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Exhibit 10.18
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS MARKED WITH "X" AND HAS BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.
DISCONTINUATION AGREEMENT
THIS DISCONTINUATION AGREEMENT (the "Agreement") is entered into
effective as of April 4, 1999 (the "Effective Date") between ALKERMES, INC., a
Pennsylvania corporation ("Alkermes Parent"), located at 00 Xxxxxx Xxxxxx,
Xxxxxxxxx, Xxxxxxxxxxxxx 00000 and GENENTECH, INC., a Delaware corporation
("Genentech"), located at 0 XXX Xxx, Xxxxx Xxx Xxxxxxxxx, Xxxxxxxxxx 00000.
Alkermes Controlled Therapeutics, Inc., a Pennsylvania corporation and
a wholly owned subsidiary of Alkermes Parent ("Alkermes"), and Genentech have
entered into, on the date hereof, a License Agreement (the "License Agreement")
under which they will further collaborate on the development of formulations of
recombinant human growth hormone for use in human beings using Alkermes'
technology currently known as the ProLease(R) delivery system, consisting of
patents and know-how, that permits PLGA encapsulation of particular molecules
leading to sustained release of such molecules when injected under the skin.
Genentech and Alkermes Parent have entered into, on the date hereof, a
Stock Purchase Agreement, pursuant to which Genentech agreed to buy and Alkermes
Parent agreed to sell shares of Alkermes Parent's 1999 Redeemable Convertible
Exchangeable Preferred Stock (the "Preferred Stock") to fund their further
collaborative efforts under the License Agreement through the year 2000.
Genentech and Alkermes Parent desire to enter into this Agreement in
order to provide for the option by Alkermes Parent or its successor in interest
to discontinue the Preferred Stock funding mechanism described above in the
event of a change in control of Alkermes Parent.
Therefore, Alkermes Parent and Genentech, intending to be legally bound
hereby, agree as follows:
1. Any capitalized term used herein and not defined shall have
the meaning set forth in the License Agreement.
2. So long as the Bonus Milestone Payment has not been paid
pursuant to Section 3.1 of the License Agreement, in the event
that a third party, who is not an affiliate of Alkermes
Parent, acquires greater than 49% of the voting stock of
Alkermes Parent, such acquiring third party, Alkermes Parent
or its successor may, in its sole discretion, elect to
discontinue the Preferred Stock funding mechanism. In such
case,
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THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS MARKED WITH "X" AND HAS BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.
(a) Alkermes Parent or its successor shall redeem for
cash that amount of the Preferred Stock held by
Genentech equal to (i) the difference between the
proceeds from the sale of the Preferred Stock to
Genentech and (ii) the Development Funds expended by
Alkermes to the date of such redemption in accordance
with the 1999/2000 Development Budget;
(b) There will not be a termination of the License
Agreement by virtue of the discontinuation of the
funding mechanism and the termination provisions in
Section 9 of the License Agreement shall control;
(c) The Bonus Milestone Payment shall be adjusted to
equal the sum of XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXX multiplied by a fraction, the numerator of
which is the Development Funds expended by Alkermes
as of the payment date and the denominator of which
is the proceeds from the sale of the Preferred Stock
to Genentech; and
(d) Alkermes Parent shall redeem the remaining Preferred
Stock (or Debentures, if issued in exchange for the
Preferred Stock) according to its terms, if not
earlier converted into Common Stock or Non-Voting
Common Stock.
3. This Agreement, along with the License Agreement and the terms
of the Preferred Stock and the Non-Voting Common Stock in the
Second Amended and Restated Articles of Incorporation of
Alkermes, Inc., as amended, constitute and contain the entire
understanding and agreement of the parties and cancel and
supersede any and all prior negotiations, correspondence,
understandings and agreements, whether verbal or written,
between the parties respecting the subject matter hereof. No
waiver, modification or amendment of any provision of this
Agreement shall be valid or effective unless made in writing
and signed by a duly authorized officer of each of the
parties.
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THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS MARKED WITH "X" AND HAS BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.
IN WITNESS WHEREOF, the parties have caused this Discontinuation
Agreement to be executed by their respective duly authorized officers as of the
day and year first above written, each copy of which shall for all purposes be
deemed to be an original.
ALKERMES, INC. GENENTECH, INC.
By: /s/ Xxxxx X. Xxxxxx By: /s/ Xxxxxxx X. Xxxxx
----------------------------------- ------------------------------
Name: Xxxxx X. Xxxxxx Name: Xxxxxxx X. Xxxxx
Title: Vice President, Chief Financial Title: Chief Operating Officer
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