or
to, 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) made
by it to Newco unless any Person in whose favour any such pledge, lien,
or charge is created or permitted to subsist or such option or rights
are granted or such interest is disposed of shall be expressly subject
to and bound by all the limitations and provisions which are embodied
in this Agreement.
17.3 Rights of First Offer:
If, at any time after the end of the Research and Development Term, a
Stockholder shall desire to Transfer any Shares owned by it (a "Selling
Stockholder"), in any transaction or series of related transactions
other than a Transfer to an Affiliate or subsidiary or in the case of
EIS permitted by the Agreement to a special purpose financing or
similar entity established by EIS, then such Selling Stockholder shall
deliver prior written notice of its desire to Transfer (a "Notice of
Intention") (i) to Newco and (ii) to the Stockholders who are not the
Selling Stockholder (and any transferee thereof permitted hereunder, if
any), as applicable, setting forth such Selling Stockholder's desire to
make such Transfer, the number of Shares proposed to be transferred
(the "Offered Shares") and the proposed form of transaction (the
"Transaction Proposal"), together with any available documentation
relating thereto, if any, and the consideration to be paid and the
terms and conditions, at which such Selling Stockholder proposes to
Transfer the Offered Shares (the "Offer Price"). The "Right of First
Offer" provided for in this Clause 17 shall be subject to any "Tag
Along Right" benefiting a Stockholder which may be provided for by
Clause 17, subject to the exceptions set forth therein.
Upon receipt of the Notice of Intention, the Stockholders who are not
the Selling Stockholder shall have the right to purchase at the Offer
Price the Offered Shares, exercisable by the delivery of notice to the
Selling Stockholder (the "Notice of Exercise"), with a copy to Newco,
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
Stockholders who are not the Selling Stockholder 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 Stockholder 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 Stockholders, the Selling
Stockholder 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
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Stockholders. If such sale does not occur, the Offered Shares shall
again be subject to the Right of First Refusal set forth in Clause
17.3.
In the event that any of the Stockholders who are not the Selling
Stockholder exercise their right to purchase all of the Offered Shares
(in accordance with this Clause 17), then the Selling Stockholder shall
sell all of the Offered Shares to such Stockholder(s), in the amounts
set forth in the Notice of Intention, after not less than 20 business
days and not more than 30 business days from the date of the delivery
of the Notice of Exercise. In the event that more than one of the
Stockholders who are not the Selling Stockholders wish to purchase the
Offered Shares, the Offered Shares shall be allocated to such
Stockholders on the basis of their pro rata equity interests in Newco,
taken as a whole.
The rights and obligations of each of the Stockholders pursuant to the
Right of First Offer provided herein shall terminate upon the date that
the Common Stock is 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
Stockholders who are not the Selling Stockholder (scheduled in
accordance with Clause 17), the Selling Stockholder shall deliver
certificates evidencing the Offered Shares being sold, duly endorsed,
or accompanied by written instruments of transfer in form reasonably
satisfactory to the Stockholders who are not the Selling Stockholder,
duly executed by the Selling Stockholder, 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.
17.4 Tag Along Rights:
Subject to Clause 17.3, a Stockholder (the "Transferring Stockholder")
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 Stockholders (the
"Remaining Stockholders"), to sell Shares at the same price and on the
same terms and conditions as the Transferring Stockholder has agreed to
sell its Shares (the "Tag Along Right").
In the event a Transferring Stockholder proposes to Transfer any Shares
in a transaction subject to this Clause 17.4, it shall notify, or cause
to be notified, the Remaining Stockholders 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 17, if such right is applicable, and the total
number of Shares the transferee has agreed to purchase from the
Stockholders in accordance with the terms hereof.
The Tag Along Right may be exercised by each of the Remaining
Stockholders by delivery of a written notice to the Transferring
Stockholder (the "Co-sale Notice") within 20 business days following
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receipt of the notice specified in the preceding subsection. The
Co-sale Notice shall state the number of Shares owned by such Remaining
Stockholder which the Remaining Stockholder wishes to include in such
Transfer; provided, however, that without the written consent of the
Transferring Stockholder, the amount of such securities belonging to
the Remaining Stockholder included in such Transfer may not be greater
than such Remaining Stockholder's percentage beneficial ownership of
Fully Diluted Common Stock multiplied by the total number of shares of
Fully Diluted Common Stock to be sold by both the Transferring
Stockholder and all Remaining Stockholders. Upon receipt of a Co-sale
Notice, the Transferring Stockholder 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 Stockholder 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 Stockholder prior to the expiration of
the 20 business day period referred to above and if the provisions of
this Section have been complied with in all respects, the Transferring
Stockholder shall have the right for a 45-day period to Transfer 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 Stockholders 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 Stockholder, and the Remaining Stockholder, 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 Stock pursuant to an effective registration statement
under the Securities Act in a bona fide public offering.
CLAUSE 18
MATTERS REQUIRING PARTICIPANTS' APPROVAL
18.1 Subject to the provisions of Clause 18.2, in consideration of Sheffield
and Elan agreeing to enter into the License Agreements, the Parties
hereby agree that Newco shall not without the prior approval of the EIS
Director and the Sheffield Directors:
18.1.1. make a material Newco determination outside the ordinary
course of business, including, among other things,
acquisitions or dispositions of intellectual property and
licenses or sublicenses, changes in the Business or the Newco
budget; entry 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;
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18.1.2. issue any unissued Shares or unissued Common Stock
Equivalents, or create, authorize or issue any new shares
(including a split of the Shares) or Common Stock Equivalents,
except as expressly permitted by the Newco By-Laws in effect
as of the date hereof;
18.1.3. alter any rights attaching to any class of share in the
capital of Newco or alter the Newco By-Laws;
18.1.4. consolidate, sub-divide or convert any of Newco'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 Newco;
18.1.6. do or permit or suffer to be done any act or thing whereby
Newco 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. license or sub-license any of the Elan Intellectual Property,
Sheffield Intellectual Property, Newco Intellectual Property;
18.1.9. amend or vary the terms of the Sheffield License Agreement or
the Elan License Agreement;
18.1.10. permit a person other than Newco to own a regulatory approval
relating to the Product(s);
18.1.11. approve, amend or vary the Business Plan or the Newco budget;
and
18.1.12. alter the number of Directors.
CLAUSE 19
DISPUTES
19.1 Should any dispute or difference arise between Elan and Sheffield, or
between Elan or Sheffield and Newco, 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 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
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other Parties that it wishes such dispute or difference to be referred
to the Chief Executive Officer of Sheffield and the President of Elan
Pharmaceutical Technology, a division of Elan Corporation, Plc ("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 chief executive officer of each
Participant 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 chief
executive officers of the Participants who shall endeavor to resolve
the dispute. If the chief executive officers of the Participants 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 Newco to procure that the agreed terms
are fully and promptly carried into effect.
19.3 In the event the chief executive officers of the Participants are
unable to resolve a dispute or difference when it is referred to them
under Clause 19.1 which relates to the interpretation of this Agreement
or any other Transaction Document or the compliance of the Parties with
their legal obligations thereunder, such dispute or difference shall be
referred to arbitration in accordance with Clause 24.8.3 hereof. If the
dispute or difference does not relate to the interpretation of this
Agreement or any other Transaction Document or the compliance of the
Parties with their legal obligations thereunder, the provisions of
Clause 24.8.2 shall govern.
CLAUSE 20
TERMINATION
20.1 This Agreement shall govern the operation and existence of Newco 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 [REDACTED]
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20.2.2 [REDACTED]
20.2.3 [REDACTED]
20.2.4 [REDACTED]
20.2.5 [REDACTED]
20.2.6 [REDACTED]
20.4 If either Participant commits or suffers a Relevant Event, the other
Participant shall be entitled, within three months of the occurrence of
the Relevant Event, to require the defaulting Participant (the
"Recipient Participant") to sell on reasonable terms of payment to the
non-defaulting Participant (the "Proposing Participant") all (but not
some only) of the Shares, held or beneficially owned by the Recipient
Participant for an amount equal to [REDACTED] of the fair market value
of the Shares of the Recipient Participant (the "Buyout Option").
20.5 The Proposing Participant shall notify the Recipient Participant of the
exercise of the Buyout Option, no later than 30 business days prior to
the proposed exercise thereof, by delivering written notice to the
Recipient Participant stating that the Buyout Option is exercised and
the price at which the Proposing Participant is willing to purchase the
Shares of the Recipient Participant.
20.6 In the event that the Participants do not agree upon a purchase price
for the Shares within five Business Days following the receipt by the
Recipient Participant of written notice from the Proposing Participant
pursuant to Clause 20.5 above, the Proposing Participant may contact
the American Arbitration Association ("AAA"), sitting in New York City
and request that an independent US-based arbitrator who is expert in
the pharmaceutical/biotechnology industry be appointed within 10
Business Days. The AAA shall endeavor to select an arbitrator who is
technically knowledgeable in the pharmaceutical/biotechnology industry
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(and who directly and through his affiliates, has no business
relationship with, or shareholding in, either the Proposing Participant
or the Recipient Participant). Promptly upon being notified of the
arbitrator's appointment, the Proposing Participant and the Recipient
Participant shall submit to the arbitrator details of their assessment
of the fair market value for the Shares of the Recipient Participant
together with such information as they think necessary to validate
their assessment. The arbitrator shall notify the Recipient Participant
of [REDACTED] of the fair market value assessed by the Proposing
Participant (the "Proposing Participant Price") and shall notify the
Proposing Participant of [REDACTED] of the fair market value assessed
by the Recipient Participant (the "Recipient Participant Price"). The
Proposing Participant and the Recipient Participant shall then be
entitled to make further submissions to the arbitrator within five
Business Days explaining why the Recipient Participant Price or the
Proposing Participant Price, as the case may be, is unjustified. The
arbitrator shall thereafter meet with the Proposing Participant and the
Recipient Participant and shall thereafter choose either the Recipient
Participant Price or the Proposing Participant Price (but not any other
price) as the purchase price for the Shares (the "Purchase Price") on
the basis of which price the Expert determines to be closer to
[REDACTED] of the fair market value for the Shares of the Recipient
Participant. The arbitrator shall use his best efforts to determine the
Purchase Price within 30 Business Days of his appointment. The
Proposing Participant and the Recipient Participant shall bear the
costs of the arbitrator equally provided that the arbitrator may, in
his discretion, allocate all or a portion of such costs to one Party.
Any decision of the arbitrator shall be final and binding.
20.7 The Proposing Participant shall purchase the Shares of the Recipient
Participant by delivery of the Purchase Price in cash no later than the
15th Business Day following determination of the Purchase Price by the
Expert.
20.8 The Shares of the Recipient Participant so transferred shall be sold by
the transferor as beneficial owner with effect from the date of such
transfer free from any lien, charge or encumbrance with all rights and
restrictions attaching thereto. If the Proposing Participant elects to
purchase the Shares of the Recipient Participant, the Shares of the
Recipient Participant shall be sold by the Recipient Participant as
beneficial owner for a price equal to [REDACTED] of the Purchase Price
with effect from the date specified by the Proposing Participant in its
notice of election free from any lien, charge or encumbrance together
with all rights attaching thereto.
20.9 If the Proposing Participant exercises the Buyout Option, 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 Recipient Party.
20.10 If either Participant commits a Relevant Event, the other Stockholder
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.
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20.11 In the event of a termination of the Elan License Agreement and/or the
Sheffield 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.
20.12 The provisions of Clauses 1.1, 18, 19, 20 and 22 shall survive the
termination of this Agreement under this Clause 20.10 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 this
Clause 20.10 or by mutual consent pursuant to Clause 20.1.
CLAUSE 21
SHARE RIGHTS
The following is a summary of the terms of the capital stock of Newco.
This summary does not purport to be complete and is qualified in all respects by
reference to the Newco By-laws, which are hereby incorporated by reference.
Each share of Common Stock is entitled to one vote on all matters on
which the stockholders of Newco are entitled to vote. Subject to the Bermuda
Companies Act of 1981 (or any successor legislation), shares of Preferred Stock
shall not be entitled to vote on any matters brought before the shareholders of
Newco. At any time after to the second anniversary of the date hereof each share
of Preferred Stock may be converted into shares of Common Stock at a one-for-one
ratio, subject to adjustment for stock splits, stock dividends and similar
events. The Preferred Stock and the Common Stock rank pari passu with respect to
the payment of dividends, which shall be paid to the holders thereof on a pro
rata basis. Upon any liquidation, dissolution or winding up of Newco or the sale
of substantially all of the assets of Newco, or the merger of Newco with and
into another Person, the Preferred Stock shall rank prior to the Common Stock
and the holders of Preferred Stock shall be entitled to be paid, prior to any
distribution to any holders of Common Stock, an amount in cash equal the
aggregate purchase price paid by the Stockholders for the Preferred Stock,
pursuant to Clause 4.41 hereof.
CLAUSE 22
CONFIDENTIALITY
22.1 The Parties and/or Newco 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 Combined
Fields, the Products, present or future products, the Newco
Intellectual Property, the Elan Intellectual Property or the Sheffield
Intellectual Property, as the case may be, methods, compounds, research
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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;
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.
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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 Agreement and their duties hereunder and to obtain
their consent hereto as a condition of receiving Confidential
Information. Each Party agrees that it will exercise a reasonable
degree of care and protection to preserve the proprietary and
confidential nature of the Confidential Information disclosed by a
Party. 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 commitment to abide by the confidentiality provisions of
this Clause 22 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
22.1 Each Stockholder shall bear its own legal and other costs incurred in
relation to preparing and concluding this Agreement and the Transaction
Documents.
22.2 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 Newco, shall
be borne by Newco.
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 Sheffield as partners, or Elan/EIS as an
employee or agent of Sheffield, or Sheffield 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/EIS at:
Xxxxxxx Xxxxx, Xxxxxxx Xxxxx, Xxxxxx 0, Xxxxxxx
Attention: Vice President & General Counsel
Elan Pharmaceutical Technologies,
a division of Elan Corporation, plc
Telephone: 000-0-000-0000
Fax: 000-0-000-0000
and
Elan International Services, Ltd.
000 Xx. Xxxxx Xxxxx
Xxxxxx, Xxxxxx XX00
Bermuda
Attention: President
Telephone: 000-000-0000
Fax: 000-000-0000
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Sheffield at:
Sheffield Pharmaceuticals Inc.
000 Xxxxx Xxxxxxxxx Xxxx
Xx. Xxxxx, XX 00000
Attention: President
Telephone: 000-000-0000
Fax: 000-000-0000
and
0000 Xxxxxx Xxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Attention: Chairman
Telephone: 000-000-0000
Fax: 000-000-0000
with a copy to:
Xxxxxx X. Xxxxxxxxx, Esq.
Olshan, Grundman, Frome, Xxxxxxxxxx & Xxxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Telephone: 000-000-0000
Fax: 000-000-0000
Newco at:
000 Xx. Xxxxx Xxxxx
Xxxxxx, Xxxxxx XX00
Bermuda
Attention: Secretary
Telephone: 000-000-0000
Fax: 000-000-0000
and to
Xxxxxxxxx Xxxxx
0 Xxxxxx Xx.
Xxxxxxxx, Xxxxxxx
or to such other address(es) as may from time to time be notified by
any Party to the others hereunder.
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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. The Parties will attempt in good faith to resolve any dispute
arising out of or relating to this Agreement promptly by
negotiation between executives of the Parties. In the event
that such negotiations do not result in a mutually acceptable
resolution, the Parties agree to consider other dispute
resolution mechanisms including mediation.
24.8.3 Any dispute under this Agreement which is not settled by
mutual consent under Clause 24.8.2 shall be finally settled by
binding arbitration, conducted in accordance with the
Commercial Arbitration Rules of the American Arbitration
Association by one 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 a presiding justice of the Supreme Court
of New York, New York County, to appoint an arbitrator.
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.
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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 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 this Agreement 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 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.
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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 (in which case, written notice shall be
delivered by the assigning Party to the other Parties):
24.12.1 Elan, EIS and/or Sheffield 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 any Affiliate. Each assignee must
comply with the representations and warranties in clause 3.5
hereof.
24.13 Whole Agreement/No Effect on Other Agreements:
This Agreement (including the Schedules attached hereto) and the
Transaction 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
subject matter hereof, either oral or written, between the Parties
other than as set forth in this Agreement and the Transaction
Documents.
In the event of any ambiguity or conflict arising between the terms of
this Agreement and those of the Newco Bye-Laws, the terms of this
Agreement shall prevail, except with respect to Clause 21, in which
case the terms of the Newco Bye-laws shall govern.
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.
24.14 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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SCHEDULE 1
ELAN LICENSE AGREEMENT
SCHEDULE 2
SHEFFIELD LICENSE AGREEMENT
SCHEDULE 3
TECHNOLOGICAL COMPETITORS OF ELAN
[REDACTED]
SCHEDULE 4
TECHNOLOGICAL COMPETITORS OF SHEFFIELD
[REDACTED]
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on the day
first set forth above.
SIGNED
BY:/s/
-----------------------------------
for and on behalf of
ELAN PHARMA INTERNATIONAL LTD.
in the presence of:__________________
SIGNED
BY:/s/
-----------------------------------
for and on behalf of
ELAN INTERNATIONAL SERVICES, LTD.
in the presence of:__________________
SIGNED
BY:/s/
-----------------------------------
for and on behalf of
SHEFFIELD PHARMACEUTICALS, INC.
in the presence of:__________________
SIGNED
BY:/s/
-----------------------------------
for and on behalf of
SHEFFIELD NEWCO, LTD.
in the presence of:__________________
